Of the 510 mutual funds that received five-star ratings from Chicago fund tracker Morningstar at the end of July, 83% of them were posting negative returns, with an average negative return of 9.23% year to date.

Morningstar isn't alone in this misery. New York-based fund analyst Lipper has seen its top-rated Lipper Leaders funds decline, as well. Sixty-one percent of the funds that Lipper rates for "consistent return" have posted negative returns so far this year, with the average loss at 5.48%.

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