And the Winners Are … – top mutual funds in past one to 20 years

And the Winners Are … – top mutual funds in past one to 20 years – Statistical Data Included

Here are the best of the best. You’ll discover a gold mine of ideas in these rankings of the top-performing funds of the past one, three, five, ten and 20 years, in 14 investment categories.

AGGRESSIVE GROWTH

These funds require a go-go market to get proper traction, and they had one this past year–at least until recently. Some one-year winners, such as the Van Wagoner funds, have miserable longer-term records. Longer-term winners reflect good staying power. Rydex OTC tracks the tech-heavy Nasdaq 100 index, with spectacular results the past five years. Janus Twenty underwent a manager change in mid 1997 (see “A Fund Family on Fire,” page 66), but newbie Scott Schoelzel is, if anything, more aggressive than the person he replaced. Alger Capital Appreciation reflects the skills of veteran David Alger, but a cheaper way to ride his horse is to avoid this broker-sold fund and go to no-load Spectra fund, also run by Alger in the same manner and with comparable results the past five years.

1 YEAR

1. ProFund UltraOTC Inv 136.3%

2. Van Wagoner Post Venture 112.9

3. Grand Prix 98.0

4. Van Wagoner Emerging Growth 90.0

5. Potomac OTC Plus 89.6

6. TCW/DW Mid Cap Equity B 83.4

7. TCW Galileo Aggressive Growth 81.3

8. Rydex OTC 74.4

9. Van Wagoner Mid Cap 67.5

10. BlackRock Micro Cap A 67.5

CATEGORY AVERAGE 7.1%

3 YEARS

1. Rydex OTC 45.1%

2. Janus Twenty(**) 39.5

3. MFS Strategic Growth A 35.9

4. Delaware Aggressive Gro A 34.0

5. Rydex Nova 31.9

6. Janus Mercury 30.3

7. UAM Analytic Enhanced Equity 29.4

8. MAS Mid Cap Value Instl 27.7

9. Robertson Stephens Emerging Gro A 27.3

10. TCW Galileo Aggressive Growth 27.0

CATEGORY AVERAGE 10.5%

5 YEARS

1. Rydex OTC 40.9%

2. Alger Capital Appreciation B 33.9

3. Janus Twenty(**) 33.6

4. Janus Mercury 30.9

5. Rydex Nova 30.9

6. Delaware Aggressive Gro A 30.6

7. Spectra([dagger]) 30.6

8. MAS Mid Cap Growth Instl 28.3

9. TIP Turner Small Cap Growth 27.8

10. Robertson Stephens Emerging Gro A 26.7

CATEGORY AVERAGE 16.6%

10 YEARS

1. Spectra([dagger]) 24.5%

2. Janus Twenty(**) 23.5

3. Van Kampen Emerging Growth A 21.4

4. Robertson Stephens Emerging Gro A 21.1

5. MFS Emerging Growth B 20.7

6. American Century Ultra 20.6

7. Invesco Dynamics 20.1

8. United New Concepts A (Waddell) 19.8

9. AIM Aggressive Growth A(**) 18.8

10. FPA Capital(**) 18.6

CATEGORY AVERAGE 14.0%

20 YEARS

1. Spectra([dagger]) 22.4%

2. Putnam Voyager A 19.0

3. Van Kampen Emerging Growth A 18.6

4. Putnam Vista A 18.0

5. Delaware Trend A 17.5

6. Fortis Growth A 17.4

7. Value Line Leveraged Growth 17.2

8. Seligman Capital A 16.9

9. Invesco Dynamics 16.6

10. Founders Special 15.1

CATEGORY AVERAGE 15.2%

(**) Closed to new investors.

([dagger]) Returns to June 1; Spectra had been a closed-end fund.

SOURCE: STANDARD & POOR’S MICROPAL

INTERNATIONAL – SPECIALIZED

The Road Runner award for the past 12 months goes to Matthews Korea, which tripled investors’ money. But the Korean stock market had fallen so far that this fund’s three-year return is still in negative territory. The European funds that dominated the one-year winners a year ago treaded water. Now it’s Asian funds’ turn to shine and, like Matthews Korea, virtually all are merely making up for stupendous losses they incurred the past couple of years.

And that’s the problem: Over time, these funds go down almost as much as they go up, leaving you with puny long-term returns, as the list of ten-year winners so aptly demonstrates. The lesson here may be to stick to diversified funds when you invest in overseas companies. Otherwise, you’re just spinning the roulette wheel.

1 YEAR

1. Matthews Korea I 211.4%

2. Fidelity Japan Small Co 115.6

3. Van Eck Asia Dynasty A 103.5

4. Matthews Pacific Tiger 95.8

5. Montgomery Emerging Asia R 83.4

6. Pioneer Indo-Asia A 82.4

7. Warburg Pincus Japan Sm Co Cmn 73.7

8. Deutsche Top 50 Asia A 73.6

9. Fidelity Southeast Asia 69.6

10. Ivy Asia Pacific A 69.5

CATEGORY AVERAGE 19.4%

3 YEARS

1. Fidelity Nordic 24.4%

2. Scudder Greater Europe Growth 22.7

3. Vanguard Intl Index European 22.5

4. Merrill Lynch EuroFund B 22.4

5. Chase Vista European A 21.3

6. Fidelity Europe Capital Apprec 20.4

7. Putnam Europe Growth A 20.2

8. Prime Upper Europe Equity Retail 19.7

9. J.P. Morgan European Equity 19.3

10. Prudential Europe Growth A 19.1

CATEGORY AVERAGE 1.2%

5 YEARS

1. Morgan Stanley DW Euro Gro B 19.7%

2. Putnam Europe Growth A 19.6

3. Vanguard Intl Index European 19.6

4. T. Rowe Price European Stock 18.6

5. Wright EquiFund Netherlands 18.5

6. Pioneer Europe A 18.2

7. Fidelity Europe 18.1

8. Merrill Lynch EuroFund 8 18.1

9. Alliance New Europe A 16.8

10. Invesco European 16.6

CATEGORY AVERAGE 2.8%

10 YEARS

1. Merrill Lynch EuroFund B 14.5%

2. Fidelity Europe 13.3

3. Invesco European 12.4

4. Merrill Lynch Pacific Fund A(**) 9.7

5. AIM Europe Growth A 7.0

6. Fidelity Canada 5.9

7. J. Hancock Pacific Basin Equity A 5.1

8. Fidelity Pacific Basin 4.1

9. Nomura Pacific Basin 3.9

10. Japan Fund 3.0

CATEGORY AVERAGE 6.9%

20 YEARS

1. AIM New Pacific Gro A 8.3%

2. Lexington Worldwide Emerging Mkts(*) 6.9

CATEGORY AVERAGE 7.7%

(*) Adopted its present investment focus in 1991

(**) Closed to new investors.

SOURCE: STANDARD & POOR’S MICROPAL

GLOBAL

Here’s where you go for the ultimate geographic diversification, in stocks of both U.S. and non-U.S. companies. One-year and three-year winner Pilgrim America World Growth recently had half of its assets in U.S. stocks. It looks for rapidly growing companies–many of them not so large–and judging by its sky-high average price-earnings ratio, it isn’t afraid to pay dearly to own them. Dreyfus Premier Worldwide Growth, number one for the past five years, stakes out huge companies when their P/Es are reasonable and holds them indefinitely. Janus Worldwide, number two for five years, owns faster-growing companies than the other two funds and is the least attached to U.S. stocks. The Dreyfus fund is less wedded to volatile technology stocks than the Pilgrim America or Janus entries.

1 YEAR

1. Pilgrim America World Gro A 36.2%

2. Warburg Pincus Global Post Common 29.1

3. Maxus Laureate Inv 28.1

4. Gabelli Global Opportunity 25.0

5. American New Perspective 24.2

6. Deutsche Top 50 World A 22.0

7. Citizens Global Equity 21.7

8. Oppenheimer Global Gro & Inc A 20.8

9. Putnam Diversified Equity Trust A 19.4

10. Montgomery Global Opps R 16.3

CATEGORY AVERAGE 6.8%

3 YEARS

1. Pilgrim America World Gro A 25.9%

2. Oppenheimer Global Gro & Inc A 24.3

3. Dreyfus Premier Worldwide Gro A 22.2

4. American New Perspective 21.6

5. Citizens Global Equity 21.0

6. Janus Worldwide 20.3

7. Idex JCC Global A 19.6

8. American Capital World Gro & Inc 19.3

9. Putnam Diversified Equity Trust A 19.3

10. Montgomery Global Opps R 19.2

CATEGORY AVERAGE 11.9%

5 YEARS

1. Dreyfus Premier Worldwide Gro A 21.4%

2. Janus Worldwide 20.9

3. Pilgrim America World Gro A 20.6

4. Idex JCC Global A 19.9

5. American New Perspective 19.0

6. Oppenheimer Global Gro & Inc A 18.5

7. Phoenix-Engemann Global Gro A 18.4

8. American Capital World Gro & Inc 18.0

9. Montgomery Global Opps R 17.2

10. API Capital Income 16.9

CATEGORY AVERAGE 12.3%

10 YEARS

1. American New Perspective 15.9%

2. Oppenheimer Global A 14.1

3. Merrill Lynch Global Alloc A(**) 14.0

4. Templeton Growth A 13.5

5. Templeton World A 13.3

6. Putnam Global Growth A 12.7

7. Amer Express IDS Managed Alloc A 12.5

8. Scudder Global 12.4

9. Evergreen Global Opportunities A 12.3

10. MFS Global Equity B 11.5

CATEGORY AVERAGE 10.2%

20 YEARS

1. American New Perspective 17.0%

2. Oppenheimer Global A 17.0

3. Putnam Global Growth A 15.8

4. Templeton Growth A 15.1

5. Phoenix Worldwide Opportunities A 12.3

6. Alliance Global Small Cap A 10.9

CATEGORY AVERAGE 15.1%

(**) Closed to new investors.

SOURCE: STANDARD & POOR’S MICROPAL

LONG – TERM GROWTH

These are the funds that should give moderately aggressive investors a good ride over time, without vicious volatility, and the best of them have delivered the goods this past year. Many winners got there by putting their chips beside large tech companies, such as Dell Computer, Cisco Systems, Intel and Microsoft. Such funds include Janus Olympus, Reynolds Blue Chip Growth and Transamerica Premier Equity. Others–such as Fidelity New Millennium and White Oak Growth–could as easily be called aggressive-growth funds.

The oddball is Legg Mason Value, which looks for large companies that manager William Miller thinks could fetch a far higher price in a buyout. Miller bought such hot shots as America Online and Dell when they were outcasts, and never really let go, to great effect.

1 YEAR

1. Jundt Twenty-Five A 70.6%

2. Pilgrim Large Cap Growth A 69.6

3. WM Growth A 60.9

4. Millennium Growth 60.3

5. Janus Olympus 57.1

6. Managers Capital Appreciation 56.1

7. Fidelity New Millennium(**) 55.9

8. Excelsior Large Cap Growth 51.1

9. Reynolds Opportunity 47.9

10. Phoenix-Goodwin Strategic Theme A 47.6

CATEGORY AVERAGE 14.1%

3 YEARS

1. Legg Mason Value P 41.2%

2. Weitz Hickory(**) 37.8

3. Reynolds Blue Chip Growth 35.3

4. Transamerica Premier Equity 33.8

5. Pioneer Growth Shares A 33.6

6. Alliance Premier Growth A 32.2

7. Massachusetts Investors Growth A 32.2

8. Citizens Index Retail 31.1

9. Janus Olympus 30.8

10. Vanguard Growth Index 30.4

CATEGORY AVERAGE 19.1%

5 YEARS

1. Legg Mason Value P 34.7%

2. Fidelity New Millennium(**) 32.7

3. White Oak Growth 32.6

4. Reynolds Blue Chip Growth 31.1

5. Weitz Hickory(**) 30.4

6. Pioneer Growth Shares A 30.0

7. Alliance Premier Growth A 29.6

8. Fidelity Dividend Growth 29.1

9. Vanguard Growth Index 29.0

10. Idex JCC Growth A 28.9

CATEGORY AVERAGE 20.1%

10 YEARS

1. Fidelity Contrafund(**) 22.0%

2. Fidelity Blue Chip Growth 20.9

3. Harbor Capital Appreciation 20.6

4. Legg Mason Value P 20.4

5. AIM Value A 20.1

6. Alger Growth B 20.0

7. Fidelity Destiny Plan II 19.9

8. Idex JCC Growth A 19.9

9. MainStay Capital Appreciation B 19.8

10. Pioneer Growth Shares A 19.8

CATEGORY AVERAGE 15.1%

20 YEARS

1. Fidelity Magellan(**) 24.0%

2. Davis New York Venture A 20.4

3. Janus Fund 20.3

4. Amer Express IDS New Dimensions A 20.2

5. Fidelity Destiny Plan I 20.1

6. Amer Express IDS Growth A 20.0

7. AIM Weingarten A 19.9

8. New England Growth A 19.7

9. Sequoia(**) 19.4

10. Fidelity Contrafund(**) 18.8

CATEGORY AVERAGE 17.1%

(**) Closed to new investors.

SOURCE: STANDARD & POOR’S MICROPAL

GROWTH & INCOME

Beware some wolves in sheep’s clothing. Growth-and-income funds evoke images of steady-as-you-go, even staid investing. But one-year runner-up Ameritor Security Trust has more than 40% of assets in just three hot stocks (Microsoft, MCI WorldCom and Intel), IPS Millennium filled half of its portfolio with technology issues, and even Janus Equity Income, with less than half its assets in stocks, puts a lot on the line with technology names.

Of special note: Vanguard 500 Index, on its way to becoming the biggest fund in the world, and Domini Social Equity, which is an index fund for the socially conscious. Less volatile than these is Safeco Equity, whose largest holdings include Chase Manhattan and Kimberly-Clark, in addition to the usual tech stocks.

1 YEAR

1. IPS Millennium 54.9%

2. Ameritor Security Trust 48.8

3. Janus Equity Income 40.7

4. Ameritor Investment(**) 39.6

5. Trainer Wortham First Mutual 38.7

6. Flex-Fund Muirfield 36.1

7. Northstar Gro + Value A 33.9

8. MainStay Instl Equity Income A 31.4

9. Strong Total Return 30.2

10. Strong Blue Chip 100 Fund 30.1

CATEGORY AVERAGE 11.2%

3 YEARS

1. IPS Millennium 31.3%

2. SSgA Growth & Income 29.7

3. Ameristock Mutual Fund 28.8

4. Janus Growth & Income 28.5

5. Selected American Shares 28.3

6. Domini Social Equity 28.2

7. Green Century Equity 27.6

8. Strong Growth & Income 27.3

9. Pioneer Fund A 27.2

10. Nationwide D(**) 27.1

CATEGORY AVERAGE 18.5%

5 YEARS

1. Janus Growth & Income 27.1%

2. Trainer Wortham First Mutual 25.8

3. Domini Social Equity 25.7

4. Smith Breeden US Market Plus 25.6

5. Alleghany Chicago Trust Gro & Inc 25.6

6. Vanguard 500 Index 25.5

7. Principal Preservation S&P 100 Plus 25.4

8. S&P 500 Index (CCM Partners) 25.3

9. SSgA S&P 500 Index 25.3

10. BT Equity 500 Index 25.3

CATEGORY AVERAGE 18.7%

10 YEARS

1. Oppenheimer Main St Inc & Gro A 21.7%

2. Chase Vista Growth & Income A 18.9

3. Kemper-Dreman High Return A 18.2

4. Safeco Equity 18.2

5. Fidelity Growth & Income(**) 18.2

6. Vanguard Growth & Income 17.7

7. J.P. Morgan US Equity 17.7

8. Vanguard 500 Index 17.6

9. Invesco Blue Chip Growth 17.2

10. Massachusetts Investors A 17.1

CATEGORY AVERAGE 13.8%

20 YEARS

1. Washington Mutual Investors 18.0%

2. Fidelity Equity Income 17.6

3. Van Kampen Comstock A 17.5

4. American Fundamental Investors 17.4

5. Fidelity Fund 17.4

6. Vanguard 500 Index 17.2

7. American Investment Co of Amer 17.2

8. Vanguard Windsor 17.2

9. Putnam for Growth & Income A 16.8

10. Safeco Equity 16.6

CATEGORY AVERAGE 15.5%

(**) Closed to new investors.

SOURCE: STANDARD & POOR’S MICROPAL

BALANCED

Funds in this category own both stocks and bonds, usually in some fixed proportion–the idea being that you get capital growth from the stocks, and income and stability from the bonds. Bond yields aren’t much to brag about, and no downturn in stocks during the 1990s has lasted more than a few months. So it should come as no surprise that winning funds here tend to be top-heavy in stocks. Oppenheimer Quest Balanced is only one-third invested in bonds and is tilted toward technology stocks, as are the Alger, Janus and Transamerica entries in this field.

Less daring are Dodge & Cox Balanced, Fidelity Balanced and socially sensitive Pax World, all of which manage good returns without sending the volatility meter into the red zone. This makes them ideal holdings.

1 YEAR

1. Oppenheimer Quest Blncd A 32.9%

2. Berger Balanced 30.9

3. Idex JCC Balanced A 27.0

4. Janus Balanced 26.2

5. Alger Balanced B 25.2

6. Leonetti Balanced 23.6

7. Pax World 20.7

8. Fidelity Balanced 19.2

9. Phoenix-Engemann Blncd Return A 17.3

10. WesMark Balanced 17.0

CATEGORY AVERAGE 8.4%

3 YEARS

1. Oppenheimer Quest Blncd A 26.7%

2. Transamerica Premier Balanced 23.9

3. Idex JCC Balanced A 22.7

4. Janus Balanced 22.6

S. Flag Investors Value Builder A 21.5

6. Fidelity Balanced 20.9

7. Pax World 20.4

8. Alger Balanced B 19.6

9. Alleghany/Montag & Caldwell Blncd 19.5

10. Alleghany Chicago Asset Allocation 19.4

CATEGORY AVERAGE 14.8%

5 YEARS

1. Oppenheimer Quest Blncd A 23.1%

2. Flag Investors Value Builder A 20.6

3. Janus Balanced 19.5

4. Pax World 19.3

5. Invesco Balanced 19.2

6. Alger Balanced B 18.7

7. Dreyfus Premier Balanced A 18.5

8. Phoenix-Engemann Blncd Return A 18.1

9. Mairs & Power Balanced(**) 17.9

10. Rainier Investment Balanced 17.7

CATEGORY AVERAGE 14.8%

10 YEARS

1. AIM Balanced A 14.6%

2. Dodge & Cox Balanced 13.7

3. Mairs & Power Balanced(**) 13.6

4. Phoenix-Engemann Blncd Return A 13.5

5. Pax World 13.3

6. Fidelity Puritan 13.3

7. MainStay Total Return B 13.3

8. Vanguard Wellington 13.3

9. CGM Mutual 13.1

10. Liberty-Colonial A 12.9

CATEGORY AVERAGE 11.9%

20 YEARS

1. Fidelity Puritan 15.7%

2. Vanguard Wellington 14.9

3. Delaware Balanced A 14.9

4. Liberty-Colonial A 14.5

5. Kemper Total Return A 14.5

6. MFS Total Return A 14.2

7. George Putnam Fund of Boston A 14.1

8. Phoenix-Goodwin Income & Gro A 13.8

9. Founders Balanced 13.4

10. New England Balanced A 13.1

CATEGORY AVERAGE 14.0%

(**) Closed to new investors.

SOURCE: STANDARD & POOR’S MICROPAL

INTERNATIONAL – DIVERSIFIED

Some good to excellent returns are once again flowing from international funds. A year ago the one-year winners were heavily invested in Europe. Investors would have been smart then to head toward the Pacific Rim because that’s where a lot of the action has been lately. Interestingly, one-year winner Warburg Pincus International Small Company worked its wonders mostly in Europe and Japan. All of this points to a pothole awaiting international funds: Stock pickers not only have to find the right stocks, but they have to find them in the right countries. Having to be right twice puts a burden on managers, which may explain why those two perennial winners, American Century International Discovery and Janus Overseas, did poorly during the past 12 months.

1 YEAR

1. Warburg Pincus Intl Small Co Common 72.9%

2. Oakmark Intl Small Cap 49.7

3. Montgomery Glbl Long-Short R 48.0

4. Nations Intl Value Inv A 24.6

5. Northstar Intl Value A 24.0

6. Oppenheimer Intl Small Co A 23.6

7. Fortis World Intl Equity A 23.5

8. Kayne Anderson Intl Rising Div 23.1

9. Schroder Cap Intl Small Inv 21.4

10. Oakmark International 20.7

CATEGORY AVERAGE 6.1%

3 YEARS

1. Federated Intl Small Company A 27.2%

2. Pilgrim America Intl Sm Cap A 23.7

3. Waddell & Reed Intl Growth B 22.6

4. Artisan International 21.4

5. Putnam International Voyager A 21.2

6. Northstar Intl Value A 21.2

7. JB International Equity A 20.4

8. Amer Cent Intl Discovery 20.4

9. Nations Intl Value Inv A 20.2

10. Tweedy Browne Global Value 19.9

CATEGORY AVERAGE 10.5%

5 YEARS

1. Janus Overseas 18.8%

2. Amer Cent Intl Discovery 18.0

3. Waddell & Reed Intl Growth B 16.4

4. Putnam Intl Growth A 16.0

5. Tweedy Browne Global Value 16.0

6. UMB Scout Worldwide 15.9

7. Harbor International(**) 15.3

8. Harbor Intl Growth 14.5

9. Aetna International Fund I 14.4

10. Fidelity Diversified Intl 14.3

CATEGORY AVERAGE 9.2%

10 YEARS

1. Harbor International(**) 14.7%

2. EuroPacific Growth 14.3

3. United Intl Growth A 12.5

4. Ivy International A 12.3

5. Templeton Foreign A 12.0

6. Smith Barney World Intl Equity A 11.5

7. Scudder International 11.0

8. T. Rowe Price Intl Stock 10.9

9. USAA International 10.7

10. Vanguard Intl Growth 10.5

CATEGORY AVERAGE 9.7%

20 YEARS

1. United Intl Growth A 15.7%

2. Scudder International 14.5

3. Nations International Growth A([dagger]) 12.1

CATEGORY AVERAGE 15.1%

(**) Closed to new investors.

([dagger]) Returns to June 1; Spectra had been a closed-end fund.

SOURCE: STANDARD & POOR’S MICROPAL

U.S. GOVERNMENT BONDS

The one thing Treasury bonds have going for them is that you know you’ll be paid back. Otherwise, they are just as susceptible to swings in interest rates as corporates. One-year winner Rydex Juno inversely tracks the bond market–that is, when interest rates go up, so does its net asset value. Unless you fear we’re headed into another inflationary spiral, avoid it. Also approach the American Century Target Maturity funds with caution. They own only Treasury bonds stripped of their interest coupons and trade at discounts to face value.

They are supersensitive to interest rates up or down.

Looking for something less frenetic? Strong Government is one of the few funds in this category to produce above-average results in each of the past five 12-month periods.

1 YEAR

1. Rydex Juno 10.8%

2. PIMCO Real Return Instl 7.5

3. Fidelity Target Time 1999(**) 5.7

4. UAM Analytic Short Term Govt A 5.1

5. First Investors US Govt + Series II(**) 4.9

6. Flex-Fund US Govt Bond 4.8

7. Fidelity Target Time 2001 4.5

8. Delaware Limited Term Government A 4.3

9. Montgomery Short Dur Govt Bond R 4.2

10. American Century Target 2000 4.2

CATEGORY AVERAGE 1.5%

3 YEARS

1. Amer Cent Target Maturity 2025 15.6%

2. Amer Cent Target Maturity 2020 12.6

3. Amer Cent Target Maturity 2015 12.3

4. Amer Cent Target Maturity 2010 10.5

5. PIMCO Long Term US Govt Instl 10.0

6. Amer Cent Long Term Treas Inv 9.0

7. Vanguard Admiral Long Term Treas 9.0

8. T. Rowe Price US Treas Long Term 9.0

9. Vanguard Long Term Treasury 8.9

10. Wasatch-Hoisington US Treasury 8.7

CATEGORY AVERAGE 6.4%

5 YEARS

1. Amer Cent Target Maturity 2015 11.5%

2. Amer Cent Target Maturity 2020 11.4

3. Amer Cent Target Maturity 2010 10.0

4. PIMCO Long Term US Govt Instl 9.5

5. Amer Cent Target Maturity 2005 8.5

6. Vanguard Admiral Long Tm Treas 8.5

7. Vanguard Long Term Treasury 8.4

8. Amer Cent Long Term Treas Inv 8.2

9. T. Rowe Price US Treas Long Term 8.0

10. USAA Income 8.0

CATEGORY AVERAGE 6.1%

10 YEARS

1. Amer Cent Target Maturity 2015 10.4%

2. Amer Cent Target Maturity 2010 10.0

3. Amer Cent Target Maturity 2005 9.6

4. Vanguard Long Term Treasury 8.7

5. USAA Income 8.6

6. American Century Target 2000 8.4

7. US Government (US Global) 8.3

8. Heartland US Government 8.2

9. Dreyfus US Treasury Long Term 8.1

10. Strong Government 8.1

CATEGORY AVERAGE 7.0%

20 YEARS

1. Federated Fund fur US Govt A 8.4%

CATEGORY AVERAGE 8.4%

(**) Closed to new investors.

SOURCE: STANDARD & POOR’S MICROPAL

INVESTMENT-GRADE TAX-FREE BONDS

The higher your tax rate, the more you should be attracted to munis. On a taxable-equivalent basis, the typical muni yields more than the average investment-grade corporate bond. Funds with low expenses carry a built-in advantage, and it should come as no surprise that the seven funds that came through with above-average returns each of the past five 12-month periods all possess below-average expense ratios. Those funds: Dreyfus Basic Municipal Bond, Executive Investors Insured Tax Exempt (4.75% sales fee), MAS Municipal, Sit Tax Free Income, Vanguard High Yield Tax Exempt, Vanguard Long Term Tax Exempt and Oppenheimer Municipal A.

Up-and-comer CitiFunds National Tax Free Income, with a three-year track record of first-decile returns, has been waiving its expenses.

1 YEAR

1. Strong Municipal Advantage 4.0%

2. First Investors Insured Intmed A 3.9

3. Nations Short Term Muni Inc Inv A 3.9

4. Strong Short Term Muni 3.7

5. Calvert Tax Free Limited Term A 3.6

6. Dreyfus Short Intmed Muni Bond 3.5

7. Vanguard Short Term Tax Exempt 3.5

8. Federated Short Term Muni Instl 3.5

9. Merrill Lynch Muni Ltd Maturity A(**) 3.5

10. Bernstein Short Dur Diversified Muni 3.5

CATEGORY AVERAGE 1.9%

3 YEARS

1. CitiFunds National Tax Free Income 9.0%

2. Strong Muni 8.1

3. T. Rowe Price Summit Muni Income 8.1

4. Dreyfus Basic Municipal Bond 8.1

5. Alliance Muni National A 8.1

6. Executive Inv Insured Tax Exempt 8.0

7. Safeco Municipal 7.7

8. Alliance Muni Insured National A 7.6

9. Nuveen Flagship All Amer Muni A 7.6

10. USAA Tax Exempt Long Term 7.6

CATEGORY AVERAGE 6.1%

5 YEARS

1. Executive Inv Insured Tax Exempt 7.4%

2. Excelsior Long Term Tax Exempt 7.2

3. Dreyfus Basic Municipal Bond 7.2

4. T. Rowe Price Summit Muni Income 7.1

5. MAS Municipal 7.1

6. Alliance Muni National A 6.9

7. Sit Tax Free Income 6.6

8. Norwest Tax Free Income A 6.6

9. Safeco Municipal 6.6

10. Nuveen Flagship All Amer Muni A 6.6

CATEGORY AVERAGE 5.5%

10 YEARS

1. Excelsior Long Term Tax Exempt 8.1%

2. Smith Barney Managed Munis A 8.0

3. Nuveen Flagship All Amer Muni A 7.9

4. Fidelity Advisor High Income Muni T 7.7

5. Vanguard High Yield Tax Exempt 7.7

6. Vanguard Long Term Tax Exempt 7.6

7. Chase Vista Tax Free Income A 7.6

8. Alliance Muni National A 7.6

9. United Muni A 7.5

10. Dreyfus Premier Municipal Bond A 7.4

CATEGORY AVERAGE 6.6%

20 YEARS

1. MFS Municipal Bond A 8.8%

2. Scudder Managed Municipal 7.7

3. Oppenheimer Municipal A 7.6

4. Amer Express IDS Tax Exempt A 7.0

CATEGORY AVERAGE 7.8%

(**) Closed to new investors.

SOURCE: STANDARD & POOR’S MICROPAL

HIGH-YIELD CORPORATE BONDS

Junk-bond funds react less to changes in interest rates and more to changes in the economy–which makes sense because a recession could throw issuers of these low-rated or unrated bonds into default. Such fears abounded last fall but proved groundless when economic troubles in Russia and Asia failed to upset the U.S. economy. Two funds in particular stand out for achieving above-average results each of the past five 12-month periods. Fidelity High Income’s winning ways are described in “High Time for High Yield,” on page 88. MAS High Yield (an institutional fund available through many discount brokers) owes some of its success to investments in bonds from developing nations in Asia and Latin America. But like the Fidelity fund, it is highly volatile.

1 YEAR

1. Fidelity Capital & Income 7.6%

2. Strong Short Term High Yield 7.0

3. Fidelity High Income 4.3

4. Eaton Vance Income of Boston 3.9

5. Payden & Rygel High Income R 3.2

6. Lipper High Income Bond Retail 2.9

7. Eaton Vance High Income B 2.6

8. PIMCO High Yield Instl 2.6

9. Columbia High Yield 2.5

10. SteinRoe High Yield 2.4

CATEGORY AVERAGE -2.1%

3 YEARS

1. Fidelity Capital & Income 12.5%

2. Eaton Vance Income of Boston 12.0

3. Strong High Yield 11.9

4. Fidelity High Income 11.7

5. MAS High Yield Instl 11.2

6. Eaton Vance High Income B 11.1

7. Invesco High Yield 11.0

8. Legg Mason High Yield Primary 10.7

9. Janus High Yield 10.1

10. PIMCO High Yield Instl 10.0

CATEGORY AVERAGE 8.4%

5 YEARS

1. Fidelity High Income 12.3%

2. Legg Mason High Yield Primary 10.9

3. MAS High Yield Instl 10.9

4. Fidelity Capital & Income 10.9

5. PIMCO High Yield Instl 10.8

6. MainStay High Yield Corp B 10.7

7. Eaton Vance Income of Boston 10.7

8. Invesco High Yield 10.4

9. Northeast Investors Trust 10.4

10. Seligman High Yield A 10.1

CATEGORY AVERAGE 8.7%

10 YEARS

1. Fidelity Advisor High Yield T 12.7%

2. Fidelity Capital & Income 11.8

3. Oppenheimer Champion Income A 11.2

4. Federated High Income Bond A 11.1

5. MainStay High Yield Corp B 10.9

6. Seligman High Yield A 10.7

7. Northeast Investors Trust 10.7

8. Eaton Vance Income of Boston 10.6

9. Liberty-Colonial High Yield A 10.6

10. American High Income 10.4

CATEGORY AVERAGE 9.3%

20 YEARS

1. Northeast Investors Trust([dagger]) 12.0%

2. Eaton Vance Income of Boston 11.7

3. MFS High Income A 11.1

4. Delaware Delchester A 10.1

5. Oppenheimer High Yield A 9.8

6. Pilgrim High Yield A 9.4

7. Evergreen High Yield B 8.3

CATEGORY AVERAGE 10.2%

([dagger]) Returns to June 1.

SOURCE: STANDARD & POOR’S MICROPAL

MORTGAGE SECURITIES

These have been the poor relations of the bond world for some time. Returns of mortgage-securities funds have lagged behind those of corporate and government bonds. And should rates go down, homeowners will refinance and rob you of your capital-appreciation potential. Mortgage funds tend to do best when rates are stable. At such times, the slight yield advantage they have over government bonds makes them attractive.

Alas, volatility seems to be the rule these days. Consistently above-average returns distinguish a few entries in this category, such as no-load funds TCW Galileo Total Return Mortgage Backed and Vanguard GNMA. Still, it’s hard to justify recommending such funds just now, given the lackluster returns by most entries in this forlorn category.

1 YEAR

1. Countrywide Adjustable Rate Govt A 5.1%

2. AMF Adjustable Rate Mortgage 4.8

3. Lexington GNMA Income 4.4

4. Evergreen Preserv & Inc A 4.4

5. First American Adj Rate Mortgage 4.4

6. Goldman Sachs Adjustable Rate A 4.1

7. Federated Adjustable Rate US Govt F 3.7

8. Franklin Adjustable US Govt 3.7

9. Smith Barney Adj Rate Govt Inc A 3.7

10. Smith Breeden Short Dur US Govt 3.7

CATEGORY AVERAGE 2.3%

3 YEARS

1. TCW Galileo Total Return Mortg Backed 8.5%

2. PaineWebber US Govt Income A 8.0

3. Lexington GNMA Income 7.8

4. Advantus Mortgage A 7.8

5. Principal Government Income A 7.6

6. AmSouth Govt Inc Classic 7.5

7. WM US Government A 7.5

8. Vanguard GNMA 7.4

9. Franklin Strategic Mortgage 7.4

10. AMF US Government Mortgage 7.3

CATEGORY AVERAGE 6.5%

5 YEARS

1. TCW Galileo Total Return Mortg Backed 8.2%

2. Huntington Mortgage Inv 7.9

3. Lexington GNMA Income 7.7

4. Vanguard GNMA 7.5

5. Franklin Strategic Mortgage 7.4

6. Advantus Mortgage A 7.4

7. Target Mortgage Backed 7.3

8. Principal Government Income A 7.3

9. Smith Barney US Government A 7.1

10. Franklin Custodian US Govt A 7.1

CATEGORY AVERAGE 6.3%

10 YEARS

1. Vanguard GNMA 8.1%

2. Lexington GNMA Income 8.0

3. Principal Government Income A 7.8

4. Advantus Mortgage A 7.8

5. American Century GNMA 7.8

6. Franklin Custodian US Govt A 7.7

7. Dreyfus Premier GNMA A 7.7

8. T. Rowe Price GNMA 7.6

9. Dreyfus Basic GNMA 7.6

10. Federated GNMA Instl 7.6

CATEGORY AVERAGE 7.1%

20 YEARS

1. Lord Abbett US Government A 9.6%

2. Franklin Custodian US Govt A 8.4

3. Lexington GNMA Income 8.4

CATEGORY AVERAGE 8.8%

SOURCE: STANDARD & POOR’S MICROPAL

SECTOR

The numbers beside these narrowly focused funds are tempting, to say the least. Seldom does a fund double your money in a year, and to quadruple it, as Internet fund did, is a phenomenal achievement. Even if you leave aside the newcomers, the funds with ten-year records look impressive. Of course, you have to pick the right sector, and in hindsight the choices were rather limited: technology, technology or technology.

Also, be forewarned that none of the top eight one-year winners in this category has a three-year track record. That’s an important element because even the most successful sector fund hits the mat when its holdings are pummeled, and this typically occurs without warning. With no diversification across industry lines, those periods can be daunting.

1 YEAR

1. Internet Fund 306.5%

2. Amerindo Technology D 232.6

3. Van Wagoner Technology 139.8

4. Firsthand Tech Innovators 136.0

5. Dreyfus Premier Tech Gro A 120.1

6. Munder NetNet A 117.2

7. Firsthand Tech Leaders 97.3

8. WWW Internet Fund 96.4

9. Fidelity Select Electronics 95.4

10. Fidelity Select Develop Comms 19.4%

CATEGORY AVERAGE

3 YEARS

1. Flag Investors Communications A 45.7%

2. Northern Technology 44.8

3. Invesco Strategic Worldwide Comms 40.4

4. Dresdner RCM Global Tech I 39.5

5. Fidelity Select Computers 38.3

6. Fidelity Select Electronics 38.0

7. Fidelity Select Technology 35.7

8. Principal Preservation PSE Tech A 34.8

9. Gabelli Global Couch Potato 34.0

10. Firsthand Technology Value 31.8

CATEGORY AVERAGE 16.9%

5 YEARS

1. Firsthand Technology Value 47.0%

2. Fidelity Select Electronics 40.8

3. Fedility Select Computers 38.0

4. Fidelity Select Technology 34.1

5. Flag Investors Communications A 34.1

6. First American Technology A 33.2

7. Alliance Technology A 33.0

8. Fidelity Select Develop Comms 31.3

9. Seligman Comms & Info A 30.8

10. T. Rowe Price Science & Technology 30.7

CATEGORY AVERAGE 19.5%

10 YEARS

1. Fidelity Select Electronics 30.4%

2. Fidelity Select Computers 27.8

3. Fidelity Select Technology 26.5

4. T. Rowe Price Science & Technology 24.6

5. Seligman Comms & Info A 24.0

6. Invesco Strategic Technology 23.9

7. Alliance Technology A 23.4

8. Fidelity Select Software & Computer 23.3

9. Fidelity Select Health Care 23.0

10. Vanguard Health Care(**) 22.5

CATEGORY AVERAGE 17.3%

20 YEARS

1. United Science & Tech A (Waddell) 17.8%

2. Kemper Technology 17.1

3. Franklin Custodian Dynatech A 15.7

4. T. Rowe Price New Era 13.2

CATEGORY AVERAGE 16.2%

(**) Closed to new investors.

SOURCE: STANDARD & POOR’S MICROPAL

INVESTMENT-GRADE CORPORATE BONDS

Most bonds react inversely to interest rates–as rates go up, bond prices go down, and vice versa. The run-up in rates claimed investment-grade corporates among its biggest victims. The best total return most could muster for the 12 months to June 14 was in the high single digits, and those were mainly funds with short-maturity portfolios.

For a better shopping list, look at the five-year winners. Loomis Sayles Bond reflects the penchant of manager Dan Fuss for bonds he considers even slightly undervalued. Strong Corporate and Managers Bond both include a slew of high-yield “junk” bonds, and most of their investment-grade holdings are rated BBB–the lowest rung on the investment-grade ladder. T. Rowe Price Spectrum Income invests in other Price bond funds.

1 YEAR

1. Calvert Income A 8.8%

2. Metropolitan West Low Duration 5.7

3. Payden & Rygel Limited Maturity R 5.3

4. Stagecoach Lifepath Opportunity A 5.0

5. Touchstone Standby Income 5.0

6. Eclipse Funds Ultra Short Term 4.9

7. Bernstein Short Duration Plus 4.9

8. Harbor Short Duration 4.8

9. Hotchkis & Wiley Short Term Inv 4.8

10. SSgA Yield Plus 4.8

CATEGORY AVERAGE 1.5%

3 YEARS

1. Loomis Sayles Bond 10.9%

2. Calvert Income A 10.8

3. Dreyfus Intmed Term Income 10.7

4. Managers Bond 9.3

5. Lebenthal Taxable Municipal Bond 9.1

6. Vanguard Long Term Index 9.0

7. Strong Corporate Bond 8.8

8. Crabbe Huson Contrarian Income A 8.7

9. PIMCO Total Return Instl 8.7

10. Stagecoach Lifepath Opportunity A 8.6

CATEGORY AVERAGE 6.5%

5 YEARS

1. Loomis Sayles Bond 11.8%

2. Strong Corporate Bond 9.6

3. Managers Bond 9.5

4. Calvert Income A 9.1

5. T. Rowe Price Spectrum Income 9.0

6. Smith Barney Investment Grade B 8.7

7. AIM Income A 8.7

8. Vanguard Long Term Index 8.6

9. CGM Fixed Income 8.6

10. Stagecoach Lifepath Opportunity A 8.3

CATEGORY AVERAGE 6.5%

10 YEARS

1. Alliance Corporate Bond A 10.0%

2. PIMCO Total Return Instl 9.2

3. Vanguard Long Term Corporate 9.0

4. Smith Barney Investment Grade B 9.0

5. Harbor Bond 8.9

6. Federated Bond F 8.9

7. FPA New Income 8.8

8. Amer Express IDS Bond A 8.8

9. Calvert Income A 8.8

10. Dreyfus Core Bond 8.8

CATEGORY AVERAGE 7.6%

20 YEARS

1. American Bond Fund of America 10.2%

2. Amer Express IDS Bond A 10.2

3. Vanguard Long Term Corporate 10.1

4. AIM Income A 9.7

5. Amer Express IDS Selective A 9.7

6. MFS Bond A 9.6

7. Putnam Income A 9.4

8. United Bond A (Waddell) 9.3

9. Sentinel Bond A 9.0

10. SteinRoe Intermediate Bond 9.0

CATEGORY AVERAGE 9.3%

SOURCE: STANDARD & POOR’S MICROPAL

GLOBAL BONDS

Intuitively, you’d think these would make good investments. After all, they can buy bonds wherever they wish–here in the United States or anywhere else in the world–wherever opportunity beckons in the form of attractive interest rates. Yet something seems to go wrong along the way and global bond funds end up in the doghouse, sharing a leftover bone with mortgage-securities funds. Perhaps it’s because they confront not just interest-rate and default risk but also that of currency fluctuation–a lot of variables for any fund manager to juggle.

Within this category, good bets include no-load PIMCO Foreign Bond (an institutional fund available to individuals through discount brokers) and Janus Flexible Income. Both are perennial overachievers among their peers.

1 YEAR

1. Loomis Sayles Global Bond Instl 15.2%

2. Munder International Bond A 7.7

3. Strong International Bond 7.7

4. Managers Global Bond 6.8

5. Target International Bond 6.8

6. Delaware Global Bond A 6.6

7. PaineWebber PACE Global Fixed Inc. 6.6

8. Alliance North American Govt Inc A 6.4

9. Payden & Rygel Global Fixed Inc R 6.4

10. Janus Flexible Income 6.3

CATEGORY AVERAGE -1.2%

3 YEARS

1. Alliance North American Govt Inc A 13.6%

2. Alliance Global Strategic Income A 11.5

3. PIMCO Foreign Bond Instl 11.3

4. Loomis Sayles Global Bond Instl 10.0

5. Standish Global Fixed Inc 9.9

6. Fidelity New Markets Income 9.6

7. Fidelity Advisor Emerging Mkts Inc T 9.4

8. New England Strategic Income A 9.4

9. Payden & Rygel Global Fixed Inc R 8.9

10. ISI North American Govt Bond 8.7

CATEGORY AVERAGE 5.3%

5 YEARS

1. PIMCO Foreign Bond Instl 11.7%

2. Loomis Sayles Global Bond Instl 10.6

3. Franklin Strategic Income A 10.1

4. Fidelity New Markets Income 10.1

5. Bear Stearns Emerging Mkts Debt A 9.6

6. Standish Global Fixed Inc 9.6

7. Goldman Sachs Global Income A 9.0

8. Alliance North American Govt Inc A 8.9

9. Payden & Rygel Global Fixed Inc R 8.9

10. Janus Flexible Income 8.8

CATEGORY AVERAGE 6.3%

10 YEARS

1. Kemper Strategic Income A([dagger]) 10.0%

2. T. Rowe Price International Bond 9.2

3. Liberty Colonial Strategic Income A([dagger]) 8.7

3. Janus Flexible Income 8.7

5. Amer Express IDS Global Bond A 8.6

6. Putnam Diversified Income A 8.3

7. AIM Strategic Income A 8.3

8. Scudder International Bond 8.1

9. American Capital World Bond 8.1

10. Lord Abbett Global Income A 8.0

CATEGORY AVERAGE 7.7%

20 YEARS

1. Kemper Strategic Income A([dagger]) 10.4%

2. Liberty-Colonial Strategic Income A([dagger]) 10.2

CATEGORY AVERAGE 10.3%

([dagger]) Returns to June 1.

SOURCE: STANDARD & POOR’S MICROPAL

RELATED ARTICLE: Key Facts for Mutual Funds Investors

To achieve some perspective, consider these benchmarks of Wall Street performance.

Huge downdrafts, for example, weren’t invented yesterday.

Down markets of the past 50 years

BEGAN LASTED S&P 500 FELL

August 1956 15 months 21.6%

August 1959 15 months 13.9

December 1961 7 months 28.0

February 1966 8 months 22.2

November 1968 18 months 36.1

January 1973 21 months 48.2

September 1976 17 months 19.4

November 1980 21 months 27.1

August 1987 3 months 33.5

July 1990 3 months 19.2

July 1998 3 months 18.8

Recessions of the past 50 years

BEGAN LASTED

November 1948 11 months

July 1953 10 months

August 1957 8 months

April 1960 10 months

December 1969 11 months

November 1973 16 months

January 1980 6 months

July 1981 16 months

July 1990 8 months

Big days, bad days

LARGEST DOW JONES INDUSTRIAL AVERAGE GAINS

March 15, 1933 15.3%

October 6, 1931 14.9

October 30, 1929 12.3

September 21, 1932 11.4

October 21, 1987 10.2

August 3, 1932 9.5

February 11, 1932 9.5

November 14, 1929 9.4

December 18, 1931 9.4

February 13, 1932 9.2

LARGEST DOW JONES INDUSTRIAL AVERAGE LOSSES

December 12, 1914 24.4%

October 19, 1987 22.6

October 28, 1929 12.8

October 29, 1929 11.7

november 6, 1929 9.9

August 12, 1932 8.4

October 26, 1987 8.0

July 21, 1933 7.8

October 18, 1937 7.8

All-time closing highs

Dow Jones industrial average 11107.19 May 13, 1999

Standard & Poor’s 500-stock index 1367.56 May 13, 1999

Nasdaq Composite 2652.05 April 26, 1999

New York Stock Exchange index 651.35 May 13, 1999

Dow Jones transportation average 3783.50 May 12, 1999

Dow Jones utility average 333.27 June 7, 1999

Note: All data to June 14, 1999

SOURCE: Standard & Poor’s Marketscope (via Telescan)3

COPYRIGHT 1999 The Kiplinger Washington Editors, Inc.

COPYRIGHT 2000 Gale Group