Guide to Mutual Fund Classes
These tables rank the top-performing stock and bond mutual funds for the fourth quarter of 2004 for each of the main investment categories as defined by research firm Morningstar Inc., which provided the data for the tables. The tables of top-performing funds are followed by individual performance figures for 5,400 mutual funds, organized by fund company.
Stock Funds
Most of the mutual funds that invest in the stocks of U.S. companies are sorted by Morningstar into nine broad categories. First, the funds are categorized by the average market capitalization (or “cap”) of the stocks they own: large-cap, mid-cap or small-cap. (A stock’s capitalization is its share price times the number of its shares outstanding.)
The funds are further categorized by their basic investment objective: growth, value or a blend of the two. Among other criteria, growth-oriented funds tend to focus on stocks of companies that have, or are expected to have, robust earnings growth. Value funds look for stocks that appear to be underpriced relative to the underlying value of the company.
In the tables, these broad categories are identified as large-cap growth (LG), mid-cap growth (MG), small-cap growth (SG), large-cap blend (LB), mid-cap blend (MB), small-cap blend (SB), large-cap value (LV), mid-cap value (MV) and small-cap value (SV).
Stock funds that invest no more than 10% of their assets in U.S. stocks are subdivided into five categories: foreign large-cap value (FV); foreign large-cap blend (FB); foreign large-cap growth (FG); foreign small/mid-cap value (FA); and foreign small/mid-cap growth (FR).
Other stock funds are categorized as follows:
* Specialty funds: Invest primarily in companies within a single industry or sector. The sectors are: communications (SC), financial (SF), health (SH), natural resources (SN), precious metals (SP), real estate (SR), technology (ST) and utilities (SU).
* Bear-market: Use strategies, such as short selling and put options, specifically designed to profit from falling stock prices.
* Moderate and conservative allocation (CA, MA): Invest in a mix of stocks and bonds. Formerly combined under the category of “domestic hybrid.” Conservative funds have at least 20% of their assets invested in stocks and 50% to 80% invested in fixed-income securities and cash. Moderate funds have 50% to 70% of their assets invested in stocks and more than 10% invested in fixed-income.
* Convertibles (CV): Invest in bonds and preferred stocks that can be converted to common stocks.
* World (WS): Invest primarily in foreign stocks, with more than 10% of assets invested in U.S. stocks.
* World allocation (IH): Formerly “international hybrid.” Invests in a mix of stocks and bonds, of which at least 40% is foreign.
* Europe (ES): At least 75% of assets invested in Europe.
* Pacific/Asia (ex. Japan) (PJ): At least 75% of assets invested in Pacific Rim countries, with less than 10% invested in Japan.
* Japan (JS): At least 75% of assets invested in Japan.
* Diversified emerging markets (EM): At least 50% of assets invested in emerging markets -- generally defined as fast-growing economies.
* Latin America (LS): At least 75% of assets invested in Latin America.
* Diversified Pacific/Asia (DP): At least 65% of assets invested in Pacific Rim countries, with at least an additional 10% invested in Japan.
Bond Funds
Bond funds are divided broadly among taxable bond funds, on which interest is typically subject to income taxes, and municipal bonds, which pay interest that is free of federal -- and sometimes state -- income taxes. Within these broad groupings, bond funds are categorized as follows:
* Long-term government (GL): At least 80% of bond portfolio invested in government issues with an average effective maturity of more than 10 years.
* Intermediate-term government (GI): At least 80% of bond portfolio invested in government issues with an average effective maturity of at least four years but less than 10 years.
* Short-term government (GS): At least 80% of bond portfolio invested in government issues with an average effective maturity of at least one but less than four years.
* Long-term investment grade (CL): Focuses on corporate and other investment-grade securities with an average effective maturity of more than 10 years.
* Intermediate-term investment grade (CI): Focuses on corporate and other investment-grade securities with an average effective maturity of more than four but less than 10 years.
* Short-term investment grade (CS): Focuses on corporate and other investment-grade securities with an average effective maturity of more than one but less than four years.
* Ultra-short-term (UB): Invests in securities with an effective maturity of less than one year. Includes corporate and government bond funds.
* Bank loan (BL): Formerly included in “ultra-short-term” category, these funds invest primarily in syndicated bank loans.
* High-yield (junk) (HY): At least 65% of assets invested in bonds rated below BBB (considered speculative).
* Multi-sector (MU): Invests in several fixed-income sectors.
* International bond (IB): At least 40% of assets invested in foreign markets, excluding emerging markets.
* Emerging markets (EB): At least 75% of assets invested in emerging-market bonds.
* High-yield muni (HM): At least 50% of assets invested in municipal securities that are not rated, or are rated below BBB.
* Muni long-term (national) (ML): Invests primarily in long-term municipal bonds.
* Muni intermediate-term (national) (MI): Invests primarily in intermediate-term municipal bonds.
* Muni short-term (national) (MS): Invests primarily in short-term municipal bonds.
* Muni California long-term (MC): Invests primarily in long-term California tax-free bonds.
* Muni California intermediate-/short-term (MF): Invests primarily in intermediate-term California tax-free bonds.
* Muni single-state long-term (SL): Invests primarily in long-term, single-state municipal bonds.
* Muni single-state intermediate-term (SI): Invests primarily in intermediate-term, single-state municipal bonds.
The Pct. Load column lists sales charges (known as “loads”) or commissions; NL means “no load.” The Exp. Ratio column is the annual percentage of the fund’s assets paid for operating and management expenses, excluding sales charges. NA means “not applicable,” usually because the fund was not in existence long enough.
For more information on footnotes and an explanation of fund return figures and ratings, see the “How to read the mutual fund tables” box on the following page.
