Guide to Mutual Fund Categories

These tables rank the top-performing stock and bond mutual funds for the first quarter of 2006 for investment categories defined by research firm Morningstar Inc., which provided the data. 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 outstanding shares.)

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 more than 80% of their assets in foreign 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 specialty categories are communications (SC), financial (SF), health (SH), natural resources (SN), precious metals (SP), real estate (SR), technology (ST) and utilities (SU).

* Bear-market (BM): Uses strategies, such as short-selling and put options, specifically designed to profit from falling stock prices.

* Moderate and conservative allocation (MA and CA): Includes funds that invest in a mix of stocks, bonds and cash. Conservative-allocation funds have at least 20% of their assets invested in stocks and 50% to 80% invested in fixed-income securities and cash. Moderate-allocation funds have 50% to 70% of their assets invested in stocks and more than 10% invested in fixed income.

* Convertibles (CV): Invests in bonds and preferred stocks that can be converted to common stocks.

* World (WS): Invests 40% to 80% of assets in foreign stocks and 20% to 60% of assets in U.S. stocks.

* World allocation (IH): Invests in a mix of stocks and bonds, of which at least 40% is foreign.

* Europe (ES): Invests at least 80% of assets in Europe.

* Pacific/Asia (PJ): Invests at least 70% of assets in Pacific Rim countries, with less than 10% invested in Japan.

* Japan (JS): Invests at least 75% of assets in Japan.

* Diversified emerging markets (EM): Invests at least 50% of assets in emerging markets -- generally defined as fast-growing economies.

* Latin America (LS): Invests at least 75% of assets in Latin America.

* Diversified Pacific/Asia (DP): Invests at least 40% of assets in Pacific Rim countries, with at least an additional 10% in Japan.

* Long-Short (LO): Takes long positions in stocks deemed attractive and “short” positions in securities considered likely to decline.

* Target-Date 2000-2014 (TA): Geared to investors expecting to retire between 2000 and 2014.

* Target-Date 2015-2029 (TB): Geared to investors expecting to retire between 2015 and 2029.

* Target-Date 2030+ (TC): Geared to investors expecting to retire in 2030 and beyond.

Bond Funds

Bond funds are broadly divided based on how heir dividends are taxed. The interest from taxable-bond funds is subject to federal income tax, while the interest from municipal-bond funds is generally exempt from federal -- and sometimes state -- income taxes. Within these broad groupings, bonds funds are categorized as follows:

* Long-term government (GL): Invests at least 90% of bond portfolio in U.S. government issues with an average effective duration of more than six years.

* Intermediate-term government (GI): Invests at least 90% of bond portfolio in U.S. government issues with an average effective duration of at least 3 1/2 years but less than six.

* Short-term government (GS): Invests at least 90% of bond portfolio in U.S. government issues with an average effective duration of at least one year but less than 3 1/2 years.

* Long-term investment grade (CL): Focuses on corporate and other investment-grade securities with an average effective duration of more than six years.

* Intermediate-term investment grade (CI): Focuses on corporate and other investment-grade securities with an average effective duration of more than 3 1/2 years but less than six.

* Short-term investment grade (CS): Focuses on corporate and other investment-grade securities with an average effective duration of more than one year but less than 3 1/2 years.

* Ultra-short-term (UB): Invests in fixed-income securities with an effective duration of less than one year. Includes corporate and government bond funds.

* Bank loan (BL): Formerly included in the “ultra-short” category, these funds invest primarily in syndicated bank loans.

* High-yield (junk) (HY): Invests at least 65% of assets in bonds rated below BBB (considered speculative).

* Multi-sector (MU): Invests in several fixed-income sectors, such as U.S. government, foreign, corporate and high-yield.

* International (IB): Invests at least 40% of bond assets in foreign markets.

* Emerging markets (EB): Primarily invests in bonds issued by governments and companies in emerging markets.

* High-yield muni (HM): Invests at least 50% of assets in municipal securities that are rated at BBB or below or are not rated.

* Muni national long-term (ML): Invests primarily in municipal bonds with an average effective duration of more than seven years.

* Muni national intermediate term (MI): Invests primarily in municipal bonds with an average effective duration of at least 4 1/2 years but less than seven years.

* Muni national short-term (MS): Invests primarily in municipal bonds with an average effective duration of less than 4 1/2 years.

* Muni California long-term (MC): Invests at least 80% of assets in long-term California tax-free bonds.

* Muni California intermediate-term (MF): Invests at least 80% of assets in intermediate-term California tax-free bonds.

* Muni single-state long-term (SL): Invests primarily in long-term, single-state municipal bonds.

* Inflation-protected (IP): Provides returns that rise with the rate of inflation.

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 above.