These tables rank the top-performing stock and bond mutual funds for 2006 for each of the main investment categories as defined by research firm Morningstar Inc., which provided the data for these 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 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 securities.
