Now that the third quarter has drawn to a close and we have updated our mutual-fund ratings, it's time to look back at how the 437 fund families TheStreet.com Ratings tracks have placed in our "ultra" fund family contest.

To be considered an "ultra" fund family, an investment house needs to place more funds on our quarterly list of the top 200 open-end funds than its peers. That list is being published in the Fall 2007 edition of our TheStreet.com Ratings Guide to Stock Mutual Funds, available for purchase from Grey House Publishing (518-789-8700) or for free at the reference desk of your public library.

There's been a subtle but significant innovation in our methodology: we are now using a single, primary share class to represent each fund in the rankings. Previously, every share class of a fund, with a high enough rating could be listed in the top 200 table. Now only the primary share class makes the list.

The change eliminates a valid criticism that multi-share fund classes were skewing the results for a portion of the competition. The outcome is a dramatic reshuffling of the leaders.

Whenever possible, the selected fund is one that a retail investor might choose. As this share class may not be the appropriate one for you, please consult with your financial adviser, the fund company, and the fund's prospectus before buying any investment vehicle.

Now that the clone war is over, the new galactic fund empire is lead by Fidelity, with 15 different funds on our top 200 list. Vanguard comes in second with eight, followed by Columbia Funds, a unit of

Bank of America

(BAC) - Get Report

and

Morgan Stanley

(MS) - Get Report

with seven each. ING Investment, a unit of

ING Groep

(ING) - Get Report

, with six, rounds out the top five "ultra" fund families.

Due to the crowding effect of multiple share classes, none of these five fund families had more than four unique funds on last quarter's top 200 list.

Honorable mention also goes to AIM Investments, a unit of

Invesco PLC

(IVZ) - Get Report

; American Century Investments; Dimensional Investment Group; Dreyfus, a unit of

Bank of New York Mellon Corp

(BK) - Get Report

; Franklin Templeton, a unit of

Franklin Resources

(BEN) - Get Report

and JPMorgan Funds, a unit of

JPMorgan Chase

(JPM) - Get Report

. Each of these families placed five funds in the top 200.

The sprint may have changed, but the team portion of the "ultra" fund family competition remains the same. For a fund family to win here, it needs to be among those that have the highest percentage of funds ranked in the top 30% of all open-end funds in comparison to other fund families of similar size. The top 30% represents overall investment grades of A+ to B-. The middle 40% are fund grades of C+, C, and C-, with D+ and lower in the bottom 30%.

For the fifth consecutive quarter, American Funds takes the top spot, beating out all other fund families with 100 or more funds. Just over 61% of its 211 rated funds rank in the top 30%, with just 1.9% in the bottom 30%. Allianz Global Investors, a unit of

Allianz SE

(AZ)

, moved up from fifth place last quarter into second position with 53.5% of its 127 rated funds in the top 30%.

T. Rowe Price

(TROW) - Get Report

improved by one notch from fourth to third place by maintaining 47% of its funds in the top 30%.

Making runs for the top of the list by improving their percentage of funds in the top 30%, MFS, a unit of

Sun Life Financial

(SLF) - Get Report

, jumped to fourth from ninth, while Columbia Funds moved up to fifth from 11th and Nationwide Funds to sixth from 10th.

Ivy Funds, another unit of Bank of New York Mellon Corp, once again leads the group of fund families with 40 to 99 rated funds. It improved its score to 63.1% of its funds in the top category, up from 50.6% in the previous quarter. Likewise, the Seligman Group now has 60.2% of its funds in the top category compared with just 27.6% in the prior ranking. This earned the company a promotion to second place from 10th.

Among the 69 fund families with between 10 and 39 rated funds, Thornburg Funds retains the top spot in the third quarter. Amazingly, all 17 of its rated funds are again in the top 30% category. Alger Funds took second place with 80.6% of its funds outperforming, and HSBC Asset Management, a unit of

HSBC Holdings

(HBC)

, showed in third, up one notch from last quarter.

Of the 301 fund families with fewer than 10 rated open-end stock funds, only Marsico Investment Fund, another unit of Bank of America, had all four of its rated funds in the top 30%. Harding Loevner Funds, Industry Leaders Funds and Julius Baer Funds, a unit of

Julius Baer Holding

( JBHGF), followed closely with three top-ranked funds.

Kevin Baker became the senior financial analyst for TSC Ratings upon the August 2006 acquisition of Weiss Ratings by TheStreet.com, covering mutual funds. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.