In a landslide election, U.S. voters handed control of both houses of Congress to the Democratic Party. Overall, Wall Street cheered the move, banking on gridlock in Washington to restrain government spending in the absence of any other fiscal discipline.

But the political shift did put health care stocks and the mutual funds that hold them into play. For the most part, the movements of these funds were negative, as investors worried that the Democrats' early agenda would include scrutiny of big pharma's drugs that are still under patent.

The health care and biotech sector funds we rate lost an average of 1.21% for the five trading days ended Thursday, Nov. 9.

There were also some positive stories, however. Democrats tend to be pro-science. That means additional money may now be spent on stem cell science and other less controversial research.

Amazing breakthroughs are possible with the right funding. Just this week, a study showed that some vision could be restored to blind mice by implanting cells that restore degenerated rods.

The best performer for the five trading days ended Thursday was the Integrity Health Sciences Fund

( IHLAX), which gained 2.44%. Its top holdings --

Amgen

(AMGN) - Get Report

,

Merck

(MRK) - Get Report

and

Caremark Rx

( CMX) -- fell 2.35%, 5.55% and 1.24%, respectively.

But these declines were offset by gains in other holdings, such as

Boston Scientific

(BSX) - Get Report

, which edged up 0.3%, and

Kos Pharmaceuticals

( KOSP), which leapt 54.3% after agreeing to be acquired by

Abbott Laboratories

(ABT) - Get Report

.

Second place on the list is

(GENEX)

GenomicsFund . Its largest holdings include

deCODE genetics Inc

( DCGN),

Alnylam Pharmaceutical

(ALNY) - Get Report

and

Gilead Sciences

(GILD) - Get Report

.

But the stock that put the fund in the black for the week was

Isis Pharmaceuticals

(ISIS)

, which jumped 24.6% as several brokerage firms initiated coverage with buy ratings based on the company's prospects for competing in the lucrative cholesterol market next year.

After giving nearly 70% of their political campaign contributions to Republicans for the 2006 races, pharmaceutical companies now expect a little push back. Democrats, who campaigned with pledges to fix Medicare Part D, plan to change the law to allow the government to negotiate lower prices for the purchase of prescription drugs.

These price cuts would come directly out of the pockets of the major pharmaceutical players such as Merck,

Pfizer

(PFE) - Get Report

and

Bristol-Myers Squibb

(BMY) - Get Report

.

The worst-performing health care/biotech fund of the past week,

(MFHAX)

Munder Healthcare Fund, holds both Merck and Pfizer. Pharmaceuticals account for 41.7% of its holdings, followed by biotechnology stocks at 16.3% and managed health care at 11.6%.

The second-worst performing fund,

(JGLIX)

Janus Aspen Series - Global Life Sciences Portfolio, has an even higher concentration of pharmaceutical stocks at 53.2%, followed by health care-services with 14.8% and biotechnology with 14.0%.

Coventry Health Care

( CVH), Gilead Sciences and

United Therapeutics

(UTHR) - Get Report

are three of the top four positions held by this fund.

But the fund on our worst-performing list with the highest concentration of pharmaceutical stocks is the Fidelity Select Pharmaceuticals Portfolio

(FPHAX) - Get Report

. Its 94.8% concentration of pharmaceutical stocks makes this fund a pure-play in that industry.

The other big headache in the pharmaceutical industry this week is the recall of 11 million bottles of acetaminophen, a private-label pain killer by

Perrigo Company

(PRGO) - Get Report

, after bits of metal wire were found in a batch of the pills. The company sells the products under more than 100 store brands including

Wal-Mart

,

CVS Corp

and

Albertson's

. McNeil Consumer Healthcare, a

Johnson & Johnson

company

(JNJ) - Get Report

, quickly assured the public that its Tylenol painkiller was not affected.

While the complete fallout for Perrigo is not yet known, the mutual fund complexes with the biggest combined holdings of the stock include Royce & Associates, Wellington Management, Barclays Global and Janus Capital.

Half the ratings given to the funds on the top-performer table earned our lowest possible rating of E-. It is important to note that our rating model ranks funds on a risk-adjusted return basis. Health care and biotechnology funds, in general, tend to be more volatile than the overall market and are therefore judged to be riskier investment choices. But there is a place for them in a diversified portfolio.

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.