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) and Morgan Stanley ( MS) with seven each. ING Investment, a unit of ING Groep ( ING), 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); American Century Investments; Dimensional Investment Group; Dreyfus, a unit of Bank of New York Mellon Corp ( BK); Franklin Templeton, a unit of Franklin Resources ( BEN) and JPMorgan Funds, a unit of JPMorgan Chase ( JPM). 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%.


Fund Families With 100 or More Rated Funds
Fund Family Name No. of Funds Rated Top 30% Middle 40% Bottom 30%
American Funds 211 61.60% 36.50% 1.90%
Allianz Global Investors 127 53.50% 36.20% 10.20%
T. Rowe Price 117 47.00% 46.20% 6.80%
MFS 291 45.00% 35.10% 19.90%
Columbia Funds 454 43.00% 42.10% 15.00%
Nationwide Funds 194 40.70% 41.20% 18.00%
Hartford Funds, The 189 39.70% 49.20% 11.10%
AIM Investments 165 38.80% 39.40% 22.40%
Franklin Templeton 192 38.50% 41.70% 19.80%
RiverSource Investments 165 38.20% 38.80% 23.00%
Vanguard 128 37.50% 51.60% 10.90%
BlackRock 214 35.50% 38.30% 26.20%
Van Kampen 145 35.20% 44.80% 20.00%
Fidelity 617 34.40% 45.10% 20.60%
American Century Investments 173 34.10% 43.90% 22.00%
ING Investments, LLC 318 30.50% 37.10% 32.40%
Morgan Stanley 183 30.10% 39.30% 30.60%
Dreyfus/Mellon Funds 256 29.70% 40.20% 30.10%
JPMorgan Funds 234 29.10% 46.20% 24.80%
OppenheimerFunds 170 28.80% 44.70% 26.50%
Wells Fargo Advantage Funds 222 27.50% 45.00% 27.50%
Pioneer Investments 100 26.00% 39.00% 35.00%
MainStay Funds 106 25.50% 38.70% 35.80%
Alliance Bernstein 306 24.80% 63.10% 12.10%
Principal Financial Group 358 24.30% 51.10% 24.60%
Goldman Sachs 129 20.90% 41.90% 37.20%
DWS Scudder 154 16.90% 35.70% 47.40%
MassMutual Funds 125 16.00% 48.00% 36.00%
Pacific Life Funds 117 15.40% 41.00% 43.60%
Rydex Funds 147 14.30% 23.80% 61.90%
Putnam Funds 383 13.30% 25.30% 61.40%
Legg Mason 102 7.80% 26.50% 65.70%
Delaware Investments 101 3.00% 53.50% 43.60%
Source: TheStreet.com Ratings

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

The 10 Best Fund Families With 40 to 99 Rated Funds
Fund Family Name No. of Funds Rated Top 30% Middle 40% Bottom 30%
Ivy Funds 84 63.10% 16.70% 20.20%
Seligman Group 98 60.20% 27.60% 12.20%
Waddell & Reed 55 56.40% 36.40% 7.30%
GMO Funds 48 50.00% 10.40% 39.60%
Eaton Vance 82 39.00% 42.70% 18.30%
Janus Fund 97 35.10% 46.40% 18.60%
GE Investment 49 34.70% 42.90% 22.40%
Evergreen Investments 98 33.70% 41.80% 24.50%
Gabelli Funds 86 32.60% 41.90% 25.60%
Federated Investors 66 30.30% 37.90% 31.80%
Source: TheStreet.com Ratings

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.

The 10 Best Fund Families With 10 to 39 Rated Funds
Fund Family Name No. of Funds Rated Top 30% Middle 40% Bottom 30%
Thornburg Funds 17 100.00% 0.00% 0.00%
Alger Funds 31 80.60% 19.40% 0.00%
HSBC Asset Mgmt 24 79.20% 20.80% 0.00%
Kinetics Mutual Funds, Inc. 10 70.00% 10.00% 20.00%
William Blair Funds 13 69.20% 0.00% 30.80%
Henderson Global Funds 12 66.70% 8.30% 25.00%
Nicholas-Applegate Mutual Funds 19 57.90% 36.80% 5.30%
Lazard Funds 11 54.50% 27.30% 18.20%
Dimensional Investment Group 27 51.90% 25.90% 22.20%
Brazos Mutual Fund 10 50.00% 50.00% 0.00%
Source: TheStreet.com Ratings

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.