TheStreet.com Ratings initiated coverage of 16 open-end mutual funds and one closed-end fund that accrued a sufficient track record of risk and performance data by the end of January. Only two of the open-end funds launched in January 2006 received our top-rating level of "excellent." Both of those funds took a fund-of-funds approach to investing. First, with an initial rating of A, the Direxion Evolution Total Return Fund ( PETRX) appears to have wisely sidestepped much of the recent stock-market collapse. The sub-adviser, Flexible Plan Investments, used its wide latitude of strategy options to shift upwards of 79% of assets into a Goldman Sachs money market fund and other lower-risk choices such as the SPDR Barclays Capital 1-3 Month T-Bill ETF ( BIL). The Direxion Funds confirmed that the name of this fund is being changed to the Direxion Evolution Alternative Investment Fund. Second, the Flex-Funds Defensive Balanced Fund ( FLDFX) scored a brand-new rating of A-minus. The fund has avoided larger losses by limiting equity exposure to about 33% of assets. The holdings that target equities include defensive sector funds of Health Care Select Sector SPDR Fund ( XLV), Consumer Staples Select Sector SPDR Fund ( XLP) and Utilities Select Sector SPDR Fund ( XLU). Lastly, one closed-end fund, Pimco Income Opportunity Fund ( PKO), which began trading on Nov. 30, 2007, earned a first-time rating of D on a below-average risk-and-return performance compared with the universe of closed-end and exchange-traded funds we rate. The fund's government and corporate debt portfolio lost 18.8% for the 12 months ending Jan. 31.