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First-Half Grades for 10 of the Biggest Mutual Funds

Were American Funds able to deliver the goods?

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The first half of 2006 is in the books, and what a doozy it was. We began with a great rally, then rising inflation and a newfound aversion to risk sent markets plummeting, then we rebounded a bit. Just like a roller coaster, we've soared and plunged only to end up where we started.

The indexes tell the story: The S&P 500 and Morningstar Market Index (a broad measure of the overall market) finished the first half up 2.7% and 3.3%, respectively. Eight of the nine style box indexes had positive gains, but large growth shed 3.1%. The best spots were small core (up 10.2%) and large value (up 8.4%). Rising inflation hurt bonds as the Lehman Brothers Aggregate lost 0.7% while a falling dollar made up for flat international equity markets to boost the MSCI EAFE 10%.

Let's take a look at how the 10 largest actively managed funds fared amid those wild swings in the first half. I'll give each one a grade for how they fared given their investment approaches. Of course there's much more to a fund than six months' worth of returns, so I'd encourage you to read our analyses to see whether we think the funds are attractive investments for the next 10 years.

Russel Kinnel has a position in the following securities mentioned above: PTTRX, AWSHX. Find out about Morningstar’s editorial policies.