(MONEY Magazine) – For fund investors, the past five years have been like an Indiana Jones movie. There were quite a few close shaves: remember those chilling scenes in October 1987 or, for bond fund investors, in the spring of that year as interest rates rose? But, like Indy himself, stock and bond fund players somehow not only survived but also prospered. Though the average equity and government bond fund failed to keep pace with the popular investment indexes (see the chart at right), their five-year compound annual returns through late June -- 16.1% and 11.8%, respectively -- were generous by historical standards. As usual, though, the gains during those five years -- an appropriate period for investment strategizing -- weren't spread equally among all funds or fund groups. A newsreel of performance thrills and spills might include: -- Most stunning reversal. The top five-year gainer, Merrill Lynch Pacific (up 282%), has logged the worst performance of any equity fund so far this year, losing 9.9% through June 22, the cutoff date for our stock and taxable bond fund rankings. -- As a group, international equity funds, up 199.6%, led all categories during the past half-decade. But, largely because a rising dollar has cut into the value of their foreign holdings, they've returned a puny 4% so far in 1989, placing them next to last among the 20 fund subsets that we follow. -- Unlikeliest superstars. No contest here. Moderate-risk growth and income funds posted a five-year gain of 124.8%, the best among all domestic equity groups. This normally solid but often third- or fourth-place category rode the stock market's blue-chip bull to nifty gains. The U.S. market's 1989 surge, however, has favored the bold. Growth funds (up 18% since Jan. 1) and maximum- capital-gains funds (up 19.1%) turned in the best results of any categories through midyear. The hottest fund: gains-oriented Delaware Trend, up 38%. -- Worst performance. Even Ishtar did better than the gold funds, which won this dubious five-year honor pans down. The glitter group rose just 9.5% -- and that's total, not average annual, return. Winning the Chuck Norris award for worst individual performance was the Strategic Investments gold fund, down 57.5%. This month's 26 pages of stock and bond fund rankings and alphabetical listings represent Money's most comprehensive record of fund performance ever. Not only do we cover more funds than in any previous issue -- 900, to be precise -- but we also provide additional information to help you X-ray those you've either invested in or are considering. Starting on page 94, we rank the top funds in each of 20 stock, taxable bond and tax-exempt bond fund categories for the five years through mid-1989. If a fund you're interested in doesn't rank among our top performers, you're likely to find it in our alphabetical listings, which begin on page 102. The most direct way to see how a fund has fared is to look at its % gain (or loss) to June 22, 1989. For an idea of how much a top-performing fund averaged annually, check out the % compound annual return. But don't stop with either of these measures. Did the fund's performance justify the risks it took? To find out, examine the MONEY risk-adjusted rating for each fund. Based on a formula developed by Stanford University finance professor William Sharpe, the rating rewards funds for high total returns and punishes them for nerve- testing volatility (defined here as the amount by which a fund's month-to- month returns deviated from its average monthly returns). Armed with this tool, you can readily choose among funds that have delivered comparable gains in the past few years. If two funds scored similar total returns but have different risk-adjusted ratings, the one that subjected shareholders to fewer bumps was the more efficient investment. For purposes of this rating, tax- exempt bond funds compete with other tax-exempts; taxable bond entries with other taxables; and equities with equities. The lone exception is that, because international and global funds as well as gold and sector funds are so specialized, they compete among themselves in two customized groupings. To get our highest rating ( ft.), a fund must rank in the top 10%; a in. goes to the upper-middle 20%; a ) to the middle 40%; a to the lower-middle 20%; and a 8 to the bottom 10%. A few very volatile top performers, like Scudder Capital Growth (our No. 2 stock fund overall), scored high risk-adjusted ratings by posting gains big enough to compensate for sharp setbacks along the way. An investor seeking to sidestep unpleasant surprises should check a fund's five- year analysis, which will tell you how much the fund gained or lost during its best and worst quarters for the period that ended last March 31.

Few investment strategies work well in all market conditions, and you can check for inconsistent results in the exclusive Lipper Market Phase Rating. It grades our top-performing stock and taxable bond funds during three distinct investment periods: the current phase (defined by Lipper Analytical as Dec. 3, 1987 to present); the prior up phase (July 26, 1984 to Aug. 20, 1987); and the prior down phase (Aug. 20, 1987 to Dec. 3, 1987). For each market phase, the top 20% of funds in each of 11 equity categories and in the taxable bond group earned an A rating; the next 20%, a B; and so on to E, the rating assigned to the lowest 20%. The portfolio analysis section of the tables profiles each fund's management approach. For both stock and bond funds, we provide % yield and % cash. Equity funds with above-average yields tend to be conservative; for bond funds, the opposite is often true. A high cash level of 10% or more often reflects a defensive stance that can cut risks -- and returns. For stock funds, we furnish a price/earnings ratio -- the higher the P/E ratio, the greater generally are the potential pitfalls and rewards. For bond funds, note the average maturity, which indicates the typical term of the issues in the portfolio. The lengthier that figure, the more shareholders stand to lose if interest rates rise -- and the more they will gain if rates fall. For our top- performing tax-free bond funds, the column headed % A-rated or better indicates how heavily the fund invests in high-quality debt. The column marked senior fund manager, age (years managing fund) tells you whether the individual who built the fund's record is still on the job. No amount of study can guarantee that you'll choose the most rewarding fund, but our expense analysis section will turn up funds that provide a solid headstart by keeping costs down. It shows the % maximum initial sales charge, the load that many funds deduct from a shareholder's original investment. The five-year projection of expenses tells the total amount you will pay in sales charges and operating expenses, assuming you invest $1,000 at an annual return of 5%, reinvest all dividends and capital gains, and sell your shares after five years. A fund's % turnover is also worth noting. If annual turnover is unusually high -- say, 200% or more -- commission costs and tax liabilities on transactions are likely to nibble at future gains.

CHART: NOT AVAILABLE CREDIT: ILLUSTRATED CHART BY WARREN ISENSEE Sources: Ibbotson Associates, Lipper Analytical Services CAPTION: HIGHLIGHTING FUND RETURNS

CHART: NOT AVAILABLE CREDIT: Rankings by Lipper Analytical Services CAPTION: THE TOP PERFORMERS: STOCK FUNDS

CHART: NOT AVAILABLE CREDIT: Rankings by Lipper Analytical Services CAPTION: THE TOP PERFORMERS: TAXABLE BOND FUNDS

CHART: NOT AVAILABLE CREDIT: Rankings by Lipper Analytical Services CAPTION: THE TOP PERFORMERS: TAX-EXEMPT BOND FUNDS