(MONEY Magazine) – Fed up with puny yields on bank accounts and money-market funds, savers have lately been shoveling dough into Ginnie Mae funds at a rate of $100 million a day. And why not? Call a Ginnie fund sponsor and you're likely to be quoted an income payout close to 9%. For a yield-starved investor, that can sound just too good to pass up. Problem is, what you hear isn't always what you get. The so-called distribution rate that many companies quote often deliberately overstates a fund's real yield. Here's how the legerdemain works. As mortgage rates in general declined from 10.5% three years ago to around 8.5% recently, the interest payouts on newly issued Ginnie Maes fell commensurately. (That's because Ginnie Maes simply pass through to investors the income thrown off by a bundle of mortgages.) As a consequence, older securities with high interest payouts rose in value. For example, a Ginnie issued in 1988 paying $100 a year for every $1,000 of face value now sells for around $1,080. If you bought the security at its going price, you'd collect a current payout of 9.3% ($100 divided by $1,080), even though newly issued Ginnies are paying only about 8.1%.

The trouble occurs when homeowners refinance and pay off their old mortgages. The fund that paid $1,080 for a high-income Ginnie Mae gets back only the face value of $1,000 -- and shareholders take the loss. In other words, says Sherman Russ, head of fixed-income investing at the Pioneer group, ''Ginnie Mae funds that maintain high dividends in the face of falling mortgage rates are just handing you back some of your capital and calling it income.'' Since 1988, the SEC has required bond funds to use a standard calculation that accounts for this potential loss when mentioning the fund's yield in advertising. Funds also have to quote this so-called SEC yield, not the distribution rate, in recorded messages on their toll-free information lines, since the messages are considered advertising. Live phone reps are allowed to quote either one, however. When we spot-checked the 800 numbers of major organizations with GNMA funds, the reps at most of the 20 load groups we reached -- and at one of the seven no-loads -- quoted the distribution rate first and the SEC yield only when we specifically asked for it. In many cases the distribution rate was a mouth- watering two or more percentage points higher than the SEC yield. Experts say that a gap of more than a point may indicate a pumped-up dividend. If you're shopping for income, then, insist on getting the SEC figure; it remains the fairest basis of comparison. Two funds that show up well by this yardstick: Vanguard GNMA (800-662-7447), with a yield of 8.3%, and Benham GNMA (800-472-3389), yielding 8.2%.

CHART: NOT AVAILABLE CREDIT: Source: Lipper Analytical Services CAPTION: MOST OF OUR TOP DIVERSIFIED EQUITY FUNDS END A CHILLY NOVEMBER IN THE RED The October jinx hit the stock market one month late, dropping the S&P 500 by more than 4% in November. Most of our aggressive leaders actually lost more than the market. But some interest-sensitive entries, such as Eaton Vance Total Return, and high-cash funds, such as Mathers, eked out slight gains. Twentieth Century Ultra dropped 4.6% for the month but remains the five-year leader, up 177%.

CHART: NOT AVAILABLE CREDIT: Source: Lipper Analytical Services CAPTION: SELECTED EQUITY CATEGORIES POST UNIFORMLY DISMAL NUMBERS IN NOVEMBER As the economic recovery took sick in November, the average fund in six of our eight selected categories lost money -- with four of the stock groups dropping an identical 4%. Frustrated investors found some asylum abroad, as a droopy dollar pushed world income funds up by 0.6%. Montgomery Small Cap continued to lead small-cap funds -- and all others -- over the 12 months to Dec. 1 with an 87.5% gain.

CHART: NOT AVAILABLE CREDIT: Source: Lipper Analytical Services CAPTION: SHORT IS SWEET AMONG BOND FUNDS AS THE FED EASES AGAIN The weak economy depressed stock investors in November, but it cheered the bond market, as receding inflation worries freed the Federal Reserve to cut the discount rate from 5% to 4.5%. All our fixed-income funds showed gains for the month, though funds with maturities under 10 years -- the group that benefited most directly from Fed easing -- gained the most, up 1% on average.

CHART: NOT AVAILABLE CREDIT: Source: Lipper Analytical Services, IBC/Donoghue's Money Fund Report CAPTION: THE MONEY 20: SUPERIOR FUNDS FOR THE LONG HAUL

CHART: NOT AVAILABLE CREDIT: Source: Lipper Analytical Services, IBC/Donoghue's Money Fund Report CAPTION: THE MONTH'S BEST-PERFORMING MONEY-MARKET FUNDS