(MONEY Magazine) – We at MONEY have always had a measured view of the money-management business. We have been perhaps mutual funds' biggest boosters, promoting them as the ideal vehicles for individual investors. But we have also been among the industry's loudest critics, challenging high fees, lax oversight and poor performance--even identifying the dangers of market timing four years before Eliot Spitzer ("Fund Wars," September 1999).

We continue that dual tradition in this Mutual Fund Guide. On page 66 we recommend eight solid funds for 2004--all from companies you can count on to put investors' interests first. Our annual rankings, beginning on page 83, give you something else to celebrate: the first positive year for fund returns in the new century.

But we also remain committed to tough-minded scrutiny. To get a precise picture of fund industry practices and policies, we asked the 100 biggest firms for in-depth information on how they run their businesses and protect their investors. The result is a quantitative study of the ethical state of the fund industry that you won't find anywhere else (page 74). I encourage you to visit the subscriber-only area of our website (money.com), where you can read the answers to our questionnaire submitted by each company.

A reader wrote to us recently asking if we consider fund governance when making recommendations. The short answer is yes. Our primary considerations are the strategy, performance and leadership of each fund. But we also look at such "character" issues as expenses (which tell you much of what you need to know about how the company treats investors); whether the company closes funds when they get too big; whether the company has a history of regulatory problems or offering shoddy funds; and whether the portfolio managers invest in their own funds (a clear plus).

To be sure, we have recommended funds from firms caught up in the market-timing and late-trading scandals. Until the recent revelations, no one, including us, suspected the extent of abusive practices within the industry. There will always be, in any business, those who seek to game the system and bend--or break--the rules. The fund industry is no different; in fact, with so many smart, ambitious competitors clawing for the tiniest edge, some abuse is almost inevitable. Still, we believe that funds remain the easiest, safest, cheapest way for most investors to construct a diversified portfolio. We must be vigilant against wrongdoing, keeping alert to issues of character as well as of performance. But we should not walk away from the opportunity that investing in funds offers.

ROBERT SAFIAN MANAGING EDITOR