In the Black

The positive-return champ is T. Rowe Price Capital Appreciation (PRWCX). Including the first half of 2007, the fund has produced black ink for 17 consecutive years. Most of that record was attained under previous managers: Current captain David Giroux has been with the fund only since July 2006. Capital Appreciation typically keeps a little more than half of its assets in undervalued stocks of established companies and the rest in preferred stocks, regular bonds, convertible bonds and cash. Its only negative year was 1990, when it lost 1%; it even eked out a 0.5% gain in 2002. The fund's annualized return of 12% over the past decade beat the S&P 500's return by an average of five percentage points per year.

Two funds tie for the next-longest record of positive years. Counting the first half of '07, both Gabelli ABC (GABCX) and First Eagle Overseas (SGOVX) chalked up 14 straight years of positive returns. Manager Mario Gabelli buys shares of companies targeted for mergers or takeovers after the deals are announced. This low-risk strategy has yielded an annualized return of 7% over the past ten years. That beats the S&P's return by less than half of a percentage point per year. Merger fund, a member of the Kiplinger 25, also invests in deal stocks. The fund (MERFX) has produced positive returns in 17 of the past 18 years (the only blemish occurred in 2002, when it lost 6%). First Eagle Overseas, a load fund that is closed to new investors, mitigates risk by investing in deeply undervalued foreign companies and stockpiling cash when opportunities are scarce.

Two small-company funds with long strings of positive returns are Aegis Value (AVALX) and FMC Strategic Value. If you include 2007, each fund has returned nine straight years of black ink, thanks to tiny gains in '02.

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Selected funds that delivered positive total returns in at least 90% of calendar years, including the first half of 2007:

SOURCE: ©2007 Morningstar Inc.

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