There may not be much to gloat about as you read your mutual funds' annual reports and re-examine annual performance this month, but you...

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There may not be much to gloat about as you read your mutual funds’ annual reports and re-examine annual performance this month, but you can at least snicker at the foibles of some less fortunate fund investors.

You know the people I’m talking about, the ones in funds that routinely wind up on those lists of bottom dwellers.

Not every fund that winds up at the dregs of the performance database is truly awful. Investors can expect a stylized fund to circle the drain when its strategy is out of sync with the market. It’s no surprise, for example, that bear-market funds accounted for 10 of the 50 worst issues of 2004, since it wasn’t a bear-market kind of year.

The top of the dung heap for funds smells of high expenses, risky strategies and heavy turnover, with directors and shareholders apparently immune to the stench. Assuming your nose still works, hold it now and let’s plow into the pile of bad funds from 2004:

Ameritor Investment Fund was the year’s biggest loser, falling 35.3 percent. That nearly qualified as the second-best year for the fund this century, which has turned every $1,000 invested at the start of 2000 into $105 today. Over the past decade, the fund has an annualized loss of more than 13 percent, according to Morningstar, despite having posted a couple of good years during the bull market.

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The Ameritor funds were once called the Steadman Funds, arguably the worst fund family of all time. High costs, heavy turnover, a barely diversified portfolio and seemingly never-ending ineptitude in stock-picking prove that investors should not stick around assuming things will get better because that doesn’t always happen.

Thurlow Growth, the third-biggest loser of 2004 with a 33.6 percent decline, opened during the bull market and won praise for gaining 43 percent in 1998 and 213 percent in ’99. Since then, however, the fund’s annualized average return amounts to a 27.6 percent loss. The story is similar at the Grand Prix fund, whose 15.6 percent loss in 2004 was bad enough to rank 16th on the list of bottom dwellers. Like Thurlow, Grand Prix started hot — gains of 112 percent and 149 percent in 1998 and ’99 — only to blow its engine; the fund’s average annual loss over the past five years is 30.9 percent.

Both funds have narrow portfolios — nine issues for Thurlow and about 30 for Grand Prix — but churn them faster than someone trying to make butter while the house is on fire. They stand as a reminder that the speed of the start isn’t as important as the power to run a great distance; the one thing both funds had going for them was luck — opening at the right time — and it has long run out.

Two Van Wagoner funds, Emerging Growth and Small Cap Growth, finished in the bottom 15 for 2004, with losses of roughly 16 percent each. Fund manager Garrett Van Wagoner was in trouble with regulators and out of favor with the market.

It’s hard to say the funds show the foibles in wishing on a star manager, because Van Wagoner hasn’t qualified for years, but they do highlight the problem of investing with the boutique shop where the top guy is not paying enough attention to all facets of running the money.

Chuck Jaffe is senior columnist at MarketWatch. He can be reached at jaffe@marketwatch.com or Box 70, Cohasset, MA 02025-0070.