Apr. 5--Most mutual fund investors suffered through a harsh first quarter. Their only solace? It could have been much worse.

The Standard & Poor's 500 index of the country's largest public companies was down 11 percent by March 31 -- and that's the good news. Through March 9, when the bear market hit its most recent bottom, the S&P 500 hit 676, down 25 percent from Jan. 1.

The late-March rally, which has spilled into the first few days of the second quarter, was a welcome respite for investors. Still, very few stock mutual funds ticked up during the first quarter.

Among Minnesota-based funds, that select few included RiverSource Precious Metals & Mining, which rose 8.8 percent following a 25 percent haircut in 2008; the small-company Perkins Discovery Fund, up 3 percent following a 51 percent slashing in 2008; and the First American Funds Mid-Cap Growth Opportunity Fund, up nearly 1 percent after a 46 percent drubbing in 2008.

There was shelter from the storm mostly within bond funds.

"Investment-grade [corporate] and government-insured mortgage funds were good places to be if you wanted to sleep at night," said Mark Simonstad, head of fixed-income funds at Thrivent Financial.

For example, the Thrivent Municipal Bond Fund was up 4 percent in the quarter. The Wells Fargo Advantage Minnesota Tax-Free Fund was up 4.5 percent, and the Sit Minnesota Tax-Free Income Fund was up 7.4 percent. These securities are invested in bonds issued by states and municipalities.

The best-performing stock fund last year, the Leuthold Group's Grizzly Short Fund, which bets against stock prices going up, was up 74 percent in 2008. It dropped 1 percent in the first quarter.

The March rally helped mutual funds that specialize in technology, large-growth, natural resource and financial-services companies.

Steve Leuthold, an investor, occasional growling bear and market strategist for nearly 50 years, reiterated in early March last fall's prediction that the market would make a strong recovery in 2009.

Stepped-up federal spending is starting to fill the void left by shaken businesses and consumers. And the U.S. Treasury and Federal Reserve's resuscitation of the battered big banks and credit markets appears to be slowly gaining traction after weeks of angst and criticism from the left and right.

There is still a minority view that, with the market up about 25 percent from the March low, this could be another false rally, similar to the one last fall.

"We see a lot of internal measures of strength within the market," said Doug Ramsey, director of research at Leuthold.