THE FIRST QUARTER

came to a close on Monday and most investors were more than happy to put it in their rear-view mirrors. Only two fund categories gold and short bias managed to post gains, according to Lipper. The other 60 categories it tracks all lost money.

The first three months of 2008 were characterized by a series of historic events. The country's largest financial institutions wrote down the value of tens of billions of dollars of assets mostly tied to mortgages. As Wall Street became jittery about whether these firms were houses of cards, the credit crisis that has gripped the investing world the last six months claimed its biggest victim: Bear Stearns. In addition, the Federal Reserve dramatically cut interest rates and injected billions of dollars into the financial system. A collection of economic data ranging from housing prices to consumer confidence hit some of their lowest levels ever. By the time the calendar turned to April, every major stock index was seeing red.

"There was definitely a crisis of confidence," says Elliot Herman, a partner with PRW Associates, a wealth-management firm in Quincy, Mass.

We don't typically spend a lot of time looking at such short-term performance. To us, the long view is the smarter one. But sometimes we make exceptions, especially when those short-term periods show a dramatic shift in market direction. That was certainly the case with the first quarter. And those kinds of changes can't be ignored since they could possibly impact portfolio performance for years. With that in mind we're taking a quick look back at the winners and losers of the last 90 days and we will try to give you a little insight into what the rest of the year may look like, too.

The winners were easy to spot in a sea of poor performers.

By far the most dominant investing theme of the first quarter was the surge in commodities. As investors grew concerned the U.S. economy was falling into a recession, they piled into a range of commodities that tend to do well in inflationary times. The price of crude, gold and several agricultural crops hit record levels. According to Lipper, as the per ounce price of gold soared over $1,000, the funds that focus on that precious metal returned an average 5.2% in the first quarter, the best tally of any category. Some individual funds did even better. Two exchange-traded funds United States Oil and PowerShares DB Agriculture returned 7.3% and 11.2%, respectively. United States Oil tracks the price of West Texas Intermediate crude and the PowerShares product invests in corn, wheat, soybeans and sugar.

Other winners were the funds that go short certain benchmarks to take advantage of falling stock prices. With the market jumping around so much, investors were willing to gamble on making bets about whether it was going to increase or decrease. The bears, obviously, won out. Indeed, the Direxion Nasdaq-100 Bear 2.5 fund gained a whopping 38.6% in the first quarter. This fund tries to post returns that are 2.5 times the inverse returns of the 100 largest nonfinancial companies trading on the Nasdaq. This fund finished first on the list of Lipper's top returners for the first quarter.

It wasn't just the exotic offerings that did well. Some more mainstream funds were able to navigate the turmoil, too. Permanent Portfolio gained 3.8% by investing in a combination of gold, silver, U.S. Treasurys, natural-resource firms and growth stocks. It did own a small Bear Stearns position, but the increases in other parts of the portfolio more than made up the difference. This fund is atop Morningstar's conservative allocation category during the trailing one-, three-, five- and 10-year periods.

"Our diversified strategy did what it was supposed to do in times of market turmoil," says Michael Cuggino, Permanent's manager.

Other category leaders included Hussman Strategic Growth, a long-short fund technically a midcap core fund, according to Lipper that combines put and call options with stock picking, gained 0.13%. FPA Capital, a midcap fund, gained 0.35%. And Heartland Value Plus, a small-cap offering, gained 1.9%. Those returns may not seem like much. But remember, the average S&P 500 index fund lost 9.6%. So even a small gain is reason for celebration. Indeed, even if a fund could stem some of the bleeding it was a call for celebration. Fairholme, a fund that follows a Warren Buffett-type investing strategy, managed to only lose 3.6% in the first quarter. That was good enough to put it atop of Lipper's midcap growth category.

That was certainly the case, too, for some of the industry's largest funds. For example, the $66.7 billion American Funds Investment Company of America lost 9%, according to Lipper, and American Funds Capital World Growth & Income, a fund that holds $77.8 billion, lost 7.7%.

Pimco Total Return, the industry's largest bond fund with $75.5 billion in assets, gained 3.3%.

As for sectors, a surprising entrant made the top spot: real estate. These funds lost just 1.2% in the first quarter. Natural-resource funds lost 4.5%.

Of course, there was a fair share of disappointments in the first quarter, too.

Financials were at the center of the storm. It's not every quarter you see the industry's fifth-largest investment bank seemingly implode over the course of a weekend. Bear Stearns will almost certainly become the poster child for this time period. But there was other carnage as well. Every major financial institution has announced major write-downs. The impact has spread to markets overseas, as well. Financial funds lost 12.2%.

Some of the biggest losses were recorded by growth funds. Last year, this category had many cheerleaders as it seemed to turn a corner against its value counterparts. But as companies announced poor earnings many investors began to doubt their future prospects. Analyst estimates and company guidance were viewed with skepticism. In the end, that dinged these funds. Large-cap growth offerings lost an average 11.6%, midcap growth dropped 12.9%, and small-cap growth turned in a disappointing average decrease of 14.9%.

One surprise was the pullback in China. The funds that focused on that country returned an average 50% the last two years, putting them atop the entire fund universe. But inflation fears and a flight to safer harbors had investors selling out of their positions. China funds dropped 21.2% the first quarter, the largest drop of any category. Emerging markets, in general, dropped 11.7%.

Some well-respected funds were hurt by the fallout at Bear Stearns. Legg Mason Value Trust and Vanguard Windsor II apparently owned shares in the company right up until the end. Value Trust was down 19.7% in the first quarter. The Vanguard offering lost 11.2%. Dodge & Cox Stock, a perennial good buy, had an off quarter. It returned -11.9%, two and a half percentage points behind the broad market, according to Lipper. And after a stellar 2007, Fidelity Magellan a fund heavy on growth stocks dropped 12.4%.

As for sectors, technology and telecommunications lost 15.8% and 19.3%, respectively. These two categories were victims of the growth stock downturn.

It's easy to look back and make sense of the market. However, investors need to look forward, too. There's still considerable debate about just what's in store for investors the rest of this year. Is the worst behind us? Or will there be another round of painful write-downs.

"We are being extremely cautious," says Bill Wixon, a spokesman for the Minnesota Financial Planners Association and an executive with Wixon Associates, a financial-planning firm in Plymouth, Minn. "We think there are still some lows ahead."

That said, there are some parts of the market to keep a close eye on. There's speculation about a cooling off of the commodities bull market. The emergence of exchange-traded funds that allow both sophisticated and mainstream investors to place bets on all types of metals or crops has probably popped the price of commodities. That can't last forever. It's probably a good time to take some profits off the table. Also, look for growth stocks to come back late in 2008 or early 2009. As soon as these firms can start posting good year-over-year earnings, investors will start reconsidering them for their portfolios.