QUARTERLY ROUNDUP

performance scores from quarter to quarter or year to year is almost an

impossible task. This year, for instance, the biggest gains in equity funds

during the third quarter were found in financial and biotech funds. Look at

year-to-date performance, however, and it's another story.

Those crowing about how much money their funds have made them so far this

year are likely to be health/biotech fund investors, those types of funds

were up on average 60.29 percent, through Sept. 30; real estate fund

investors, up on average 21.61 percent; natural resource fund investors, up

an average of 20.98 percent; and those invested in mid-cap funds, up 19.24

percent for the year, according to Lipper Inc.

And, with the average diversified equity fund up 2.67 percent for the

quarter and 6.46 percent for the year; all categories of world equity funds

down for the quarter other than Canadian Funds, they're up 4.04 percent and

23.48 percent for the year; sector funds up for 5.52 percent for the quarter

and 15.81 percent for the year; and mixed equity funds up 1.55 during the

third quarter and 3.39 percent over the past nine months, it's , anyone

forgetting to have a portion of their assets invested in cash might want to

rethink that decision. Money market mutual funds during the third quarter

gained an average of 1.50 percent; for the year they are up 4.25 percent.

That's not too shabby for a packaged investment product that scores lowest on

the risk meter and although returns are not guaranteed, money market mutual

funds have historically provided investors with positive returns year after

year.

If you're wondering how the race between active and passively managed funds

is going the answer is, not like it used to.

From 1989 to 1998, the Wilshire 5000 equity index, it tracks all U.S. stocks,

was up on average 17.8 percent per year while the average actively managed

U.S stock fund returned an average of 15.22 percent, according to Lipper Inc.

In 1999, the tide turned as the average actively managed stock fund gained

28.74 percent and the average stock index fund gained 19.9 percent.

Last year, 84 percent of actively managed portfolios beat the performance of

the S & P 500 funds. This year the situation is similar as 83 percent of

actively managed funds have beaten the S & P 500 index funds.

On another note, if you're a shareholder and been notified that your fund is

liquidating, don't panic. It happens regularly and isn't necessarily bad news.

At the end of the third quarter, 176 different mutual funds had liquidated

their assets to shareholders, according to Wiesenberger, a Thomson Financial

and Rockville, MD based mutual research company. In 1998, a record 222 funds

liquidated their assets.

Typical reasons for closings include poor performance, an inability to raise

new assets, a shrinking asset base, the fund not being profitable and mergers

and acquisitions. Regarding profitability, industry statistics indicate that

a mutual fund needs to pass $50 million in assets to be profitable. As for

mergers and acquisitions, when fund families are purchased by other families

or financial institutions, those with like investment objectives are often

combined. So, one fund closes as another picks up new assets and

shareholders.

Also, with the proliferation of various classes of fund shares---there's an

alphabet of class shares beginning with the Class A, or front-end load

funds---- not all have been able to survive the long haul.

Five of the biggest funds liquidated through August, 31 this year include:

Phoenix Seneca Mid Cap Portfolio, it began in Nov., 1989 and was liquidated

in March, 2000; Munder Value Y, created in August 1995, it was liquidated in

June; PIMCO Small Cap Growth Fund, it began in Jan. 1991 and closed in July;

Smith Barney Retirement 2000, it opened in August 1991 and closed in Feb.;

and Lord Abbett Equity 1990 A , its inception date was in June 1990 and the

fund was liquidated this past May.

Correction: I made a mistake in the recent column about the various college

savings plans, specifically the Education IRA.

The story stated that earnings in Education IRAs would be taxed as ordinary

income when they are taken out. That's not the case. Invest in an Education

IRA and you'll pay taxes on your dollars before they are invested. Then when

it's time to take the monies out, provided the proceeds are used for

qualified education expenses, they won't be taxed.

Similar to ROTH IRAs----which also can be used for college savings

plans---money invested in Education IRAs get taxed first, then grow and

compound over time, and come out tax-free.