A Michael Lipper

One of the curious aspects of mutual funds these days is that it's hard to get a universally accepted count of them. Researcher Lipper Analytical Services, for instance, counts about 8,000 mutual funds, while the Investment Co. Institute, the industry's trade group, says there are 5,600. How can two such tallies be so far off? The answer involves multiple classes of shares. About 1,900 funds issue more than one type of share, with different fees attached.

Since last October's stock crash, sales of mutual funds have slumped markedly--despite generally good performances by most funds. But based on the latest third-quarter performance results, released Thursday, investors who have been shunning funds now may not feel quite so bad about not buying. For the first time this year, funds performed almost uniformly poorly, according to Lipper Analytical Services of Summit, N.J.

After a decade-long advance, the junk bond market hit the skids as the 1980s came to a close. Prices of these high-yield, high-risk issues plunged in the second half of this year as defaults were announced by Campeau Corp., Resorts International and Integrated Resources. Mutual funds were forced to sell into the slide when they suffered hundreds of millions of dollars in redemptions as investors headed for cover.

Small mutual funds that invest in the little guys of American business fared best as a group in the first quarter of 1989, with health and biotechnology stock funds leading the pack. But world income funds, which hold foreign currencies and bonds, actually lost money because of the U.S. dollar's appreciation against the Japanese yen and major European currencies.

Mutual funds that invest in the little guys of corporate America fared best as a group in the first quarter of 1988, as equity funds on average beat the leading stock market indexes for a second consecutive quarter for the first time in five years. Figures released Thursday made the funds' stock pickers look good, as the average equity fund rose 7.77%. That compared to a 3.46% return, including reinvested dividends, for the Dow Jones industrial average and a 5.

Might Drexel Burnham Lambert rise like a phoenix from the ashes of its bankruptcy? The odds are heavily against it. But Drexel's management and lawyers for the first time have raised the possibility that the firm might emerge from Chapter 11 proceedings and go back into business in some form. "It's one of several things we're considering," Drexel spokesman Steven Anreder said. "We haven't made a decision yet." Until now, Drexel has said the entire company would be liquidated.

Thanks to the strong stock market, mutual fund investors have much to cheer about from the first quarter of 1987. But those cheering the loudest are those who took some of the biggest risks. Funds investing in gold-mining stocks, aggressive-growth stocks and technology issues--all volatile sectors--were the standout performers in a quarter where every type of fund showed healthy gains, according to results compiled by Lipper Analytical Securities of New York.

For mutual funds, 1987 was the ultimate roller coaster. They began 1987 riding an unprecedented boom in sales and performance. But they ended the year hoping that the worst was over. Equity funds--blasted by the Black Monday stock market crash--posted their worst performance since 1981 and again failed to beat the major market indexes.

It paid to be "green" in the second quarter of 1990. The top-performing mutual fund last quarter was the Schield Progressive Environment Fund, which invests in stocks of environmentally responsible waste management and landfill firms, according to Lipper Analytical Services' quarterly ranking of mutual fund performance. Progressive Environment, which debuted only in February, earned a 29.54% return during the second quarter. And the fund's managers are optimistic.

Mutual fund investing proved gratifying in 1989, with funds specializing in everything from gold to utilities posting double-digit returns. Even the worst-performing fund group beat the rate of inflation last year, according to Lipper Analytical Services, which surveys mutual fund performance. During 1989, the average equity fund increased 23.81% in value.