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Welcome to the year 2000, where the abbreviation '00 not only represents the year but the starting point of every fund's total return.

If you're a mutual fund scorekeeper, one of the great things about every New Year is that no matter how magnificently the total return on your fund investments were on Dec. 31, the slate gets wiped clean come Jan.1. That means, if you were one of the lucky shareholders in a fund that just happened to rack up an unbelievable 100, 200, 300 or 400 percent total return in 1999, the time allotted for bragging rights has come to a stop.

Conversely, if your fund investment was a double-digit downer last year, there's no need to cower any longer. Why? Because for a few hours at the beginning of each year, before the starting bell rings on Wall Street, those zero zero total returns are the fund industry's great equalizer.

Which funds will perform the best or the worst is anybody's guess at this point. Unsettling as that might, every new year always brings with it new opportunities and surprises.

First, the big picture. Step back and look at corporate America and you can't overlook corporate earnings or interest rates.

"For the sheer number of positive earnings surprises, 1999 has been the best year since 1988," says Kevin Parke, chief equity officer of MFS.

Parke thinks that corporate earnings growth of U.S. companies in 2000 will be about par with what they were in 1999 --- growing on average about 17 percent. Reasons for his thinking are based the positive influence corporate restructuring has had on many companies; the low inflation, low interest rate environment; and global economic developments.

At T.Rowe Price, the view is cautionary. Managers there expect the Federal Reserve to nudge interest rates higher during the first half of the year. And, since cheap money has fueled the bull market, that move could translate into single digit returns for fund investors.

"It's critical that the economy slow down, " says M. David Testa, T.Rowe Price's chief investment officer. " If it doesn't, it will drain liquidity from the financial markets and the Fed will have to squeeze even harder, pushing rates higher, also pulling money out of the markets, unless it wants to foster inflation."

Richard Cripps, Legg Mason's chief market strategist suggests staying away from Internet and technology stocks. In his mid-December weekly commentary he said that the vast majority of stocks, excluding the technology and the mega-cap sectors, have had "uninspiring fundamentals in terms of earnings growth".

He believes the best opportunities over the next 12 months will be in stocks that will gain the most from the faster economic growth abroad.

As for the Internet, there isn't a investment professional around who hasn't wondered, or been asked, about a "new paradigm" and whether the old way of measuring the value of a company fits into our new techno-savvy world. Or, if tech funds aren't heading at breakneck speed toward a crash. And therein lies a tech fund investor's investing conundrum; should I hold'em or take my profits?

Sheldon Jacobs, editor-in-chief of The No-Load Fund Investor, offers some common sense advice telling investors to expect some volatility and set-backs from the tech sector going forward. He reminds us that while tech funds have beaten the stock market's average over the past four out of five years, that that upward swing hasn't always been the case, and, can't be counted on.

Looking back he says that technology funds had a positive three-year run from 1978 to 1980, and another positive two-year run in 1982-1983. "Major corrections have always followed extend run-ups of technology stocks," he writes.

Jacobs' advice? Consider a portfolio with a weighting of between 14 and 30 percent in tech sector funds. The latter for aggressive investors who believe that the tech industry is fueling a huge economic shift that's going to continue on.

A. Michael Lipper, chairman of the Lipper, Inc. thinks that "the best next five-year opportunities will come from some of the lagging fund groups."

On top of the which-fund-type-hasn't-done-well list are gold oriented funds. Their average annual total return for the past five years from 121/22/94 through 12/23/99, was minus 10.69 percent.

Other fund types with measly five-year total returns include Latin American funds, Pacific x-Japan funds; emerging markets funds; specialty diversified equity funds, natural resources funds, real estate funds and China Region funds.

One fund category Lipper suggests keeping your eye on are China Region funds. "We have taken the point of view that in the next millennium, whether one invest in China or not, China is going to be the focus of a good bit of economic and political developments that will shape our markets," he said.

And so it begins all over again. Here's hoping 2000 is a prosperous one for you and your fund picks.

To read more articles, please visit the column archive.

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