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This year, two mutual funds turn 75 years old. And there are lessons one can learn from each.

MFS's Massachusetts Investors Trust, (800-637-2929), is the oldest fund in the land. Around since 1924, this growth and income fund has mostly been managed by committee-- or a team-- since its inception, still holds GE in it's portfolio, and has made plenty of shareholders bundles of money throughout the years.

In fact, if your Grandpa Charlie were kind enough to invest $1000 into that fund when it first began and had that money invested in a tax-deferred account in which it was left to grow and compound for your benefit all these years, at the reading of his will on February 28, 1999, you'd have inherited over $1.2 million. That's a pretty sweet prize and is the result of compounding and money growing at an average annual return of 10.09 percent.

State Street Research Investment Trust, (800-562-0032), is the second oldest mutual fund around. It's a growth and income fund as well, has been managed by five different individuals since its inception, and also has also rewarded it's shareholders handsomely. One-thousand dollars invested in it back in 1924, would have grown to $11.5 million by February 28, 1999. Money in this case grew at an average annual rate of 13.36 percent.

Ask the average guy or gal on the street what the difference between 10 and 13 percent is, and after they say something like "duh, 3 percent", ask them how much they think the impact that 3 percent can make over time on money invested for the long term. This question gives you an opportunity to show your smarts by using the example above.

But, since most people aren't likely to keep an investment for 75 years, when you're thinking about investing in a fund for the long term ---like 10 or 20 years--- remember that not only can a few full percentage points make a big difference in your total return. Fractional differences can too.

Now let's look at these two funds over the past 10 years. According to Wiesenberger, a Maryland-based mutual fund research company, over the last ten years beginning on Feb. 28, 1989 and ending Feb. 28, 1999, the average annual total return for State Street's Investment Trust was 17.2 percent, and, for MFS's Massachusetts Investment Trust, 17.7 percent. Had you invested $1000 in each, in a tax-deferred account in which the money was left to grow and compound, would have grown to $4,891 in the State Street Research Investment Trust and $5,112 in the MFS Massachusetts Investment Trust. That's a difference of $221. While that might not sound like much, it really can be.

Easton Ragsdale, the director of quantitative research at State Street Research, ran some numbers showing how the value of $1 changes over a 10-year period of time when it's been working at average annual rates of 17.2 percent and 17.7 percent. In the first instance, $1 grew to $4.89 in 10 years. Using the higher return, $5.10. The difference between those two ending dollar amounts is 4.3 percent.

Go out 20 years and that difference between ending dollar amounts more than doubles and grows to 8.9 percent. So, over two decades $1 invested at a17.2 percent annual return in an account that's tax-deferred and is compounding grows to $23.91. Earning a 17.7 percent return, that buck grows to $26.03. "What's really going on here, are the benefits of compounding," says Ragsdale.

The lessons that long-term fund investors can take away from these examples are really quite simple ones. So simple, in fact, that they often get overlooked. They include the following: Money in tax-deferred accounts such as IRAs and 401 (k)s really can grow quickly; never discount the value of compounding; and, little average annual total return percentage differences add up over time.

"Compounding and time together can make a small difference in returns into a large difference in accumulated wealth," says Ragsdale.

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