HOW HIGH CAN THOSE INTERNET FUNDS FLY?

The year-to-date performance figures of some funds investing in internet stocks is staggering. The Munder Net Net Fund, (800-468-6337), for example, was up 57.89 percent, through May 13. While that's impressive, it still wasn't the blue ribbon winner.

The Monument Fund, (888-420-9950), posted a gain of 113.50 percent, over that same period of time. Fabulous, but still not tops. The fund that was even hotter was The Internet Fund, ( 888-386-3999). It gained 120.99 percent.

While it's hard to believe that in less that six months a mutual fund can soar 10 times what's considered to be an average annual return, look back at its one-year total return and The Internet Fund will wow you even more: For the past 52- weeks ending May 13, the fund was up an amazing 325.35 percent.

That's the biggest one-year gain A. Michael Lipper, president of the mutual fund research company bearing his name, said he can ever remember seeing on a SEC registered mutual fund.

But if you're not an investor in any of these funds yet, don't mortgage your home just to buy shares of them. While the future appears promising for some internet companies, the pros don't even expect those kinds of returns to continue ad finitum. So neither ought you.

"Clearly we've gone through an extraordinary period of growth in this industry," says Ryan Jacob, portfolio manager of The Internet Fund, " And although that growth should continue, it would pretty difficult to replicate the growth rates we've seen."

Alexander Cheung, portfolio manager of the Monument Internet Fund agrees. In a recent audio interview he told listeners that a pull-back in prices of internet stocks wouldn't be unusual. And, that a 20 percent adjustment in prices would not be "out of the ordinary".

But perhaps some of the wisest investment advice comes from H. Bradley Perry of David. L. Babson & Co. He says that every 10 years or so a mania comes along in the stock market. And, that there are two risks inherent in those frenzies that can cause investors to lose money even though the hot businesses or industries become big successes.

The first is that investor enthusiasm outruns reality.

"People get so excited about the new field that they end up paying much more for stocks than even super-rapid growth by most of the companies can justify, " he says. "So even if a company's earnings record winds up to be good, it might not be good enough to justify the stock prices the mania produced."

The second, and bigger risk, is mortality rate.

Knowing which of the internet companies is going to be around for the long haul is the $64-billion dollar question these days. And if history is any guide, here's a little bit of it to chew on: According to Perry, in the mid-1920s the two hot growth industries were automobiles and radio--- at that time there were 400 companies manufacturing cars in the U.S. and 500 radio producers.

Radio Corporation of America (RCA), he says, was the America Online or Yahoo! of that era. And that in just a few years RCAs stock price went from 10 to 505 dollars a share before collapsing and staying underwater for decades.

As far as the automobile manufacturers go, today you count the ones left on one hand. And not use all of your fingers.

What this all means to fund investors is simple: If you're going to invest in internet funds, go into them with both eyes wide open; expect them to be volatile investments; and, know that while you may have missed getting in on the ground floor, you haven't necessarily missed the boat. New businesses, once they are established and showing profits, can make fund shareholders money, too.