Bank-managed mutual funds are about to get some respect.

Fortune magazine, the glossy chronicler of corporate America, has proclaimed that "it may finally be time to take bank-sponsored mutual funds seriously."

In an issue due to hit newsstands next week, the magazine urges mutual fund investors to consider bank-managed funds.

"Though many bank-sponsored funds are too young to have long-term records, we found a handful posting very unbank-like numbers over the past three years," Fortune states.

The article, which runs in the magazine's personal investing section, then goes on to list five bank-managed funds with total three-year annualized returns surpassing the Standard & Poor's 500.

Among the winners: PNC Bank's Compass Small Cap Growth Investor; Wachovia Bank's Wachovia Special Values; and Bankers Trust's BT Investment Small Cap.

For bankers, the piece is a long-awaited seal of approval for their foray into mutual funds. For years the popular press has painted proprietary bank funds as laggards managed by people who could not cut it at traditional investment firms.

But that impression is finally changing, bankers said. Bank-managed mutual funds held more than $550 billion of assets at the end of the second quarter, according to Lipper Analytical Services, Summit, N.J.

More importantly, the average bank-managed equity fund posted a three- year return of 22.5%-in line with nonbank stock fund averages.

"The fact that funds are sponsored by banks is irrelevant now," said Allen Croessmann, director of mutual funds for BankBoston Corp. "The distinction is becoming less important."

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