Bank-managed mutual funds trail industry in most categories.

In an anemic third quarter, mutual funds managed by banking companies fared slightly worse than the entire fund industry in most categories.

Specifically, bank funds lagged. in the equity, taxable bond, and mixed categories, according to data compiled by CDA/Wiesenberger, Rockville, Md.

Among equity funds, for example, portfolios managed by banks fell 0.17%, compared to a decline of 0.6% among all funds. Bank-managed taxable bond funds were up 0.41%, compared to a category average of 0.51%.

In mixed funds, which CDA/Wiesenberger defines as balanced and asset-allocation funds, the bank fund average was up 2.58%. All funds in the category rose an average of 2.76%.

The sole type of portfolio banks managed better than the industry was tax-exempt bonds. Bank funds squeeked ahead with an average return of 0.44%. All funds in the group rose 0.41%

But not all funds were listless in the period. In fact, one new fund, the Seven Seas Emerging Markets portfolio, managed by Boston's State Street Bank & Trust Co., enjoyed a stint of celebrity status.

This fund was the best performing bank-managed mutual fund in the quarter, with a return of 29.65%. It was the seventh-best of all 2,060 equity funds tracked by CDA.

This marks an auspicious start for State Street's first actively managed international mutual fund. The fund was launched in March.

"We came out with the emerging markets fund first because we felt there wasn't a great, low-cost" mutual fund already available to investors in these markets, said Heydon D. Traub, a managing director of State Street's Global Advisors money management unit. Nearly a quarter of Global Advisors' $130 billion of assets is invested internationally.

Mr. Traub said the Emerging Market fund's performance has attracted good press and investor attention. This, in turn, has helped boost assets from $10 million shortly after the fund's launch to $31 million now. Most investors are institutions, or wealthy clients of financial planners.

Mr. Traub credited the solid performance to the fund's emphasis on Brazil, where markets have benefited from successful anti-inflation policies. The fund is keeping close to a third of its assets in the country.

Less heady but still respectable returns were posted by Mellon Bank N.A.'s Laurel Managed Income Investor, which is being renamed the Dreyfus Managed Income Investor.

This fund topped the rankings of taxable bond funds, with a slim 1.86% return for the quarter. The fund is also among the minority of bank-managed funds with a long-term track record. Over the last three years, it has posted an average annual return of 7.94%, besting the 6.15% average for all funds in the category. Over five years, it has returned 7.86% annually, compared with the 7.76% group average.

The top bank funds over three years were two Parkstone Small Cap. equity mutual funds managed by First of America, Kalamazoo, Mich., which had 18.55% and 18.37% average annual returns, respectively.

Over five years, the top performers were two of Chase Manhattan Corp.'s equity portfolios; the Vista Growth & Income fund, with a 16.99% return, and the Vista Capital Growth fund, with a return of 16.65%.

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