trend toward tepid mutual fund sales.

Though they acknowledge that market volatility is causing some investor skittishness, these bankers reported August mutual fund sales higher than a year earlier, coupled with relatively low redemption rates.

"We have a pretty strong customer retention program," said Robert L. Ash, managing director of Fleet Investment Management, a division of Fleet Financial Group of Boston.

Assets under management in Fleet's proprietary Galaxy Funds totaled $20.4 billion on Aug. 31, compared with $12.3 billion a year earlier. The overall redemption rate for the funds was 18%. Mr. Ash said third-party funds sold through Fleet's brokerage had similar results.

But industrywide, redemptions were up in August from the previous month, and net new cash inflows slipped. According to the Investment Company Institute, the Washington, D.C.-based industry trade group, total assets in mutual funds were essentially flat in August, at just over $6 trillion, with redemptions increasing to 23.7%, from 21.8% in July. That's also up from August 1998, when redemptions were 20.8%.

Meanwhile, net new cash slipped to $9.21 billion, from $12.4 billion. For the first eight months of the year, net new cash flow reached just over $112 billion, down from $132.4 billion a year earlier.

The difference, Mr. Ash said, has been persuading customers to take a long-term view.

"Our focus is on assets under management rather than short-term revenues," he said. Sales representatives, for instance, are compensated on the basis of assets managed, rather than sales, which discourages asset turnover, he said.

Some bankers said the key to retaining fund assets is educating investors on the importance of taking a long-term perspective.

"We haven't had a huge problem with redemptions," said Rob Comfort, senior managing director of the brokerage arm of Huntington Bancshares of Columbus, Ohio. "We've really trained our representatives, even if people are panicking, to keep them focused on the long term."

William G. Papesh, president of the mutual fund division of Seattle-based Washington Mutual Inc., said: "One of our concerns and challenges is to make sure people have realistic expectations. A lot of people assume the market will continue to go up, and that's not always going to happen."

Ken Hoffman, president of Optima Group, a consulting firm in Fairfield, Conn., said it is not surprising to see some banks bucking mutual fund industry trends.

Their redemptions may be lower, he said, because "banks have really concentrated on the buy-and-hold investor."

Mr. Hoffman said banks still have an opportunity for growth in the mutual fund business. Because the saturation level of mutual fund sales among banks is relatively low, he said, those willing to invest the resources can continue to increase sales.

"It's different from a mutual fund company that's going to rise or fall according to market conditions," he said.

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