but observers said it is premature to play a funeral dirge for the industry.

Net inflows -- or sales minus redemptions -- into long-term funds totaled $2.7 billion in September, down 57.8% from August and 50.9% from September 1998, according to data released Thursday by Financial Research Corp. of Boston.

The Investment Company Institute, which also released monthly data Thursday, showed assets of long-term and short-term funds fell 0.9%, to $5.976 trillion.

Though Financial Research does not distinguish cashed-out funds from new sales, Christopher J. Brown, an analyst with the Boston firm, attributed the drop to a slowdown in new investments by fund shareholders.

"The market tends to dip in September and October and rally again in November and December, and we're right in line for that pattern this year," he said.

Some bank brokerage executives agreed.

"It used to be the rumor of the quarter; now we have the rumor of the hour," said Jack D. Cussen, chairman and chief executive at the brokerage unit of Summit Bancorp in Princeton, N.J. Each rumor, he said, "causes an action or reaction in the market, which may or may not have anything to do with the long-term actions of the marketplace,"

Mr. Cussen estimated that fund sales at his firm fell 20% to 25% in September. But he said he still expects to hit at least $30 million of sales this month, on par with figures from a year earlier.

A drop in the Dow Jones industrial average from 11,000 to 10,000 "is a huge move in most people's minds," said Deborah Bernot, president of California Federal Bank's brokerage unit, where fund sales fell 3% from August to September.

Meanwhile, Alan Kennebeck, president of Amcore Financial Inc.'s investment unit in Rockford, Ill., said his firm saw a drop in proprietary fund sales, primarily because platform bankers who sell them have been more focused on deposit gathering. "We're fighting for shelf space with our banking companion," he said.

Investors continued to have a healthy appetite for most equity funds last month, according to Financial Research and the Investment Company Institute. Fixed-income funds, hurt by rising interest rates, had net redemptions of $4.9 billion -- their worst monthly total since December 1994, which saw a $9.3 billion outflow, Financial Research reported.

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