Most stock mutual funds, 96.3%, rose during the third quarter of 2003, according to Weiss Ratings. Average gain was 5.24%, lower than the 16.38% of the previous quarter.

A second quarter of gains is a good sign for the economy, but investors should not read too much into it, said Melissa Gannon, vice president at Weiss. "However, investors should not throw caution to the wind because of underlying weaknesses in the economy and concerns about the extent of improper trading activities in the mutual fund industry."

The three top sectors last quarter were precious metals, emerging markets and technology, with average gains of 25.25%, 14.28% and 9.66% respectively. The best-performing individual fund was Scudder Gold & Precious Metals, which gained 44.33% last quarter and has a one-year return of 71.40%.

The only sector that reported a loss last quarter, a modest 0.52%, was utilities.

Bond funds are experiencing their long-predicted fall, with only 56.5% of bond funds reporting positive returns last quarter, versus 99.4% with positive returns in the second quarter.

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