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When going gets tough, dial your broker

When the market goes down, phone calls to Fidelity Investments go up _ and this latest drop has brought a record-setting number.

But while many mutual fund owners moved to reduce their stock holdings, many other small investors stood pat. And some were looking to buy even before the market bounced back Tuesday.

"It's like the old joke that the definition of a professional is "the first one to panic,' " said Catherine Voss Sanders, who publishes the monthly Morningstar Investor. "It's the people who are watching the market minute by minute and who have large stakes that may have the itchier trigger fingers."

While the market bucked, mutual fund investors, many of whom buy stocks for retirement through 401(k) plans and other payroll deductions, checked in _ a lot. But while some moved money from stocks into bonds or other investments, most did not abandon equities.

Mutual fund holders have an increasing say in today's market. They held about 15 percent of all stocks in the United States at the end of March, comprising $1.52-trillion of the $10.10-trillion stock market pie, according to the Investment Company Institute, an industry group.

Boston-based Fidelity, the world's largest mutual fund company, added extra operators to handle the flood of calls Monday, many of which were made after people arrived home from work.

At 4 p.m., investors had started adding money to Fidelity equity funds, with the greatest investment in international funds, said spokesman Andy Trincia. Fidelity also had money coming into taxable fixed-income funds and slight outflows from retail money market funds.

The total of 712,000 retail calls far exceeded the previous high of 515,590 set last year. Fidelity's Web site was visited so frequently that some trades were delayed. The pattern continued into Tuesday.

At No. 2 Vanguard Group, calls were up 20 percent Monday and started off strong again Tuesday. But while sellers outweighed buyers early Tuesday, buyers actually ended up carrying the day Monday.

"Looking at the cash flow into the equity funds, you would have thought the market was up rather than down," said Brian Mattes, a spokesman for Vanguard, which is based in Valley Forge, Pa.

You knew the market was down if you worked for Charles Schwab & Co., the nation's largest discount brokerage firm. Nearly $400-million was transferred out of stock and bond mutual funds by Schwab customers Monday. On an average day, about $50-million moves into the funds.

A record 140,000 people spoke with Schwab phone representatives Monday, double the usual figure. Another 400,000 called automated lines. Tuesday, Schwab expected even more calls: 250,000 live calls and more than 1-million customer contacts on its automated lines and Web site.

"Yesterday was more of an institutional day. Today is the day individuals are tuning in more," said Glen Mathison, a spokesman for Schwab, based in San Francisco.

Several other mutual fund companies said calls were up but the flow of money from one type of fund to another did not follow any unusual patterns.

Stock fund shareholders have held on during market downturns over the past 50 years, accordingto trade figures. During the crash of October 1987, outflows from mutual funds remained under 5 percent of the total.

But while much has been made of investors' mettle, 30 percent of mutual fund holders have entered the market since 1990. That means they haven't seen a bear market, said Joseph Weintraub, an associate professor of marketing at Babson College.

"We haven't even come close to testing the resiliency to the small investor. If the market keeps going down, then we'll have a better test," Weintraub said.

"Right now, it's just wait and see."