Asian elation! Pacific Asian funds have turned the corner.

If stock markets along the Pacific Coast of Asia are any indication, the region's economies have come back from their mid-90s demise with a vengeance. In Hong Kong, the Hang Seng Index measuring that region's stocks was up 30% by mid October. Stock markets in Indonesia, Malaysia, and India were up 51%, 63%, and 21%, respectively. South Korea rose 23% during the same time period.

That kind of lift has done wonders for mutual funds that invest in the area. According to Morningstar, the Chicago fund data company, portfolios investing in Pacific Rim nations outside of Japan were up an average 30.6% at, the end of September 2003.

Reforms to currencies, banks, and corporate governance have helped economies in the Asia Pacific region average a 4.4% annual growth rate over the past 20 years, more than 30% above the 3.2% average of the United States' economy.

Even though there's good news, the region is still volatile. Besides the economic crisis of 1997, the region endured the SARS virus in early 2003, there is the belligerent North Korean government, and additional concerns stemming front the U.S. war in Iraq. Morningstar analyst William Samuel Bocce says there is still good reason to invest in the region, provided you have a sound base in domestic funds and a good foothold in an all purpose international portfolio. Recto recommends that you place no more than 10% of your overall assets in a Pacific Asian fund. "For most people, these shouldn't be core foreign holdings," he says. "They make sense as a second international fired, one with a good amount of spice and the potential for some 'pop' over the long-term."

We screened Morningstar's database looking for funds with diversified holdings that spread their assets to many nations in the region. We also looked for the best portfolios over the three-year period that ended Sept. 30, 2003 to get the best gauge of a fund's performance over both rough and easy periods.

The fund atop our chart was the Matthews Asian Growth & Income Fund. Management at the San Francisco fund have built a relatively conservative portfolio with modestly valued shares, and companies that pay secure dividends and include convertible bonds. At the end of the third quarter, it had a 15.9% average annual total return. Its sibling, the Matthews Pacific Tiger Fund, is a bit zestier, taking a stake in smaller companies and markets with more pop, such as Indonesia. It finished third on our ranking with a 5.3% average annual total return over the last three years.

Top 6 Asian-focused Mutual Funds

                                     1-Year       3-Year      5-Year
Fund Name (Ticker)                   Return       Return      Return

Matthews Asian Gr & Inc (MACSX)      25.87%       15.90%      22.30%
Eaton Vance Asian SmCo A (EVASX)     49.22%       13.45%        NA
Matthews Pacific Tiger (MAPTX)       49.16%        5.31%      22.44%
Guiness Atkinson Asian Fo (IASMX)    36.21%        5.18%       7.18%
Fidelity Southeast Asia (FSEAX)      32.47%       -0.82%      13.29%
T. Rowe Price New Asia (PRASX)       37.78%       -1.51%      12.17%

                                    Minimum
                                    Initial     Toll-Free
Fund Name (Ticker)                  Purchase      Number

Matthews Asian Gr & Inc (MACSX)      $2,500    800-789-2742
Eaton Vance Asian SmCo A (EVASX)     $1,000    800-225-6265
Matthews Pacific Tiger (MAPTX)       $2,500    800-789-2742
Guiness Atkinson Asian Fo (IASMX)    $2,500    800-915-6566
Fidelity Southeast Asia (FSEAX)      $2,500    800-544-8888
T. Rowe Price New Asia (PRASX)       $2,500    800-638-5660

PACIFIC ASIA EX JAPAN FUNDS, SINGLE SHARE CLASS, RETAIL ONLY, BY 3-YR
RETURNS THROUGH 09/30/2003. SOURCE: MORNINGSTAR, INC. MORNINGSTAR
MAKES EVERY EFFORT TO ENSURE COMPLETENESS AND ACCURACY OF DATA, BUT
CANNOT GUARANTEE IT.