MUTUAL FUND WITHDRAWALS SURGE.

Byline: Edward Wyatt The New York Times

Mutual fund investors, rattled by an increasingly volatile stock market, withdrew $4 billion from equity funds in the week ended Wednesday, more than in any single week in the last four years, according to data released Friday.

The withdrawals represented about three-tenths of 1 percent of the assets in stock funds, according to AMG Data Services of Arcata, Calif., an independent fund-tracking company. The withdrawals were the biggest ever recorded in AMG's database, which dates to January 1992, and the first since October.

The data do not reflect investor activity Thursday and Friday, when the stock market exhibited considerably less volatility than it did earlier in the week. Indeed, a few fund companies reported that cash flows to stock funds turned positive Thursday and Friday.

But Robert Adler, president of AMG, said the withdrawals through Wednesday continued a trend in which cash flows to stock funds had been declining for several weeks.

Friday provided more fodder for skittish investors, as analysts expressed disappointment about earnings reports from several technology companies, including Sun Microsystems, Adaptec and Iomega.

That put another round of selling pressure on small stocks and sent the Nasdaq composite down 12.14 points, or 1.1 percent, to 1,097.68. But larger stocks also fell. The Dow Jones industrial average declined 37.36 points, or seven-tenths of 1 percent, to 5,426.82, while the Standard & Poor's 500 index slumped 4.83 points, to 638.73.

Investors who stayed the course and did not pull their money out of stock funds during last week's market slide regained some of the ground they lost early in the week. Despite one of most hectic trading weeks in recent memory, the Dow Jones industrials finished the week with a decline of only 83.74 points, or 1.5 percent. But the index went through a range of nearly 328 points - equal to nearly 6 percent of its closing price the previous week of 5,510.56.

In addition, this week was the busiest ever in the 204-year history of the New York Stock Exchange, where 2.48 billion shares changed hands, 5 percent more than the old record of 2.35 billion set in mid-March.

Significantly, the most recent outflows from equity mutual funds broadened from the slowdown noticed in previous weeks. Cash flows to aggressive growth and emerging growth stock funds - which focus on smaller stocks and are generally more volatile than funds that track the broad market - have been declining for several weeks.

But in the most recent period, even large-cap stock funds experienced net redemptions by shareholders of $1.3 billion.

``There has been a gradual erosion of investor sentiment,'' Adler said. ``This has been occurring for some time. What has changed is the size of redemptions and the fact that they are not limited to technology funds, but have expanded to the large-cap sector.''

While the withdrawals for the week (ending Wednesday) measured less than 1 percent of the total assets in stock funds, in dollars they totaled more than half the $7.5 billion that was withdrawn from equity funds in October 1987, the month of the market crash. At that time, however, equity mutual fund assets totaled $180 billion, so the outflows measured 4 percent of assets. Now, assets in equity mutual funds total $1.5 trillion.

The Investment Company Institute, the mutual fund trade group that tracks cash flows on a monthly basis, most recently estimated that net inflows to stock funds fell to $15.5 billion in June from $25.1 billion in May. A final report on May cash flows is due out near the end of the month, and the institute will estimate July cash flows in early August.

The industry has not experienced net outflows from equity funds in any month since September 1990. One month after that, stocks started an upward move that has now lasted more than five years without a substantial decline.

Some fund companies reported that cash flows reversed course late in the week, just as the stock market retraced its path beginning Tuesday afternoon. The Vanguard Group experienced net inflows to stock funds in the week ended Thursday, despite outflows in the early part of the week, said John S. Woerth, a spokesman.

At T. Rowe Price, while money flowed out of stock funds early in the week, ``that stabilized on Wednesday, and we had a pretty good rebound in inflows Friday,'' Steven E. Norwitz, a spokesman, said. So far in July, stock funds at T. Rowe Price, based in Baltimore, have recorded net inflows of about $135 million.

Fidelity Investments, the country's largest fund company, declined to comment Friday on its cash flows. On Tuesday, the company, a unit of FMR Corp., said it experienced net outflows from stock funds in the early part of the week.