Just a few short months ago, every 401(k) or mutual fund statement seemed more depressing than the next. Undoubtedly, many weary investors just stopped reading them.

But finally, there may be some better news hitting your mailbox this month.

Just when it seemed those statements would be perpetually gloomy, the clouds have parted.

The average stock fund gained 17.5 percent from March through June - the sunniest quarter since late 1999, according to fund research firm Lipper.

And the gains were across the board, with more categories of stock funds ending in double-digit gains than in any other quarter over the last 15 years.

Since 1960, stock funds saw only six better quarters. Funds are now about the same level they were a year ago, Lipper says.

How quickly things can change.

As good as '98

Funds have spiraled downward with the market in the last few years, obliterating their fantastic gains of the late 1990s.

But Lipper says equity funds overall are back to where they were five years ago.

That's good news to anyone who started investing before 1998 - you might still have a gain. Almost anything invested since 1998, however, still is in the loss column.

Big winners for the last three months: funds that invest in smaller companies and funds that look for undervalued companies. In industry jargon, small-cap and value funds outperformed.

But that's not to say that large-cap and growth funds suffered. In fact, even the worst sectors tracked by Lipper had a fantastic second quarter.

Besides specialty diversified equity funds, which was the only group Lipper tracks that lost money, natural resource funds performed the worst - gaining a measly 12 percent.

Hold on to winners

With such great second-quarter performance across so many sectors, where should investors look in the third quarter?

To the same funds that shone in the second quarter, Lipper says.

Such strong quarters for stock funds historically have been followed by another strong quarter about three-fourths of the time, Lipper says.

And although that history shows that value funds doing better than growth funds after bear markets is rare, Lipper predicts the anomoly will continue. The firm's analysts say small-cap funds will continue to lead.

"Smaller companies do better in terms of revenue growth when the economy starts rebounding," senior research analyst Don Cassidy wrote last week.

Among the industry sectors, Cassidy says to look for solid gains in funds investing in financial services and utility companies.

Real estate funds should perform well - not enough to outperform market averages, but probably better than natural resources, gold and technology funds that have likely already peaked for the year.

Contact Amy Higgins at 768-8373; ahiggins@enquirer.com; or 312 Elm St., Cincinnati 45202. She regrets that she cannot reply to all individual questions.