``Chasing fund performance is often the quickest way to hurt your mutual fund returns,'' SEC Chairman Arthur Levitt said in a statement. ``Investors should comparison-shop for funds that best match their long-term financial goals and tolerance for risk.''

Investors should closely examine mutual funds' fees and expenses because small differences can have a sizable impact on returns. The more volatile a fund, the greater the investment risk and the lesser certainty of future returns, according to guidelines issued by the SEC.

Quick, short-term gains can often be attributed to a fund's investment in select initial public offerings or a few successful stocks that have driven its gains, two things that are hard to duplicate, the SEC said. The SEC also urged mutual fund investors to read a fund's prospectus and shareholder reports to learn about its investment strategy as well as to determine any possible tax consequences from capital gains distributions before choosing a fund.

The securities regulator issued its guidance to investors after some mutual funds posted skyrocketing rises in 1999. Fidelity Investments' $105 billion Magellan Fund posted a 24.05 per cent return last year, compared with the Standard & Poor's 500, which showed a 21.04 per cent return. A complete list of the SEC's guide to mutual fund investing can be found on the Internet at http://www.sec.gov under the Investor Assistance section.