Popular as mutual fund investing has grown over the last 20 years, it stands no chance of ever becoming hip.

It's hopelessly, quintessentially bourgeois. Middle-class. Middlebrow. Middle-of-the-road. Utterly devoid of those hallmarks of 21st century culture, edge and attitude.

As the Encyclopedia Britannica explains, "The word bourgeois usually is used disparagingly to characterize a concern for material interests and respectability, with a tendency toward mediocrity."

These thoughts came to mind as I was reading a recent report by the Investment Company Institute, the biggest mutual fund trade group, entitled "U.S. Household Ownership of Mutual Funds in 2000."

The report, based on a June survey of 3,000 individuals and families, found that almost half of all American households 49 percent, to be exact now own mutual funds, compared with 5.7 percent 20 years ago.

"Fund ownership tends to increase with income," the institute reported. But fund investors as a group should never be confused with "the rich."

Fewer than one in five fund investors report annual household income of $100,000 or more. Fifty-eight percent said they make between $25,000 and $75,000 a year.

The greatest percentage increase over the last two years occurred in the $25,000-to-$35,000 income range. In 1998, 28 percent of those households owned funds; now the percentage is up to 37. Among people with incomes of less than $25,000, fund ownership increased over the same span from about one in eight households to one in six.

This pretty much rules out any image of fund investors as a narrow cabal of plutocrats conspiring to keep their wealth out of the hands of the masses. More accurately, they are the masses.

The numbers testify that funds have done a great deal, and are still doing a great deal, to democratize capitalism. To put a twist on an old theme by Walt Kelly, we have met the new business owner and he is us.

One characteristically middle-class activity is paying taxes. Permit me a few back-of-the-envelope calculations here, working from ICI data.

Investors redeemed, or sold, slightly more than $1 trillion of shares in stock, bond and hybrid (stock and bond) funds in 1999. We can estimate that about a third of that occurred in tax-deferred retirement accounts. The rest of the redemptions would have represented what accountants call "taxable events."

So figure $670 billion in proceeds to taxable investors. At a conservative guess after 18 years of a roaring bull market, let's say 40 percent of that was profit or $268 billion. Assuming a tax rate of 20 percent, that's $54 billion to Uncle Sam.

Funds also paid out $96 billion in dividends last year. Knock off a third, again, for retirement accounts, and you get $64 billion of income taxed at, let's say, an average rate of 25 percent. Chalk up $16 billion more for the Internal Revenue Service.

Then we had $237 billion in capital-gains distributions in 1999. Subtract a third for retirement accounts, and you get $158 billion taxed at 20 percent, or $32 billion.

Let's not forget taxable money-market funds, which we can estimate paid something like $40 billion in dividends to their taxable investors. At a presumptive tax rate of 25 percent, we get another $10 billion in federal revenue.

By my crude math, at any rate, we've got $112 billion in tax revenues from fund investors. As it happens, the federal budget surplus for calendar 1999 was $124 billion.

So it's not unreasonable to nominate mutual fund investors as unsung heroes in the battle of the federal budget, and let politicians claim all the credit they want.

Just acknowledge that mutual fund investors paid a big part of the bill and how bourgeois of them to do so.

Chet Currier is a columnist for Bloomberg News.

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