OK, mutual fund gunslingers, you’ve got a new target. Find the real, high-performing fund.

When a new mutual fund is created, it has no performance history. Investors watch it for a while to see how it does.

But thanks to decisions by the staff of the Securities and Exchange Commission, new mutual funds are creating what appears to be instant long-term performance.

Their prospectus and sales materials can tout the manager’s long-term success in running other pools of money not just other mutual funds but also private accounts. This invites you to infer that the new fund will do as well.

Funds like this aren’t widely advertised yet. If their sponsors belong to the National Association of Securities Dealers, they have to wait until the NASD signs off on the SEC approach.

Assuming that happens, a race for virtual performance may begin.

Barry Barbash, director of the SEC’s division of investment management, says that the manager’s past history helps investors evaluate new mutual funds. At least one SEC commissioner, however, wants to rethink.

Barbash is right in cases where the record is clean. Take Elizabeth Bramwell, the high-profile manager who put the Gabelli Growth Fund on the map. She split and started the Bramwell Growth Fund. Last year, the SEC allowed her to show her past record in her new prospectus.

But the SEC’s Bramwell decision has opened the door to something else. The sponsor of a new mutual fund can now shop for money management companies with superior past performance, including performance in privately managed accounts. Those records give the new fund credibility.

But you don’t know which individual managers produced those splendid records and whether they’ll actually work for the new funds. “So you’re getting a record that may be bogus,” says money manager Steve Janachowski of Brouwer & Janachowski in Tiburon.

Barbash points out that mutual fund records are blurry already. Funds often change the person who picks the stocks. Investors buy new managers without even realizing it.

The Gabelli Growth Fund is a perfect example. It advertises the performance that Elizabeth Bramwell ran up, even though she’s no longer there.

Janachowski calls that bogus, too. “When a manager leaves a fund without grooming a replacement, the fund has no track record,” he says. If he owns the fund, he sells.

Aggressive managers have been pushing the SEC’s Bramwell decision even further, to manufacture attractive past performances.

Take the new Style Select Series run by SunAmerica Asset Management. It picked several well-known management firms, combined their performance, and produced a prospectus showing how well they would have done had they actually worked together.

This is hypothetical performance, which the SEC may have to curb. It should also look at sales material where the manager’s past performance is shown in a more commanding light than the actual performance of the mutual fund.

At the Nicholas-Applegate fund company, mutual funds are being sold based on the past performance of the company’s comparable private accounts. This has been allowed in the past but only during a fund’s first year of life.

Nicholas-Applegate says it needs long-term records to sell new funds to people with retirement plans. Barbash sees no problem here, as long as the company doesn’t mislead.

Another change authorized by the SEC lets an existing, private investment pool turn itself into a mutual fund. Here, the past performance isn’t shown separately. It’s treated as the actual history of the new fund.

Presto, we get the Berger International Fund. Berger took a pool of money run by the Bank of Ireland Asset Management Group and brought it public as a mutual fund. The fund is just seven months old, but its ads and prospectus tout an eight-year performance record. It will take time to show whether that previous record is relevant.

The SEC set a number of conditions for using prior performance records. But SEC Commissioner Isaac Hunt Jr. worries that “clever people may be going further than the SEC staff intended.” In an interview, Hunt said he plans to “walk around the halls and talk” to the other commissioners about whether they should address this issue. Barbash says the SEC staff will come out with a further statement, clarifying the limits of what funds can do.

Dial-arounds

AT & T;, the long-distance company faithfully used by a majority of Americans, is fighting a new kind of competition. The competitors are called “dial-arounds.” They offer cheaper phone calls, but cheaper than what? AT & T; thinks the people who use them don’t understand them. It recently sued two of the dial-arounds VarTec Telecom and Telco claiming misleading advertising.

So the challenge has been posed. If you use a dial-around for long-distance calling, do you know what you’re doing? If you don’t use a dial-around, should you try one?

With a dial-around, you circumvent or “dial around” your current long-distance company. Before dialing the area code and number, you dial a special code that begins with “10” and then add three digits. (In 1998, the code will lengthen to 10 plus five digits.)

The cost of the call will appear on your regular telephone bill but you haven’t used your regular phone company. The call went through the dial-around and it gets the revenue.

This kind of calling is becoming a huge business. The dial-arounds copped $1 billion in revenue last year, up from $100 million in 1993, according to Atlantic-ACM, a Boston telecommunications strategy and research firm. The number of companies rose from nine to 22.

But to get the savings the dial-arounds promise, you have to know their rules. That’s what AT & T; thinks you’re missing.

It even commissioned a survey to prove it, by the New York research firm Louis Harris & Associates. Unfortunately for AT & T;, the results were mixed.

You can see what’s bothering AT & T; in the TV and radio ads run by Telecom USA, which is owned by the long-distance carrier MCI. The ads tell you to dial 10321 before dialing 1 and the long-distance number, to save up to 50 percent over AT & T; on calls lasting more than 20 minutes.

Here’s what the ad doesn’t say: (1) On calls lasting less than 20 minutes, you save only one cent a minute over AT & T;’s basic rate, which is also its most expensive. (2) If you switch to an AT & T; calling plan, you’ll probably pay less than the dial-around charges.

International calls may be an exception. Companies like Primus (dial 10024) do indeed offer attractive, flat rates to people with relatives abroad.

Syndicated columnist Jane Bryant Quinn can be reached in care of the Washington Post Writers Group, 1150 15th St., Washington D.C. 20071-9200.