Q: How can I prove that my company 401(k) plan is a loser? The company I work for has our plan with Putnam. I believe there is no combination of funds in the 401(k) that has ever beaten the S&P 500 index over any period of time.

But I need to figure out how to prove this by collecting the data and displaying it in graphs or other ways to make it clear. Where do I start? Can you point me to somewhere to start on such an analysis -- a software package, a data source, Web site, whatever? -- J.M., by e-mail

A: What you know in your gut is right on. Collecting the data and putting it together is where Morningstar, the Chicago investment data firm, shines. Its fund reports present a standardized format showing trailing returns for a variety of time periods, the percentile ranking of each fund against all the other funds in the same asset class, and a variety of risk measurements. You can get this data by going to www.morningstar.com, clicking on "funds," and entering the ticker for each fund you want to examine. The data can also be obtained by using Morningstar Principia, its mutual fund data service on CD-ROM.

You'll have to do the complete analysis since I don't know which funds are offered in your plan, but here is what makes me think the management at your company may be enjoying two martinis at lunch.

Using Morningstar Principia for the period ending March 31, I found that Putnam has five funds that are categorized as "large domestic blend" funds. These are funds that are benchmarked against the S&P 500 index. According to the Hewitt 401(k) index, this category accounts for nearly 19 percent of all 401(k) plan balances.

Over time periods ranging from the first three months of this year out to 15 years, these funds have averaged returns that trail the benchmark index. They have trailed by very wide amounts (see table below). Beyond that, all but one of the individual funds have ranked miserably against competing funds.

Putnam Tax Smart Equity fund, for instance, has ranked in the 97th, 98th and 92nd percentiles over the last 12 months, three years and five years, respectively.

Putnam Research fund has been in the bottom 10 percent in all recent time periods. But if you go out 10 years, it rises to being beaten by 83 percent of its competition.

Putnam Investors has also been in the bottom 10 percent in all time periods out to 15 years except the five- and 10-year periods, where it managed to be beaten by only 87 percent and 89 percent of competing funds, respectively.

Putnam Capital Appreciation has a similar record. Its best performance was over the last five years, when 86 percent of its competitors provided higher returns.

The only hopeful sign is Putnam Asset Allocation: Growth. This fund was beaten by 71 percent of its large blend competitors in the last 12 months, but it has performed in the top 25 percent over the last five- and 10-year periods.

Putnam's two balanced or moderate allocation funds were also in the bottom half of their category. Putnam fixed-income funds and international funds were somewhat better in performance -- they weren't all bottom of the class -- but there is nothing in the basic numbers to make me think that every employee at your company wouldn't be better off in index funds.

Performance Little Family, One Funds, Five

Bottom line: Your company management could do better. They may, however, suffer a major limitation. If the company is small and the plan involves relatively little in assets, there are plenty of vendor choices, but they are all relatively expensive. That's why I believe IRA contribution limits should be the same as 401(k) and 403(b) plan limits -- employees could easily make a choice of less expensive options for themselves.

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