Help. I am looking for a growth or value index fund with a minimum investment of $1,000 or less. Vanguard requires $3,000.

-- Steve Underwood

Steve,

To start, I'm going to assume that you're talking about domestic index funds and you're going to hold these funds in a taxable account. If you are planning on buying a fund for your IRA account, most fund families will lower the initial minimum payment. Also, if you have a 401(k) plan at work, see if any high-minimum index funds are an option. These minimums generally are irrelevant in a 401(k) plan.

And a quick note on

Vanguard

index funds. The majority of those funds do require a $3,000 minimum, as you say. But you don't ever pay a load, and the fund family has some of the lowest expense ratios and best returns in the business. Its

(VIGRX) - Get Report

Vanguard Growth Index, for example, has a very low 0.22% annual expense ratio. So it might be worth trying to scrape up the money to get in.

Now on to your question.

There are only a few index funds that consider themselves to be strictly growth or value. Most index funds are classified as blended portfolios, meaning they're a combination of both. Of the few growth and value indices out there, I did find one quasi-value index fund and two growth index funds that will allow you in for $1,000 or less. All of them have high expense ratios, though. So the price of getting in with a small investment is paying higher fees over time.

(SDOWX)

Strong Dow 30 Value Index will waive its $2,500 minimum investment if you sign up for a monthly $50 automatic withdrawal from your checking account. But it is not a pure index fund. As we recently

reported, only half the fund's $33.9 million in assets are used to match the 30-stock

Dow Jones Industrial Average

. The other half is concentrated in the benchmark's best buys, as determined by a quantitative model.

The fund has returned 17.6% for 1999 through April 22 and 17.9% over the last 12 months, according to

Lipper

. The

S&P 500

, an index dominated by growth stocks, has returned 11.0% and 23.2% over the same periods. The Strong Dow 30 fund has a 1.5% annual expense ratio, about average for all mutual funds, but on the high side for an index fund.

Isn't it interesting that the only two growth index funds that will waive a hefty initial investment are tagged as socially responsible?

(WAIDX)

Citizens Index will forgo the $2,500 minimum initial investment if you'll invest $250 up front and set up an automatic $50-a-month investment from your checking account. The catch here is that you'll be charged a $3 monthly fee until your account hits $2,500.

Citizens Index has been around since March 1995 and has a 1.6% annual expense ratio. My colleague,

Joe Bousquin

, swears he hears

Bob Dylan

singing in the background every time he calls the folks who manage the fund in Portsmouth, N.H. See this previous

story for more on the fund.

(DSEFX) - Get Report

Domini Social Equity will let you in for $1,000. You could bypass that requirement if you scrape up $500 and participate in a $25-a-month automatic investment plan. The annual expense ratio is 1.2%.

Both of these socially responsible indices track the S&P 500 while staying away from stocks that have spotty records on environmental issues, promote tobacco or alcohol or make money in the defense or nuclear industries, among other things.

Their returns closely match those of the S&P 500. Year to date, for example, the S&P 500 has returned 11.0%, while Citizens has returned 10.2% and Domini has returned 9.9%.

Do Some Legwork

Even if your favorite fund has a high minimum initial investment, you still should call its shareholder-services department and ask for other options. Here's what I learned from making a few calls. (Vanguard and

Fidelity

are not included here -- they won't budge.)

Although the fund is listed as having a $2,500 initial investment, you can get into the

(PREIX) - Get Report

T. Rowe Price Equity Index 500 fund for nothing if you sign up for a $50 monthly automatic withdrawal.

And even though

Wilshire Associates

won't let you into its growth index or value index funds for less than $2,500, you can get into the

(WFIVX) - Get Report

Wilshire 5000 Index Portfolio for just $1,000.

Even though the minimum investment in the

(PEOPX) - Get Report

Dreyfus S&P 500 Index is $2,500, if you send $1,000 and simultaneously sign up for the automatic investment plan, "they might let you through," says a customer-service representative.

And don't forget the

Schwab family of funds. The company has a bunch of no-load index funds with low minimums and low expense ratios (none that are strictly growth or value, though). In addition, through Schwab's Mutual Funds OneSource, you may be able to get into many other index funds listed above for even lower amounts.

Caveat Emptor

For a comprehensive listing of index funds, check out

www.indexfundsonline.com.

And, yes, many more of these index funds will let you in for initial investments of $1,000 or less. But beware. In exchange for these low minimums, you may be hit with some hefty sales charges.

For instance, you can get into the

(MUXAX) - Get Report

Munder Index 500 for a mere $250. And if you opt to invest a minimum of $50 in a monthly automatic investment plan, you'll need only $50 up front. But the fund has a 2.5% front-end load.

More On Your Credit History Report

Monday's

Fund Forum included a suggestion that you get a copy of your credit report if you're a "credit-card flipper" -- that is, you frequently move your credit-card balance from one card to another to take advantage of the low "teaser" rates. Reader

Dale Simmons

added this point: "Always ask the credit-card company to state that the account was closed at the customer's request. That way, there is no misunderstanding about why the account was closed."

That's a great point, Dale. You don't want potential lenders thinking your account was closed because of delinquent payments, for instance.

TSC Fund Forum aims to provide general fund information. Under no circumstances does the information in this column represent a recommendation to buy or sell funds or other securities.