The S&P 500 continued its relentless rise during the first quarter, but it was a period of mixed results for the mutual fund portfolios assembled by the TSC Portfolio Planners.

Three of the four portfolios posted positive returns for the quarter, though only one outgained the S&P 500's return of 5%. (For a look at how all the portfolios fared, see the

Scoreboard.)

On the other hand, beating the S&P 500 was not the goal. In December, we asked four respected financial planners each to design a $100,000 fund portfolio around a specific set of circumstances for four imaginary clients, ranging from a twentysomething investor with a very long time horizon to a retired couple in need of additional income. (See our

introduction to the series.)

The planners were, for the most part, satisfied with their portfolios' first-quarter performance. Two of the four made no changes going into the second quarter, while the other two opted to replace some lagging performers.

Before looking at each of the portfolios, let's review some of the ground rules we set up originally: Actually, there aren't any. We just asked the planners to pick investments we could track. We allowed them to pick institutional funds or funds that are closed to new investment because they often are able to do that for their own clients, and we wanted their picks to be as "real world" as possible. When they did select funds that individuals can't get into, we asked them to provide alternative choices.

We realize the four scenarios represented by these portfolios don't fit everyone's situation. So we occasionally ask one of the planners to look at a reader's portfolio and suggest how to improve it. See what

Vern Hayden

, planner and

TSC

contributing editor,

recommends for Lorraine Schroeder, a 46-year-old government worker who plans to retire in nine years.

Now to the portfolios:

Unlimited Future Portfolio

This portfolio, assembled by Roxanne Fleszar of

Financial Resources Management

in Peabody, Mass., returned 3.5% during the first quarter thanks to a big boost from

(JAVLX)

Janus Twenty. The concentrated large-cap growth fund returned a whopping 24.3%.

The fund, which has returned an amazing 85.8% in the past 12 months, has a great long-term track record, but it carries a lot of risk. That's OK with our imaginary 28-year-old investor, though, who wants to buy a home within five years but otherwise has a very long time horizon.

The portfolio's biggest setback came from

(CLPRX)

UAM Clipper Focus, down 4.9%. The value fund has been dragged down by a large holding in embattled tobacco stock

Philip Morris

(MO) - Get Report

, which represents 13% of the fund.

Fleszar says she believes tobacco exposure will continue to have a big impact on this fund. "Lawsuits

against tobacco companies will keep popping up, so this can go on and on

ad infinitum

." As a result, she's dropping Clipper Focus in favor of Wally Weitz's

(WVALX) - Get Report

Weitz Value fund. The fund has returned 6.5% year to date and 17.5% over the past year in a tough environment for value funds.

Clipper Focus wasn't her only disappointment.

(GAMNX)

GAM International's 11% nosedive concerned her as well. She met with manager John Horseman, though, and believes "he has created an intelligent long-term asset allocation, and it will be beneficial in the future." So she's sticking with him.

The only other move she made was to drop the

GE Interest Plus Account

in favor of Vanguard's

Tax Exempt Money Market

fund. And that was mainly because the Vanguard fund's returns are easier to track. It also has a mere 0.2% expense ratio.

Family Values Portfolio

This portfolio, created for a working mom and dad saving for retirement and their kids' college education, was the only one to finish the quarter in the red. It was down a slight 0.2%. Nevertheless, planner Lou Stanasolovich of

Legend Financial Advisors

in Pittsburgh says the family's long-term time horizon (in our scenario, the kids are in grade school) means he's not worried about small short-term drops.

He's confident his long-term approach, "although not too exciting, should generate equity-like returns over a five- to 10-year period."

His portfolio held relatively stagnant with an equal amount of wins and losses. The winners were his 13% allocation in the

(VFINX) - Get Report

Vanguard 500 Index fund, which returned 5%, and his 10% allocation in the

(COAGX) - Get Report

Caldwell Orkin Market Opportunity fund, which uses short positions as a hedge. The fund returned 4.6%.

His two big disappointments came from the small-cap and real estate sectors. The 12% first-quarter drop in

(SKSEX) - Get Report

Skyline Special Equities hurt. But he's holding on to the fund, expecting value stocks to come back into favor.

And with real estate investment trusts down 5.9% for the first quarter, according to the

National Association of Real Estate Investment Trusts

, it was no surprise that

(CSSPX) - Get Report

Cohen & Steers Special Equity and

(PRREX) - Get Report

UAM Heitman Real Estate fell 7.1% and 5.6%, respectively.

But Stanasolovich still feels strongly that real estate is "the best buy of any investment class available right now." So he's sticking with both funds.

Empty-Nesters Portfolio

This portfolio returned a robust 7.6%, powered by a 19.0% return for the portfolio's largest holding,

(LMVTX) - Get Report

Legg Mason Value Trust. Hayden, of

American Planning Group

in Westport, Conn., put together the portfolio for a middle-aged couple who are planning for retirement in 10 years and have kids in college.

All of the portfolio's six funds were in the black except the

(CFIMX) - Get Report

Clipper fund, which, like its cousin, UAM Clipper Focus, was dragged down by holdings in Philip Morris. It was off 3.3%. Still, "I'm going to hang in there for a little while" with Clipper, says Hayden.

Despite the solid first-quarter performance, Hayden says he's concerned about Legg Mason Value, which, despite its stated value objective, owns go-go growth stocks like

America Online

(AOL)

. "Any growth fund that has been in even the solid Internet

stocks like AOL and

Cisco

(CSCO) - Get Report

is going to be very vulnerable in the next correction," he says.

And Hayden says the chances of a correction "are more compelling this year because of the Y2K problem and possibly another foreign surprise such as China or the war

in Kosovo taking a really bad turn."

Still, "this portfolio is built for 10 years, and I don't plan on pulling anything out at any given point." But Hayden says he might shift as much as 20% to 40% of the portfolio's assets to the

(HABDX) - Get Report

Harbor Bond fund if he felt a correction was imminent or in progress.

During the quarter, one of Hayden's holdings,

(VGHCX) - Get Report

Vanguard Health Care, closed to new investors. Hayden recommends

(FHLSX)

Invesco Health Sciences as a substitute, though he warns it's "more aggressive" than Vanguard Health Care.

Golden Years Portfolio

This portfolio, for a retired couple seeking additional income, returned 2.3% during the quarter. Ron Roge of

R.W. Roge & Co.

of Bohemia, N.Y., who designed the portfolio, says he'll stick with all the funds in it except

(RYTRX) - Get Report

Royce Total Return. The small-cap growth fund lost 9.3%, worse than the quarter's average loss of 6% for small-cap funds.

Roge will replace Royce with the $470 million

(BSCFX) - Get Report

Baron Small Cap fund. "The fund is focusing on supplies to the cable industry and to telecommunications, and some of the companies are going to grow much larger," he says. "I'm looking at trying to participate in that area." Roge says he bought the fund for his clients "the day it came out" in 1997, "and I've been adding to it ever since."

The only other fund in the portfolio showing a loss for the quarter is

(TWEBX) - Get Report

Tweedy Browne American Value, down just 1.5%. But top-performer

(HACAX) - Get Report

Harbor Capital Appreciation, which returned 12.1%, more than made up for it. "The equity stuff looks like it's doing pretty well," concludes Roge.

The TSC Portfolio Planners series aims to provide general fund and investing information. Under no circumstances does the information in this column represent a recommendation to buy or sell funds or other securities.