In the "season of giving," fund investors should consider just how charitably they feel toward their mutual funds.

If your fund portfolio gives you warm, comfortable feelings, you can finish the year confident that your monies are well positioned. If, however, you've got funds that have been disappointing, it's time to make a decision.

In the early 1990s, most experts suggested living with below-your-expectations performance for about three years before bailing out. These days, with improved performance-measurement tools and additional indicators, most experts now suggest allowing 18 months on the watch list, give or take six months for individual circumstances.

Studies show that investors tend to leave funds at the wrong times, with too many changes resulting in "buy high, sell low" returns. That's why investors must decide just how much leeway they'll accept.

There is no reason to stick with a fund whose yo-yo performance, mediocre returns or downright awful behavior is unacceptable. But it takes more than a few bad months to see that, which is why investors should focus on having a solid "sell discipline."

"How long you wait before giving up on a fund depends on the degree of underperformance and the reasons for it," says Russel Kinnel, director of fund research at Morningstar Inc. "You had good reasons for buying the fund, you should have good reasons for selling it, and that's usually not as simple as 'They've had a bad six months.'"

One reason to evaluate your funds now is that there are tax benefits to selling losers before the end of the year. If you have long-term gains in the fund, however, waiting until January to make a change will postpone taxes on those gains until 2007.

Think of your portfolio like an investment party, where each fund gets an invitation and you must decide whether to invite them back or kick them off the guest list. Make that decision by answering the following questions:

1. Has the fund changed shape, size or character?

Performance can sour for many reasons. A bad year may coincide with a change in managers, a rush of new assets or a hike in costs that cuts returns. When poor performance is aligned with a critical change in a fund's makeup, you must decide if the fund can still meet your needs.

2. Overall, has the fund lived up to my expectations?

One bad stretch should not turn you off to a fund, particularly if it has delivered in the past. The better the fund has performed for you -- and relative to its peers -- the more patience it has earned.

If the fund has not inspired your confidence and patience, take that as a sign.

3. What does management say about performance?

If a fund has been testing your patience, read up on how the manager justifies the ride or call the fund for an explanation of what happened. Make sure that the current reasoning is sound and that you come away believing a rebound is in order.

Most of us want a fund that's consistent, not jumping around from one investment style to the next. When management loses confidence in its discipline, that's a sign of trouble.

4. Have my objectives for the money changed?

Every fund should have a role in your portfolio, so think about the purpose of the investment and review performance by looking first at your own needs.

Over time, your objectives may change, particularly as you near investment goals. The idea is to reach those goals, not to hang on to the funds that got you there. If you bought a growth fund but now need safety and income, you may have a bad fit.

5. Does my portfolio need a change?

Even if your objectives remained steady and you believe the fund can rebound, look at the big picture to see whether your overall investment strategy would benefit from a change. If you need to re-allocate and have a fund that prompts you to raise these questions, this might be a good time to rebuild your portfolio.

6. Would I buy the fund again today? Do I prefer an alternative?

This is always the key question, and you should keep a list of why you first buy a fund in order to answer this question later. When the answer is "No," it's time to make sure that charity begins at home; stop giving your money to a manager who has stopped serving you and find something better.