While the number of funds accepting small initial investments is shrinking, many still bend the rules to accommodate young investors -- who could be the wealthy adults of the future.

Because minimum investments of $5,000 or even $1,000 are beyond the reach of many new investors, one of the first tasks facing some market neophytes is to find a fund with a lower minimum requirement. After all, what use is a high-performance fund to a young investor, or anyone with small pockets, if they can't afford the minimum investment?

Some big fund groups, such as American Century Investments and Janus Capital Corp., have raised minimum purchase requirements to reduce the burden of small accounts whose fees don't cover the cost of opening an account, preparing quarterly statements and postage.

"Richer investors were subsidizing the smaller account holders, so there was a move against low minimums," said Lou Harvey, a fund industry analyst with Dalbar Inc. in Boston.

Of the 2,266 equity funds investing in the U.S. market, only 180 have a minimum investment of $250 or less, according to the mutual fund research company Morningstar Inc.

For the truly dedicated investor, though, there are more options. Many funds accept new customers with small initial investments if the investor agrees to make additional purchases, even as small as $25, on a regular schedule.

While children are typically not allowed to own fund shares directly, they can invest through a custodial account opened with an adult.

Stein Roe & Farnham, with its $708 million Young Investor Fund, does more than just accommodate children with low minimum investments. It provides newsletters and games to teach the fundamentals of investing and the economy, and it created a portfolio of companies such as Nike Inc., McDonald's Corp. and Walt Disney Co. that young investors will recognize. That has been a winning formula. Over the past 12 months, the fund's total return of 39 percent exceeded the performance of the Standard & Poor's 500-stock index, a benchmark most fund managers fail to match.

About three-quarters of the Young Investor Fund's 135,000 accounts are held by custodians. The fund requires a minimum of $100 if at least $50 is invested monthly, or $1,000 for a custodial account if no automatic investment plan is established.

For an automatic plan, the investor must have a banking account from which money can be transferred. Stein Roe will charge a quarterly fee of $5 if the automatic plan is permanently stopped and the $1,000 minimum hasn't been reached.

"You can use $100 in different ways, but the best is to put it in a mutual fund -- then in the long run it could double or triple," said Candice Farr, a 13-year-old investor who lives in Bakersfield, Calif.

"I've made $2,000 profit in a year; I didn't think you could make that much," said Farr, whose gains stem from an initial $5,000 stake in the Young Investors Fund. "They send you different fun things to do with investing, and that's got me involved."

Neuberger & Berman's Partners Fund is another fund with a strong performance the past year and a willingness to accept smaller accounts for children. The $3.8 billion fund will reduce its regular $1,000 minimum to $250 for custodial accounts.

"It's performed well and has managers with good backgrounds in well-established funds," said Tim Medley, a Jackson, Miss., investment adviser. The fund's total return for the past 12 months is 31 percent.

Apart from setting lower minimums for children, some fund groups see benefits from setting lower minimums for all new customers.

"We found that by dropping the minimum from $1,000 to $500 we picked up accounts from people who would normally use checking or saving accounts," said Peter Morris, who manages the $463 million Homestead Value Fund for Arlington-based RE Advisers. Even the $500 will be waived if the investor agrees to a schedule of additional purchases.

The seven-year-old fund, which invests in mid-capitalization companies, performed considerably better than a checking or savings account in the past 12 months, with a total return of 38 percent.

"We are trying to attract young people with the low minimums, as well as retired people who are using the fund to continue their investment programs," Morris said.

The world's biggest pension fund, Teachers Insurance & Annuity Association-College Retirement Equities Fund, with $224 billion under management, is also accepting small investments as it opens up its mutual funds to outside investors. In the past, TIAA-CREF funds were available only to educators. The funds have a minimum investment of $250, or just $25 if at least that much is added to the fund quarterly.

The American Funds Group's Fundamental Investors Fund is another strong performer among funds with an investment requirement of only $250. "Virtually anyone who can afford a fund can afford this one," said Russ Kinnel, a Morningstar analyst. Fundamental Investors Fund returned 32 percent over the past year. Once young investors are established in a fund, the same advice applies to them as to larger, older investors -- start adding to the fund on a regular schedule, whether markets are up or down.

"Any age is good," teenager Farr said. "My cousin is about 6 years old and he's got investments."