Big-cap stocks still rule and Europe is red hot.

Those are the stock mutual fund facts of life in a quirky 1998 in which the average funds posted an 11.75 percent gain for the first half despite a fractional second-quarter loss tied to the Asian economic fallout."If you analyze the first six months of the year, it was still an above-average return," observed A. Michael Lipper, president of the Lipper Analytical Services fund-tracking firm. "It seems as though the market will simply go up until there's little money coming in."

It's been an excellent time for index funds, led by one that specializes in buying futures contracts tied to them.

"We're a leveraged index fund with no stock-picking or personal opinions whatsoever in our formula, which is designed to have twice the performance of the Nasdaq 100 on a day-to-day basis," explained Louis Mayberg, president and portfolio manager of Ultra OTC ProFund, up 74.16 per-cent in the first half to lead the pack and up 17.04 percent in the second quarter to notch fourth place. "We do a good job and, of course, the Nasdaq has been up."

Market sentiment right now is overwhelmingly bullish, noted Mayberg, who prefers long-term investors, rather than traders, use this and other funds his company offers.

Investing heavily in Europe at a time of telecommunications deregulation has provided excellent opportunities for wireless communications, boosting the Montgomery Global Communications Fund, up 46.97 percent in the first half to rank second overall. Stock of COLT Telecom Group and Orange, both in the United Kingdom, were hot performers, along with STET Hellas, a recent initial public offering in Greece.

"You won't find any telecom operators in Southeast Asia in our portfolio currently, for we're concerned that operators in places like the Philippines or Malaysia don't have the capital they need to buy their equipment in U.S. dollars," pointed out Stephen Parlett, analyst with Montgomery Global Communications Fund. "We're seeing more opportunities in Europe because of many less efficiently-covered companies to go after there."

The best-performing stock funds available to individual investors in the first half of 1998, according to Lipper, were:

Ultra OTC ProFund, Bethesda, Md.; $50 million in assets; "no-load" (no initial sales charge); $15,000 minimum initial investment; up 74.16 percent.

Montgomery Global Communications Fund, San Francisco; $253 million; Class R shares are no-load; $1,000 minimum; up 46.97 percent.

Orbitex Info-Tech & Communications Fund, New York; $2.5 million; 5.75 percent load; $2,500 minimum; up 45.82 percent.

Transamerica Premier Aggressive Growth Fund-Investor Shares, Los Angeles; $36 million; no-load; $1,000 minimum; up 45.40 percent.

Munder NetNet Fund, Birmingham, Mich.; $13 million; no-load; $1,000 minimum; up 45.32 percent.

Numbers crunchers did well in the second quarter. For example, small- to mid-cap stocks chosen quantitatively based on earnings and price momentum provided a kick for the Grand Prix fund, which was up 21.77 percent. America Online, Capital One Financial and McKesson were powerhouse stocks for this fund with a high turnover rate of 200 percent annually.

"If you wanted a core holding in your portfolio, it should be an S&P 500 fund, with our fund then used in addition to add value," said Bob Zuccaro, portfolio manager of the Grand Prix Fund, which has one-third of its portfolio in technology and one-quarter in finance. "Our two big concerns are Asia, which the market will probably continue to shrug off, and the Year 2000 problem, which so far hasn't had an impact."

The restructuring and shareholder value movements among German companies aided the Deutsche German Equity Fund, up 18.77 percent in the second quarter. Overachievers included shares of software maker SAP, mobile phone company Mannesman, carmakers Volkswagen and Daimler-Benz, insurance firms Allianz Lebensversiche and Muenchener Reuckvers, and banking leader Deutsche Bank.

"Company earnings have been increasing the past two years and expectations are very good, especially drawing money from big institutional investors and from abroad," said Matthias Butlaff, spokesman for Deutsche German Equity Fund.

The top-performing second-quarter stock funds available to individuals were:

IAI Value Fund, Minneapolis; $30 million; no-load; $5,000 minimum; up 24.80 percent.

Grand Prix Fund, Wilton, Conn.; $1.4 million; no-load; $5,000 minimum; up 21.77 percent.

Deutsche German Equity Fund, Pittsburgh; $1 million; Class A shares have 5.5 percent load; $5,000 minimum; up 18.07 percent.

Ultra OTC ProFund, Bethesda, Md.; $50 million; no-load; $15,000 minimum; up 17.04 percent.

Transamerica Premier Small Company Fund, Los Angeles; $26 million; no-load; $1,000 minimum; up 16.79 percent.

The big jump in the performance of IAI Value Fund was tied to a stake it held in Pathnet Inc., which filed to sell shares to the public, according to the Morningstar Mutual Funds investment advisory.