NEW YORK (CNN/Money) - Brace yourselves, 401(k) investors. After two miserable years, you're in for at least a little good news this quarter.

Seven of the 10 largest mutual funds -- the bread and butter of 401(k) plans -- are beating the S&P 500 this year through March 22, according to Morningstar.

And early signs show that investors are continuing to make 401(k) contributions despite the market downturn and the fallout from Enron.

"Based on anecdotal evidence, we're seeing that 401(k) investors are staying the course," said Sarah Friedell, a spokeswoman from Fidelity, the No. 1 provider of 401(k) plans in the United States. Fidelity has $412 billion in assets under management, with 7.8 million participants.

To be sure, 401(k) investors have had a rough ride on Wall Street. The plans have delivered dismal returns these past two years.

In 2000, for example, 401(k)s lost money for the first time in their 20-year history, according to a study by Cerulli Associates. The average 401(k) balance declined to $41,919 in 2000 from $46,740 in 1999. Assets fell by a total of $72 billion. Figures for 2001 won't be available until late spring, but evidence points to another dog of a year.

TOP 401(K) FUNDS       • American Funds Washington Mutual , up 3.3 percent • Fidelity Contrafund, up 2.3 percent • American Funds Investment Company of America, up 2 percent • American Funds New Prospective, up 1.8 percent • American Funds EuroPacific Growth, up 1.3 percent • Fidelity Growth & Income , up 0.9 percent • Vanguard 500 Index, up 0.3 percent • PIMCO Total Return Instl, up 0.2 percent • American Funds Growth Fund of America, down 0.5 percent • Fidelity Magellan, down 1.2 percent • Source: Morningstar (Data as of 3/22)

We're a long way from getting hard numbers for the first quarter of 2002, but the performance of the nation's largest mutual funds offers a glimpse into what you might see on your quarterly performance statement.

At the top of the list is American Funds Washington Mutual, a large value fund with $49.1 billion in assets that likes to invest in dividend-paying stocks. The fund is up 3.3 percent so far this year, compared to a gain of 0.3 percent for the S&P 500, according to Morningstar.

Another top performer is American Funds Investment Company of America, also a large value offering, which invests in about 200 multinationals. The fund, with $53.9 billion in assets, is up about 2 percent.

The other extreme isn't so pretty. The worst performer of the 10 largest funds is Fidelity's flagship Magellan, down 1.2 percent this year. One of the main culprits of its poor showing is its heavy weighting in Tyco (TYC: Research, Estimates), which is off 41 percent this year. The stock, battling concerns about financial practices, is the No. 4 holding by manager Bob Stansky. The fund's assets once topped $100 billion, but since the market downturn totals around $75 billion.

The lone bond fund on the list, PIMCO Total Return, is up 0.2 percent. The fund, with $35.3 billion in assets, got stung by a recent spike in long-term bond rates, Morningstar said. Still, manager Bill Gross is considered to be the best bond fund manager on Wall Street and has a solid long-term record. His fund is in the top 7 percent of its category. (Click here to read more about Gross's comments on GE's debt.)

If anything, 401(k) investors have been taking a wait-and-see approach with their plans, according to several retirement analysts. They aren't liquidating their accounts, but they aren't exactly taking a proactive approach to their savings, either.

"My fear is a lot of people are burying their heads in the sand, and they don't even open their statements," said Ted Benna, president of the 401(k) Association, who is credited with creating the 401(k) back in 1981. "Clearly, it's been a sobering time."

Nevin Adams, executive editor of plansponsor.com, which tracks 401(k) participation levels, said investors are asking more questions of plan sponsors, but aren't making changes in their accounts. "They're letting the market reallocate their money. They're not doing anything. They're falling asleep at the switch," he said.

Morningstar analyst Russ Kinnel said investors might not be doing much these days because the biggest funds are holding their own on Wall Street. A lot of the biggest funds are in a good position to weather tough times because they are more diversified, have lower costs and have a deep research bench. "They may have been in a pretty good position to weather the storm."

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What should you do? It's less painful to shove your next quarterly statement in a drawer, but grit your teeth and take a look.

Make sure you have the right asset allocation and that your money is spread between large-, mid- and small-cap stocks, with some growth and some value holdings. Depending on your age and risk tolerance, you'll want to throw some international stocks and bonds into the mix, as well. (To help build the right portfolio, click here for CNN/Money's asset allocator.)

Another thing to keep in mind: Many of the biggest funds, such as Fidelity Contrafund, have lightened up dramatically on tech, Kinnel said. Check out your overall weighting so you don't miss out on the next tech rally.