(MONEY Magazine) – With nearly twice as many mutual funds as there are stocks on the New York Stock Exchange, you'd think there'd be a fund to satisfy every need. Not always. Sometimes close cousins of mutual funds -- or even direct investments in stocks and bonds -- serve you better.

If you want to own Treasuries It often makes more sense to buy Treasuries directly rather than through a fund. Since there's no credit risk, you don't need a fund's diversification. And since the investments are, quite literally, commodities, you don't need a pro to select them. As Fidelity Magellan's former maestro Peter Lynch writes in his bestseller Beating the Street (Simon & Schuster, $23), ''There's no point paying Yo Yo Ma to play a radio.'' You can buy Treasury bonds and notes without sales charges directly from the Federal Reserve. For an application, write the U.S. Treasury, Bureau of the Public Debt, Washington, D.C. 20239 or call the Bureau at 202-874-4000, ext. 232.

If you plan to reinvest your interest, however, Treasuries can be a hassle. For example, these days $10,000 worth of three-year notes generates just $218 every six months -- too little to reinvest in more notes. One solution is to go with zero-coupon Treasuries, which make no regular interest payments. You buy zeros for a price that now ranges from 10% to 90% of their face value, depending on the bonds' maturity. Your return is the difference between your purchase price and the face value, paid at maturity. Zeros are especially useful if you want to put your hands on a specific amount at a point in the future. If you expect to need $20,000 for your 14-year-old's first-year college bills, for example, you could invest $16,260 today for $20,000 worth of zeros maturing in four years. You buy zeros from a broker, but you can minimize transaction costs -- and avoid worry over the bonds' volatility -- by holding them to maturity.

If you're investing in illiquid foreign markets If you want to put your money in a particular country, like Indonesia or Taiwan, you'll find the widest range of choices among the hybrid investments known as closed-end funds. Like an ordinary mutual fund, a closed-end fund owns a bundle of individual securities, but like a corporation, it issues a fixed number of shares that trade on exchanges like stocks. Depending on buyers' eagerness, a closed-end can trade at a premium (a price above the portfolio's net asset value) or a discount (below NAV). That adds extra volatility to funds whose narrow focus makes them risky to begin with. Since Jan. 1, 1992, for example, an investor who put $1,000 in the Argentina Fund would have seen his money dwindle to $686 as the fund not only lost 12% in NAV but also suffered a drop in premium from 36% to 6%. Still, if you want to venture into developing lands, closed-end funds are the right vehicle. Unlike open-end funds, closed-ends don't have to contend with a daily flow of fresh cash and redemptions, which can swamp a small, illiquid market. Says Ken Gregory, editor of the No-Load Fund Analyst, ''If I had to choose between an open-end and a closed-end emerging-markets fund with / equally competent managers, I'd buy the closed-end, so long as it wasn't at a premium.'' One fund Gregory likes: Latin America Discovery Fund (New York Stock Exchange; $14.50), recently trading at a 9.5% discount.

If you're in a high tax bracket and saving for retirement For long-term investors, variable annuities combine the performance of funds with the tax breaks of life insurance. Sold by life insurers and a few mutual fund groups, variables are less like single funds than mini-families of six to eight portfolios. The main appeal is tax deferral: Because you don't pay taxes on your investment earnings until you withdraw your money, your capital builds faster than it would in taxable funds. Unfortunately, you may have to wait as long as 22 years for tax-deferred compounding to make up for variables' crushing expenses. The annuities' negligible life insurance component -- which promises that your heirs will get back at least as much as you put in -- costs between 0.55% and 1.5% a year. That's on top of mutual-fund-like management fees. In addition, if you withdraw money in the first six or seven years you may owe a back-end charge. And if you take money out before age 59 1/2, you'll have to pay Uncle Sam a tax penalty of 10%, just as you would with an IRA. A handful of no-load fund companies, including Scudder and Vanguard, have introduced relatively low-cost annuities. The least expensive by far is the Vanguard Variable Annuity Plan. Including insurance fees, the annual costs on its Equity Index Portfolio run just 0.87%, only about 0.3 points more than comparable mutual funds. But even Vanguard's variable works only for long-term investors: You'd still have to invest for eight to 10 years before the annuity would give you a higher after-tax return than comparable Vanguard mutual funds.

If you're skilled at picking individual stocks Funds' inherent diversification and professional management limit your risk, but they also cut your chances of making a killing. If you have expertise in a particular industry, or if you simply have a keen eye for promising products, you may be able to outpick the pros. Naturally, you have to be willing to spend time on research, and you should have $15,000 or more to buy a minimally diversified portfolio of at least 10 issues. But if you think you've got what it takes, you might draw inspiration from Minneapolis probation officer Lawson Brown, who traded in his funds in 1991 for a portfolio that now holds 15 + stocks. He finds them by scrutinizing financial publications and putting likely prospects through as many as 50 mathematical screens. ''I've beaten most mutual fund managers so far,'' says Brown, ''and I think I can keep it up.'' -- B.S.