October 5, 1989

LEAD: The three best-performing mutual funds in the third quarter benefited from owning big blocks of airline stocks involved in takeovers and substantial stakes in Fannie Mae, Nike and a handful of Japanese insurance companies, according to a survey released yesterday.

LEAD: U S West Inc., the regional Bell telephone company serving the Rocky Mountain states, announced plans yesterday to more than double its investments in financial services businesses by acquiring Financial Security Assurance Holdings Ltd., the largest insurer of corporate bonds.

LEAD: IN design and home furnishings, Philadelphia has been thought of as a conservative city, notable mostly for past achievements in cabinetmaking. But now there is a new Philadelphia story. Fueled by the energy and enthusiasm of a new generation of entrepreneurs, this city has become an exciting place to shop for contemporary home furnishings as well as antiques.

LEAD: The agency that administers drug abuse programs in New York has been so eager to expand treatment in the state that it has spent money haphazardly and encouraged fraud, a report released today by Gov. Mario M. Cuomo's office said.

LEAD: The White House considered military support for the Panamanian uprising but ruled it out because it was uneasy with the rebel leadership, fearful of a trap and uncertain whether Gen. Manuel Antonio Noriega had been captured, Administration officials said today.