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Question - I've lately been following the phenomenal rise of Microsoft, including its new Chicago (code name for Windows 4.0) software. Is it time to buy?

Answer - Investing in this impressive company makes even more sense if you keep the faith that brilliant founder and chairman Bill Gates will spend a long and healthy life at its helm.

Buy shares of Microsoft Corp. (around $55 a share, over the counter), largest independent maker of personal computer software, because that Windows upgrade product you mention will be a powerful contributer to earnings growth next spring, advised Stephen McClellan, first vice president with Merrill Lynch & Co.

In addition, Microsoft is a leader in the emerging CD-ROM home consumer software market, expected to be a huge profit center in the future. Its existing software applications also continue strong. Proof of that includes its Excel spreadsheet overtaking Lotus 1-2-3 and its Word software for word-processing outselling WordPerfect.

A remarkable 23 percent annual growth rate is expected for Microsoft over the next five years.

"Microsoft has become a juggernaut in the industry, and, so long as its creative, aggressive and focused chairman Gates is there, it will stay on course," said McClellan, who noted that a recent antitrust settlement with the U.S. Justice Department was "stunningly" favorable to Microsoft, requiring only the most minor of pricing concessions.

Quesetion - I was employed at Time Inc. several years ago and enrolled in its stock purchase program. When Time's subsidiary Temple-Inland went on its own, I received shares, which have split several times. Are they worth keeping?

Answer - They remain timely.

But while shares of paper and container company Temple-Inland Inc. (around $50, New York Stock Exchange) are worth holding, they're expensive for purchase because of Wall Street's growing optimism about the firm's prospects, advised George Adler, managing director with Smith Barney Shearson.

The container and containerboard business, putting a difficult 1993 of low demand behind it, is enjoying an improved market that has permitted three recent product price increases. Earnings in that area are expected to double this year, though prices still remain below peak levels.

Temple-Inland also makes building products and has operations in the savings and loan, mortgage banking, real estate development and insurance businesses. Building products may have reached their peak, and, with higher interest rates, mortgage lending has slowed.

"This stock has anticipated a great deal of improvement already, and I don't expect it to outperform the overall market," concluded Adler.

Question - We're concerned about the performance of our shares of Vanguard/Wellesley Income Fund. We're retired and income is our first need.

Answer - Your concern is understandable. This has been a difficult period for income funds, even though this one's doing better than two-thirds of its peers.

The giant $6.1 billion Vanguard/Wellesley Income Fund is up less than 1 percent over the past 12 months, with a more commendable three-year average annual return of 10.72 percent.

"If your goal is to be in an income fund, this is a good offering," explained Paul Reis, analyst with Morningstar Inc., noting that 60 percent of the portfolio is in bonds and 40 percent in stocks. "However, it's going to have a little bit of a problem with its net asset value if interest rates keep going up."