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As Rally Continues Two Strong Funds Say, 'No Mas'

Plus, Vanguard adds a board member, American Century news, and more.

Morningstar Analysts, 10/05/2009

Morningstar's fund analysts cover 2,000 mutual funds. Their full analyst reports, including Stewardship Grades, are available in Morningstar Principia Mutual Funds Advanced and Morningstar Advisor Workstation Office Edition.

Buffalo Small Cap BUFSX, with $2.4 billion in assets, will officially close to new investors on Oct. 5. The fund is up 37.5% for the year through Sept. 30, topping 83% of its peers, and is one of the top small-growth performers over trailing periods. Its asset base has approximately doubled since the end of 2008. In addition, FMI Common Stock FMIMX announced this week that it will close to new investors effective Dec. 31. The mid-cap blend fund, which is up 32.3% for the year to date and is also a top performer over trailing periods, had reopened in February 2008 after being closed for four years. As of Sept. 29, assets in the fund have swelled to $876.5 million after ending 2008 at about $429 million.

Out of the 60-plus funds that have been shuttered so far this year, FMI Common Stock is the only mid-cap blend offering to close. Only one of Buffalo Small Cap's small-growth peers has also closed its doors: Dreyfus Discovery FDISX. This offering closed in early February and stood at $122.1 million in assets as of Sept. 29. It's up 17.6% for the year to date, lagging most of its peers.

Ballooning assets haven't been a problem for most equity funds this year following the global downturn. According to Morningstar fund flow data, the vast majority of recent inflows has gone to fixed-income funds, not equity funds. This year, through Aug. 31, U.S. equity funds took in $8.01 billion, while $209.1 billion went into taxable and municipal-bond funds.

Vanguard Adds New Board Member
This week, F. Joseph Loughrey was named to the board of directors of The Vanguard Group and to the board of trustees of each of Vanguard's mutual funds. Loughrey is the former president and chief operating officer of Cummins Inc. CMI. He had also served as vice chairman of the Cummins board of directors before stepping down in April 2009. Loughrey joins Vanguard's board following the departure of longtime board member J. Lawrence Wilson, who stepped down earlier this year. Wilson had been on the board since 1985.

American Century Adjusts Names and Strategies and Eliminates B Shares
For several years now, small-cap siblings American Century New Opportunities TWNOX and American Century New Opportunities II ANOAX have been essentially identical portfolios with the same strategy and managers, Stafford Southwick and Matt Ferretti. Now the firm is differentiating them--a bit. As of Dec. 1, American Century New Opportunities will keep its name but adjust its strategy to focus on both small- and mid-cap stocks rather than just small caps. American Century New Opportunities II will be called American Century Small Cap Growth and will continue to focus on small-growth stocks. The funds will continue to be managed by Southwick and Ferretti.

In other firm news, following the lead of many other fund shops, American Century is discontinuing the B shares of those funds that offered them, with a few exceptions. This change is also effective Dec. 1.

Summary Prospectuses Starting to Roll Out
American Century also announced that it will make summary prospectuses available for five funds on Oct. 1. By Aug. 1, 2010, all American Century funds will have a summary prospectus. The fund firm Amana has summary prospectuses for their three funds, Amana Trust Income AMANX, Amana Growth AMAGX, and the new Amana Developing World.

The summary prospectus, a three- to four-page reader-friendly overview of a fund's investment objectives, was approved by the SEC last year. Funds must still offer the traditional long-form prospectus.

Jess Tan's short tenure as manager of Fidelity Southeast Asia FSEAX has ended. Colin Chickles has been named portfolio manager of the fund. He has extensive experience following emerging markets, having served as analyst in this space since joining Fidelity in 1996. He has less experience managing portfolios. He comanaged Fidelity Series Emerging Markets FEMSX from 2008 through Aug. 2009. Tan will continue to manage retail and institutional equity offerings available to overseas investors.

Klaus Bockstaller replaces Tom Rodwell on the portfolio management team of Forward Emerging Markets PGERX.

Trustees of John Hancock2 Optimized Value JOVAX have voted to liquidate the fund by Dec.11.

Beginning Dec. 1, Class B shares of Virtus Mutual Funds will no longer be sold, and existing Class B shares will be converted to Class A shares.

All 12 of the Old Mutual Target Date Funds will be liquidated on Nov. 9. These funds never really caught the attention of investors, as all but one fund had less than $400,000 in assets.

Scott Opsal is no longer a portfolio manager of the MEMBERS Mutual Funds. David Hottmann will replace Opsal as co-portfolio manager of MEMBERS Conservative Allocation MCNAX, MEMBERS Moderate Allocation MMDAX, and MEMBERS Aggressive Allocation MAGSX. John Brown will remain as the sole portfolio manager of MEMBERS Large Cap Value MGWAX. Additionally, MEMBERS Small Cap Growth MASGX will merge into MEMBERS Small Cap Value MASVX on Nov. 30.

Detlev Schlichter is off the portfolio management team of AssetMark Core Plus Fixed Income AFCFX, which is subadvised by Western Asset Management Company.

Pending the approval of shareholders, Morgan Stanley Natural Resource Development NREAX will merge into Morgan Stanley Commodities Alpha COAAX.

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