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Vanguard Plans New International Index Fund

Plus, Legg Mason's new A shares, Neuberger Berman sale, and more.

Morningstar Analysts, 12/15/2008

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.

Vanguard is planning to add a new small-cap international index fund to its lineup. The Vanguard FTSE All-World ex-US Small-Cap Index Fund will track the index listed in its title, which follows more than 3,300 stocks in 47 countries. Estimated expenses for the retail share class are 0.60% and will require a minimum investment of $3,000. ETF shares are also available at a cost of 0.38%. This will be Vanguard's first small-cap international index fund. It is expected to launch in early 2009.

Legg Mason Adds A Shares
Investors will soon have a way to avoid the high fees of several of the Legg Mason Primary funds. The firm is planning to introduce cheaper A shares into its Primary Shares fund lineup in February 2009 (Legg Mason Partners funds already offer A shares). Exact expense ratios are not finalized, but the new share class should provide a cost break for funds like Legg Mason International Equity LMGEX and Legg Mason American Leading Companies LMALX. Hefty expenses (including a 1% 12b-1 fee) have been a steep hurdle for several of these funds to overcome, and lower price tags could give some of the struggling funds a boost. The Primary Shares will be renamed C shares.

Neuberger Berman Buys Itself
After months of speculation, the future of Neuberger Berman (the asset-management arm of Lehman Brothers) has finally been decided. A group of senior executives and portfolio managers will acquire a majority interest in the firm, with the deal expected to close in early 2009. The transition should not directly affect fund shareholders, as the fund family's lineup and investment approaches are not expected to change. Management's stake in the firm should give them incentive to stick around for the long haul.

The transaction comes on the heels of several failed deals, including one involving Bain Capital Partners, LLC and Hellman & Friedman, LLC.

More Manager Mayhem
PIMCO has said goodbye to municipal-bond fund manager Mark McCray. Several of his funds have tanked this year, notably PIMCO Municipal Bond PMLAX, which is down more than 23% for the year to date through Dec. 10. John Cummings will take over that fund as well as PIMCO New York Municipal PNYAX and PIMCO Short-Duration Municipal Income PSDAX. Cummings has a mixed record at his other charges, including PIMCO California Intermediate Municipal PCMBX, PIMCO California Short-Duration Municipal Income PCDAX, and PIMCO High Yield Municipal PYMAX.PAGEBREAK

DWS has also shaken up the management teams at several lackluster funds. Robert Janis is out as lead manager of DWS Small Cap Growth SSDAX, DWS Mid Cap Growth SMCAX, and DWS Micro Cap SMFAX. The three funds have performed near the bottom of their respective categories during Janis' four-and-a-half year tenure. Joseph Axtell, comanager of the three funds since late 2006, will be joined by Jeffrey Saeger, a 12-year veteran of the firm, and Rafaelina Lee, a former analyst.

Tara Kenney, Stephen Russell, and Rainer Vermehren have replaced Terrence Gray at the middling DWS Latin America Equity SLANX. Kenney previously comanaged the fund for a 10-year stretch ended in 2006.

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