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Fund Times: Vanguard Announces Noteworthy Distributions

Plus: a prominent small-cap fund to reopen, a manager shuffle, and more.

Morningstar Analysts, 12/04/2006

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

Vanguard has announced projected 2006 distributions for several funds. Leading the pack is Vanguard International Growth VWIGX, which will make a sizable distribution of about 8% of the fund's NAV as of the end of November. (This percentage may change slightly by the time the distribution is made in late December.)

Shareholders of Vanguard Capital Opportunity VHCOX, Primecap VPMCX, Explorer VEXPX, and Windsor VWNDX should also plan for significant distributions before year-end. Notably, however, the announcement included only one Vanguard index fund--the REIT Index Fund VGSIX. (Click here to see Vanguard's most recent distribution announcement.)

FBR to Reopen Small-Cap Fund
FBR recently announced it will reopen FBR Small Cap FBRVX on Jan. 2. According to FBR, manager Chuck Akre is seeing better investment opportunities since the fund closed in late 2004. At the time, Akre held close to 35% of assets in cash, but that ratio has since dwindled to less than 5%.

The fund is nearing $1 billion in assets, but if history is a guide, FBR may close the fund again. It previously closed the fund because Akre found too few compelling investment opportunities for the large inflows of cash the fund saw in 2003 and 2004.

MFS Adjusts Manager Lineup for Several Growth Funds
MFS Investors Growth Stock MIGFX and MFS Growth Opportunities MGOFX comanager Irfan Ali left Boston-based MFS Investment Management. Maureen Pettirossi, a seasoned financials analyst but newer comanager, will remain as the lone manager of Growth Opportunities. MFS Investors Growth Stock will retain both Pettirossi and long-tenured manager Stephen Pesek at the helm, and they will be joined by Jeff Constantino, who currently manages MFS Capital Opportunities MCOFX.

American Century Launches Three New Funds
American Century Investments launched three new funds. American Century Short Duration Bond and American Century Core Plus Bond will be managed by the firm's fixed-income team. Core Plus Bond will invest at least 65% of assets in the debt of investment-grade issuers, though it has the flexibility to invest up to 35% in high-yield bonds as well. Short Duration Bond will invest assets in investment-grade securities only, and its duration--a measure of interest rate sensitivity--will remain lower than three years.

The firm's quantitative group will run American Century International Core Equity Fund. The group will use computer models to select the most attractive stocks from the 2,500 largest companies outside the U.S. and Canada.

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