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Fund Times

Fund Times: Fidelity to Close Japan Smaller Companies

Plus, Preferred to merge funds with T. Rowe Price, more.

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Fidelity Investments announced that it is closing Fidelity Japan Smaller Companies (FJSCX) to new accounts as of the close of business on Feb. 28, 2006.

"This fund has turned in three straight years of robust investment returns, which has led to strengthening cash inflows and a growing asset base," said Eric M. Wetlaufer, chief investment officer overseeing international investments. "For example, Japan Smaller Company's assets stood at more than $2.3 billion at the end of January, up from $1.3 billion at the end of 2004, which is a significant increase given the fund's investment focus on smaller companies. That recent growth, combined with the potential we see for strong inflows in the months ahead, led us to decide that it's in the best interests of the fund's shareholders to close it to new investors. We believe that limiting new purchases of the fund will help stabilize cash flows and will benefit (manager Kenichi Mizushita) in his management of this fund at this time."

Investors already in the fund will still be able to make new investments after Feb. 28.

It is easy to see why the fund has been a big draw, as it has returned an annualized 35% over the trailing three years. It is also encouraging to see Fidelity close the fund at a modest asset base. In the past, Fidelity has temporarily closed small-cap funds faced with a crush of inflows but has reopened them after flows slowed down. That scenario is likely to take place again here.

Preferred to Merge Funds with T. Rowe Price
Preferred Funds announced that its funds will merge into T. Rowe Price funds on June 19, 2006. Most of the mergers involve similar funds, such as Preferred International Growth (PFIGX) merging into  T. Rowe Price International Stock (PRITX) and Preferred Mid Cap Growth (PFMGX) merging into  T. Rowe Price Mid-Cap Growth (RPMGX). Most of the Preferred funds have a few hundred million dollars, so they shouldn't cause asset bloat problems at T. Rowe Price.

Dreyfus Launches Global Long-Short Fund
Following recent announcements by Janus and American Century, Dreyfus, which managed a market-neutral fund that was later killed off due to poor returns, is getting back in the long-short fund game.

Dreyfus Premier Global Tactical Advantage Fund looks like it can use pretty much every tool in the toolbox. According to the prospectus, the fund will invest in "global equity, bond and currency markets, and in fixed-income securities.� Investment exposure to global equity, bond and currency markets will be achieved primarily through long and short positions in futures, options or, in the case of currencies, forward contracts, which should enable the fund's portfolio managers to implement investment decisions quickly and cost-effectively."

"The fund's portfolio managers seek to deliver value added excess returns ('alpha') by applying a systematic, quantitative investment approach designed to identify and exploit relative misvaluations across and within global capital markets."

American Century Hires Keegan for Bond Group
American Century has hired Jim Keegan to serve as senior vice president and senior portfolio manager. Keegan has overall responsibility for the taxable-credit team, with all credit portfolio managers and analysts reporting to him. In addition, he will manage the portfolios of American Century Diversified Bond (ADFIX), American Century Balanced (TWBIX), and American Century High-Yield (ABHIX).

Keegan was chief investment officer of Westmoreland Capital Management in New York, where he built and led the firm's asset management group.

Russel Kinnel has a position in the following securities mentioned above: RPMGX. Find out about Morningstar’s editorial policies.