(MONEY Magazine) – One needn't be a polyglot to appreciate the investment volte-face that's taken place since the Berlin Wall fell last Nov. 9. Over the first 10 months of 1989, indexes compiled by Morgan Stanley showed that U.S. stocks advanced 22% % vs. an 8% rise (in dollar terms) for European issues. In the following four months to March 1, share prices slumped 2% on Wall Street but shot up 13% in Europe -- Germany's 33% gain was tops among major markets -- as the dollar slid 8% on average across the Atlantic. (A sinking dollar inflates your returns earned overseas; a rising dollar deflates them.) While holders of U.S. blue chips may be aqua with envy, few have the time or conviction to become fluent in the fast-changing European markets that many analysts believe could set the pace for investment returns this decade. Since mid-November, for example, Morgan Stanley's influential chief strategist, Barton Biggs, has urged clients to invest heavily in Europe, particularly in Germany, which he predicts will be the Japan of the 1990s. ''Sure, these stocks have had a great move,'' notes Biggs, whose model portfolio is 55% invested in stocks, 29% of them European. ''But they've slept for years and are still very cheap.'' For most investors, the best way to play the new Europe is via a young but growing family of diversified (as opposed to single-country) open-end Eurofunds that recently have been as profitable in practice as they are sensible in theory. Ten such funds have one-year records through March 1, during which the group led all types of diversified portfolios with an 18% average gain vs. 11% for internationals and 12% for the typical stock fund. Moreover, the Euro 10 weathered January's and February's selling storms with a 2.6% loss vs. declines of 6% for internationals and 5% for stock funds overall.

This stellar performance precipitated a torrent of new cash into the three funds big enough ($25 million or more in assets) to qualify for MONEY's data base of widely available funds. In the past four months, net assets soared tenfold in top-ranked G.T. Europe Growth, tripled in Fidelity Europe and doubled in Merrill Lynch Eurofund. Predictably, Wall Street marketeers swiftly struck up a chorus of ''Send in the Clones'' -- new multicountry closed-end funds that, like their single-country cousins, sell a fixed number of shares that then trade on stock exchanges. The first to debut, Scudder New Europe, raised $200 million in February alone. Five lookalikes were in SEC registration at press time, according to Charles E. Simon & Co., a financial research firm in Washington, D.C.

What follows are critiques of several leading Eurofunds; see the table at left for additional data. We also profile one sleeper with heavy European exposure spotted among the globals, which can invest anywhere in the world. Common to most are core holdings of leading multinationals -- many of them German -- in machinery, power generation, telecommunications, transport, banking and other sectors that analysts expect to profit most from increased trade with Eastern Europe. So we focus on the side wagers on which the fund managers' relative performance is likely to hinge. G.T. Europe Growth (up 31.8% in the 12 months to March 1; 800-824-1580). Credit much of this fund's superior results to manager John Legat's resolve -- and his competitors' reluctance -- to load up on German blue chips immediately after the Berlin Wall's fall. The next day he boosted those holdings from 15% to 25% of his portfolio en route to 30% by the end of November. (German stocks represent 17% of Morgan Stanley's Europe index.) ''I've maintained that weighting by adding to my positions as money pours into the fund,'' says Legat, 27, the fund's skipper since its launch in 1985. ''Prices on the Frankfurt exchange are still fairly cheap at about five times cash flow vs. a U.S. multiple of about 7.5. And Germany's long-term growth prospects are much brighter.'' Legat's other big bets -- in oil services and shipping -- are dominated by Norwegian stocks, which make up 10% of his portfolio. He sees higher crude prices reviving exploration in North Sea fields off Norway, thereby enriching local rig companies he owns. (See page 59 for U.S. stocks that could benefit from this trend.) Legat also thinks rising world trade and shipping rates could make the fleets of Oslo-listed Laboremus and Vard attractive to larger rivals who scuttled modernization during the 1980s shipping glut and now face a shortage of vessels. Says he: ''Given today's high shipbuilding costs, the best way to expand capacity may be via the stock market.''

Fidelity Europe (up 24.3%; 800-544-8888). Manager Penny Dobkin in Boston didn't increase her commitment to German stocks until last January, when she enlarged the fund's stake from 13% to its current 18%. ''Though I was initially skeptical, I'm not worried I've missed that market's biggest move,'' says Dobkin, manager since the fund's inception in 1986. ''There's plenty of money to be made in Germany in the months and years ahead.'' Like Legat, she sees an upward trend in oil consumption and prices, which could spurt if production shortfalls continue to plague Russia's vast oil . patch. ''It's hard to find a major European oil stock that's not in the fund,'' quips Dobkin. Also prominent is her pub play: Allied-Lyons, Bass, Whitbread and other British brewers that own chains of public houses selling food as well as drink. She believes the pubs could be worth more than the parents' total market value to non-European food-and-beverage firms seeking a beachhead in the European Community single market planned for 1992. Yet at recent prices, she says, the stocks (8% of her fund) are buys solely on consistent earnings growth of 10% to 15% a year. Merrill Lynch Eurofund (up 18.2% for class A shares sold with a 6.5% load vs. 19.3% for the more popular class B shares subject to 12b-1 fees and a maximum 4% redemption charge; 800-637-3863). Manager Alan Albert, 43, in London says he was slow to see the Revolution of 1989's long-term significance to German stocks, now 21% of the fund. But so were many Japanese money managers, who he expects will be big buyers in Frankfurt soon after their new fiscal year begins April 1.

Elsewhere on the Continent, Albert is heavily invested in Dutch multiline insurers (like Nationale Nederlanden) and giant Swiss drugmakers Hoffmann La Roche, Sandoz and Ciba Geigy. In an effort to woo more foreign shareholders, both groups are adopting more revealing accounting methods; that should show off earnings and asset values he believes are far more fetching than most investors have imagined. He's finding bargain-priced British companies in trucking, building products and media -- three sectors he sees as ripe for corporate acquirers. European Emerging Companies (up 21.6%; 800-523-2578). Born in January 1989, this transatlantic offspring of the Over-the-Counter Securities Fund is run by the London office of Rockefeller & Co., the you-know-whose family money manager. Like OTC Securities, the fund focuses on what fund chairman Richard Smith calls ''pre-institutional' ' companies -- ones too small or closely held by insiders to warrant coverage by analysts at major brokerages. Example: West Germany's Pfaff, a sewing machine maker poised to expand in Eastern Europe, where it earned 25% of last year's $660 million in sales. Budding Rockefellers may prefer DFA Continental Small Company (up 38.3%; 1.5% load; 213-395-8005). This index fund, with $214 million in seven European markets, was created in 1988 for institutional clients of Dimensional Fund Advisors in Santa Monica. Small investors can buy shares through fee-only financial advisers who trade with discount broker Charles Schwab (commission: 1% on a $5,000 transaction). No-loads include Financial Strategic European (up 18.4%; 800-525-8085) and newly launched T. Rowe Price European Stock (800-638-5660). Oppenheimer Global (up 28.5%; 8.5% load; 800-525-7048). Don't be put off by this $631 million fund's load or label. For several years New York City manager Ken Oberman, who also runs Oppenheimer's Gold & Precious Minerals (see page 46), has bet the fund on Continental companies, primarily in Norway, the Netherlands, Finland and Germany. Lately, Eurostocks were about 70% of his holdings, vs. 20% for North America and only 6% for Japan. Oberman, 59, was initially drawn to European companies whose share prices seemed out of sync with their high profiles in his favorite investment themes: energy, capital goods, communications and health care. The payoff: the No. 1 ranking for globals over the one-year period to March 1. Says he: ''Europe will be the place to make money for many years to come.''

CHART: NOT AVAILABLE CREDIT: Rankings by Lipper Analytical Services CAPTION: The Euro 10's top five European funds have risen smartly since the Berlin Wall fell. Excluded here is DFA Continental Small Company, up 38.3% in the past 12 months but sold only through certain fee-only advisers.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: Money meter Back to bonds Investors deserted the flagging yields of money funds in February and flocked instead to municipal bond funds, according to our monthly survey of funds' net cash flow vs. the preceding month (gray arrows). Stock funds -- especially the hot Euro group -- also lured cash.

CHART: NOT AVAILABLE CREDIT: Source: Lipper Analytical Services CAPTION: DIVERSIFIED EQUITY FUNDS REBOUND BUT STILL SEE RED In February, investors saw a reversal of the slaughter endured by diversified stock funds in the first month of the year. While all except two of our top performers had losses in January, all but two posted gains in February. The biggest winner: Shearson's Small Cap, up 6.9%. Equity funds gained 1.7% on average for the month -- not bad, but not enough to get them into the black for 1990. The average fund still showed a 4.9% loss for 1990 to March 1.

CHART: NOT AVAILABLE CREDIT: Source: Lipper Analytical Services CAPTION: DESPITE SOME TARNISH, GOLD FUNDS LEAD SELECTED CATEGORIES

As inflation fears eased and the dollar strengthened, gold funds slid more than 7% on average in February. The carnage was most brutal at last month's top gold fund, Strategic Investments, which lost 18.5% in February -- more than any other equity fund. Still, over the past 12 months, gold funds dominated our selected categories, up 15.8% on average. Internationals, with a boost from Euro funds (see page 43), were in hot pursuit, returning 15%.

CHART: NOT AVAILABLE CREDIT: Source: Lipper Analytical Services CAPTION: GINNIE MAES BOUNCE BACK AS INTEREST RATES STABILIZE CAPTION: With interest rates leveling off after an upward blip earlier this year, Ginnie Mae funds climbed to the top of our list of 12-month fixed- income winners, up more than 11% on average. Bolstered by Benham's ultra- volatile zero-coupon entries, U.S. Government funds finished a close second with a 10.7% average gain. But travails in the trashy world of high-yield bonds pushed junk funds to the bottom of the heap with an average 7.6% loss for the year.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: Investor Choices THE MONEY RECOMMENDED FUNDS

CHART: NOT AVAILABLE CREDIT: Sources: Lipper Analytical Services and IBC/Donoghue's Money Fund Report CAPTION: BEST-PERFORMING MONEY-MARKET FUNDS