(MONEY Magazine) – MERCURY'S NEW MAN

Fund manager Warren Lammert is leaving Janus Mercury, the high-octane fund he has run since 1993. His replacement: David Corkins, Janus' version of a voice of moderation, who'll continue to run Janus Growth & Income. While Growth & Income has low volatility and a modest price/earnings ratio, Mercury has been a poster child for aggressive growth. Lammert held big stakes in tech and telecom as far back as 1995, and huge gains in the late '90s were followed by huge losses in recent years. Can one manager really run both funds? Corkins' new role is less bizarre than it appears. He assisted on Mercury from 1997 to 2001, while also steering Growth & Income to impressive results. Lammert has ratcheted risk back so much lately that the funds have a lot in common, including sector weightings and some top holdings. Corkins says he'll maintain Mercury's "risk tolerant" profile, but his price-sensitive style argues against his reproducing Lammert's dizzying gains--and agonizing losses. Odds are that many investors will appreciate the steadier ride. --MAGGIE TOPKIS

VANGUARD ADDS A SCOTTISH ACCENT

Vanguard has shaken up one of its big actively managed funds, $5.5 billion Vanguard International Growth. In February, Vanguard announced that 20% to 25% of the fund's assets would be taken away from Schroder's Richard Foulkes--the subadviser who has run the fund from London since its 1981 launch--and be handed over to Edinburgh-based Baillie Gifford, a firm that manages $30 billion, much of it for overseas institutions.

What gives? The MONEY 100 fund has a great record: Its annualized return of 5.7% over the past decade puts it two percentage points ahead of the MSCI EAFE index and in the top third of foreign-stock funds, according to Morningstar. But it's down 19.6% over the past 12 months, trailing EAFE and placing it in the bottom half of its fund peers. Vanguard says it made the change to diversify the fund and position it for long-term growth. Foulkes has focused on blue-chip names in the U.K. and Continental Europe; new co-manager James K. Anderson says his purchases include Vodafone and Russian oil company Lukoil. "I hope we can add a degree of spice," he says. --AMY FELDMAN

DYNAMIC DUO

Two-year-old fund Artisan Mid Cap Value is on a roll--for the past year, the fund's total returns have earned it 13th place among the 208 midcap funds ranked by Lipper.

Beginner's luck? Not likely. The fund's managers, Scott Satterwhite and James Kieffer, have delivered strong returns at former MONEY 100 fund Artisan Small Cap Value for several years (it exited the list after closing to most new investors in 2000). By scouting out deep value stocks in financials, industrials and energy, the pair powered the small-cap fund into the top 6% of its category for five-year performance--and many of its small-cap winners have migrated into the midcap value offering. "Last year the midcap value fund did really well," notes Morningstar analyst Paul Herbert. "While we don't like to look at one-year performance, their success with the small-cap fund is clear evidence that this fund should do well." What to watch for: inflows. Artisan has closed funds pretty quickly when swelling asset size has made it tough to take positions in smaller-cap companies. Fund assets are now $42 million. --MAYA JACKSON

UPDATE

When it was launched in 1995, the Liberty Young Investor fund (then called Stein Roe Young Investor) had a lofty mission--teaching children about the market. It offered a winning combination of low minimum initial investment, useful educational material and decent performance--all at a reasonable cost.

Now, faced with falling returns and soaring expenses, young investors are learning a harsh lesson. After a strong showing in the 1990s, managers David Brady and Erik Gustafson have struggled: Over the past five years the fund has ranked in the bottom third of its peers. Meanwhile, Liberty has slapped on loads as high as 5.75%. (The no-load fund closed to new investors in 2002.) And in February no-load investors in the fund saw expense ratios zoom from 1.26% to 1.76%; class-A shareholders now pay 1.67%. By contrast, the average large-growth fund has an expense ratio of 1.51%.

Liberty says higher expenses reflect the costs of administering the fund's small accounts and that it's looking for ways to lower expenses. Still, it's tough to recommend this MONEY 100 fund anymore. Parents would do better to find a low-cost fund--and buy their own educational material. --PENELOPE WANG

FUNDS Roundup

LOAD UP American Century added loads to 10 of its funds. Among those affected: American Century International Growth, a MONEY 100 fund; its front-end sales charge is now 5.75%.

CHINA PLAY Barclays Global Investors registered a prospectus with the Securities and Exchange Commission for the first exchange-traded fund to mimic the FTSE/Xinhua HK China 25 index. The index tracks the 25 largest mainland China companies.

CHANGING FOCUS Jim Hillary shifts from Marsico 21st Century to join Tom Marsico as co-manager of the Marsico Focus Fund and Marsico Growth.

A WISE MOVE?

Berkshire Hathaway's Warren Buffett has many imitators. The Wisdom fund sets out to ape his picks; it uses publicly traded stocks to match his private holdings. It's up an annualized 3.5% over three years vs. Berkshire's 11.9%. Why not buy the real thing? Wisdom's manager says Berkshire trades above the underlying value of its assets, while the fund's price and assets are in line. But Berkshire doesn't have a 5.75% load and a 1.9% management fee. --ILANA POLYAK

PROXY STOCKS

Buffett holds... --Nebraska Furniture Mart --Dairy Queen --Geico

So Wisdom holds... --Ethan Allen Interiors --Yum Brands, Wendy's --Progressive Corp.

Source: Wisdom fund.

Cut cord. It's the rare fund company that gives shareholders more information than is required by law. Southeastern Asset Management, managers of the Longleaf Funds, is one such firm. Not only has it provided quarterly holdings and discussions of stocks, but until recently it held quarterly interactive conference calls with shareholders. No longer. The company's openness was working to its detriment as other investors, including hedge funds, used the calls to try to buy or sell in advance of the funds. Even so, Longleaf remains among a handful of boutiques, including Acorn Funds and Third Avenue Funds, offering timely peeks into portfolios. In the rest of the fund world, more disclosure may be coming--a Securities and Exchange Commission proposal would force companies to disclose holdings quarterly rather than semiannually, as now required. --I.P.