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Funds nervous about Serbs
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April 2, 1999: 3:51 p.m. ET
But one analyst says country funds haven't been affected by the crisis
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NEW YORK (CNNfn) - As NATO bombs rain on Yugoslavia and ethnic Albanians stream into border countries to escape Serbian forces, global money managers are eyeing the region nervously.
But after a week marked by the capture of three U.S. soldiers and an escalation of the NATO military campaign against Belgrade, closed-end funds that invest overseas remain largely unaffected by the conflict, said Doug Beck, senior international equity fund analyst at Merrill Lynch.
"It depresses sentiment more than anything else," Beck said. "Any political instability or regional conflict ...creates uncertainty. But I haven't seen much of an impact."
Beck, who tracks more than 80 country funds, said funds were mostly unchanged for the week.
(Closed-end country funds, which have a finite number of shares and trade like stock on the New York Stock Exchange, invest in a country or region).
The Greek market was hit hard this week by the troubles in Yugoslavia, but few funds have a big exposure in Greece, Beck said. Italy's market also felt a sting this week in part because of the situation.
"It's a thorn in the side of Europe that it didn't need right now," Beck said about the unrest.
Europe funds were down in the first quarter, hurt mostly by a weak euro and a slowdown in economic growth, he said.
Overall, sentiment about Europe has cooled, while managers are putting more money in improving Asian markets.
"In Asia, the news is positive," he said. "Those markets are far away from Kosovo."
The Italy Fund (ITA) was off 4 percent for the shortened trading week, while the Central European Equity Fund (CEE), was down 5 percent and the Europe Fund (EF) fell 3.7 percent.
There aren't any funds that invest in Yugoslavia. But some funds, like the Central European Equity Fund, have holdings in countries in the region, including Croatia, Hungary, Romania, and the Czech Republic, according to Salomon Smith Barney.
Has the U.S. mutual-fund market become saturated? New figures from a research group show that the number of new mutual funds introduced in 1999 is at the lowest level since 1991.
There were less than 70 new funds introduced in 1999, according to CDA/Wiesenberger, a mutual-fund research group in Rockville, Md. owned by Thomson Financial Services. By contrast, there were 400 new funds in the same time in 1998, according to Wiesenberger.
Mutual funds flooded the market in the 1990s. In 1997, there were a total of 1,688 new funds; 1,411 in 1996; 1,158 in 1995; 1,451 in 1994; and 1,134 in 1993, according to Wiesenberger data.
Scudder seems to be bucking the trend of fewer new funds. The company on Friday announced two new no-load funds that will mirror different types of large cap stocks.
The Scudder Select 500 Fund, a 'blend' fund, will mirror the S&P 500, while the Scudder Select 1000 Growth Fund will focus on growth stocks in the Russell 1000 Growth Index.
Both funds will ignore the lowest-performing stocks in those indexes, Scudder said.
Because of a goof by Vanguard Group, some shareholders of seven international funds may have to file amended IRS statements if they filed their taxes early in January or February.
The fund family made the mistake on a 1099-tax form it sent to third-party brokers and dealers who sell Vanguard funds, the company said.
The company made an error reporting figures relating to foreign tax credits on the form, which was mailed to brokers and dealers in mid-January, spokesman John Worth said.
Vanguard discovered the mistake in late February and sent out a revised form.
Worth couldn't say how many shareholders were affected. But he argued it is a small number, since most shareholders buy Vanguard funds directly and not through third parties.
But at least those shareholders can take comfort that they won't owe Uncle Sam more money -- because of the mistake they likely overreported their tax liability, Worth said.
Mid cap stocks sometimes get overlooked, especially when large companies have been performing so much better. But here are some winners and losers in the category, according to Lipper Analytical Services, a New York fund research company.
The top performer for the week between March 25 and April 1 was Loomis Sayles Mid Cap Growth Fund, up 14.54 percent for the week and 27.97 percent year to date as of April 1; followed by Westport Fund R shares, up 7.86 percent this week and 1.52 percent this year; and Legg Mason Special Investment Trust, up 6.63 percent for the week and 6.08 percent for the year.
At the other end, the biggest loser was Anchor Capital Accumulation Trust, down 2.36 percent for the week and 1.08 percent for the year; Reserve Mid Cap Equity Fund, off 1.91 percent this week and 9.07 percent year to date; and Marathon Value Fund down 1.06 percent this week and 6.58 percent year to date. 
-- Staff writer Martine Costello covers mutual funds for CNNfn Interactive. If you have any comments about mutual funds, you can contact her at cnnfn.interact@turner.com
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