New investment products are being designed and other existing products are being revamped in response to the introduction of the euro.

The Emerging Germany Fund plans to ask shareholders this month to approve a series of changes which would convert the fund from a closed-end single country fund to an open-end pan-European fund. And last month State Street Global Advisors received permission from the SEC to convert an existing Deutsche mark-denominated money market fund into a euro-denominated fund.

These changes and others which are expected are in response to the European economic and monetary union's introduction of the euro for the first day of business today. Money management professionals expect that the euro - which will be phased in during the next three years as the common currency of Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain - will lead to a continuing stream of new investment strategies and products.

The monetary union and the euro will heighten the importance of investing in sectors throughout so-called Euroland, said Paul Aaronson, a principal and executive director at Morgan Stanley Dean Witter. While there will be a place for country-specific products and investing, the euro will change European investing, Aaronson said.

"What defines an investing market is much broader now," Aaronson said. "Picking countries is probably going to be less critical than getting industries right."

Aaronson, Morgan Stanley's product manager for WEBS - Worldwide Equity Benchmark Shares - said the firm is considering the development of a new product in light of the euro but he declined to describe it. Morgan Stanley currently offers single-country WEBS, essentially a basket of securities which track a national index for seven of the 11 euro countries. The WEBS serving euro countries Austria, Belgium, France, Germany, Italy, the Netherlands and Spain have approximately $430 million in assets, Aaronson said.

There are about a dozen closed-end and a handful of open-end single country funds in nations participating in the euro, said Gregg Wolper, international funds editor at Morningstar. The euro will not make single-country funds and WEBS irrelevant, Wolper said. Those products will continue to serve a niche group of investors. Nevertheless, single-country funds may become a tougher sell because of the euro and the monetary union, Wolper said.

The Emerging Germany Fund directors and the fund's adviser, Dresdner RCM Global Investors, suggested as much in Emerging Germany's preliminary proxy statement filed Dec. 16 with the SEC. The switch from a single country to a pan-European fund is a positive move for investment purposes, according to the fund directors and adviser.

The euro and the EMU mean that "single European country funds will have a reduced purpose and will tie an investor's fortunes to a limited and somewhat arbitrary group of issuers," according to the proxy statement.

Not all fund sponsors, however, expect to convert their single country funds to pan-European funds. Fidelity Investments, for example, offers two open-end funds for countries using the euro, Fidelity France Fund and Fidelity Germany Fund. Fidelity also has a United Kingdom Fund. Fidelity has no plans to broaden the investment scope of its single country funds, said Jim Griffin, a spokesperson. Fidelity already has pan-European and international funds which invest in Europe.

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