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Central European Fund Will Shift Focus

Shareholders of the closed-end Central European Value Fund can expect to see major changes over the next few months.

Clemente Capital of New York, which manages $700 million in assets in mutual funds and separate accounts, has been appointed as the fund's new adviser and began managing the six-year-old fund April 1. The fund will also have a broader investment mandate, its second major change in investment focus in two years.

PIMCO Advisors of Newport Beach, Calif., the fund's former investment manager and administrator, and OpCap Advisors of New York, a subsidiary of Oppenheimer Capital which is owned by PIMCO, agreed with the fund board to discontinue their investment advisory services to the fund as of March 31, said William Clark, the newly-appointed corporate secretary to the Central European Value Fund, in a statement March 21.

Stephen J. Treadway resigned as president and director of the fund, according to the board statement.

OpCap's agreement with the board to terminate the advisory contract was "consistent with the firm's strategic plans and is driven from its desire to allocate resources to other business lines," according to the fund's announcement,

But, OpCap and the fund's board of directors appear to have disagreed over the future direction of the fund. Neither PIMCO nor OpCap returned calls seeking comment.

In the fall, Ron Olin, principal of Deep Discount Advisors, a registered investment advisor in Asheville, N.C. and beneficial owner of close to 40 percent of the Central European Value Fund's shares, was elected as a trustee to the fund's board of directors. At that time, the number of fund board members was being increased from five to seven. Ralph Bradshaw, also of Deep Discount Advisors, was also elected to the fund's board. Last month, Bradshaw was appointed as the fund board's new chairman.

In connection with their election, Olin and Bradshaw agreed for a period of one year, beginning Nov. 3, 1999, not to present any proposals to alter the Central European Value Fund's investment objective or fundamental investment policies, according to fund documents filed in the fall.

Despite that agreement, the board of the Central European Value Fund recently decided to broaden the investment mandate of the fund, allowing it to invest beyond the countries of Central Europe, according to the March 21 fund announcement.

Currently, the fund invests at least 65 percent of its assets in firms in Austria, Estonia, Croatia, The Czech Republic, Hungary, Poland, Romania, Slovenia and Slovakia, according to the prospectus.

The board also recently voted to change the name of the fund to the Cornerstone Strategic Return Fund, pending shareholder approval to change the fund's investment scope.

"The intention of the board is to give the fund as much latitude as possible and make it more global oriented," said the fund's new manager, Leopold Clemente. Clemente, president of Clemente Capital, was appointed president and portfolio manager of the Central European Value Fund as of April 1, pending shareholder approval of Clemente Capital becoming the fund's permanent adviser. The fund had assets of $90 million as of April 1.

Clark, the fund's secretary, declined to comment on the specific parameters for the fund's future investments pending the fund's filing of a preliminary proxy statement to shareholders within the next few weeks. According to Clark, that proxy will provide additional information.

The Central European Value Fund has long been trying to settle on an investment focus. In September 1994, the fund originally was introduced as The Czech Republic Fund, concentrating its investments within that country. But the fund decided to remove the geographic limits and in May 1998 changed its investment universe to include other European countries.