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Lipper Fund Awards USA 2009
ADVERTISING SUPPLEMENT
Come Under the Rainbow... The Golden Rainbow.
The James Balanced: Golden Rainbow Fund – (GLRBX) Lipper Leader: 2009 Best Mixed-Asset Target Allocation
Moderate Fund Over 10 YearsAward is for the ten-year period, among 145 eligible 0rms in the
Mixed-Asset Target Allocation Moderate Fund Universe as of 12/31/2008
Investors should consider the investment objectives, risks, and charges and expenses of the Funds carefully before investing; this and other information about The James Advantage Funds is in the prospectus, which can be obtained by calling 1-800-99-JAMES. Read the prospectus carefully before you invest. The performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will �uctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The James Advantage Funds are distributed by Uni"ed Financial Securities, Inc. 2960 N. Meridian St., Ste. 300, Indianapolis, IN 46208.Lipper Inc. - A Reuters Company, is a nationally recognized organization that ranks the performance of mutual funds within a universe of funds that have similar investment objectives. Rankings are historical with capital gains and dividends reinvested.
NOT FDIC INSURED NO BANK GUARANTEE MEMBER FINRA MAY LOSE VALUE
© 2009 James Investment Research, Inc. All rights reserved.
Advised by JAMES INVESTMENT RESEARCH, INC.
www.jamesfunds.com 1-800-99-JAMES
1Lipper Fund Awards U.S. 2009
ADVERTISING SUPPLEMENT
Table of Contents
InsideAnnual Lipper Fund Awards Methodology 2
2009 Lipper Fund Awards U.S. Fund Family Winners 3
Taking a Broad View 4American Century’s success benefi ts investors, medical research
Sticking with the Program 5Waddell & Reed culture values input of experts
Value of Integration 7Janus studies equity, credit sides of companies
2009 U.S. Lipper Three-Year Fund Classifi cation Winners35 Largest Classifi cations 8
The Strength of Their Convictions 10American Funds gives analysts the power to act on their research
Across the Board 12Rainier seeks equity winners in every sector
The Conservative Approach 13HighMark works to weed out risk in its fi xed-income funds
A division of InvestmentNews
VP/PublisherSuzanne Siracuse (212) 210-0715 [email protected]
Advertising Sales DirectorCharles J. Dixson (212) 210-0152 [email protected]
Marketing DirectorTracy David (212) 210-0417 [email protected]
EditorialGaynor Communications
DesignReuter & Associates
Website www.InvestmentNews.com
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2 Lipper Fund Awards U.S. 2009
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Annual Lipper Fund AwardsMethodology
T L F A
presented annually in the United States
and 20 other countries. % e methodology
for deciding the award winners includes:
Criteria (Cumulative)• Funds registered for sale in the respec-
tive country as of the end of the evalu-
ation year.
• At least 36 months of performance his-
tory as of the end of the evaluation year.
• Lipper Global classifi cations with at
least 10 distinct portfolios based on the
primary share class defi nition, exclud-
ing residual classifi cations, institutional,
private, closed-end, exchange-traded
and insurance funds as well as absolute
return funds.
• Asset classes: equity, bond and
mixed-asset.
Fund classifi cation awards% e currency for the calculation corre-
sponds to the currency of the country
for which the awards are calculated and
relies on monthly data. Classifi cation
averages are calculated with all eligible
share classes for each eligible classifi ca-
tion. % e calculation periods extend
over 36, 60 and 120 months. % e high-
est Lipper Leader for Consistent Re-
turn (Eff ective Return) value within
each eligible classifi cation determines
the fund classifi cation winner over
three, fi ve or 10 years. For a detailed
explanation, please review the Lipper
Leaders methodology documents on
www.lipperweb.com/research/leaders.asp
Asset class group awardsFund groups with at least fi ve equity, fi ve
bond or three mixed-asset portfolios in
the respective asset classes are eligible for
a group award. % e lowest average decile1
rank of the three years, Consistent Return
measure of the eligible funds per asset
class and group will determine the asset
class group award winner over the three-
year period. In cases of identical results,
the lower average percentile rank will de-
termine the winner.
Asset class group awards will be given to
the best large and small groups separately.
Small groups will need to have at least
three distinct portfolios in one of the asset
classes: equity, bond or mixed-asset.
Overall group awardFund groups with at least fi ve equity, fi ve
bond and three mixed-asset funds are eli-
gible for an overall group award. An over-
all group award will be given to the group
with the lowest average decile1 ranking of
its respective asset class results based on
the methodology described above. In cases
of identical results, the lower average per-
centile rank will determine the winner.
An overall group award will be given to
the best large and small group separately.
Small groups will need to have at least
three equity, three bond and three mixed-
asset funds.
1. % e decile ranking is obtained by the percentile ranking
according to the formula: INT((((Percentile Rank 1 ) * (
1 4.3.21 )) / 10 ) +1 ) in order to eliminate the percentile
ranking bias within very small and very large sectors by
number of funds.
Methodology
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2009 Lipper Fund AwardsU.S. Fund Family Winners
U.S. Fund Family Winners
Management Company Name Award Firm Size
American Century Investment Management, Inc. Overall Large
Waddell & Reed Investment Management Company Overall Small
American Funds Equity Large
Rainier Investment Management, Inc. Equity Small
Janus Capital Management LLC Fixed Income Large
HighMark Capital Management, Inc. Fixed Income Small
Janus Capital Management LLC Mixed Assets Large
Waddell & Reed Investment Management Company Mixed Assets Small
4 Lipper Fund Awards U.S. 2009
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Taking a Broad ViewAmerican Century’s success benefi ts investors, medical research
I
who benefi t from the performance of the
funds managed by American Century In-
vestments. ' e Kansas City, Mo.-based
fi rm also is a major supporter of a medical
research facility dedicated to fi nding a cure
for gene-based diseases. And both inves-
tors and the research facility have been do-
ing well recently: American Century was
the 2009 overall Lipper Award fund fam-
ily winner among large companies.
' e fi rm has about 80 total funds, with
about $70.1 billion in assets under man-
agement as of Dec. 31, 2008. About 40%
of the funds are in fi xed-income, and the
remaining 60% are equity funds. In ad-
dition to its Kansas City headquarters,
American Century has offi ces in London,
New York and Mountain View, Calif.
Jonathan ' omas, president and chief
executive offi cer of American Century,
attributes much of the fi rm’s success to
what he calls “the four Ps.” ' e fi rst is
performance.
“We truly have been focused on per-
formance for 50 years,” since the fi rm
was founded by Jim Stowers, Jr., in 1958,
' omas says. “We measure our success
by our clients’ success, and we know that
when they entrust us with their assets,
these are assets that they have sacrifi ced
and gone without so that they could invest.
It’s a big deal to us.”
' omas says the fi rm produces perfor-
mance by focusing on securities selection
in its major asset classes: growth, value,
fi xed-income, international, asset alloca-
tion and quantitative. ' e quantitative
funds use only computer analysis of fi nan-
cial data for stock selection, but the rest of
the funds have analysts who look at that
data and then add their own insights and
expertise.
' e fi rm’s analysts do proprietary re-
search on both the fi xed-income and the
equity side, and the two groups share re-
search, ' omas says. For example, a few
years ago the fi xed-income analysts decid-
ed that risk was not being properly priced
into the fi xed-income market, and they
pulled back from some areas. ' ey shared
this belief with the equity managers, who
also pulled back. As a result, the fi rm’s
funds were able to sidestep some of the
market’s current problems, ' omas says.
American Century has so much confi -
dence in its strategy that the fi rm’s manag-
ers rarely keep money on the sidelines in
cash, ' omas says. Instead, they are fully
invested in the style of each individual
fund. “Clients are not paying us to man-
age cash,” he says. “' ey are paying us to
be actively invested in the fund they have
chosen.”
After performance, the next “P” is pure
play. ' e company was founded as an asset
manager, and it has not strayed into other
areas. “' is is all we do – we only do asset
management,” ' omas says. “All of our re-
sources, all of our focus, go into managing
money.”
He says this is particularly important
because asset management should be
judged by performance over the long haul.
“If you’re in a business that has multiple
channels and some of them can yield re-
sults in a much shorter period of time,
people have a tendency to cheat toward
the shorter returns,” ' omas says. “But the
truth of the matter is that being pure play
in the money management space allows us
to have a very long-term horizon.”
' e third “P” is that the fi rm is privately
held. ' omas believes the fi rm benefi ts
from not having to meet the continuing
fi nancial expectations of stockholders or
industry analysts. Instead, it can stick to its
long-term approach
“Clearly in today’s environment, where
short-term pressures and market volatility
are causing so many people to take short-
term action, being private and indepen-
dent has been a real asset for us,” he says.
“Being pure and privately held gives us a
lot of fl exibility and allows us to continue
to manage the business for the long term.”
' e fi nal “P” is what American Centu-
ry calls “Profi ts with a Purpose,” and it is
where the medical research facility comes
in. Jim Stower, the fi rm’s founder, and his
wife, Virginia, are both cancer survivors.
' eir experience moved them in 1994 to
found the Stowers Institute for Medical
Research, also located in Kansas City. ' e
600,000-square-foot, $300 million facility
conducts research into gene-based diseas-
es such as cancer, diabetes and dementia.
More than 40% of American Cen-
tury Investments’ profi ts go to benefi t the
Stowers Institute. In addition, the fi rm
has a relationship with Lance Armstrong’s
LIVESTRONG foundation; its target-
date asset allocation funds are called
LIVESTRONG Funds.
“' is is something that no one else in
the industry really does,” ' omas says.
“It really gives people a higher purpose
and motivation, and I think it is part of
what makes this fi rm such a special place
to work.”
“ � is is all we do – we only do asset management.”
Jonathan Thomaspresident and chief executive offi cerAmerican Century Investments
American Century
5Lipper Fund Awards U.S. 2009
ADVERTISING SUPPLEMENT
Sticking with the ProgramWaddell & Reed culture values input of experts
Waddell & Reed
W R I Man-
agement Co. believes in sticking with what
works, and that approach has landed the
company at the top of the Lipper Awards
for the second year in a row.
+ e Overland Park, Kan.-based fi rm
was the overall fund family winner in
2009 among small companies. It also was
the small-fi rm fund family winner among
mixed-asset funds.
“+ is fi rm does not have a culture in
which every year we say, ‘Well, let’s try this
way,’ and then another year goes by and we
say, ‘Well, let’s try this way,’ ” says Michael
Avery, who is executive vice president and
chief investment offi cer of Waddell &
Reed Investment Management Co.
“I’ve been with Waddell & Reed for
well over 30 years, and the way we manage
money has not changed in that period of
time,” he says. “We do the same thing over
and over again, sticking with that process
and applying it every day.”
Waddell & Reed Investment Manage-
ment advises the Waddell & Reed Advi-
sors Funds, a total of 21 funds including
international and domestic equity funds;
fi xed-income funds; specialty funds such
as balanced funds and sector funds; and a
money market fund. As of Dec. 31, 2008,
the Advisors Funds had a total of about
$23 billion in assets under management.
Also as of Dec. 31, 2008, the Waddell &
Reed Advisors Funds had approximately
$3.1 billion in assets under management
in the mixed-asset category, within three
funds: Advisors Asset Strategy Fund, Ad-
visors Continental Income Fund and Ad-
visors Retirement Shares.
Central to Waddell & Reed’s time-test-
ed approach to managing money is a daily
meeting of its Investment Management
Division. + ere are 62 portfolio managers
and analysts in the Investment Manage-
ment Division, and every day they meet
as a group from 8:45 to about 10 a.m. On
any given day, more than half the portfolio
managers and analysts are able to attend.
“+ e design of the meeting is to be an
around-the-room discussion in rapid fash-
ion, starting with major macroeconomic,
social and political developments and
drilling down to the implications for major
asset classes, to sectors, to industries to in-
dividual companies,” Avery says.
+ e meeting is chaired by Chief Execu-
tive Offi cer Hank Herrmann, which is an
indication of the importance the company
puts on this sharing of ideas. “+ e way
Hank runs the meeting is that everybody
contributes,” Avery says. “He says, don’t
hold anything back, and let’s use it as the
platform for healthy discussions when we
leave the room.”
+ is frank and honest input helps
managers to better understand the huge
amounts of information that they receive
every day. “+ is is a business where there’s
no lack of information,” Avery says. “But
you need people to help you sort out the
relevant pieces of information.”
He adds, “It’s like a family jigsaw puzzle.”
Everyone has some of the pieces, and the
idea is to work together to combine those
pieces into a whole.
In addition to being executive vice presi-
dent and chief investment offi cer, Avery is
a co-portfolio manager of the Lipper-hon-
ored Asset Strategy Fund. He says he of-
ten fi nds inspiration in the daily meeting.
“We listen to people who are smart and
focused on one area,” he says. “If you listen
to all those people and ask them ques-
tions, you take away a broad overview of
where you think the world is headed and
how you think investments should be al-
located.”
And, he says, “If you do it that same way,
day in and day out, every day, it works.”
Avery also notes that the daily meeting
is successful not just because people have
good ideas, but because the structure of
the fi rm encourages them to share those
ideas. “We don’t have teams siloed in a
way where teams don’t talk to one an-
other,” he says. In addition, compensation
is not based on how well the funds do in
competition with each other, which could
discourage information-sharing. Rather,
Avery says, compensation is based in part
on how much individual analysts and port-
folio managers contribute to the overall
success of all the fi rm’s funds.
Avery says that the fi rm’s culture con-
tributes to long tenure among its profes-
sionals. Avery has 30-plus years with the
fi rm, and CEO Herrmann has 40 years.
“+ at is not only unique, but it probably
also adds to the success of the system,” Av-
ery says.
He believes this commitment to a time-
tested process will guide the fi rm through
the current economic crisis. “Having peo-
ple who have been in the business and have
been doing things successfully for a long
time has to help,” he says.
“ If you do it that same way, day in and day out, every day, it works.”
Michael Averyexecutive vice president and chief investment offi cerWaddell & Reed Investment Management Co.
7Lipper Fund Awards U.S. 2009
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Value of IntegrationJanus studies equity, credit sides of companies
Janus Capital Management
J C M LLC
won Lipper Awards in two categories:
large company fi xed-income fund family
and large company mixed-asset fund fam-
ily. According to Gibson Smith, co-chief
investment offi cer of Janus, the combina-
tion of awards is a testament to the fi rm’s
investment model, which integrates fi xed-
income and equity research.
In conducting research on a company,
Smith says, Janus looks at how that com-
pany manages both its equity and its debt.
“Companies can use debt or leverage to
turn little profi ts into big profi ts in good
times, so having that additional leverage
within your capital structure can really en-
hance returns,” he says. “At the same time,
having a lot of leverage in your capital
structure can be detrimental to returns
in diffi cult economic times. So when we
approach a company, we’re looking at the
business from a fundamental standpoint,
and we’re also analyzing the balance sheet
of the company to make sure we are buy-
ing into a business that is being managed
properly on the capital structure side, with
a balance between debt and equity.”
7 is kind of fundamental research is a
cornerstone of Janus, according to Smith.
”We’re looking at companies from the bot-
tom up, trying to understand the key driv-
ers of those businesses,” he says. “We have
a deep focus on return on invested capital,
the free cash fl ow generation ability of the
businesses, and how management is set-
ting the business up for long-term success.”
7 e fi rm’s analysis includes detailed
modeling, but analysts also hit the road to
meet with management and talk to suppli-
ers, competitors and employees. “We focus
on getting as close to the business as we
possibly can, thinking about it as being an
owner,” Smith says.
7 is approach applies to all the funds
managed by Janus – a total of 33 strategies
with $64.1 billion in assets under manage-
ment. 7 ere are three fi xed-income strate-
gies with $3.2 billion in assets under man-
agement, and fi ve mixed-asset strategies
with $4.8 billion in AUM. (Figures are as
of Dec. 31, 2008.)
7 e fi xed-income funds draw on the
work of 12 fi xed-income analysts and
three portfolio managers, and the mixed-
asset funds use that team as well as 33
equity analysts and 19 portfolio managers.
On the fi xed-income side, Smith says
that, especially after recent federal govern-
ment eff orts to prop up Fannie Mae and
Freddie Mac, there are really only two
parts to the market – government bonds
and corporate bonds. Janus focuses on cor-
porate bonds, where its deep understand-
ing of companies comes into play.
“From the debt side of the equation,
we have to look at what the management
team is doing to change the valuation on
the equity side,” Smith says, noting that
most company management teams are
compensated based on the equity side
of their business. “As credit investors, it’s
very important that we think like equity
investors,” he says. “Looking at a business
through both the debt and the equity is so
important in terms of driving conclusions
around the business.”
For the most part, Smith says, “We’re
looking for … management teams that
realize they have taken on too much debt
and that they have to use the free cash fl ow
of their business to de-leverage.”
In managing its mixed-asset funds,
Janus takes the same approach to under-
standing companies. But it also weighs the
overall asset mix of the funds and adjusts it
to meet the conditions of the market.
For example, Smith says, the Balanced
Fund, which Smith helps manage, has
a default allocation that is 60% equities.
However, over the last four years, he and
the fund’s other manager have looked hard
at the risk/reward profi le of the equity and
fi xed-income components, and they have
taken steps to reduce the amount of risk
in the fund.
“We have a core philosophy that risk
can be viewed as a permanent loss of capi-
tal,” he says. As a result, they have adjusted
the allocation to about 50% equity and
50% fi xed-income.
Smith believes that Janus’ focus on un-
derstanding individual companies works
especially well in this market. “We are in a
market that is focused on individual secu-
rity selection, so the ability to diff erentiate
ourselves in this market will come down
to our in-depth fundamental research and
being stock and bond pickers in this dif-
fi cult market,” he says.
“7 ere are companies that are going to
do extremely well in this tough environ-
ment and are going to come out of this
very strong. 7 ere are other companies
that are going to go away,” Smith says.
And, he adds, the key to success, both
now and going forward, is being able to
tell the diff erence.
“ We’re looking at companies from the bottom up, trying to understand the key drivers of those businesses.”
Gibson Smithco-chief investment offi cerJanus Capital Management LLC
8 Lipper Fund Awards U.S. 2009
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Management Company Lipper Classifi cation Fund NameTicker Symbol Load Type
Boston Trust Investment Management Inc Phone 800-282-8782
Mixed-Asset Target Allocation Growth Funds
Boston Trust Balanced Fund BTBFX No Load
RidgeWorth Funds Phone 888-784-3863
Intermediate Investment Grade Debt Funds
RidgeWorth Investment Grade Bond Fund, I
STIGX Institutional Load
MassMutual Life Insurance Company Phone 888-309-3539
Large-Cap Value Funds MassMutual Select Fundamental Value Fund, S
MVUSX Institutional Load
Schwartz Investment Counsel Inc Phone 888-726-9331
Multi-Cap Core Funds Ave Maria Growth Fund AVEGX Level Load
Markman Capital Management Inc Phone 800-707-2771
Large-Cap Growth Funds Markman Core Growth Fund, I MTRPX No Load
Saturna Capital Corporation Phone 800-728-8762
Multi-Cap Growth Funds Amana Growth Fund AMAGX No Load
Brown Brothers Harriman Phone 800-625-5759
Large-Cap Core Funds BBH Core Select Fund, N BBTEX No Load
Janus Capital Management LLC Phone 800-525-0020
International Multi-Cap Growth Funds
Janus Adviser International Growth Fund, I
JIGFX Institutional Load
Natixis Asset Management Advisors LP Phone 800-225-5478
Small-Cap Core Funds Natixis Vaughan Nelson Small Cap Value Fund, A
NEFJX Front-End Load
HighMark Capital Management Inc Phone 800-433-6884
International Multi-Cap Core Funds
HighMark International Opportunities Fund, M
HIOMX No Load
BB&T Asset Management Inc Phone 800-228-1872
Equity Income Funds BB&T Equity Income Fund, B BEIBX Back-End Load
MFS Investment Management Phone 800-225-2606
Mixed-Asset Target Allocation Moderate Funds
MFS Global Total Return Fund, I MFWIX Institutional Load
Dimensional Fund Advisors LP Phone 310-395-8005
Emerging Markets Funds DFA Emerging Markets Value Portfolio, Institutional
DFEVX Institutional Load
Needham Investment Management LLC Phone 800-625-7071
Mid-Cap Growth Funds Needham Aggressive Growth Fund NEAGX No Load
Heartland Advisors Inc Phone 800-432-7856
Multi-Cap Value Funds Heartland Select Value Fund, Investor
HRSVX No Load
Epoch Investment Partners Inc Phone 800-527-9525
Global Multi-Cap Value Funds Epoch Global Equity Shareholder Yield Fund, Institutional
EPSYX No Load
J.P. Morgan Funds Phone 800-480-4111
Mid-Cap Value Funds JPMorgan Mid Cap Value Fund, Institutional
FLMVX Institutional Load
Wells Fargo Funds Management LLC Phone 800-222-8222
High Current Yield Funds Wells Fargo Advantage Short-Term High Yield Bond Fund, Investor
STHBX No Load
2009 U.S. Lipper Three-Year Fund Classifi cation Winners35 Largest Classifi cations
9Lipper Fund Awards U.S. 2009
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Management Company Lipper Classifi cation Fund NameTicker Symbol Load Type
BlackRock Inc Phone 800-441-7762
Mid-Cap Core Funds BlackRock US Opportunities Portfolio, Institutional
BMCIX Institutional Load
Bessemer Investment Management LLC Phone 800-607-2200
General Municipal Debt Funds Old Westbury Municipal Bond Fund OWMBX No Load
American Beacon Advisors Inc Phone 800-345-2345
International Large-Cap Value Funds
American Beacon International Equity Fund, AMR
AAIAX No Load
American Century Investment Management Inc Phone 800-345-3533
Corporate Debt A-Rated Funds
American Century Diversifi ed Bond Fund, Institutional
ACBPX Institutional Load
Vanguard Group Inc Phone 800-662-7447
Short Investment Grade Debt Funds
Vanguard Short-Term Bond Index Fund, Admiral
VBIRX No Load
BlackRock Inc Phone 800-441-7762
Global Flexible Port Funds BlackRock Global Allocation Fund, Institutional
MALOX Institutional Load
Harbor Capital Advisors Inc Phone 800-422-1050
International Large-Cap Core Funds
Harbor International Fund, Institutional
HAINX No Load
Robert W Baird & Company Inc Phone 866-442-2473
Intermediate Municipal Debt Funds
Baird Intermediate Municipal Bond Fund, Institutional
BMBIX Institutional Load
Van Kampen Asset Management Phone 800-847-2424
Small-Cap Growth Funds Van Kampen Small Cap Growth Fund, A
VASCX Front-End Load
BlackRock Inc Phone 800-441-7762
GNMA Funds BlackRock GNMA Portfolio, BlackRock
BBGPX Institutional Load
Waddell & Reed Investment Management Company Phone 888-923-3355
Flexible Portfolio Funds Waddell & Reed Asset Strategy Fund, Y
WYASX Institutional Load
BlackRock Inc Phone 800-441-7762
Treasury Infl ation Protected Securities Funds
BlackRock Infl ation Protected Bond Portfolio, BlackRock
BPLBX Institutional Load
Delaware Management Company Phone 800-362-7500
Multi-Sector Income Funds Delaware Diversifi ed Income Fund, Institutional
DPFFX Institutional Load
Hussman Econometrics Advisors Inc Phone 800-487-7626
Mixed-Asset Target Allocation Conservative Funds
Hussman Strategic Total Return Fund
HSTRX No Load
Calvert Funds Phone 800-368-2745
Corporate Debt BBB-Rated Funds
Calvert Long Term Income Fund, A CLDAX Front-End Load
Intrepid Capital Management Inc Phone 866-996-3863
Small-Cap Value Funds Intrepid Small Cap Fund ICMAX No Load
American Funds Phone 800-421-0180
Global Large-Cap Core Funds New Perspective Fund, R-5 RNPFX Institutional Load
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The Strength of Their ConvictionsAmerican Funds gives analysts the power to act on their research
For American Funds, success is about
fundamentals and empowerment. Ameri-
can Funds, which was the 2009 Lipper
Award winner in the large-company equi-
ty fund family category, relies heavily on its
analysts to provide insight into companies
whose strong fundamentals make them
market leaders. And it gives those analysts
the power to act on their insights.
" e fi rm has focused on fundamentals
since it was founded in Los Angeles in
1913. Dale Hanks, vice president of Capi-
tal Research and Management Company,
the investment adviser to American Funds,
explains, “" e company was a pioneer in
what would today be called fundamental
analysis, meaning truly looking at busi-
nesses and company fundamentals, and
investing in the equities when you felt that
the valuation the market was providing on
those company fundamentals was advanta-
geous to a long-term investment horizon.”
American Funds has a total of 31
funds, with about $830 billion in assets
under management as of Dec. 31, 2008.
In the equity category, it has 16 funds,
which had about $570 billion in AUM at
the end of 2008.
Analysts are the cornerstone of the
American Funds strategy. " e fi rm has
analysts worldwide, working out of its of-
fi ces in Los Angeles, New York, Washing-
ton, D.C., San Francisco, Geneva, London,
Hong Kong and Tokyo.
“Analysts are given the assignment to
get out and understand the industries that
they are asked to cover, and the compa-
nies within those industries,” Hanks says.
“" ey are given the tools that they need,
and they go out and kick the tires, visit
companies and try to understand them
from the bottom up.”
Some analysts work with a single in-
dustry, while others work with more than
one industry. Some focus on an industry
worldwide, while others look at an indus-
try either regionally or within an individ-
ual company. “The decision is based on
what our investment professionals feel is
really the best way to understand the com-
panies and the opportunities,” Hanks says.
" e analysts have a signifi cant impact
on the makeup of portfolios in two ways.
First, their research weighs heavily in the
decisions made by portfolio managers.
“ Analysts in our organization actually make investment decisions.”
American Funds
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But American Funds also allows its
analysts to put their money where their
mouth is. Each portfolio includes a Re-
search Portfolio, in which the decisions on
what stocks to buy or sell are made by the
analysts.
“Analysts in our organization actually
make investment decisions,” Hanks says.
“% ey manage shareholder assets in the
fund. % ey are not just making recom-
mendations, like now is a good time to
buy XYZ Corp.; they actually are making
those decisions.”
% e Research Portfolio is about 20% to
25% of each portfolio. % at percentage is
then divided among the analysts, who are
able to choose – or reject –equities in their
area of expertise. “An analyst may have
only a small piece of a particular fund, but
he or she may have a small piece of many
funds,” Hanks says.
% e rest of the portfolio decisions are
made by the portfolio managers, whom
American Funds calls portfolio counsel-
ors; they rely heavily on input from the an-
alysts. % ere can be as many as 11 portfo-
lio counselors on each fund, which means,
“You could have 40 or 50 people making
decisions in a fund,” Hanks says. American
Funds sees this as a strength, Hanks says,
because the fi rm can draw on the opinions
of so many experts.
% e value American Funds places on its
analysts is evident in the fact that analysts
often make as much in compensation as
portfolio counselors. An analyst can be-
come a portfolio counselor, but he or she
also can choose to remain an analyst, with-
out any loss of status or compensation,
Hanks says.
He believes that because of the au-
tonomy and respect that the fi rm gives to
both analysts and portfolio counselors, its
professionals tend to stay with the fi rm.
Portfolio counselors, for example, have an
average of more than 20 years with Ameri-
can Funds.
Hanks says the value of this approach
becomes even more evident in tough eco-
nomic times. “Clearly in the investment
business, you don’t get it right 100%. But
we focus on understanding a business and
its fundamentals, and on the long term,
and that’s where we really think that we
are going to add value,” he says.
“% ere are going to be companies that
are not going to survive, and there are
going to be other companies that are not
only going to survive, but are going to ben-
efi t from the weakness of others,” he says.
“Our approach is very conducive to identi-
fying the winners over the long haul, and
hopefully avoiding those companies that
are not going to survive.”
“ We focus on understanding a business and its fundamentals, and on the long term.”
We proudly congratulate Greg Habeeb, Calvert Senior Vice President
and Lead Portfolio Manager,and his taxable bond fund team on earning
a fifth annual Lipper award in the past six years.For more information visit calvert.com.
Lipper Fund Awards are granted annually to the funds ineach Lipper classification that achieve the highest score forConsistent Return, a measure of funds' historical risk-adjusted returns, measured in local currency, relative topeers. Funds registered for sale in a given country areselected, then scores for Consistent Return are computedfor all Lipper global classifications with five or more dis-tinct portfolios. The scores are subject to change everymonth and are calculated for the following periods: three-year, five-year, ten-year, and overall. The highest 20% offunds in each classification are named Lipper Leaders forConsistent Return. The highest Lipper Leader forConsistent Return within each eligible classification deter-mines the fund classification winner over three,five,or tenyears. Source: Lipper Inc.
Past performance is no guarantee of future results.
Please keep in mind, investment in mutual fundsinvolves risk, including possible loss of principal invested.Bond funds are subject to credit risk, inflation risk, andinterest rate risk. When interest rates rise, the value offixed-income securities generally fall.
For more information on any Calvert mutualfund, please call Calvert at 800.818.8397 for afree prospectus. An investor should considerthe investment objectives, risks, charges, andexpenses of an investment carefully beforeinvesting. The prospectus contains this andother information. Read it carefully before youinvest or send money.Calvert mutual funds are underwritten and distributed by CalvertDistributors, Inc . , a member of FINRA and subsidiary of CalvertGroup, Ltd. #8866 (3/09)
L I P P E R F U N D AWA R D W I N N E R
Calvert Long Term Income Fund (CLDAX)
Best Corporate Debt Fund BBB-Rated
Based on risk-adjusted performance among 116 funds in the Corporate Debt Fund BBB-Rated classification
over three years ending December 31, 2008.
12 Lipper Fund Awards U.S. 2009
ADVERTISING SUPPLEMENT
Across the BoardRainier seeks equity winners in every sector
R I M,
Inc. believes in specialization: Its focus is
almost exclusively on U.S. growth stocks.
At the same time, though, it believes in tak-
ing a broad look at those stocks across all
sectors. . at approach has earned Rainier
the 2009 Lipper Award for the top equity
fund family among small fi rms.
. e fi rm, which is headquartered in
Seattle and also has offi ces in New York,
had $12.5 billion in assets under manage-
ment as of Dec. 31, 2008, including insti-
tutional assets and mutual funds. It has
fi ve funds, representing about 35% of its
assets under management. . e vast ma-
jority of these assets – about 95% – are in
its three equity portfolios; Rainier also has
a balanced fund and a fi xed-income fund.
“We are primarily an equity shop, and
for us, that really means U.S. growth
stocks,” says Len Brennan, president and
chief executive offi cer of Rainier.
. e fi rm has a large-cap, a mid-cap and
a small/mid-cap fund. . e small/mid-cap
and the large-cap funds were launched in
1994, and the mid-cap fund was launched
after the small/mid-cap fund was closed to
new investors at the end of 2005.
Brennan says the fi rm’s philosophy is
simple: “We believe that earnings growth
drives stock prices.” As a result of this
philosophy, Rainier seeks to identify com-
panies “that have a sound economic foun-
dation with regard to their business, their
ability to get market share, the strength of
the organization versus their peers in terms
of, for example, new product off erings.”
At the same time, Brennan says, “We
identify growth, but there has to be a rea-
sonable or a sensible price paid for that
growth.”
Another critical part of Rainier’s ap-
proach to picking stocks is the belief that
growth can occur in any sector of the mar-
ket. In fact, Brennan says, the fi rm partici-
pates in all sectors of the S&P 500 – even
those that may not traditionally be consid-
ered growth sectors.
“. is ensures that our clients are partic-
ipating across the broad spectrum of eco-
nomic sectors and industry sectors,” Bren-
nan says. “Our responsibility is to identify
growth opportunities within each sector.”
One obvious advantage of this approach
is that it provides automatic diversifi cation
for investors. But more than that, Brennan
says, it puts them in a good position when
a sector begins to pick up speed.
“It’s a recognition that, as you go through
market cycles, there is always diff erent lead-
ership,” he says. “We don’t want our clients
to miss an opportunity because the leader-
ship of a cycle was an industry sector that
was not defi ned as a growth sector.”
For example, he says, at the end of 2001
or 2002, most benchmarks put energy in
the value rather than growth category. But
Rainier included in its portfolios those
stocks that its experts thought off ered the
best growth in the energy sector.
“Two years into the cycle, energy stocks
are now categorized as growth stocks. But
it would have been too late by then for cli-
ents to have participated in that growth,”
Brennan says.
In choosing stocks for its portfolios,
Rainier starts with a broad screening of a
wide range of companies, looking for those
that have an industry consensus forecast
for high earnings growth. . is screen-
ing process whittles 3,000 or more stocks
down to about 500 to 600.
At that point, Rainier’s portfolio man-
agers begin to dig deeper. . e fi rm’s nine
portfolio managers are broken into sector
teams with two to three portfolio manag-
ers on each team. . ey are responsible for
doing additional research to identify what
stocks should be bought – or sold.
No single holding can make up more
than 5% of any portfolio, and the top hold-
ing in a portfolio usually is closer to 3% of
the total. “We defi nitely believe in gener-
ating returns in small amounts on a large
number of stocks, rather than having the
philosophy that we’re going to bet it all on
one company or sector,” Brennan says.
“We fundamentally believe in diversity,
and we believe in our ability to identify com-
panies across a spectrum of industry groups.
We want to have enough names represented
so that our insight into those companies
adds value to the portfolio,” he says.
Brennan is confi dent that Rainier’s un-
derlying philosophy will continue to serve
investors well even in these tough econom-
ic times.
“We’ve been in business for a long time,
and we believe that our clients have not
hired us to have a knee-jerk reaction to an
economic environment in terms of chang-
ing the way we run money,” Brennan says.
“Is this cycle diff erent? Every cycle is
diff erent. Clearly this one is deep and dra-
matic and has structural and foundational
changes. But we view it as incumbent upon
us to stick to our philosophy, and let the
clients decide whether it is appropriate for
their portfolio.”
“ We believe that earnings growth drives stock prices.”
Len Brennanpresident and chief executive offi cerRainier Investment Management, Inc.
Rainier Investment Management
13Lipper Fund Awards U.S. 2009
ADVERTISING SUPPLEMENT
The Conservative ApproachHighMark works to weed out risk in its fi xed-income funds
HighMark Capital Management
T
HighMark Capital Management, Inc. “We
are a conservative investment manager,”
says Greg Knopf, managing director of
mutual funds for the San Francisco-based
company. Following that conservative phi-
losophy made HighMark the 2009 Lip-
per Award winner among small company
fi xed-income fund families.
Knopf says the company, which is
owned by Union Bank of California, has
followed this approach since it began
managing money more than 90 years ago.
In addition to its San Francisco headquar-
ters, the fi rm has offi ces in Los Angeles,
Seattle, San Diego, Portland, Ore., and
Irvine, Calif.
As of Dec. 31, 2008, HighMark had 24
funds with a total of $8.5 billion in assets
under management. Four of those were
fi xed-income funds, with about $600 mil-
lion in assets.
H e fi rm’s fi xed-income family consists
of two taxable bond funds: the Short-
Term Bond Fund, which began retail sales
in 2004; and the Bond Fund, an interme-
diate-term fund that went retail in 1994.
In addition, it has two tax-exempt bond
funds: the National Intermediate Tax-Free
Fund, available since 2003; and the Cali-
fornia Intermediate Tax-Free Fund, which
opened in 1994.
Signifi cant assets for all four bond funds
come from the clients of Union Bank’s
Trust Department, which makes the con-
servative philosophy of the funds even
more valued, Knopf says.
“We’re very credit conscious; we’re very
aware of the entity that is issuing the
bonds,” he says. “Especially in the area of
our tax-exempt bonds, we’ve never relied
on the insurance wrapper as the rating.
We always look through the insurance and
make sure the credit standing on its own
has an appropriate rating.”
In order to look beyond the insurance
rating, the fi rm’s analysts take the position
that, “We’re just plain conservative, so if
there’s any hint of issues, we’re just not go-
ing to own a bond,” Knopf says.
HighMark’s fi xed-income analysis is an-
chored by the two men who manage the
fi xed-income funds — Robert Bigelow for
tax-exempt funds and Jack Montgomery
on the taxable side.
Knopf says that Bigelow has a deep un-
derstanding of the municipalities and oth-
er bond issuers he deals with. He not only
studies existing research, but he also visits
the cities and examines their fi nancial sta-
bility. He is not averse to holding cash until
he fi nds the right investment opportunity,
Knopf says, adding, “He’s very picky in
what he buys.”
Montgomery leads a similar eff ort in
taxable bonds. Knopf notes that there is a
lot of research available on taxable bonds
and the companies that off er them. “But if
you look in this environment, that hasn’t
always helped,” he says.
Knopf says that the best analysts can see
beyond the conventional ways of looking at
the data. “What separates some managers
from others is that they are just better at
interpreting the available research,” he says.
In the case of HighMark’s analysts, he
says, they fi rst ask whether the underlying
fi nancial reality of the entity issuing the
bond is suffi cient to merit the rating given
to the bond.
“H en we also ask ourselves whether
there is an event that could take place that
could change the rating positively,” he says.
In other words, they not only try to elimi-
nate bonds that are rated too high; they
also look for bonds that might be poised
to improve their rating.
Knopf says this approach is especially
welcome in the current economic envi-
ronment. “Obviously, in this environment
– which has gone on for quite some time
now, where there is an aversion to risk –
that has served us very well in the types of
securities we’ve bought,” he says.
But for HighMark, this is not a phi-
losophy driven by the current markets. In-
stead, it is the fi rm’s approach to investing,
no matter what the markets. “We know
that there will be periods of time when
the market is rewarding risk more,” Knopf
says. “But we believe that, over time, taking
that risk is not worth it.”
Knopf notes that this approach to
risk comes naturally to the fi rm, which
is owned by a conservative bank. Union
Bank, owned by the Japanese fi rm Mit-
subishi UFJ Financial Group, Inc., avoided
the fi nancial upheaval that has affl icted
many banks, Knopf says, explaining that
the parent company, like HighMark, is
philosophically opposed to too much risk.
“H e idea of being conservative comes
from the top down,” he says.
Knopf notes that HighMark funds fi ll a
niche for investors looking for more-con-
servative vehicles. HighMark clients un-
derstand the fi rm’s investment philosophy
and are comfortable with it.
“Clients buy our funds because they ap-
preciate our sensitivity to credit and our
aversion to risk,” he says. And, true to the
fi rm’s underlying philosophy, it does not
intend to change.
“ Clients buy our funds because they appreciate our sensitivity to credit and our aversion to risk.”
Greg Knopfmanaging director of mutual fundsHighMark Capital Management, Inc.