Morningstar Advisor - Fall 2008 - 65

MF $18K 16 14 12 03 Eaton Vance Inc. Fund of Boston EVIBX LB Aggregate Bond TR 04 05 06 07 08 Jan-03 An experienced team with a proven record of strong credit selection gives this fund an edge. Managers Michael Weilheimer and Tom Huggins like stable franchises with predictable cash flows. So, they are light in energy and commodity plays and overweight in consumerrelated issues, especially in the gaming and retail sectors. Neiman Marcus’ debt is Jan-08 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 a top holding—the managers say that the firm’s affluent customer base will be lightly impacted ETF iShares Dow Jones Select byJul-03 Apr-04 May-05 Apr-06 Mar-07Dec-07 a environment, Oct-07 Oct-04 Sep-05 Sep-06 Jul-07 Jul-08 Nov-05 Oct-06 Aug-07 Aug-08 Feb-03Nov-03 economicOct-05 Jul-06 Apr-07 Mar-08 Mar-03toughJul-04 Apr-05 Feb-06Nov-06 Sep-07Jun-08 Apr-03 Feb-04 Mar-05 Mar-06 Feb-07Nov-07 May-03 Mar-04 Jun-03 May-04 Jun-05 May-06 May-07 Apr-08 Aug-03 Jun-04 Sep-03 Aug-04 Jul-05 Jun-06 Jun-07 May-08 Oct-03 Sep-04 Aug-05 Aug-06 preserving Dec-04 Dec-05 Dec-06 Feb-05 Dec-03 Nov-04 They also own debt from Dividend DVY the firm’s cash flows. Feb-08 18000 several casino operators such as Waterford and $18K Trump Entertainment that provide high income 16000 16 but are a tad riskier. Rounding off the fund’s 14000 14 consumer exposure is such specialty retail plays 12000 as Gamestop GME, the leading purveyor 12 S&P 500 TR of videogame products, and Hit Entertainment, 10000 04 05 06 07 08 an online retailer. This fund is yielding 8.8%, and we don’t anticipate a big drop-off based on This fund sifts the Dow Jones U.S. Total Market management’s strong long-term record. Index for about 100 stocks that pay the highest S Southern Company SO dividends and bolsters quality by omitting those that have made a dividend cut in the past $20K 34000 five years or dole out more than 60% of S&P 500 TR 17 earnings in dividends. The fund’s 0.40% 28000 14 expense ratio is inexpensive in absolute terms 22000 and relative to most dividend-oriented conventional mutual funds. That low price tag 16000 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 03 04 05 06 07 08 assures that the bulk of the dividend income 10000 thatJul-04Feb-05 Oct-05 Jun-06 Jun-07 the ends Feb-04 Oct-04 Jun-05 holdingsDec-06Jul-07 May-08 Mar-04Nov-04 Jul-05 Mar-06Nov-06 Aug-07 Jun-08 Apr-04 portfolio’s Apr-06 throw offDec-07Jul-08 May-04 Mar-05Nov-05 Jul-06 Jun-04 Apr-05 Dec-05Aug-06 Aug-04 May-05 Sep-04 Aug-05 May-06 Sep-05 Sep-06 Oct-06 Sep-07 up Oct-07 Aug-08 Nov-07 Dec-03 Dec-04 Feb-06 fund Apr-07 Feb-08 Feb-07 scores well Mar-07 May-07 Mar-08 Apr-08 Southern Company’s four traditional regulated in investors’ pockets. The also utility operations provide a strong and from a tax perspective, as it hasn’t made a steady stream of cash flows that have led to capital gains distribution since its 2003 launch. 243 consecutive quarters of stable or increasing Using the depth and breadth of our analysts’ dividend payments. While traditional utilities coverage, we also think this ETF is cheap are typically viewed as stable but relatively using a bottoms-up valuation analysis. This ETF low-growth businesses, Southern’s enviable is trading near our Consider Buying price, market position in the growing Southeastern which means that you’re getting both income economies of Alabama, Florida, Georgia, and and a substantial bargain all in one fund. Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Feb-03Nov-03 Sep-04Jun-05Mar-06Dec-06Sep-07Jun-08 Mar-03 Feb-04 Feb-05 Feb-06Nov-06 Oct-07 Jul-08 Apr-03 Mar-04 Mar-05 Apr-06 Mar-07 Mar-08 May-03 Apr-04 Apr-05 May-06 Apr-07 Apr-08 Jun-03 May-04 May-05 Jun-06 May-07 May-08 Jul-03 Jun-04 Aug-03 Jul-04 Jul-05 Jul-06 Jun-07 Sep-03 Aug-04 Aug-05 Aug-06 Jul-07 Aug-08 Oct-03 Sep-05 Sep-06 Aug-07 Oct-05 Oct-06 Nov-07 Dec-03 Oct-04 Nov-05 Nov-04 Dec-05 Dec-04 Feb-07 Dec-07 Feb-08 Mississippi presents transparent and material opportunities for investment that we think support projections of 4%-6% growth in both earnings and dividends over the next five years. Moreover, a constructive regulatory environment and favorable rate mechanisms allow Southern to capitalize on these opportunities with timely and generally guaranteed recovery of its investment. With its strong balance sheet, commitment to the pure-play regulated utility model, and steady prospects for growth, Southern provides one of the safest dividends in the market today and currently yields almost 4.5%. It is also worth noting that during the past four recessions, Southern has outperformed the S&P 500 by a wide margin, averaging total returns of almost 31% during those periods, compared with 2.5% for the S&P. International Overview Quality knows no boundaries, so it shouldn’t surprise investors that we prefer firms that have carved out economic moats whether they are domestic or international. Wellfounded is the argument for maintaining a healthy exposure to foreign equities under optimal asset allocation strategies, but macroeconomic shifts are often hard to foresee and can cause rapid valuation shifts. Over the long haul, a passive approach of owning a large bucket of geographically diverse firms will suit most investors better than speculating on specific countries. However, by owning firms with sustainable competitive advantages, either through stock selection or by finding the right fund, investors can find superior returns with investment horizons beyond a few cycles. Overview by Paul Justice MF $34K 28 22 Artisan International Value ARTKX MSCI EAFE TR 16 03 04 05 06 07 08 This compact portfolio has plenty of exposure to consumers around the globe. That’s a function of management’s requirements. Like many, David Samra and Dan O’Keefe favor firms with strong cash flows, high returns on capital, and clean balance sheets. But they only buy those trading at healthy discounts to their estimate of a firm’s intrinsic value. Slumping Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-03 Feb-03Nov-03 Sep-04Jun-05MorningstarAdvisor.com 65 Mar-03Dec-03 Oct-04 Jul-05 Apr-06 Feb-07Nov-07 Apr-03 Mar-04 Mar-05 Feb-06 Mar-07 Feb-08 May-03 Apr-04 Apr-05 Mar-06 Apr-07 Mar-08 Jun-03 May-04 May-05 May-06 May-07 Apr-08 Jul-03 Jun-04 Aug-03 Jul-04 Aug-05 Jun-06 Jun-07 May-08 Sep-03 Aug-04 Sep-05 Jul-06 Jul-07 Jun-08 Oct-03 Oct-05 Aug-06 Aug-07 Jul-08 Sep-06 Sep-07 Aug-08 Oct-06 Oct-07 Feb-04Nov-04 Nov-05 Nov-06 Dec-07 Dec-04 Dec-05 Dec-06 Feb-05
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Morningstar Advisor - Fall 2008

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