(PUB) Morningstar FundInvestor

July 2 014

Morningstar FundInvestor

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A Rally for TCW International Small Cap Leaders & Laggards | Alec Lucas

reinvest their cash in property development. The fund will lag, though, when REIT s outperform REOC s.

Laggards IVA International IVIOX

Soaring equity markets do not play to this fund’s strengths, and the fund’s one-, three-, and five-year returns are in the cellar. Comanagers Charles de Vaulx and Charles de Lardemelle look for shares of solid companies selling at deep discounts to their assessments of intrinsic value, which include worst- case scenarios. That’s not unusual. In addition, they hold a lot of cash and gold to protect against losses, and that’s held the fund back. Price declines in sev- eral Chinese stocks have hurt as well. Shares of Springland International Holdings have lost nearly 25% since the end of 2013 ’s third quarter, when the fund first established its position. AMG Yacktman YACKX This fund’s one-year return ranks near the large-blend category’s bottom, while its 10 -year gain ranks near the top. A sizable cash stake and an overweighting to consumer staples stocks have hurt the fund. In short, the fund is conservatively positioned, so it’s not surprising that it’s lagging in a strong rally. Picks like eBAY EBAY have also hurt. ASTON/TAMRO Small Cap ATASX The fund’s 12 . 6% one-year return falls short of all but a few small-growth peers. Management’s prefer- ence for small-cap firms with strong competitive posi- tions hurt in the final six months of 2013 , when riskier, more aggressive small-growth stocks led the way. Returns have improved somewhat in 2014 , but consumer discretionary names like Francescas Holdings FRAN and Quicksilver ZQK have held the fund back. Both stocks have lost more than 40% for the year to date. œ

Leaders TCW International Small Cap TGICX

Ten Best-Performing Funds

Fund Name

YTD Cat Rank %

Manager Rohit Sah’s moves are finally starting to pay off. He had a strong, albeit volatile, run during a seven-year stint with former charge Oppenheimer Small Company OSMAX . That created big expecta- tions when he started at this fund in late February 2011 . Sah disappointed early on, as his tendency to make big sector bets based on his macroeconomic outlook worked against him. More recently, his bias toward emerging markets has paid off. Thanks to picks like Finolex Cables , the fund’s 36 . 4% one-year gain bests all foreign small/mid-growth category peers. Sound Shore SSHFX The fund’s one-year return of 29 . 6% ranks among the large-cap value category’s best. Shares of longtime holding Southwest Airlines LUV more than doubled during that period, as investors have reacted favor- ably to the firm’s expansion efforts, including launch- ing an international service. Energy picks also fared well. Weatherford International ’s WFT stock price suffered earlier in the year after the firm reported big losses for 2013 ’s fourth quarter. The stock has rebounded since, thanks in part to enthusiasm about Weatherford’s plan to partner with two other firms in tapping unconventional oil-and-gas resources in China. Third Avenue Real Estate Value TAREX This fund’s one-year 21 . 3% gain tops all global real estate rivals, thanks to finishing 2013 well. Plus, the fund’s long-term record is spectacular. Its three-, five-, and 10 -year returns all rank within the catego- ry’s top quintile or better. Comanagers Mike Winer and Jason Wolf have built this record by favoring real estate operating companies. Unlike REIT s, REOC s aren’t encumbered by dividend requirements and can

ClearBridge Aggressive Gr Fidelity Capital & Income Fidelity Independence Fidelity Select Health Ca Loomis Sayles Investment Matthews India Investor

1 1 1 1 1 1

Oakmark Select I 1 TCW International Small C 1 Vanguard Capital Value In 1 Fidelity New Markets Inco 2

Ten Worst-Performing Funds

Fund Name YTD Cat Rank % Vanguard Precious Metals 100 Ariel Discovery Investor 99 CGM Focus 99 Conestoga Small Cap Inves 98 Greenspring 98 ASTON/Montag & Caldwell 97 Berwyn 97 Scout Core Plus Bond Inst 97 Weitz Hickory 97 Eaton Vance Floating Rate 96