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Kathy Panagopouloskathy.panagopoulos@morningstar.com
Morningstar Announces 2005 Fund Manager of the Year Awards - Winners Demonstrate Investment Excellence and Stewardship in a Year of Mixed Results

CHICAGO, Jan. 4, 2006 – In a year when international-stock funds soared, bond funds struggled, and domestic-stock funds fell somewhere in the middle, the best fund managers demonstrated that even when the markets are mixed, superb analysis, long-term focus, and outstanding stewardship make a difference.

To recognize the best fund managers, Morningstar, Inc., a leading provider of independent investment research, each year selects leaders in three categories – domestic stock, international stock, and fixed income. Today, Morningstar announced its 2005 Fund Manager of the Year award winners:

• Domestic-Stock Fund Manager of the Year:
Christopher Davis and Ken Charles Feinberg
Selected American Shares (SLASX)
Davis NY Venture A (NYVTX)

• International-Stock Fund Manager of the Year:
Robert Lyon, Matthew Pickering and Jerrold Senser
ICAP International (ICEUX)

• Fixed-Income Fund Manager of the Year:
Tad Rivelle, Laird Landmann, Stephen Kane, and David Lippman
Metropolitan West Total Return Bond (MWTRX)

“This year’s winners are longtime Morningstar favorites. We’ve recommended these managers for years, and they have long been on the Morningstar Analyst Picks list,” said Kunal Kapoor, director of mutual fund analysis for Morningstar. “The managers at Davis Selected Advisers, ICAP and Metropolitan West stand out for their attention to fees, investing in the funds they oversee and their respect for shareholders with all-around strong stewardship.”

Domestic-Stock Fund Manager of the Year:
Christopher Davis and Ken Charles Feinberg
Selected American Shares (SLASX)
Davis NY Venture A (NYVTX)

Chris Davis and Ken Feinberg maintain a tight focus on producing good long-term results for shareholders. They seldom trade, take heed of transaction costs and taxes, maintain low expenses and avoid short-term bets. Even though interest rates rose steadily in 2005, this team’s superb stock-picking ability helped their financials-heavy portfolio buck conventional wisdom and trump the SandP 500 Index by 5 percent.

In 2004, Davis Selected Advisers demonstrated its strengths as a steward of shareholders’ capital by instituting a less expensive, directly sold share class (D class) for Selected American, which resulted in a sizable fee cut for those who invest through the firm, rather than with a supermarket.

In 2005, the team at Davis Selected Advisers set a higher standard for stewardship. After being named as the management team to oversee the Clipper Fund, the employees at Selected Advisers immediately invested $50 million of their money into the fund, and they offered Clipper’s shareholders a nearly 50 percent cut in management fees.

“This firm sets the bar for others in the industry,” Kapoor said. “At a time when other firms don’t always do what is best for their shareholders, it’s refreshing to see a firm so committed to the long-term welfare of fundholders. Davis and Feinberg were runners-up for our 2004 Domestic-Stock Fund Manager of the Year, and they deserve this year’s award. They follow in the footsteps of Shelby Davis, Chris’ dad, who won the Domestic-Stock Fund Manager of the Year award in 1996.”

International-Stock Fund Manager of the Year:
Robert Lyon, Matthew Pickering and Jerrold Senser
ICAP International (ICEUX)

In May 2005, the ICAP International Fund team, led by Rob Lyon, converted the fund from a Europe fund to one with a broad foreign-stock mandate, in order to invest in Japanese companies the fund team found to be attractive. This proved to be a fortuitous move as Japan enjoyed quite a rally in 2005. The fund, which produced a five-year annualized return of nearly 10 percent, jumped in 2005 to a stunning 19 percent return, aided by stocks such as Mitsubishi (MSBHY) and Mizuho Financial Group (MIZHF).

This has not been the only wise move by Lyon and his team. They keep fees low – to just 0.80 percent, even though many fund companies charge higher foreign fund management fees simply because they can. The firm pays its board in fund shares and keeps turnover among its investment professional staff to a minimum, which helps the team maintain its consistent performance.

“In hindsight, ICAP International’s transition from a Europe-only portfolio to a diversified international fund seems perfectly timed,” Kapoor said. “We’re pleased to see such a decision be driven by an investment rationale rather than marketing considerations. The fund had an amazing year, but its appeal goes beyond its short-term performance. The team leverages the expertise it has developed on the domestic side to make sharp calls on international stocks – in fact, ICAP was also among the finalists for our Domestic-Stock Fund Manager of the Year award. We have confidence in the team’s ability because they have consistently outperformed as a Europe-only fund. We’re also encouraged that Lyon and his team invest heavily in the shop’s funds.”

Fixed-Income Manager of the Year:
Tad Rivelle, Laird Landmann, Stephen Kane, and David Lippman
Metropolitan West Total Return Bond (MWTRX)

The MetWest team deftly manages its fixed-income assets – producing great results. The team will shift into different sectors of the bond market, bulk up on individual bond issues when opportunities arise and adjust the fund’s interest-rate sensitivity based on its outlook for the markets. In 2005, the MetWest team added to its exposure in the high-yield, bank-loan and other specialty areas of the bond market to help Total Return Bond return more than 3 percent – topping 95 percent of its peer group.

The management team’s value approach can lead it to unloved areas of the bond market, which helps the fund perform well in a variety of market environments. MetWest Total Return Bond held up better than most when interest rates spiked in 1999, and it also fared quite well when rates moved lower in 2000 and 2001. And while rising rates have hampered returns across the intermediate-term bond category more recently, the fund's defensive positioning has helped cushion the blow.

The fund has delivered an annualized return of more than 7 percent since its 1997 inception, which easily beats the average intermediate-bond fund’s nearly 6 percent.

“Unlike some fixed-income shops, the MetWest management team uses every club in its bag. The fund’s flexibility can cause some short-term dips, but this team has been together for nearly 10 years, and their experience wins out during the long haul,” Kapoor said. “They also keep expenses low and invest in the funds they oversee.”

Runners-Up for 2005

This year’s winners had some superb competition. The team at Dodge and Cox Stock fund (DODGX), which was a finalist for Morningstar’s 2004 Domestic-Stock Fund Manager of the Year award, was runner-up in 2005. James Moffett, manager of UMB Scout WorldWide (UMBWX), was runner-up for the International-Stock Fund Manager of the Year, his first time as a nominee. Jeffrey Gundlach, manager of TCW Galileo Total Return Bond (TGLMX), was runner-up in the fixed-income category, his second nomination. He was first named a contender in the category in 2004.

Established in 1988, the Morningstar Fund Manager of the Year award recognizes portfolio managers who demonstrate excellent investment skill and the courage to differ from the consensus to benefit investors. To qualify for the award, managers’ funds must have not only posted impressive returns for the year, but the managers also must have a record of delivering outstanding long-term performance and of aligning their interests with shareholders’. The Fund Manager of the Year award winners are chosen based on Morningstar’s proprietary research and in-depth evaluation by its fund analysts.

For the complete report, go to:

For a list of past and present winners, go to:


Calendar-year results for 2005 are based on preliminary data.

About Morningstar, Inc.
Morningstar, Inc. (Nasdaq: MORN) is a leading provider of independent investment research in the United States and in major international markets. The company offers an extensive line of Internet, software, and print-based products and services for individuals, financial advisors, and institutions. Morningstar tracks more than 100,000 investment offerings, including stocks, mutual funds, and similar vehicles. The company has operations in 16 countries.

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