Getting Morningstar Getting Morningstar FreeFree

From the SD County LibraryFrom the SD County Library

MorningstarMorningstar

Regular edition available on line @ Regular edition available on line @ www.morningstar.comwww.morningstar.com with limited with limited capability.capability.

Premium edition available @ above Premium edition available @ above site for $19.95/month.site for $19.95/month.

We’ll focus on a free edition available We’ll focus on a free edition available thru the San Diego County Library @ thru the San Diego County Library @ www.sdcl.orgwww.sdcl.org. .

Navigating to siteNavigating to site

You will need a San Diego You will need a San Diego CountyCounty Library Card number and pin to use Library Card number and pin to use the web site.the web site.

Enter http://www.sdcl.org into the Enter http://www.sdcl.org into the address line on your browser.address line on your browser.

Click on databases, then business and Click on databases, then business and investing, then Morningstarinvesting, then Morningstar from from library branch.library branch.

Fill in your library card number and pin Fill in your library card number and pin then click submit. then click submit.

Navigating in the site.Navigating in the site.

From the Morningstar (mst) web site From the Morningstar (mst) web site home page, enter VFINX (any mutual home page, enter VFINX (any mutual fund ticker will do) in the fund ticker will do) in the “Reports”“Reports” line. line.

A new page with the quote will A new page with the quote will appear.appear.

Explore the page by reading each of Explore the page by reading each of the pages under the blue bar in the the pages under the blue bar in the left margin of this page. left margin of this page.

Note Especially!Note Especially!

Purchase informationPurchase information. . – open to new investors???open to new investors???

Stewardship RatingStewardship Rating. See $ . See $ manager’s own money is in the fund. manager’s own money is in the fund.

Snapshot.Snapshot. Initially, consider only Initially, consider only– no load fundsno load funds– <1% expenses <1% expenses – turnover turnover < 3< 30%/yr 0%/yr

Suggested SequenceSuggested Sequence

Chart of five year returns vs. S&P.Chart of five year returns vs. S&P. ““Performance More” for 10 yr. returns.Performance More” for 10 yr. returns. Click “Purchasing Info” for open / closedClick “Purchasing Info” for open / closed ““Snapshot” for total assets, fees, Snapshot” for total assets, fees,

turnover, management.turnover, management. ““Management tab” to see number, Management tab” to see number,

tenure and performance of managers.tenure and performance of managers. ““Stewardship” Read it all!Stewardship” Read it all!

Let’s look at some Let’s look at some Mutual FundsMutual Funds

VFINX message… index fundVFINX message… index fund

MUTHX message… fund MUTHX message… fund expensesexpenses

VGHCX… A sector fundVGHCX… A sector fund

DODFX… An international fundDODFX… An international fund

DODGX message… value fundDODGX message… value fund

VFINXVFINX

Vanguard 500 Vanguard 500 IndexIndex

An S&P 500 Index FundAn S&P 500 Index Fund

Total Returns are typically 2% ahead of Total Returns are typically 2% ahead of the S&P 500 Index because of dividends the S&P 500 Index because of dividends

on the S&P 500 stocks.on the S&P 500 stocks.

MUTHXMUTHX

Mutual Shares Z, a Franklin Family FundMutual Shares Z, a Franklin Family Fund Large-cap value started by pundit M. Large-cap value started by pundit M.

PricePrice Note Note

– was recently closedwas recently closed– Classes A, B, C & RClasses A, B, C & R

same portfoliosame portfolio same ratio of stocks in portfoliosame ratio of stocks in portfolio higher fees and lower returns! higher fees and lower returns!

VGHCXVGHCX

Vanguard Health CareVanguard Health Care Note how the five and ten year Note how the five and ten year

performance has out paced the S&Pperformance has out paced the S&P Great to own, but closed to new Great to own, but closed to new

investors!investors! A favorite of BI members for many A favorite of BI members for many

yearsyears

Category CharacteristicsCategory Characteristics

Various categories of funds behave Various categories of funds behave differently in bull and bear marketsdifferently in bull and bear markets

Compare Performance Compare Performance – Funds recommended by non-BI sourceFunds recommended by non-BI source– compare large cap growth compare large cap growth – vs. large cap valuevs. large cap value– vs. mid cap vs large vs. mid cap vs large

Five LargeCap Growth Fundsvs. S&P 500 Fund, VFINX

0

5

10

15

20

25

30

Years

Thou

sand

s of

Dol

lars

S&P 500

VPCCX

PRGFX

MXXIX

FDCAX

AGTHX

Five LargeCap Value Fundsvs. S&P 500 Fund, VFINX

0

5

10

15

20

25

30

35

40

01/0

1/9

6

01/0

1/9

7

01/0

1/9

8

01/0

1/9

9

01/0

1/0

0

01/0

1/0

1

01/0

1/0

2

01/0

1/0

3

01/0

1/0

4

01/0

1/0

5

01/0

1/0

6Years

Th

ou

san

ds o

f D

ollars

S&P 500

TWEIX

TWVLX

UMBIX

PRFDX

TGIGX

Five MidCap Growth Fundsvs. S&P 500 Fund VFINX

0

5

10

15

20

25

30

35

40

45

Years

Th

ou

sa

nd

s o

f D

oll

ars

S&P 500

ACRNX

MERDX

BPTRX

ACTWX

POAGX

Five MidCap Value Funds vs. S&P 500 Fund, VFINX

0

5

10

15

20

25

30

35

40

Jan-96

Jan-97

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Years

Th

ou

san

ds

of D

olla

rs S&P 500

FDVLX

TRMCX

VASVX

JMCVX

MQIFX

International & Foreign International & Foreign FundsFunds

Consider Currency RiskConsider Currency Risk

Consider the dollar’s strengthConsider the dollar’s strength

Here is one new fund to considerHere is one new fund to consider

Value FundsValue Funds

Solid during bear and bull marketsSolid during bear and bull markets

Consistent, reasonable returnsConsistent, reasonable returns

DODGXDODGX

Dodge and Cox Stock FundDodge and Cox Stock Fund Lagged S&P during the internet Lagged S&P during the internet

bubblebubble Now leads the S&PNow leads the S&P Excellent long term returnsExcellent long term returns Excellent stewardship gradesExcellent stewardship grades Fund Family gets high marksFund Family gets high marks Invests in contrarian (unloved and Invests in contrarian (unloved and

beaten up) stocksbeaten up) stocks

DODGX lags S&P 500

DODGX lead S&P 500

Maybe 10 years isn’t Maybe 10 years isn’t enough… So… enough… So…

Select Mutual Fund ReturnsSelect Mutual Fund Returns

Sources: 1985 to 1997, AAII’s Low Load Mutual Fund Handbook; 1997 to Present, Morningstar

Twenty Year Cumulative Return on $10K

020406080

100120140160180200

Years

Th

ou

sa

nd

s o

f D

oll

ars

DODGX

MQIFX

MUTHX

FGRIX

VFINX

Twenty Year Cumulative Return on $10K

020406080

100120140160180200

Years

Thou

sand

s of

Dol

lars DODGX

MQIFX

MUTHX

FGRIX

VFINXIndex

S&P 500

Value Funds

Growth Fund

Twenty Year Cumulative Return on $10K

020406080

100120140160180200

Years

Thou

sand

s of

Dol

lars DODGX

MQIFX

MUTHX

FGRIX

VFINX

S&P 500

Value Funds

Growth Fund

Danger is buyingIndex or Growth here.

Twenty Year Cumulative Return on $10K

020406080

100120140160180200

Years

Th

ou

san

ds

of

Do

llar

s

DODGX

MQIFX

MUTHX

FGRIX

VFINX

15% Double in Five Years15% Double in Five Years

$20K$20K

$40K$40K

$80K$80K

$160K$160KIsn’t Compounding Isn’t Compounding

Wonderful !!! Wonderful !!!

Twenty Year Cumulative Return on $10K

020406080

100120140160180200

Years

Thou

sand

s of

Dol

lars DODGX

MQIFX

MUTHX

FGRIX

VFINX

Hypothesis:Hypothesis:

Value Funds are Value Funds are

less volatile than less volatile than

growth and growth and

index.index.

Twenty Year Cumulative Return on $10K

020406080

100120140160180200

Years

Thou

sand

s of

Dol

lars DODGX

MQIFX

MUTHX

FGRIX

VFINX

Value investing is a Value investing is a

learned, predictable learned, predictable

process applicable toprocess applicable to

Buying stocks.Buying stocks.

Twenty Year Cumulative Return on $10K

020406080

100120140160180200

Years

Thou

sand

s of

Dol

lars DODGX

MQIFX

MUTHX

FGRIX

VFINX

Value Funds Value Funds

escaped the escaped the

Internet Internet

Bubble.Bubble.

Twenty Year Cumulative Return on $10K

020406080

100120140160180200

Years

Thou

sand

s of

Dol

lars DODGX

MQIFX

MUTHX

FGRIX

VFINX

Value lagged Value lagged

growth during growth during

the boom.the boom.

Value led growth Value led growth

during the bust.during the bust.

Compounded ReturnsLinear Scale

0

5000

10000

15000

20000

1 3 5 7 9 11 13 15 17 19 21

Years

Dolla

rs

30%

25%

20%

15%"

10%"

Compounded ReturnsLogarithmic Scale

100

1000

10000

1 2 3 4 5 6 7 8 9 101112131415161718192021

Years

Dolla

rs

30%

25%

20%

15%

10%

Selected Mutual FundsCumulative Return of $10K

10

100

1000

Years

K-D

oll

ars

DODGX

MQIFX

MUTHX

FGRIX

VFINX

We’ve Covered…We’ve Covered…

Financial PlanningFinancial Planning Mutual Fund Categories and Mutual Fund Categories and

averagesaverages TaxesTaxes Comparison ToolsComparison Tools Morningstar web-siteMorningstar web-site Ten and 20 year histories of selected Ten and 20 year histories of selected

fundsfunds And moreAnd more

Questions?Questions?

On any of the above?On any of the above? That’s all Folks!That’s all Folks!

I Encourage You to I Encourage You to LEARNLEARN

Web sites, in addition to the ones we’ve Web sites, in addition to the ones we’ve studied today, like studied today, like www.finance.yahoo.com/, www.finance.yahoo.com/, www.moneycentral.com, etc.www.moneycentral.com, etc.

Basic Accounting.Basic Accounting.– Not bookkeepingNot bookkeeping– Understanding mutual fund financial Understanding mutual fund financial

statements and their tax implications from the statements and their tax implications from the point of view of the investor.point of view of the investor.

Using Qualitative, (non-numerical) Data.Using Qualitative, (non-numerical) Data.

Tutorials on the webTutorials on the web

http://www.morningstar.com/Cover/Chttp://www.morningstar.com/Cover/Classroom.htmllassroom.html

http://www.betterinvesting.org/mutuhttp://www.betterinvesting.org/mutualfunds/courses/alfunds/courses/

http://finance.yahoo.com/funds/basichttp://finance.yahoo.com/funds/basicss

http://www.aaii.com/Classroom/http://www.aaii.com/Classroom/ And many more!And many more!

This time is for you!This time is for you!

Any questions?Any questions? Any funds you would like to look at Any funds you would like to look at

specifically?specifically?

A Recommended ReadA Recommended Read

Contrarian Investment StrategiesContrarian Investment Strategies, , The Next Generation, by David The Next Generation, by David DremanDreman

Mark Your Calendars!Mark Your Calendars!Coming Attractions:Coming Attractions:

Special Stock Study Computer Group Special Stock Study Computer Group Meeting: 6:00-8:00 pm, Wednesday, Meeting: 6:00-8:00 pm, Wednesday, August 15 at the JCC, 4126 Executive August 15 at the JCC, 4126 Executive Drive, La Jolla. Manifest Investing’s Mark Drive, La Jolla. Manifest Investing’s Mark Robertson Robertson

InvestEd, Costa Mesa, August 17-19InvestEd, Costa Mesa, August 17-19 Edufest, SD BI Chapter Annual meeting and Edufest, SD BI Chapter Annual meeting and

Education Faire, SeptemberEducation Faire, September SSCG Meetings begin October 4SSCG Meetings begin October 4th th

at 6:00pm at The JCCat 6:00pm at The JCC

A few last detailsA few last details

Evaluation FormEvaluation Form– How did you find out about the workshops?How did you find out about the workshops?– What did you like most about the class?What did you like most about the class?– What did you like the least?What did you like the least?

What would you like to have included in What would you like to have included in the class that was missing?the class that was missing?

Thanks for coming. We hope to see you Thanks for coming. We hope to see you again in August, September and on...again in August, September and on...