Which specific market sectors or stocks contributed to performance?
Four sectors made substantial contributions to performance over the Russell Value Index over the past 12 months. In order of importance they are: telecommunications, financials, consumer discretionary and technology. Once again, telecommunications was the worst- performing sector of the Russell 1000 Value Index, the fund’s benchmark, throughout the period. It was, in fact, the only sector to lose ground. While adept stock selection and timing helped us avoid some deep potholes, overall it was the fund’s substantial underweighting in the sector vis รก vis the Russell 1000 Value Index that proved crucial. Few telecommunications stocks met our quality criteria or, in our view, had adequate prospects for above-average earnings growth. Meanwhile, the fund’s financial names logged substantial gains. Nine holdings did extremely well, including regional bank stocks SunTrust Banks, Inc., National City Corp., AmSouth Bancorp. and PNC Financial Services Group, due to better-than-expected earnings.
