Use the new Kiplinger 25 to achieve your financial goals. Plus: Three ways to build your portfolio. By Steven Goldberg, Contributing Columnist April 30, 2006 Editor's note: For the current list of best mutual funds, visit our new Kiplinger 25 Center.If there's one question we hear again and again, it's this: What is the best mutual fund? The question usually has a follow-up: What's the best fund for retirement? Or for college? Or for other vital goals? To all who ask, here are our answers -- our annual look at the Kiplinger 25, the best stock and bond funds you can buy without paying sales fees. Narrowing 8,000 funds to just 25 is part art and part science. Let's start with the science. Because you plan to invest on your own, there's no point paying a load, or sales charge. If you pay a load, it's guaranteed that you begin your quest for good returns in the hole. The same logic explains why we generally avoid funds with high expenses. We also favor funds that require relatively modest initial investments. RELATED STORIES New: Update of This Year's List Portfolios to achieve your goals How our 2005 picks performed What's changed since last year The rest is pretty much art. Although past results don't ensure future results, you can't ignore them. A fund's long-term performance compared with other funds that invest in the same types of securities reveals plenty. How long is long term? Ten years or more is ideal, provided the same person is still in charge of the fund and assets haven't skyrocketed. Advertisement Don't overlook risk. The returns of some funds are good enough to justify their purchase despite high risks. The best measure of a fund's risk is its volatility, which is also the best predictor of how a fund will hold up in a bear market. Finally, we spend a lot of time getting to know managers before we recommend their funds. We learn, among other things, whether a manager has a disciplined investment process that doesn't change on a whim and whether the manager's investment team is stable and motivated. In addition to the discussion offered in this article, we describe how to use our picks to build portfolios for different goals, time frames and levels of risk tolerance. We also provide the essential numbers for our 25 favorites. And we review the results of last year's picks. Small and midsize-company funds You may be having trouble finding great funds that focus on small and midsize companies. We share your pain. So many investors have piled into these funds in recent years that many are closed to new accounts. And funds that haven't shut may be too big for their britches (see When Big Isn't Better). We found four funds in this field that we endorse enthusiastically. Advertisement John Montgomery runs two of them. When he was still a transportation engineer in Houston, he loved to buy stocks in his spare time. One day nearly 20 years ago, Montgomery's accountant told him that he'd never seen a better stock picker. "He said, 'If you ever decide to do it professionally, let me know,' " Montgomery recalls. Montgomery launched the Bridgeway funds in 1994. It was a good move for him and for his clients. All of his funds have excelled. Because it gives Montgomery the widest latitude, the best of the bunch is probably Bridgeway Aggressive Investors 1. "It's run the way I would do my own personal investing," he says. Over the past ten years to March 1, it returned an annualized 21% -- the sixth-highest return of any fund -- and it beat Standard & Poor's 500-stock index in each of the past seven calendar years. That fund is closed to new investors. But Montgomery runs Bridgeway Aggressive Investors 2 (symbol BRAIX), launched in late 2001, in almost the same way. Investors 2 buys shares of companies of all sizes, but it focuses on midsize firms with good growth prospects. Montgomery doesn't scour annual reports or talk with company executives. Instead, he uses computers to pick stocks. He won't say precisely what goes into his models, but it's hard to get too worked up over the secrecy because the results are so remarkably consistent. Aggressive Investors 1 gained 121% in 1999 and handily beat the market during the 2000Ð°2 downturn. Over the past three years, Investors 2 returned an annualized 32%, versus 17% for the S&P 500. As an added attraction, Bridgeway's management fees are tied to the results of its funds, a rarity in the industry. Advertisement Montgomery also manages Bridgeway Small-Cap Growth (BRSGX), which is less than three years old. Here, too, Montgomery proves that he is one of the best computer-using stock jockeys in the land. "Quants," as managers who spend their days refining computer models are known, tend to do best with stocks of small companies. "It's easier to beat the market with very small stocks than with very large stocks," says Montgomery. Small-Cap Growth's assets stand at just $218 million -- making it nimble enough to prospect effortlessly among small companies. The fund gained 12% in 2004, its first full year, 18% last year and 7% in the first two months of '06. As its name indicates, RS Value (RSVAX) looks for bargains. Manager Andy Pilara invests mostly in midsize companies selling at a steep discount to their fair value. Since Pilara took over the fund in 1999, it has trailed its peers only twice. Over the past five years, it gained an annualized 18%. Lately, Pilara has become a fan of media stocks, investing in such firms as Discovery Holding and Liberty Global. He also remains an energy bull. "Many energy stocks are still ridiculously cheap," he says. Another first-class fund that invests in cheap, midsize companies is Vanguard Selected Value (VASVX). Managers James Barrow and Mark Giambrone are better known for managing most of Vanguard Windsor II, a premier large-company fund. "Mid caps offer more opportunity because the companies aren't as closely followed by analysts," says Giambrone. Selected Value has finished in the top half of its peer group in four of the past five years. Expenses are low, at 0.51% per year. (Note that Vanguard has hired Donald Smith & Co. to run a small portion of the fund.) Advertisement Large growth-company funds Tom Marsico is bullish on emerging markets. So how does the veteran, Denver-based manager play these exotic markets in Marsico Growth (MGRIX)? By investing in big U.S. multinationals. He's buying shares of such citizens of the world as Caterpillar, which is helping to construct China's new cities, and FedEx, which is flying more and more packages around Asia. Marsico's approach to emerging markets illustrates how he combines big-picture economic thinking with savvy stock picking. And his methods work. Since its start-up in late 1997, Marsico Growth has outpaced the average fund that specializes in large, growing companies in all but two years. The fund's annualized return over the past five years -- a difficult period for large-company growth stocks -- is a meager 4%. But that still puts Marsico Growth in the top 10% of its category. Before setting up his own shop, Marsico produced stellar returns for nearly ten years at Janus Twenty. One worry: Assets in Marsico Growth and other similarly managed accounts stand at $55 billion. That's worth keeping an eye on, but so far Marsico is handling the challenge. The past five years have been unkind to investors in T. Rowe Price Growth Stock (PRGFX), as well as most other funds that specialize in big, fast-growing companies. Bob Smith guided Growth Stock to a 3% annualized gain over that stretch. The average fund in this category lost an annualized 1%. Given their recent record, why bother with these kinds of funds at all? Because they can sizzle, as they demonstrated in the late 1990s, and they are bound to do so again. When their turn comes, Smith's fund will be well positioned. Smith, who buys stocks only when he thinks they're reasonably priced, holds solid growth companies such as Amgen, General Electric and Microsoft. Masters' Select Equity (MSEFX), which is run by managers from six different investment firms, doesn't fit neatly into this group. Its roster of managers includes both bargain hunters and those who favor growth stocks. But as the big growth stocks have languished, managers who favor value stocks have taken to buying growth stocks as well. Select Equity's all-star managers include Chris Davis and Ken Feinberg of Selected American Shares, Mason Hawkins of Longleaf Partners and Bill Miller of Legg Mason. Each manager (or manager pair) invests 10% or 20% of the fund's assets. Except for 1997 and 1998, the fund's first two full years, it has topped the S&P 500 each year. Since its inception, it has gained an annualized 10%. A team pilots Vanguard Primecap Core (VPCCX), too, but this quintet comes from the same firm. Primecap Management has shepherded Vanguard Primecap (closed to new investors) since 1984. There are slight differences between the two, but both funds essentially feature the same people doing the same things: buying industry leaders with vibrant growth stories while paying attention to price. The original Primecap returned an annualized 15% since its inception in late 1984. Primecap Core earned 16% in 2005, its first full year. Large undervalued-company funds Like Cal Ripken Jr., who made his mark in Baltimore as baseball's Iron Man, Brian Rogers shows up for work every day in downtown Baltimore and quietly gets the job done. Rogers has run T. Rowe Price Equity Income (PRFDX) fund since its inception more than 20 years ago, placing him among the nation's longest-tenured fund managers. Over both the past ten and 15 years, his fund topped the S&P 500 by an average of one percentage point per year. Unlike Ripken, who hit with some power, Rogers is a self-professed singles hitter. "I don't hit many home runs, but I don't strike out a lot, either," he says. As a result, Equity Income, which invests mainly in large companies that are cheaply priced and that pay decent dividends, holds up better than most during bear markets. Rogers looks for financially solid, industry-leading companies that have fallen out of favor. "The hard part is figuring out which of those companies will turn around," he says. He's finding bargains today among media and drug stocks. Consumers are willing to pay for content, no matter its source, says Rogers, so he's been buying shares of Dow Jones, New York Times and Time Warner. And he's invested in nearly all of the major drug makers, including Bristol-Myers Squibb, Eli Lilly, Johnson & Johnson, Merck and Wyeth. Dave Williams is not a household name, but maybe he should be. Williams has done wonders running Excelsior Value & Restructuring (UMBIX), which invests in bargain-priced stocks and then holds on to them for years. It outpaced the S&P 500 in 11 of the past 13 calendar years, and over the past ten years the fund gained an annualized 15%. Williams broadly defines the restructuring mandate suggested by the fund's name -- he considers just about any action a company takes to improve its fortune to be a restructuring. But there's no question about his credentials as a value investor. One of his favorite spots for finding bargains is the list of stocks hitting new 52-week lows. Chris Davis and Ken Feinberg are no slouches at uncovering bargains, either. In the 11 years since Davis took the reins, Selected American Shares (SLASX) earned an annualized 14%. However, Davis and Feinberg (who joined in 1998) generally invest in sounder businesses than Williams does and are willing to pay higher prices for stocks. Davis contends that the market today is practically giving away big, high-quality stocks, such as American Express, Costco and JPMorgan Chase. "These are companies with above-average growth and below-average prices," he says. (Davis and Feinberg recently assumed the helm of Clipper fund, which holds only about 20 stocks. It will be more volatile than Selected, but, in theory, should deliver better gains over the long term.) Why own a Chevy, asks Bill Nygren, co-manager of Oakmark Select (OAKLX), when you can get a BMW for the same price? Like Clipper, Select owns only about 20 stocks. And like Davis and Feinberg, its managers are bullish on blue chips. Normally, Nygren and co-pilot Henry Berghoef invest in below-average companies with shares selling at dirt-cheap prices. But nowadays, Nygren says, they can find plenty of above-average companies selling at average prices relative to their earnings. Select's long-term record is superb. Since its inception in late 1996, it has returned an annualized 19%. But hurt by the emphasis on blue chips, Select has trailed the S&P by two percentage points annually for the past three years. "I believe we were just early," says Nygren. Ron Muhlenkamp, manager of the eponymous Muhlenkamp fund (MUHLX), is an independent and disciplined thinker. Over the past 15 years, his fund has returned 16% annualized -- five points per year ahead of the S&P 500. In analyzing a stock, Muhlenkamp pays close attention to two numbers: its price-earnings ratio (he wants it to be below average) and return on equity, a measure of profitability (which he wants above average). Muhlenkamp invests in companies of all sizes, but lately the fund has tilted in the direction of larger firms because that is where Muhlenkamp is finding more stocks that meet his criteria. International funds Dodge & Cox is not your average fund company. Most of the managers and analysts who join the San Francisco-based, employee-owned company do so after business school and stay their entire careers. The seven co-managers of Dodge & Cox International Stock (DODFX) have been at the firm an average of 17 years. That continuity, plus the firm's penchant for successfully sniffing out cheap stocks, has helped make International a top performer since its launch in 2001. International follows the same formula perfected by Dodge & Cox Stock, a venerable domestic fund that has long owned some foreign stocks (and is now closed to new investors). Both funds are team-managed, so that a variety of viewpoints are represented. Both charge low fees; International's annual expense ratio of 0.70% is less than half that of the typical international fund. And the management teams of both funds -- there's some overlap between the two -- are terrific value investors. Experience coupled with thorough research, says co-manager Diana Strandberg, "often gives us the confidence to keep buying more of a stock as it declines." International's managers have lately been finding opportunities in drugs, media, technology and telecom -- areas that are normally the purview of growth-stock pickers. "We're finding lots of bargains in former growth darlings," Strandberg says. The fund has a fourth of its assets in Japan and 15% in emerging markets. You need to have determination to take long bike rides several times a week, as David Herro does. Sometimes, he says, "you feel tired and you start wondering, What am I doing on this bike?" Lately, Herro, manager of Oakmark International (OAKIX), has been feeling that way about some of his stock picks. Last year marked the first time since 1998 that Oakmark's total return trailed that of the average diversified overseas fund. The problem? Herro is a dogged value investor, so he sold most of his emerging-markets stocks too soon because they had become pricey, in his view. Herro also missed out on part of the big move in Japanese stocks because he has trouble finding Japanese companies "with managers who care about shareholders." Instead, he's loaded up on blue-chip media and drug companies, mostly based in Europe. It's hard to argue with International's long-term results, however. The fund returned an annualized 12% over both the past five and ten years, putting it in the top 20% of broad-based foreign funds. Marsico International Opportunities (MIOFX) has matched Oakmark International's gains over the past five years. But its manager, Jim Gendelman, arrived there via a different route. Like his mentor, Tom Marsico, Gendelman studies the economic picture before researching stocks. He's keen on emerging markets and has invested about 20% of the fund's assets in them. "Many of them have better underlying fundamentals than do developed economies," says Gendelman, who also runs Harbor International Growth (which has a slightly lower expense ratio). And because he thinks Japan's economy is finally on the mend, he has placed 16% of assets in Japanese shares. Because of their volatility and periodic implosions, emerging-markets funds aren't for the faint of heart. Bolder investors, though, should consider SSgA Emerging Markets (SSEMX). Over the past five years, the fund ranked in the top third of emerging-markets funds, with an annualized return of 22%. Over ten years it gained an annualized 10% -- in the top 20% of the category. The fund avoids making big bets on any sector or country, says Brad Aham, who leads the seven-person team of managers. Computer models rank the attractiveness of both stocks and developing nations. But the fund diverges only slightly from the country weightings in the major emerging-markets indexes. In any case, Aham likes what he sees in developing nations: "In a lot of emerging countries, the consumer is being liberated -- with access to credit cards, mortgages and car loans for the first time." Specialized funds For several years, Ken Heebner's CGM Focus (CGMFX) rode the real estate boom by owning a parcel of home-building stocks. Then in 2004, he abruptly dumped the homebuilders and charged into energy and industrial-materials stocks. Meanwhile, he sold short -- a way of profiting from a stock's decline -- shares of some big U.S. consumer and telecom companies. Huge sector bets, short positions, a concentrated portfolio and sudden shifts are hardly new for Heebner, who invests as much by closely following economic developments as he does by analyzing individual stocks. For most folks, this is no way to manage money. But Heebner, a 30-plus-year industry veteran, seems to have perfected this style. Over the past five years, CGM Focus returned an annualized 26% -- 24 percentage points per year more than the S&P 500. An older Heebner fund, CGM Capital Development, which is shut to new investors, gained 13% annualized over the past 20 years, one point per year ahead of the S&P. But when Heebner is out of step, performance can be awful. For instance, he wouldn't invest in highflying technology stocks in 1998 and 1999 and trailed the market badly. It's best to view Focus as a hedge fund in the guise of a mutual fund. As such, it shouldn't be the main course on your investment plate -- but in small portions it can do wonders for your portfolio. If the mutual fund world has a superstar today, it is unquestionably Bill Miller. Under his leadership, Legg Mason Value has topped the S&P 500 for 15 straight years, an unparalleled record of consistency. But since its inception six years ago, we have consistently suggested Legg Mason Opportunity (LMOPX)as the preferred vehicle for riding the Miller bandwagon. It has been the right call: Opportunity's five-year annualized return of 11% beats Value's by seven percentage points per year. Opportunity is a more attractive choice than Value because it's smaller (assets are less than $4 billion, versus $45 billion for Value and other similarly run accounts) and more flexible. At Opportunity, Miller can invest in smaller companies. The newer fund also allows him to bet against stocks by selling their shares short or by employing options. Opportunity provides more validation for Miller's painstaking research and willingness to buy "mispriced" stocks, regardless of whether they fall into the growth or value camps. Like Opportunity, T. Rowe Price Real Estate (TRREX) shouldn't represent a major portion of anyone's portfolio. But the fund, which invests primarily in real estate investment trusts, is a nice diversifier. The fund yields about 3.2%, and its price movements don't correlate closely with the overall stock market. It returned an annualized 22% over the past five years and has lagged the average real estate fund just once in its eight years of existence. Manager David Lee runs the fund conservatively. He invests the bulk of assets in a "core, blue-chip group" of REITs that are well diversified both by geography and by property type. He then adds a few more-speculative stocks. In either case, he tries to identify companies with superior management teams. Bond funds For more than two decades, the best way to invest in bonds was to buy long-term issues. This held true even as the Federal Reserve relentlessly raised short-term rates. But we don't recommend owning long-term bond funds now because the potential returns are not worth the risks (bond prices move inversely with yields, and long-term bonds are more volatile than short-term bonds). From today's meager levels, rates are more likely to climb than to fall. When that happens, the prices of most bonds and bond funds will sink. What to do? Invest some of your bond money in Fidelity Floating Rate High Income (FFRHX), a fund designed to benefit from rising short-term rates. Here's how it works: Manager Christine McConnell invests in bank loans whose interest rates vary with changes in the general level of short-term rates. Consequently, McConnell's fund collects more interest payments as rates rise. The rate adjustments also enable the bank loans to maintain their values. By contrast, bonds generally lose value when rates rise. As a result, the fund's price tends to remain remarkably constant. Floating Rate yields 5.4% and gained an annualized 5% over the past three years. But don't confuse Floating Rate with a money-market fund. It invests in low-quality "junk" loans, meaning there's always the danger that a borrower may not repay its debts. But holders of bank loans stand first in line, ahead of almost all other creditors, including bondholders, in the event an issuer defaults. McConnell, who has been investing in junk debt for 20 years, says she's "paid to be pessimistic." That is, she conjures up worst-case scenarios for the companies whose debt she buys and then tries to determine the likelihood of those scenarios occurring. Since she started running a broker-sold version of Floating Rate six years ago, it has experienced only two "unexpected bankruptcies." In general, we prefer funds that invest in medium-maturity bonds, are run by experienced managers and charge below-average fees. Dodge & Cox Income (DODIX) meets all three of these criteria. The fund earned 2% in 2005 -- a smidgen less than the return of the Lehman Brothers Aggregate Bond Index. Over the past ten years, though, it ranks among the top 10% of funds that specialize in high-quality taxable bonds, with an annualized return of 7%. The fund's nine managers are first and foremost bond pickers. While they make interest-rate forecasts, they devote most of their efforts to researching companies and searching for attractively priced bonds. Adding to the fund's appeal: low expenses of 0.44% per year. The story is similar at Fidelity Intermediate Municipal Income (FLTMX). Manager Doug McGinley and his colleagues don't make big bets on the direction of rates and look mostly for high-quality tax-free bonds trading for less than they think they're worth. Over the past ten years, the fund returned an annualized 5%, besting 90% of medium-term muni funds. It charges 0.43% annually. Bill Gross, the head bond honcho at Pimco, one of the nation's most prominent fixed-income managers, is the closest thing to a bond superstar. Harbor Bond (HABDX), which Pimco manages, returned an annualized 7% over the past ten years and hasn't finished in the bottom half of its peer group -- intermediate-maturity taxable bond funds -- since 1994. Truth be told, Gross's moves in managing Harbor Bond are nowhere near as bold as his occasionally cataclysmic pronouncements. (For example, speaking of the U.S., he recently said that "we have exhausted our savings, lost our competitive edge and squandered our educational heritage.") He doesn't extend or shrink maturities in Harbor Bond by large amounts. And although the fund has profited lately from holdings in emerging-markets and inflation-indexed bonds, its holdings in nontraditional areas have been modest. If you want an adrenaline rush from bonds, look to Dan Fuss and Kathleen Gaffney, who run Loomis Sayles Bond (LSBRX). Fuss and Gaffney typically stash about 35% of assets in junk bonds, including low-grade corporate IOUs and debt issued in developing markets. The pair roam wide in their pursuit of undervalued bonds and even currencies. Yes, this is wild stuff for supposedly sedate bonds. But the managers have justified the risks they take by delivering solid returns. The fund gained 7% over the past year, aided by a big stake in emerging-markets bonds. Over the past ten years, it gained an annualized 10% -- more than three points per year ahead of the Lehman index. In the bond arena, that's a huge edge. By the numbers: Key information about the Kiplinger 25 The raw returns are just a starting point in our assessment of the Kiplinger 25. We also look at how funds perform against their peers and whether their results justify the risks they take. U.S. Stock Funds FUND NAME SYMBOL 1 YR. TOTAL RETURN 3 YR. TOTAL RETURN (ANNUALIZED) 5 YR TOTAL RETURN (ANNUALIZED) 10 YR TOTAL RETURN (ANNUALIZED) EXPENSE RATIO TOLL-FREE NUMBER Bridgeway Aggressive Investors 2 BRAIX 21.9% 32.1% -- -- 1.23% 800-661-3550 Bridgeway Small-Cap Growth BRSGX 7.0 -- -- -- 0.88 800-661-3550 CGM Focus CGMFX 17.0 40.0 24.6% -- 1.07 800-343-5678 Excelsior Value & Restructuring UMBIX 15.4 28.0 9.1 14.9% 1.14 800-446-1012 Legg Mason Opportunity Primary* LMOPX 19.3 29.6 11.4 -- 1.89 800-822-5544 Marsico Growth MGRIX 12.0 19.6 4.2 -- 1.26 888-860-8686 Masters' Select Equity MSEFX 10.5 19.3 5.3 -- 1.22 800-656-8864 Muhlenkamp MUHLX 6.6 28.3 12.0 15.4 1.14 800-860-3863 Oakmark Select OAKLX 5.3 15.2 8.2 -- 1.00 800-625-6275 T. Rowe Price Equity Income PRFDX 7.6 18.6 6.7 10.3 0.71 800-638-5660 T. Rowe Price Growth Stock PRGFX 12.5 17.8 3.4 9.8 0.72 800-638-5660 T. Rowe Price Real Estate TRREX 33.0 32.6 22.2 -- 0.85 800-638-5660 RS Value RSVAX 13.2 33.7 17.8 5.8 1.49 800-766-3863 Selected American Shares S SLASX 9.3 19.5 4.9 12.2 0.92 800-243-1575 Vanguard Primecap Core VPCCX 15.6 -- -- -- 0.72 800-662-2739 Vanguard Selected Value VASVX 9.1 24.5 12.2 9.5 0.51 800-662-2739 S&P 500-STOCK INDEX 8.4% 17.1% 2.4% 8.9% RUSSELL 2000 INDEX 16.6 28.1 10.4 9.9 Data is to March 1, 2006. --Not available. *Limited or no availability through discount brokers. Source: Copyright © 2006, Standard & Poor's, a division of The McGraw-Hill Companies, Inc. All rights reserved. International Stock Funds FUND NAME SYMBOL 1 YR. TOTAL RETURN 3 TOTAL RETURN (ANNUALIZED) 5 YR TOTAL RETURN (ANNUALIZED) 10 YR TOTAL RETURN (ANNUALIZED) EXPENSE RATIO TOLL-FREE NUMBER Dodge & Cox International Stock DODFX 16.7% 38.7% -- -- 0.70% 800-621-3979 Marsico International Opportunities MIOFX 26.8 31.0 12.1% -- 1.49 888-860-8686 Oakmark International I* OAKIX 18.3 30.4 11.9 12.0% 1.11 800-625-6275 SSgA Emerging Markets SSEMX 39.2 45.3 21.9 10.4 1.25 800-647-7327 MSCI EAFE INDEX 17.9% 29.4% 7.8% 6.7% Data is to March 1, 2006. --Not available. *Limited or no availability through discount brokers. Source: Copyright © 2006, Standard & Poor's, a division of The McGraw-Hill Companies, Inc. All rights reserved. Bond Funds FUND NAME SYMBOL 1 YR. TOTAL RETURN 3 YR. TOTAL RETURN (ANNUALIZED) 5 YR TOTAL RETURN (ANNUALIZED) 10 YR TOTAL RETURN (ANNUALIZED) EXPENSE RATIO TOLL-FREE NUMBER Dodge & Cox Income DODIX 2.2% 3.6% 5.9% 6.6% 0.44% 800-621-3979 Fidelity Floating Rate High Income FFRHX 4.6 5.1 -- -- 0.82 800-544-8544 Fidelity Intermediate Municipal Income FLTMX 3.1 3.7 5.0 5.2 0.43 800-544-8544 Harbor Bond Institutional HABDX 3.4 3.9 6.3 6.9 0.58 800-422-1050 Loomis Sayles Bond LSBRX 7.1 11.6 9.8** 1.00 800-633-3330 LEHMAN BROS. AGGREGATE BOND INDEX 2.7% 3.2% 5.4% 6.3% Data is to March 1, 2006. --Not available. **For the older, institutional class, which has a higher minimum investment and lower operating expenses. Source: Copyright © 2006, Standard & Poor's, a division of The McGraw-Hill Companies, Inc. All rights reserved.