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How Did Past Winners Fare in Tough 2000?

Late Wednesday morning


announced its choices for 2000's mutual fund

Managers of the Year

and the theme was value investing. Among U.S. stock funds the winners were Jim Gipson, Douglas Grey, Peter Quinn, Michael Sandler and Bruce Veaco of the large-cap value

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Clipper fund. The pick among foreign funds was Chris Browne, William Browne and John Spears of the foreign and value-oriented

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Tweedy, Browne Global Value fund.

And the bond fund winner was Bill Gross and his colleagues who run the

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Pimco Total Return fund, among others. Gross and his team also won in 1998 and are the first two-time winners.

Morningstar's stock analysts named Jorma Ollila of Finnish cell phone titan


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chief executive of the year.

The Chicago fund-tracking shop's annual awards are the fund world's version of the Oscars. The list of past winners includes legendary former

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Fidelity Magellan skippers Peter Lynch and Jeff Vinik, in addition to Bill Miller, whose

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Legg Mason Value Trust is the only retail mutual fund to beat the

S&P 500s in each of the past 10 years.

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There aren't any strict criteria for receiving the award, but it typically goes to fund managers with a strong long-term track record after a year when their investment style sparkles. This year's list reflects the resurgence of the value style -- essentially bargain hunting in the stock market -- after several years when the more aggressive growth style had a strong wind at its back.

In 1999, for instance, the average tech fund gained 135% but last year the category averaged a more than 30% loss and the average large-cap growth fund lost more than 15%. Consequently, the firm chose to highlight price-conscious managers that have stayed ahead of their peers.

"Anyone can make money in a rally, but skilled managers steer clear of the worst damage and make it easier for investors to stick around for the next rally," said Morningstar Director of Fund Analysis Russ Kinnel.

The no-load Clipper fund's managers look for solid businesses they think are trading some 30% below their true value. That tends to lead them to the financial sector, where more than 44% of the fund's assets were invested on Sept. 30. And when they can't find bargains like that, the team lets cash mount up. At the end of September for instance, the fund had more than 15% of its money in cash -- nearly triple the cash position of most stock funds.

That strategy sounds odd, but it has led to solid results. After a 37.4% gain last year, the fund boasts annualized returns that beat the S&P 500 and their average peer over the last one-, three-, five- and 10-year periods, according to Morningstar. The fund's 19.7% 10-year annualized return beats the S&P 500 by more than 2% as well as some 97% of its peers. The fund's worst recent year was in 1999, when it lost 2%, trailing both the S&P 500 -- by more than 23 points -- and 86% of its peers.

The team behind the Tweedy, Browne Global Value fund also takes a staid approach. The three managers sift foreign markets, looking for stocks they think are trading below their private market value. They also tend to trade less than their peers, which enhances the fund's tax efficiency, and they hedge the fund's currency risk to protect shareholders from currency swings that can diminish returns.

The fund's 16.2% annualized return since its 1993 inception beats its average peer by nearly 6%. And last year, when a sagging euro and tech-stock meltdown left most foreign funds in the red, the fund managed to post a 10% gain.

The fund struggled in 1998 and 1999, trailing their average peer when more aggressive and tech-heavy funds soared.

Gross' Pimco Total Return fund has outpaced the

Lehman Brothers Aggregate Bond Index

in 10 of the past 13 years, according to Morningstar. Gross is a legendary bond investor known for prescient moves. Early last year he and his team began loading up on long-term

Treasury bonds and reducing their exposure to corporate bonds, helping the fund post a 11.6% return, better than 89% of its peers. The intermediate-term bond fund's 9.2% 10-year annualized gain beats 97% of its peers and the fund has been less volatile than its average peer, according to Morningstar.

In a television interview on


, Morningstar managing director Don Phillips said the winners' offerings "are pretty good funds to own right now," but a look at the difficulties past winners ran into just last year highlights the importance of looking closely even at these picks before buying shares.

Morningstar launched its CEO of the Year award last year with

Charles Schwab


David Pottruck

, co-heads of Schwab's eponymous brokerage


, as winners. The leading online broker's stock rose 11.4% in 2000.

After gaining 220% in 1999, Nokia's stock fell 8.7% in 2000, due to reduced profit margins, slowing economic growth and valuation concerns among tech and telecom investors. Morningstar's Phillips mentioned the company's candid approach to communicating with shareholders and its customer focus as two reasons for Ollila's selection.

Ollila was runner-up for the award in 1999, according to a report on