Table of Contents

1.  Market Outlook
2.  Singapore
3.  PIMCO Real Return D (PRRDX)
4.  Additional Investing Ideas
5.  Investor Trivia -- Currency Booster
6.  Featured Topic -- Small-Cap Value Stocks  
7.  Free Investing Resources

Today's Top Stock Picks

Forget China! Investors Look to Singapore for Double-Digit Yields
China and India aren't the best places to search for high yields. However, income investors can benefit by investing in other Asian countries that are directly profiting from their growth. Read More. . .

An Ultra-Safe Treasury Fund with a Yield of 7.8%
Managed by the world's biggest bond manager, this fund has an ultra-safe "AAA"-rated portfolio of U.S. Treasuries and a solid yield. Read More. . .

Market Outlook

Although there were only four trading days in the past holiday-shortened week, there were enough market gyrations to last a month.

On March 11th, the Dow Jones Industrials shot up 416 points on reassuring news that the Fed was pumping $200 billion in loans to liquidity-stricken financial institutions. Unfortunately, those gains unraveled within a few short days after worries intensified that Bear Stearns (NYSE: BSC) was in dire need of a bailout.

And those fears came to surface this past Monday when word got out that JP Morgan Chase (NYSE: JPM) had engineered a deal to acquire the beleaguered company (which has borne the brunt of the mortgage-backed security meltdown) for the fire-sale price of $2 per share -- a remarkable collapse for a stock trading above $150 at this point last year.

However, Bear Stearns' troubles were brushed aside on Tuesday, thanks in part to better-than-expected news on the earnings front -- from Lehman Brothers (NYSE: LEH) and Goldman Sachs (NYSE: GS) no less. But a sharp interest rate cut of 3/4 of a percentage point was what really jump-started the market.

The Fed has now slashed rates six times in the past six months, aggressively lowering the benchmark fed funds rate to just 2.25%, less than half of where it stood last summer. And traders showed their appreciation, sending the Dow up 420 points (+3.5%), while the S&P 500 and Nasdaq both shot up more than +4% -- the biggest one-day surge in more than five years for all three of the major averages.

Unfortunately, in action very reminiscent of the prior week, the Dow surrendered nearly 300 points of that gain the very next day, before bargain hunters came rushing back in on Thursday. For the week, all the averages finished sharply higher.

As the age-old battle between fear and greed wages on, there is a growing sense that the Fed's intervention, along with the economic stimulus checks set to arrive at the doorsteps of 130 million households over the next few months, might be just enough to give the economy a soft landing.

But while the American economy might be in limbo, China and India still have decades of strong growth ahead of them. But for investors looking for income, these growth stories might not be the best place to put your money. However, thanks to their boom times, neighboring markets are offering juicy double-digit yields. And below, High-Yield International editor Nick Lanyi profiles one Asian country that is profiting hand over fist and rewarding income investors at the same time.

After that, High-Yield Investing editor Carla Pasternak takes us on a tour of PIMCO Real Return D (PRRDX). With a portfolio chock full of secure "AAA"-rated Treasuries and inflation-protected securities, this fund will keep you calm in even the roughest of markets.

Good Investing!

-- Nathan Slaughter
Co-Editor
TopStockAnalysts Digest

But there's a problem.

If you're an income investor, then China and India aren't the best places to search for high yields.  For the most part, companies in these two emerging markets pay little or no dividends; they're too busy reinvesting cash into their businesses or acquiring competitors as they strive to keep up with the surging economy.

So, how can income investors take advantage of economic growth in these markets, yet still lock in solid dividend yields?  The answer is simple -- invest in other Asian countries that are directly benefiting from the economic boom in China and India.

Asian Countries Deliver Big Gains

Not surprisingly, stocks in surrounding nations like South Korea, Japan and Singapore have delivered strong returns in recent years.  The table below tells the tale, and the same phenomenal growth story applies throughout the rest of Asia.

As you can see, by and large, all of Asia is enjoying an economic boom -- thanks in no small part to what's happening in China and India.  As these two economies have grown, trade with their neighbors has picked up, leading to increased demand for natural resources and other important exports from surrounding countries like Singapore and South Korea.  This has fueled strong economic growth throughout the entire region.

And while the pickings are slim when it comes to high-yield stocks in China and India, many surrounding countries are loaded with high-quality dividend payers.  Best of all, thanks to solid economic growth in the region, these dividend-rich firms are generating strong cash flows -- cash they're returning to shareholders in the form of steadily growing dividend payments.

Enter:  Singapore

Although a number of Asian nations look promising in today's environment, Singapore remains one of my absolute favorite high-yield hunting grounds.

A tiny city-state made up of 63 islands but with a geographic size of just 272 square miles, Singapore masquerades as a geographic midget, but in reality it's an economic giant.  The country has a population of less than 5 million and is less than half the size of Los Angeles -- Singapore is really a city-state.  But the country is one of the most business-friendly and efficiently run nations in the world.  It's also a developed market with a high standard of living.  On a per capita gross domestic product (GDP) basis, Singapore ranks above such countries as Spain, Portugal, and Greece and just behind Italy, Australia, and Canada. 

The government recognized early on that it can't compete with China on labor costs for manufacturing.  Nor can the country compete with India on price when it comes to certain services.  Singapore instead re-focused its economy on high value-added industries such as financial services and technology.  As a result, the country has become a key banking and financial services center within Asia, and it remains one of the highest volume currency-trading centers in the world.

And the nation is taking steps to make sure it maintains its competitive edge. Singapore has eased labor laws, making it easier for needed workers to emigrate there. Singapore has also enacted legislation to reduce its corporate tax rate to 18% starting with the 2008 tax year; soon its taxes will be among the lowest in the world.

Meanwhile, Singapore's enviable position at the intersection of various shipping routes has made its port one of the world's busiest for 300 years.  As a result, Singapore's so-called "entrepot" industry -- duty-free importing and exporting out of the same port facilities -- provides the nation with a significant source of income.  And thanks to Singapore's proximity to fast-growing Asian markets like China, the nation is one of the biggest beneficiaries of booming Asian trade.

Singapore's real estate industry is also in the midst of an incredible expansion. With limited space, developers have constructed thousands of new homes, but values have still shot through the roof, as demand has outstripped supply.  The same scenario has also unfolded in the market for office and industrial space.

Looking at the overall picture, Singapore's economy is soaring.  The nation's gross domestic product has increased +6-8% annually over the past four years, with +6.5% growth expected in 2008 -- faster than almost every other developed economy in the world.  If it manages that rate, then the country's stock market should continue to deliver robust returns.

Of course, if you've been following Singaporean stocks, then outsized gains are certainly nothing new.  The tiny city-state has been one of the world's best-performing markets over the past five years . . .

The MSCI Singapore Index has skyrocketed over +200% since 2003, delivering annualized gains of +27.6% and trouncing the S&P 500 by a 3-to-1 margin.  I expect that outperformance to continue in the coming years thanks to the implementation of business-friendly reforms, as well as strong demand for exports to China.

Capturing Above-Average Yields in Singapore

There are many compelling reasons to invest in Singapore.  Aside from strong economic growth, the nation is also delivering abnormally high dividend yields.  The average Singaporean stock is now yielding about 3.5% -- nearly 2X the level seen in the U.S.  And remember, that's just the average -- many individual stocks in Singapore are now dishing out yields of 6%, 8% . . . even 10% or more.

In the most recent issue of my premium newsletter -- High-Yield International -- I went in search of high yields in Singapore, as well as several other attractive nations in Southeast Asia.  In the process, I profiled some of my favorite high-yield picks in the region, including a fast-growing company that is scooping up some of Singapore's most valuable real estate.  Thanks to strong economic growth, real estate prices and rental rates are booming, helping this firm deliver +49% revenue growth and an impressive 9.0% dividend yield. 

If you'd like to learn the name of this high-yielding Singaporean real estate play -- plus receive a steady stream of foreign stocks, funds and other investing ideas with abnormally high dividend yields each and every month -- then I'd like to extend you a personal invitation to try my premium international investing newsletter -- High-Yield International.  Visit this link to learn more.

Managed by PIMCO, the world's biggest bond manager, PIMCO Real Return D (PRRDX, $11.50) has an ultra-safe "AAA"-rated portfolio of U.S. Treasuries and government agency bonds. About a quarter of the $14 billion in assets is in Treasury Inflation-Protected Securities (TIPS). The balance of the portfolio is in U.S. Treasuries, government-sponsored mortgage-backed securities, corporate bonds, and international bonds.

With an intermediate-term average duration of about seven years, the portfolio carries moderate sensitivity to interest rates. To extract extra yield, the fund manager may buy TIPS derivatives, which cost considerably less than the bonds themselves. That leaves more cash to invest in safe, but higher-yielding, short-term corporate bonds.

Dividend:  The fund pays a varying dividend each month of about $0.04 per share. Over the past 12 months, regular dividends plus year-end capital gains of $0.375 have amounted to $0.90 per share. That gives the fund a generous yield of 7.8% as we go to press.

This fund is sold to retail investors in four ways -- "A" shares, "B" shares, "C" shares, or "D" shares. Each share class has a different price structure and charges. We've zeroed in on the "D" shares as providing the lowest cost and maximum return potential. A 0.9% management expense fee takes a small bite out of total returns.

The fund has a dividend reinvestment plan, and for more information, you can call investor relations at 1-888-877-4626. The fund requires a minimum initial investment of  $5,000.

Performance:  Established in April 1998, the fund has performed in the upper quartile of its category in 1-year and 5-year annual returns. Returns of +14.8% over the past year are more than double those of the benchmark Lehman Brothers Aggregate Bond Index and demonstrate the success of PRRDX's portfolio strategies.

Outlook:  This fund's returns are sensitive to interest rate changes. Falling interest rates could increase the value of the bond portfolio and its shares. An unexpected rise in interest rates could have the opposite effect. The heavy weighting on inflation-indexed bonds provides protection against inflation, but the value of these bonds is still affected by changes in rates.

For example, the fund put in its best year in 2002, when interest rates were falling, and its worst year in 2006, when rates were on the rise. Still, given the fund's diverse bond holdings, the range of trading strategies, and the wealth of management expertise at PIMCO, we would expect the fund to provide solid average returns of at least +7% a year over the long-term, in line with its 5-year average.

Action To Take ---> For investors with a moderate risk profile, PRRDX should benefit from today's low interest rate environment and provide a hedge against inflation risk -- as well as healthy long-term returns.