(PUB) Investing 2016

Investing 2016

B UCKEYE A SSOCIATION O F S CHOOL A DMINISTRATORS

O ne of the tools offered for your use in our company 401K Program in addition to a plan with all adminis- trative costs paid 100% by BASA. In addition you may meet with a Fidelity Investment Advisor One on One for an individualized plan at no cost to you.

8050 N. High Street - #150 Columbus OH 43235

January 2016 Vol. 24 No. 5

FundInvestor Research and recommendatio s for the s riou fund investo

SM

Where to Invest in 2016 and Beyond

are starting from very low levels, so a couple of interest-rate increases doesn’t mean the Fed is slamming the brakes on the economy. Should the economy trend downward, even the gradual rate-hike plan could be put on hold. Where to Invest Finding attractive investments today is something of a challenge because higher-risk assets have generally gotten cheaper while lower-risk assets have not. But you almost certainly don’t want to sell conservative investments across the board while buying risky ones. This isn’t Las Vegas. So, I’ll start with ideas on the low-risk side and work my way up to more-aggressive, opportunistic ideas. Conservative Ideas The best time to buy insurance is when it doesn’t appear to be needed. With oil prices plummeting, inflation-protected securities are now a pretty good deal by most measures. If you have a large part of your portfolio in fixed income, then some inflation insurance is a good idea. Ideally, you should own your Treasury Inflation- Protected Securities fund in a tax-sheltered account because you have to pay taxes on any uptick in the TIPS ’ values. There are three strong options here. Vanguard Short- Term Inflation-Protected Securities Index VTIPX is my favorite because it doesn’t come with much interest-rate risk. You can also go with Vanguard Inflation-Protected Securities VIPSX or Harbor Real Return HARRX . Harbor Real Return is run by PIMCO ’s Mihir Worah using a wide array of inflation- linked bonds outside the U.S. as well as derivatives.

RusselKinnel, Director of ManagerResearch and Editor

Fund Reports

5

It was a pretty good year for the economy but a subpar year for investing. Most fund categories were in the red or just slightly in the black in 2015 . Falling oil prices, a rising dollar, and our first interest-rate hike since 2006 made for a volatile mix. On top of that, there’s some worry that a recession is not far around the corner. tripled from its 2009 low point. On the other hand, commodities and emerging markets have been much less rewarding in recent years, and that’s not a coincidence. Slower-than-expected growth in China hurt commodities prices because they’re closely tied to that country’s economy. In addition, Saudi Arabia’s crude production boost, combined with increased fracking in the United States, pushed oil prices to remarkably low levels. So you’ll find that energy and emerging markets played a big role in your 2015 fund returns. Funds that avoided both looked great while those that had meaningful exposure to either of them generally suffered dismal performance. That includes equity funds as well as high-yield bond funds. And now the Federal Reserve is raising rates. But that doesn’t spell doom. Fed chairwoman Janet Yellen has signaled that the plan is to hike very gently. We After a long bull market, it isn’t a shock to see markets back up a bit. After all, the S & P 500 has

Artisan Global Value Dodge & Cox Global Stock T. Rowe Price Blue Chip

Morningstar Research Great Small-Cap Funds

8

The Contrarian Buy the Unloved

10

Red Flags

11

Funds With High Payout Ratios

Market Overview

12

Leaders & Laggards

13

Manager Changes and News

14

Portfolio Matters

16

Transitioning From Growth to Retirement Income

Tracking Morningstar

18

Analyst Ratings

Income Strategist

20

High Yield Faces Challenges but Isn’t in Third Avenue’s Shoes

Changes to the 500

22

FundInvestor 500 Spotlight

23

Follow Russ on Twitter @RussKinnel

Continued on Page 2

2

Where to Invest in 2016 and Beyond Continued From Cover

My Favorites for 2016

Upside Capture Ratio 10 Yr

Downside Capture Ratio 10-Yr

Morningstar Analyst Rating

Expense Ratio %

Manager Tenure, Yrs (Longest)

Top Manager Ownership Level

Name

Ticker

Category

American Century Value

TWVLX

Large Value

0.97

22.3 $100k–$500k

89

90

•

American Funds New World *

NEWFX

Diversified Emerging Mkts

1.03

16.5

>$1M

96

85

Œ

Artisan Global Value

ARTGX

World Stock

1.32

8.0

>$1M

•

Artisan Value

ARTLX

Large Value

0.98

9.8

>$1M

´

Dodge & Cox Global Stock

DODWX

World Stock

0.65

7.6

>$1M

Œ

Fidelity High Income

SPHIX

High-Yield Bond

0.72

15.5

>$1M

116

71

Œ

Fidelity Low-Priced Stock

FLPSX

Mid-Cap Value

0.79

26.0

>$1M

106

102

•

Harbor Real Return

HARRX

Inflation-Protected Bond

0.57

8.0

0

•

Harding Loevner Emerging Markets

HLEMX

Diversified Emerging Mkts

1.45

17.1

$50k–$100k

111

106

•

Matthews Asia Dividend

MAPIX

Diversified Pacific/Asia

1.05

4.8 $100k–$500k

•

Sound Shore

SSHFX

Large Value

0.92

30.6

>$1M

101

105

•

T. Rowe Price High Yield 1

PRHYX

High-Yield Bond

0.74

19.5

0

Œ

Vanguard Capital Value

VCVLX

Mid-Cap Blend

0.47

7.5 $100k–$500k

129

145

´

Vanguard High-Yield Corporate

VWEHX

High-Yield Bond

0.23

7.8

$500k–$1M

•

Vanguard Inflation-Protected Secs

VIPSX

Inflation-Protected Bond

0.20

4.3

0

Œ

Vanguard Shrt-Term Infl-Prot Sec Idx

VTIPX

Inflation-Protected Bond

0.20

3.2

0

*Load fund. Data through 11/30/2015. 1 Mark Vaselkiv has between $500,000 and $1 million invested in T. Rowe Price Institutional High Yield TRHYX.

Lower-Risk Investments Value Without Much Energy or Materials Value funds have been hit across the board, but those with meaningful energy and basic-materials stakes have been hit hardest. That’s a little scary as it is tough to call the bottom, especially with growth in China slowing. So, in the less-risky bucket I’ll add value funds that don’t have much in those areas. Artisan Global Value ARTGX This recently reopened fund is one of the better ways to take advantage of bargains in the value sphere. Managers David Samra and Dan O’Keefe look for turn- arounds with healthy balance sheets. They seek companies with high returns on capital that are trading at discounts to their private market value. Today, they have only 3% in energy but a huge 40% financials weighting. That’s a bold move, but they did a great job of avoiding banks in 2008 because they were wary of leverage, among other things. The fund had its first year of underperformance in 2015 , and that led to some outflows, so they reopened the fund in the fall.

Dodge & Cox Global Stock DODWX Dodge & Cox Global Stock is a more conventional take on value investing. Its managers are patient value investors buying stocks when they suffer from bouts of unpopularity and waiting for them to rebound. The fund’s 7% energy weighting and 2% materials weighting are about in line with the category and benchmark, as are most of its sector weightings. It is a little more adventurous in emerging markets where it owns a 14% weighting versus 5% for the peer group. That has held it back lately. On the plus side, it has some of the lowest fees in the category. Sound Shore SSHFX This fund shows that focused portfolios don’t have to be high-risk. Management only owns 40 stocks, but it limits stock weightings to no more than 3 . 5% . It also avoids deep-value stocks, which tend to be higher risk/higher reward. Rather, it favors stocks that have shown some signs of recovery and have strong competitive positions. The end result is a fairly consis- tent portfolio and performance. Its desire for com- panies with competitive positions has led it away from materials and energy and into financials, tech, and

3

January 2016

Morningstar FundInvestor

healthcare. Personnel also has been consistent. Harry Burn III and Gibbs Kane Jr. have been running the fund since 1985 , and comanager John DeGulis was named manager in 2003 but has been with the firm since 1996 . Fidelity Low-Priced Stock FLPSX Joel Tillinghast just keeps on producing great results. It’s a huge wide-ranging fund, but one that has beaten its benchmark over the long haul with less risk than the benchmark. Tillinghast looks for modest valuations at firms with competitive advantages. He invests quite a bit overseas, too. The fund’s 39% foreign equity weighting puts it a hair below our cutoff for world stock. The fund’s energy and materials weightings are below the benchmark and peer group, but Tillinghast’s biggest sector bet is on consumer cyclicals, where he has 28% of equities. American Century Value TWVLX Phil Davidson and team have a 19% energy weighting and a minuscule materials weighting, but I’m including it in the lower-risk bin unlike the other value funds with big energy and materials bets. Davidson looks for companies with defensible franchises whose shares are in the cheapest third of the S & P 500 . His fondness for yield also leads him to some of the oil majors. Exxon Mobil XOM , Chevron CVX , and Occidental Petroleum OXY are among its top holdings. Because those companies operate across the oil-supply chain, they tend to be less vulnerable to declining oil prices. In fact, the fund has held up reasonably well. So, it’s not as contrarian a play as those below but remains an appealing core value fund.

tunately, the cheap have gotten cheaper, as the likes of Apache APA , Goldcorp G, and Devon Energy DVN have been crushed. But that also means they could produce big gains with just a little good news. I would note, though, that we lowered the fund to Bronze from Silver because of Scott Satterwhite’s planned retirement in 2016 . Vanguard Capital Value VCVLX This is one of Vanguard’s boldest funds. Peter Higgins and David Palmer of Wellington manage separate sleeves of the fund. We know from Higgins’ time running this and another fund solo that he is a very aggressive value investor who likes both deep- value names and tech stocks. Palmer was added to moderate Higgins’ side, but it is still a pretty bold fund. Today, it has 9% in materials and 14% in energy. Higgins’ long-term record is strong, though, so it’s not a bad bet if you keep it as a small holding. High Yield High-yield fund managers talk about two markets. There’s the hard-hit energy segment, where defaults are growing and yields are in the 12% – 13% range. Then there’s the rest, where yields are in the 5% – 8% range and the bumps have been few. That’s why a category that only lost 5% in 2015 has generated the drama and teeth-gnashing usually associated with much greater losses. That presents investors with opportunity and danger, as even a modest rebound could be a tremendous boon for high-yield funds. In fact, we are hearing more bond managers are looking at energy issuers now that yields are much higher. At this point, I might dip a toe in, but I wouldn’t buy with both fists because I’m a cautious investor. If you want to be really cautious, there’s Vanguard High-Yield Corporate VWEHX . The fund straddles the line between investment-grade and high-yield. Thus, you get less downside and less upside than most high-yield funds, but low costs ensure you do pretty well in the end.

Higher-Risk Investments Value With Energy or Materials

Feeling really contrarian? How about a good value fund with an overweighting in energy or materials?

Artisan Value ARTLX This slumping fund has 12% in materials and 13% in energy. Needless to say, recent returns are lousy. Still, the team’s longer track record at other funds shows this is a decent bet for a rebound. The team looks for cheap stocks but wants solid business models. Unfor-

4

A notch higher in yield but lower in credit quality are Fidelity High Income SPHIX and T. Rowe Price High Yield PRHYX . Both are well-run funds with seasoned portfolio managers. At Fidelity High Income, Fred Hoff has built a strong record since 2000 that covers two major credit melt- downs. He had light exposure to automakers in 2007 and more recently has had limited energy exposure. He has occasionally built cash for defensive purposes, though it was only 3% at the end of October 2015 . Mark Vaselkiv has run T. Rowe Price High Yield since 1996 , and he’s done a fine job of diving into good value plays at the right time. For example, he added financials after the 2008 crisis. He has beaten peers and the benchmark over the trailing 10 years and since he took over in 1996 . Emerging Markets What’s wrong with emerging markets? The short answer is China. China’s growth slowed faster than most expected. That pulled the rug out from under commodity prices. That was bad news for China and many other emerging-markets commodities producers. But Brazil had its own turmoil beyond falling commodity prices, and quite a few emerging markets look fragile today. Emerging markets have been getting cheaper and cheaper, but now it takes a little nerve to get in because so many are under the gun. But it might be worth it. GMO ’s current seven-year forecast is for negative returns in stocks and bonds across the globe except for emerging-markets stocks and bonds, which are forecast to have returns of 4 . 1% and 2 . 2% annualized, respectively. If it is right, then there will also be a big cost to being out of emerging markets. Harding Loevner Emerging Markets HLEMX This fund is a nice steady performer. It has outper- formed in six of the past seven years. Management’s emphasis on high-quality companies with strong margins gives it some defensive characteristics. Comanager Rusty Johnson has been at the helm since the fund was launched in 1998 , and comanager Craig Shaw has been on board for five years.

American Funds New World NEWFX This is a great option for those who want to invest conservatively. American mixes emerging-markets companies with developed-markets companies that derive a big chunk of their business from emerging markets. It makes the fund tamer than its peers, and that’s not a bad thing given how volatile emerging markets are. I also like the skill and depth of the team and the low costs here. Matthews Asia Dividend MAPIX You don’t get all of emerging markets covered here, but Matthews’ expertise in Asia makes it worthwhile. The fund’s dividend focus serves as a nice reality check in an area that sometimes can have more hype than substance. Managers Yu Zhang and Robert Horrocks have solid records here and at other Matthews funds. More Ideas Morningstar senior analyst Laura Lallos shares some great ideas for small-cap funds in Research on Page 8 . In the Contrarian on Page 10 , I have our annual Buy the Unloved ideas for you. We are facing another tricky market environment that seems to offer equal parts peril and opportunity. I hope some of these ideas can help you adjust your portfolio so that you are well-positioned for the coming years. K

5

January 2016

Morningstar FundInvestor

Data through December 31, 2015 FINRA members: For internal or institutional use only. Artisan Global Value Investor

Ticker ARTGX

Yield 0.3%

Total Assets $1,576 mil

Mstar Category World Stock

Benchmark 1: MSCI ACWI NR USD Benchmark 2: MSCI ACWI Ex USA NR USD Morningstar Analyst Rating 01-05-16 „

Investment Style Equity

Historical Profile Return Risk Rating High Below Avg QQQQQ Highest

4 4 4 7 4 7 4 1

10.0 12.5 15.0 17.5

Growth of $10,000

Investment Values of Fund Investment Values of Benchmark 1

Morningstar Pillars Process

∞ Positive ∞ Positive ∞ Positive ∞ Positive § Negative

7.5

Performance

People Parent

5.0

Performance Quartile (within Category)

& * * & * & * (

Price

History

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 12-15

Morningstar Analyst Rating Morningstar evaluates mutual funds based on five key pillars, which its analysts believe lead to funds that are more likely to outperform over the long term on a risk-adjusted basis. Analyst Rating Spectrum Œ „ ´ ‰ Á

. .

9.63 6.76 8.81 10.16 10.14 11.97 15.34 15.51 14.24 -29.26 33.37 16.18 1.50 18.98 31.12 4.50 -2.87 12.94 -1.26 3.51 8.84 2.85 8.32 0.34 -0.51 16.27 -8.08 5.02 15.20 2.15 15.83 8.37 2.79 0.55 3.01 0.85 0.00 0.61 0.72 0.51 0.33 -29.81 30.36 15.33 1.50 18.36 30.40 3.99 -3.20 0.05 0.20 0.08 0.00 0.06 0.09 0.08 0.05 0.00 0.00 0.00 0.17 0.03 0.26 0.44 0.80 3.53 1.50 1.96 1.72 1.51 1.37 1.30 1.28 1.39 1.11 0.71 0.56 0.50 0.45 0.59 0.46 6 46 26 9 27 16 29 68

NAV

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total Return % +/- Bmark 1 +/- Bmark 2 Income Return % Capital Return % Capital Gains $ Expense Ratio % Income Ratio % Turnover Rate % Net Assets $mil Total Rtn % Rank Cat Income $

Pillar Spectrum ∞ Positive

§ Negative

¶ Neutral

Performance 12-31-15 1st Qtr 2nd Qtr

3rd Qtr

4th Qtr

Total

2011 2012 2013 2014 2015

2.56 2.98 -13.51 11.12 1.50 9.17 -2.80 7.62 4.18 18.98 8.77 3.46 7.20 8.69 31.12 1.30 4.31 -3.58 2.56 4.50 0.52 0.45 -7.60 4.11 -2.87

42 17

57 31

35 43

32 91

22

31

25

19 .

239 1,064 1,303

Rating and Risk Time Period Load-Adj Return %

Portfolio Analysis 09-30-15 Total Stocks: 47 Share change since 06-30-15 Y Bank of New York Mellon C Y Royal Bank of Scotland Gr Y Arch Capital Group Ltd Y Oracle Corporation

Morningstar Rtn vs Cat

Morningstar Risk vs Cat

Morningstar Risk-Adj Rating

Sector

Country

% Assets

Trailing

Total Return%

+/- Bmark 1

+/- Bmark 2

%Rank Cat

Growth of $10,000

Technology United States Finan Svcs United States

4.83 4.22

1 Yr 3 Yr 5 Yr

-2.87 10.00

3 Mo 6 Mo

4.11 -0.92 0.86 -3.80 1.10 5.52 -2.87 -0.51 2.79 10.00 2.31 8.50 9.95 3.86 8.89

53 10,411 33 9,620 68 9,713 24 13,309 5 16,071

-Avg QQQQ -Avg QQQQQ

+Avg

Finan Svcs United Kingdom 4.01

9.95

High

1 Yr

Finan Svcs United States Finan Svcs United States Technology United States Hlth Care United States Hlth Care United States Technology South Korea Finan Svcs United States Technology United States Technology United States Cnsmr Def

3.99 3.62 3.49 3.30 3.15 3.09 3.03 3.02 2.96 2.82 2.71 2.61 2.54 2.16 2.12 1.97

10 Yr Incept

— — — —

3 Yr Avg 5 Yr Avg 10 Yr Avg 15 Yr Avg

Y Citigroup Inc Y Microsoft Corp

6.78

— — — — — — — — — —

T Johnson & Johnson

Other Measures

Standard Index

Best Fit Index

Y Medtronic PLC

Alpha

8.4

-4.0 0.96

T Samsung Electronics Co Lt

Beta

0.75

Tax Analysis

Tax Adj Rtn% %Rank Cat Tax-Cost Rat %Rank Cat

T Tesco PLC Y Chubb Corp

United Kingdom 3.09

R-Squared

77

94

3 Yr (estimated) 5 Yr (estimated) 10 Yr (estimated)

8.75 9.09

21

1.14 0.78

45 41

4

Standard Deviation

10.54 10.00

Y Cisco Systems Inc Y Qualcomm Inc

— — — —

Mean

Sharpe Ratio

0.95

Y Marsh & McLennan Companie Finan Svcs United States

Potential Capital Gain Exposure: 6% of assets

T ABB Ltd

Industrl

Switzerland

Morningstar's Take by Greg Carlson 01-05-16 The recently reopened Artisan Global Value finally had an off year, but its substantial virtues remain intact. Thus, it continues to earn a Morningstar Analyst Rating of Silver. The fund finished 2015 in the world stock Morningstar Category’s 68th percentile and 2.9% behind its MSCI ACWI benchmark as picks such as U.S. software maker Oracle ORCL, Royal Bank of Scotland RBS, U.K. grocer Tesco TSCO, and telecom chipmaker Qualcomm QCOM all posted double-digit losses for the year. It’s not surprising that the fund’s returns cooled off; it had never trailed its typical peer in a calendar year since its 2007 inception, a period that encompassed years with strong gains, modest losses, and a more substantial downturn. The managers had trouble finding attractively valued companies in recent years, thus cash had risen to double digits. That changed in 2015’s third-quarter downturn, when they began to find more compelling ideas and cash dipped below 8% of assets. This shift, coupled with modest net redemptions, prompted the managers to reopen the fund in October 2015 to new investors for the first time since 2013. (That move didn’t result in net inflows to the fund in either October or November.) The

T UBS Group AG

Finan Svcs Switzerland

Y ISS A/S

Industrl

Denmark

managers runatotalof$14.5billion inthisstrategy.While their other charge, Artisan International Value ARTKX, remains closed, that strategy has a larger asset base and the portfolio includes fewer large, very liquid stocks than this one. The fund typically shines brightest in tough times and in up-and-down markets due to the managers’ emphasis on firms with steadier revenues and relatively solid balance sheets. However, as economically sensitive fare has latelyunderperformed, it'sbegun tomake itsway into the portfolio. Thus, financial firms such as Citigroup C and Royal Bank of Scotland are now among the fund’s largest holdings. The nature of these recent additions may cause volatility--which has been low relative to peers--to rise a bit in the future. But the fund's virtues remain. Samra and O'Keefe are accomplished, disciplined investors who invest substantially in the fund. It’s an excellent long-term holding.

Y American Express Co

Finan Svcs United States Finan Svcs Netherlands Finan Svcs United States

Y ING Groep N.V. Y Progressive Corp

Current Investment Style

Sector Weightings h Cyclical r BasicMat t CnsmrCyc y FinanSvcs u Real Est j Sensitive i CommSrvs o Energy p Industrl a Technlgy k Defensive s CnsmrDef d Hlthcare f Utilities

% of Stocks

Rel Bmark 1

Market Cap % Giant 58.8 Large 28.9 Mid 11.7 Small 0.7 Micro 0.0 Avg $mil: 44,637

Value Blend Growth

Large Mid Small

43.67 1.14 0.00 0.00 3.21 0.27 40.46 2.15 0.00 0.00 38.89 1.09 2.07 0.42 3.07 0.50 8.39 0.82 25.36 1.78 17.45 0.67 8.79 0.86 8.66 0.68 0.00 0.00

Value Measures

Rel Category

Price/Earnings 14.25

0.80 0.64 0.88 0.88 0.88 0.99 0.83 0.12 -4.64 0.68

Price/Book Price/Sales

1.46 1.36

Price/Cash Flow 7.70 Dividend Yield % 2.33

Growth Measures

% Rel Category

Long-Term Erngs 10.78

Regional Exposure % Stock UK/W. Europe 32 N. America 59 Japan 0 Latn America 2 Asia X Japan 7 Other 0

Book Value

3.22 0.08 -6.60

Sales

Address:

Artisan Funds Inc

Minimum Purchase: Min Auto Inv Plan:

$1000 $1000

Add: — IRA: —

Cash Flow

Milwaukee, WI 53202

Add: $50

Historical Erngs 2.23

800-344-1770

Sales Fees:

No-load, 2.00%R

Country Exposure United States 57 UK 14 Switzerland 8

% Stock

Web Address:

www.artisanfunds.com

Management Fee:

1.00% mx./0.90% mn. Mgt:0.99% Dist:—

Composition - Net Cash

South Korea 5 Denmark 5

Inception:

12-10-07

Actual Fees:

8.0 Bonds

0.0 0.0

Advisor:

Artisan Partners Limited Partnership

Expense Projections: Income Distribution:

3Yr:$418 5Yr:$724 10Yr:$1591

Stocks 92.0 Other

Subadvisor:

None

Annually

Foreign (% of Stock)

42.6

A

ß ® Mutual Funds

©2016Morningstar, Inc.All rights reserved. The information herein is not represented orwarranted to be accurate, complete or timely. Past performance is no guarantee of future results.Access updated reports at www.morningstar.com . To order reprints, call 312-696-6100.

6

Data through December 31, 2015 FINRA members: For internal or institutional use only. Dodge & Cox Global Stock

Ticker DODWX

Yield 1.7%

Total Assets $5,902 mil

Mstar Category World Stock

Benchmark 1: MSCI ACWI NR USD Benchmark 2: MSCI ACWI Ex USA NR USD Morningstar Analyst Rating 12-07-15 Œ

Investment Style Equity

Historical Profile Return Risk Rating Average Above Avg QQQ Neutral

1 4 4 1 1 4 4 1

10.0 12.0 14.0 8.0

Growth of $10,000

Investment Values of Fund Investment Values of Benchmark 1

Morningstar Pillars Process

∞ Positive ∞ Positive ∞ Positive ∞ Positive ∞ Positive

6.0

Performance

People Parent

Performance Quartile (within Category)

& * ( & & & )

Price

History

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 12-15

Morningstar Analyst Rating Morningstar evaluates mutual funds based on five key pillars, which its analysts believe lead to funds that are more likely to outperform over the long term on a risk-adjusted basis. Analyst Rating Spectrum Œ „ ´ ‰ Á

. . .

5.34 7.91 8.90 7.68 8.99 11.48 11.83 10.46 49.18 13.51 -11.39 21.11 33.17 6.95 -8.05 14.56 0.84 -4.05 4.98 10.37 2.79 -5.68 7.74 2.36 2.31 4.28 17.88 10.82 -2.38 1.05 0.99 1.67 1.90 1.81 1.34 1.57 48.14 12.52 -13.07 19.21 31.36 5.61 -9.62 0.04 0.06 0.08 0.15 0.15 0.16 0.15 0.19 0.00 0.00 0.05 0.17 0.32 0.30 0.23 0.87 0.74 0.69 0.66 0.65 0.65 0.65 0.64 1.39 1.09 1.19 1.94 1.93 1.58 1.42 1.98 12 44 73 14 12 14 90

NAV

. . . . . . . . . . . . . . . . . . . . . . . .

Total Return % +/- Bmark 1 +/- Bmark 2 Income Return % Capital Return % Capital Gains $ Expense Ratio % Income Ratio % Turnover Rate % Net Assets $mil Total Rtn % Rank Cat Income $

Pillar Spectrum ∞ Positive

§ Negative

¶ Neutral

. . .

. . . .

Performance 12-31-15 1st Qtr 2nd Qtr

. . . . . . . . . . . .

3rd Qtr

4th Qtr

Total

2011 2012 2013 2014 2015

4.27 -0.43 -20.56 7.44 -11.39 13.80 -6.52 8.69 4.74 21.11 7.45 3.83 8.37 10.14 33.17 3.75 4.79 -0.32 -1.30 6.95 1.44 0.75 -13.07 3.50 -8.05

. .

10

20

14

19

12

24

17

467

914 1,817 1,875 2,695 3,924 5,895

Rating and Risk Time Period Load-Adj Return %

Portfolio Analysis 09-30-15 Total Stocks: 88 Share change since 06-30-15

Morningstar Rtn vs Cat

Morningstar Risk vs Cat

Morningstar Risk-Adj Rating

Sector

Country

% Assets

Trailing

Total Return%

+/- Bmark 1

+/- Bmark 2

%Rank Cat

Growth of $10,000

T Hewlett-Packard Co Y Time Warner Cable Inc

Technology United States Comm Svcs United States Technology United States Technology South Korea Finan Svcs United States Technology South Africa Hlth Care Switzerland Hlth Care United States Cnsmr Cyc United States Technology United States Finan Svcs United States Technology United States Hlth Care France

3.05 2.99 2.67 2.54 2.50 2.50 2.34 2.34 2.20 2.15 2.06 1.84 1.84 1.75 1.74 1.69 1.68 1.63 1.57

1 Yr 3 Yr 5 Yr

-8.05 9.41 7.04

3 Mo 6 Mo

3.50 -1.53 0.26 -10.02 -5.12 -0.70 -8.05 -5.69 -2.38 9.41 1.72 7.91 7.04 0.95 5.98

68 10,350 92 8,998 90 9,195 35 13,097 45 14,054

+Avg QQQ +Avg QQQ

Avg Avg

T Google

1 Yr

T Samsung Electronics Co Lt Bank of America Corporati

10 Yr Incept

— — — —

3 Yr Avg 5 Yr Avg 10 Yr Avg 15 Yr Avg

3.27

T Sanofi

— — — — — — — — — —

T Naspers Ltd Class N Y Roche Holding AG

Other Measures

Standard Index

Best Fit Index

Alpha

7.7

0.9

T Express Scripts Holding C

Beta

0.94

1.11

Tax Analysis

Tax Adj Rtn% %Rank Cat Tax-Cost Rat %Rank Cat

T Time Warner Inc Y Microsoft Corp

R-Squared

84

93

3 Yr (estimated) 5 Yr (estimated) 10 Yr (estimated)

8.11 5.94

29 39

1.18 1.03

47 56

Standard Deviation

12.59

Y Charles Schwab Corp T Cisco Systems Inc Y Schlumberger Ltd Y UnitedHealth Group Inc

— — — —

Mean

9.41 0.77

Sharpe Ratio

Energy

United States

Potential Capital Gain Exposure: 6% of assets

Hlth Care United States

Morningstar's Take by Gregg Wolper 12-07-15 Dodge & Cox Global Stock’s long-term focus helps explain its disappointing 2015 showing, but it's also why the fund remains a sound choice. This fund’s managers buy companies that are out of favor, but have strong long-range prospects, and then hold on to them. (The fund’s far-below-average turnover rateof17% in2014was typical.)Theydon’tmind ifsector or country weightings are out of sync with those of indexes or peers, but to reduce the risks inherent in a contrarian strategy, they usually limit individual holdings to about 3% of assets. Thatapproachgenerallyhasworkedwell for this fund and its older, similarly run siblings. Since its May 2008 inception, it has beaten the world-stock Morningstar Category average and the MSCI ACWI Index. But that includes a bottom-quartile return this year. The main culprit has been the fund’s outsized exposure to emerging-markets companies, which have suffered as sentiment toward emerging markets has soured. Some individual holdings have specific problems, too. Petrobras PBR has been enmeshed in a nasty corruption scandal, and Standard Chartered STAN (based in Britain but with

T Barclays PLC

Finan Svcs United Kingdom 1.73

EMC Corp

Technology United States

most of its business in emerging markets) has been plagued by doubts about its business model. But Diana Strandberg and Ray Mertens, two of the managers here, continue to believe in the long-term prospects of emergingmarketsandhave faith inthosetwocompanies. They don’t downplay the firms’ issues and don’t expect quick turnarounds, but they believe that at their current prices they will reward the managers' patience eventually. Outside of emerging markets, Hewlett- Packard HPQ, the top holding as of Sept. 30 (before it split into two companies), has also hurt this year, but the controversial name has paid off before. The managers’ willingness to own disliked companies or sectors and stick with them may make the funddifficult toownat times.However, thisapproachhas shown its value over time, and experienced management and low expenses make for an enticing package. The fund retains its Morningstar Analyst Rating of Gold.

Honda Motor Co Ltd

Cnsmr Cyc Japan

T Cigna Corp

Hlth Care United States Finan Svcs Switzerland

Credit Suisse Group

Current Investment Style

Sector Weightings h Cyclical r BasicMat t CnsmrCyc y FinanSvcs u Real Est j Sensitive i CommSrvs o Energy p Industrl a Technlgy k Defensive s CnsmrDef d Hlthcare f Utilities

% of Stocks

Rel Bmark 1

Market Cap % Giant 48.6 Large 40.6 Mid 10.8 Small 0.1 Micro 0.0 Avg $mil: 46,107

Value Blend Growth

Large Mid Small

35.74 0.93 2.36 0.50 10.29 0.87 21.41 1.14 1.68 0.55 44.84 1.26 11.47 2.34 6.95 1.13 3.72 0.36 22.70 1.59 19.43 0.75 4.48 0.44 14.95 1.18 0.00 0.00

Value Measures

Rel Category

Price/Earnings 14.44

0.81 0.59 0.71 0.70 1.05 0.85 0.93 1.33 1.07 0.21

Price/Book Price/Sales

1.34 1.09

Price/Cash Flow 6.15 Dividend Yield % 2.80

Growth Measures

% Rel Category

Long-Term Erngs 9.26

Regional Exposure % Stock UK/W. Europe 25 N. America 54 Japan 3 Latn America 3 Asia X Japan 11 Other 5

Book Value

3.58 0.90 1.52

Sales

Address:

Dodge & Cox Funds

Minimum Purchase: Min Auto Inv Plan:

$2500 $2500

Add: $100 IRA: $1000

Cash Flow

San Francisco, CA 94104

Add: $100

Historical Erngs 0.70

800-621-3979

Sales Fees:

No-load

Country Exposure United States 54 Switzerland 8 UK 6

% Stock

Web Address:

www.dodgeandcox.com

Management Fee:

0.60%

Composition - Net Cash

France 4 South Africa 3

Inception:

05-01-08

Actual Fees:

Mgt:0.60% Dist:—

2.6 Bonds

0.0 0.6

Advisor:

Dodge & Cox

Expense Projections: Income Distribution:

3Yr:$208 5Yr:$362 10Yr:$810

Stocks 96.8 Other

Subadvisor:

None

Annually

Foreign (% of Stock)

46.4

A

ß ® Mutual Funds

©2016Morningstar, Inc.All rights reserved. The information herein is not represented orwarranted to be accurate, complete or timely. Past performance is no guarantee of future results.Access updated reports at www.morningstar.com . To order reprints, call 312-696-6100.

7

January 2016

Morningstar FundInvestor

Data through December 31, 2015 FINRA members: For internal or institutional use only. T. Rowe Price Blue Chip Growth

Ticker TRBCX

Yield 0.0%

Total Assets $31,007 mil

Mstar Category Large Growth

Benchmark 1: Russell 1000 Growth TR USD Benchmark 2: S&P 500 TR USD Morningstar Analyst Rating 12-11-15 „

Investment Style Equity

Historical Profile Return Risk Rating High Above Avg QQQQQ Highest

7 7 7 7 7 7 7 7

20.0 25.0

Growth of $10,000

Investment Values of Fund Investment Values of Benchmark 1

15.0

Morningstar Pillars Process

∞ Positive ∞ Positive ∞ Positive ∞ Positive ∞ Positive

10.0

Performance

People Parent

Performance Quartile (within Category)

( & * ( & * & & & ( & 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 12-15 32.68 35.73 40.23 23.01 32.77 38.13 38.65 45.63 64.60 67.27 72.38 5.95 9.73 13.02 -42.62 42.57 16.42 1.50 18.41 41.57 9.28 11.15 0.68 0.65 1.21 -4.19 5.36 -0.29 -1.14 3.16 8.09 -3.77 5.48 1.03 -6.07 7.53 -5.63 16.10 1.35 -0.61 2.41 9.19 -4.41 9.76 0.26 0.40 0.42 0.17 0.15 0.06 0.13 0.35 0.00 0.00 0.00 5.69 9.33 12.60 -42.80 42.42 16.36 1.37 18.07 41.57 9.27 11.15 0.08 0.13 0.15 0.07 0.04 0.02 0.05 0.14 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 3.26 2.36 0.85 0.81 0.77 0.80 0.81 0.77 0.77 0.76 0.74 0.72 0.70 0.28 0.36 0.42 0.22 0.15 0.08 0.12 0.32 0.03 -0.02 0.03 53 25 48 69 20 39 17 18 7 60 3

Price

History

Morningstar Analyst Rating Morningstar evaluates mutual funds based on five key pillars, which its analysts believe lead to funds that are more likely to outperform over the long term on a risk-adjusted basis. Analyst Rating Spectrum Œ „ ´ ‰ Á

NAV

Total Return % +/- Bmark 1 +/- Bmark 2 Income Return % Capital Return % Capital Gains $ Expense Ratio % Income Ratio % Turnover Rate % Net Assets $mil Total Rtn % Rank Cat Income $

Pillar Spectrum ∞ Positive

§ Negative

¶ Neutral

Performance 12-31-15 1st Qtr 2nd Qtr

3rd Qtr

4th Qtr

Total

2011 2012 2013 2014 2015

5.74 0.72 -13.52 10.20 1.50 18.76 -5.45 6.34 -0.83 18.41 8.15 3.69 11.94 12.78 41.57 -1.10 4.16 1.73 4.27 9.28 5.96 0.49 -4.98 9.86 11.15

. .

44

39

32

54

60

47

44

25

35

33

7,998 8,811 11,296 6,727 9,461 10,970 10,597 13,692 20,230 23,276

Rating and Risk Time Period Load-Adj Return %

Portfolio Analysis 09-30-15 Total Stocks: 125 Share change since 06-30-15

Morningstar Rtn vs Cat

Morningstar Risk vs Cat

Morningstar Risk-Adj Rating

Sector

YTD Ret % % Assets

Trailing

Total Return%

+/- Bmark 1

+/- Bmark 2

%Rank Cat

Growth of $10,000

T Amazon.com Inc

Cnsmr Cyc 117.78 6.30

1 Yr 3 Yr 5 Yr

11.15 19.80 15.63

3 Mo 6 Mo

9.86 2.54 2.82 4.38 2.74 4.23 11.15 5.48 9.76 19.80 2.97 4.68 15.63 2.10 3.06 9.33 0.80 2.03 5.94 1.61 4.33

3 10,986 5 10,438 3 11,115 3 17,195 1 20,666 8 24,408 14 23,770

T Alphabet Inc Class C Capi T Priceline Group Inc T Facebook Inc Class A

Technology Cnsmr Cyc Technology Finan Svcs Finan Svcs Technology Industrl

— 3.77

+Avg QQQQQ +Avg QQQQQ +Avg QQQQQ

High High High

11.82 3.49 34.15 3.29 9.00 3.14 19.07 2.91 13.74 2.71 46.60 2.44 — 2.33 -4.49 2.31 3.09 2.20 7.06 2.05 22.22 2.01 8.72 1.92 -2.80 1.78 47.98 1.74 32.19 1.58 -0.09 1.55 18.23 1.54 38.06 1.29 1.47 0.48 26.02 1.36 10.57 2.02 0.00 0.00 33.62 0.80 3.17 0.62 0.54 1.02 10.66 0.86 19.25 0.81 28.32 0.99 1.96 0.18 26.36 1.48 0.00 0.00 — 1.77 % of Stocks Rel Bmark 1

1 Yr

10 Yr Incept

9.33

3 Yr Avg 5 Yr Avg 10 Yr Avg 15 Yr Avg

T Danaher Corp T Visa Inc Class A

10.41

T MasterCard Inc Class A Y Alphabet Inc Class A

Other Measures

Standard Index

Best Fit Index

Alpha

3.8

1.6

T Allergan PLC Y McKesson Corp

Hlth Care Hlth Care Hlth Care Hlth Care

Beta

1.02

1.02

Tax Analysis

Tax Adj Rtn% %Rank Cat Tax-Cost Rat %Rank Cat

R-Squared

79

92

3 Yr (estimated) 5 Yr (estimated) 10 Yr (estimated)

19.05 15.15

1 1 4

0.63 0.41 0.25

14 13

T Alexion Pharmaceuticals I

Standard Deviation

12.29 19.80

T Celgene Corp T Microsoft Corp

9.06

9

Mean

Technology

Sharpe Ratio

1.54

Y Gilead Sciences Inc

Hlth Care

Potential Capital Gain Exposure: 41% of assets

Y Apple Inc

Technology Hlth Care Cnsmr Cyc Technology Comm Svcs

Morningstar's Take by Katie Rushkewicz Reichart, CFA 12-11-15 T. Rowe Price Blue Chip Growth has excelled during manager Larry Puglia's 22-year tenure, supporting its Morningstar Analyst Rating of Silver.

T Valeant Pharmaceuticals I Y Starbucks Corp T Salesforce.com Inc Y American Tower Corp T UnitedHealth Group Inc

pricing of its drugs, the fund has had a stellar year in 2015 as other stocks in its diversified portfolio produced big gains. In particular, longtime holding and top position Amazon.com AMZN had a banner year, and the position grew to over 6% of assets by September. It also got a boost from Netflix NFLX, Alphabet GOOGL, and Facebook FB. The fund occasionally stumbles in market pullbacks, and it's lostabitmore than theRussell1000Growth Index in down markets during the past decade. Certain positioning, such as its above-average biotech stake relative to the benchmark, could weigh on results if there's an industrywide sell-off. Longer term, there's also the question of capacity across T. Rowe's large-growth funds (this strategy alone is $50 billion in assets). However, on the whole the fund has done a good job of producing strong risk-adjusted results during Puglia's tenure.Reasonablecostsalsohelp thecase for this fund's Silver rating.

Hlth Care

Beyondbenefiting fromanexperiencedmanager, the fund draws on T. Rowe's analyst team for stock ideas, which has proved quite capable at finding successful large-growth names. The fund has consistently produced strong returns relative to its large-growth Morningstar Category peers and the Russell 1000 Growth Index, even in recent years when it's been difficult for many active- equity managers to beat passive index funds. Puglia looks forcompanieswithsustainableearnings, free cash flow growth, and management teams that will drive further growth. While the fund's active share (its differentiation from the benchmark) isn't exceptionally high, the fund makes enough bets to meaningfully distinguish itself fromaperformancestandpoint. In recent years, that's included a significant stake in healthcare stocks, which has boosted results. Despite owning a top-20 position in Valeant Pharmaceuticals VRX as of September 2015, which subsequently stumbled upon concerns about aggressive

Current Investment Style

Sector Weightings h Cyclical r BasicMat t CnsmrCyc y FinanSvcs u Real Est j Sensitive i CommSrvs o Energy p Industrl a Technlgy k Defensive s CnsmrDef d Hlthcare f Utilities

Market Cap % Giant 46.1 Large 46.5 Mid 7.4 Small 0.0 Micro 0.0 Avg $mil: 64,145

Value Blend Growth

Large Mid Small

Value Measures

Rel Category

Price/Earnings 22.88

1.02 1.06 0.82 1.09 0.64 1.17 1.39 1.12 0.98 1.29

Price/Book Price/Sales

4.09 1.91

Price/Cash Flow 14.94 Dividend Yield % 0.80

Growth Measures

% Rel Category

Long-Term Erngs 15.26

Book Value

13.14

Composition - Net

Sales

9.73

Cash 0.3 Stocks 99.7 Bonds 0.0 Other 0.0 Foreign 7.9 (% of Stock)

Address:

T. Rowe Price Blue Chip Growth Fund, Inc

Minimum Purchase: Min Auto Inv Plan:

$2500 $2500

Add: $100 IRA: $1000

Cash Flow 11.50 Historical Erngs 16.05

Baltimore MD 21202

Add: $100

800-638-5660

Sales Fees:

No-load

Web Address:

www.troweprice.com

Management Fee:

0.30% mx./0.26% mn., 0.15%A

Profitability

%

Inception:

06-30-93

Actual Fees:

Mgt:0.57% Dist:0.00%

Return on Equity Return on Assets

19.85

Advisor:

T. Rowe Price Associates, Inc.

Expense Projections: Income Distribution:

3Yr:$230 5Yr:$401 10Yr:$894

8.72

Subadvisor:

None

Annually

Net Margin

13.95

A

ß ® Mutual Funds

©2016Morningstar, Inc.All rights reserved. The information herein is not represented orwarranted to be accurate, complete or timely. Past performance is no guarantee of future results.Access updated reports at www.morningstar.com . To order reprints, call 312-696-6100.

8

Great Small-Cap Funds Morningstar Research | Laura Lallos

Mairs & Power Small Cap MSCFX This young fund doesn’t have a five-year record yet, but it follows Mairs & Power’s long-established strategy of buying and holding financially sound businesses with sustainable competitive advantages that can deliver consistently above-average returns on equity. The resulting high-quality portfolio has shown moderate volatility so far—and is the same strategy that enabled the firm’s all-cap flagship Mairs & Power Growth MPGFX to outperform most of its category peers in 2008 ’s bear market. This fund’s lead manager, Andrew Adams, has been a significant small-cap resource for the Growth fund and is now comanager there. Like its older sibling, this fund emphasizes businesses headquartered nearby in the upper Midwest, where the managers believe they have a research advantage. The fund is backed by a firm that has been an exemplary steward of shareholder capital and is committed to closing this strategy before it gets too large. Neuberger Berman Genesis NBGNX Veterans Judy Vale and Bob D’Alelio implement a long-term, fundamentally driven strategy. They look for small-cap stocks, preferably not too cyclical, that dominate a competitive niche and feature solid balance sheets, strong cash flows, and reason- able valuations, and often hold on to favorites for many years. While the fund sometimes lags when lower-quality stocks lead, its 15 -year returns rank in the top 2% of the small-growth category as of December 2015 , and it has been one of the least volatile funds. A caveat: With more than $10 billion in assets, this is among the largest funds in the cate- gory, even after suffering $5 billion in net outflows in recent years. The managers argue that the fund’s quality bias and low turnover allow them to handle size and outflows relatively easily. Perkins Small Cap Value JSCVX This recently reopened fund has reliably provided downside protection despite some team turnover. The approach focuses first on how much a stock could potentially lose, and the portfolio routinely sports a lower debt/capital ratio and higher returns on invested capital than the Russell 2000 Value Index. That’s helped the fund hold up relatively well in

With small-cap benchmarks lagging larger-cap counterparts, is now a good time to invest in small- cap funds? There is no easy answer—for example, conventional wisdom says that rising interest rates are hard on smaller companies, but then again, the economic growth that often accompanies such increases could be a tailwind. But for most stock investors, it is always a good time to have some small- cap diversification. Still wary? We compiled a list of small-cap Morningstar Medalists that have had lower downside capture ratios relative to the S & P 500 than the Vanguard Small- Cap Index VSMAX has had. Six of the seven funds below had lower downside captures over not only the past three years but also the five- and 10 -year periods. The exception is Mairs & Power Small Cap MSCFX , which doesn’t have a five-year record yet but is likely to continue to be relatively temperate. Conestoga Small Cap CCASX This fund’s managers take a relatively conservative approach to the small-growth universe. They are patient, seeking investments with the potential to appreciate by at least 100% over three to five years, and they tend to hang on to their picks for about that long. They prefer companies with strong fran- chises and at least a 15% return on equity, as well as a debt/total capitalization ratio of less than 40% . They invest with conviction, holding between 40 and 50 names, have much leeway to deviate from the Russell 2000 Growth Index’s sector weightings, and also try to stay fully invested at all times. The result is one of the strongest 10 -year risk-adjusted records in the small-growth Morningstar Category. Below-average expenses and a small asset base add to the fund’s attraction.

9

January 2016

Morningstar FundInvestor

Small-Cap Downside Capture

Morningstar Category

Morningstar Analyst Rating

Total Assets ($ Mil)

3-Yr Downside Capture Ratio*

5-Yr Downside Capture Ratio*

10-Yr Downside Capture Ratio*

Name

Ticker

Conestoga Small Cap

CCASX

Small Growth

637

85.51

93.96

96.52

•

Mairs & Power Small Cap

MSCFX

Small Blend

191

93.34

•

Neuberger Berman Genesis

NBGNX

Small Growth

10,245

97.04

92.56

89.48

´

Perkins Small Cap Value

JSCVX

Small Value

1,434

93.50

105.38

90.58

•

T. Rowe Price Div Sm Cap Growth PRDSX

Small Growth

2,068

81.12

110.97

111.63

•

T. Rowe Price Small-Cap Value

PRSVX

Small Blend

7,773

104.36

109.83

107.55

´

Wasatch Core Growth

WGROX

Small Growth

1,222

87.76

84.46

110.00

•

Vanguard Small-Cap Index

VSMAX

Small Blend

56,001

106.95

124.31

123.56

Œ

*Ratios calculated vs. S&P 500. Data as of November 2015.

rough patches, including the third quarters of 2014 and 2015 , when strong stock-picking, rather than a large cash stake, drove results. The fund’s strong long-term risk-adjusted record within the small- value category dates back to its 1987 founding under Bob Perkins, who has stepped back but remains involved. The 2013 departure of comanager Todd Perk- ins was unexpected, but comanager Justin Tugman remained onboard and was joined by finan- cials analyst Tom Reynolds. T. Rowe Price Diversified Small Cap Growth PRDSX This fund has racked up an excellent record since Sudhir Nanda took the helm in October 2006 , beating most of its small-growth peers on both a total- return and risk-adjusted basis. The fund has been a consistent performer, too, landing in the category’s top half in each calendar year during Nanda’s tenure. Nanda relies heavily on quantitative stock-picking models but has kept a lid on volatility by relying less on momentum than many quants do, instead focus- ing on valuation and earnings quality. The portfolio holds about 300 stocks, with positions capped at 1% of assets. The fund’s quant models don’t take com- panies’ debt into account, so the portfolio’s debt/ capital ratio is sometimes above the category norm, and the fund could be hurt if interest rates rise. However, Nanda’s disciplined strategy and record of strong stock selection, coupled with the fund’s well below-average fees, bode well. T. Rowe Price Small-Cap Value PRSVX This fund has generated good long-term risk-adjusted performance with a portfolio diversified across

more than 300 names—which not only minimizes stock-specific risk but has also kept a large asset base manageable. David Wagner, who had served as associate portfolio manager since 2005 , took over for longtime manager Preston Athey in July 2014 after working alongside him for nine months to ensure a smooth transition. He follows the same risk-conscious strategy, buying stocks trading at low absolute or relative valuations and hanging on as their gains com- pound. This buy-and-hold approach pushes up the fund’s valuation metrics, nudging it into the small- blend category. However, management avoids holding too many stocks that graduate to mid-caps. Wasatch Core Growth WGROX Wasatch is known for building compact portfolios of stocks with defensible economic advantages and consistent economic returns across market cycles, and this fund has delivered competitive results within the small-growth category with generally low Morningstar Risk ratings. Stock-picking drives portfolio construc- tion, so assets can cluster in sectors where managers J.B. Taylor and Paul Lambert find opportunities: The fund has large helpings of industrial and financial stocks relative to its small-growth peers and a sig- nificant underweighting in health care. Its average valuation measures are generally in line with the category average, but its quality metrics—such as re- turn on assets--are usually stronger than peers’, and risk-adjusted performance is its selling point. The fund hasn’t always outperformed in down markets— it was out of step in 2008 —but it was well in the black in 2011 ’s tough market. K Contact Laura Lallos at laura.lallos@morningstar.com