(PUB) Investing 2016

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Fund News

Fund Manager Changes

American Century Growth TWCGX Date: 01/31/2016 Comanager Prescott LeGard was replaced by Justin Brown. Brown joined Greg Woodhams, who has been a manager on the fund since 1997. Brown has been a comanager on American Century Fundamental Equity AFDAX since June 2008. The large-blend fund has lagged its benchmark modestly from his start date through January 2016. Our Take: This fund has lagged modestly just like American Century Fundamental Equity, so the change doesn’t appear to be a big upgrade or downgrade. Impact: Negative Date: 03/31/2016 Gibson Smith is leaving Janus. Comanager Darrell Waters will take over as lead manager. Our Take: We have downgraded the funds to ˇ as this is a big blow to two formerly appealing funds. Smith built up Janus’ bond effort over the past 12 years and was vital to the team. Impact: Negative Date: 03/23/2016 Bob Goldfarb stepped down as comanager in the wake of the implosion of top holding Valeant Pharmaceuticals VRX. Sequoia explained that decision-making was too centralized and didn’t give enough room for analyst input. Our Take: Goldfarb achieved a lot for investors even though he may be best remembered for the Valeant mess. Moreover, the latest bad news on Valeant makes it clear that Sequoia’s thesis was wrong—up until this point we didn’t know if Valeant’s problems were small or large. We have lowered our rating to ´ from Gold. Impact: Negative Date: 07/01/2016 Manager Taymour Tamaddon is moving to run T. Rowe Price Institutional Large Cap Growth TRLGX. Ziad Bakri will take his place on July 1, 2016. Bakri has been a healthcare analyst with the firm since 2011. He is an M.D. and had previously worked as a biotech analyst for Cowen and Co. Our Take: This is a challenge for T. Rowe because it follows the loss of a manager and two healthcare analysts in 2014. The firm says it plans to hire additional analysts. This is Bakri’s first time serving as a portfolio manager. Impact: Negative Date: 04/01/2016 Dan Martino will be stepping down as portfolio manager in order to join T. Rowe’s value team. Justin White will take over T. Rowe Price New America Growth. White has been an analyst at T. Rowe Price since 2008, covering cable and satellite television, Internet infrastructure, and telecom. Our Take: It’s a surprising move, as Martino had been managing the fund only since May 2013. You don’t often see managers go from the growth side to the value side. We have lowered our rating to ˇ . Date: 01/28/2016 James Troyer has stepped down as manager. Binbin Guo was promoted to comanager, and he will run the fund along with Michael Roach and James Stetler, who were named comanagers in 2012. Troyer will remain on the team, however. This is Guo’s first time as a named manager, but he has been with Vanguard since 2007 and has headed the equity research and portfolio strategy team at Vanguard’s Quantitative Equity Group since 2010. Our Take: Troyer is still on the team, so this doesn’t alter our view of the fund. Virtus Foreign Opportunities JVIAX Former Morningstar Fund Manager of the Year winner Rajiv Jain is leaving subadvisor Vontobel to set up his own firm. Matthew Benkendorf, who has been at Vontobel for 17 years, is taking over. Benkendorf signed a 10-year contract when Jain resigned, so we can at least be sure that he won’t be following Jain. We don’t yet know if any of the team’s analysts will leave. Our Take: Losing Jain is a big blow, though Benkendorf is experienced and a fair amount of the team will most likely remain in place. We lowered ratings for both funds to ´ from Silver. Impact: Neutral Janus High-Yield JAHYX and Janus Flexible Bond JAFIX Sequoia SEQUX T. Rowe Price Health Sciences PRHSX T. Rowe Price New America Growth PRWAX Vanguard Strategic Equity VSEQX Impact: Neutral Virtus Emerging Markets Opportunities HEMZX Impact: Negative Date: 05/31/2016

Aston/Fairpointe Mid Cap Reopens Aston/Fairpointe Mid Cap CHTTX reopened to new investors after shareholders withdrew $1 . 4 billion over the 12 months through the end of February. It also saw $462 million go out the door in the first two months of 2016 . We’re maintaining our Morningstar Analyst Rating of Silver for the fund. Although the fund’s poor 2015 performance no doubt spurred the outflows, the fund actually is in the top decile of its peer group over the trailing 10 - and 15 -year periods. The fund also named a fourth portfolio manager, Brian Washkowiak. Washkowiak joined the team in 2015 but had worked with lead manager Thyra Zerhusen from 1999 to 2002 . Silver-rated BBH Core Select Reopens Outflows have spurred BBH Core Select BBTEX to reopen. Investors took out $1 . 7 billion for the trailing 12 months ended Feb. 29 , 2016 , and $221 million in the first two months of 2016 . The fund’s three-year returns are bottom-quartile as its high-quality bias and modest underweighting in healthcare held it back. However, those same biases helped it to strong performance in the first quarter of 2016 , and its long- term record remains strong. Goldfarb Steps Down Amid Valeant Debacle Bob Goldfarb has stepped down as comanager of Sequoia Fund SEQUX . We have lowered our rating of the fund to Bronze. Please see Page 7 for more details. This was a mutual decision, but the fund board and others at the firm felt that decision-making had become too centralized and others on the team needed to have more input in the investment process. Plus, there was a belief that senior members of the team were ready to take on greater responsibility. (Some of them have been with the firm since the Bill Ruane days.)