(PUB) Investing 2015

14

Fund News

Fund Manager Changes

Calamos Growth CVGRX Change: Negative Date: 09/01/2015 Co-CIO Gary Black left Calamos three years after joining the firm. The situation is similar to that of Janus, where Black arrived to fix a problem firm but left after a few years as both sides were ready to move on. Black was one of five comanagers listed on the fund. Calamos added Michael Roesler to replace Black as the fifth manager. Our Take: It isn’t pretty. Performance was mediocre over Black’s tenure, and his departure leaves a void in upper management. Date: 03/14/2016 Chuck Myers will take a six-month leave of absence. Derek Jansen will fill in while he is gone. Jansen runs Fidelity Small Cap Value FCPVX, where he worked with Myers before replacing him there. Our Take: For a low-turnover fund, we don’t see much risk in Myers taking six months off. We will watch closely, though, to be sure he comes back on time. Usually managers come back after leaves of absence and pick up right where they left off, but occasionally they decide not to come back. Change: Negative Date: 09/30/2016 Lead manager Jerry Senser will retire at the end of September 2016. The firm named Tom Cole co-chief investment officer and said Matthew Swanson will step down to focus on U.S. strategies. Our Take: Senser has led ICAP since Rob Lyon’s death in 2007. We’ve lowered our rating to ˇ from ´ . Change: Negative Date: 09/09/2015 Comanager In-Bok Song left to work as an analyst at Thornburg. This follows Richard Gao’s departure in July 2015. Our Take: Although Song was not the lead, her departure along with Gao’s led us to lower the fund’s rating to • . As the rating implies, we still think the fund is in good hands. Sharat Shroff has experience and a track record at Matthews that inspires confidence. The fund recently reopened because of outflows seen at most Asia funds. Change: Positive Date: 09/09/2015 John Lech was added as a comanager for Justin Leverenz. Lech has been with Oppenheimer since 2008. Our Take: Leverenz is still very much in charge, but Oppenheimer is trying to make supporting managers and possible successors more visible to quell concerns about key-man risk. We’ll be interested to see how much authority Lech has over the portfolio, but in the meantime we are maintaining our • rating. Date: 08/28/2015 USAA has hired Lazard Asset Management and Wellington Management and given them 15% each to manage. MFS managers Marcus Smith and Daniel Ling will still guide 70% of the fund. Our Take: This is only a slight negative as Wellington and Lazard are solid managers. MFS has done such a good job that we’d rather not see them diluted, but they are still having quite an impact at 70%. We are maintaining our ´ rating. Change: Negative Date: 01/01/2016 Longtime lead manager James Barrow will retire. Comanagers Jeff Fahrenbruch and David Ganucheau will replace him. The two have been comanagers since 2013, and eight years ago Vanguard had said they would eventually succeed Barrow. Barrow will continue to manage Vanguard Selected Value VASVX. Our Take : We knew Barrow would retire in the relatively near future, so this is not a surprise. Still, Barrow’s outstanding record makes this a real loss. His replacements are seasoned but do not have long track records of their own. We have lowered our rating to ´ from • . Date: 02/01/2016 Jeff Cardon will step down as lead portfolio manager of this fund and CEO of Wasatch Advisors. He will remain a comanager on the fund. J.B. Taylor will take over Cardon’s role as both CEO and lead manager on the fund at that time. Our Take: This looks like a gradual evolution. We are maintaining our Œ rating but will watch closely to see how involved Cardon is. On the plus side, Taylor has a strong record, too. Fidelity Small Cap Discovery FSCRX Change: Neutral MainStay ICAP International ICEUX Matthews Pacific Tiger MAPTX Oppenheimer Developing Markets ODMAX USAA International USIFX Change: Change: Neutral Vanguard Windsor II VWNFX Wasatch Small Cap Growth WAAEX Change: Neutral

File-And-Suspend Social Security Option Eliminated Congress voted to change Social Security rules that had allowed people to file for but then suspend benefits in order to boost their benefits. Planning expert Michael Kitces explains: “By extending the rules for deemed application, it will no longer be possible to file a restricted application for just spousal benefits. And with an extension of the ‘suspension’ rules that stipulate suspending an indi- vidual’s benefits will also suspend any benefits to other people based on the same earnings record, Congress has killed off the various ‘File and Suspend’ strategies to allow spousal and dependent benefits to be paid while still earning delayed retirement credits. “Perhaps most notable for the new Social Security crackdown, though, is the effective date for the rules. While the new limits to restricted application will not apply to anyone who is already age 62 or older in 2015 , the new crackdown will kick in six months from now (thanks to a recent amendment to the original legislation), grandfathering anyone currently going through file-and-suspend but limiting anyone who tries to suspend benefits thereafter. Beyond that point, anyone who suspends will find that no benefits will be payable until the individual who suspended chooses to reinstate benefits (either to restart them now, or finish waiting until age 70 ).” SEC Investigates Murky Fee Issue The SEC has been shining a light on a dark corner of mutual fund expenses--sub-transfer-agency fees. Recently, the SEC sanctioned one firm, First Eagle, for unlawfully accounting for what, in fact, were sales and marketing expenses as sub-transfer-agency fees. If reports are to be believed, the SEC has had other firms in its sights as part of its Distribution-in- Guise Initiative.

While the First Eagle case hasn’t garnered a ton of attention, it’s important nonetheless. First, this is a