(PUB) Morningstar FundInvestor

January 2014 Vol. 22 No. 5

FundInvestor Research and recommendatio s for the s riou fund investo

SM

Where to Invest in 2014 and Beyond

Thus, if you are a stock investor, you should curb your enthusiasm and diversify. GMO isn’t dumping all its U.S. equities. Nor should you. I’ll share my ideas for where you should invest in 2014 and beyond. There aren’t a lot of screaming buys, but there are some areas that look better than others. It makes sense to nudge your portfolio in that direction rather than do anything drastic. I have some more ideas on Page 10 , where I update our annual Buy the Unloved report, and Dan Culloton has some good ideas in Income Strategist. Europe This time last year, I said European and Asian stocks were attractive, and I was mostly right. European stocks produced a nifty 21% return in 2013 , while Japan-stock funds gained 24% . However, Pacific/ Asia ex-Japan funds were flat for the year. Europe still looks like the best place for equities, as it started off at an exceptionally low level that priced in near-disaster. The EU is expected to finally emerge from recession in 2014 , and many of the savviest foreign-equity investors I’ve spoken to still say Europe offers superior opportunities compared with the rest of the world. With that in mind, I continue to like Van- guard European Stock Index VEUSX as a cheap pure play on the region. Meanwhile, there are some great foreign-equity funds with big Europe bets that are well worth a look. Causeway International Value CIVVX has a Morningstar Analyst Rating of Gold and is run by Harry Hartford and Sarah Ketterer. They’ve pro- duced great long-term results, yet unlike many of my favorite foreign funds, they aren’t awash in assets.

RusselKinnel, Director of FundResearch and Editor

Fund Reports 4 Causeway International Value Harbor Bond USAA International Vanguard European Stock Index

Wow, what a great year to invest in stocks. The typical U.S. stock fund gained about 30% , and other developed markets were buoyant, too. Emerging markets had modest gains, however, and rising inter- est rates led to small losses for most bond funds. Ben Inker of GMO is throwing cold water on this party. He forecasts that U.S. stocks will not even keep pace with inflation over the next seven years. GMO projects the S & P 500 will return negative 1 . 7% annualized after inflation and the Wilshire 5000 will return negative 2% after inflation. U.S. small caps are projected to have a negative 4 . 5% return after inflation. The crux of GMO ’s argument is that corpo- rate profit margins are unsustainably high. When they revert to the mean, stock prices will trend lower, too. GMO is more positive about U.S. high-quality stocks ( 2 . 7% annualized above inflation), foreign developed- markets equities ( 1 . 4% for large caps and 1 . 0% for small caps), and emerging-markets stocks ( 3 . 2% ). How- ever, it projects a mere 0 . 1% return above inflation for U.S. bonds. GMO ’s profit-margin argument is sound, but few models or forecasts get everything right. More impor- tant than the absolute projections GMO makes is its basic point that most stocks have gone from super cheap to something like fully priced over the past five years.

Morningstar Research

8

The Empire Strikes Back

The Contrarian

10

Buy the Unloved

Red Flags 11 Don’t Be Fooled By These Funds’ Five-Year Returns

Market Overview

12

Leaders & Laggards

13

Manager Changes and News

14

Portfolio Matters

16

The Beauty of HSAs

Tracking Morningstar

18

Analyst Ratings

Income Strategist

20

FundInvestor 500

22

FundInvestor 500 Spotlight

23

Follow Russ on Twitter @RussKinnel

Continued on Page 2

Where to Invest in 2014 and Beyond Continued From Cover

2

‘Reforgotten’ Funds Since before I joined Morningstar, we’ve written arti- cles titled “Hidden Gems” or “Under the Radar Funds” to highlight talented managers who haven’t gotten much attention. However, as investors have fled ac- tively managed equities in the past few years, I think we need a new variation called “reforgotten funds.“ Many once-popular managers have seen assets ebb in recent years even as they bolstered their research staff. In a small-cap roundup a few months ago, I wrote about how there were more good small-cap funds open to new investors than you typically saw five years into a rally. This month I’ll highlight some great funds you may have forgotten about. Westport Select Cap WPSRX is a patient fund that has tried investors’ patience. Poor returns in the snapback rallies of 2009 and 2012 have spurred inves- tors to redeem the fund. Yet it fared well in the down years of 2008 and 2011 thanks to the ability of managers Andy Knuth and Ed Nicklin to find good turnaround candidates trading at modest prices. They’ve produced strong 15 -year results at this fund and had good results at previous funds, too. Longleaf Partners LLPFX and Longleaf Partners International LLINX are excellent funds run by managers who are really committed to the long term as well as to their shareholders. As I discussed in the December issue, management invests in a limited number of stocks that meet their strict valuation standards. If you believe in concentrated, long-term value investing, these two funds are worth long looks. And being out of favor means management has max- imum flexibility because of the smaller asset base. Oakmark Equity & Income OAKBX flipped from get- ting huge inflows earlier in the 2000 s to getting sizable outflows in recent years. Comanager Ed Studz- inski retired at the end of 2012 after the fund posted poor returns in three out of the past four years. So, it’s understandable that a slump and manager depar- ture would spur redemptions. But Studzinski and lead manager Clyde McGregor had built a brilliant record. With McGregor still in charge and now

The Largest and Smallest 15-Year Investor Returns

Morningstar Analyst Rating

Total Ret % Rank Cat 10 Yr

Total Ret % Rank Cat 15 Yr

Manager TenureYrs (Average)

Morningstar Category

Expense Ratio %

Name

American Funds Capital World G/I CWGIX Œ

World Stock

24

12 0.82 10.52

ASTON/Montag & Caldwell Grw MCGFX •

Large Growth

56

66 1.06 19.17

Causeway International Value CIVVX

Frgn Large Blend 25

1.24 9.31

Œ

Dodge & Cox Stock DODGX

Large Value

22

1 0.52 15.62

Œ

FPA Perennial FPPFX

Mid-Cap Growth 55

13 1.02 9.75

Œ

LKCM Equity LKEQX

Large Growth

25

14 0.81 7.27

•

Longleaf Partners LLPFX

Large Blend

80

12 0.91 23.25

•

Longleaf Partners International LLINX

Frgn Large Blend 73

9 1.29 9.46

´

Matthews Asian Grwth & Inc MACSX

Pac/ex-Asia Jpn

50

1 1.11 3.42

•

Royce Special Eqty Multi-Cap RSEMX

Large Blend

1.39 3.08

´

USAA International USIFX

Frgn Lg Growth

23

27 1.21 7.92

´

Vanguard European Stck Idx VEUSX

Europe Stock

57

71 0.12 5.42

Œ

Westport Select Cap WPSRX

Mid-Cap Growth 69

19 1.36 16.08

•

Data as of 12/31/2013

The fund has just $ 4 . 5 billion in assets, giving them more flexibility than most topnotch foreign- equity funds. USAA International USIFX is another appealing Europe-lover that might have escaped your notice. It’s run by Marcus Smith and Daniel Ling of MFS . They take a moderate-growth approach with an emphasis on high-quality stocks.Thus, the fund is a little more defensive than most growth funds. The fund has 71% of assets in Europe, featuring large weightings in the United Kingdom, France, Germany, and Switzerland. Asia, Too Asia’s biggest emerging markets, China and India, had disappointing growth in 2013 but remain compelling for the long term. Last year I picked Matthews Asia Dividend MAPIX and Matthews Asian Growth & Income MACSX as Asia plays. I still like both funds quite a lot, but Asia Dividend is closed and has lost lead manager Jesper Madsen, so Asian Growth & Income it is. The fund is an appealingly cautious play on Asia as it invests in a mix of convertible bonds, preferred stocks, and dividend-paying stocks, and therefore it provides much greater downside protec- tion than Pacific/Asia ex-Japan peers.

January 2 014

Morningstar FundInvestor

3

If you have this fund in your 401 (k) or it’s offered through your advisor, you’re in luck.

What the Experts Say

Bill Gross

Stay on the short end of the yield curve. The Fed won’t hike rates until 2016.

Brian Rogers

Few things are cheap. Emerging markets are among the better opportunities.

Aston/Montag & Caldwell Growth MCGFX is well- positioned if GMO is correct that U.S. high-quality stocks are the place to invest over the next several years. Ron Canakaris and his team have long favored such issues. This fund, which has disappointed in the past couple of years, has historically rebounded nicely from periods of underperformance. More important, its emphasis on quality has made it a fairly stable investment in troubled times. Royce Special Equity Multi-Cap RSMCX isn’t tech- nically forgotten as it’s still pretty young. But inves- tors have known about Charlie Dreifus’ accounting chops for eons and they’ve overlooked this fund, which has a mere $ 180 million to its name. Dreifus owns a focused portfolio of stocks that meet rigor- ous tests for balance-sheet health, cash flow, and valuation. Historically his funds have held up well in downturns, and I’d expect the same here. Dodge & Cox Stock DODGX isn’t small, but it’s one of the best funds to get more than $ 1 billion in redemp- tions in 2013 and $ 10 billion the past three years. Dodge simply does value investing well and charges its shareholders little. You’ll be hard-pressed to find more experience and continuity than at Dodge & Cox. Managers own the firm and have to sell back after they retire, thus ensuring stability for the long term. It’s a great core holding for patient investors. Cash When asset prices rise, cash makes sense as a way to be ready for the next downturn. Of course, your current return on cash is going to be near zero until something gets cheap, and then you might enjoy a very nice return. As Warren Buffett likes to say, in investing you don’t have to swing at a pitch you don’t like. You can take a thousand pitches before you find one you like. How Have My Past Picks Fared? Come to mfi.morningstar.com during January as I’ll walk through how my past buying recommendations have fared. œ

Bob Johnson

Economic growth will remain moderate in the 2.0% to 2.5% range in 2014.

David Marcus

The most attractive opportunities remain in the developed European markets.

Jason Hsu

Raising equity weightings in 2014 will likely prove extraordinarily costly.

Dan Fuss

We are greatly reducing our position in long maturity, very high-quality debt.

Dennis Stattman

Japanese equities offer the best risk/reward trade-off.

Jeffrey Gundlach

Emerging-markets bonds should outperform U.S. high-yield bonds.

supported by Colin Hudson, Matt Logan, and Edward Wojciechowski, who have good resumes for the task at hand, there’s plenty of appeal left in this fund. FPA Perennial FPPFX is an appealing mix of growth and value characteristics run by Eric Ende, Steve Geist, and Greg Herr. They look for small- and mid-cap stocks that have high returns on capital, low debt, and potential for above-average growth. They have produced strong long-term returns with modest risk. The fund has only $ 326 million in assets in part because it was a load fund with no salesforce. However, it was recently converted to no-load, so it’s worth a good long look. LKCM Equity LKEQX is another old-school fund that a lot of folks have missed. It’s a large-cap fund that emphasizes quality companies with low debt. That leads to stocks like Monsanto MON , Apple AAPL , and Honeywell HON . As you might guess, the fund held up nicely in 2008 and 2011 , though it lagged a bit in 2013 . Lead manager Luther King is a very experienced investor backed by a surprisingly large, 35 -member investment team. Thus, you have a small fund with low fees but the backing of a big group of skilled professionals. American Funds Capital World Growth & Income CWGIX is still a giant, but it has been heavily redeemed of late along with many of its fellow Amer- ican Funds. This fund’s appeal hasn’t changed a lick, however. American has outstanding global analyst coverage and low costs. This fund has posted uninspiring five-year returns, but it has earned excellent 10 - and 15 -year results. Sometimes, the best opportunities are right there under our noses.

4

Data through December 31, 2013 Causeway International Value Inv

Ticker

Status Yield Total Assets

Mstar Category Foreign Large Blend

CIVVX Open

0.8% $4,740 mil

Morningstar Analyst Rating 11-15-13

Investment Style Equity Stock %

Historical Profile Return Risk Rating High High Above Avg

97% 98% 99% 98% 99% 95% 99% 96% 95%

Œ

Manager Change Partial Manager Change

14.0 18.0 22.8 26.8

Morningstar Pillars Process Performance

Growth of $10,000

Positive Positive Positive Positive Negative

∞ ∞ ∞ ∞

Investment Values of Fund Investment Values of MSCI WexUS

People Parent Price

10.0

7.0

§

NAV Total Return % +/-MSCI WexUS +/-MSCI WexUS Income Return % Capital Return % Capital Gains $ Expense Ratio % Income Ratio % Turnover Rate % Net Assets $mil Total Rtn % Rank Cat Income $ Performance Quartile (within Category) History

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 12-13

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 „ ´ˇ ¨

10.66

9.36

13.36 45.53 24.62 24.62

16.17 26.31

16.52

19.70 25.74

16.67

8.65

11.25 32.01 20.86 20.86

12.43

10.73

16.07 23.90

-11.18 . -52.01 . -52.01 .

7.87

-42.06 7.64 -83.51 53.17 -83.51 53.17

-10.79 11.98 -27.62 25.69 -27.62 25.69

-18.78 9.69 -18.78 9.69

9.09 9.09 1.12

8.61 8.61 1.01

0.61

1.73

1.78

2.08 5.79 0.34 0.58 95

2.06

2.88

1.93

1.44

2.85

.

-11.79 .

43.80

24.53

24.62

-44.94 5.58

30.08

-13.64 10.54

22.89

36

17

13

57

67

41

36

12

21

2

Pillar Spectrum Positive ∞

.

0.01 0.00

0.07 0.04

0.16 0.09

0.24 0.45

0.19 0.89 1.48 -0.61

0.41 4.00 1.51 -0.89

0.48 0.45 1.55 -1.01

0.17 0.00 1.56 -1.06

0.16 0.00 1.61 -1.26

0.35 0.00 1.58 -0.58

0.13 0.00 1.20 1.84

§ Negative

¶ Neutral

1.47 1.52 . . . -0.90 -0.70 . . . 462 1178 . . .

Performance 12-31-13 1st Qtr 2nd Qtr

3rd Qtr

4th Qtr

Total

591

381

244

304

202

234

22

2009 2010 2011 2012 2013

-15.61 25.34 22.73 1.68 -42.06 3.64 -13.81 17.11 7.03 32.01 5.87 1.67 -22.12 6.41 11.98 15.56 -7.02 8.50 6.55 -10.79 1.38 2.56 11.99 6.41 24.23

18 . .

53

16

34

12

43

63

30

32

742

Portfolio Analysis 09-30-13 Share change since 06-13 Total Stocks:63 Sector

Rating and Risk Time Load-Adj

Country

% Assets

Morningstar

Morningstar Risk vs Cat

Morningstar Risk-Adj Rating

Period Return % Rtn vs Cat

Akzo Nobel NV Reed Elsevier NV

Basic Mat

Netherlands

3.68 3.39 2.87 2.81 2.77 2.76 2.71 2.54 2.48 2.42 2.39 2.36 2.36 2.35 2.04 2.03 1.97 1.95 1.88 1.86

1 Yr 3 Yr 5 Yr

23.90 11.15 15.21

Trailing

Total +/- MSCI

+/- MSCI

%Rank Growth of

Cnsmr Cyc Netherlands Comm Svs Japan

Return% WexUS WexUS

Cat

$10,000

High High +Avg

+Avg High High

KDDI Corp. Siemens AG

3 Mo 6 Mo 1 Yr

6.41 1.64 19.16 3.82 23.90 8.61 11.15 6.01 15.21 2.40 8.05 0.48

1.64 3.82 8.61 6.01 2.40 0.48

38 10,641 13 11,916 15 12,390 4 13,732 9 20,298

Industrl

Germany

10 Yr Incept

8.05 9.41

Toyota Motor Corp

Cnsmr Cyc Japan

Novartis AG

Hlth care Switzerland Hlth care France Cnsmr Cyc Germany Finan Svs U.K. Comm Svs U.K. Finan Svs France Finan Svs Switzerland Hlth care Switzerland Cnsmr Def U.K. Cnsmr Def U.K.

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

Sanofi

Other Measures

Standard Index MSCI WexUS

Best Fit Index

British American Tobacco

MSCI Eur

25 21,689 . . . . . Tax Analysis Tax-Adj Rtn% %Rank Cat Tax-Cost Rat %Rank Cat

Daimler AG

Alpha

5.6

1.9

HSBC Holdings PLC

Beta

1.02

0.91

Tesco PLC

R-Squared

92

95

Vodafone Group PLC

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

10.35 14.55

3 6

0.72 0.57 1.43

67 56 86

BNP Paribas

Standard Deviation

17.53 11.15

UBS AG

Mean

Roche Holding AG

6.51

32

Sharpe Ratio

0.69

JGC Corp. Total SA

Industrl Energy Energy

Japan France Canada

Potential Capital Gain Exposure: 8% of assets

Morningstar’s Take by Kevin McDevitt, CFA 11-15-13 Causeway International Value is showing that it can succeed in any environment. Consistently good stock selection continues to be this fund’s greatest strength. That’s apparent because of the portfolio-level weightings that should’ve hurt it. strikes against it. Relative to the MSCI EAFE Index, the portfolio has an underweighting in Japan, one of the better-performing big markets in 2013, with 12.8% of assets there versus EAFE’s 21.6%. Plus, the team’s bottom-up investment process has led it to overweight the struggling energy and materials sectors. But materials stocks have been the fund’s strongest source of returns in 2013. Top-holding chemical company Akzo Nobel has gained 40% through the 12 months ended Nov. 7, 2013. Notably, most of the fund’s materials holdings are industrial companies rather than floundering miners. Effectively managing risk has played just as large of a role in the fund’s year-to-year consistency. In 11 The fund is on pace for its fourth consecutive top-quartile calendar-year return despite several

Imperial Oil Ltd

Lloyds Banking Group PLC

Finan Svs U.K. Technology France

calendar years, the fund has landed in its category’s bottom quartile just once. Although the team’s contrarian nature ensures that the fund’s volatility will remain above average, it has done a masterful job of knowing when to dial risk up or down. Management’s risk assessments are based on expected returns and historical volatility for the stocks on its watchlist. As expected returns diminish, the team tends to reduce portfolio volatility as measured by beta. The team took the portfolio’s beta below 1.0 during the financial crisis in 2008 and increased it in early 2009 as valuations improved. With expected returns continuing to fall, the team has cut beta to about 1.0. Despite its consistency, the fund will go through stretches of poor performance. The team is happy to dial up risk and buy beleaguered stocks when expected returns are high. This can add to short-term volatility. There are few such holdings these days, but the portfolio does have a decidedly cyclical tilt. But this fund has shown over more than a decade that any extra volatility has been worth it.

Legrand SA

Current Investment Style

Sector Weightings

% of Stocks

Rel MSCI

3 Year Low

WexUS High

Market Cap % Giant 59.3 Large 35.0 Mid 5.7 Small 0.0 Micro 0.0 Avg $mil: 39,830

Value Blnd Growth

Cyclical 43.72 BasicMat 10.40 CnsmrCyc12.59 FinanSvs 20.73 Real Est 0.00 Sensitive 38.29 CommSrvs 6.17 Energy 13.98 Industrl 13.15 Technlgy 4.99 Defensive18.00 CnsmrDef 6.81 Hlthcare 9.33 Utilities 1.86

.

h r t y u j i o p a k s d f

Large Mid Small

. 11 8 . 16 13 . 21 17 . . .

. .

6 3

. 14 7 . 31 13

Growth Measures Long-Term Erngs Book Value Sales Cash Flow Historical Erngs Price/Cash Flow Dividend Yield % Value Measures Price/Earnings Price/Book Price/Sales

Rel Category

9.30 2.17 0.93 -9.09 -4.07 13.57 1.60 0.95 4.76 2.87

0.84 0.77 0.10 NMF NMF 1.03 1.01 0.97 0.88 1.03

5 1

. . .

9 3

. 10 9

3 0

.

% Rel Category

Regional Exposure UK/W. Europe 77 Japan 13 Asia X Japan 7

% Stock

N. America 2 Latn America 0 Other 1

Address:

11111 Santa Monica Blvd Los Angeles, CA 90025 866-947-7000 www.causewayfunds.com

Minimum Purchase: Min Auto Inv Plan:

$5000 $5000

Add: $0 IRA: $4000

Add: $100

Sales Fees:

No-load, 2.00%R 0.80%, 0.06%A

Composition - Net

Web Address: Inception: Advisor: Subadvisor: NTF Plans:

Management Fee:

Country Exposure

% Stock

Cash

4.8

Bonds Other

0.0 0.0

10-26-01

Actual Fees:

Mgt:0.80% Dist: .

U.K.

26 13 13

Germany 11 Switzerland 11

Causeway Capital Management LLC

Expense Projections: Income Distribution:

3Yr:$393 Annually

5Yr:$681 10Yr:$1500

Stocks

95.2

None

Japan France

Foreign

100.0

(% of Stock)

Fidelity Retail-NTF, CommonWealth NTF

Mutual Funds ß ®

© 2013Morningstar, Inc.All rights reserved.The informationherein is not represented orwarranted tobeaccurate, correct, completeor timely. Pastperformance is no guarantee of future results.Access updated reportsat Toorder reprints, call312-696-6100. mfb.morningstar.com.

EQ

January 2 014

Morningstar FundInvestor

5

Data through December 31, 2013 Harbor Bond Institutional

Ticker Status Yield SEC Yield Total Assets Mstar Category HABDX Open 2.9% 1.49% $6,476 mil Intermediate-Term Bond

Morningstar Analyst Rating 12-31-13

Investment Style Fixed Income Income Rtn %Rank Cat

Historical Profile Return Risk Rating Above Avg Above Avg Above Avg

84

34

49

13

44

49

69

82

32

Œ

Manager Change Partial Manager Change

Morningstar Pillars Process Performance

12.0 14.0 16.0 18.4

Positive Positive Positive Positive Positive

∞ ∞ ∞ ∞ ∞

Growth of $10,000

NAV Total Return % +/-BC Agg Bnd +/-BC Agg Bnd Income Return % Capital Return % Capital Gains $ Expense Ratio % Income Ratio % Turnover Rate % Net Assets $mil Total Rtn % Rank Cat Income $ Investment Values of Fund Investment Values of BC Agg Bnd Performance Quartile (within Category) History

People Parent Price

10.0

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 12-13

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 „ ´ˇ ¨

11.42 9.03 -1.23 -1.23 4.88 4.15

11.70 10.63

11.83

11.83

11.62 2.57 -1.76 -1.76 4.26 -1.69

11.56 3.91 -3.06 -3.06 4.42 -0.51

11.91

11.30 3.34 -2.59 -2.59 4.87 -1.53

12.14 13.84

12.10

12.19 3.48 -0.73 -0.73 2.52 0.96

11.95 -1.46 0.56 0.56 2.82 -4.28

5.30 0.96 0.96 2.59 2.71 0.30 0.19 0.57 2.21 32

5.47 3.04 3.04 2.94 2.53 0.34 0.30 0.58 3.39 7

8.69 3.45 3.45 5.34 3.35 0.61 0.02 0.55 4.47 514 2

7.96 0.12 0.12 3.25 4.71 0.39 0.61 0.53 2.73 666 38

6.53 6.53 5.80 4.83 0.65 0.26 0.58 3.43 6

7.30 7.30 4.73 9.11 0.53 0.18 0.55 2.34 675 46

15

11

53

19

91

19

Pillar Spectrum Positive ∞

0.54 0.27 0.58 4.37 293

0.50 0.01 0.58 4.34 312

0.51 0.00 0.56 4.73 213

0.57 0.42 0.57 4.34 574

0.30 0.02 0.54 2.88 473

0.35 0.00

§ Negative

¶ Neutral

. . .

Performance 12-31-13 1st Qtr 2nd Qtr

3rd Qtr

4th Qtr

Total 3.34

333 . .

2009 2010 2011 2012 2013

0.81 5.97 2.53 3.02 1.17 1.89 2.55 2.40 0.67 -3.33

5.45 1.05

1,417

1,527

1,613

1,983

2,370

2,809

3,942

6,016

7,273

7,300

7,687

6,344

3.36 -1.12 13.84

-1.44 1.85 3.19 0.89 1.04 0.22

7.96 3.48 9.32

Portfolio Analysis 09-30-13

Rating and Risk Time Load-Adj

Date of Maturity

Amount

Value % Net $000 Assets

Morningstar

Morningstar Risk vs Cat

Morningstar Risk-Adj Rating

Period Return % Rtn vs Cat

Total Fixed-Income:2107

$000

1 Yr 3 Yr 5 Yr

-1.46 3.68 6.50 5.63 7.64

Trailing

Total

+/- BC

+/- BC %Rank Growth of

90day Eurodollar Futures Swu0566v5 Irs Usd R F 1. 90day Eurodollar Futures 90day Eurodollar Futures Us 5yr Note (Cbt) Dec13 US Treasury Note 1.5% Bwu0617t9 Irs Usd R V 03 Fed Natl Mort Assc 4% Swu003fj4 Irs Usd R F 1. Fannie Mae Single Family US Treasury Note 1.375% Us 10yr Note (Cbt)dec13 US Treasury Note 0.75% Bwu004x94 Irs Usd R V 03 US Treasury Note 1% Fed Natl Mort Assc 5% 90day Eurodollar Futures Fannie Mae Single Family US Treasury Note 0.875% US Treasury Note 0.625%

06-15-15 2,040,000 2,024,394 Cme 03-18-16 965,800 971,399 14.11 12-14-15 890,000 879,276 12.78 09-14-15 485,750 481,087 6.99 12-31-13 375,500 454,531 6.60 08-31-18 316,800 318,941 4.63 06-15-41 312,200 312,200 4.54 10-15-43 297,000 311,618 4.53 10-15-17 277,800 274,714 3.99 11-01-43 239,000 254,610 3.70 06-30-18 248,900 249,571 3.63 12-19-13 195,100 246,588 3.58 03-31-18 218,500 213,882 3.11 12-18-43 211,900 211,900 3.08 09-30-19 220,100 210,866 3.06 10-15-43 172,500 187,082 2.72 03-14-16 156,500 154,207 2.24 11-01-43 143,000 149,547 2.17 07-31-19 156,500 149,433 2.17 04-30-18 135,600 131,818 1.92 4 Agency MBS Pass-Through 16 Agency MBS ARM 0 Agency MBS CMO 1 Non-Agency Residential MBS 2 Commercial MBS 1 Asset-Backed 1 Municipal 2 Cash & Equivalents 4 Other 0 Composition - Net Cash -71.3 Bonds 166.6 Stocks 0.0 Other 4.8 Special Securities Restricted/Illiquid Secs Exotic Mortgage-Backed Emerging-Markets Secs 2 Options/Futures/Warrants Yes 6 0 3 Sector Breakdown % of assets US Treasury 11 Non US Government Government Related 1 45 Corporate

Return% Agg Bnd Agg Bnd

Cat

$10,000

Avg Avg High

+Avg +Avg +Avg

3 Mo 6 Mo 1 Yr

0.22 0.36 1.26 0.83 -1.46 0.56 3.68 0.42 6.50 2.06 5.63 1.08 6.12 0.89

0.36 0.83 0.56 0.42 2.06 1.08 0.89

49 10,022 33 10,126 44 9,854 47 11,145 45 13,701 9 17,293 7 24,376

10 Yr Incept

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

Other Measures

Standard Index

Best Fit Index BC US Credit

BC Agg Bnd

Alpha

0.7

0.1

Beta

0.91

0.71

R-Squared

47

71

Tax Analysis Tax-Adj Rtn% %Rank Cat Tax-Cost Rat %Rank Cat 3 Yr (estimated) 5 Yr (estimated) 10 Yr (estimated) 2.24 45 1.39 66 4.69 49 1.70 83 3.79 9 1.75 87 Potential Capital Gain Exposure: -1% of assets Morningstar’s Take by Eric Jacobson 12-31-13 Harbor Bond will not be changing its stripes. In institutional lingo, this is a "core-plus" offering. It keeps its rate sensitivity in a range around its benchmark, the Barclays U.S. Aggregate Index, invests in the same sectors as the index, and can add some out-of-benchmark bonds. That gives the fund a broad palette. Manager Bill Gross has historically made large bets using the fund’s benchmark sectors (in particular with agency mortgages), has peppered in nonbenchmark holdings such as emerging-markets and nonagency mortgage debt, and has long used interest-rate bets to try and improve returns. For all of its freedom, though, the fund keeps its duration at plus or minus two years around the bogy’s. It’s also limited to 10% in high yield and 15% in emerging markets. The duration issue is notable as many investors have recoiled from interest-rate risk. PIMCO made headlines thanks to more than $30 billion in outflows from PIMCO Total Return PTTRX during the second and third quarters of 2013, and that trend left the intermediate-bond category with more than $70

Standard Deviation

3.63 3.68 1.00

Mean

Sharpe Ratio

billion in net outflows; about the same amount flowed into the more interest-rate resistant bank-loan and nontraditional bond groups. This fund’s interest-rate limits haven’t been an issue; Gross has yet to near the bottom bound. The direction and magnitude of its rate bets has mattered--the fund was caught short in late 2011 and long during the summer of 2013--but as flows suggest, and as Gross believes, many investors want to give more flexibility to their managers to slash their durations. Neither he nor Harbor see changing this portfolio’s rules as the right solution. Gross believes he has enough tools here to remain competitive and wants to keep the fund intact for shareholders who prefer a corelike offering. For like-minded investors, Gross’ long-term record and massive PIMCO resources remain compelling. For those who want to give their managers much more freedom--along with more freedom to fail--this isn’t the place to be.

Current Investment Style

Duration Ltd Mod Ext

Quality High Med Low

figure provided by fund

1

1 Avg Eff Duration Avg Eff Maturity Avg Credit Quality Avg Wtd Coupon Avg Wtd Price Coupon Range

6.0 Yrs 7.0 Yrs

BBB

3.05%

102.75% of par

% of Bonds Rel Cat

0% PIK 0% to 6% 6% to 8% 8% to 10%

23.3 8.2 73.2 0.9 3.2 0.3 0.3 0.1 0.1 0.1

More than 10%

Address:

Harbor Funds Chicago, IL 60606 800-422-1050

Minimum Purchase: Min Auto Inv Plan:

$1000

Add: $0 IRA: $1000

1.00=Category Average

$0

Add: .

Credit Analysis

% bonds 09-30-13

Sales Fees:

No-load

BB

AAA

71

Web Address: Inception: Advisor: Subadvisor: NTF Plans:

www.harborfunds.com

Management Fee:

0.48% mx./0.46% mn. Mgt:0.48% Dist: .

B 1 Below B 3 NR/NA 0

AA

9 6 8

12-29-87

Actual Fees:

Harbor Capital Advisors Inc

Expense Projections: Income Distribution:

3Yr:$181 Quarterly

5Yr:$316 10Yr:$712

A

Pacific Investment Management Co LLC

BBB

N/A

Mutual Funds ß ®

© 2013Morningstar, Inc.All rights reserved. The information herein isnot representedorwarranted tobe accurate, correct, completeor timely.Pastperformance isnoguaranteeof future results.Accessupdated reports at To order reprints, call 312-696-6100. mfb.morningstar.com.

FI

6

Data through December 31, 2013 USAA International

Ticker

Status Yield Total Assets

Mstar Category

USIFX Open

0.8% $3,383 mil

Foreign Large Growth

Morningstar Analyst Rating 12-16-13

Investment Style Equity Stock %

Historical Profile Return Risk Rating Above Avg Average Above Avg

95% 95% 99% 97% 98% 99% 99% 99% 98%

´

Manager Change Partial Manager Change

14.0 18.0 22.8

Morningstar Pillars Process Performance

Growth of $10,000

Positive Positive Positive Neutral Negative

∞ ∞ ∞

Investment Values of Fund Investment Values of MSCI WexUS

10.0

People Parent Price

¶ §

7.0

Performance Quartile (within Category) History

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 12-13

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 „ ´ˇ ¨

16.78 -14.58

15.13 -9.08

19.80 31.90 10.99 15.17

21.85 18.50

23.34 12.65

27.00 27.35 10.70

27.44

17.05

22.34 32.43 21.28 17.98

24.32

21.62 -9.81

30.51 18.02

NAV

-35.24 8.83 -76.69 54.36 -73.91 54.44

9.87

Total Return % +/-MSCI WexUS

-49.91 0.37 -43.50 0.41

-14.00 1.88 -10.96 1.79

-26.64 23.58 -26.48 24.08

2.73 2.53 0.91

6.32 2.60

+/-MSCI AC World exUSA Gr ND

0.91

0.75 -9.83 0.13 0.00 1.42 0.79 148 435 4

0.69

0.74

0.98

1.61

1.62

1.39

0.99

1.23

Income Return % Capital Return %

-15.49

31.21

17.76

11.67

24.75

-36.86 7.22

31.04

-11.04 8.88

17.11

8

59

26

73

15

93

1

69

89

31

12

Total Rtn % Rank Cat

Pillar Spectrum Positive ∞

0.18 0.00 1.32 0.78

0.10 0.05 1.31 0.91 . 587

0.14 1.44 1.23 1.02

0.21 1.07 1.20 3.29

0.56 2.14 1.20 1.21

0.41 1.55 1.14 1.94

0.44 0.25 1.31 1.89

0.24 0.00 1.23 1.09

0.22 0.00 1.21 1.37

0.30 0.00 1.21 1.56

0.24 0.00 1.21 1.27

Income $

§ Negative

¶ Neutral

Capital Gains $ Expense Ratio % Income Ratio % Turnover Rate % Net Assets $mil

Performance 12-31-13 1st Qtr 2nd Qtr

3rd Qtr

4th Qtr

Total

36

41

44

32

22

20

25

17

20

.

2009 2010 2011 2012 2013

-13.08 19.77 20.90 5.22 -35.24 0.76 -12.48 16.09 7.32 32.43 3.04 3.59 -20.30 6.02 9.87 13.97 -6.98 6.20 8.43 -9.81 3.07 -1.56 10.25 5.51 22.07

321

805

1,267

1,542

929

1,349

1,601

1,571

1,395

1,740

Portfolio Analysis 08-31-13 Share change since 05-13 Total Stocks:68 Sector

Rating and Risk Time Load-Adj

Country

% Assets

Morningstar

Morningstar Risk vs Cat

Morningstar Risk-Adj Rating

Period Return % Rtn vs Cat

Bayer AG Nestle SA

Hlth care Germany

3.77 3.36 3.02 2.55 2.40 2.39 2.38 2.37 2.31 2.30 2.30 2.23 2.19 2.16 2.15 2.10 2.09 2.07 2.01 1.84

1 Yr 3 Yr 5 Yr

18.02

Trailing

Total +/- MSCI

+/- MSCI

%Rank Growth of

Cnsmr Def

Switzerland

Return% WexUS AC World exUSA Gr ND

Cat

$10,000

9.12

+Avg

Avg

HSBC Holdings PLC

Finan Svs U.K.

3 Mo 6 Mo 1 Yr

5.51 0.74 16.33 0.99 18.02 2.73 9.12 3.98 13.59 0.78 8.52 0.95 6.75 1.34

0.85 2.43 2.53 4.17 0.69 1.16

53 10,551 42 11,633 54 11,802 26 12,993 51 18,910 23 22,652 27 26,639

13.59

Avg

+Avg -Avg

Linde AG

Basic Mat

Germany

10 Yr Incept

8.52 8.01

+Avg

Honda Motor Co Ltd Compass Group PLC

Cnsmr Cyc Japan Cnsmr Cyc U.K. Cnsmr Cyc U.K. Finan Svs U.K.

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

WPP PLC

Other Measures

Standard Index Best Fit Index MSCI WexUS MSCI EAFE Growth

Standard Chartered PLC

Heineken N.V. ING Groep N.V.

Cnsmr Def

Netherlands

Alpha

3.9

1.1

Finan Svs Netherlands

.

Beta

0.97

1.01

Danone Randstad

Cnsmr Def

France

R-Squared

95

96

Tax Analysis Tax-Adj Rtn% %Rank Cat Tax-Cost Rat %Rank Cat 3 Yr (estimated) 5 Yr (estimated) 10 Yr (estimated) 8.65 21 0.43 63 13.14 47 0.40 54 7.55 28 0.89 77 Potential Capital Gain Exposure: 27% of assets Morningstar’s Take by William Samuel Rocco 12-16-13 USAA International Fund has several positive attributes. This foreign large-growth fund has a personnel edge over most of its rivals. It is subadvised by MFS, which is a good money manager with a strong suite of international-stock funds. Manager Marcus Smith is a skilled MFS veteran who has earned good long-term risk-adjusted returns at a few of that firm’s foreign-stock and Asian-equity mutual funds and separate accounts. Comanager Daniel Ling has a good resume as well. And the two managers have an excellent support team, which includes the MFS managers that run Silver-rated USAA World Growth USAWX as well as the analysts that run Silver-rated MFS International Research MRSAX. The fund’s strategy is another factor in its favor. This fund takes on less risk than most foreign large-growth funds, because Smith and Ling are much more quality-oriented and price-conscious than most of their peers, and they invest less in emerging-markets names as well. But the fund has ample upside

Industrl Industrl

Netherlands

Schneider Electric Air Liquide SA

France France

Standard Deviation

16.45

Basic Mat

Mean

9.12 0.61

LVMH Moet Hennessy Louis

Cnsmr Cyc France

Sharpe Ratio

UBS AG

Finan Svs Switzerland Cnsmr Cyc Japan

Denso Corporation

Canadian National Railwa

Industrl

Canada France Japan

Pernod Ricard NV

Cnsmr Def Basic Mat

potential, because Smith and Ling readily allow their stock selection to lead to distinctive country and sector weights, and their portfolios are more concentrated by issue than the group norm. The fact that this strategy has worked well at several other international-stock funds from USAA and MFS adds to is appeal. Smith and Ling have executed the fund’s moderate growth strategy skillfully over time. Granted, the fund has posted mediocre results in 2013’s generally favorable conditions. But it earned superior gains in the quality-driven rally of 2012 and in some of the surges that occurred earlier in the 2000s. And it has consistently outperformed in sell-offs. As a result, it has handily outpaced--and suffered less volatility than--the average foreign large-growth fund and the typical foreign large-blend offering since Smith came on board in mid-2002. All in all, this fund is well worth a look from risk-conscious investors who are seeking a core foreign holding.

Shin-Etsu Chemical Co Lt

Current Investment Style

Sector Weightings

% of Stocks

Rel MSCI

3 Year Low

WexUS High

Market Cap % Giant 66.1 Large 28.9 Mid 5.1 Small 0.0 Micro 0.0 Avg $mil: 37,624

Value Blnd Growth

Cyclical 45.31 BasicMat 10.00 CnsmrCyc14.81 FinanSvs 20.50 Real Est 0.00 Sensitive 28.46 CommSrvs 1.51 Energy 3.56 Industrl 11.73 Technlgy 11.66 Defensive26.22 CnsmrDef16.25 Hlthcare 9.10 Utilities 0.87

.

h r t y u j i o p a k s d f

Large Mid Small

. 10 5 . 15 9 . 22 19 . . .

. . .

3 2 6 3

Growth Measures Long-Term Erngs Book Value Sales Cash Flow Historical Erngs Price/Cash Flow Dividend Yield % Value Measures Price/Earnings Price/Book Price/Sales

Rel Category

11.11 3.43 0.62 -0.15 3.86 15.25 1.77 1.37 6.39 2.27

0.88 1.60 0.89 NMF 0.05 1.00 0.81 0.96 0.83 1.03

. 22 12 . 13 8

.

. 20 16

9 5 1 0

. .

% Rel Category

Regional Exposure UK/W. Europe 70 Japan 13 Asia X Japan 10

% Stock

N. America 4 Latn America 1 Other 2

Address:

9800 Fredericksburg Road San Antonio, TX 78288 800-531-8722

Minimum Purchase: Min Auto Inv Plan:

$3000

Add: $50 IRA: $3000

$0

Add: .

Sales Fees:

No-load

Composition - Net

Web Address: Inception: Advisor: Subadvisor: NTF Plans:

www.usaa.com

Management Fee:

0.75%, 0.15%A

Country Exposure

% Stock

Cash

0.9

Bonds Other

0.0 1.3

07-11-88

Actual Fees:

Mgt:0.79% Dist: .

U.K.

22 14 13

Germany 12 Switzerland 11

USAA Asset Management Company MFS Investment Management

Expense Projections: Income Distribution:

3Yr:$384 Annually

5Yr:$665 10Yr:$1466

Stocks

97.8

France Japan

Foreign

99.1

(% of Stock)

Vanguard NTF

Mutual Funds ß ®

© 2013Morningstar, Inc.All rights reserved.The informationherein is not represented orwarranted tobeaccurate, correct, completeor timely. Pastperformance is no guarantee of future results.Access updated reportsat Toorder reprints, call312-696-6100. mfb.morningstar.com.

EQ

January 2 014

Morningstar FundInvestor

7

Data through December 31, 2013 Vanguard European Stock Index Adm

Ticker

Status Yield Total Assets

Mstar Category

VEUSX Open

2.8% $19,604 mil

Europe Stock

Morningstar Analyst Rating 10-31-13

Investment Style Equity Stock %

Historical Profile Return Risk Rating Average Average Neutral

97% 97% 98% 98% 95% 97% 99% 99% 96%

Œ

Manager Change Partial Manager Change

14.0 18.0 22.8

Morningstar Pillars Process Performance

Growth of $10,000

Positive Neutral Positive Positive Positive

¶ ∞ ∞ ∞ ∞ ∞

Investment Values of Fund Investment Values of MSCI WexUS

10.0

People Parent Price

7.0

Performance Quartile (within Category) History

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 12-13

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 „ ´ˇ ¨

47.51

38.04

51.64 38.84 17.93 17.96

61.01 20.96

65.05

84.64 33.57 16.92 19.71

93.46

47.90

60.86 32.04 20.89 28.16

61.03

51.60

73.22 24.89 9.60 -0.34 3.39 21.50

NAV

-17.85 . -58.68 . -56.39 .

9.36

-44.67 13.93 -86.12 59.46 -80.50 60.35

-11.49 5.01 -28.32 18.72 -30.61 16.07

Total Return % +/-MSCI WexUS

-17.29 4.34 -24.36 11.54

+/-MSCI Eur

2.05

2.94

2.72

2.75 6.61 1.68 0.00 0.17 3.45 72

3.45

3.47

3.87

4.97

4.70

3.92

Income Return % Capital Return %

.

-19.90 .

35.90

18.24

30.12

-48.54 10.46

27.07

-15.41 0.31

47

37

32

41

40

23

54

82

32

60

Total Rtn % Rank Cat

Pillar Spectrum Positive ∞

.

1.04 0.00 0.23 2.41

0.98 0.00 0.23 2.84

1.12 0.00 0.18 2.76

1.41 0.00 0.18 2.93

2.24 0.00 0.12 3.45

2.94 0.00 0.12 3.92

3.62 0.00 0.16 3.91

2.38 0.00 0.14 3.10

2.86 0.00 0.14 3.58

2.39 0.00 0.12 3.89

2.03 0.00 0.12 3.16

Income $

§ Negative

¶ Neutral

Capital Gains $ Expense Ratio % Income Ratio % Turnover Rate % Net Assets $mil

Performance 12-31-13 1st Qtr 2nd Qtr

3rd Qtr

4th Qtr

Total

15

5 . .

6

9

15

18

11

6

7

10

2009 2010 2011 2012 2013

-16.79 26.37 22.75 2.29 -44.67 -1.35 -15.72 20.40 4.91 32.04 6.08 2.81 -23.36 5.90 5.01 11.43 -7.32 8.69 7.79 -11.49 2.07 -0.11 13.33 8.08 20.99

329

520

726

1,474

2,419

2,851

1,402

1,751

2,826

2,311

2,644

3,645

Portfolio Analysis 11-30-13 Share change since 10-13 Total Stocks:474 Sector

Rating and Risk Time Load-Adj

Country

% Assets

Morningstar

Morningstar Risk vs Cat

Morningstar Risk-Adj Rating

Period Return % Rtn vs Cat

Nestle SA

Cnsmr Def

Switzerland

2.70 2.39 2.25 2.11 2.07 1.70 1.50 1.46 1.41 1.39 1.27 1.20 1.17 1.13 1.13 1.01 0.95 0.93 0.92 0.91

1 Yr 3 Yr 5 Yr

24.89 10.18 13.15

Trailing

Total +/- MSCI

+/- MSCI

%Rank Growth of

HSBC Holdings PLC Roche Holding AG

Finan Svs U.K.

Return% WexUS 8.08 3.31 22.48 7.14 24.89 9.60 10.18 5.04 13.15 0.34

Eur

Cat

$10,000

Avg Avg Avg

Avg

Hlth care Switzerland Hlth care Switzerland

3 Mo 6 Mo 1 Yr

0.20 -0.09 -0.34 0.29 -0.21 0.24

61 10,808 30 12,248 61 12,489 62 13,375 57 18,547

+Avg

Novartis AG

10 Yr Incept

7.52 6.92

Avg

Vodafone Group PLC

Comm Svs U.K.

BP PLC

Energy

U.K.

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

GlaxoSmithKline PLC Royal Dutch Shell PLC Cl

Hlth care U.K.

Other Measures

Standard Index MSCI WexUS

Best Fit Index

Energy Energy

U.K.

MSCI Eur

7.52 -0.05 57 20,649 . . . . . Tax Analysis Tax-Adj Rtn% %Rank Cat Tax-Cost Rat %Rank Cat

Total SA Sanofi Bayer AG

France

Alpha

4.5

0.4

Hlth care France Hlth care Germany

Beta

1.09

0.99

R-Squared

94

99

Siemens AG

Utilities Cnsmr Def Basic Mat

Germany

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

9.30

51 60 54

0.80 0.81 0.74

72 83 26

British American Tobacco

U.K.

Standard Deviation

18.52 10.18

12.23

Basf SE

Germany

Mean

Banco Santander SA Royal Dutch Shell PLC Cl

Finan Svs Spain

6.72

Sharpe Ratio

0.61

Energy

U.K.

Potential Capital Gain Exposure: -12% of assets

Daimler AG

Cnsmr Cyc Germany

Morningstar’s Take by Alex Bryan 10-31-13 Although Europe is fraught with risk, Vanguard European Stock Index is a compelling vehicle for investors looking to take advantage of attractive valuations, profit from a potential European recovery, or improve diversification. The fund invests in large- and mid-cap stocks across 16 developed countries in Europe, representing more than 86% of the investable market. However, British and Swiss stocks account for nearly half the portfolio. This is the cheapest broad European-stock fund with one of the most comprehensive portfolios available. Consequently, it is one of the best options for passive exposure to European equities and is a suitable core holding. Its largest holdings are quality multinational names, such as Novartis NVS, Vodafone VOD, Total SA TOT, and Nestle NSRGY. European stocks can offer meaningful diversification benefits to U.S. investors. The FTSE Developed Europe and Russell 1000 Indexes were 0.90 correlated over the past decade. The fund offers greater exposure to basic-materials stocks than most broad U.S. funds,

Anheuser-Busch Inbev SA

Cnsmr Def Cnsmr Def

Belgium

Diageo PLC Allianz SE

U.K.

which tend to under-represent them. It also owns more financial services stocks. While European banks still face significant risks, these stocks may enhance the fund’s diversification benefits. Like most international funds, the fund does not hedge its currency exposure. Consequently, it may help hedge against a decline in the value of the U.S. dollar relative to the euro and pound sterling. This fund is also available as an exchange-traded fund, Vanguard European ETF VGK. This hybrid structure allows the fund’s managers to transfer low-cost-basis shares out of the fund in a tax-free transaction with the ETF’s market makers, known as authorized participants. Low turnover further enhances the fund’s tax efficiency. It has not distributed any capital gains over the past decade. In March 2013, Vanguard moved the fund from the MSCI Europe Index to the FTSE Developed Europe Index, citing potential cost savings. These indexes offer nearly identical exposure. The fund’s low fees and full index replication has kept tracking error low.

Finan Svs Germany

Current Investment Style

Sector Weightings

% of Stocks

Rel MSCI

3 Year Low

WexUS High

Market Cap % Giant 61.1 Large 28.6 Mid 10.2 Small 0.0 Micro 0.0 Avg $mil: 48,716

Value Blnd Growth

Cyclical 40.06 BasicMat 9.00 CnsmrCyc 9.30 FinanSvs 20.93 Real Est 0.83 Sensitive 28.98 CommSrvs 6.20 Energy 9.16 Technlgy 4.05 Defensive30.96 CnsmrDef13.52 Hlthcare 12.55 Utilities 4.89 Industrl 9.57

.

h r t y u j i o p a k s d f

Large Mid Small

. 10 8 . 10 7 . 21 17

1 1

. . .

7 5

. 13 9 . 12 10

Growth Measures Long-Term Erngs Book Value Sales Cash Flow Historical Erngs Price/Cash Flow Dividend Yield % Value Measures Price/Earnings Price/Book Price/Sales

Rel Category

8.81 -2.76 -0.07 -1.12 -14.14 15.09 1.61 0.97 5.06 2.90

0.76 NMF NMF NMF NMF 1.10 0.93 0.97 0.90 0.97

4 3

. .

. 15 12 . 13 9

5 4

.

% Rel Category

Regional Exposure UK/W. Europe100 Japan 0 Asia X Japan 0

% Stock

N. America 0 Latn America 0 Other 0

Address:

PO Box 2600 Valley Forge, PA 19482 800-662-7447 www.vanguard.com

Minimum Purchase: Min Auto Inv Plan:

$10000

Add: $100 IRA: $0

$0

Add: .

Sales Fees:

No-load 0.09% 3Yr:$39 Quarterly

Composition - Net

Web Address: Inception: Advisor: Subadvisor: NTF Plans:

Management Fee:

Country Exposure

% Stock

Cash

0.4

Bonds Other

0.0 3.3

08-13-01

Actual Fees:

Mgt:0.09% Dist: .

U.K.

31

Germany

14

Vanguard Group, Inc.

Expense Projections: Income Distribution:

5Yr:$68 10Yr:$154

Stocks

96.3

None

France 15 Switzerland 14

Spain

5

Foreign

99.9

(% of Stock)

Vanguard NTF

Mutual Funds ß ®

© 2013Morningstar, Inc.All rights reserved.The informationherein is not represented orwarranted to be accurate, correct, complete or timely. Pastperformance is no guarantee of future results.Accessupdated reportsat To order reprints, call 312-696-6100. mfb.morningstar.com.

EQ