(PUB) Morningstar FundInvestor

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Fund News

Fund Manager Changes

Fidelity Dividend Growth FDGFX Impact: Negative 01-01-14 Ramona Persaud is replacing Larry Rakers on the fund. Rakers is moving to Fidelity’s asset-allocation group. | Our Take: Rakers’ strong track record and Persaud’s short record make this a negative change. We have placed the fund’s rating under review. However, one positive is that Persaud is likely to follow a true dividend growth strategy whereas Rakers was a wide-ranging investor with a penchant for cyclical stocks. The move may be a logical extension of Fidelity’s effort to make its Equity Income funds actually focus on dividends for a change. Vanguard and T. Rowe Price run dividend growth strategies that have produced excellent risk-adjusted returns. Impact: Neutral 11-17-13 PIMCO has replaced lead manager Saumil Parikh with Mohamed El-Erian. El-Erian will review the fund’s allocation moves, which have not been timed well. | Our Take: The fund was designed to be cautious, so its lagging returns recently are no shock, but the fund has been disappointing even in the context of cautious allocation strategies. On one level, having El-Erian take over looks like an upgrade. However, PIMCO is reviewing the fund’s allocation strategy, and we’re always wary of funds when the Under Con- struction signs go up. We’re rating the fund Neutral. Impact: Negative 12-17-13 Longtime comanager Ken Feinberg has been removed and was replaced by analyst Danton Goei. Goei had been regarded as the firm’s top analyst. | Our Take: This was a surprise, and we are disappointed to see a key contributor leave. We have downgraded the funds to Bronze as a result. The change may also result in a drop in financials exposure, as Feinberg was a big fan of financials whereas Goei has had greater interest in other sectors. Impact: Neutral 12-31-13 Veteran manager Jack Granahan has retired. Comanagers Gary Hatton and Jane White will continue to run the sleeve of the fund managed by Granahan Investment Management. The firm runs one fourth of Vanguard Explorer. Our Take: We don’t see a big impact and have maintained our Neutral rating. The fund’s large asset base and collection of seven subadvisors make this a rather bland fund, and that won’t change with Granahan’s retirement. The positive is that the fund is pretty cheap, so it doesn’t need to do a lot to catch up with an index fund. Impact: Negative 10-30-13 Comanager Virginie Maisonneuve was hired away by PIMCO. She had been a comanager of this fund’s Schroders-run sleeve since 2005. Schroder runs about one third of the fund, and Simon Webber, who has been listed since 2009, will be the sole manager of the Schroder sleeve. | Our Take: Maisonneuve was the second-most senior manager on the fund, so it’s a blow. However, as she was a comanager of only one third of the fund, it’s far from a disaster. The other slices are run by experienced managers at Baillie Gifford and M&G Investment Management. We are maintaining our Silver rating because the fund still has strong management and low fees. Impact: Negative 11-17-13 Longtime manager Graham French is stepping down, and comanager Randeep Somel is replacing him. | Our Take: The move appears to have more to do with a slump in a broad equity fund that the two managed for M&G Investment. We are putting the rating under review while we look into the change. We don’t expect a change in strategy, but French has done well at this fund even if the global strategies have suffered. PIMCO Global Multi Asset PGMDX Selected American SLADX/Davis NY Venture NYVTX/Clipper CFIMX Vanguard Explorer Vanguard International Growth VWIGX Vanguard Precious Metals and Mining VGPMX

Correction The December issue of FundInvestor had incorrect regional weightings for foreign-stock and world-stock funds. We regret the error. Sequoia Closed Sequoia Fund SEQUX has closed to new investors. In order to avoid a last-minute rush, the firm didn’t give advance warning. Managers Bob Goldfarb and David Poppe said that their goal is to limit asset growth so the fund can continue to take meaningful positions in mid-cap stocks. While the portfolio includes mostly large-cap names, 30% of the portfolio is in small- and mid- cap companies. Plus, nearly four years into a robust bull market, the duo is having a difficult time finding new buying opportunities. The fund’s cash stake is nearly 18% of assets, too, although the fund has long held a sizable cash cushion. Vanguard Cap Opp Closes Vanguard closed Vanguard Capital Opportunity VHCOX to new investors. Vanguard said existing investors can invest up to $ 25 , 000 a year in new money in the fund. However, clients of Vanguard Flagship services and Vanguard Asset Management can still establish a new account in Vanguard Capital Opportunity. Vanguard didn’t provide any advance notice on the closing. While it may annoy those who wished to get in, it does prevent a last rush of cash from piling in. Yacktman Funds Close Yacktman Fund YACKX and Yacktman Focused YAFFX closed to new investors at year-end. Vanguard Bond Fund Reopens Meantime, Vanguard has reopened Vanguard High- Yield Corporate VWEHX . “The fund was closed to