Time to Improve College Savings Plans L Gordon Crovitz Peter Thiels Legal Smackdown JOURNAL REPORT | R1 OPINION | A15 * * * * * Last week: DJIA 17807.06 g 66.16 0.4% NASDAQ 4942.52 0.2% MONDAY, JUNE 6, 2016 ~ VOL CCLXVII NO 131 STOXX 600 341.29 g 2.4% WSJ.com 10-YR TREASURY 10/32 , yield 1.707% OIL $48.62 g $0.71 At the Boyhood Home of Muhammad Ali, Fans Pay Tribute Whats News Business & Finance U S officials appear poised to make history by approving the first private space mission to go beyond Earths orbit, a move that may set important precedents A1 Republican victory in November elections would herald a scaling back of financial regulations, according to a policy blueprint C1 DAVID GOLDMAN/ASSOCIATED PRESS Investors are buying municipal debt at a record clip, enduring low returns in exchange for stability C1 IN MEMORY: Aprilla Howard was among those Sunday who visited the former boxers childhood home in Louisville, Ky Thousands of fans left flowers, notes and gifts at a local museum dedicated to Alis life A funeral and city procession is planned for Friday A3, B7 The Pentagon has decided to rely on an Abu Dhabiowned company to supply the most advanced microchips used in the military B3 Saboteurs Hit Nigerian Oil Low interest rates are hurting investment by encouraging stock buybacks and dividends instead, a Carlyle Group economist says C1 Attacks by the Niger Delta Avengers have cut output, helping to push up crude prices Teenage Mutant Ninja Turtles: Out of the Shadows was the latest sequel to underperform its predecessor B5 World-Wide A split is emerging inside Sanderss campaign over whether he should stand down after Tuesdays primaries and unite behind Clinton A1 Damage caused by a band of saboteurs in Nigeria has reduced oil output and helped tip the country toward recession A1 Some large public U.S universities recorded higher rates of cheating among international students than domestic students A1 China pushed back strongly against U.S criticism of its stance on maritime disputes as the two sides began high-level talks A10 Trump is giving a national platform to parents of victims of crimes by illegal immigrants to boost support for hard-line policies A4 Indias Modi will seek to cement progress made with the U.S on economic and security issues on a visit to the nation this week A10 A Buddhist temple in Thailand is at the center of a wildlife-trafficking probe after scores of dead tiger cubs were found A10 Kansas, Illinois and other Midwestern states are scrambling to firm up financial packages to ensure classes open again in the fall A7 Novak Djokovic won his first French Open title, beating Andy Murray B7 CONTENTS Business News B2-6 Crossword B6 Europe File A12 Election 2016 A4-6 Heard on Street C6 Journal Report R1-10 Markets Digest C4 Opinion A15-17 Outlook A2 Sports B7 U.S News A2-3,7 Weather B6 World News A10-13 > s Copyright 2016 Dow Jones & Company All Rights Reserved YEN 106.53 Sanders CampIs SplitOver NextStep A band of saboteurs that calls itself the Niger Delta Avengers has been prowling the swamps of Nigerias petroleum-rich south for four months, bombing pipelines and diving underwater to destroy equipment The damage has helped tip By Drew Hinshaw in Abuja, Nigeria, and Sarah Kent in London Africas biggest economy toward recession, and has cost Nigeria its position as the continents top oil producera distinction inherited by Angola The Avengers struck again before dawn on Friday A group of militants sneaked through marshland to bomb two pipelines, one owned by Royal Dutch Shell PLC and the other owned by Italys Eni SpA, according to Nigerias navy Shell confirmed signs of a spill from one of its pipelines and said it is still evaluating potential damage Eni confirmed the attack but said it didnt contribute to any new supply disruption On the groups purported Twitter account, it called the Eni attack part of its promise that Nigeria Oil production will be Zero. The brazen strikes were the FOREIGN STUDENTS MORE LIKELY TO CHEAT latest demonstration of destructive proficiency by the Avengers, which has considerably cut the amount of oil in global markets The strikes have led Nigeria to shift some of the forces who have been fighting an Islamist insurgency On and off for years, criminal groups in the Niger Delta have extorted and bombed oil compaPlease see OIL page A13 Saudis cut prices of oil exports to Europe C3 A split is emerging inside the Bernie Sanders campaign over whether the senator should stand down after Tuesdays election contests and unite behind Democratic front-runner Hillary Clinton, or take the fight all the way to the July party convention and try to pry the nomination from her One camp might be dubbed the Sandersistas, the loyalists who helped guide Mr Sanderss political ascent in Vermont and the U.S Congress and are loath to give up a fight that has far surpassed expectations Another has ties not only to Mr Sanders but to the broader interests of a Democratic Party pining to beat back the challenge from Republican Donald Trump and make gains in congressional elections Mr Sanders in recent weeks has made clear he aims to take his candidacy past the elections on Tuesday, when California, New Jersey and four other states vote But the debate within the campaign indicates that Mr Sanderss next move isnt Please see RACE page A6 Trump brings new voices to bitter crime debate A4 Republican elders criticize attacks on judge A4 Washington, Beijing Open Talks U.S schools show higher rates of academic fraud among overseas enrollees BY MIRIAM JORDAN AND DOUGLAS BELKIN found that in the 2014-15 school year, the schools recorded 5.1 reports of alleged Number of international At Ohio State University, a undergraduate students in the U.S cheating for every 100 international students They recorded Chinese student took tests for Chinese Others one such report per 100 doChinese classmates for cash 600 thousand mestic students last year, guaranteeing an A Students from China were At the University of Calisingled out by many faculty fornia, Irvine, some internamembers interviewed Cheattional students used a lost-ID400 ing among Chinese students, card ruse to let impersonators especially those with poor lantake exams in place of others guage skills, is a huge probAt the University of Ari200 lem, said Beth Mitchneck, a zona, a professor told of ChiUniversity of Arizona profesnese students handing in mulsor of geography and developtiple copies of the same ment incorrect test answers In the academic year just A flood of foreign under2012 13 14 15 16 ending, 586,208 international graduates on Americas camNote: Figures are for school years ending undergraduate students atpuses is improving the finanin the year shown tended U.S colleges and unicial health of universities It Source: Student and Exchange Visitor Program, Department of Homeland Security versities, according to the Dealso sometimes clashes with a partment of Homeland fundamental value of U.S Security More than 165,000 were from China scholarship: academic integrity South Korea and Saudi Arabia were the source A Wall Street Journal analysis of data from Please see CHEAT page A14 more than a dozen large U.S public universities Changing Campus Diving NBA Players Create First-Row Problems i i Should fans in pricey seats lend a hand, or duck and cover? BY BEN COHEN OAKLAND, Calif.A ticket for a floor seat to an NBA Finals game between the starstudded Cleveland Cavaliers and Golden State Warriors is a rare and increasingly expensive commodity But that privilege also presents the lucky fans in these courtside seats with a peculiar dilemma It isnt the possibility of spilling beer on the court or being caught on television staring into your phone Its what you choose to when a hu- mongous, sweaty NBA player in sneakers comes barreling in your direction while chasing a loose balland then dives on top of you Cleveland center Timofey LeBron Mozgov, who stands 7-foot-1 and weighs 275 pounds, already knows what he would if he were in the bleachers and someone of his size came flying at him at full speed I would get away, Mr Mozgov said If only it were that simple There is no statistician who tracks player leaps per game, but it is likely to happen a lot more in the playoffs, James when possessions come at a premium In this years NBA Finals, though, the fuss isnt over how many players have flung themselves into Please see DIVE page A14 SAUL LOEB/PRESS POOL The spread of combination cancer treatments threatens to heighten tensions over soaring drug prices B1 EURO $1.1364 BY PETER NICHOLAS The Feds plans for raising rates went on hold after a dismal jobs report, with officials wanting to wait and see whether the economy stays on track A3 GM plans to convert some Cadillac stores into virtual dealerships that will have low overhead but sophisticated technology B1 HHHH $3.00 SHARP SHOOTER: Secretary of State John Kerry taking part in a ceremony in Mongolia on Sunday Mr Kerry is part of the U.S delegation meeting in Beijing this week for economic and security talks with Chinese officials A10 U.S Poised to Clear Private Moon Mission BY ANDY PASZTOR U.S officials appear poised to make history by approving the first private space mission to go beyond Earths orbit, according to people familiar with the details The governments endorsement would eliminate the largest regulatory hurdle to plans by Moon Express, a relatively obscure space startup, to land a roughly 20-pound package of scientific hardware on the Moon sometime next year It also would provide the biggest federal boost yet for unmanned commercial space exploration and, potentially, the first in an array of forprofit ventures throughout the solar system The expected decision, said the people familiar with the details, is expected to set important legal and diplomatic precedents for how Washington will ensure such nongov- ernmental projects comply with longstanding international space treaties The principles are likely to apply to future spacecraft whose potential purposes range from mining asteroids to tracking space debris Approval of a formal launch license for the second half of 2017 is still months away, and the proposed mission poses huge technical obstacles for Moon Express, including the fact that the rocket it wants to use hasnt yet flown But the projects proponents have considered federal clearance of the suitcase-size MX-1 lander and its payload as well as approval of a planned two-week operation on the Moon itself to pose the most significant legal challenges to the mission After months of lobbying by Moon Express officials and high-level deliberations among Please see SPACE page A7 A2 | Monday, June 6, 2016 THE WALL STREET JOURNAL * **** U.S NEWS VALUE PROPOSITION Best value in a large-cabin aircraft: three flexible living areas, unmatched payload, choice of a forward or aft galley GULFSTREAM.COM SCOTT NEAL +1 912 965 6023 scott.neal@gulfstream.com College Loan Glut Turns Sour T he U.S government over the last 15 years made a trillion-dollar investment to improve the nations workforce, productivity and economy A big portion of that investment has now turned toxic, with echoes of the housing crisis The investment was in human capital, or, more specifically, higher educaTHE tion The govOUTLOOK ernment JOSH helped finance MITCHELL tens of millions of tuitions as enrollment in U.S colleges and graduate schools soared 24% from 2002 to 2012, rivaling the higher-education boom of the 1970s Millions of others attended trade schools that award career certificates The government financed a large share of these educations through grants, low-interest loans and loan guarantees Total outstanding student debtalmost all guaranteed or made directly by the federal government has quadrupled since 2000 to $1.2 trillion today The government also spent tens of billions of dollars in grants and tax credits for students N ew research shows a significant chunk of that investment backfired, with millions of students worse off for having gone to school Many never learned new skills because they dropped outand now carry debt they are unwilling or unable to repay Policy makers worry that without a bigger intervention, those borrowers will become trapped for years and will ultimately hurt, rather than help, the nations economy Adhaesio One hand two times www.meistersinger.net Old Northeast Jewelers St Pete & Tampa, FL; Orlando Watch Co Winter Park, FL Exquisite Timepieces Naples, FL; Worthmore Jewelers Atlanta, GA Little Treasury Jewelers Gambrills, MD; Kuhns Jewelers Salisbury, MD Alexanders Jewelers Columbus, OH; Robert Goodman Jewelers Zionsville, IN Joseph Gann Jewelers Boston, MA; Martin Pulli Fine Jewelry Philadelphia, PA Saltzmans Watches and More Cranston, RI; Aaron Faber Gallery New York, NY Bassano Jewelry New York, NY; Danson Jewelers Hasbrouck Heights, NJ THE WALL STREET JOURNAL (USPS 664-880) (Eastern Edition ISSN 0099-9660) (Central Edition ISSN 1092-0935) (Western Edition ISSN 0193-2241) Editorial and publication headquarters: 1211 Avenue of the Americas, New York, N.Y 10036 Published daily except Sundays and general legal holidays Periodicals postage paid at New York, N.Y., and other mailing offices POSTMASTER: Send address changes to The Wall Street Journal, 200 Burnett Rd., 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CONTACT CUSTOMER SUPPORT By web: customercenter.wsj.com By email: wsjsupport@wsj.com By phone: 1-800-JOURNAL (1-800-568-7625) Or by live chat at wsj.com/ livechat Debt, but No Degree Student debt defaults have soared in recent years, particularly among students who borrowed but then dropped out Dropouts earn only marginally more than high-school graduates, and far less than college grads Share of loans, by type, that are delinquent 90 days or more Median weekly earnings 15% $1,500 12 1,200 Bachelors degree or higher Student loan 900 Auto loan Some college/ associate degree Credit card quarterly data Home equity line of credit Mortgage 2003 04 05 06 07 08 09 10 11 12 13 14 15 16 600 Treasury Deputy Secretary Sarah Bloom Raskin compares the seven million student-loan borrowers in defaultand millions of others who appear on the same pathto homeowners who found themselves underwater and headed toward foreclosure after the housing crash We needed individual households to stabilize property values and help revive communities, she said We want to stabilize this generation of student borrowers and revive their prospects for the future I think students are essential to our future economic growth and contributions to productivity. In a working paper released last week, economists at George Washington University and the Treasury Department tracked the earnings of some 1.4 million students who left a for-profit college in the two years through September 2008 Seventy percent of them dropped out Those who enrolled in associates and bachelors programs earned an average of $600 to $700 a year less in the six years after leaving school compared with the six years before CORRECTIONS The Centers for Disease Control and Prevention shared the results of an assessment of counties vulnerable to HIV and hepatitis C outbreaks with the 26 affected states in which those counties are located A U.S News article Friday about the agencys mapping of outbreak risks incorrectly gave they entered Almost all of them left with student debtan average $8,000 for associates candidates and $13,000 for bachelors candidates Those in for-profit certificate programs earned an average $920 less The National Bureau of Economic Research working paper used federal tax records and Education Department data Student debt threatens to widen the gap between the haves and have-nots There are similar problems in nonprofit colleges, which enroll about 2.7 million students a year A report released in May by Third Way, a nonpartisan think tank, showed that among students who enrolled in 2005, on average only half graduated from such institutions within six years On average, nearly four in 10 undergraduates at those schools who took on student debt earned no more than $25,000 in 2011, the same as the typical AMPLIFICATIONS the number of affected states as 25 The Nasdaq KBW Bank Index includes 24 large commercial lenders In some editions Saturday, a Business & Finance article about bank stocks incorrectly said the index has 25 constituents Readers can alert The Wall Street Journal to any errors in news articles by emailing wsjcontact@wsj.com or by calling 888-410-2667 High school Less than high school 300 2000 10 14 THE WALL STREET JOURNAL Source: Federal Reserve Bank of New York (delinquencies); Labor Dept (earnings) Following in Dads footsteps requires a great pair of shoes brooksbrothers.com Education attainment high-school graduate Other research shows similar dropout rates at public colleges and universities A long with weak job prospects, most of these students are now severely behind on payments, damaging their credit and limiting their ability to borrow for homes and cars More than a fifth of all student debt is at least 90 days delinquent, according to the New York Federal Reserve, and federal data show dropouts are three times more likely to default than degree earners No group saw its net worth decline more between 2010 and 2013 than college dropouts The median value of their assets minus debts fell 14% over that period, according to the Federal Reserves Survey of Consumer Finances By comparison, the typical college graduate saw her wealth increase 5% In that sense, student debt threatens to widen the gap between societys haves and have-nots A disproportionate share of for-profit college students is poor, black and Hispanic The NBER study showed that half of the 1.4 million for-profit school borrowers were parents Ms Raskin worries these borrowers are at risk of having their financial positions spiral downward due to debt During the housing crisis, plummeting home values left millions of Americans underwater on their mortgages, preventing them from selling their homes and moving to better jobs The lack of mobility in turn hurts productivity, since it limits the pool of workers that employers can choose from THE WALL STREET JOURNAL Monday, June 6, 2016 | A3 * * * * âT&CO 2016 U.S NEWS Fed Back in Wait-See Mode MANUEL BALCE CENETA/ASSOCIATED PRESS Bank officials want economy to stay on track before raising interest rates again BY JON HILSENRATH AND KATE DAVIDSON The Federal Reserves plans for boosting short-term interest rates went on hold after Fridays dismal jobs report, with central bank officials now wanting to see whether the economy remains on track before they make a move A rate increase at the Feds June 14-15 meeting is almost surely off the table A move at their July meeting six weeks later is still possible though less likely, because officials wont have that much more economic data to reassure themselves about the course of the economys expansion, according to their remarks Some officials could prefer to wait until their September meeting to consider lifting rates, provided the economy picks up during the summer The Feds next signal could come Monday from Chairwoman Janet Yellen, who is scheduled to speak in Philadelphia on the economic outlook and monetary policy We cannot take the resil- Fed Chairwoman Janet Yellen ience of our recovery for granted, Fed governor Lael Brainard said in a speech Friday after the employment report, possibly foreshadowing Ms Yellens approach Though the two women dont always see eye-to-eye, they are both cautious about raising interest rates In this environment, prudent risk management implies there is a benefit to waiting for additional data to provide confidence that domestic activity has rebounded strongly and reassurance that nearterm international events will not derail progress toward our goals, Ms Brainard said at the Council on Foreign Relations Before Friday, when the Labor Department reported that hiring slowed sharply in May, Fed officials were considering lifting rates this month or next Todays labor market report is sobering, and suggests that the labor market has slowed, Ms Brainard said Friday Cleveland Fed President Loretta Mester, speaking Saturday in Stockholm, said the jobs gain reported Friday was a disappointing number, adding it has not changed fundamentally my economic outlook, but we will be assessing the data as it comes in. Employers added just 38,000 jobs to their payrolls in May, and the pace of hiring slowed to an average 116,000 a month over the past three months, the Labor Department said Ahead of the report, many Fed officials believed economic growth was accelerating modestly after a first-quarter slowdown Consumer spending picked up in the spring after softening in the first quarter Exports were firming, and financial markets stabilized after turbulence early in the year With hiring steady and inflation showing signs of rising, they thought before Friday that it was about time to raise short-term rates by another quarter percentage point The main question was whether to move this month or wait until their July meeting, after the June 23 U.K vote on whether to stay in the European Union The economy is continuing to improve, Ms Yellen said in late May We saw weak growth in the first quarter of the year and relatively weak growth at the end of last year Growth looks to be picking up from the various data that we monitor. A rate increase, she said, was probable in the coming months. Now officials need to piece together whether the hiring slowdown was temporary or more lasting If the slump was temporary, they can proceed toward rate increases once they get the data to prove it On six occasions since 2010, monthly hiring gains have dipped below 100,000 and bounced back One important factor is business investment, which softened in the first quarter A gauge of such investment rose in April, but government measures can be volatile Fed officials wont get a reading on second-quarter gross domestic product, a broad measure of economic output, until after their July meeting JUST THE THING TO CELEBRATE GRADS Return to Tiffanyđ 800 843 3269 | TIFFANY.COM Global Tributes Follow Alis Death BY JON KAMP LONGINES DAVID GOLDMAN/ASSOCIATED PRESS Rahaman Ali, right, the boxers brother, cried at a service in a Louisville church his family attended again, she said, when she failed attemping to row a hand-built boat across the Atlantic Ocean in 1996 She completed the quest three years later Other Ali fans also revered him for his words and actions outside the ring Mr Dixon, the local boxing coach, said he was impressed with Alis willingness to take a stand against the Vietnam War in the late 1960s, even though it cost him more than three years of suspension during his athletic prime He stood up to adversity and discrimination and racism like no other athlete, Mr Dixon said But Alis exploits in the ring also helped seal his iconic, global status Donald Lassere, the Muhammad Ali Centers chief executive, said he has spoken with media from at least seven foreign countries since the boxing great died He was remembered in Manila, the Philippine capital where he beat Joe Frazier in 1975, by local boxing legend Manny Pacquiao Later in life, Ali was renowned for his three-decade- long battle with Parkinsons disease, a degenerative neurological disease The Muhammad Ali Parkinson Center in Phoenix posted a video online with patients paying tribute to the fighter known as The Greatest Jason Gay: Another Muhammad Ali? Probably never B7 FATHERS DAY JUNE 19 The Longines Master Collection $3325 Fifth Avenue and 50th Street 212.753.4000 FREE GROUND SHIPPING ONLINE AND IN STORES EVERY DAY EVERY ORDER âD.YURMAN 2016 James Dixon, a boxing coach in Louisville, Ky., planned to head over to the Muhammad Ali Center on Sunday to leave a T-shirt from his gym with some handwritten words: Rest in peace champ. Flowers, notes and boxing paraphernalia from scores of well-wishers piled up on the plaza outside the museum and cultural institution dedicated to Alis life, as his hometown prepared to say goodbye to him with a procession and funeral Friday, a week after his death at age 74 A makeshift memorial also took shape outside his boyhood home We lost our son, said Mr Dixon, a 42-year-old who founded the Louisville TKO gym The funeral will take place Friday afternoon at Louisvilles KFC YUM! Center arena, the city said, after a morning procession winds slowly through the city, down a boulevard named after the boxing legend Confirmed speakers at the funeral include former President Bill Clinton, comedian Billy Crystal and sportscaster Bryant Gumbel I was honored to award him the Presidential Citizens Medal at the White House, to watch him light the Olympic flame, and to forge a friendship with a man who, through triumph and trials, became even greater than his legend, Mr Clinton said in a statement At Louisvilles Spalding University, where the athletic center includes the gym where Ali first trained when he was known as Cassius Clay, university President Tori Murden McClure spoke about her friend during Saturdays commencement ceremony He personally encouraged her to try Soldiers Killed in Texas Flooding Identified BY JON KAMP U.S Army officials released the names over the weekend of the nine soldiers from Fort Hood in Texas killed last week when a flash flood swept away their truck during a training exercise Eight of the deceased soldiers were members of the 1st Cavalry Division, and one was a cadet from West Point They ranged in age from 19 to 38, according to Fort Hood They came from around the U.S., including two soldiers from both California and Florida A team from the Army Combat Readiness Center at Fort Rucker, Ala., will investigate the training accident, according to Fort Hood The team was dispatched to Fort Hood on Friday, a day after the accident, the Associated Press reported Fort Hood is planning a memorial service for Cadet Mitchell Alexander Winey, a 21-year-old from Valparaiso, Ind., on Thursday, said Maj John Miller, a spokesman for the 1st Cavalry Division A memorial service for the eight other soldiers is tentatively planned for June 16, he said The memorials would allow soldiers at Fort Hood who cant attend private family funerals off base a chance to grieve, he said As the extended Cav Family grieves together, we wrap our arms around the loved ones and teammates impacted by this tragedy, Maj Gen J.T Thomson said on the 1st Cavalry Divisions Facebook page Three other soldiers from the accident were rescued and released from the hospital, Fort Hood officials said The accident occurred in a central Texas area hit hard by floods that started after heavy rain began pounding Texas on Memorial Day weekend belmont đ curb link collection DAV I DY U RM A N C O M 8 - DY U RM A N A4 | Monday, June 6, 2016 P W L C 10 11 12 H T G K B F A M O I X X THE WALL STREET JOURNAL Trump Brings New Voices to Bitter Debate The Republican cites support from families of victims of crime by illegal immigrants Republican presumptive presidential nominee Donald Trump is giving a national platform to parents of victims of crimes by illegal immigrants, inviting them to rallies and telling their tragic stories to boost support for hard-line immigration policies Mr Trump is drawing intense media attention to what he says is a public-safety issue caused by illegal immigration But the families also help put a sympathetic face on Mr Trumps attacks on some Mexican immigrants as criminals and his plans to build a wall along the southern border and deport millions of people who are in the U.S illegally Two weeks ago, Sabine Durden told thousands of people at a Trump rally in Anaheim, Calif., about her 30-year-old son, Dominic, a sheriffs dispatcher who was killed in a 2012 motorcycle accident by an illegal immigrant truck driver convicted twice of driving under the influence Choking back tears, she recalled: I heard Donald Trump on the television as I walked by talking about illegal immigration and about the cost of American lives and I screamed Donald Trump became my life savior that day, my hero. In an interview, Mr Trump said meeting the parents of children killed by illegal immigrants reinforced even more his support for stringent immigration laws Even I didnt realize how bad it was, he said The only way people can understand how JONATHAN ERNST/REUTERS BY BETH REINHARD Women representing families of people killed in incidents linked to undocumented immigrants at a May Trump rally in Anaheim, Calif severe this crisis is is to see the families, and then they see the horror of it. Mr Trumps kinship with these grieving parents parallels Hillary Clintons ties to several mothers of African-Americans killed in gun violence or in confrontations with police, including Trayvon Martin, Eric Garner and Michael Brown The mothers of the movement have campaigned with Mrs Clinton to push tougher gun-control laws and raise awareness about racial profiling Two weeks after he flagged crime by illegal immigrants in his June 16, 2015, campaign announcement, 32-year-old Kathryn Steinle was slain in San Francisco, allegedly by a felon who had been deported five times Mr Trump seized on the murder as proof his focus on border security was on track Ms Steinles brother, Brad, told CNN in July that Mr Trump was sensationalizing her death The Steinle family last week declined a request for comment on Mr Trump through an attorney Mr Trump did find an ally in Jamiel Shaw, whose 17-year-old son was gunned down in 2008 by a gang member living illegally in the U.S Donald Trump was right on, Mr Shaw told Fox News last July Donald Trump is like speaking for us, speaking for our dead. Mr Trump saw the Fox interview and called him Days later, he met Mr Shaw and other parents of children killed by illegal immigrants at a Beverly Hills, Calif., hotel He told me my sons death would not be in vain, said Mr Shaw, a Democrat-turned-independent voter who owns a gymequipment repair firm Among the parents Mr Trump is giving voice to are blacks and Hispanics, who bring a diverse face to a candidate facing allegations of racial and ethnic prejudice, most recently for accusing a Mexican-American judge of being biased against him Mr Shaw is African-American Last years Beverly Hills gathering was organized by Maria Espinoza, founder of the Remembrance Project, which advocates on behalf of such families The Anti-Defamation League, which opposes discrimination, said in a 2014 report that the Remembrance Project demonizes immigrants. Ms Espinoza didnt respond to interview requests Another parent who met Mr Trump in Beverly Hills was Don Rosenberg, whose 25-year-old son was riding his motorcycle in San Francisco when he was struck and killed by an illegal immigrant driver in 2010 Mr Rosenberg is grateful Mr Trump is drawing attention to illegal immigration but said his inflammatory references to Mexicans as rapists muddles his message The self-described liberal Democrat has pressed campaign advisers to offer more detailed policy plans Every speech cant be, Were going to build a wall and Mexico will pay for it And Kate, said Mr Rosenberg, referring to Ms Steinle in San Francisco In the Journal interview, Mr Trump attributed a staggering amount of crime to illegal immigration But data is scarce The federal government reports the ethnicity and race of offenders but not their legal status or country of origin On the question of whether illegal immigrants commit crimes out of proportion to their share of the population, its very hard to say, said Steven Camarota, director of research at the Center for Immigration Studies, which favors curbs on legal immigration and stricter border enforcement Mr Camarota and other proponents of reduced immigration often point to a Government Accountability Office report in 2011 that found an estimated 296,000 immigrants here illegally or with unknown legal status in state and local jails That count, which includes multiple incarcerations of the same person in different jurisdictions, covers violent and nonviolent offenses There are estimated to be 11 million illegal immigrants in the U.S Deportations remain at record-setting numbers under President Barack Obama, and more Mexicans are leaving the U.S than entering it, according to the Pew Research Center Mr Trumps critics say his emphasis on crime tied to immigration is misguided Trumps attacks on immigrants and immigration are divisive, racist, and quite frankly, hearken back to some of the darkest periods in our nations history, said Ali Noorani, executive director of the National Immigration Forum Action Fund, which backs citizenship for illegal immigrants BY THOMAS M BURTON ethnicity, Mr Trump answered, I dont think so at all Hes proud of his heritage Hes a Mexican Were building a wall between here and Mexico. Judge Curiel is presiding over a pair of cases in which the plaintiffs allege Trump University duped them into paying tens of thousands of dollars on the belief they would be trained to learn Mr Trumps real estate strategies Mr Trump denies the allegations, saying the students got their moneys worth, with many offering positive evaluations of the program Appearing on NBC, Mr McConnell said that all of us came here from somewhere else. Almost all Americans, the Kentucky Republican added, U.S Judge Gonzalo Curiel are either recent immigrants or have ancestors who were risk takers and who got up from wherever they were and came here. The denunciations come as the Republican Party establishment has been fitfully coming around to support Mr Trump Mr Gingrich, appearing on Fox News, called on Mr Trump to move to a new level. This is no longer the primaries, the former House speaker said Hes no longer an interesting contender He is now the potential leader of the U.S and hes got to move his game up to the level of being a potential leader. Republican Sen Rob Portman of Ohio, who is facing a difficult re-election race in a battleground state, told the Washington Post in an interview printed Sunday, The fact that the judge has a MexicanAmerican heritage has nothing to with how you should describe his judicial ability. And last week, House Speaker Paul Ryan (R., Wis) told a local radio station, The comment about the judge the other day just was out of left field Its reasoning I dont relate to I completely disagree with the thinking behind that. Also on Sunday, Democratic front-runner Hillary Clinton said Mr Trumps remarks about Judge Curiel were vicious and typical of Mr Trumps ethnic slurs and rants against everyone. The former secretary of state, appearing on ABC, said her opponent is trying to divert attention from the very serious fraud charges against the for-profit school Mr Trump, she said, does have that thin skin and, you know, Judge Curiel is as American as I am and certainly as American as Donald Trump. Location: 2017 Preston St (Formerly Cheek-Neal Coffee Building) Two Republican Party elders on Sunday denounced Donald Trumps attacks on a Hispanic federal judge, adding to a wave of criticism from party figures of their presumptive presidential nominee Over the past week, Mr Trump has repeatedly said that U.S District Judge Gonzalo Curiel, the Indiana-born jurist presiding over civil fraud litigation in California involving Trump University, is unfit to hear the case because he is of Mexican ancestry and Mr Trump has vowed to build a wall along the U.S.-Mexico border I couldnt disagree more with what he had to say, Senate Majority Leader Mitch McConnell said in an interview broadcast Sunday Former House Speaker Newt Gingrich, an outspoken Trump supporter who has suggested he would serve as Mr Trumps running mate, called the presumptive nominees remarks one of the worst mistakes Trump has made, and said, I think its inexcusable. In an interview broadcast Sunday on CNN, Mr Trump complained that Judge Curiel had issued horrible rulings against him in the Trump University litigation and had treated him very unfairly. He cited the judges Mexican heritage and noted Im building a wall between the U.S and Mexico Judge Curiel, he said, should recuse himself. Asked whether it was racist to say the judge cant his job effectively because of his INDIANA UNIVERSITY Republican Elders Knock Attacks on Hispanic Judge Experience vibrant museums and galleries in a city where creativity has no limits L to R: Houston artists Patrick Renner, GONZO247, Theresa Escobedo, JooYoung Choi, Nathaniel Donnett, Trenton Doyle Hancock, Susannah Mira #HoustonIsInspired THE WALL STREET JOURNAL Monday, June 6, 2016 | A5 A6 | Monday, June 6, 2016 * **** Continued from Page One settled For now, Democratic officials, fund-raisers and operatives are getting impatient, calling on Mr Sanders to quit the race and begin the work of unifying the party for the showdown with the Republican presumptive nominee Orin Kramer, a New York hedge-fund manager who has raised campaign funds for both President Barack Obama and Mrs Clinton, said with respect to Mr Sanderss future plans: I would hope people would understand what a Trump presidency would mean and act accordinglyand accordingly means quickly. A strong showing in New Jersey on Tuesday, before California results even come in, could help Mrs Clinton reach the 2,383 delegates needed to clinch the nomination Her total includes hundreds of superdelegatesparty leaders and elected officials who can back either candidate Mr Sanders is hoping that defeating Mrs Clinton in the most populous state later Tuesday might give superdelegates reason to drop her and get behind his candidacy Those superdelegates have given no indication they will shift allegiances Even so, Mr Sanders isnt backing off In an interview that aired Sunday on CNN, he stepped up an attack on Mrs Clinton involving the Clinton Foundation Echoing a critique made by Republicans, Mr Sanders said he has a problem with the foundation accepting money from foreign sources during her service as secretary of state In a news conference Saturday in California, Mr Sanders indicated he would battle for superdelegates all the way to the convention The Democratic National Convention will be a contested convention, he said Mrs Clinton, who won Puerto Ricos Democratic primary on Sunday, seems to be running out of patience with Mr Sanders Having shifted MARIEL CALLOWAY/ZUMA PRESS RACE Sen Bernie Sanders shook hands while campaigning in Los Angeles on Saturday POLITICS COUNTS Tuesdays Terrain The six states holding Democratic contests Tuesday offer different challenges for Hillary Clinton and Sen Bernie Sanders Mr Sanders has won no state that is more racially diverse than the U.S on average, so rural Montana and South Dakota, which are largely nonHispanic white, are likely a good fit for him Diverse and densely populated New Jersey will probably favor Mrs Clinton People per square mile U.S Percent white, non-Hispanic 90 251 California 17 Montana 475 39 1,208 New Jersey New Mexico Pledged delegates at stake 63 34 40 87 South Dakota 11 84 North Dakota 11 88 Source: U.S Census Bureau (demographics); Democratic National Committee (delegates) her focus to Mr Trump, she told CNN that after Tuesday, Im going to everything I can to reach out to try to unify the Democratic Party, and I expect Sen Sanders to the same. When she ran against Mr Obama in 2008, Mrs Clinton stayed in the race until the end As late as the final week of voting, she was talking hopefully of wooing super-delegates and capturing the nomination But on June of that 126 58 yearfour days after the primary season endedshe gave a speech bowing out and immediately threw her support to Mr Obama Tad Devine, a senior Sanders strategist who advised Democratic nominees Al Gore in 2000 and John Kerry in 2004, among others, suggested the path forward is uncertain, hinging on the outcome in California and other states He voiced a conciliatory note, describing how the 21 20 18 THE WALL STREET JOURNAL two campaigns might set aside differences that have grown more pronounced in the heat of the year-long campaign What will happen hopefully when the voting is done, our two campaigns will begin to talk once more to one another and figure out where the common ground is, he said Campaign manager Jeff Weaver, who has worked in Mr Sanderss congressional offices and Vermont-based campaigns dating to the THE WALL STREET JOURNAL mid-1980s, takes a more aggressive approach A victory in California and elsewhere on Tuesday would strengthen the argument for the nomination, Mr Weaver said, but it isnt necessary to keep the candidacy alive through the convention The plan is as the senator has described it: to go forward after Tuesday and keep the campaign going to the convention and make the case to superdelegates that Sen Sanders is the best chance that Democrats have to beat Trump, Mr Weaver said That is what worries Democratic leaders Pointing to polls indicating a tightening race in November, they say Mr Sanders, if he is sincere about beating back Mr Trump, must quickly join forces with the party front-runner Democrats will need as much unity as early as we can get it as possible, said Tom Daschle, a former Senate Democratic leader It would be a huge mistake to underestimate [Mr Trump] Weve done that the entire election season. Democratic Senate leader Harry Reid has concluded Mr Sanders has no path to the nomination, an aide said, and that he should shift focus to helping Democrats pick up Senate seats Doing so would help Mr Sanders return to the chamber with more power than he wielded before the presidential race began a year ago, the aide said William Daley, who chaired Mr Gores presidential campaign and served as a White House chief of staff for Mr Obama, said in an interview the damage Mr Sanders could is overwhelming if he doesnt give [Mrs Clinton] the breather she needs in the run-up to the convention to take on Trump. At a minimum, some of Mrs Clintons supporters would like to see Mr Sanders lay off the attacks Alan Kessler, a longtime Democratic fundraiser, said Mr Sanderss tone is a little disappointing. Theres no reason why he shouldnt fight for the things that hes talking about, but theres no need to continually make it personal, he added HHHHH CAMPAIGN WIRE HHHHH DEMOCRATIC RESULTS Clinton Winner in Puerto Rico Primary Hillary Clinton overwhelmed Bernie Sanders in Puerto Rico's Democratic presidential primary on Sunday, putting her within striking distance of capturing her party's nomination After a victory Saturday in the U.S Virgin Islands and a win in the U.S territory, Mrs Clinton was less than 30 delegates short of the 2,383 needed to win the nomination, according to an Associated Press count While Puerto Rican residents cannot vote in the general election, the island's politics could reverberate into the fall campaign Tens of thousands of Puerto Ricans have left the island to escape a dismal economy, with many resettling in the key battleground of Florida Associated Press CAMPAIGN VIOLENCE Trump: Protesters Sent by Democrats Presumptive Republican presidential nominee Donald Trump on Sunday suggested protesters who attacked his supporters after a rally in San Jose, Calif., Thursday were paid agitators deployed by the Democrats Appearing on CNN, Mr Trump blamed for the mayhem thugs who attend every rally. Theyre bad people, and I think theyre sent by the Democrats, he said He offered no evidence for the claim, but said some of the protesters were holding campaign signs for Democratic candidate Bernie Sanders In separate appearances on CNN, Mr Sanders and Democratic front-runner Hillary Clinton condemned violence at political gatherings I condemn it absolutely, Mr Sanders said I want to make it clear that any person who is a Bernie Sanders supporter, please, not in any way, shape or form engage in violence. Kate Davidson THE WALL STREET JOURNAL Monday, June 6, 2016 | A7 * * * * U.S NEWS Funding Fights Vex Schools Risk Algorithms Face Court Test Officials in Kansas, Illinois and Michigan work to try to keep classrooms open BY JOE PALAZZOLO By Melissa Korn, Douglas Belkin and Kris Maher Stung by lower tax revenue and nearing the end of the regular legislative sessions, politicians and school administrators in Kansas, Illinois and some other Midwestern states are scrambling to firm up financial packages that would keep some educational programs running through the summer, and ensure that classrooms open again in the fall The Kansas Supreme Court ruled last month that legislative efforts to make funding for poorer school districts more equitable didnt go far enough to meet a standing court order; judges said Friday that the state had until June 30 to bring funding formulas in line with constitutional requirements or the court would shut schools The Kansas fight is the latest fallout from a move by the states Republican governor and Legislature to cut taxes dramatically in an effort to spur economic growth The states regular legislative session ended last Wednesday and was adjourned until January Gov Sam Brownback hasnt yet said whether he would call for a special session to address school funding, but he reiterated Friday that he would work with the attorney general and legislative leadership to respond aggressively and appropriately to the courts closure threat The court should not be playing politics with SETH PERLMAN/ASSOCIATED PRESS Lawmakers in some states have a daunting homework assignment over their summer break: to find hundreds of millions of dollars to make sure the next school year can start on time Illinois Gov Bruce Rauner tells students in Auburn, Ill., in April about budget talks with lawmakers our childrens education, he said State Rep Jim Ward, a Democrat, said his colleagues in the statehouse are the ones playing politics Theyre going to play chicken for a while That never works out well, he said, predicting a special session would be called toward months end We must plan for the worst and hope for the best, John Allison, superintendent of the 51,000-student Wichita School District, wrote on the districts website Thursday He said that while regular summer school is completed by July and wont be affected by any shutdown, extended summer sessions and a summertime meal program used by low-income students could be suspended, and monthly payroll and nonbond vendor payments of more than $50 million would be affected Illinois closed out its spring legislative session last Tuesday without a budget for the second year in a row The state, with a Republican governor and Democratic-led Legislature, now has $7 billion in unpaid bills, as well as the nations lowest credit rating and highest unemployment rate Were like a banana republic We cant manage our money, Gov Bruce Rauner told reporters last week when the two sides again failed to reach a deal Illinois passed supplemental bills to release funds for specific purposes, like education, last year; a first attempt to the same for the coming cycle failed last week Chicagos schools wont open in the fall unless the governor and Legislature pass a budget or supplemental education appropriation, said Chicago Public Schools Chief Executive Forrest Claypool That could compound the problems facing many of the citys neighborhoods already suffering from a surge in deadly shootings this year Any time your school system shuts down it has an incredible impact on families, said Mr Claypool, whose district has more than 392,000 students But I dont believe it will come to that. Meanwhile, Michigan lawmakers are trying to finalize a financial rescue package less than a month before the Detroit Public Schools are pro- jected to run out of cash On Thursday, the state House of Representatives passed a set of six bills that would provide $617 million to the district, including $467 million to pay off its operating debt and $150 million to start up a new, debt-free district Democrats overwhelmingly opposed the funding plan, calling for more money for the district and a new commission to oversee school openings The measures passed Thursday would create an advisory council that would make no binding recommendations This plan saves Detroits school system and returns local control to the city, preventing a disastrous bankruptcy that would have affected every community in the state, said Republican House Speaker Kevin Cotter The measures now head to the state Senate, which passed a different version of the package Michigans Legislature typically breaks for the summer in mid-June, and the Senate could squeeze in the new proposals this week, said Amber McCann, spokeswoman for Senate Majority Leader Arlan Meekhof Algorithms used by authorities to predict the likelihood of criminal conduct are facing a major legal test in Wisconsin The states highest court is set to rule on whether such algorithms, known as risk assessments, violate due process and discriminate against men when judges rely on them in sentencing The ruling would be among the first to speak to the legality of risk assessments as an aid in meting out punishments Criminal-justice experts skeptical of such tools say they are inherently biased, treating poor people as riskier than those who are well off Proponents of risk assessments say they have elevated sentencing to something closer to a science Evidence has a better track record for assessing risks and needs than intuition alone, wrote Christine Remington, an assistant attorney general in Wisconsin, in a legal brief filed in January defending the states use of the evaluations Risk-evaluation tools have gained in popularity amid efforts around the country to curb the number of repeat offenders They help authorities sort prisoners, set bail and weigh parole decisions But their use in sentencing is more controversial Before the sentencing of 34year-old Eric Loomis, whose case is before the states high court, Wisconsin authorities evaluated his criminal risk with a widely used tool called COMPAS, or Correctional Offender Management Profiling for Alternative Sanctions, a 137-question test that covers criminal and parole history, age, employment status, social life, education level, community ties, drug use and beliefs The assessment includes queries like, Did a parent figure who raised you ever have a drug or alcohol problem? and Do you feel that the things you are boring or dull? Scores are generated by comparing an offenders characteristics to a representative criminal population of the same sex Prosecutors said Mr Loomis was the driver of a car involved in a drive-by shooting in La Crosse, Wis., on Feb 11, 2013 Mr Loomis denied any involvement in the shooting, saying he drove the car only after it had occurred He pleaded guilty in 2013 to attempting to flee police in a car and operating a vehicle without the owners consent and was sentenced to six years in prison and five years of supervision The risk assessment tools that have been utilized suggest that youre extremely high risk to reoffend, Judge Scott Horne Tools used to evaluate offenders for sentencing raise controversy in La Crosse County said at Mr Loomiss sentencing Mr Loomis said in his appeal that Judge Hornes reliance on COMPAS violated his right to due process, because the company that makes the test, Northpointe, doesnt reveal how it weighs the answers to arrive at a risk score Northpointe General Manager Jeffrey Harmon declined to comment on Mr Loomiss case but said algorithms that perform the risk assessments are proprietary The outcome, he said, is all that is needed to validate the tools Northpointe says its studies have shown COMPASs recidivism risk score to have an accuracy rate of 68% to 70% Independent evaluations have produced mixed findings Michael Rosenberg, a lawyer for Mr Loomis, and a spokeswoman for the Wisconsin Attorney General Brad Schimel declined to comment on the case Continued from Page One various federal agencies led by the White House science office, the people familiar with the matter said, the company appears close to obtaining what it has called mission approval. Until recently, Moon Express faced a regulatory Catch-22 because there was no template for getting Washingtons blessing for what it proposed Official action coordinated through the Federal Aviation Administration, which regulates U.S rocket launches and is responsible for traditional payload reviews, could come as soon as the next few weeks, these people said An FAA spokesman said the agency is currently working through the interagency process to ensure a mechanism is in place that permits emerging commercial space operations such as Moon Express But the agency declined to elaborate Bob Richards, chief executive and a founder of Moon Express, said over the weekend that weve become a regulatory pathfinder out of necessity, because in the past only governments have undertaken space missions beyond Earth orbit. He added that the company is eagerly awaiting a determination on its mission-approval request Based in Cape Canaveral, Fla., Moon Express, which has 40 employees, was co-founded by Naveen Jain, a Silicon Valley entrepreneur and philanthropist, and Mr Richards, along with another longtime space expert, Barney Pell, a former NASA scientist Mr Richards also is a founder of International Space University, a private institution that trains space scientists and which has a central campus in Strasbourg, France From the beginning, Moon Expresss goal was to conduct robotic missions able to carry scientific payloads and scale up to commercial operations The company is among those competing for the Google Lunar X Prize, which offers a first prize of $20 million for the first privately funded team that develops a spacecraft to land on the Moon, traverse its surface and MOON EXPRESS SPACE Rendering of Moon Expresss suitcase-size MX-1 spacecraft transmit photos and videos Moon Expresss lander is slated to be blasted into orbit from a remote New Zealand site by a 52-foot Electron rocket manufactured by Rocket Lab Ltd Onboard thrusters are supposed to propel the spacecraft, carrying a space telescope and equipment for other experiments, further from the Earth and down to the Moons surface in a matter of days or weeks Though the plan has drawn little attention outside the commercial space industry, it is being closely monitored by aerospace companies and entrepreneurs mulling investments in the nascent industry Under decades-old treaties, the U.S and other countries are responsible for continuing supervision of both government and commercial payloads Such responsibilities are largely formalities when they focus on satellites headed for typical orbits around the Earth, or spacecraft controlled by the Pentagon, the National Aeronautics and Space Administration or other federal entities So far, the government has sent probes to the Moon, Mars and other planets But the proposed Moon Express mission is more complex, raising new questions about international treaty obligations and protection of heavenly bodies The new procedure features a more detailed, governmentwide review of what such payloads include, and whether their contents or expected trajectories pose contamination or other threats prohibited by treaty provisions According to the FAA, a company such as Moon Express may voluntarily request an FAA review of its payload to determine if it poses any significant public safety, national security, or foreign policy concerns. With the emergence of new private players, its important to show some regulatory predictability, according to Scott Pace, a former senior NASA official who teaches at George Washington University Moon Express illustrates how dramatically costs to build and launch small spacecraft are falling When the company was formed around the beginning of the decade, it projected a moon mission would cost roughly $50 million Today, company officials project a price tag of around half that amount The government is expected to use the same process to vet private attempts to fly deeper into space, including billionaire Elon Musks plan to send an unmanned craft to Mars in 2018 Officials of SpaceX, as Mr Musks company is called, are engaged in similar governmentwide discussions in advance of seeking a launch license A SpaceX spokesman on Sunday said, we take planetary protection very seriously, adding the company is working with federal officials to ensure compliance with space treaty obligations Eventually, space scientists and aerospace-industry leaders expect congressional action will be required to spell out new review procedures reducing industry uncertainty But until that occurs, Moon Express is expected to set the standard for how the FAA, State Department and other federal agencies review private launches aiming to escape the Earths gravitational pull Support Special Olympics athletes Make a donation today! Join us in raising $1,000,000 to support Special Olympics athletes Now through June 24, 2016, you can make a donation at your local TD Bank.* To learn more about how you can make a difference, visit tdbank.com/specialolympics or call 1-888-751-9000 *92% of all donations benet Special Olympics; remaining 8% used for promotional materials TD Bank, N.A | Equal Housing Lender THE WALL STREET JOURNAL A8 | Monday, June 6, 2016 THE WALL STREET JOURNAL Monday, June 6, 2016 | A9 PAID ADVERTISEMENT PAID ADVERTISEMENT U.S., EUROPEAN MAYORS UNITE TO FIGHT ANTI-SEMITISM As U.S and European leaders have acknowledged, anti-Semitism is on the rise In response, AJC reached out to mayors across Europe and the U.S., urging them to publicly condemn and take concrete actions against this pathology These 188 European mayors from 31 countries, representing over 67 million people, and 319 U.S mayors and municipal leaders from 50 states and the District of Columbia, representing over 82 million people, have signed the Mayors United Against Anti-Semitism statement Anti-Semitism is not compatible with fundamental democratic values, asserts the Mayors United Against Anti-Semitism statement As Mayors and municipal leaders, we have a special responsibility to speak out against the growing menace of anti-Semitism. The statement affirms that: EUROPEAN MAYORS AND MUNICIPAL LEADERS ALBANIA Berat Petrit Sinaj Korỗở - Sotiraq Filo Lushnjở Fatos Tushe Patos Rajmonda Balilaj Roskovec Majlinda Bufi Tirana Erion Veliaj AUSTRIA Salzburg Heinz Schaden Vienna Michael Họupl Villach Gỹnther Albel BELGIUM Antwerp Bart de Wever Boortmeerbeek Michel Baert Knokke-Heist Graaf Leopold Lippens Turnhout Eric Vos BOSNIA AND HERZEGOVINA Sarajevo Ivo Komi BULGARIA Sofia Yordanka Fandakova We, the undersigned, CROATIA Zagreb Milan Bandic n Condemn anti-Jewish hatred, in all its forms; n Reject the notion that anti-Semitic acts, while sometimes carried out in the name of a political cause, may ever be justified or excused by ones opinions about the actions or existence of the State of Israel; n n n n Declare that prejudices against Jews or others due to differences in religious faith are inconsistent with our core values; Support government efforts directed at eradicating antiSemitism and preventing extremist indoctrination and recruitment; and support expanded education programs, including Holocaust programs, that increase awareness and counter intolerance and discrimination; Recognize the ever-present need to be vigilant about efforts to prevent and report acts of anti-Semitism, and other hate crimes; and Believe that communities that promote a climate of mutual understanding and respect among all citizens are essential to good governance and democratic life. If your mayor is listed, please take a moment to thank him or her for standing up against anti-Semitism Otherwise, mayors can join this global effort by contacting mayorsunited@ajc.org If not now, when? 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Zanni Monterey Scott J Jenssen Needham Maurice P Handel Newburyport Donna D Holaday Newton Setti Warren Northampton David Narkewicz Norwood Paul A Bishop Plympton Mark E Russo Quincy Thomas P Koch Revere Daniel Rizzo Salem Kimberley Driscoll Sandisfield Alice B Boyd Sandwich Frank Pannorfi Sharon William A Heitin Somerville Joseph Curtatone Springfield Domenic J Sarno Stoughton Joseph M Mokrisky Taunton Thomas Hoye, Jr Waltham Jeannette A McCarthy Worcester Joseph Petty MICHIGAN Ann Arbor Christopher Taylor Farmington Hills Barry L Brickner Muskegon Stephen J Gawron Oak Park Marian McClellan Southfield Donald F Fracassi MINNESOTA Golden Valley Shep Harris MISSISSIPPI Gulfport Billy Hewes Jackson Tony T Yarber MISSOURI Clayton Harold J Sanger Creve Coeur Barry L Glantz Kansas City Sylvester Sly James, Jr St Louis Francis G Slay University City Shelley Welsch MONTANA Great Falls Bob Kelly NEBRASKA Lincoln Chris Beutler NEVADA Henderson Andy A Hafen Las Vegas Carolyn G Goodman NEW HAMPSHIRE Portsmouth Robert J Lister NEW JERSEY Atlantic City Donald A Guardian Avalon Martin L Pagliughi Camden County Jeffrey L Nash Cape May Edward J Mahaney, Jr Cherry Hill Chuck Cahn Closter John C Glidden, Jr East Hanover Joseph Pannullo East Windsor Janice F Mironov Elizabeth J Christian Bollwage Englewood Frank Huttle Fort Lee Mark J Sokolich Harrison James Fife Highland Park Gayle Brill Mittler Hope Township Timothy C McDonough Jersey City Steven M Fulop Livingston Michael M Silverman Margate Michael S Becker Marlboro Jonathan L Hornik Morristown Timothy P Dougherty Newark Ras Baraka Parsipanny-Troy Hills James R Barberio Plainsboro Peter Cantu Princeton Liz Lempert Randolph Joanne Veech Ridgewood Paul Aronsohn Roxbury Township Jim Rilee Summit Ellen Dickson Tenafly Peter Rustin West Orange Robert D Parisi West Windsor Shing-Fu Hsueh Woodcliff Lake Jeffrey R Goldsmith NEW MEXICO Santa Fe Javier Gonzales Rye Brook Paul S Rosenberg Southold Scott A Russell Suffolk County Steven 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Pittsburgh William Peduto RHODE ISLAND Central Falls James A Diossa Cranston Allan Fung Providence Jorge Elorza Warwick Scott Avedisian SOUTH CAROLINA Charleston Joseph P Riley, Jr Columbia Stephen K Benjamin SOUTH DAKOTA Rapid City Steve Allender TENNESSEE Chattanooga Andy Berke Memphis AC Wharton, Jr Nashville Karl Dean Shelby County Mark H Luttrell, Jr TEXAS Austin Steve Adler Corpus Christi Nelda Martinez Dallas Mike Rawlings Fort Worth Betsy Price Galveston James D Yarbrough Garland Douglas Athas Houston Sylvester Turner Plano Harry LaRosiliere Richardson Paul Voelker San Antonio Ivy R Taylor Waco Malcolm Duncan, Jr UTAH Holladay Robert M Dahle Midvale City JoAnn B Seghini Provo John R Curtis Salt Lake City Ralph Becker Salt Lake County Ben McAdams VERMONT Burlington Miro Weinberger Montpelier John Hollar VIRGINIA NEW YORK Buffalo Byron W Brown Farmingdale Ralph Ekstrand Greenburgh Paul Feiner Hastings-on-Hudson Peter Swiderski Hempstead Kate Murray Huntington Frank P Petrone Mamaroneck Norman S Rosenblum Montebello Jeffrey Oppenheim Nassau County Edward P Mangano New Rochelle Noam Bramson New York Bill De Blasio Ossining Victoria Gearity Oyster Bay John Venditto Peekskill Frank Catalina Port Washington North Robert Weitzner Rochester Lovely A Warren Rockland County Edwin J Day Alexandria Wiliam D Euille Chesapeake Alan P Krasnoff Fairfax County Sharon Bulova Norfolk Paul D Fraim Richmond Dwight Clinton Jones Suffolk Linda T Johnson Virginia Beach William D Sessoms WASHINGTON Mercer Island Bruce Bassett Seattle Ed Murray WEST VIRGINIA Huntington Stephen T Williams Wheeling Andy McKenzie WISCONSIN Madison Paul Soglin WYOMING Gillette Louise Carter-King A10 | Monday, June 6, 2016 * *** THE WALL STREET JOURNAL WORLD NEWS Maritime Spat Brews as U.S., China Talk RAJ WONG/EUROPEAN PRESSPHOTO AGENCY; WALLACE WOON/EUROPEAN PRESSPHOTO AGENCY (LEFT) Beijing rejects warning that it risks isolating itself due to its stance in territorial dispute China and the U.S sparred over maritime disputes at a weekend summit before sitting down for economic and security talks expected to be dominated by tensions over the South China Sea The dialogue, which began By Chun Han Wong in Singapore and Felicia Schwartz in Beijing on Monday in Beijing, takes place with China bracing against growing international pressure over its territorial claims and asserting its intent to exercise greater clout as a major power Economic strains between Beijing and Washington, meanwhile, have flared over currency and trade practices The intent of the high-level talks, which President Barack Obama launched in 2009, is to try to find common ground U.S officials, for instance, have said they would seek Beijings help in pressuring North Korea over its nuclear program Last week, though, Washington took additional steps to cut off Pyongyang from the global financial systema move that could expose China, North Koreas largest trading partner, to negative economic effects The annual Strategic and Economic Dialogue is a twoday affair that draws hundreds of U.S and Chinese officials They are led on the U.S side by Secretary of State John Kerry Chinese Adm Sun Jianguo, left, on Sunday dismissed what he called U.S interference in Asian security issues At right, the USS Blue Ridge arrived in Shanghai in May and Treasury Secretary Jack Lew, and on the Chinese side by State Councilor Yang Jiechi and Vice Premier Wang Yang At the opening of the talks, Mr Lew chided China for a recently passed law granting police broad authority to supervise foreign nonprofit groups We are very concerned that Chinas recently passed Foreign NGO Management Law will weaken that foundation by creating an unwelcome environment for foreign NGOs, Mr Lew said, adding that addressing it will be important for our bilateral relationship. Mr Kerry appeared to reference the NGO law as well saying nothing does more to assist our official deliberations than the involvement of individuals and grass-roots organ- izations in both the United States and Chinaand said he would raise concerns about human rights and transparency in the meetings Disagreements were evident on Sunday At Asias largest security conference in Singapore, Beijings highest-ranking delegate spoke forcefully against U.S.-led criticism of Chinas activities in the South China Sea, particularly its refusal to accept a coming tribunal ruling at The Hague that could contradict its maritime claims in the worlds busiest shipping lanes Adm Sun Jianguo, deputy chief of the Chinese militarys Joint Staff Department, dismissed what he characterized as U.S interference in Asian security issues and rebuffed accusations that Beijing risked isolating itself through its as- sertive behavior and expansive claims in the South China Sea We were not isolated in the past, we are not isolated now, and we will not be isolated in the future, Adm Sun said at the Shangri-La Dialogue, an annual gathering of Asian and Western defense officials Instead, he criticized other countries for retaining a Cold War mentality when dealing with China, saying they may only end up isolating themselves. On Monday, at the start of the talks in Beijing, Chinese President Xi Jinping said China is committed to advancing peace, stability and development in the Asia Pacific. The vast Pacific should be a stage forcooperation, not an arena for competition. U.S Defense Secretary Ash Carter on Saturday told the conference in Singapore that China risked erecting a Great Wall of self-isolation. He urged Beijing to abide by international law and respect the outcome of The Hague arbitration case, which was filed by the Philippines in 2013 in a bid to curtail Chinas territorial assertions in the South China Sea The ruling is expected within weeks Chinas denunciations of the tribunal and its legal authority dominated discussions at the Shangri-La Dialogue Several Asian and Western defense chiefsincluding those from Japan, Malaysia, Britain and Franceurged compliance with the United Nations Convention on the Law of the Sea, or Unclos, under which the tribunal was established, though only a few of them referred directly to China The timing of this conference was very sensitive for China, coming just ahead of the tribunal ruling, said Bonnie Glaser, senior adviser for Asia at the Washington-based Center for Strategic and International Studies The Chinese were very much on the defensive. A senior Chinese delegate admitted as much, saying they face an uphill task in overcoming foreign propaganda against Beijing International public opinion is still being controlled by the Western world, said Maj Gen Jin Yinan, a professor at Chinas National Defense University In such unfavorable circumstances, we must still our best to use public forums to explain Chinas position. By Niharika Mandhana in New Delhi and Carol E Lee in Washington to cement progress the two have made on economic and security fronts when he arrives in Washington on Monday Mr Modi will address Congress during the three-day visit, which comes months before President Barack Obama leaves office Indias Foreign Ministry described Mr Modis White House meeting, scheduled for Tuesday, as a consolidation visit, after two years of brisk diplomacy and deepening relations between the leaders The trip furthers one of Mr Obamas foreign-policy efforts: cultivating New Delhi as part of his Asian pivot The focus on India under Mr Obama hasnt drawn as much attention as many other initiatives abroad, but the president sees a change in Indias role as one of his major achievements, a senior administration official said India made a big shift under Prime Minister Modi, the official said I think its really hard to overestimate the rapid pace of progress in our defense relationship. The two countries agreed in April to facilitate their armed forces use of each others bases for replenishment and repair They are in talks to coproduce advanced military hardware in India In a message to Beijing, they released a joint strategic vision last year agreeing to ensure freedom of navigation, especially in the TH A N N I V E R S A R Y S A L E South China Sea, where China is locked in a standoff with the U.S and others over its maritime claims New Delhi remains wary of an outright alliance with the U.S In a recent interview with the Journal, Mr Modi said he wouldnt deviate from the nonalignment doctrine that has defined Indias international relations for decades Still, Indias current stance is a significant shift from Cold War days, when New Delhi tilted clearly toward Moscow Mr Modiwho is seeking American investment to fuel Indias growth and technology to modernize its defense sector has been eager to work closely with the U.S Among the factors propelling the relationship is Chinas growing footprint in Indias traditional sphere of influence The U.S has supported India Prime Minister Narendra Modi, who visits the U.S this week on issues including New Delhis bid to join the Nuclear Suppliers Group, which would help it access nuclear fuel and technology more easily China, a close ally of Indias nuclear-armed ri- val Pakistan, hasnt backed Indias membership on the grounds that India, which also has nuclear arms, hasnt signed the nonproliferation treaty Mr Modi is also making stops in Switzerland and Mexico this week in a bid to win support for Indias application The issue is expected to come up in his meeting with Mr Obama Making Indias case on Friday, Foreign Secretary S Jaishankar invoked a subject central to Mr Obamas legacy: the climate-change agreement signed in Paris last year Mr Jaishankar pointed to Indias pledge to increase the share of its electricity-generation capacity from sources other than fossil fuels to 40% by 2030 To make that happen, India will have a very large number" of nuclear reactors in the next 15 years, he said If there is uncertainty about trading rules, if there is uncertainty about technology access, you will really not get that kind of investment and players stepping forward, he said Getting us into the NSG would help facilitate nuclear trade with us. Until three years ago, Mr Modi was barred from the U.S after religious riots broke out in 2002 in a state he governed as chief minister, leaving 1,000 people dead, most of them Muslims The U.S revoked his tourist visa and denied him a diplomatic visa following allegations Mr Modi didnt enough to restrain Hindu mobs from attacking Muslims Mr Modi has denied the accusations and an Indian court has said there isnt enough evidence to prosecute him William Mauldin in Washington contributed to this article Tiger Temple Is Focus of Trafficking Probe BY JAMES HOOKWAY Save $1,000 UNPRECENDENTED SAVINGS CELEBRATION! To celebrate Inada USAs 10th Anniversary, were offering the unmatched quality and design of the Flex3s at our lowest price ever Combining therapeutic stretching with luxurious Japanese shiatsu massage techniques, the Flex3s releases your body and mind from the stress of everyday life and delivers transcendent relaxation Treat yourself to the best at a once in a decade price Flex3s đ Regular $5,299 ANNIVERSARY SPECIAL $4,299 Made in Japan Available at Stores Nationwide 888-727-2150 Store.InadaUSA.com BANGKOKA Buddhist temple west of Bangkok, once a staple on Thailands tourist trail, is at the center of one of the countrys biggest-ever wildlife-trafficking investigations after scores of dead tiger cubs were found piled in a freezer and stuffed into bottles and jars Until recently, the Tiger Temple drew visitors with the opportunity to pose for photographs with big cats or bottlefeed tiger cubs Wat Pha Luang Ta Bua, as the temple is formally known, was an easy day trip from the capital Buddhist monks would charge 600 bahtabout $17per person as an entry fee, with additional payments for photos or interacting with cubs But now, Thai investigators say they are trying to confirm activists suspicions that the temple was breeding tigers to feed the market for wild-animal parts in China and elsewhere After removing 137 tigers and shutting the attraction in recent days, police and wildlife officials found 40 tiger-cub corpses in a freezer and the remains of another 20 stuffed into bottles and jars This raised questions about whether endangered animals were being trafficked Wildlife-protection officials have filed criminal complaints against several suspects for il- CHAIWAT SUBPRASOM/REUTERS Indian Prime Minister Narendra Modi, who has worked to forge closer strategic ties with the U.S as Chinas rise changes Asias power balance, will seek AREF KARIMI/AGENCE FRANCE-PRESSE/GETTY IMAGES Indias Modi Looks to Fortify Ties With Washington A tranquilized tiger was removed from the Tiger Temple, west of Bangkok, on Friday legally possessing endangered animals or animal parts, including temple abbot Phra Sutthi Sarathera and other monks, none of whom could be reached for comment Some were arrested while attempting to move tiger pelts and other body parts away from the temple Officials said they also found tiger carcasses in the living quarters of Phra Sutthi Temple staff said he left for Bangkok in May and his whereabouts were unknown On its Facebook page, the temple said the cubs in the freezer died of natural causes and were stored there on the recommendation of a veterinarian It said it had no knowledge of tiger pelts and tiger parts found at the temple Authorities say it is too soon to conclude that the Tiger Temple was breeding cubs for the trade in endangered animals We need to talk to the suspects and expand our investigation, said Adisorn Nuchdamrong, deputy director-general of Thailands Department of National Parks Thailand has long been a hub for wildlife trafficking, and the business appears to be growing despite efforts to crack down on the trade Animal-welfare and antitrafficking groups, which researched a 2014 report for the Convention on International Trade in Endangered Species of Wild Fauna and Flora, wrote that an increasing number of live animals and frozen bodies are being detected, with more than 50% of seizures over the past 14 years occurring since 2010. Tigers and tiger parts are still used in traditional medicine in China, and are often sold as a way to boost sexual potency in men Wilawan Watcharasakwet contributed to this article THE WALL STREET JOURNAL Monday, June 6, 2016 | A11 WHAT IS A BANK? T U E S D AY, S E P T E M B E R 7, | N E W Y O R K WSJ Pro Private Equity Analyst Conference brings together leading investors to examine issues shaping the industry, from tech buyouts to the strategies of major limited partners Gain insight from interviews and discussions guided by our expert journalists, and meet with industry leaders at the marquee private equity event of the year SPEAKERS JOSEPH BARATTA JENNIFER FONSTAD Senior Managing Director and Global Head of Private Equity, Blackstone Co-Founder and Managing Partner, Aspect Ventures KENNETH HAO ALEXANDER NAVAB Managing Partner, Silver Lake Member and Head of Americas Private Equity, KKR HELEN STEERS WYLIE A TOLLETTE Partner, Pantheon Chief Operating Investment Officer, CalPERS Seating is limited To request an invitation, go to PEAC.WSJ.com â 2016 Dow Jones & Co., Inc All rights reserved 6DJ3838 THE WALL STREET JOURNAL C2 | Monday, June 6, 2016 MOVING THE MARKET THE TICKER | Market events coming this week Monday Wednesday No major events are scheduled Mort bankers indexes Purchase, prev down 5% Refinan., prev down 4% Tuesday Productivity 1st qtr first est down 1.0% 1st qtr rev est down 0.6% Unit labor costs 1st qtr first est up 4.1% 1st qtr rev est up 4.1% Consumer Credit March, previous up $29.7 billion April, expected up $20.5 billion Earnings expected* Estimate/Year Ago($) HD Supply 0.47/0.33 Michaels 0.35/0.32 EIA status report Previous change in stocks in millions of barrels Crude oil Gasoline Distillates down 1.4 down 1.5 down 1.3 Earnings expected* Estimate/Year Ago($) Brown-Forman 0.72/0.66 Lululemon 0.31/0.34 Thursday Short-selling reports Ratio, days of trading volume of current position, at May 13 NYSE Nasdaq 4.4 4.7 Initial jobless claims Previous 267,000 Expected 270,000 BONDS Rick Taormina, head of municipal strategies at JPM Asset Management, said some investors have been experiencing rate shock, surprised by the low yields even on longerdated or less-creditworthy debt Despite such low yields, the hazards of municipal bonds including hundreds of millions in defaults from Puerto Rico seem mild compared with the years swings in stocks and other riskier assets The supply of new bonds has fallen, helping to drive up prices Government borrowers have issued $170 billion of bonds from the beginning of 2016 through June 1, down 4.2% from the same period of 2015, according to Thomson Reuters data When theres less volume, THE WALL STREET JOURNAL over how tight their finances were just a few years ago. For cities and states that borrow, costs have fallen Connecticut, which was recently downgraded to double-A-minus by two ratings firms amid concerns about the states budgetary flexibility, last month sold 10-year bonds yielding 2.33%, down from a yield of 2.75% on 10-year debt the state sold a year ago, notes Matt Fabian, partner at the research firm Municipal Market Analytics Despite the threat of higher interest rates, few are predicting a major pullback in munis this year Analysts said that Puerto Ricos defaults have had little impact on the broader market And the tax break provided by municipal bonds helps offset the low yields the debt currently offers John Miller, co-head of fixed income at Nuveen Asset Management, which manages about $113 billion in state and local debt, said the imbalance between demand for the debt and the supply of new bonds is likely to keep prices high in the short term, even if the Fed raised rates Theres a bit less fear around the implications of that, he said Even though munis are at low yields relative to history, theyre at high yields relative to the rest of the world. Mr Thomas may have solved part of the puzzle of low investment, but not the entire puzzle He has found that low interest rates boost the performance of stocks that pay high dividends but hasnt shown that dynamic influences companies investment decisions While dividend considerations might give companies one reason not to invest more when interest rates are low, it isnt clear how important that effect is in the scheme of things A company may see few promising capital projects and thus conclude it would rather return the cash to shareholders This wouldnt be because interest rates are low It would be reflecting the same forces that are keeping rates lowtoo much cash chasing too few profitable investments Countless other factors affect the decision to invest, the most important being the outlook for sales, which tends to benefit from low rates which boost consumer spending Higher interest rates would damp consumer spending and push up the dollar, both of which would hurt sales and thus investment Moreover, for companies that dont have publicly traded shares or pay high dividends, the traditional benefit of low rates on investment is probably still more important than the effect on the share price Nonetheless, when interest rates have been so low for so long, it is worth re-examining old relationships J.M Smucker 1.19/0.98 Continued from the prior page produce negative returns from these levels. Yields on the Barclays Municipal Bond Index fell to a record 1.75% in mid-May and were at 1.83% on Friday Municipal bonds have returned 2.89% so far this year, counting price appreciation and interest payments, according to Barclays PLC as of Friday That compares with 3.88% for Treasurys, 6.14% for highly rated corporate debt and 8.09% for junk bonds Friday Muni Mania U.Mich consumer index May, final 94.7 June, prelim 93.9 Strong investor interest in debt sold by state and local governments in the U.S is helping to push down yields EIA report: natural gas Previous change in stocks in billions of cubic feet up 82 Wholesale inventories March, previous up 0.1% April, expected up 0.1% Earnings expected* Estimate/Year Ago($) Treasury budget April, previous $82 billion deficit May, expected n.a * FACTSET ESTIMATES EARNINGS-PER-SHARE ESTIMATES DONT INCLUDE EXTRAORDINARY ITEMS (LOSSES IN PARENTHESES) ADJUSTED FOR STOCK SPLITNOTE: FORECASTS ARE FROM DOW JONES WEEKLY SURVEY OF ECONOMISTS 2.89% Municipal bonds return this year, according to Barclays PLC as of Friday theres more money chasing after fewer and fewer bonds, said Howard Cure, director of municipal research at Evercore Wealth Management I think a lot of governments are still getting U.S municipal-bond fund ows Average yield on municipal debt $10 billion 4.0% May $3.96B 3.5 3.0 2.5 10 2.0 15 1.5 20 1.0 2013 14 15 Friday 1.83% Record low 16 2013 2014 Sources: Lipper (ows); Barclays Municipal Bond Index (yields) JUSTIN SULLIVAN/GETTY IMAGES RATES J.M Smucker is scheduled to report quarterly results Thursday As measured by the S&P 500 index, dividends included, the market was up by 1.4% in 2015 How did you do? And your broker? Is it time to consider a less expensive alternative? At Interactive Brokers you enjoy the lowest trading cost* and can allocate funds from your self-directed account to registered advisors and hedge funds DOWNLOAD OUR FREE DEMO ibkr.com/freedemo Interactive Brokers Member - NYSE, FINRA, SIPC Supporting documentation for any claims and statistical information will be provided upon request *According to Barrons best online broker review on March 9, 2015, How Secure Is Your Securities Portfolio Lowest cost of any broker and Best Trading Experience & Technology in Barrons survey Barrons is a registered trademark of Dow Jones & Company, Inc Hedge funds are highly speculative and investors may lose their entire investment 03-IB16-965CH963 Continued from the prior page undermines investment Mr Thomass argument relies instead on basic corporate finance Companies can choose to distribute cash to shareholders as dividends or share repurchases or invest it in the business In theory, an investment that raises future cash flow also raises future dividends and should be just as appealing as a higher dividend today, irrespective of interest rates But Mr Thomas says this assumes investors dont care whether they get their dividends today or tomorrow In fact, he says, investors such as retirees have a strong need for current yield and will pay a premium, in terms of the price/earnings ratio, for a company that distributes more of its income today Since 1976, higher-yielding stocks systematically outperform the overall market by 0.76 percentage point when inflation-adjusted interest rates fall percentage point, Mr Thomas finds Moreover, the relationship becomes more extreme the lower rates go and the longer they stay low John Bull can stand many things but he cannot stand two per cent, Walter Bagehot, a 19th century editor of The Economist, once said, describing investors need for some minimum level of income When real five-year bond yields dropped 0.5 percentage AIG Continued from the prior page jobs and new categories of risk are proliferating amid fast-changing technology, allowing for rapid advancement for those seizing opportunity wherever it exists In addition, the latest generation is less likely to stay tied down to a single geographic region. Among industries, property-casualty insurance is one of the most likely, however, for a longer career with one firm It is an industry that values experience and relationships, and both of those increase with time spent on the job, said Mr Hartwig, who has known a number of people who have worked at a single insurer for a half century or so The average employee tenure was 8.1 years as of 2014, the latest figure available, according to the Society for Human Resource Management, a membership group The average tenure in the insurance industry specifically stood at 8.9 years Mr Rodriguez came to AIG by chance, and his career was nearly cut short twice, first by Fidel Castros rise to power, and then by a car accident in the late 1980s that nearly cost him his life The job stemmed from a beach outing point between February and May, the Standard & Poors Dividend Aristocrats Indexmade up of companies that increased their payout every year for at least 25 yearsoutperformed the S&P 500 by 4.8% This means that the lower rates go, the higher a hurdle a new investment must meet to boost the stock price more than a higher dividend Not all companies would respond the same way Young companies with no internal cash flow and tech companies that are valued more for their growth have little option or incentive not to invest in their businesses They would be less affected than large, mature companies with higher depreciation expenses and cash flow 2015 2016 Why Arent Low Rates Working? Blame Dividends Falling interest rates earlier this year drove up stocks with high dividends, a consistent pattern in recent years which may be one reason companies have favored dividends and stock buybacks over capital spending S&P Dividend Aristocrat relative to the S&P 500 Five-year real bond yield 0.4% Growth in uses of cash by U.S nonnancial companies 6% 194% 200% 0.2 150 100 Share Repurchases Dividends Business Investment 67% May 17 4.8% May 17 0.27% 0.2 50 0.4 0.2 43% F 2016 M A M F 2016 M A M 2009 10 I did get offers from other companies, but I was happy, Manolo Rodriguez says In 1963, he transferred to AIGs fledgling Puerto Rico office He earned a college degree and for many years assessed property and liability risks, such as exposure of condominiums to hurricanes He worked with brokers to find ways to provide coverage meeting the needs of their business clients In an interview, Mr Greenberg, 91, who now runs another insurance conglomerate, recalled Mr Rodriguez as being very diligent He had very good relationships with brokers He was extremely knowledgeable about our business. Mr Greenberg joined AIG in late 1960 from 12 13 14 15 THE WALL STREET JOURNAL Source: The Carlyle Group While on a bus, his father pointed to AIGs office building, where people were coming and going This looks like a good place to work, the son recalls his father, who was a baker, saying Mr Rodriguez was among employees relocated by AIG to the U.S during the communist takeover of the country At first, the idea of leaving family in Cuba was shocking and he hesitated But in 1961, he and his wife moved to New York 11 another insurance company Francisco Diaz, an AIG senior executive in Puerto Rico, said colleagues considered Mr Rodriguez like an encyclopedia on questions about insurance, able to give you the right answer. He was a late adopter to using a personal computer but ultimately checked his BlackBerry frequently enough to be teased by his grandchildren, his family said Still, he was not a big email guy, said his son, Manny Rodriguez Its the personal touch with him: Hey, can I have five minutes of your time to hash things out? My dad is a seriously loyal man who was always appreciative that AIG had invested in him, believed in him, from Cuba onwards, the younger Mr Rodriguez said Currencies U.S.-dollar foreign-exchange rates in late New York trading Country/currency in US$ US$vs, YTDchg Fri per US$ (%) Country/currency Americas Vietnam dong Argentina peso 0719 13.9080 7.5 Brazil real 2835 3.5277 10.9 Canada dollar 7728 1.2941 6.5 Chile peso 001466 682.30 3.7 Colombia peso 0003318 3014.25 5.1 Ecuador US dollar 1 unch Mexico peso 0538 18.5935 8.1 Peru new sol 2980 3.356 1.7 Uruguay peso 03222 31.0400 3.8 Venezuela b fuerte 100150 9.9851 58.4 Europe Asia-Pacific Australian dollar 7363 1.3581 1.0 China yuan 1526 6.5518 0.9 Hong Kong dollar 1287 7.7682 0.2 India rupee 01498 66.771 0.8 Indonesia rupiah 0000745 13431 2.9 Japan yen 009387 106.53 11.4 Kazakhstan tenge 002961 337.71 0.3 Macau pataca 1249 8.0033 unch Malaysia ringgit 2450 4.0823 5.1 New Zealand dollar 6954 1.4380 1.7 Pakistan rupee 00955 104.750 0.1 Philippines peso 0216 46.232 1.3 Singapore dollar 7368 1.3572 4.3 South Korea won 0008595 1163.48 1.1 Sri Lanka rupee 0068074 146.90 1.9 Taiwan dollar 03099 32.267 2.0 Thailand baht 02827 35.370 1.8 Czech Rep koruna Denmark krone Euro area euro Hungary forint Iceland krona Norway krone Poland zloty Russia ruble Sweden krona Switzerland franc Turkey lira Ukraine hryvnia UK pound in US$ US$vs, YTDchg Fri per US$ (%) 22415 1.2 04206 23.774 1527 6.5479 1.1364 8800 003636 275.06 008094 123.55 1223 8.1784 2588 3.8637 01534 65.184 1228 8.1404 1.0243 9763 3446 2.9015 0398 25.1360 1.4519 6888 4.5 4.7 4.4 5.3 5.1 7.5 1.5 9.3 3.6 2.6 0.6 4.8 1.5 00004461 Middle East/Africa Bahrain dinar Egypt pound Israel shekel Kuwait dinar Oman sul rial Qatar rial Saudi Arabia riyal South Africa rand 2.6522 3770 1125 8.8850 2599 3.8469 3.3101 3021 2.5976 3850 2748 3.639 2666 3.7503 0659 15.1789 unch 13.5 1.2 0.5 unch 0.1 0.1 1.9 Close Net Chg % Chg YTD%Chg WSJ Dollar Index 86.15 1.461.67 4.46 Sources: Tullett Prebon, WSJ Market Data Group Monday, June 6, 2016 | C3 THE WALL STREET JOURNAL GLOBAL FINANCE Short-term Instruments including letters of credit could be written down if lender fails BY JON SINDREU From the Chinese Tang Dynasty in the eighth century to Lombard Street in Victorian London, trade finance has always greased the wheels of global commerce But this legacy is under threat in Europe from new regulation aimed at preventing another bank bailout Banks and commerce bodies are increasingly jittery about the potential effects of European Union regulation on the short-term financial instruments that connect buyers and sellers of goods across countries EU authorities have included trade-finance instruments, such as letters of credit, in the list of bank liabilities that could be written down if a bank goes under This decision, the banks say, creates an enormous compliance headache and a competitive disadvantage and could leave unsuspecting parties holding the bag if foreign buyers fail to pay their bills The spat comes amid a challenging backdrop The World Trade Organization warned in a report this month that a trade finance gap is hurting global commerce, especially for smaller companies The Bank for International Settlements estimated that reduced trade finance could have accounted for as much as two-fifths of the fall in export volumes between the 2008 financial crash and 2014 Every bank is squirming, thinking about how they can avoid the regulation, said Geoffrey L Wynne, a London-based partner at American law firm Sullivan & Worcester But banks and trade associations dont have high hopes of getting a last-minute opt-out Data for trade finance are scarce, but the BIS says banks serve as intermediaries for between $6.5 trillion and $8 trillion of it a year It makes up roughly 4% of the revenue of the worlds 12 largest banks, according to figures by analytics firm Coalition Development Ltd A spokeswoman for the European Commission said members would be considering these concerns, among other issues, when the results of a consultation on the new financial regulation are published at a date yet to be confirmed The rules are designed to shield taxpayers from bailing out distressed financial institutions again, shifting the brunt to a bail-in by investors instead All EU bank contracts that fall outside the blocs jurisdiction are mandated to include a SEAN GALLUP/GETTY IMAGES EU Bank Rule Could Upend Trade Finance A new regulation threatens European trade finance Shipping containers in Hamburg, Germany clause obliging liability holders to accept the possibility of a bail-in This regulation, introduced in January, was intended to stop creditors seeking the protection of foreign courts Trade credit is usually provided by a long chain of financial institutions across different countries, meaning each of those banks needs to hold anothers liability EU banks worry that a bail-in stamp would put them at a disadvantage relative to U.S banks U.S trade credit faced its own uncertainty last year, when the U.S Export-Import Banks charter was allowed to expire for five months before finally being renewed in December A lobbying effort by business groups, and the vocal complaints of large exporters including General Electric Co and Boeing Co., eventually overcame opposition to Ex-Im Bank from congressional Republicans who insisted that its existence unfairly put taxpayers at risk Deutsche Bank AGs global head of trade finance, Michael Spiegel, warned theres a possibility that non-EU counterparties would be reluctant to accept such clauses, because many GAP Online Lender Vouch Is Closing IAN TIMBERLAKE/AGENCE FRANCE-PRESSE/GETTY IMAGES BY TELIS DEMOS AND ROLFE WINKLER Online marketplace lender Vouch Financial is shutting down, according to people familiar with the matter Vouch was among a wave of online lenders that raised venture-capital funding in recent years, hoping to capitalize on the huge growth enjoyed by firms such as LendingClub Corp and Prosper Marketplace Inc., which filled a gap in personal lending left by retreating banks However, a sharp decline in investor appetite for online lenders loans in recent months, plus a Silicon Valley pullback in willingness to commit more funding, has curtailed the growth of some platforms, leading some of the smallest to pursue sales or, in the case of Vouch, to begin the process of winding down The companys decision to shut its doors is a further indication of pressure affecting online lenders It also suggests that more activity may begin to gravitate toward larger players and even potentially banks that are increasingly offering online loans of their own Vouch had struggled to compete with its bigger online rivals, and its investors decided not to continue backing it with more funds, a person familiar with the companys thinking said Yee Lee, the companys cofounder and a board member, declined to comment The San Francisco firm, started in 2013, makes personal loans Vouch borrowers must ask a friend or family member to sponsor them and put up a slice of money that will be lost if the borrower doesnt pay back, on the theory that would improve borrowers likelihood to repay the loan Vouch had raised $11 million in venture funding from investors including Greylock Partners, First Round Capital and Data Collective, according to Dow Jones VentureSource Loan volume by Vouch never took off like larger peers Through last August, Vouch said it had made $1 million in loans By contrast, Prosper and LendingClub each lent several billion last year It wasnt immediately clear how many people worked at Vouch, or their current status The companys LinkedIn profile said it had fewer than 50 employees, and 28 people were listed on the website of them wont understand them. Banks also argue that logistical complications are insurmountable, as these decades-old contracts dont operate under any specific law Furthermore, they are usually transmitted over the Society for Worldwide Interbank Financial Telecommunication network, which banks use to send information to one another in a standardized way, making them hard to amend Commerce bodies are highly critical of the regulation as well, saying it could especially hurt smaller companies with less ac- A Saudi Aramco facility OPEC last Thursday failed to agree to a ceiling on production of crude Saudi Arabia Cuts Prices Of Oil Exports to Europe BY BENOIT FAUCON Saudi Arabia on Sunday cut its oil prices to Europe, signaling mounting competition after OPEC failed to cap its output as Irans exports ramp up In an email sent to customers, state oil company Saudi Aramco said it had cut its light crude prices by 35 cents a barrel to northwest Europe and by 10 cents a barrel to the Mediterranean for July deliveries The price reduction is surprising, as demand typically grows in the second half of the year as refineries return from maintenance In addition, markets have recently been buoyed by outages in countries like Nigeria But Saudi Arabias move comes after the Organization of the Petroleum Exporting Countries last Thursday failed to agree on a production ceiling The absence of output limits effectively gives a blank check for the groups two most influential members and rivals, Saudi Arabia and Iran, to pump at will Geopolitical tensions helped scotch a deal on capping production, with Iran taking a firm stand late last Wednesday against any move that would limit its own production as it aims for an economic comeback following the end of Western sanctions in January The two Persian Gulf nations are jockeying for political influence in hot spots such as Yemen and Syria Iran resumed its crude ex- The lack of output limits allows Saudi Arabia and Iran to pump oil at will ports to the European Union in February after an EU embargo on its oil was lifted and is now heavily competing there with Saudi Arabia, which had partly replaced Iran as a source of European supply during the sanctions Shipments from Iran to the EU have now reached 400,000 barrels a day They are set to increase to 700,000 barrels a day in the coming months after Iran clinched deals with Greek, French and Italian refiners, according to Iranian officials By contrast, Saudi Arabia exported 800,000 barrels a day on average to Europe last year, according to the International Energy Agency As a result, Saudi Arabia and Iran have been matching each others price cuts, though they deny offering special, private discounts to individual buyers Iran believes it will ultimately have the upper hand, as its finances are less dependent on oil Saudi Arabia will be big loser in the price war, Akbar Nematollahi, the head of public relations at Irans oil ministry, wrote last month in the ministrys in-house magazine Some European oil producers could be collateral victims of the rivalry Northern European oil producers, mostly in the U.K and Norway, have struggled to attract new investments amid depressed oil prices Competition for market share has been less intense in Asia, where Iran was always allowed to sell On Sunday, Saudi Arabia increased its light-crude prices to the Far East by 35 cents a barrel It also raised prices by 10 cents a barrel in the U.S., where Iran is still banned from selling Continued from page C1 like taking customer deposits, the Sydney-based firm, with more than half of its $350 billion in assets in the Americas, is instead classified as a representative office of a foreign company Theres no question Macquarie has taken advantage of that classification, said James Newsome, a former chairman of the U.S Commodity Futures Trading Commission whose firm, Delta Strategy Group, represents banks in dealings with regulators The fact theyre not registered as a bank-holding company in the U.S gives them the ability to stay active in these markets. Macquarie officials say the firm doesnt have to be treated as a bank in the U.S because it doesnt have a banking license, has no access to Fed funding and doesnt take deposits Big banks jumped into commodities trading in the 1980s, buying up pipelines, metals warehouses and power plants to trade barrels of oil, megawatts of electricity and ingots of aluminum Morgan Stanley, Goldman Sachs Group Inc and J.P Morgan Chase & Co became the heavyweights of a group known as the Wall Street refiners The banks presided over an unprecedented commodity boom during the 2000s But the business slumped in recent years after a steep and broadbased commodities-market decline and waning investor interest Regulators and Congress began examining bank activities in the commodity markets in 2013 They feared damage to the financial system if a calamity occurred, and worried that the trading information gave the firms unfair advantages In 2014 testimony before a cess to trade credit Its a poorly thought-out regulation that will hurt EU businesses, said Emily OConnor, senior policy manager at the Paris-based International Chamber of Commerce Letters of credit guarantee a seller will get paid even if the buyer fails to make good, which enables unknown parties in different countries to trade by putting their faith in banks rather than one another A bank issues the letter of credit against a promise by the importer that it will pay up and then sends it to a confirming bank, which is the one the exporter uses A specified time after proof the product was shipped is presented, the confirming bank will pay the exporter While sellers are promised payment by both buyer and confirming bank, the lattermore often a chain of themis directly exposed to the risk of the issuing bank going under Although this risk was there before, traditional bankruptcy procedures used to be protective of trade finance, whereas the new regulation pinpoints it as liable to be written off People familiar with the matter said banks across different EU countries are testing the waters and slowly starting to phase in these rules in some trade-finance instruments, while still intensively lobbying European regulators U.S Senate committee, Fed governor Daniel Tarullo said the central bank planned to unveil strict new limits on bank activity in commodity markets in early 2015 While that hasnt happened, the Fed still is considering what rules to introduce, people familiar with the matter say The threat of new regulation was enough to deter most banks Deutsche Bank AG, Credit Suisse Group AG, Morgan Stanley and J.P Morgan all closed or curtailed commodity operations Commodity revenue at the top 12 global investment banks has declined by two-thirds since 2008, according to London researchconsultancy Coalition Macquaries expanding presence in raw-materials markets also has helped it boost business in parts of the $3 billion Leveraged loans Macquarie extended to the U.S energy industry in the past five years company that handle more traditional banking activities, particularly for U.S companies in the oil, gas and energy industries The firms ranking in U.S energy-stock underwriting jumped to 12th in 2015 from 29th in 2009, managing six deals with a value of $471 million, according to Dealogic And though representative offices are prohibited from making loans, Macquarie has become one of the largest lenders to the U.S energy industry of a particular kind of high-risk credit, extending $3 billion in leveraged loans in the past five years It has done so by building relationships with U.S companies and having foreign offices handle the closing on the loan agreements, which is allowed under U.S law THE WALL STREET JOURNAL C4 | Monday, June 6, 2016 MARKETS DIGEST Dow Jones Industrial Average S&P 500 Index Last Year ago 17807.06 t 66.16, or 0.37% last week Trailing P/E ratio * 19.00 P/E estimate * 16.99 High, low, open and close for each of Dividend yield 2.58 the past 52 weeks 16.22 16.00 2.33 All-time high 18312.39, 05/19/15 Last 2099.13 s 0.07, or 0.003% last week High, low, open and close for each of the past 52 weeks Year ago Trailing P/E ratio * 24.22 21.23 P/E estimate * 17.81 17.89 Dividend yield 2.18 2.00 All-time high: 2130.82, 05/21/15 Week's high Current divisor 0.14602128057775 2150 200-day moving average Monday's open t Friday's close 200-day moving average 19200 UP Friday's close t DOWN Monday's open Week's low 18600 2100 18000 2050 17400 2000 16800 1950 1900 15600 1850 Bars measure the point change from Monday's open 15000 A S O N D J F M A J t Primary market NYSE weekly volume, in billions of shares 1800 M J t J Composite J A S O N D J F M A J A S O N D J F M A M J Financial Flashback The Wall Street Journal, June 6, 2005 30 20 10 J ProLogis is buying fellow real-estate investment trust Catellus Development Corp., in a $3.6 billion cash-andstock deal M J Major U.S Stock-Market Indexes High Low % chg -0.37 -0.54 -66.16 -42.15 16.07 41.25 1.55 52-Week Close (l) 4971.36 4909.21 4531.35 4480.80 Low % chg High l 15660.18 6625.53 2.45 541.97 0.19 18663.11 0.29 446.15 0.18 9.01 -2.75 4942.52 4509.79 18144.07 l 8509.64 l 672.35 l 22287.78 l 586.75 2.2 2.9 16.4 2.7 2.4 -0.2 -9.2 19.4 -1.3 -8.1 last week 2105.26 2085.10 1507.10 1483.14 713.22 701.22 2099.13 1500.90 709.55 0.07 8.83 6.70 Russell 2000 1170.77 1148.60 1164.13 NYSE Composite 10504.46 10369.50 10487.94 Value Line 465.82 458.08 464.42 NYSE Arca Biotech 3328.87 3194.81 3262.68 NYSE Arca Pharma 527.80 516.91 526.11 KBW Bank 71.46 68.55 69.79 PHLXĐ Gold/Silver 89.23 78.62 89.06 PHLXĐ Oil Service 168.02 159.01 162.09 PHLXĐ Semiconductor 709.59 694.81 705.60 13.47 CBOE Volatility 15.25 12.90 13.68 18.43 3.78 86.25 6.81 -1.24 9.65 -3.05 9.90 0.35 3/4 Atkore International Group Sells electrical circuitry raceways and metal frames used in commercial construction ATKR N 12.0 20.00/ Credit Suisse, DB, 22.00 JPM, UBS, Citi, RBC Cptl Mkts, WFS 6/9 5/12 China Online Education Group Software education platform in China COE N 36.0 18.00/ MS, Credit Suisse 20.00 Lockup Expirations IPO Scorecard l 4266.84 3947.80 -0.06 5218.86 4719.05 l -1.3 -1.8 -2.5 0.7 0.003 0.59 0.95 l 1829.08 1238.82 588.26 l l 2128.28 1549.44 742.13 4965 4940 12.6 14.7 2.7 7.3 5.6 0.3 -1.7 -1.7 27 30 31 May 8.6 8.3 8.4 % Chg From Friday3s Offer 1st-day close ($) price close Company SYMBOL IPO date/Offer price 6.45 17.3 7.06 0.9 2.6 NantHealth NH June 2/$14.00 18.54 32.4 Cotiviti Hldgs COTV May 26/$19.00 19.65 GMS GMS May 26/$21.00 22.75 Sensus Healthcare SRTSU June 3/$5.50 Clearside Biomedical CLSD June 2/$7.00 18.71 70.1 43.2 25.29 10.0 1.5 0.3 Midland States Bancorp 22.56 MSBI May 24/$22.00 2.5 3.0 3.4 14.8 Grupo Supervielle SUPV May 18/$11.00 6.5 1.8 8.3 3.8 Merus MRUS May 18/$10.00 Reata Pharmaceuticals RETA May 26/$11.00 US Foods USFD May 26/$23.00 -1.75 -1.85
Philadelphia Stock Exchange l 1295.8 -7.7 l 11149.36 -4.5 l 517.73 -9.1 l 4431.87 -21.1 l 605.94 -9.8 l 80.41 -10.1 l 92.85 31.5 l 214.12 -23.3 l 728.22 -2.8 l 40.74 -5.2 Takedown date/ Deal value Registration Registration date ($ mil.) (mil.) 4915 China Biologic Products Healthcare June June 5,315 $316.4 MS 4890 Adeptus Health Healthcare June July 20,315 $151.9 GS Easterly Government PropertiesJune Real Estate March 9,316 $126.8 $500.0 Citi, Jefferies, Raymond James, RBC Cptl Mkts Weatherford Intl (Switzerland)June Oil & Gas March 7,314 $1,100.0 RBC Cptl Mkts, Citi, DB, JPM, MS, Mitsubishi UFJ, WFS s 41.25, or 0.19% 2.5 5.5 3.4 3.9 4.2 2.9 -14.5 18.6 -2.8 7.4 -4.5 4.3 96.6 -6.9 2.8 -14.0 6.3 14.4 -26.0 -6.1 8.51 14.9 15.2 Shelf registrations allow a company to prepare a stock or bond for sale, without selling the whole issue at once Corporations sell as conditions become favorable Here are the shelf sales, or takedowns, over the last week: last week 1.19 953.72 0.18 9029.88 0.82 383.82 2.72 2642.53 1.31 477.25 56.51 12.16 38.84 128.61 1.42 559.18 2.67 11.95 11.71 Issuer/Industry DJ US TSM Other Indexes % Chg From Friday3s Offer 1st-day close ($) price close Company SYMBOL IPO date/Offer price Off the Shelf 5.3 7.1 11.7 8.2 7.2 Standard & Poor's 500 Index MidCap 400 SmallCap 600 Bookrunner(s) 6/9 Secondaries and follow-ons expected this week in the U.S market None expected this week s 9.01, or 0.18% % chg YTD 3-yr ann Nasdaq Stock Market Nasdaq Composite Nasdaq 100 Symbol/ Pricing primary Shares Range($) exchange (mil.) Low/High Issuer/business Other Stock Offerings Nasdaq Composite Dow Jones Industrial Average 17899.24 17664.79 17807.06 Transportation Avg 7829.69 7640.19 7730.13 Utility Average 675.46 654.41 672.35 Total Stock Market 21738.64 21495.06 21665.91 528.66 Barron's 400 532.26 524.30 Expected pricing date Filed Sources: WSJ Market Data Group; FactSet Research Systems * P/E data based on as-reported earnings from Birinyi Associates Inc Latest Week Close Net chg Initial public offerings of stock expected this week; might include some offerings, U.S and foreign, open to institutional investors only via the Rule 144a market; deal amounts are for the U.S market only Performance of IPOs, most-recent listed first 65-day moving average J IPOs in the U.S Market None expected this week 65-day moving average 16200 New to the Market Public Offerings of Stock Bookrunner(s) Public and Private Borrowing 27 30 31 May Sources: SIX Financial Information; WSJ Market Data Group 21690 Treasurys 21610 Monday, June Auction of 13-week bills; announced on June 2; settles on June Tuesday, June Auction of three-year notes; announced on June 2; settles on June 15 21530 Auction of 26-week bills; announced on June 2; settles on June Auction of four-week bills; announced on June 6; settles on June 21450 Wednesday, June Auction of 10-year notes; announced on June 2; settles on June 15 Thursday, June Auction of 30-year bonds; announced on June 2; settles on June 15 Public and Municipal Finance International Stock Indexes DJ TSM Americas Brazil Canada Mexico Chile The Global Dow DJ Global Index DJ Global ex U.S Global Dow Euro 2346.68 312.21 210.15 1949.82 Global Global ex U.S Developed ex U.S Global Small-Cap Global Large-Cap 3211.74 2124.29 2097.17 4372.95 3047.48 DJ Americas Sao Paulo Bovespa S&P/TSX Comp IPC All-Share Santiago IPSA 505.39 50619.50 14226.78 45928.23 3083.35 341.29 2850.77 321.74 2997.55 3490.55 4421.78 10103.26 1444.86 17495.09 445.31 8801.60 480.68 8148.40 6209.63 Europe Stoxx Europe 600 Stoxx Europe 50 Eurozone Euro Stoxx Euro Stoxx 50 Belgium Bel-20 France CAC 40 Germany DAX Israel Tel Aviv Italy FTSE MIB Netherlands AEX Spain IBEX 35 Sweden SX All Share Switzerland Swiss Market U.K FTSE 100 Asia-Pacific Australia China Hong Kong India Japan Singapore South Korea Taiwan Latest Week % chg DJ Asia-Pacific TSM 1374.26 S&P/ASX 200 5318.90 Shanghai Composite 2938.68 Hang Seng 20947.24 S&P BSE Sensex 26843.03 Nikkei Stock Avg 16642.23 Straits Times 2809.23 Kospi 1985.84 Weighted 8587.36 52-Week Range Close Low 0.10 0.34 0.55 2047.44 272.15 184.52 1699.54 0.38 0.58 0.49 1.27 0.25 2795.15 1863.63 1843.94 3665.30 2667.12 1.68 0.27 3.20 0.86 0.42 0.22 2.39 2.81 2.00 2.63 0.93 2.06 1.78 1.00 3.80 1.25 3.36 1.74 1.74 0.98 1.36 1.61 4.17 1.80 0.71 1.14 0.24 0.85 1.46 433.35 37497.48 11843.11 40265.37 2759.77 303.58 2566.26 284.92 2680.35 3130.76 3896.71 8752.87 1383.34 15773 382.61 7746.3 435.21 7496.62 5536.97 1190.45 4765.3 2655.66 18319.58 22951.83 14952.61 2532.70 1829.81 7410.34 High YTD % chg 2604.27 337.78 240.41 2223.60 0.4 1.4 3.7 3475.18 2421.86 2361.07 4702.42 3299.27 1.4 0.1 0.5 3.8 1.1 522.13 54477.78 14957.16 46191.51 3198.07 3.7 16.8 9.4 6.9 4.7 533.74 Reuters-Jefferies CRB 188.67 Crude oil, $ per barrel 48.62 A consumer rate against its benchmark over the past year Home Equity 5.00% t 4.00 t Interest rate 1.75% 912-280-9115 Salem Five Salem, MA 3.00% 978-745-5555 Savings Bank of Danbury 3.00% Danbury, CT 203-743-3849 2.00 The Torrington Savings Bank 3.00% Torrington, CT 860-496-2152 1.00 J J A S O N D J F M A MJ 2015 2016 United Community Bank Blairsville, GA 3.00 Prime rate 3.24% 877-668-2265 Brookline Bank Brookline, MA Yield/Rate (%) Last (l)Week ago Federal-funds rate target 0.25-0.5 0.25-0.5 Prime rate* 3.50 3.50 Libor, 3-month 0.67 0.68 Money market, annual yield 0.25 0.25 Five-year CD, annual yield 1.24 1.24 30-year mortgage, fixed 3.68 3.62 15-year mortgage, fixed 2.88 2.87 Jumbo mortgages, $417,000-plus 4.40 4.46 Five-year adj mortgage (ARM) 3.22 3.24 New-car loan, 48-month 3.20 3.16 HELOC, $30,000 4.58 4.67 3-yr chg 52-Week Range (%) Low High (pct pts) 0.00 l 3.25 0.28 l 0.22 l 1.24 l 3.56 2.79 4.14 3.05 2.96 4.29 l l l l l l l 0.50 3.50 0.69 0.36 1.53 4.22 3.42 4.97 3.86 3.38 5.01 2.61 2.17 16.96 U.S Dollar Index 93.87 -1.83 -1.91 -4.88 WSJ Dollar Index 86.15 0.25 0.25 0.41 -0.21 0.01 -0.59 -0.51 0.10 0.25 0.52 -0.56 Bankrate.com rates based on survey of over 4,800 online banks *Base rate posted by 70% of the nation's largest banks. Excludes closing costs Sources: SIX Financial Information; WSJ Market Data Group; Bankrate.com 270.0 N.R N.R N.R Preliminary/ Gray & Pannell LLP June prelim Georgia 1,080.0 N.R N.R N.R Preliminary/ Gray & Pannell LLP June prelim Prince Georges CoMaryland 177.4 AAA Aaa AAA Preliminary/ Graves & Horton LLC 1,036.0 AAA Aaa AAA Preliminary/ Maryland 106.53 -3.74 -3.39 -11.44 June prelim Miami-Dade Co-Florida 339.3 N.R N.R Yen, per dollar U.K pound, in dollars N.R RBC Cptl Mkt/ 1.45 -0.01 -0.70 -1.47 June April 1, 2046 Seattle CityWashington 164.5 N.R Aa1 AA+ Preliminary/ Stradling Yocca Carlson June prelim Massachusetts 450.5 N.R N.R N.R Preliminary/ Mintz Levin Cohn Ferris June May 1, 2037 South Broward Hospital Dt 168.0 N.R Aa3 AA Preliminary/ Greenberg Traurig PA June prelim Ventura CoCalifornia 176.7 N.R N.R N.R Preliminary/ Norton Rose Fulbright June 10 prelim District of Columbia 421.8 N.R N.R N.R J P Morgan Securities LLC/ June 10 prelim Los Angeles Co-California 800.0 N.R N.R N.R Wells Fargo & Co/ 420.23 % Chg 571.61 -3.74 l Reuters-Jefferies CRB 155.01 228.18 -15.22 l Crude oil, $ per barrel 26.21 l 61.43 -17.77 Natural gas, $/MMBtu l 2.93 -7.41 Gold, $ per troy oz U.S Dollar Index WSJ Dollar Index 1.64 l 1050.80 92.57 100.20 -2.57 84.64 l 91.66 -1.55 0.86 Yen, per dollar 6.19 1294.70 l Euro, per dollar 106.41 U.K pound, in dollars 0.95 -2.18 l 125.62 -15.19 l l 1.39 1.59 -4.91 Real-time U.S stock quotes are available on WSJ.com Track mostactive stocks, new highs/lows, mutual funds and ETFs WSJ COM Plus, get deeper money-flows data and email delivery of key stock-market data All are available free at WSJMarkets.com 4.00 3.00 2.00 Friday 1.00 0.00 710 years maturity Georgia June prelim 5.00% month(s) June prelim -1.66 -1.89 -4.46 Yield to maturity of current bills, notes and bonds One year ago Rating Bookrunner/ Fitch Moodys S&P Bond Counsel(s) 0.8800 -0.0197 -2.19 -4.43 DJ Commodity 1557.73 1.1 5706.7 0.4 5166.35 17.0 27404.97 4.4 28504.93 2.8 20868.03 12.6 3373.48 2.5 2107.33 1.3 9476.34 3.0 Total ($mil.) Euro, per dollar Yen, euro vs dollar; dollar vs major U.S trading partners 16% 14 12 10 2 30 Yen s Home equity loan 26.30 Benchmark Yields and Rates Treasury yield curve Forex Race 4.67% Bankrate.com avg: 0.229 10.56 52-Week Low Close(l) High 406.80 6.7 3520.48 8.0 380.54 6.8 3686.58 8.3 3849.12 5.7 5196.73 4.6 11735.72 6.0 1723.56 5.5 24031 18.3 503.48 0.8 11556.1 7.8 541.60 4.8 9526.79 7.6 6846.74 0.5 t Selected rates 1.83 17.61 1.36 7.03 Final maturity Issuer -0.71 -1.44 31.26 Natural gas, $/MMBtu 2.398 Gold, $ per troy oz 1240.10 t U.S consumer rates 9.57 2.53 DJ Commodity Source: SIX Financial Information;WSJ Market Data Group Consumer Rates and Returns to Investor YTD % chg Last Week Close Net chg %Chg WSJ Dollar index s World Close Sale Euro s Region/Country Index Deals of $ 150 million or more expected this week Commodities and Currencies 2015 2016 Sources: Ryan ALM; Tullett Prebon; WSJ Market Data Group Corporate Borrowing Rates and Yields Bond total return index Spread +/- Treasurys, Yield (%) in basis pts, 52-wk Range Last Wk ago Last Low High 10-yr Treasury, Ryan ALM DJ Corporate Aggregate, Barclays Capital High Yield 100, Merrill Lynch Fixed-Rate MBS, Barclays Muni Master, Merrill EMBI Global, J.P Morgan 1.707 2.796 2.080 6.532 2.180 1.519 5.938 1.851 2.901 2.210 6.410 2.380 1.555 6.058 51 524 15 -3 419 46 424 15 -9 375 70 741 36 538 Total Return 52-wk 3-yr 8.31 3.88 7.73 4.48 4.89 3.11 -2.544 2.013 3.93 3.28 6.135 3.597 7.206 3.875 Sources: J.P Morgan; Ryan ALM; S&P Dow Jones Indices; Barclays Capital; Merrill Lynch Source:Thomson Reuters/Ipreo Corporate Debt None scheduled this week A Week in the Life of the DJIA A look at how the Dow Jones Industrial Average component stocks did in the past week and how much each moved the index The DJIA lost 66.16 points, or 0.37%, on the week A $1 change in the price of any DJIA stock = 6.85-point change in the average To date, a $1,000 investment on Dec 31 in each current DJIA stock component would have returned $31,188, or a gain of 4.00%, on the $30,000 investment, including reinvested dividends The Weeks Action Pct Stock price Point chg chg (%) change in average Company Symbol Close 4.28 2.40 2.12 1.50 1.28 3.08 1.61 2.84 1.70 1.04 21.09 11.03 19.45 11.64 7.12 Caterpillar DuPont UnitedHealth Group Johnson & Johnson Procter & Gamble CAT $75.04 DD 68.78 UNH 136.84 JNJ 114.76 PG 82.47 $1,130 1,045 1,168 1,134 1,056 0.73 0.59 0.58 0.39 0.35 0.21 0.30 0.26 0.44 0.28 1.44 2.05 1.78 3.01 1.92 Cisco Systems Verizon Coca-Cola Travelers Visa CSCO 29.13 VZ 50.92 KO 45.04 TRV 114.62 V 79.94 1,092 1,129 1,057 1,021 1,035 0.28 0.23 0.17 0.16 0.03 0.16 0.08 0.12 0.05 0.05 1.10 0.55 0.82 0.34 0.34 Merck Pfizer Wal-Mart Stores Intel IBM MRK 56.64 PFE 34.69 WMT 70.87 INTC 31.62 IBM 152.89 1,082 1,095 1,175 932 1,133 0.05 0.30 0.33 0.60 1.01 0.03 0.51 0.33 0.18 0.53 0.21 3.49 2.26 1.23 3.63 American Express AXP 65.49 MMM 168.38 3M United Technologies UTX 100.43 General Electric GE 29.94 Microsoft MSFT 51.79 950 1,134 1,060 968 946 1.21 1.33 1.42 1.54 1.54 0.79 1.36 1.84 1.54 1.90 5.41 9.31 12.60 10.55 13.01 J.P Morgan Chase Chevron Boeing Walt Disney McDonalds JPM 64.64 CVX 100.66 BA 127.38 DIS 98.75 MCD 121.35 992 1,146 894 940 1,043 1.64 1.82 2.42 2.42 4.88 2.20 1.64 2.43 3.86 2.74 15.07 11.23 16.64 26.43 18.76 Home Depot Exxon Mobil Apple Goldman Sachs Nike HD 131.74 XOM 88.37 AAPL 97.92 GS 155.67 NKE 53.45 1,007 1,156 940 870 860 $1,000 Invested(year-end '15) $1,000 Sources: WSJ Market Data Group; S&P Dow Jones Indices For more information on the Dow Jones Industrial Average and the 30 industrials, please visit www.djindexes.com THE WALL STREET JOURNAL Monday, June 6, 2016 | C5 CLOSED-END FUNDS wsj.com/funds Listed are the 300 largest closed-end funds as measured by assets Closed-end funds sell a limited number of shares and invest the proceeds in securities Unlike open-end funds, closed-ends generally not buy their shares back from investors who wish to cash in their holdings Instead, fund shares trade on a stock exchange a-The NAV and market price are ex dividend b-The NAV is fully diluted c-NAV is as of Thursdays close dNAV is as of Wednesdays close e-NAV assumes rights offering is fully subscribed f-Rights offering in process g-Rights offering announced h-Lipper data has been adjusted for rights offering j-Rights offering has expired, but Lipper data not yet adjusted l-NAV as of previous day o-Tender offer in process v-NAV is converted at the commercial Rand rate w-Convertible Note-NAV (not market) conversion value y-NAV and market price are in Canadian dollars NA signifies that the information is not available or not applicable NS signifies fund not in existence of entire period 12 month yield is computed by dividing income dividends paid (during the previous twelve months for periods ending at month-end or during the previous fifty-two weeks for periods ending at any time other than month-end) by the latest month-end market price adjusted for capital gains distributions Source: Lipper Friday, June 3, 2016 52 wk Prem Ttl Fund (SYM) NAV Close /Disc Ret General Equity Funds Adams Divers Equity Fd ADX 15.28 12.81 -16.2 -2.8 Boulder Grwth & Inco BIF 10.23 8.05 -21.3 -3.0 Central Securities CET 24.98 20.24 -19.0 3.1 CohSteer Opprtnty Fd FOF 13.08 11.55 -11.7 -1.6 Cornerstone Strategic CLM 14.20 16.64 +17.2 -4.7 EtnVnc TaxAdvDiv EVT 21.22 20.42 -3.8 9.4 Gabelli Dividend & Incm GDV 21.67 19.16 -11.6 -2.9 Gabelli Equity Trust GAB 5.97 5.67 -5.0 -2.3 Genl American Investors GAM 38.28 31.42 -17.9 -7.5 HnckJohn TxAdv HTD 26.20 24.65 -5.9 29.2 Liberty All-Star Equity USA 6.01 5.07 -15.6 -4.0 Royce Micro-Cap RMT 8.86 7.53 -15.0 -9.3 Royce Value Trust RVT 14.46 12.13 -16.1 -5.9 Source Capital SOR 39.21 36.80 -6.1 3.5 Tri-Continental TY 24.26 20.60 -15.1 -1.1 Zweig Fund ZF 14.17 12.57 -11.3 -9.7 Specialized Equity Funds Adams Natural Rscs Fd PEO 22.47 19.84 -11.7 -10.3 AllnzGI NFJ Div Interest NFJ 14.49 12.66 -12.6 -11.0 AlpnGlblPrProp AWP 6.77 5.59 -17.4 -7.4 BlkRk Enh Cap Inco CII 14.50 13.63 -6.0 -2.8 BlkRk Engy Res Tr BGR 15.07 14.06 -6.7 -20.3 BlackRock Enh Eq Div Tr BDJ 8.73 7.84 -10.2 4.4 Blackrock Global Trust BOE 13.68 12.19 -10.9 -4.2 BlkRk Health Sci BME 34.38 36.48 +6.1 3.7 BlkRk Intl Grwth&Inco BGY 6.66 5.98 -10.2 -12.8 BlackRck Rscs Comm Str Tr BCX 9.17 7.59 -17.2 -12.8 BlackRock Science & Tech BST 19.07 16.38 -14.1 -4.6 BlackRock Utility & Infr BUI 20.74 19.79 -4.6 12.9 CBREClarionGlblRlEstIncm IGR 9.30 7.83 -15.8 3.1 Central Fund of Canada CEF 13.12 12.75 -2.8 8.5 ClearBridge Amer Engy CBA 9.59 8.67 -9.6 -35.6 ClearBridge Engy MLP Fd CEM 16.34 16.50 +1.0 -26.5 Clearbridge Engy MLP Opp EMO 12.94 NA -29.6 Clearbridge Engy MLP TR CTR 13.82 12.64 -8.5 -28.1 Cohen & Steers Infra UTF 24.00 20.48 -14.7 1.6 Cohen & Steers Qual Inc RQI 14.04 12.68 -9.7 22.2 CohnStrsPfdInco RNP 22.53 19.29 -14.4 16.0 Cohen & Steers TR RFI 14.02 13.08 -6.7 15.5 CLSeligmn Prem Tech Gr Fd STK 16.72 16.97 +1.5 2.6 Divers Real Asset Incm Fd DRA 18.97 16.41 -13.5 1.9 Duff & Phelps DNP 9.64 10.27 +6.5 4.7 Duff&PhelpsGblUtilIncFd DPG 19.58 17.06 -12.9 0.4 Eaton Vance Eqty Inco Fd EOI 13.52 13.17 -2.6 5.3 Eaton Vance Eqty Inco II EOS 13.96 13.12 -6.0 1.0 EtnVncRskMngd ETJ 10.40 9.83 -5.5 0.5 Etn Vnc Tax Mgd Buy-Write ETB 15.25 15.91 +4.3 10.7 Eaton Vance BuyWrite Opp ETV 13.99 14.82 +5.9 6.8 Eaton Vance Tax-Mng Div ETY 11.32 10.61 -6.3 0.6 EatonVanceTax-MngdOpp ETW 11.06 10.65 -3.7 -0.9 EtnVncTxMngGlDvEqInc EXG 9.39 8.94 -4.8 0.2 Fiduciary/Clymr Opp Fd FMO 14.73 13.42 -8.9 -36.5 FT Energy Inc & Growth Fd FEN 25.21 24.81 -1.6 -18.5 FstTrEnhEqtIncFd FFA 14.96 13.21 -11.7 -5.4 First Tr Engy Infr Fd FIF 19.04 16.79 -11.8 -11.4 First Tr MLP & Engy Incm FEI 15.41 15.39 -0.1 -14.0 Gabelli Hlthcr & Well GRX 12.21 10.63 -12.9 0.4 Gabelli Utility Tr GUT 5.69 6.59 +15.8 5.3 GAMCOGlblGoldNatRscs&Inc GGN 6.26 6.40 +2.2 5.5 GoldmanSachsMLPIncOpp GMZ 9.59 NA -34.5 Goldman Sachs MLP Energy GER 6.98 NA -44.5 John Hancock Finl Opps Fd BTO 26.23 27.44 +4.6 12.2 KayneAndersonEngyTRFd KYE 10.94 10.18 -6.9 -49.8 Kayne Anderson MLP Invt KYN 18.59 20.13 +8.3 -32.4 Macquarie Glbl Infrstrctr MGU 25.46 21.59 -15.2 -5.4 52 wk Prem Ttl Fund (SYM) NAV Close /Disc Ret NeubergerBermanMLPIncm NML 9.07 8.02 -11.6 -47.9 Neubrgr Brm Rl Est Sec Fd NRO 6.06 5.32 -12.2 17.0 Nuveen Dow 30 Dynamic DIAX 15.78 14.37 -8.9 2.2 NuvDivInco JDD 12.84 11.31 -11.9 2.7 Nuveen Engy MLP Fd JMF 13.08 12.21 -6.7 -22.5 NuvNASDAQ100DynOver QQQX 19.30 18.17 -5.9 3.0 Nuveen Real Estate Fd JRS 12.05 11.10 -7.9 11.5 NuveenS&P500Buy-Write BXMX 13.34 12.82 -3.9 7.7 Reaves Utility Fund UTG 30.80 NA 10.7 Tekla Hlthcr Investors HQH 25.45 25.92 +1.8 -17.6 Tekla Healthcare Opps Fd THQ 18.84 16.68 -11.5 -8.4 Tekla Life Sciences HQL 19.83 19.29 -2.7 -22.4 Tekla World Hlthcr Fd THW 16.30 14.40 -11.7 NS Tortoise Energy TYG 29.44 30.13 +2.3 -19.9 Tortoise MLP Fund NTG 19.48 18.74 -3.8 -11.4 Voya Gl Equity Div IGD 7.79 6.96 -10.7 -5.3 Income Preferred Stock Funds Calamos Strat Fd CSQ 11.10 10.03 -9.6 -2.5 Cohen & Steers Dur Pfd LDP 25.26 24.39 -3.4 10.4 Cohen & Strs Sel Prf Inco PSF 26.74 26.94 +0.7 18.5 FT Interm Duration Pfd FPF 23.09 23.03 -0.3 13.1 Flaherty & Crumrine Dyn DFP 24.58 24.10 -2.0 15.1 Flaherty & Crumrine Pfd FFC 19.08 20.85 +9.3 11.8 John Hancock Pfd Income HPI 22.62 22.71 +0.4 22.2 John Hancock Pfd II HPF 22.37 22.44 +0.3 20.0 John Hancock Pfd Inc III HPS 19.85 19.47 -1.9 20.7 JHancock Pr Div PDT 16.61 16.25 -2.2 29.7 LMP Cap & Inco Fd SCD 12.90 NA -12.5 Nuveen Preferred & Incm JPI 24.20 23.90 -1.2 14.0 Nuveen Preferred Inc Opp JPC 10.29 10.10 -1.8 16.1 Nuveen Preferred Incm Fd JPS 9.48 9.25 -2.4 14.4 TCW Strategic Income Fund TSI 5.31 NA 2.6 Zweig Total Return ZTR 13.31 11.84 -11.0 -3.4 Convertible Sec's Funds AdvntClymrFd AVK 16.17 14.23 -12.0 -9.6 AllianzGI Conv & Incm NCV 6.27 6.07 -3.2 -19.8 AllianzGI Conv & Incm II NCZ 5.59 5.30 -5.2 -21.7 AllianzGI Equity & Conv NIE 21.03 18.37 -12.6 -1.1 Calamos Conv Hi Inco Fd CHY 11.35 10.39 -8.5 -19.9 Calamos CHI 10.72 9.72 -9.3 -16.4 World Equity Funds Alpine Tot Dyn Div AOD 8.99 7.58 -15.7 -7.5 Calamos Glbl Dyn Inc CHW 8.25 7.14 -13.5 -8.9 Cdn Genl Inv CGI 25.27 18.05 -28.6 -9.4 China Fund CHN 16.61 14.32 -13.8 -26.2 Clough Global Opp Fd GLO 11.50 9.48 -17.6 -14.6 EtnVncTxAdvGblDiv ETG 16.46 14.79 -10.1 -8.9 EatonVance TxAdv Opport ETO 22.77 21.58 -5.2 -2.9 First Trust Dynamic Eur FDEU 18.47 16.00 -13.4 NS GDL Fund GDL 12.01 10.00 -16.7 2.6 India Fund IFN 27.38 24.45 -10.7 0.4 Japan Sml Cap JOF 11.61 9.84 -15.2 3.5 Korea Fund KF 35.62 32.10 -9.9 -10.1 Mexico Fund MXF 18.54 16.49 -11.1 -16.3 MS China a Shr Fd CAF 21.26 17.38 -18.3 -17.4 MS India Invest IIF 30.45 26.84 -11.9 0.6 New Germany Fund GF 15.55 13.87 -10.8 -3.2 Swiss Helvetia Fund SWZ 12.23 10.49 -14.2 -8.5 Templeton Dragon TDF 19.97 17.19 -13.9 -21.4 Voya Infr Indls & Matls IDE 14.34 12.32 -14.1 -8.2 Wells Fargo Gl Div Opp EOD 7.06 6.12 -13.3 -6.8 Prem12 Mo Fund (SYM) NAV Close /Disc Yld U.S Mortgage Bond Funds BlackRock Income Trust BKT 6.97 6.58 -5.6 5.5 Brkfld Mortgage Opp Incm BOI 16.37 14.75 -9.9 10.4 Brookfield TR Fund HTR 24.10 22.73 -5.7 10.1 Nuveen Mtg Oppy Term Fd JLS 24.60 23.25 -5.5 6.6 Investment Grade Bond Funds Blackrock Core Bond Tr BHK 14.54 13.70 -5.8 6.4 BlkRk Credit Alloc Incm BTZ 14.21 12.79 -10.0 7.4 John Hancock Income Secs JHS 15.32 14.60 -4.7 5.9 MFS Inc Tr MIN 4.93 4.58 -7.1 9.3 WstAstClymr InfLnkd Fd WIW 12.57 11.05 -12.1 3.6 WstAssetClymr InflLnk Sec WIA 12.84 11.41 -11.1 3.4 Loan Participation Funds Apollo Sr Fltg Rate Fd AFT 17.68 16.21 -8.3 7.0 BlackRock FR Incm Strat FRA 14.65 13.38 -8.7 5.7 Blkrk FltRt InTr BGT 14.21 13.20 -7.1 5.5 BlackstoneGSO Strat Cred BGB 16.13 14.48 -10.2 8.7 Blackstone GSO Sr Float BSL NA 16.09 NA 6.4 Eaton Vance FR Incm Tr EFT 14.69 13.81 -6.0 6.6 EatonVnc SrFltRate EFR 14.29 13.35 -6.6 7.1 Eaton Vance Sr EVF 6.70 6.01 -10.3 6.9 1st Tr Sr Fltg Rt Fd II FCT 14.00 13.02 -7.0 6.7 Invesco Credit Opps Fund VTA 12.49 11.06 -11.4 8.1 Invesco Senior Income Tr VVR 4.62 4.16 -10.0 7.5 Nuveen Credit Strt Inc Fd JQC 9.13 8.17 -10.5 7.4 Prem12 Mo Fund (SYM) NAV Close /Disc Yld NuvFloatRteInco Fd JFR 11.21 10.48 -6.5 6.8 Nuv Float Rte Opp Fd JRO 11.15 10.58 -5.1 7.2 Nuveen Senior Income Fund NSL 6.69 6.07 -9.3 6.9 Pioneer Floating Rate Tr PHD 12.35 11.30 -8.5 6.4 Voya Prime Rate Trust PPR 5.67 5.15 -9.2 6.4 High Yield Bond Funds AllianceBernstein Glbl AWF 12.91 12.07 -6.5 9.1 Babson Gl Sh Dur Hi Yd BGH 19.33 17.92 -7.3 10.9 BlackRock Corp Hi Yd Fd HYT 11.30 10.27 -9.1 9.6 BlkRk Debt Strat Fd DSU 3.98 3.56 -10.6 7.2 BlackRockDurInco Tr BLW 16.55 15.20 -8.2 7.5 DoubleLine Incm Solutions DSL NA 18.41 NA 10.4 Dreyfus Hi Yld Fd DHF 3.35 3.25 -3.0 10.7 Fst Tr Hi Inc Lg/Shrt Fd FSD 16.89 14.78 -12.5 7.9 Guggenheim Strat Opps Fd GOF 17.55 18.03 +2.7 12.4 NexPoint Credit Strat Fd NHF 23.84 21.45 -10.0 13.8 Nuveen Gl Hi Incm Fd JGH 16.46 14.26 -13.4 11.2 Nuveen High Incm Dec18 JHA 9.97 10.23 +2.6 NS Pioneer High Income Trust PHT 9.78 9.91 +1.3 13.1 Prud Gl Shrt Dur Hi Yd GHY 16.49 14.90 -9.6 9.1 Prudentl Sh Dur Hi Yd Fd ISD 16.81 15.63 -7.0 8.7 Wells Fargo Incm Opps Fd EAD 8.67 7.91 -8.8 9.8 Wstrn Asset Glbl Hi Inco EHI 10.58 9.57 -9.5 12.1 Wstrn Asset High Inco II HIX 7.17 6.84 -4.6 12.0 Wstrn Asset Opp Fd HIO 5.32 4.85 -8.8 8.7 West Asst HY Def Opp Fd HYI 15.86 14.75 -7.0 8.9 Other Domestic Taxable Bond Funds Ares Dynamic Credit Alloc ARDC NA 13.97 NA 9.8 Babson Cap Corp Inv MCI NA 17.52 NA 6.7 BlackRock Multi-Sector IT BIT 18.30 16.68 -8.9 9.0 BlackRock Taxable Mun Bd BBN 24.00 23.45 -2.3 6.8 Doubleline Oppor Credit DBL NA 25.76 NA 10.1 Duff & Phelps Utl & Cp Bd DUC 10.27 9.72 -5.4 6.2 EtnVncLtdFd EVV NA 13.32 NA 9.2 Franklin Ltd Duration IT FTF NA 11.71 NA 6.4 GuggenhBondMnegDurTr GBAB 23.46 22.83 -2.7 7.9 MFS Charter MCR 9.24 8.47 -8.3 8.9 MFS Multimkt MMT 6.63 5.98 -9.8 9.1 Nuveen Build Am Bd Fd NBB 22.80 22.50 -1.3 6.0 PIMCO Corporate & Incm PTY NA 14.52 NA 11.1 PIMCO Corporate & Incm PCN NA 15.00 NA 9.2 PIMCO HiInco PHK NA 9.54 NA 13.6 PIMCO Inco Str Fd PFL NA 10.15 NA 10.6 PIMCO Incm Strategy Fd II PFN NA 9.11 NA 11.3 Putnam Mas Inco PIM 4.77 4.39 -8.0 7.1 Putnam Premier Income Tr PPT 5.25 4.72 -10.1 6.5 Wells Fargo Multi-Sector ERC 13.77 12.50 -9.2 8.9 World Income Funds Abeerden Asia-Pacific FAX 5.59 4.99 -10.7 5.6 Etn Vnc Short Dur Fd EVG NA 13.53 NA 5.5 Legg Mason BW Glbl Incm BWG 14.57 12.47 -14.4 15.1 MS EmMktDomDebt EDD 8.79 7.73 -12.1 11.2 PIMCO Dynamic Credit Incm PCI NA 18.68 NA 11.7 PIMCODynamicIncomeFund PDI NA 27.35 NA 15.3 PIMCO Income Opportunity PKO NA 22.97 NA 10.0 PIMCO Strat Income Fund RCS NA 9.65 NA 10.6 Templeton Emerging TEI 11.76 10.54 -10.4 7.6 Templeton Global GIM 6.98 6.45 -7.6 4.6 Wstrn Asset Emerg Mkts ESD NA 15.10 NA 8.5 Wstrn Asset Emerg Mkt II EMD 12.41 10.62 -14.4 8.0 Wstrn Asset Gl Def Opp Fd GDO 18.55 17.28 -6.8 7.9 National Muni Bond Funds AllianceBrnstn NtlMun AFB 15.58 14.78 -5.1 5.2 Blackrock Invest BKN 16.95 17.52 +3.4 5.2 BlackRockMun2030Target BTT 24.78 23.73 -4.2 4.1 BlackRock Municipal Trust BFK 15.28 15.71 +2.8 5.7 BlackRockMuni BLE 15.88 16.27 +2.5 5.8 BlackRockMuni Tr BYM 15.97 15.45 -3.3 5.5 BlkRk MuniAssets Fd MUA 14.54 15.16 +4.3 4.9 BlkRk Munienhanced MEN 12.59 12.65 +0.5 5.8 BlkRk MuniHldgs Inv MFL 15.74 15.56 -1.1 5.5 BlkRk MuniHldgs Qlty II MUE 14.95 14.41 -3.6 5.6 BlkRk MuniHldgs MHD 18.06 18.55 +2.7 5.7 BlkRk MuniVest MVF 10.30 10.85 +5.3 6.0 BlkRk MuniVest II MVT 16.22 17.39 +7.2 5.8 BlkRk MuniYield MYD 15.71 15.75 +0.3 6.0 BlkRk MuniYld Quality MQY 16.58 16.54 -0.2 5.8 BlkRk MuniYld Qlty II MQT 14.56 14.37 -1.3 5.7 BlRkMunyldQltyIII MYI 15.32 15.54 +1.4 5.8 Deutsche Mun Income Tr KTF 13.63 14.13 +3.7 6.0 Dreyfus Mun Bd Infr Fd DMB 14.53 13.90 -4.3 5.4 Dreyfus Municipal Income DMF 9.86 9.75 -1.1 6.0 Dreyfus Strat Muni Bond DSM 8.86 8.76 -1.1 5.7 Dreyfus Strategic Munis LEO 9.14 9.34 +2.2 5.6 Eaton Vance Mun Bd Fd EIM 14.51 13.80 -4.9 5.5 Eaton Vance Mun Income EVN 14.05 14.47 +3.0 5.9 EV National Municipal Opp EOT 23.11 22.95 -0.7 4.5 Invesco Adv Mun Incm II VKI 12.92 12.95 +0.2 6.1 Prem12 Mo Fund (SYM) NAV Close /Disc Yld Invesco Mun Incm Opps Tr OIA 7.82 7.89 +0.9 5.0 Invesco Mun Opportunity VMO 14.42 14.36 -0.4 6.1 Invesco Municipal Trust VKQ 14.36 13.72 -4.5 6.0 Invesco Qlty Mun Inco IQI 14.37 13.63 -5.1 5.6 Invesco Inv Grade Muni VGM 14.87 14.51 -2.4 6.1 Invesco Value Mun Incm Tr IIM 17.10 17.44 +2.0 4.8 MainStay DefinedTerm MMD NA 20.15 NA 5.9 MFS Munl Inco MFM 7.60 7.50 -1.3 5.3 NuvAMTFreeMuniIncm NEA 15.66 14.70 -6.1 5.1 NuveenAMT-FreeMunValue NUW 17.54 18.40 +4.9 4.3 Nuveen Div Fnd NAD 16.15 15.42 -4.5 5.5 Nuveen Enh AMT-Fr Muni NVG 17.00 15.87 -6.6 4.9 Nuveen Enh Muni Credit NZF 16.74 15.65 -6.5 5.3 Nuveen Enhncd Mun Val Fd NEV 15.93 16.11 +1.1 5.9 Nuveen Intermed Dur Mun NID 14.22 13.91 -2.2 5.0 Nuveen Invest Qual Muni NQM 16.63 16.35 -1.7 5.8 NuveenMuniIncoOpp Fd NMZ 13.97 14.22 +1.8 6.4 Nuveen Muni Mkt Opp NMO 15.94 14.84 -6.9 5.1 Nuveen Muni Value Fund NUV 10.55 10.47 -0.8 3.7 Nuveen Performance Plus NPP 16.96 16.29 -4.0 5.4 Nuveen Premium Inco Muni NPI 16.18 15.19 -6.1 5.5 Nuveen Prem Inco Muni NPM 16.18 15.09 -6.7 5.7 Nuveen Premier Muni Inc NPF 15.87 14.84 -6.5 5.4 Nuveen Select Quality NQS 16.39 15.35 -6.3 5.1 Nuveen Sel Tax Free NXP 15.70 15.37 -2.1 3.6 Nuveen Sel TF NXQ 15.09 14.84 -1.7 3.6 PIMCO MuniFd PMF 13.67 16.72 +22.3 5.9 Pimco Muni Inc II PML 12.81 13.53 +5.6 5.9 PIMCO Muni Inc III PMX 11.60 12.66 +9.1 6.0 Pioneer Mun Hi Inc Adv Tr MAV 12.71 13.87 +9.1 6.6 Pioneer Mun Hi Incm Tr MHI 13.56 14.20 +4.7 6.0 Putnam Tr PMM 8.20 7.95 -3.0 5.6 PutnamMuniOpportunities PMO 13.81 13.36 -3.3 5.4 Wstrn Asset Mngd Muni MMU 14.63 14.98 +2.4 5.2 WesternAssetMunTrFund MTT 22.60 25.19 +11.5 4.2 Single State Muni Bond BlackRock CA Municipal Tr BFZ 16.21 16.54 +2.0 5.3 BlkRk MuniHldgs CA Qlty MUC 16.34 16.09 -1.5 5.1 Blkrck MunHl NJ Qlty MUJ 16.30 15.86 -2.7 5.4 BlRk MuHldg NY Qlty MHN 15.48 15.13 -2.3 5.3 BlkRk MuniYld CA Fd MYC 16.85 17.04 +1.1 5.2 BlkRk MuniYld CA Quality MCA 16.60 16.30 -1.8 5.4 BlkRk MuniYld MI Qlty MIY 16.11 15.52 -3.7 5.5 BlRk Muyld NY Qlty MYN 14.86 14.30 -3.8 5.3 Eaton Vance CA Mun Bd EVM 13.14 13.07 -0.5 5.3 Invesco CA Value Mun Incm VCV 14.22 14.02 -1.4 5.6 Invesco PA Value Mun Incm VPV 14.77 14.27 -3.4 5.6 Invesco Inv Grade NY Muni VTN 15.52 15.55 +0.2 5.4 Nuveen California AMT NKX 16.61 16.34 -1.6 5.4 Nuveen CA Div Fnd NAC 16.47 16.32 -0.9 5.6 Nuveen CA Div NVX 16.49 16.05 -2.7 5.1 NuveenCA NZH 15.35 15.39 +0.3 5.3 Nuveen CA Muni Value NCA 10.76 10.98 +2.0 4.3 NuveenMDPremiumIncome NMY 15.12 13.83 -8.5 4.8 Nuveen MI Quality Income NUM 16.18 14.86 -8.2 5.1 NuveenNCPremiumIncome NNC 15.63 14.51 -7.2 4.1 Nuveen NJ Div NXJ 16.32 14.75 -9.6 5.4 NuvAMTFreeMuniIncm NRK 15.01 13.95 -7.1 5.1 Nuveen NY Div Fnd NAN 15.79 15.27 -3.3 5.3 Nuveen Ohio Qual Income NUO 17.53 16.38 -6.6 5.0 Nuveen Pa Investment Qual NQP 16.23 15.16 -6.6 5.4 NuveenVAPremiumIncome NPV 15.04 14.55 -3.3 4.7 PIMCO California Muni PCQ 15.00 16.73 +11.5 5.5 PIMCO California Mun II PCK 9.26 10.80 +16.6 6.0 52 wk Prem Ttl Fund (SYM) NAV Close /Disc Ret General Equity Funds Specialized Equity Funds Corsair Opportunity:A 9.49 NA NA NS Corsair Opportunity:I 9.51 NA NA -8.1 Griffin Inst Access RE:A 26.74 NA NA 8.7 Griffin Inst Access RE:C 26.59 NA NA NS Griffin Inst Access RE:I 26.79 NA NA NS SharesPost 100 25.50 NA NA -2.3 Versus Cap MMgr RE Inc:F 27.29 NA NA 9.1 Versus Cap MMgr RE Inc:I 27.35 NA NA 9.4 Wildermuth Endwmnt Str 11.19 NA NA -1.0 Wildermuth Endwmnt S:C 11.17 NA NA NS Income Preferred Stock Funds Convertible Sec's Funds Calmos Dyn Conv and Inc CCD 19.74 17.98 -8.9 -10.3 World Equity Funds BMO LGM Front ME 8.78 NA NA -3.5 Prem12 Mo Fund (SYM) NAV Close /Disc Yld U.S Mortgage Bond Funds Vertical Capital Income 12.20 NA NA 3.1 Prem12 Mo Fund (SYM) NAV Close /Disc Yld Loan Participation Funds 504 Fund 10.08 NA NA 3.4 Invesco Sr Loan A 6.22 NA NA 6.0 Invesco Sr Loan B 6.22 NA NA 6.0 Invesco Sr Loan C 6.23 NA NA 5.2 Invesco Sr Loan IB 6.22 NA NA 6.2 Invesco Sr Loan IC 6.22 NA NA 6.1 Invesco Sr Loan Y 6.22 NA NA 6.2 Voya Senior Income:A 12.51 NA NA 5.6 Voya Senior Income:B 12.45 NA NA 5.1 Voya Senior Income:C 12.48 NA NA 5.1 Voya Senior Income:I 12.47 NA NA 5.9 Voya Senior Income:W 12.51 NA NA 5.9 Prem12 Mo Fund (SYM) NAV Close /Disc Yld High Yield Bond Funds Nuveen HI Dec 2019 Tgt 9.84 10.20 +3.7 NS WA Middle Mkt Inc WMF NA NA NA 12.4 Other Domestic Taxable Bond Funds Capstone Church Capital 17.12 NA NA 1.3 GL Beyond Income 4.89 NA NA NE Palmer Square Opp Income 16.74 NA NA 6.1 Resource Credit Inc:A 9.91 NA NA 0.0 Resource Credit Inc:C 10.00 NA NA 0.0 Resource Credit Inc:D 9.89 NA NA 0.0 Resource Credit Inc:I 9.93 NA NA 0.0 Resource Credit Inc:T 9.87 NA NA 0.0 Resource Credit Inc:U 9.92 NA NA 0.0 Resource Credit Inc:W 9.89 NA NA 0.0 Borrowing Benchmarks | WSJ.com/bonds Money Rates June 3, 2016 Key annual interest rates paid to borrow or lend money in U.S and international markets Rates below are a guide to general levels but dont always represent actual transactions Inflation Other short-term rates April index Chg From (%) level March '16 April '15 239.261 246.992 0.47 0.26 1.1 2.1 Week ago 52-Week High Low 3.50 3.50 3.50 3.25 2.70 2.70 2.85 2.70 1.475 1.475 1.475 1.475 Policy Rates 0.00 0.50 0.50 1.75 Euro zone Switzerland Britain Australia 0.00 0.50 0.50 1.75 0.44 0.32 30 day Two month Three month Four month Five month Six month 0.54 0.08 Euro Libor One month Three month Six month One year Discount 1.00 1.00 0.75 0.4000 0.5625 0.3000 0.3700 0.5000 0.4100 0.5900 0.3600 0.5500 0.5600 0.0600 0.3100 0.0200 0.0400 0.0800 0.4000 0.5625 0.3000 0.3700 0.4000 n.q 0.56 0.59 0.68 0.12 n.q -0.02 -0.14 n.q -0.01 -0.09 n.q -0.01 -0.08 n.q 0.00 0.00 n.q 0.01 0.01 n.q 0.02 0.02 n.q n.q n.q n.q n.q n.q Libor One month Three month Six month One year One month Three month Six month One year 0.46480 0.68215 0.98570 1.33140 0.45445 0.67405 0.97710 1.32070 0.46955 0.68580 0.99310 1.33740 0.18300 0.28075 0.42390 0.74920 -0.351 -0.278 -0.163 -0.028 -0.353 -0.279 -0.160 -0.032 -0.069 -0.009 0.059 0.175 -0.355 -0.282 -0.163 -0.035 0.265 0.265 0.295 0.000 0.340 0.350 0.350 0.000 0.475 0.480 0.585 0.065 30-year mortgage yields 30 days 3.146 3.173 3.750 2.979 60 days 3.181 3.209 3.788 2.998 -0.349 -0.260 -0.149 -0.015 -0.062 -0.013 0.051 0.171 Value Traded -0.351 -0.262 -0.154 -0.028 52-Week High Low DTCC GCF Repo Index Treasury MBS 0.434 0.430 98.050 0.639 0.075 99.970 0.705 0.087 Open Implied Settle Change Interest Rate Secondary market Fannie Mae -0.351 -0.261 -0.154 -0.016 Latest Treasury bill auction weeks 13 weeks 26 weeks 2.00 Euro interbank offered rate (Euribor) Federal funds Effective rate High Low Bid Offer 2.25 Euro commercial paper 0.00 0.50 0.50 1.75 U.S government rates 1.00 90 days 0.05 0.50 0.50 2.00 Overnight repurchase U.S 2.25 Commercial paper (AA financial) Prime rates U.S Canada Japan 2.25 Commercial paper 30 to 270 days International rates Latest 52-Week high low Call money U.S consumer price index All items Core Week ago Latest DTCC GCF Repo Index Futures Treasury Jun Treasury Jly Treasury Aug 99.565 0.020 3203 0.435 99.530 0.040 1727 0.470 99.455 0.080 1167 0.545 Notes on data: U.S prime rate is effective December 17, 2015 Discount rate is effective December 17, 2015 U.S prime rate is the base rate on corporate loans posted by at least 70% of the 10 largest U.S banks; Other prime rates arent directly comparable; lending practices vary widely by location; DTCC GCF Repo Index is Depository Trust & Clearing Corp.'s weighted average for overnight trades in applicable CUSIPs Value traded is in billions of U.S dollars Futures on the DTCC GCF Repo Index are traded on NYSE Liffe US Sources: Federal Reserve; Bureau of Labor Statistics; DTCC; SIX Financial Information; General Electric Capital Corp.; Tullett Prebon Information, Ltd You Research The rest of your job Eat lunch at your desk You with Factiva Research Take lunch Collaborate across departments Build powerful infographics Advise colleagues Create company newsletter Stay on top of the news Spend your day working, not searching Factivas reputable sources, flexible search and powerful insights provide access to thousands of quality, licensed, news and information sources in 28 languages Know Unknowns go.dowjones.com/productivity â 2016 Dow Jones All Rights Reserved 3AO1560 C6 | Monday, June 6, 2016 Unhealthy Incentive for NantHealth One reason a company might launch an initial public offering in rough waters? Because it beats the alternative That is a possible explanation for the recent floating of NantHealth, the latest offering from entrepreneur Patrick Soon-Shiong, which develops software and medical-records systems Last Thursdays strong trading aside, there are reasons for investors to be wary Health-care stocks have lost their magic in 2016 And while Dr SoonShiong has had major successes in his career, shares in his last IPO, biotech company NantKwest, flopped after going public last summer Also, minority shareholders wont have much say in NantHealths decision making: Dr Soon-Shiong has retained a majority voting interest in NantHealth And while plenty of startups lose money, NantHealth has lost more than $300 million since its founding in 2010 Perhaps the biggest red flag is why NantHealth may have gone public in the first place A major shareholder, the Kuwait Investment Authority, owns a $150 million equity stake, which it purchased in 2014 But it also had a contractual right to sell its shares back to NantHealth, at its initial cost plus interest, if the company doesnt complete a public offering by June 20 According to its registration statement, NantHealth had just under $25 million in cash and equivalents at the end of March Given that looming deadline, going public made lots of sense for Dr Soon-Shiong The same cant be said for shareholders thinking of buying into the venture Charley Grant HEARD ON THE STREET FINANCIAL ANALYSIS & COMMENTARY Cloud Deal Wave Hasnt Crested Cloud softwares deal makers had a busy spring They may not be getting much of a summer break Three big cloud-related acquisitions were announced last week Salesforce.com agreed to buy Demandware for $2.8 billion net of cash Private-equity firm Thoma Bravo is paying $3 billion for Qlik Technologies while another, Vista Equity Partners, is picking up Marketo for $1.8 billion This just a month after Oracle spent about $1.2 billion on a pair of deals, buying up Textura and Opower Those are just some of the more notable moves of late According to Dealogic, 739 M&A deals targeting U.S software firms have been announced so far this year If activity keeps up that pace, this year will exceed last years record of 1,526 software deals Deal value so far this year has totaled about $52 billion Bought Up Number of acquisitions of U.S.-based software companies 1,500 1,000 500 2005 *Year to date 08 12 16* Source: Dealogic THE WALL STREET JOURNAL M&A waves can dissipate quickly, so there is no guarantee the current rush will continue But it is no coincidence the spike in activity follows the broad market collapse from earlier this year It hammered the technology sector and was particularly damaging to richly valued stocks in the cloud ROBERT GALBRAITH/REUTERS Email: heard@wsj.com THE WALL STREET JOURNAL and internet categories From the start of the year to mid-February, the Nasdaq Composite lost 15% of its value The BVP Cloud Indexa compilation of cloud software companies tracked by Bessemer Venture Partnersplunged by 36% during that time Values have rebounded since, but not fully The BVP index is still down 7% this year That has provided an opening, and more may take it Demand for cloud software is growing steeply, and big companies trying to service that demand have both the means and motivation to chase the right deals But prices still arent cheap For Demandware, Salesforce paid an enterprise value of about 8.3 times forward salemore than triple the Nasdaq average Brent Thill of UBS estimates that strategic M&A deals in software have typically fallen between to times forward revenue Note that the current median enterprise value on the BVP Cloud Index is about 5.3 times, which does not include deal markups So those shopping in the cloud should be ready for a case of sticker shock But investors in potential targets should enjoy the rainfall Dan Gallagher Why Wall Street Needs to Hire Younger Staff Investment banks are competing fiercely for young talent Of course, they always did, but in the past the lure was mostly financial Now, banks are loudly promising a modicum of quality of life, too Just last week, UBS told bankers they can take two hours of personal time each week Credit Suisse has insisted bankers ought to take Friday evenings off unless something important is happening Morgan Stanley is offering paid sabbaticals And J.P Morgan Chase has loosened its dress code to allow employees to wear business-casual attire For bank investors, it might seem all this misses the most urgent task facing banks: to cut costs But that would be shortsighted Forever Young Change in annual pay and staff numbers between 2009 and 2015 Compensation costs Credit Suisse Goldman Sachs UBS Average* Barclays Deutsche Bank Morgan Stanley 40 20 *Average of these six banks Source: J.P Morgan Head count 20% The common view is that banks need to soften their workaholic cultures because young people could have a nicer life working in technology or other areas of finance But there is a more commercial reason, too Banks desperately need young people because they are cheaper The profile of the workforce is changing as investment banks have realized fewer of their highestpaid bankers and traders are crucial for bringing in revenue The rest of the teams can be made up of more people in their 20s with less experienceand far smaller pay packages The industry even has a word for this: juniorization. It helps explain how investment banks have cut compensation costs on average by 21% since 2009 while cutting staff numbers by just 3%, according to J.P Morgan analysts This is especially true in Europe, where regulations have forced banks to pay higher fixed salaries and less in bonuses That makes it much harder to cut the cost of higher-paid bankers in their 30s, 40s and 50s when they arent making it rain There is longer-term thinking at work, as well Banks want younger, more tech-savvy people to usher in a more automated age But those same young people also realize that future financial rewards in banking are less likely to match those widely enjoyed in the past given the industrys reduced profitability So they will need other carrots as well A younger workforce will be as important as automation and digitization in banks plans for the future: Each is a route to structurally cutting costs With revenues likely to stagnate, turning to the younger generation is a step toward better shareholder returns Paul J Davies WSJ.com/Heard OVERHEARD The European Central Bank is a long way from getting inflation back to its desired level, which is below, but close to, 2% But it has achieved another aim set a long time ago: to balloon the size of its balance sheet Back at the end of 2014, the debate around ECB policy was seen through the lens of its balance sheet This had contracted to just over trillion ($2.3 trillion) from a mid-2012 peak of 3.1 trillion A series of semantic games played out around the issue First, the ECB said it expected the balance sheet to expand to its levels of the beginning of 2012 It then followed this by saying that it intended that this would happen Of course, the ECB had to resort to bigger tools than it had announced at the time to make that actually take place Sovereign-bond purchases started in March 2015 and have boosted the ECBs balance sheet now to just under 3.1 trillion But part of the reason that the ECB ended up loosening policy so much was that monetary policy elsewhereespecially in the U.S.wasnt tightened as early or as much as expected The balance sheets of both the Bank of England, at just over Ê400 billion ($581 billion), and the U.S Federal Reserve, at $4.5 trillion, remain bloated with bonds Even as the Fed has started down the path to increasing rates, it hasnt stopped reinvesting the proceeds of maturing bonds in new purchases that keep its balance sheet from shrinking In fact, divergence in central-bank balance sheets is coming through continued expansion: The Bank of Japans balance sheet is north of Ơ425 trillion ($4 trillion) and still growing Rates have gone lower for longer But central banks have gone bigger for longer, too MONEY & INVESTING Switzerland Votes to Reject Basic Income Initiative ZURICHSwiss voters on Sunday overwhelmingly rejected an initiative that would have guaranteed all Swiss residents a minimum income on which to live The Basic Income Initiative received just 23.1% of the vote in Sundays referendum, compared with 76.9% against The outcome was never in doubt, with the government, businesses and many trade unions lining up in opposition and recent polls suggesting the public was firmly against the idea Rather, the significance of Sundays vote was that it gave a high-profile airing to an idea that has gained traction among economists in Europe and the U.S in recent years Though the monthly amount wasnt spelled out, it was expected to have been around 2,500 Swiss francs ($2,560) per adult, with a smaller subsidy for children, without regard to employment, disability, age or even wealth Supporters said the policy GOP Continued from page C1 of New York The proposal is one of many to be announced by House Republicans in coming months on a variety of issues, like health care, as part of House Speaker Paul Ryans pledge to offer voters a detailed Republican agenda during the 2016 campaign Mr Hensarlings proposal has no chance of becoming law this year, with Democrats in the Senate likely to block it, and President Barack Obama certain to veto it if it comes to his desk But the details are significant for defining the Republican financial agenda should the party win the White House and keep control of Congress in November Donald Trump, the presumptive GOP nominee, has said he would try to repeal Dodd-Frank but hasnt elaborated on his alternative Mr would provide security at a time of rapid technological change Backers also said it would simplify the patchwork of agencies charged with overseeing pensions, welfare and other support, saving the government money while freeing people from the bureaucracies of means-tested programs Opponents, meanwhile, latched on to two critiques: cost and fairness The 200 billion franc price tag would have required large tax increases, even if money was saved through reductions in social spending in other areas Che Wagner, a co-initiator of the basic income proposal, vowed after Sundays results to press on It is a very satisfying result for us, he said in an email, adding that his own prediction was the initiative would only get around 15% support Nearly 70% of respondents in a survey released Sunday said they expect to be voting on basic income again in the future The debate just started, Mr Wagner said Backers of Switzerlands basic-income plan present the 23% yes vote they received Swiss voters overwhemingly rejected the plan Hensarlings bill is the first detailed proposal for how a Republican-led government would likely proceed The Hensarling bill addresses many of the complaints lodged by the financial industry over the past six years of increased federal control of the sector Still, the proposal is likely to be treated warily by firms that have invested heavily to adjust to comply with the new system As much as banks hate all of the stuff theyve been forced to do, theyve done it now, said Douglas Landy, a partner at Milbank Tweed Hadley & McCloy, who represents large financial institutions A lot of them have spent money, sunk the costs Replacing it for something else, theyre not sure exactly what it means. There are also provisions of the GOP plan that would likely irk Wall Streetand seem designed to so in part to give Republicans political cover at a time public opinion remains hostile to the financial sector The bill includes a section of proposals to demand accountability from Wall Street through enhanced penalties for fraud and deception, the summary says Democrats, meanwhile, are preparing to attack the Republican plan as a reckless rollback of protections intended to prevent the next crisis Mr Obama last week blasted as crazy Mr Trumps pledge to repeal Dodd-Frank California Rep Maxine Waters, the top Democrat on the financial services committee, called the Hensarling bill a grab bag of special-interest gifts. The main thrust of the Hensarling bill is to scale back the growing regulatory involvement in large American financial institutions It would remove the powers of the newly created Financial Stability Oversight Committee to label firms as systemically important financial institutions and ALEXANDRA WEY/EPA BY BRIAN BLACKSTONE impose new oversight over those firms Such powers are already facing legal challenges, and insurer MetLife Inc successfully sued to overturn such a label earlier this year The plan would also streamline the complexity of postcri- Its time to move on to a 21st century model of banking, Mr Hensarling said sis regulation for banks It would offer an off-ramp from Dodd-Frank and global rules promulgated by the Basel Committee on Banking Supervisionfor any banks that hold high levels of capital and maintain a fortress balance sheet. While Basel sets guidelines for global banking regulation, it is up to individual countries to determine how, if at all, to implement their proposals It is unclear whether the Republican plan would ask banks to hold more, or less, capital than is currently required, a level many bankers say is onerous and impedes their ability to business Mr Hensarling also wants to repeal a Dodd-Frank provision that gives regulators a role in helping steer financial institutions through bankruptcy if they run into severe distress and replace it with a new portion of the bankruptcy code that would leave firms to so on their own While many parts of the plan echo longstanding Republican promises, the bills section boosting fines for alleged financial wrongdoing seems to run counter to widely maintained GOP views that stiffer bank fines may more harm than good, effectively punishing shareholders who already have been victimized by a companys fraud and further damaging the value of corporate shares Mr Hensarling plans to re- quire the Securities and Exchange Commission to determine that a penalty against a firm doesnt harm the companys shareholders, according to a person familiar with the plan The Hensarling bill would boost fines for violating insider-trading laws and the Foreign Corrupt Practices Act The plan envisions doubling or tripling some maximum penalties used by the SEC A further change would allow the SEC to calculate penalties based on the amount of investor losses incurred as a result of misconduct Currently, the SEC is constrained by statute from seeking penalties that match investor losses The heightened penalties are similar to ones pushed by the SEC four years ago that failed to gain traction in Congress At the time, Republican lawmakers expressed reluctance about giving the SEC more resources without structural changes at the agency JOURNAL REPORT | A MONTHLY ANALYSIS Follo The E w xper ts A Convn Online e DETA rsation I LS THE WALL STREET JOURNAL â 2016 Dow Jones & Company All Rights Reserved Monday, June 6, 2016 | R1 INSIDE , R2 SAVING FOR COLLEGE Leftover 529 Money? More answers to readers questions on college finance R2 Six Ways To Improve 529 College Plans SAVING FOR RETIREMENT Ask Encore: An Aging in Place Home A reader wonders how to make a house safer for retirement R4 PORTFOLIO STRATEGY The Problem With Low Vol You still need bonds, not just low-volatility stocks, if you want to cut down on turbulence R5 ENDOWMENT FUNDS The Church of Englands Blessed Investing Its $10 billion fund succeeds, as it pushes an ethical agenda R6 MONEY MANAGEMENT A Pioneering Woman TIAAs Susan Hirsch on the merits of female fund managers R6 A RICHARD ALLEN Twenty years after their creation, how the savings funds can be made even better BY CHANA R SCHOENBERGER IT WAS 20 YEARS AGO that Congress legislated 529 plans, tax-advantaged programs to encourage families to save for college By most measures, the plans have been a blockbuster success, exploding to $250 billion in assets in more than 12 million accounts and helping parents mitigate the rise in tuition costs and fight the student-debt tsunami But even blockbusters can be improved As 529 plans graduate to adulthood, experts say they would like to see several changes to make them even better These state-sponsored plansnamed for a section of the tax code, and which typically invest in mutual fundsallow college savings to grow tax-free There is no income limit on who can contribute, and the account can be reassigned to direct relatives of the original benefi- Popular on Campus Assets in '529' college-savings plans nationally $250 billion 200 150 Popularity grows after distributions become tax-free; law is made permanent in 2006 100 50 1996 98 00 02 04 06 08 20 12 Parents or other adults set up an account as early as possible after a child is born, and contributions up to $14,000 (or $28,000 a couple) in after-tax money during the year are exempt from gift-taxes reporting The money grows within the plan tax-free and, if its withdrawn for qualified higher-education expenses like tuition, room and board, or a computer, no tax is due The plans often also come with state tax benefits for residents of specific states But the plans design can be clunky Here is how financial advisers and college-savings experts say that aspects of the accounts and their use could be improved 14 Source: CSPN College Savings Plans Network THE WALL STREET JOURNAL Entice companies to a match ciarya childs cousins or siblings, for instanceif there is money left over or if the beneficiary doesnt go to college One federal tax-code change that could juice participation rates would be to make it advanPlease turn to the next page SECTOR STRATEGY A Bold Commodities Move Heinz Schimmelbusch figured out China when others didnt R7 NEWS CHALLENGE Test Your Smarts on .oil and rates Monthly quiz R10 SCOREBOARD May 2016 fund performance, total return by fund type More on R2 Bonds U.S Intl (intmd.) stocks* stocks* 1.6% 0.1% 0.01% *Diversied funds only, excluding sector and regional/country funds Source: Lipper The Truth Behind the Summer Rally BY MARK HULBERT A RICHARD ALLEN THE STOCK MARKET most likely will rally at some point this summer But that doesnt mean there will be a Summer Rally The distinction is important because, every year around Memorial Day and early June, many advisers start referring to a Summer Rally as something above and beyond the garden-variety rallies that occur at any time of the year But there is no evidence that the stock market rallies more regularly or strongly during the summer months than it does in the spring, fall or winter The absence of a distinctive Summer Rally means that the rallies you can legitimately expect this summer are no more worth betting on than those that occur any other time To put this another way: The stock market might rise powerfully between now and Labor Day, but if so its strength will have nothing to with Mr Hulbert is editor of the Hulbert Financial Digest and a senior columnist for MarketWatch He can be reached at reports@wsj.com those three months being June, July and August To be sure, I have never found a precise definition of what the Summer Rally is supposed to entail So it is always possible that a Summer Rally defined in some arcane way does in fact exist But if we focus on any of the usual ways in which most investors picture a rally, this seasonal pattern turns out to be yet another urban myth Overall lull The first clue that a Summer Rally is fictional comes from the stock markets weak performance overall during the summer months In fact, the months of June, July and August are one of the weakest three-month stretches of any in the calendar Over the past 60 years, the Dow Jones Industrial Average has produced an average monthly return of just 0.1% during these three summer months, compared with a 0.7% average for all other months Lets try a different approach: Even though the summer months as a whole are mediocre ones for equities, its still possible that the stock market could stage an especially powerful rally along the way To test for this possibility, I calculated the Dows return over the years from its lowest close in June to its highest subsequent close through the end of August Once again, I failed to find anything special about the markets rally potential during the summer Over the past six decades, the Dow gained an average of 6.9% from its lowest June close through its highest subsequent close over the next two calendar months While you might think that is worth betting on, it in fact is nothing special: The comparable calculation for each of the other 11 months of the year shows that their rally potentials are stronger, averaging 8% Summer of 32 Why, then, did investors ever come to think a Summer Rally really exists? There is no way of knowing for sure, of course But one possibility is that it traces to the spectacular rally that occurred in the summer of 1932, at the depths of the Great Depression The Dow gained 76.5% from its closing low in June of that year to its highest close in August And if I extend my earlier historical analysis back Please see SUMMER page R2 INVESTING ISNT ABOUT MEETING BENCHMARKS Its about achieving goals And simply tracking the averages may not the trick Thats why Invesco doesnt settle for average Instead, we believe investors need to look beyond the benchmarks to high-conviction active management and factor-based investing To see how Invesco can help you bench the benchmarks, visit invesco.com/HighConviction High-Conviction Active Factor-Based Equities Fixed Income Smart Beta Invesco Comstock Fund (ACSTX) Invesco Diversied Dividend Fund (LCEAX) Invesco Core Plus Bond Fund (ACPSX) Invesco Strategic Income Fund (SIZAX) PowerShares S&P 500 Quality Portfolio (SPHQ) PowerShares S&P 500 Low Volatility Portfolio (SPLV) NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE Before investing, investors should carefully read the prospectus and/or summary prospectus and carefully consider the investment objectives, risks, charges and expenses For this and more complete information about a fund, ETF or unit trust, investors should contact their advisors for a prospectus and/or summary prospectus or visit invesco.com/fundprospectus Investors considering high-conviction strategies should be aware of the unique characteristics and additional risks This does not constitute a recommendation of the suitability of any investment strategy for a particular investor ETF investing involves risks, including possible loss of money Shares are not actively managed and are subject to risks similar to those of stocks, including short selling and margin maintenance requirements Ordinary brokerage commissions apply Beta is a measure of risk representing how a security is expected to respond to general market movements Smart beta represents an alternative and selectionindexbased methodology that seeks to outperform a benchmark or reduce portfolio risk, or both Smart beta funds may underperform cap-weighted benchmarks and increase portfolio risk Past performance is not a guarantee of future performance An investment cannot be made directly in an index Invesco Distributors, Inc THE WALL STREET JOURNAL R2 | Monday, June 6, 2016 JOURNAL REPORT | INVESTING IN FUNDS & ETFS Six Ways to Improve 529 College Plans Continued from the prior page tageous for employers to offer 529 matching for employees, similar to the way 401(k) plans operate for retirement savings, says Andrea Feirstein, a 529 consultant to states and managing director of AKF Consulting Group in New York City Currently, companies dont receive any federal tax benefits related to 529s, although some offer payroll deductions to their employees If employers match employee contributions to 529s today, that money is considered taxable income to the employee Three states offer tax inducements for companies that contribute to home-state plans on behalf of their workers Utah has a $1,900 state tax deduction per beneficiary, and Nevada and Illinois each offer a state tax credit up to $500 on 25% of matched 529 contributions A federal-tax-code change would cost the government in forgone tax revenue, but policy makers might choose to make this switch anyway if it inspired more parents to save for college instead of relying on loans, eral tax incentive, like a credit or deduction, would help convince parents, says Brian Boswell, vice president of research and development at SavingForCollege.com When TurboTax pops up and asks you, Have you taken advantage of this tax credit or deduction? thats even better, he says Allow more changes Once parents or other adults have set up 529 accounts, they have to work through the plans regulatory restrictions, such as biannual trading limits Investors in the plans are allowed by law to make changes to their investment holdings only twice a year (it used to be only once a year, but in 2015 that Internal Revenue Service restriction was expanded to twice a yearwhich is still a tough restriction, in some experts view) If there are sudden market movements and youve already made your twice-per-year exchange, your hands are tied, Mr Boswell says Groups providing information to What's In Your College Kitty? Average account size of '529' college-savings plans $20,000 15,000 10,000 5,000 2002 03 04 05 06 07 08 09 10 she says Theres a point, from a policy standpoint, where you make a judgment, like we did with retirement, that retirement security mattered, Ms Feirstein says Give poorer families a credit Another item on Ms Feirsteins wish list is a federal tax credit to encourage low- and moderate-income families to save money in 529s These are the families that have trouble putting away money in 529s because they arewiselysaving for their own retirement, which, unlike college, cant be financed with borrowing If someone came to me and said, I have X dollars to save, where should I put it? I would always tell them to save for retirement first, she says The deferred tax benefits currently available through 529s are helpful, but a more-immediate fed- 11 12 13 14 2015 THE WALL STREET JOURNAL Source: CSPN College Savings Plans Network investorssuch as the College Savings Plans Network, affiliated with state treasurershad campaigned for four permissible investment changes a year, though the College Savings Plans Network says it supported the modest expansion that was ultimately awarded last year Provide a longer menu The plans also dont offer owners as many investment options as they would have with a brokerage account, which makes some sophisticated investors chafe Each plan has a menu of investment options, often target-date funds that start with a heavy weighting of stocks and move toward bonds as the childs projected high-school graduation date approaches Some people feel it just doesnt give the right investment choices for them, says Keith Bernhardt, vice president of retirement and college MONTHLY MONITOR | WILLIAM POWER U.S.-Stock Funds Rose 1.6% in May, Still Clinging To a Year-to-Date Gain For mutual-fund investors, the market continues to perform just well enough to calm the nerves But most investors wont be seeing blockbuster gains in their 401(k)s if this slow pace continues The average diversified U.S.-stock mutual fund rose 1.6% in May, according to data from Thomson Reuters Corp.s Lipper unit, and the funds have a modest 1.9% gain for the year so far The good news is that the market has shaken off the poor start to the year, and is in positive territory, at least In April, stock funds had finally moved into the black for 2016, and in May they built slightly on those gains A better outlook for the U.S economy is helping the market Although the Federal Reserve says more interest-rate increases are likely if the economy keeps gaining strengthwith a move possible as soon as the Feds next policy meeting on June 14-15investors arent too spooked Gradual rate increases are also a sign the economy is doing better, many investors figure Bond funds were virtually unchanged for the month but are up for the year Funds focused on intermediate-maturity, investment-grade debt, the most commonly held type of fixed-income fund, eased 0.01% in May, leaving their year-to-date gain at 3.3% International-stock funds are trailing their U.S counterparts, on average They eased 0.1% last month and are down for the year, by a scant 0.13% Gold funds continue to draw attention Gold-oriented funds again had a big move, this time on the downside They fell 11% in May after soaring nearly 29% in April Gold, which pays no interest, tends to attract dollars when rates are low, since it has less competition from yield-bearing assets The gold-oriented sector is still up 63% for the year (see table on page R8) Mr Power is a Wall Street Journal news editor in South Brunswick, N.J Email him at william.power@wsj.com products at fund manager Fidelity Investments SAVING FOR COLLEGE | CHANA R SCHOENBERGER Leftover 529 Money A Q&A on college financing Change financial-aid calculations to exclude 529s Exceptions should be created so that college applicants who plan to go on to graduate school can have their 529 accounts excluded from calculations about whether they qualify for undergraduate aid, says Dominick Ferraro, founder and CEO of College Select in Greenville, S.C Aid isnt as available for graduate students as it is for undergrads, Mr Ferraro says Fellowships or assistantships available to grad students are extremely limited to the type of degree and to a particular student, he says Deferring use of a 529 plan until graduate school thus could be a good option for some Get the word out For Nancy Farmer, president of Private College 529 Plan, the major challenge facing 529s isnt regulatory, but rather a lack of public awareness Three out of four Americans dont know what a 529 is, an annual survey conducted by brokerage house Edward Jones found in May And that number has increased over time, starting at 63% in 2012 The result is that a helpful aid for college savings, the 529 plans, might be benefiting only some sophisticated Americans and bypassing many others who could use it This also points out an overarching problem with college savings, Ms Farmer says: Most families dont understand what college will cost, and they dont know how they will save the money She suggests visiting the nonprofit College Boards Big Future website to run cost calculators for various types of colleges The low awareness isnt because plan sponsors and state governments arent trying to educate parents, Mr Boswell says: A lot of people tune it out because its complicated. What are the chances of some of these changes getting through Congress? The momentum is usually for having more, not less, with 529s Early last year, President Barack Obama proposed, and then quickly dropped, an idea to curtail the tax benefits for 529s Instead, Congress made the popular plans even more alluring, by allowing computers as a qualified expense Rep Lynn Jenkins (R., Kan.), a legislator behind the bipartisan computer-expense change, says, These college-savings plans are already changing, and I believe we will continue to expand and enhance them. Ms Schoenberger is a writer in New York She can be reached at reports@wsj.com Summer Continued from the prior page far enough to include the decade of the 1930s, the Summer Rallys record does improve But not by enough to convince a statistician that there is anything special about the stock markets potential during the summer months It is also possible that the origin of the Summer Rally is more cynically based in Wall Streets need to generate commission income After all, the June-through-August period comes right in the middle of a six- Saving for college is on readers minds as graduation season progresses We again asked college-finance experts to answer readers questions, most of them centering on popular tax-advantaged savings accounts such as 529 plans and Coverdells There is money left over in the 529 I funded for my nephew Can I change the beneficiary to myself and use the money to study a foreign language at a university or language school? Yes, you can change the beneficiary to yourself or to any close relative of the original beneficiary, and you can study languages at a school thats eligible to receive 529 money, says James Canup, tax practice chairman at law firm Hirschler Fleischer in Richmond, Va Many eligible colleges and universities offer language classes (some even offer academic majors in foreign languages), so look for opportunities at a local college or university, says Mark Kantrowitz, publisher and vice president of strategy at college-scholarship search site Cappex.com If youre at an eligible school, you can take as few classes at a time as you like unless you want to use 529 money for housing, in which case youll have to attend at least half-time and work toward a degree or certificate, he says i i i Can a Coverdell account be used to pay for off-campus housing? Yes, with restrictions Coverdell funds can be used to pay off-campus housing expenses for a student who is enrolled in a degree or certificate program and who attends school at least half-time at a qualified college or university, says Mr Kantrowitz You can use the funds only up to the colleges official allowance for room and board A Coverdellunlike a 529can also be used for off-campus housing for elementary or secondary students, but only if the school requires or provides it, Mr Kantrowitz says i i i I understand that if I pay a grandchilds tuition directly to the institution, there is no tax consequence for me or my grandchild Does this apply only to tuition or does it include room and board? You are right: if you pay your grandchilds tuition directly to the school, the money is exempt from both gift taxes and generation-skipping taxes But the tax codes language is specific to tuition, so it doesnt apply to room and board or to other qualified expenses such as books, says Mr Canup Those expenses, paid on behalf of your grandchild, would still incur taxes if you had used up your $14,000 individual or $28,000 joint spousal gift- month stretch that historically has been unfavorable for the stock marketa pattern that explains the saying Sell in May and go away. In contrast to the Summer Rally, this Three-month rally potential at beginning of June is one of the weakest of the calendar 1 Jan Feb March April May June July Aug Sept Oct Nov Dec *Dow Jones industrials' average gain during month and two subsequent months; data since 1955 Source: www.hulbertratings.com THE WALL STREET JOURNAL Follow The Experts >> This Journal Report doesnt stop here Join us online with The Expertsa group of industry, academic and cultural thinkers who weigh in on the latest issues raised in this and future reports Read what they have to say at WSJ.com/Experts Posts featured throughout the week include: The One Ability Robo-Advisers Are Still Missing, by Andrew W Lo, professor at MIT Sloan School of Management, director of the MIT Laboratory for Financial Engineering and chief investment strategist at AlphaSimplex Group Why Investors Should Be Wary of Crowdfunded Securities, by Micah Hauptman, the financial-services counsel for the Consumer Federation of America Why I Use Savings Bonds to Fund My Emergency Account, by Henry Bud Hebeler, former president of the aerospace division of Boeing and board member of MITs Sloan School And on page R9 of this report, you can read excerpts of some earlier online discussions The Experts offer views on fund-manager conflicts, retirement and lessons from the Depression i i Can 529 funds be used for any of the costs associated with searching for and applying to college? How about travel costs to visit prospective colleges, testing and application fees? No, the IRS is clear on this: Precollege costs dont qualify for 529 funds, Mr Kantrowitz says i i i Salesmen often tell parents to sell taxable assets and buy annuities to better qualify for financial aid Is this worth doing? Annuities usually arent a smart strategy for college savings, says Mr Canup If you sell assets to buy an annuity, youll pay taxes on any gains, while if you take money out of a 529 plan for qualified educational expenses, gains are tax-free, he says With an annuity, you would typically borrow money from the policy if you wanted to pay for college; that amount is owed with interest and must be repaid If instead you take a payout from your policy, youll have to pay taxes on the distribution above the premiums you paid, and you may also owe a surrender charge, in addition to a 10% penalty for withdrawing before age 59ẵ And dont forget, Mr Canup says, the salesman will also earn a nice premium, which is reflected in the amount you pay for the annuity. This may all be for naught as far as aid is concerned Generally, families who have sufficient assets to lose eligibility for need-based aid have sufficient income to lose aid eligibility even if they had no assets, Mr Kantrowitz says He suggests speaking with a fee-only investment adviser who doesnt sell annuities or life insurance about the pros and cons of such an investment before you buy it An annuity salesman doesnt have a fiduciary responsibility to you, Mr Kantrowitz notes Also, although annuities dont figure into the Fafsa, most private schools and private sources of financial aid factor in annuities and other excluded assets when making financial-aid calculations, Mr Canup says That means an annuity wont make those assets disappear for aid purposes The Journal Report welcomes your commentsby mail, fax or email Letters should be addressed to Lawrence Rout, The Wall Street Journal, 4300 Route North, South Brunswick, N.J 08852 The fax number is 609-520-7256, and the email address is reports@wsj.com THE JOURNAL REPORT For advertising information please contact Katy Lawrence at 212-416-4119 or katy.lawrence@wsj.com Sell in May pattern enjoys strong statistical support The Summer Rally, then, could serve as a superficially plausible rationale for why investors should instead stay and not go away Lesson learned Stock market's three-month rally potential* i HAVE A COLLEGE-FINANCE QUESTION IN GENERAL? Well answer them in future Investing in Funds & ETFs reports Email reports@wsj.com Summer Rallyor Summer Doldrums? 4% tax reporting exemption for the year And beware: Tuition payments that people other than the students parents make are factored into Fafsa financial-aid eligibility and count as cash support to the student when colleges compute financial aid, Mr Kantrowitz says I suppose there is a roundabout way in which the Summer Rally can help us to become better investors: by teaching us the need to subject our hunches to rigorous scrutiny The next time your broker or adviser refers to some pattern or another as a reason to make changes to your portfolio, ask him or her whether that pattern can be shownat standard levels of statistical significanceto be more than just random noise Most of what Wall Street talks about cant pass this test, which is one reason why so few beat the market over time REPRINTS AVAILABLE FULL PAPER: The entire Wall Street Journal issue that includes the Investing in Funds & ETFs report can be obtained for $6.50 a copy Order by: Phone: 1-800-JOURNAL Fax: 1-413-598-2259 Mail*: Investing in Funds & ETFs Dow Jones & Co Attn: Back Copy Department 84 Second Ave Chicopee, Mass 01020-4615 JOURNAL REPORT ONLY: Bulk orders of this Journal Report section only may take up to six weeks for delivery and can be obtained for $5 for one copy, $2 for each additional copy up to 50, and 25 cents for each copy thereafter Order by: Email: JournalReports@dowjones.com Mail*: Dow Jones LP Attn: Mailing Operations Dept 84 Second Ave Chicopee, Mass 01020-4615 REPRINT OR LICENSE ARTICLES: To order reprints of individual articles or for information on licensing articles from this section: Online: www.djreprints.com Phone: 1-800-843-0008 Email: customreprints@dowjones.com *For mail orders, not send cash Checks or money orders are to be made payable to Dow Jones & Co THE WALL STREET JOURNAL Monday, June 6, 2016 | R3 This is what beating 100%* of your peers looks like The Fidelityđ Capital & Fidelityđ Capital & Income Fund (FAGIX) vs High Yield Bond Peer Group Income Fund has beaten Hypothetical growth of $10,000 during managers tenure (07/15/200303/31/2016)1 an impressive number of its $30,000 peers over the 10-year period, $25,000 ranking #1 out of 365 in the Fidelityđ Capital & Income Fund ($27,348) High Yield Bond Peer Group.* High Yield Bond Peer Group ($20,531) $20,000 Portfolio Manager Mark Notkin and the deep bench of Fidelity $15,000 analysts have the exibility to invest across the entire capital structure, from bank loans $10,000 to common stocks, which has created an attractive $5,000 combination of income and capital appreciation Yet another example of the $0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 power of active management Manager Tenure Expense Ratio Average Annual Total Returns as of 03/31/2016 year year year 10 year 07/15/2003 Fidelityđ Capital & Income Fund 4.16% 3.85% 4.75% 7.51% 8.21% High Yield Bond Peer Group3 4.17% 1.06% 5.55% 3.84% 0.72% Performance data shown represents past performance and is no guarantee of future results Investment return and principal value will uctuate, so investors may have a gain or loss when shares are sold Current performance may be higher or lower than what is quoted, and investors should visit Fidelity.com/performance for most recent monthend performance M O R N I N G S T A Rđ R A T I N G S AS OF 03/31/2016, MORNINGSTAR CATEGORY: HIGH YIELD BOND Mark Notkin Portfolio Manager Fidelityđ Capital & Income Fund OVERALL OUT OF 646 FUNDS YEAR #5 OUT OF 646 FUNDS YEAR #114 OUT OF 530 FUNDS 10 Y E A R #1 OUT OF 365 FUNDS* Past performance is no guarantee of future results 800.FIDELITY | Fidelity.com/CapIncome Or call your Advisor Before investing in any mutual fund, consider the investment objectives, risks, charges, and expenses Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information Read it carefully Total returns are historical and include change in share value and reinvestment of dividends and capital gains, if any Cumulative total returns are reported as of the period indicated Life of fund gures are reported as of the commencement date to the period indicated Stock markets are volatile and can uctuate signicantly in response to company, industry, political, regulatory, market, or economic developments Investing in stock involves risks, including the loss of principal The securities of smaller, less well-known companies can be more volatile than those of larger companies Lower-quality bonds can be more volatile and have greater risk of default than higher-quality bonds Interest rate increases can cause the price of a debt security to decrease *Percent Rank in Category is the funds total-return percentile rank relative to all funds that have the same Morningstar Category The highest (or most favorable) percentile rank is and the lowest (or least favorable) percentile rank is 100 The top-performing fund in a category will always receive a rank of Percent Rank in Category is based on total returns, which include reinvested dividends and capital gains, if any, and exclude sales charges The Overall Morningstar RatingTM for a fund is derived from a weighted average of the performance gures associated with its 3-, 5-, and 10-year (if applicable) Morningstar Rating metrics For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a funds monthly performance (including the effects of sales charges, loads and redemption fees), placing more emphasis on downward variations and rewarding consistent performance The top 10% of the funds in an investment category receive stars, the next 22.5% receive stars, the next 35% receive stars, the next 22.5% receive stars, and the bottom 10% receive star (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) â 2016 Morningstar, Inc All rights reserved The Morningstar information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or redistributed; and (3) is not warranted to be accurate, complete or timely Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information Fidelity does not review the Morningstar data and, for mutual fund performance, you should check the funds current prospectus for the most up-to-date information concerning applicable loads, fees and expenses The chart above illustrates the performance of a hypothetical $10,000 investment made in the fund and a benchmark since the inception date of the product Benchmark returns include reinvestment of capital gains and dividends, if any, but not reect any fees or expenses It is not possible to invest in an index This chart is not intended to imply any future performance of the investment product Expense Ratio is the total annual fund operating expense ratio from the funds most recent prospectus The Morningstar category average is the average return for the peer group based on the returns of each individual fund within the group, for the period shown This average assumes reinvestment of dividends Past performance is no guarantee of future results Fidelity Brokerage Services LLC, Member NYSE, SIPC â 2016 FMR LLC All rights reserved 726062.7.0 THE WALL STREET JOURNAL R4 | Monday, June 6, 2016 JOURNAL REPORT | INVESTING IN FUNDS & ETFS ASK ENCORE | GLENN RUFFENACH How the Largest Funds Fared What Features a Home Needs So You Can Age in Place The Largest Stock Mutual Funds Aging in place is a hot topic Three resources can help a great deal Start with a report from the Joint Center for Housing Studies at Harvard University: Housing Americas Older Adults: Meeting the Needs of an Aging Population. (Go to jchs.harvard.edu and highlight: Research.) The study identifies five features, in particular, that make for safe and accessible homes: no-step enRatio of homes tries; single-floor livwith at least two ing; switches and safety features outlets reachable at for older adults any height; extrawide hallways and doors; and lever-style door and faucet handles (The good news: Almost 90% of existing homes have at least one of these features, the study notes The bad news: Only 57% have more than one.) Next, check out the National Association of Home Builders and its Aging-in-Place Remodeling Checklist. (Go to nahb.org and search for: aging in place.) Here, youll find more than 100 suggestions (including eight for entryways alone) that can help homeowners age 50-plus live safely, independently and comfortably. Finally, theres the HomeFit Guide from AARP, the Washington-based advocacy group (Go to aarp.org and search for: HomeFit.) This 26-page report, filled with diagrams, explains how to create a lifelong home, one thats suitable for anyone, regardless ofage or physical ability. Well worth your time 57% i i i For almost two decades Ive had my investments of over seven figures handled by the same adviser Im not too happy with the total results or the fees What is your opinion of splitting my holdingssay, 50/50 or onethird/two-thirdswith another adviser? Its wise, at the least, to consider a change (Many people, even in the face of excessive fees or poor results, are reluctant to fire an adviser, typically because they have formed a personal connection.) But this particular solutiondividing your assetsisnt the best of ideas To start, you could end up paying more in fees than you are now, says Michael Kitces, director of wealth management at Pinnacle Advisory Group Inc in Columbia, Md Breaking your large nest egg into two (relatively) small nest eggs means you might not benefit from the discounted fees that some advisers offer to clients with sizable holdings Perhaps more important: How much time you plan to give the new adviser? Six months? A year? More? If you split your holdings just as markets are jumping higher (or tanking), your new advisers performance, especially in the short term, might simply be a matter of good (or bad) timing, rather than a reflection of his or her actual abilities Anddo you plan to tell the new adviser about all your assets? Investors who split their holdings often are hesitant to give a new adviser a full picture of their portfolio (wanting, first, to see how well the new adviser performs with a piece of that portfolio) Such an omission is asking for trouble, says Mike Piper, a certified public accountant in Manitou Springs, Colo., and author of the Oblivious Investor blog Take taxes If the new adviser knows about some, but not all, of the investors accounts and holdings, recommendations about which type of account (Roth, tax-deferred or taxable) to spend from (or contribute to) will be poorly reasoned, Mr Piper says In short, splitting your holdings tends to be problematic Keeping half your portfolio with an adviser who is charging too much and not delivering value is still half too much, Mr Kitces says One alternative: meeting with a financial planner who charges by the hour Such a meeting would allow you to get a fully informed second opinion without having to move any portion of your portfolio, Mr Piper says It also would help minimize fees: Pay the adviser as needed for guidance, then hire a low-cost portfolio management firm to implement the recommendations i i i I understand that I can get Social Securitybut can change my mind in the first year and return the money Is that rule still valid? If so, and if I decide to that, what would my monthly benefit be? Would it be the benefit I received when I first applied for Social Security, or would the benefit be based on my new application date? Yes Still valid But, as always, there are wrinkles If you begin collecting Social Security retirement benefits, and then have second thoughts about your decision, you can withdraw your Social Security claim and reapply at a future date, says William Jarrett, a public-affairs specialist with the Social Security Administration The catch: This option is available only for the first 12 months after you become entitled to benefits After that, its off the table (And you can Months allowed this only once in your to withdraw a lifetime.) requested start If you decide to of Social Security withdraw your application, you must repay all the benefits you and your family received based on your retirement application, Mr Jarrett notes That includes any benefits your spouse or children received, as well as money withheld from your checks, including Medicare premiums Whats more, anyone who received benefits based on your application must consent in writing to the withdrawal After the withdrawal has been approved, you must file a new application to receive retirement benefitsand that payment amount will be based on the new application date 12 Mr Ruffenach is a retired Wall Street Journal reporter and editor living in Georgia Email your questions and comments to askencore@wsj.com Launch date Performance (%) May YTD 1-year 0.09 0.07 0.05 0.33 0.05 0.20 0.07 0.15 0.40 0.09 01/22/93 05/15/00 05/24/01 08/14/01 09/07/10 03/10/99 09/22/03 03/04/05 11/18/04 07/20/07 1.8 1.8 1.8 0.9 1.8 4.4 0.02 3.4 5.8 0.5 3.5 3.5 3.4 1.0 3.6 1.0 3.4 2.6 13.9 0.1 1.6 1.7 0.1 9.7 1.7 1.5 2.9 18.4 1.3 9.0 4,810.7 1,361.4 2,186.2 3,170.6 2,570.9 1,228.8 32,742.1 94,346.4 674.5 596.0 0.12 0.06 0.20 0.15 0.20 0.13 0.20 0.69 0.08 0.09 09/23/04 2.4 04/03/07 0.02 05/22/00 1.9 07/22/02 0.4 05/22/00 1.5 05/22/00 2.3 05/22/00 2.3 04/07/03 3.8 01/26/04 1.2 04/21/06 1.0 6.2 3.5 1.7 5.8 5.3 7.5 2.3 2.0 4.4 5.7 10.6 3.0 1.4 4.0 0.2 0.5 5.9 18.0 1.3 3.2 20.75 18.88 18.00 17.98 17.11 16.55 15.76 15.33 15.31 15.06 510.3 727.2 1,084.5 588.8 32,365.9 3,972.4 2,119.5 43,776.1 1,851.5 11,986.8 0.08 0.09 0.13 0.20 0.15 0.25 0.47 0.48 0.15 0.50 01/26/04 04/03/07 05/22/00 12/04/03 12/16/98 04/28/95 03/26/07 03/12/96 05/15/00 04/04/07 2.5 0.1 1.7 0.7 2.0 2.3 1.6 1.0 1.7 0.4 2.0 1.6 5.6 4.0 0.1 7.3 3.7 3.3 3.5 6.5 0.5 1.4 0.4 1.2 1.4 0.7 5.4 8.6 0.7 2.5 14.84 13.98 13.84 13.82 13.68 13.64 13.30 13.24 13.03 12.78 994.9 15,246.5 712.1 323.3 4,189.7 477.2 558.5 3,541.7 2,318.3 905.0 0.39 0.15 0.09 0.08 0.12 0.18 0.35 0.15 0.13 0.59 11/03/03 12/16/98 11/10/06 01/26/04 03/04/05 05/22/00 11/08/05 10/18/11 03/02/07 12/31/09 1.0 0.8 1.5 1.9 0.5 2.7 1.4 1.6 1.0 2.7 11.1 11.7 6.4 3.6 0.1 1.9 11.9 6.8 0.8 0.8 9.4 12.0 4.6 2.6 9.7 2.5 11.0 9.5 11.2 9.4 Assets ($ billions) SPDR S&P 500 ETF iShares Core S&P 500 ETF Vanguard Tot Stk Mkt Idx ETF iShares MSCI EAFE ETF Vanguard 500 Index ETF PowerShares QQQ Nasdaq 100 iShares Core US Aggregate Bond ETF Vanguard FTSE Emerging Markets ETF SPDR Gold Shares Vanguard FTSE Developed Markets ETF SPY IVV VTI EFA VOO QQQ AGG VWO GLD VEA 184.05 73.15 60.74 59.54 45.38 36.97 36.72 35.01 33.84 32.49 108,927.3 3,583.9 2,570.8 25,404.3 584.2 24,005.4 3,368.9 23,613.8 8,179.1 14,875.8 Vanguard REIT ETF Vanguard Total Bond Market ETF iShares Russell 1000 Growth ETF iShares iBoxx $ Inv Grade Cor B ETF iShares Russell 1000 Value ETF iShares Core S&P Mid-Cap ETF iShares Russell 2000 ETF iShares MSCI Emerging Markets Index Fund Vanguard Value ETF Vanguard Div Appreciation ETF VNQ BND IWF LQD IWD IJH IWM EEM VTV VIG 31.40 30.40 29.41 28.33 27.73 27.52 26.38 21.67 21.42 20.92 Vanguard Growth ETF Vanguard Short-Term Bd Idx ETF iShares Core S&P Small-Cap ETF iShares TIPS Bond ETF Financial Select Sector SPDR SPDR S&P MidCap 400 ETF iShares US Preferred Stock iShares MSCI Japan Index Fund iShares Russell 1000 ETF iShares iBoxx $ Hi Yld Corp Bd ETF VUG BSV IJR TIP XLF MDY PFF EWJ IWB HYG DVY XLE VYM VO VGK IVW SDY USMV VEU HEDJ iShares Select Dividend ETF Energy Select Sector SPDR Vanguard High Dividend Yield ETF Vanguard Mid Cap ETF Vanguard FTSE Europe ETF iShares S&P 500 Growth Index Fund SPDR S&P Dividend ETF iShares Edge MSCI Min Vol USA ETF Vanguard FTSE All-World ex-US ETF WisdomTree Europe Hedged Equity Volume (000s) Expense ratio May 1-year Vanguard TSM Idx;Adm Vanguard 500 Index;Adm Vanguard Tot I Stk;Inv Vanguard Instl Indx;Inst SPDR S&P 500 ETF American Funds Gro;A American Funds EuPc;R-6 Fidelity Contrafund American Funds CIB;A American Funds Inc;A VTSAX VFIAX VGTSX VINIX SPY AGTHX RERGX FCNTX CAIBX AMECX 423.36 229.24 204.69 200.58 185.35 140.62 123.02 106.52 99.17 97.06 1.8 1.8 1.0 1.8 1.8 2.1 0.4 1.7 0.3 0.6 0.2 1.7 10.8 1.7 1.6 0.1 9.4 1.3 1.0 0.4 10.5 11.0 1.0 11.0 10.9 11.1 3.4 11.5 5.4 6.6 11.1 11.6 0.4 11.6 11.5 10.9 2.6 11.4 6.1 7.7 7.5 7.4 2.0 7.4 7.3 7.1 N.A 8.4 5.3 6.2 Fidelity Sp 500 Idx;Adv American Funds Bal;A Vanguard Wellington;Adm American Funds CWGI;A American Funds Wash;A Franklin Cust:Inc;A American Funds ICA;A American Funds FInv;A iShares:Core S&P 500 Vanguard Md-Cp Idx;Adm FUSVX ABALX VWENX CWGIX AWSHX FKINX AIVSX ANCFX IVV VIMAX 94.47 90.40 89.25 82.19 78.46 77.69 75.06 74.28 71.28 67.56 1.8 0.5 0.8 0.2 0.9 0.5 0.5 1.4 1.8 1.9 1.7 3.0 2.0 5.0 2.0 4.8 1.1 2.1 1.7 2.6 11.0 7.9 7.6 5.6 9.6 2.7 10.8 10.3 11.0 10.4 11.6 9.3 8.6 5.8 11.0 4.8 10.8 10.3 11.6 10.0 7.4 7.0 7.4 5.4 6.9 5.5 6.6 7.3 7.4 7.8 iShares:MSCI EAFE ETF American Funds NPer;A Vanguard FTSE Dev Mk ETF Vanguard REIT Idx;ETF Vanguard Sm-Cp Idx;Adm Dodge & Cox Intl Stock Dodge & Cox Stock Vanguard FTSE Em Mkt ETF Vanguard Gro Idx;ETF First Eagle:Global;I EFA ANWPX VEA VNQ VSMAX DODFX DODGX VWO VUG SGIIX 60.07 58.68 58.13 56.49 56.39 55.23 54.58 52.42 49.66 48.08 0.9 0.9 0.5 2.4 1.9 0.9 2.3 3.4 2.5 0.9 9.7 3.1 9.0 10.6 4.0 18.2 3.9 18.4 0.5 1.2 1.9 7.5 2.5 10.2 8.5 0.5 9.3 4.4 12.0 5.8 2.0 7.6 2.3 10.2 9.4 1.4 10.5 4.8 12.0 6.1 1.8 6.8 N.A 7.4 7.7 2.6 5.4 3.0 8.7 7.2 Vanguard Health Care;Adm American Funds AMCP;A BlackRock:Gl Alloc;I Vanguard Windsor II;Adm Vanguard PRIMECAP;Adm Vanguard Wellesley;Adm Vanguard Ext Mk Id;Inst+ T Rowe Price Gro Stk Harbor:Internatl;Inst Vanguard Value Idx;ETF VGHAX AMCPX MALOX VWNAX VPMAX VWIAX VEMPX PRGFX HAINX VTV 47.88 47.49 47.33 45.41 45.03 44.94 43.70 43.50 40.76 40.28 2.7 1.7 0.5 1.2 3.1 0.6 1.8 2.1 0.7 1.2 5.2 1.5 5.3 2.1 0.2 5.0 5.9 1.4 11.7 1.3 18.6 11.5 3.0 8.1 12.8 6.3 8.2 12.8 0.5 9.9 17.2 11.6 3.4 10.1 12.5 7.5 9.0 12.3 1.1 10.8 11.9 7.9 5.4 6.2 9.3 7.5 N.A 8.7 3.9 6.4 Fidelity Low-Prcd Stk Vanguard Ins T StMk;Ins+ Fidelity Gro Company MFS Value;I American Funds Mut;A PowerShares QQQ Trust SPDR Gold Fidelity Sp Tot Mk;Adv T Rowe Price BC Gro Vanguard Tgt Ret2025;Inv FLPSX VITPX FDGRX MEIIX AMRMX QQQ GLD FSTVX TRBCX VTTVX 40.04 39.99 37.06 36.77 36.73 36.25 33.23 32.02 30.74 30.33 0.9 1.8 3.5 1.7 1.2 4.4 5.8 1.8 2.6 0.5 3.8 0.3 2.5 3.1 1.7 1.5 1.3 0.1 0.3 1.4 8.2 10.6 12.8 10.6 9.5 16.2 5.0 10.4 13.5 6.2 9.6 11.2 12.1 11.4 10.3 15.0 5.0 11.1 13.3 6.6 7.8 7.6 10.0 7.6 7.2 11.9 6.0 7.5 9.1 5.7 Ticker Assets ($ Billions) May 1-year Vanguard Tot Bd;Adm Vanguard Tot Bd II;Inv PIMCO:Tot Rtn;Inst Met West:Total Return;I DoubleLine:Tot Rtn;I PIMCO:Income;Inst Vanguard Tot Itl BI;Inv Vanguard Sh-Tm Inv;Adm Templeton Gl Bond;Adv Vanguard Int-Tm TxEx;Adm VBTLX VTBIX PTTRX MWTIX DBLTX PIMIX VTIBX VFSUX TGBAX VWIUX 161.34 98.82 87.13 75.63 58.78 57.86 57.58 54.76 49.97 49.83 0.02 0.1 0.3 0.01 0.1 0.7 0.7 0.01 1.0 0.1 3.1 2.9 2.0 2.2 2.6 2.8 4.4 2.1 6.2 5.4 2.8 2.7 2.1 2.9 3.2 4.5 4.5 2.0 0.7 3.7 3.3 3.1 3.4 4.5 4.9 7.8 N.A 2.2 1.4 4.5 4.9 N.A 6.1 6.7 N.A N.A N.A 3.7 6.6 4.6 Dodge & Cox Income Vanguard Sh-Tm Bd;ETF iShares:Core US Agg Bd Lord Abbett Sh Dur;F JPMorgan:Core Bond;R6 American Funds Bond;A T Rowe Price New Inc iShares:iBoxx $IG Corp Fidelity Str Adv Cre Inc Vanguard GNMA;Adm DODIX BSV AGG LDLFX JCBUX ABNDX PRCIX LQD FPCIX VFIJX 44.85 44.74 35.76 34.97 30.55 30.19 29.05 28.68 28.18 26.41 0.2 0.1 0.02 0.1 0.1 0.3 0.1 0.4 0.1 0.2 1.8 1.4 2.9 1.3 3.1 2.4 2.5 4.0 2.3 2.7 2.9 1.3 2.9 1.8 2.8 2.5 2.5 4.0 2.6 3.3 3.6 1.5 3.3 2.8 3.5 3.2 3.2 5.3 3.5 3.0 5.4 N.A 4.8 N.A 5.4 3.6 5.1 6.1 N.A 5.0 Vanguard Int-Tm Bd;Adm Vanguard Int-Tm Inv;Adm Vanguard Infl-Prot;Adm Fidelity Total Bond Fidelity Srs Inv Gd Bd Fidelity Sp US B Id;FA Vanguard Ltd-Tm TxEx;Adm Vanguard HY Corp;Adm iShares:iBoxx $HY Corp VBILX VFIDX VAIPX FTBFX FSIGX FSITX VMLUX VWEAX HYG 25.44 25.38 23.88 23.41 23.04 22.32 22.30 18.41 17.73 0.2 0.2 0.7 0.04 0.1 0.04 0.1 0.04 0.4 3.7 3.9 1.4 2.4 2.8 3.1 2.1 0.3 2.5 3.2 3.6 0.3 2.9 2.8 2.9 1.4 3.4 1.7 4.4 4.6 2.3 3.7 3.5 3.3 1.7 5.6 4.4 6.1 6.0 4.4 5.3 N.A N.A 2.8 6.5 N.A The Largest Bond Mutual Funds Fund 10-year Total Return (%) Annualized 3-year 5-year 10-year Mutual-Fund Yardsticks: How Fund Categories Stack Up Performance figures are total returns for periods ended May 31; for largest exchange-traded funds and other portfolios, ranked by asset size Symbol Assets ($ billions) Note: For funds with multiple share classes, only the largest is shown N.A.: Not applicable; fund is too new or data not available Tracking Exchange-Traded Portfolios Fund Total Return (%) Annualized 3-year 5-year Ticker Fund Also: How many financial advisers should you use, and second thoughts on Social Security Were debating whether to move in retirement or remodel our existing home In either case, were trying to figure out what features, at a minimum, we should look for in a new houseor add to our current houseso that we can stay in our home as we get older Does the housing industry have any guidelines or requirements for retirees? Data provided by Performance numbers are total returns (changes in net asset values with reinvested distributions) as of May 31; assets are as of April 29 All data are final *Expense charge is a maximum of cents a share Assets are estimated N.A.= Not applicable, fund is too new Note: Total returns are based on the change in the net asset values, not changes in market prices Net asset values can vary from market prices, which therefore can reflect a premium or discount to the net asset values Source: Thomson Reuters All returns are for periods ended May 31 All data are final Investment objective May Perfomance (%) YTD 1-yr 5-yr* Diversified stock & stock/bond funds Large-Cap Core Large-Cap Growth Large-Cap Value Midcap Core Midcap Growth Midcap Value Small-Cap Core Small-Cap Growth Small-Cap Value Multicap Core Multicap Growth Multicap Value Equity Income S&P 500 Funds Specialty Divers Equity Balanced Stock/Bond Blend Avg U.S Stock Fund Investment objective May Performance (%) YTD 1-yr 5-yr* World stock funds 1.6 2.4 1.3 1.7 2.4 1.5 1.7 2.5 0.9 1.4 2.2 0.9 1.2 1.7 0.1 0.6 0.5 1.6 2.5 0.9 3.4 4.3 0.9 6.1 3.5 1.1 5.5 2.4 0.9 4.2 5.1 3.3 0.2 2.5 2.3 1.9 0.9 9.9 1.2 10.5 2.9 9.0 4.2 8.1 6.4 7.8 3.0 8.8 4.7 7.4 8.9 6.8 3.4 7.4 3.5 9.1 4.2 9.1 3.6 8.5 0.8 8.7 1.2 11.1 3.6 3.7 1.8 5.6 3.1 4.6 3.8 7.8 4.2 1.1 3.3 1.3 1.4 1.4 2.0 1.2 5.6 8.5 12.8 12.0 2.7 4.4 1.9 8.6 0.3 6.1 14.6 16.0 4.2 8.6 18.5 5.5 3.6 7.3 7.9 9.2 Sector stock funds Science & Technology Telecommunication Health/Biotechnology Utility Natural Resources Sector Real Estate Data provided by Global International (ex-U.S.) European Region Emerging Markets Latin American Pacific Region Gold Oriented Global Equity Income International Equity Income 0.8 0.1 0.2 2.5 7.8 0.1 11.1 0.3 1.1 1.7 0.1 0.8 2.6 13.7 2.2 62.7 4.0 1.9 0.01 0.01 0.01 0.6 0.01 unch 0.04 0.5 0.1 1.5 unch 1.3 5.0 3.3 3.1 3.3 3.4 3.9 5.8 1.9 5.0 3.3 0.6 2.6 2.1 0.4 2.1 2.8 0.9 2.2 1.6 0.3 0.1 1.4 4.2 3.1 1.5 3.1 3.3 4.5 4.2 2.6 0.5 2.6 -0.1 0.01 0.4 0.8 0.8 2.0 2.7 3.9 0.4 4.4 5.6 7.2 0.6 3.6 5.3 7.3 4.9 5.2 9.4 1.5 7.7 2.7 15.3 4.4 14.1 12.6 15.4 1.0 19.4 15.9 3.6 4.7 9.1 0.3 Taxable-bond funds Short-Term Long-Term Intermediate Bond Intermediate U.S Short-Term U.S Long-Term U.S General U.S Taxable High-Yield Taxable Mortgage World Bond Avg Taxable-Bond Fund** Municipal-bond funds Short-Term Muni Intermediate Muni General & Insured Muni High-Yield Muni Stock & Bond Benchmark Indexes All total return unless noted Investment objective May Perfomance (%) YTD 1-yr 5-yr* Large-cap stocks DJIA S&P 500 3.3 3.6 1.4 10.0 1.7 11.7 2.3 7.5 0.4 10.0 5-yr* DJ U.S TSM Growth DJ U.S TSM Value 2.0 1.7 1.1 5.7 0.03 3.5 3.0 3.3 0.3 2.7 5.9 5.1 1.5 1.5 2.8 0.8 2.3 11.5 2.7 10.8 Barclays Agg Bond Municipal bonds 2.3 2.3 6.0 7.9 Broad stock market DJ U.S Total Stock Market Russell 3000 Performance (%) YTD 1-yr Taxable bonds Small-cap stocks Russell 2000 May Stock indexes 0.5 1.8 Midcap stocks S&P MidCap 400 Investment objective Barclays Muni Bond International stocks 1.8 1.8 3.4 3.4 0.1 11.1 0.2 11.1 MSCI EAFE (price return) Dow Jones World (ex.-U.S.) *Annualized Diversified funds only **Excludes money-market funds Europe, Australia, Far East 12.2 0.8 10.4 0.6 THE WALL STREET JOURNAL Monday, June 6, 2016 | R5 JOURNAL REPORT | INVESTING IN FUNDS & ETFS PORTFOLIO STRATEGY The Problem With Low-Vol Stock Funds Investors think theyre eliminating painful turbulence They are wrong BY JOHN COUMARIANOS LOW-VOLATILITY STOCK funds have taken in gobs of money over the past year The iShares Edge MSCI Min Vol USA fund (USMV), the biggest low-volatility exchange-traded fund, had about $8 billion in assets early this year Now it has more than $13 billion, while other stock funds bleed assets Clearly, investors want stock exposure without the gyrations that normally come with it And they think low-vol funds are how to get it That might be wishful thinking A low-vol strategy, like other smart-beta strategies, tries to beat the stock market by picking stocks based on a factor that usually breaks the link between a stocks size and its position in a plain market index In other words, the strategy underweights the most popular stocks But expecting a low-volatility stock portfolio to eliminate most of the painful turbulence that stocks deliver isnt realistic If you want a serious cushion for volatility in your portfolio, you need some bonds Low-vol is still volatile The low-volatility investment strategy owes its existence to Robert Haugen, a finance professor who died in 2013 Prof Haugen spent his career arguing against the idea that more volatility was necessary to achieve greater reward According to the theory, Tesla Motors may change the world with new technology and is fun to talk about at parties, but Procter & Gamble will put cash in your pocket more reliably by selling toothpaste and laundry detergent And Prof Haugen had backtests to prove it But he didnt think low-volatility stocks were substitutes for bonds He thought the stock market was inefficient, and, like Benjamin Graham, the founder of value investing, surmised that he could beat it over time by avoiding the most volatile, glamorous stocks Low-volatility stocks are still stocks, after all, and investors may be forgetting how volatile even boring stocks can be USMVs top 25 holdings, representing 34% of its portfolio, fell on average by nearly 17% in 2008 during the financial crisis Thats better than the 37% swoon of the S&P 500, but still painful Low-volatility stocks also might be expensive now The top 25 holdings of USMV have an average star rating of 2.7 from Morningstar Morningstar rates stocks on a scale of one star, meaning a stock is expensive, through five, meaning a stock is cheap A three-star stock means it currently trades at a price close to an analysts fair-value estimate of its underlying business So an average rating of 2.7 stars means a group of stocks is a bit expensive No firms analysis is perfect, but certainly nothing in Morning- No Respite Despite the ETFs low-volatility mandate, the top 25 holdings of iShares Edge MSCI Min Vol USA fund declined nearly 17% during the 2008 nancial crisis STOCK MORNINGSTAR RATING 2008 RETURN Newmont Mining -15.83% AT&T -27.57 Johnson & Johnson -7.61 McDonalds 8.33 Public Storage 12.11 Verizon -17.74 Procter & Gamble -13.69 General Mills 9.47 PepsiCo -25.67 ExxonMobil -13.14 Paychex -24.08 ADP -8.58 Becton Dickinson -16.76 Consolidated Edison -15.52 Southern Co -0.23 AvalonBay -29.94 Duke Energy -21.12 Berkshire Hathaway -31.78 UPS -19.46 Coca Cola -23.76 Henry Schein -40.24 Accenture -7.60 Facebook N.A Pzer -16.45 UnitedHealth Group -54.24 AVERAGE -16.71 Source: Morningstar 2.68 stars THE WALL STREET JOURNAL stars analysis indicates that low-volatility stocks are cheap Get stability from bonds, cash This means investors seeking to reduce a portfolios volatility, as always, must consider cash and bonds No doubt, this is harder than it has been for much of history The 10year U.S Treasury note is yielding less than 2% and might not allow its owner to keep up with inflation Cash is yielding nothing, and, for now, is trailing inflation and reducing an investors purchasing power Nevertheless, part of a portfolio in low-returning but stable bonds is better than one fully invested in stocks that causes an investor to panic and sell after a market decline Investors should remember that core bond portfolios have produced standard deviations of returns of around 4% for the past quarter-century That means their returns have mostly fallen in a range of 4% from their average return By contrast, according to a 2013 research paper from Newport Beach, Calif., asset manager Research Affiliates, U.S low-volatility stocks had a standard deviation of around 11% for the 20-year period starting in 1993 Thats lower than the 15% standard deviation that large-cap U.S stocks produced, but it is still gut-wrenching compared with bonds For more perspective, low-volatility stocks have been even more volatile than junk bonds, according to the Research Affiliates paper Its true that investment-grade bonds may be more volatile in the future than they have been over the past 30 years or so After all, interest rates have mostly done nothing but decline since the early 1980s, giving bonds the most favorable environment possible, since prices rise when rates fall and vice versa But a portfolio of bonds whose maturity is of moderate length and whose credit quality is high should still have far greater stability than a low-volatility stock portfolio Mr Coumarianos, a former Morningstar analyst, is a writer in Laguna Hills, Calif He can be reached at reports@wsj.com SPOTLIGHT CLEARBRIDGE APPRECIATION THIS FUND IS AS FAR FROM VEGAS AS THEY COME Like the fabled tortoise, managers of the $5.6 billion ClearBridge Appreciation Fund (SHAPX) outperform with a steady hand The managers are cautious and patient, says Morningstar Inc analyst Andrew Daniels The funds goal is to modestly beat the S&P 500 index, but with significantly less risk, so you might expect it to lag in strong bull markets, but it should continue to deliver during a full market cycle, he says ClearBridge Appreciation has gained 5.9% on average annually over the 15 years through May 31, outpacing the S&P 500, which has risen 5.6%, and its largeblend peers, which have gained 5.1% on average annually, according to Morningstar This year through May, the fund has gained 3.4%, while the S&P 500 has risen 3.6% and its peers have gained 2.4% on average Co-managers Scott Glasser and Michael Kagan have run the fund together since 2010 The two buy mostly high-quality stocks of blue-chip companies with dominant market positions, healthy balance sheets and shareholder-oriented management teams, says Mr Daniels The funds biggest holdings tend to account for just 2% to 4% of assets, and its biggest sectors bets tend to vary just percentage points in either direction from the S&P 500 index, says Mr Glasser As of April, its biggest holdings were Microsoft Corp at 3.4%, Comcast Class A at 3.5% and Home Depot Inc at 3.4% Daisy Maxey STRENGTH IN NUMBERS FOUR AND FIVE STAR FUNDS 51 Columbia Floating Rate Fund (CFRZX) Columbia Strategic Income Fund (LSIZX) Overall rating among 212 Bank Loan funds The fund received a Morningstar rating of stars among 212 funds, stars among 151 funds and stars among 63 funds for the 3-, 5- and 10-year periods, respectively Overall rating among 275 Nontraditional Bond funds The fund received a Morningstar rating of stars among 275 funds, stars among 182 funds and stars among 50 funds for the 3-, 5- and 10-year periods, respectively Columbia Overseas Value Fund (COSZX) Columbia Tax-Exempt Fund (CTEZX) Overall rating among 289 Foreign Large Value funds The fund received a Morningstar rating of stars among 289 funds and stars among 251 funds for the 3- and 5-year periods, respectively Overall rating among 181 Muni National Long funds The fund received a Morningstar rating of stars among 181 funds, stars among 175 funds and stars among 143 funds for the 3-, 5- and 10-year periods, respectively Columbia Income Builder Fund (CBUZX) Columbia Dividend Income Fund (GSFTX) Overall rating among 734 Conservative Allocation funds The fund received a Morningstar rating of stars among 734 funds, stars among 576 funds and stars among 358 funds for the 3-, 5- and 10-year periods, respectively Overall rating among 1,207 Large Value funds The fund received a Morningstar rating of stars among 1,207 funds, stars among 1,051 funds and stars among 764 funds for the 3-, 5- and 10-year periods, respectively Columbia High Yield Municipal Fund (SRHMX) Columbia U.S Government Mortgage Fund (CUGZX) Overall rating among 167 High Yield Muni funds The fund received a Morningstar rating of stars among 167 funds, stars among 149 funds and stars among 98 funds for the 3-, 5- and 10-year periods, respectively Overall rating among 297 Intermediate Government funds The fund received a Morningstar rating of stars among 297 funds, stars among 284 funds and stars among 215 funds for the 3-, 5- and 10-year periods, respectively To find out more, call 800.426.3750 or visit columbiathreadneedle.com/us Investors should consider the investment objectives, risks, charges and expenses of a mutual fund carefully before investing For a free prospectus or a summary prospectus, which contains this and other important information about the funds, visit columbiathreadneedle.com/us Read the prospectus carefully before investing All ratings are for Class Z shares as of 03/31/16 Class Z shares are sold at net asset value and have limited eligibility Out of 101 Columbia funds rated by Morningstar, 18 funds received a 5-star Overall Rating and 33 funds received a 4-star Overall Rating The Overall Morningstar Rating for a fund is derived from a weighted average of the performance figures associated with its 3-, 5- and 10-year Morningstar Rating metrics Investments involve risk, including loss of principal These funds may be subject to additional risks but not limited to the following; market, mortgage and asset-backed securities, issuer default, non-investment-grade (high-yield or junk) securities, interest rates, floating rate loans, foreign and emerging market, derivative and liquidity risks For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a funds monthly performance (including the effects of sales charges, loads and redemption fees), placing more emphasis on downward variations and rewarding consistent performance The top 10% of funds in each category receive stars, the next 22.5% receive stars, the next 35% receive stars, the next 22.5% receive stars and the bottom 10% receive star (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) â 2016 Morningstar, Inc All rights reserved The Morningstar information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information Past performance does not guarantee future results Columbia Threadneedle Investments (Columbia Threadneedle) is the global brand name of the Columbia and Threadneedle group of companies Columbia funds are distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC Columbia Management Investment Distributors, Inc., 225 Franklin Street, Boston, MA 02110-2804 â 2016 Columbia Management Investment Advisers, LLC All rights reserved CT-MK (04/16) 22UB/1469267 THE WALL STREET JOURNAL R6 | Monday, June 6, 2016 JOURNAL REPORT | INVESTING IN FUNDS & ETFS ENDOWMENT FUNDS The Church of Englands Blessed Investing Its $10 billion fund succeeds, as it and others push an ethical agenda BY GERRARD COWAN Ultimate long-term view Because the fund is a perpetual endowment, it can take a very longterm view, says Andreas Whittam Smith, the head of the fund Some of its rural estates, for example, have been in church hands for centuries Some of the things were able to do, other sorts of investors simply wouldnt be able to They have to have a sort of steady return, they cant wait on things forever. That said, one lesson investors may take away from the endowments performance is to look beyond publicly traded shares when considering investments Mr Whittam Smith says the endowment has long sought to reduce its exposure to exchange-listed stocks, a process that has accelerated in recent months with the sale of Ê250 million from the global shares portfolio in March Mr Whittam Smith, whose formal title is First Church Estates Commissioner, is downbeat on the outlook for the world economy, saying it is inexorably losing steam and governments cant much about it The point of our policy over a long number of years is to slowly, cautiously reduce our dependence upon quoted markets We can never reduce it too far, because they provide a wonderful store of liquidity, so theres obviously a limit But its A NEW ETF BETS ON BRAZILS REAL ESTATE Assets managed by the Church Commissioners for England endowment have expanded over the past decade to Ê7 billion ($10 billion) Ê7, in billions For those who think there is money to be made in Latin American real estate, the early returns of a new exchange-traded fund are promising Tierra Funds launched the Tierra XP Latin America Real Estate ETF (LARE) in December It tracks the Solactive Latin American Real Estate Index of 56 stocks listed in the region, primarily in Brazil and Mexico The fund is up almost 12% since the start of the year, and has net assets of just under $2.9 million About half its investments are in real-estate investment trusts, which have holdings in income-producing property like malls and industrial parks, and are required to pay out a periodic dividend The rest is concentrated in real-estate operating companies, which are similar to REITs, though they arent required to pay a dividend and can invest in a broader range of companies The fund also invests in an array of other real-estate-focused companies, from construction firms and home builders to related services The real-estate market in Brazil has been under pressure due to the recession there, says Jamie Anderson, managing principal of Tierra Funds Still, he is optimistic, despite the countrys economic travails and the political turmoil surrounding the impeachment of President Dilma Rousseff Mr Anderson figures the economy could turn a corner this year, particularly if the political situation stabilizes, and there could be a cut in interest rates, benefiting the property market The funds second major focus is Mexico, with a very vibrant commercial real-estate industry, Mr Anderson says However, the market is similar to the U.S., he says: Its much more stable than Brazil, but returns are going to be lower. Elsewhere, he sees opportunities in the Andean region, particularly Peru and Colombia Gerrard Cowan SUZANNE PLUNKETT/BLOOMBERG NEWS THE CHURCH OF ENGLAND traces its history from the Roman Empire to the Reformation and beyond The queen is its supreme governor, and almost a million worshipers attend its services every week It is also home to a market-beating investment fund The Church Commissioners for England endowment manages about Ê7 billion ($10 billion) of assets for the church The money helps cover the churchs annual costs, from supporting dioceses to funding mission activities Last year the endowment returned 8.2%, and it has grown by an average of 9.7% annually for the past 30 years It aims to exceed the annual inflation rate, which was 3.4% over the 30 years, by at least percentage points Although most investors cant afford the patience that this endowment enjoys, its success may hold lessons for some SPOTLIGHT | TIERRA Spiritual Growth 2006 09 12 15 Note: One pound = $1.45 Source: Church Commissioners for England Westminster Abbey, one of the historic buildings of the Church of England THE WALL STREET JOURNAL served us well to keep on diversifying. While paring its exposure to listed stocks, the endowment has increased its investments with privateequity managers and acquired other illiquid holdings in areas such as forestry These were among its strongest performers last year, with the commissioners private-equity managers notching returns of 20.2% Investors are often frightened of illiquidity, Mr Whittam Smith says However, spreading holdings across different investments can lower the risks The worst thing is to have illiquid investmentsas an overlarge holding But if these holdings are all individually only or percentage points or something, then its more manageable. Not everyone can make illiquid investments on the same scale as a large fund or charity Mr Whittam Smith says the main thing he would emphasize to investors is the importance of doing the deepest possible research into any managers with whom they choose to invest Tom Joy, the director of investments under Mr Whittam Smith, spends as much time examining and researching and checking the firms to whom we give mandates as those firms in checking into the individual shares which they buy for their portfolios, Mr Whittam Smith says Ethical investing also is a priority for the endowment, putting the meaning they wont immediately sell off a holding if they disagree with a companys stance on something, but will try to change the firms direction instead Last year the commissioners adopted a climate-change policy, divesting from companies that derive more than 10% of their revenue from thermal coal or the production of oil from tar sands However, they chose to engage with, rather than divest from, one mining company with coal revenues close to the 10% threshold, with a view to ascertaining the future place of coal in the business An ethical approach can make sense on a business level, says Adam Laird, passive-investment manager at Hargreaves Lansdown, a U.K financial firm that has worked with charities in the past Companies that are considered to be behaving ethically avoid the risk of fines, he says, and could build a good reputation with their customers But he says ethical criteria alone dont translate into business success, and investors should be mindful of the bottom line In many cases the main objective is going to be the profit at the end of it, and the ethical [side], while its a strong consideration, obviously has to sit within that framework, Mr Laird says church in a trendy area for both religious and nonreligious funds that focus on being socially responsible. Like religious endowments, individuals can invest in funds that abide by a particular faith, including Christianity and Islam While approaches and performances have varied, a recurring factor is a commitment to ethical or socially responsible investing The Rev Sộamus Finn, chairman of the New York-based Interfaith Center on Corporate Responsibility, says companies that obey the law, are transparent, treat their employees well and respect the environment and their communities are likely to be more sustainable in the long run You can take into account social and environmental and governance issues and still get a financial return that would beat others if youre patient and you apply the right kind of scrutiny and examination, says Father Finn, who is also chief of faithconsistent investing at OIP Investment Trust, which manages the long-term assets of more than 200 Roman Catholic organizations The ethical approach Both OIP Investment Trust and the Church Commissioners for England avoid investing in areas like armaments and pornography But they will at times take a more proactive approach to ethical investing, too, Mr Cowan is a writer in London He can be reached at reports@wsj.com MONEY MANAGEMENT Hirschs case, that dream came true Lehman Brothers liked her system of selecting growth stocks enough to give her a mutual fund to put it into practice, she says And even when Lehman changed its strategy and decided to leave money management, the firm helped Ms Hirsch keep her fund alive as an independent entity Wall Street Pioneer Hopes More Women Will Emerge Road to TIAA BY ROB CURRAN IF THE PAUCITY of women on Wall Street in general is noteworthy, the paltry number of female fund managers is even more jarring Susan Hirsch, manager of the $3.6 billion TIAA-CREF Large-Cap Growth fund, is one of the pioneers She says investors and the industry will profit from more women following the trail she blazed Industry research shows just how far there is still to go In last years study on manager gender from fund researchers Morningstar, only 184 funds, or 2% of the roughly 7,700 in the sample, had solo female managers A further 1,450 funds were managed by men and women Overall, only 9% of fund managers were women This could be a case of what researchers at CFP Board, a trade group for financial advisers, recently called a feminine famine. The other revelation in the Morningstar study: The average female manager produced returns in line with the average male, even though they were mostly managing niche funds that had higher-than-average expenses Ms Hirsch, for her part, has beaten the S&P 500 for the past three, five and 10 years A start at Drexel When Ms Hirsch joined the brokerage Drexel Burnham & Co as a secretary in 1975, she was attending Brooklyn College at night and expecting a child To make sure she returned after her maternity leave, Ms Hirschs boss, in the research department, said he would promote her from secretary to an assistant analyst upon her return She was soon one of only a handful of female analysts at the firm With her lack of experience, she didnt get a coveted beat like chemicals or paper, but had to toil in a fringe sector known as computers and communications. While she says she never felt harassed or discriminated against, Ms Hirsch often had the sense that everybodys looking at you, simply because female analysts were unusual When she went out on a limb to downgrade printer Moore Business Forms, the glare became even more intense The idea that a big printing company could lose business to electronic competition was, to many investors of the day, like saying Hyperloop trains will put airports out of TIM BOWER Susan Hirsch, the rare female fund manager, beats the odds, bears the scars business When The Wall Street Journal wrote about her downgrade and she began to get calls from irate shareholders, Ms Hirsch says, she felt like hiding under the table Asked whether she felt she was taken seriously as a female analyst in those days, Ms Hirsch goes back to an example from her time as an analyst at Lehman Brothers in the 1990s An Ivy League graduate, an intern, worked as her assistant as she built a model for valuing growth stocks A very young guy, very impressive Inevitably, we would go into a room and people would ask him questions about his model But it wasnt his, it was mine! Every sell-side (or brokerage) analyst hopes that their model will be adopted by someone on the buy side (such as a mutual fund) In Ms Running her own shop was no fun, however Prudential Financial invited Ms Hirsch to manage a midcap growth fund for them After a decade there, she has spent a decade at TIAA Global Asset Management, founded to serve academics and others (and until recently known as TIAA-CREF) In that time, the 63-year-old Ms Hirsch says, she has seen marked growth in the number of women in supporting roles It is no longer as unusual to see a female tech analyst as it was when she started at Drexel She also cited the relatively large number of senior female money managers at TIAA as a sign that the money-management industry is slowly changing Mr Curran, a writer in Denton, Texas, is a regular contributor to Dow Jones Newswires and The Wall Street Journal Email him at rob.curran@dowjones.com In Her Own Words: Susan Hirsch on Men vs Women as Money Managers Susan Hirsch, manager of TIAA-CREF Large-Cap Growth fund, discussed the gender gap in money management and other topics in an interview Edited excerpts: WSJ: Does it surprise you that Morningstars survey found such a low percentage of women money managers? MS HIRSCH: It doesnt surprise me that you have only 2% of mutual funds managed by solo female managers I think there are a lot more women I see in research as opposed to portfolio management, though I think thats beginning to change I think research was the first area to accept women, because many came from good schools, and they were very detail-driven and focused Susan Hirsch WSJ: Why you think the number of female money managers has remained low, even as the percentage of women grows in other financial roles? MS HIRSCH: They dont want you to become a portfolio manager and drive the returns unless youve proven youve done it before So someone has to give you a chance WSJ: What can a woman bring to a portfolio-man- agement role that a man could not? MS HIRSCH: Women have a better temperament for money management because they have an instinct for the recognition that perhaps youre missing something I think men tend to insist on the fact that theyre right Thats the reason they dont ask for directionsbecause theyre right That way, you end up being not just a bit wrong, but very, very wrong WSJ: A study in the journal Scientific Reports suggested that male hormones can drive reckless trading decisions Does that jibe with your experience? MS HIRSCH: When I was at Lehman, I remember working with one of the traders who would double down whenever a stock broke down As a money manager and a female, if a stock is break- ing down, it means theres something we missed Its an indication of larger issues WSJ: Is there any hope for significant growth in the number of female fund managers? MS HIRSCH: There has to be an educational component that allows women to be more comfortable with these positions I was lucky to have a research background Id love to see that at school, financial research where logic is rewarded and investment sense is taught Ive seen it happening selectively My niece called me while she was in school [about 10 years ago] There was a stock-picking contest She had chosen Taser It was one of these moonshots, and she wanted to know: When you sell it? What should I do? she asked I said: What you think? She said: I think, sell it. Bingo! I said Anything that goes up like that, goes down like that. Portfolio management needs to be done in an unbiased methodical way Being aggressive is not going to help Rob Curran THE WALL STREET JOURNAL Monday, June 6, 2016 | R7 JOURNAL REPORT | INVESTING IN FUNDS & ETFS SECTOR INVESTING How a Bold Approach in Commodities Paid Off One lesson: Not always relying on official statistics crease in the supply, and an effort by the end users to use less of the materials As that happens, the price explosion comes to an end THE CHIEF EXECUTIVE OFFICER of Amsterdam materials company AMG Advanced Metallurgical Group NV, Heinz Schimmelbusch, once at the center of a controversial derivatives trade that cost a staggering $1.3 billion (see article below), is back and bucking commodities-market trends While other companies have suffered stock drops and cut dividends, AMG shares have soared (up 33.5% in 2015) and the firm paid its first dividend last year Shares of rivals such as Rio Tinto PLC, Alcoa Inc and Glencore PLC, meanwhile, were hammered Dr Schimmelbusch and his team at AMGwhich makes lithium for car batteries and heat-resistant coatings for jet engines, among other thingsforesaw the commodities slowdown in 2012 and started an austerity program to reduce capital expenditure and working capital, and retire debt Four years later, the firm is debtfree and ready to expand In an interview, Dr Schimmelbusch explained how the move has paid off Edited excerpts follow: Spotting a discrepancy WSJ: What did you see in the met- als markets that others didnt? DR SCHIMMELBUSCH: In 2012 we saw a discrepancy between what our business partners were telling us about conditions in China and what the official statistics said When we asked Chinese-company leaders what was going on they said that they felt the official statistics didnt necessarily reflect what was happening on the ground They were also pessimistic about the availability of bank loans to private enterprises We then started to compare the import-export statistics, which didnt seem to match with the gross-domestic-product announcements There were so many uncer- DAN HALL BY SIMON CONSTABLE Heinz Schimmelbusch saw something happening in China that others didnt tainties about what was happening and it didnt fit with the optimism that some of our colleagues in the industry had We knew that Chinese longterm growth was the reason for the commodity boom If that was interrupted, the commodity boom would be interrupted, and therefore we started the austerity drive as a hedge against that The program reduced capital expenditure, shrank working capital and we paid down our debt We also reduced our risk positions by entering into long-term contracts with our customers WSJ: Economistsand you hold a Ph.D in economicshave a terrible reputation for forecasting How did you make sure that your anecdotal evidence was correct? DR SCHIMMELBUSCH: Here on our board we have economist Steve Hanke, and he is informed and knowledgeable about the global currency markets and monetary policy We compared notes on my observations about China, and our views reinforced each others [Prof Hanke saw a credit crunch for Chinas private sector developing, which augured a huge slowdown in that country.] As part of the process, he ran a model on commodity markets and market participants We ended up pretty sure of ourselves WSJ: The markets for all commodities are volatile, but its also true that for your products its more so Would you explain why that is? DR SCHIMMELBUSCH: The volatility of the price of critical materials follows a certain pattern When you have an increase in demand, such as the demand for lithium for use in batteries, then prices explode because the supply of the materials cannot increase quickly enough to keep up with demand Eventually there will be an in- WSJ: Even if Chinas consumption of commodities doesnt rebound, you see a sustained long-term demand for your products Why? DR SCHIMMELBUSCH: Our success will be a function of long-term technology trends, because we provide materials that enable these technologies to work For instance, we produce graphite and lithium for batteries, and titanium alloys tailored to the aerospace sector When you are a producer of titanium alloys you dont need China You need the aerospace industry, which is global When you produce tantalum, you are depending on the smartphone industry, which isnt regionally defined Austerity to expansion WSJ: AMG introduced its first dividend last year Do you think commodities markets have hit bottom? DR SCHIMMELBUSCH: Our balance sheet has improved enough to have shareholders participate without disturbing our ability to finance our growth plans The dividend also allows those asset managers who are restricted to buying dividend-paying stocks to invest in our shares The important thing now is that we are changing from austerity mode to an expansion strategy because we feel the opportunities are pretty obvious We are currently deeply involved in an expansion of our lithium resource in Brazil, partly because the price for the metal is spiking and growth in demand is stable The lithium we own was a byproduct of tantalum production, which is used in smartphones The huge benefit here is that much of the extraction costs for the lithium have been covered by the tantalum mine WSJ: The mining and metals indus- try has a reputation of being dirty; you see it as green Please explain DR SCHIMMELBUSCH: Our products enable the aerospace industry to coat turbine blades with ceramics, which provide a thermal barrier coating It means the nickel-alloyed engine blades can be used at higher temperatures, raising the fuel efficiency and reducing emission of carbon-dioxide Other materials we produce, such as graphite and lithium, allow for energy storage in batteries The same thing is true for titanium alloys, which can replace nickel alloys in the engines They are lighter-weight than nickel alloy and very heat resistant Mr Constable is a writer in New York He can be reached at reports@wsj.com COMMODITY WHIZ WAS FIGURE IN 1993 SCANDAL If there is one thing Heinz Schimmelbusch has experience with, its commodity hedging and risk management From 1989 to 1993, he was chief executive of German-based industrial conglomerate Metallgesellschaft Ultimately, it was a commodity hedge at that company that landed him in the center of one of the great trading controversies Dr Schimmelbusch abruptly left MG in 1993 after a derivatives trade started to show losses MGs partowner, Deutsche Bank, ousted Dr Schimmelbusch and cut off the credit line that backed the hedge The result was a loss of $1.3 billion, a staggering amount at the time Lawsuits and countersuits followed before the case was settled, helped partly by the backing of academics, some of whom saw the derivatives trade as a sophisticated move rather than a reckless endeavor by MG One of those supporters was economist Steve Hanke, a professor of economics at Johns Hopkins University MGs hedge was brilliant, Prof Hanke says Deutsche Bank just didnt understand it. (Deutsche Bank declined to comment.) Over the next 20 years, the two men stayed in contact as Dr Schimmelbusch put together Dutch-listed metals and materials company AMG Advanced Metallurgical Group NV It specializes in products used in new technologies, such as lithium for Tesla car batteries, tantalum for smartphones and heat-resistant coatings for jet engines Prof Hanke is on the AMG supervisory board, roughly equivalent to a U.S board of directors, and helped the company avoid the stresses of the recent bear market in materials Simon Constable THE WALL STREET JOURNAL R8 | Monday, June 6, 2016 JOURNAL REPORT | INVESTING IN FUNDS & ETFS Leaders and Laggards Category Kings in 16 Realms Data provided by Performance numbers are total returns (changes in net asset values with reinvested distributions) as of May 31; assets are as of April 29 All data are final Best-Performing Stock Funds Total Return (%) Annualized 1-year 3-year Large-Cap Core Ticker Assets ($ millions) May YTD Direxion:Jr Mnr Bull 3X Direxion:Gold M Id Bl 3X ProShares:Ult Jr Miners ProShares:Ult Gold Minrs PureFds Jr Silver(SCM/E) ProFunds:Prec Metals;Inv Glbl X Gold Explrs ETF iShares:MSCI Gl SMiners US Glbl:Wld Prec Min Glbl X Silver Miners ETF JNUG NUGT GDJJ GDXX SILJ PMPIX GLDX SLVP UNWPX SIL 344.6 1,531.7 4.6 10.0 32.6 40.6 65.4 43.2 146.7 292.9 39.8 38.8 25.7 25.8 14.1 19.8 14.7 12.3 1.0 9.3 245.8 199.6 165.1 136.2 130.7 112.6 88.5 82.2 82.1 78.9 5.6 33.8 28.9 0.5 57.0 6.6 58.2 15.8 53.3 23.5 N.A 59.8 N.A N.A 0.6 17.4 1.9 8.0 0.1 7.9 N.A 66.1 N.A N.A N.A 27.3 22.9 N.A 16.3 15.2 iShares:MSCI Gl GMiners VnEck Vctrs:Jr Gld Mnrs Rydex:Precious Metls;Inv ALPS Sprott Junior Gold EuroPac Gold;A Amer Cent:Gl Gold;Inv VnEck Vctrs:Gold Miners ALPS Sprott Gold Midas Fund PowerShares Gl Gold Prec RING GDXJ RYPMX SGDJ EPGFX BGEIX GDX SGDM MIDSX PSAU 133.1 2,659.4 90.4 42.1 64.4 460.5 7,325.2 204.5 18.2 51.4 12.9 11.5 13.1 14.4 7.4 10.6 12.0 12.8 12.1 12.0 77.4 76.1 71.2 69.1 66.4 64.7 64.7 64.0 63.4 62.4 23.2 32.4 17.7 20.9 22.4 20.8 16.3 20.7 16.0 15.2 7.2 10.9 7.7 N.A N.A 5.8 7.8 N.A 10.9 6.6 N.A 24.2 16.2 N.A N.A 15.4 16.6 N.A 24.7 16.0 Van Eck:Intl Gold;A Franklin Gld&Pr Mt;A US Glbl:Gold&PM USAA Prec Met&Min;Fund OCM:Gold;Inv Deutsche Gold&Prec;S WellsFargo:Prec Met;A Gabelli Gold;AAA Invesco Gold&Prec;A Oppenheimer Gld & Sp;A INIVX FKRCX USERX USAGX OCMGX SCGDX EKWAX GOLDX IGDAX OPGSX 816.1 1,100.6 114.9 762.4 56.6 133.7 474.5 293.6 339.8 1,251.8 10.7 11.5 7.7 10.7 11.7 12.7 11.5 10.9 11.7 9.3 62.4 61.7 60.3 60.3 60.3 58.9 58.6 58.3 56.5 56.3 18.0 18.8 36.3 13.4 19.3 14.0 18.2 22.4 12.1 18.8 3.9 2.3 0.4 5.4 2.97 8.3 5.1 0.7 5.9 5.6 15.2 16.5 12.2 17.0 13.6 17.3 14.3 12.1 14.1 17.7 Fund Best-Performing Bond Funds Total Return (%) Annualized 1-year 3-year 5-year May YTD TMF SDYL LBND DVYL DVHL HIIFX UBT YCL BZF ANGL 87.5 24.1 49.6 24.1 28.0 51.2 6.9 21.2 145.2 2.0 2.8 2.5 2.0 2.2 2.4 1.5 7.9 3.2 0.2 25.1 24.2 23.3 22.5 22.1 18.8 17.2 16.1 14.8 12.8 19.7 20.7 20.4 17.9 4.0 17.0 13.8 21.9 0.4 3.3 15.9 23.8 15.8 24.3 N.A 11.1 12.9 8.5 7.4 5.5 20.1 N.A 20.4 N.A N.A 5.0 16.1 13.6 7.9 N.A Direxion:7-10Y Trs Bl 3X PIMCO ETF:25+ Yr US Tres Vanguard Ext Dur T;ETF PIMCO:Extend Dur;Inst ProShares:Ult Inv Gr Crp ProShares:Ult Hi Yld Rydex:Gv LB 1.2x Str;Inv Morg Stan I:Corp Bd;I Ashmore:EM Sht Dur;Inst ProFunds:US Gov Pl;Inv TYD ZROZ EDV PEDIX IGU UJB RYGBX MPFDX ESFIX GVPIX 7.6 214.6 1,281.1 441.1 3.2 1.4 103.5 35.3 72.3 30.2 0.5 1.6 1.4 1.4 1.2 0.2 1.0 0.2 1.9 0.8 12.5 12.4 12.1 12.1 11.5 11.1 11.0 10.8 10.8 10.6 11.3 11.5 11.7 11.0 7.6 6.8 9.3 7.7 10.5 7.8 7.8 10.8 10.2 10.2 6.5 2.8 9.0 5.5 N.A 7.4 12.1 14.3 13.6 13.4 8.9 6.8 11.5 6.1 N.A 10.0 Fairholme:Focused Inc BlackRock:CoRI 2023;Inst USAA Flexible Inc;Fund Ryan Labs Long Credit BlackRock:CoRI 2021;Inst SPDR Barclays Lng Tm Crp FlexShs:CS US Lng Crp Bd PIMCO:Lng-Tm Credit;Inst DFA LTIP Portfolio;Inst Vanguard LT Corp Bd;ETF FOCIX BCZIX USFIX RLLCX BCYIX LWC LKOR PTCIX DRXIX VCLT 206.2 12.9 93.4 53.5 12.2 150.1 10.6 3,135.6 41.2 1,621.2 0.4 0.5 0.7 0.1 0.5 -0.03 0.4 0.5 1.6 0.2 10.4 10.4 10.1 9.9 9.8 9.6 9.6 9.6 9.6 9.5 0.8 8.3 0.7 N.A 8.7 5.7 N.A 4.4 2.2 5.9 2.4 N.A N.A N.A N.A 5.5 N.A 5.9 0.2 5.5 6.2 N.A N.A N.A N.A 7.0 N.A 8.6 N.A 7.3 Direxion:20+Y Trs Bl 3X UBS E-TRACS MP 2xL S&P D DB 3x Lng 25+ Yr Tr ETN UBS E-TRACS MP 2xL DJ SD UBS E-TRACS MP 2xL D HI Catalyst/SMH High Inc;A ProShares:Ult 20+ Yr Tr ProShs II:Ult Yen WisdomTree:Brz Real Str VnEck Vctrs:FA Hi Yd Bd Ticker Worst-Performing Stock Funds Assets ($ millions) May YTD Total Return (%) Annualized 1-year 3-year Small-Cap Core Assets ($ millions) SPDR Russell 1000 YldFoc 355.6 ProShares:S&P 500 Dv Art 1,766.7 Bright Rock Qual LC;Inst 198.5 PIMCO:RAE LV+;Inst 273.6 PowerShares Rus 1000 EW 43.8 SPDR Russell 1000 LowVol 374.7 State Farm Growth 4,153.2 Blue Chip Investor Fund 29.1 iShares:Edge MSCI MV USA 12,378.5 Jensen Quality Gr;I 5,070.9 Category Average: Fund Count Total return (%) May YTD 1-yr 5-yr* 0.1 0.8 1.2 1.4 0.9 1.8 1.2 0.1 1.6 1.0 1.7 3.5 4.7 758 866 852 921 9.9 883 715 1,017.3 58.5 1,929.9 209.4 11,234.7 2,935.7 219.2 69.4 693.3 8.0 Fund Count 2.5 2.2 2.7 1.6 2.8 2.1 2.8 0.6 2.2 0.7 Aegis Value;I CM:Advisors SC Val;I Towle Deep Value SPDR S&P 400 Mid Cap Val iShares:S&P MC 400 Val Vanguard S&P MC400V;ETF Orchard Sm Cp Val;I Guggenheim:MC Val;A RBB:Schneider Sm Cap Val Frst Tr ADex:MidCap Val Category Average: 1.3 3.4 2.9 479 542 535 36.6 10.2 6,684.4 1.3 1.3 72.6 3.2 1.4 7.5 2.8 Fund Count 9.0 493 401 1.3 2.0 2.1 2.7 1.2 2.5 1.5 1.1 1.7 1.3 8.9 5.6 5.2 5.1 5.0 4.9 4.8 4.5 4.4 4.2 N.A N.A 1.8 0.1 N.A 6.4 N.A N.A 1.6 N.A N.A N.A 11.0 21.2 N.A 11.8 N.A N.A N.A N.A 2.4 0.9 1.2 10.5 Category Average: 722 715 Fund Count 670 546 Total return (%) May YTD 1-yr 5-yr* 6.8 7.2 46.0 3.1 180.4 1.7 133.3 2.6 4,142.2 0.3 368.0 3.4 745.7 0.7 17.9 2.0 588.1 3.2 678.2 4.3 Category Average: Fund Count 23.9 15.1 14.5 11.4 11.2 11.0 10.9 10.3 9.2 8.6 16.3 12.8 N.A 5.3 3.1 14.1 7.4 5.6 0.5 6.9 1.0 N.A N.A N.A 10.8 N.A N.A 9.8 8.1 10.4 8.1 378.8 1.7 4.3 4.2 418 459 449 92.8 89.7 80.5 79.7 74.9 67.6 63.0 62.2 62.1 58.9 92.8 87.9 N.A 76.6 67.7 32.5 15.8 73.6 73.5 89.3 N.A 65.0 N.A N.A N.A N.A 16.7 79.9 79.7 80.3 N.A 38.5 N.A N.A N.A N.A N.A N.A 83.4 N.A CM:Advisors Fund;I 68.8 3.8 Rnhrt MC PrivMkt Val;Adv 127.8 2.4 GoodHaven Fund 277.3 2.1 T Rowe Price MC Vl 11,827.6 1.4 J Hancock II:Mid Val;NAV 921.0 1.4 PowerShares Russ MdCp PV 50.4 1.0 Artisan:Mid Cap V;Inv 4,766.0 0.8 Touchstone:MC Value;Y 375.5 3.4 Nuance Mid Cap Val;Inst 96.5 0.8 WisdomTree:MdCp Div 1,666.0 1.8 Direxion:S&P Btech Bl 3X Direxion:Russia Bear 3x ProShares:UP Nasdaq Bio ProShares:UlS MSCI Brz ProFunds:Sh Pr Mtls;Inv ProShares:UlS O&G Ex&Pr VelShs 3x Invrs Silver Direxion:EnergyBear 3X iPath Bloomberg NatGas A ProShs II:UlS Blm CrO LABU RUSS UBIO BZQ SPPIX SOP DSLV ERY GAZ SCO 233.8 52.9 37.7 36.2 6.9 0.9 16.7 94.3 3.3 226.8 20.4 13.6 11.0 29.9 11.9 1.5 35.5 1.1 5.6 11.4 56.8 55.7 51.6 50.9 48.0 47.8 45.5 42.9 41.9 38.9 77.6 47.2 N.A 13.0 33.1 N.A 20.9 11.7 72.3 46.6 N.A 42.3 N.A 2.8 11.0 N.A 11.1 17.6 51.4 26.6 N.A 33.8 N.A 6.0 0.3 N.A N.A 27.7 47.4 13.9 Category Average: VelShs 3x Inverse Gold ProShares:Ult Nasdaq Bio ProShs II:Ult Blm Nat Gs ProFunds:UltSh Latin;Inv ProShs II:VIX ST Fut ETF iPath ETN SP500 VIX ST A VelShs VIX ShTm ETN Direxion:Nat Gas Bull 3X ProShs II:UlS Silver DB Crude Oil Db Sht ETN DGLD BIB BOIL UFPIX VIXY VXX VIIX GASL ZSL DTO 20.1 446.0 30.0 6.4 259.6 1,587.1 9.5 58.0 36.8 18.5 8.0 4.1 28.7 19.2 19.3 19.3 1.6 22.2 10.8 38.9 35.2 35.1 34.4 32.9 32.7 32.7 32.4 31.6 30.2 19.4 47.8 70.7 15.3 29.5 29.1 29.1 97.1 9.4 76.8 3.4 23.9 59.7 15.5 44.6 44.3 44.3 84.6 3.6 35.7 N.A 35.6 N.A 8.2 47.8 47.6 47.6 74.2 2.0 19.9 Assets ($ millions) May YTD 422 315 Fund Count 17.4 7.5 0.8 11.8 2.6 N.A 11.7 7.5 3.3 11.5 2.6 10.6 11.3 2.4 10.4 11.0 0.8 11.7 10.4 2.9 7.6 10.4 4.5 9.9 10.2 7.5 N.A 10.1 6.6 12.7 299.7 1.5 6.1 3.0 153 172 170 8.8 156 110 Midcap Growth -2.1 -3.7 2.4 -3.0 -3.2 -2.8 -2.1 8.2 3.0 -0.1 -29.5 -26.6 -26.2 -25.5 -25.4 -22.1 -17.3 -16.4 -14.9 -14.1 -31.4 -28.8 -23.8 -32.7 -31.5 -23.5 -20.8 -22.6 -12.5 -17.9 N.A -20.1 -18.5 -29.5 -28.7 -23.1 -19.0 3.5 -11.7 -15.1 N.A -20.0 -20.0 -35.2 N.A -29.9 -22.8 9.5 N.A -18.5 49.6 374.8 20.8 85.2 7,133.5 7,677.6 124.7 277.1 38.4 322.1 Category Average: Fund Count Direxion:M7-10Y B 2x;Inv ProShares:UlS 7-10Y Trs Rydex:Inv Gv LB Str;Inv ProShares:Sht 20+ Treas iPath ETN Trs Steepenr A Direxion:20+Y Trs Br 1X ProShares:UlS TIPS FX Strategy;I iPath ETN Trs 2Y Bear A Access One:Fx Br HY;Inv DXKSX PST RYJUX TBF STPP TYBS TPS FXFIX DTUS AFBIX 8.5 160.0 218.4 623.3 3.8 13.5 1.3 25.60 9.8 1.3 0.03 0.1 -0.9 -1.0 -2.4 -0.9 1.4 8.2 3.7 -0.5 -9.4 -9.1 -9.0 -8.9 -8.9 -8.8 -8.0 -7.6 -7.2 -6.9 -11.2 -10.5 -10.2 -10.5 -11.9 -10.7 -3.6 -24.3 -2.7 -7.4 -9.6 -9.1 -8.7 -9.6 -4.4 -9.5 -2.2 -1.7 -8.6 -9.0 -12.9 -11.3 -11.1 -11.6 -9.1 -11.6 -6.0 -1.4 -7.2 -11.4 PowerShares Jp Curr HLV ProShares:Sht High Yield ProShares:Sht Inv Gr Crp Rydex:Stg Dlr 2x Str;H Rydex:Inv Hi Yld Str;A ProShares:UlS 3-7 Tr iPath ETN Op Cur Carry A AmericaFirst Inc Trend;A Angel Oak Flex Inc;Inst WisdomTree:Jpn IR Str FXJP SJB IGS RYSBX RYILX TBZ ICI AFPAX ANFIX JGBB 1.2 196.2 2.7 14.6 7.4 2.7 2.3 18.1 214.2 4.4 2.1 -0.4 0.4 6.2 unch 0.3 0.9 -2.5 -0.02 1.1 -6.7 -6.5 -6.3 -6.2 -6.0 -5.5 -5.4 -5.4 -5.4 -5.3 N.A -0.3 -6.2 -5.2 -6.4 -6.5 -8.9 -13.2 -6.9 -7.8 N.A -5.0 -6.1 5.9 -8.8 -5.9 -5.7 -4.0 N.A N.A N.A -7.2 -7.2 5.7 -10.3 -6.6 -3.4 -1.6 N.A N.A ProShares:Ult Gold Minrs PureFds Jr Silver(SCM/E) Glbl X Gold Explrs ETF iShares:MSCI Gl SMiners US Glbl:Wld Prec Min Glbl X Silver Miners ETF iShares:MSCI Gl GMiners VnEck Vctrs:Jr Gld Mnrs Rydex:Precious Metls;Inv ALPS Sprott Junior Gold 7.4 0.9 5.5 3.4 338 311 240 Total return (%) May YTD 1-yr 5-yr* 4.4 1.6 1.5 0.7 1.5 2.2 4.0 2.5 1.3 3.2 9.2 8.9 8.1 7.6 7.5 7.2 6.9 6.1 5.6 5.4 13.8 N.A 5.3 6.0 0.3 6.5 1.8 2.1 2.8 1.7 N.A N.A N.A 12.1 N.A 9.3 10.4 5.8 8.1 8.6 6.8 190.7 2.5 1.1 8.9 507 583 570 549 440 VnEck Vctrs:MS Wide Moat Clifford Cap Prtnr;Instl LM Low Vol Hi Div Mairs & Power Growth Virtus:Contrarian Val;A Morg Stan I:Insight;I Cloud Cap Strat AC;Inst MainStay:Epoch US EY;I NorthQuest Capital Fund Madison:Investors;Y Category Average: 705.1 3.7 18.8 4,105.4 261.1 4.2 24.7 64.2 254.4 Total return (%) May YTD 1-yr 5-yr* 2.6 1.8 1.0 1.3 0.5 0.9 0.6 1.4 1.0 2.2 14.8 8.9 N.A 12.2 4.0 N.A 10.4 N.A N.A 10.3 6.2 12.5 10.3 8.3 5.9 10.1 2.6 N.A 9.1 1.5 N.A 8.8 6.2 10.4 8.4 2.4 7.0 8.0 7.5 11.2 582.9 1.4 2.4 3.5 608 752 741 Fund Count 9.1 716 546 Assets ($ millions) Artisan:Value Fund;Adv RBB:Schneider Value Nuance Concen Val;Inst Copley Fund Berwyn Cornerstone Frst Tr:Val Line Div Idx Amer Cent:NT MCV;Inst Amer Cent:MC Val;Inv Longleaf Partners Fund Schwartz Inv:Val Focused Category Average: 1,014.5 21.6 469.5 77.5 18.3 1,698.0 921.5 7,027.2 3,604.1 19.4 Total return (%) May YTD 1-yr 5-yr* 0.7 3.2 0.5 1.2 0.1 1.4 2.5 2.4 0.04 1.3 13.9 11.6 11.4 10.6 10.6 10.4 10.0 9.8 9.2 9.1 0.6 5.3 3.5 10.7 3.6 11.2 5.7 5.4 11.7 8.2 N.A 4.1 11.8 10.1 6.2 12.7 12.5 12.2 4.5 2.8 8.5 361.7 0.9 4.2 3.6 268 331 327 Fund Count 315 249 Multicap Growth Assets ($ millions) Total return (%) May YTD 1-yr 5-yr* 2.1 3.6 3.6 1.8 2.0 2.8 2.5 1.9 1.8 3.3 Assets ($ millions) 8.5 4.5 5.8 7.0 2.3 N.A 6.6 6.2 N.A 6.3 3.8 8.9 6.2 2.3 9.5 6.0 1.8 11.3 5.6 6.1 10.2 5.6 3.2 6.5 5.4 2.3 11.0 5.2 1.1 9.7 Hodges Fund;Retail Ave Maria Growth Dreyfus US Equity;Y Davis:Opportunity;A Principal:MidCap;Inst Amana:Growth;Inv Voya:MdCp Opps;Inst Eaton Vance AC Sel Eq;I Hennessy:Focus;Inv Value Line Prem Gr;Inv Category Average: 285.7 2.4 0.9 6.4 353 415 409 7.8 397 319 Gold Oriented 15.2 19.3 52.8 367.3 77.3 2,129.8 163.1 1.9 28.7 3.8 1.6 N.A 10.1 10.1 10.1 N.A 6.6 1.0 8.0 344 Assets ($ millions) Total return (%) May YTD 1-yr 5-yr* 19.1 29.7 6.9 16.2 21.5 3.3 17.7 36.4 36.5 7.7 TAPR DLBS DTYS TMV TTT SBND TBT YCS DFVS TYO 7.4 9.6 5.7 1.1 1.1 1.1 N.A 1.1 10.6 7.4 Multicap Value Assets ($ millions) 40.3 263.1 10.2 0.4 1.4 31.6 400.5 1,075.4 611.7 291.3 Barclays Inv US TC ETN iPath ETN Trs Lng Bear A iPath ETN Trs 10Y Bear A Direxion:20+Y Trs Br 3X ProShares:UPSh 20+ Trs DB 3x Sht 25+ Yr Tr ETN ProShares:UlS 20+ Yr Trs ProShs II:UlS Yen iPath ETN Trs 5Yr Bear Direxion:7-10Y Trs Br 3X 42.9 21.6 17.3 9.7 9.6 9.6 9.6 9.5 9.4 9.3 Multicap Core Assets ($ millions) 5-year 6.6 2.8 0.3 1.4 1.4 1.4 3.3 1.3 2.7 0.9 298 Goodwood SMID Cap D;Inst 18.4 VictoryII:CEMP US SC HD 14.0 Davenport SmCp Focus 41.7 Virtus:Sm-Cap Sust Gro;I 216.9 Sit Small Cap Div Gro;I 7.6 Virtus:Small-Cap Core;I 299.8 AMG:GW&K SCC;I 379.7 Eagle:Smaller Company;C 47.3 Meridian Growth;Leg 1,248.1 Neuberger Genesis;Inst 10,092.0 621 JDST DUST GASX GDJS GDXS DRIP DWTI UVXY TVIX UGAZ Ticker Total return (%) May YTD 1-yr 5-yr* 317.9 Assets ($ millions) 806.4 Midcap Value Fund 141.5 44.4 71.8 188.1 4,490.3 300.0 0.4 533.2 26.9 51.5 Fund Count Total return (%) May YTD 1-yr 5-yr* Midcap Core Bright Rock MC Gro;Inst Congress MC Gro;Inst TorRes SMGr;Inst Commerce:MidCap Growth Fidelity Mid-Cap Stock Janus Enterprise;T Value Line MdCp Foc;Inv Eagle:Mid Cap Stock;A Virtus:Mid-Cap Core;A SPDR S&P 400 Mid Cap Gro 7.4 805 604 Small-Cap Growth Category Average: 5-year Assets ($ millions) 9.6 0.5 7.8 9.2 1.3 6.4 8.8 6.7 12.3 8.0 6.0 11.9 7.9 3.4 12.9 7.9 1.9 10.6 7.7 2.8 13.2 7.1 1.2 10.4 7.0 6.0 12.0 6.8 1.9 N.A 624.7 Assets ($ millions) Hodges Pure Contr;Rtl ProShares:S&P MC400 D Ar Principal:EDGE MdCp;Inst Ivy:Mid Cap Inc Opp;A Longleaf Partners SC PowerShares S&P MidCp LV AMG:SthSun US Eqty;I Dean Mid Cap Value CRM:Mid Cap Val;Inv Parnassus:Mid Cap 19.6 5.4 9.8 13.0 5.1 8.8 11.8 7.4 2.6 11.7 5.1 N.A 11.3 14.6 N.A 10.7 1.9 3.8 10.6 2.6 8.7 10.2 9.4 9.7 9.5 14.1 7.4 9.1 4.0 7.3 Small-Cap Value Category Average: VictoryII:CEMP US LC HD VictoryII:CEMP US SC VW MFS Mass Inv Gro;A iPath ETN LgEx Rus 1000 WisdomTree:SD US Eqty Commerce:Growth Glenmede:Resp ESG US Eq Manning&Napier:Qual Eq;S ETFS Dvsfd-Fac US LC Idx Glenmede:WL US Equity Fund Count Total return (%) May YTD 1-yr 5-yr* Direxion:Jr Mnr Bear 3X Direxion:Gold M Id Br 3X Direxion:Ntrl Gs Rl Br3X ProShares:UlS Jr Miners ProShares:UlS Gold Minrs Direxion:S&P OG EP Br 3X VelShs 3x Inv Crude ETN ProShs II:UltVIX STF ETF VelShs Dly 2x VIX ST ETN VelShs 3x Long Nat Gas Note: For funds with multiple share classes, only the largest is shown N.A.: Not applicable; fund is too new or data not available 256.9 2.5 0.9 935 Ticker Total Return (%) Annualized 1-year 3-year Category Average: 1.6 755 Fund Worst-Performing Bond Funds 35.2 1.5 990.7 2.1 50.4 2.2 209.1 3.6 67.3 3.1 880.0 2.1 45.7 2.3 249.1 4.2 351.8 0.9 5.5 3.0 756.7 Assets ($ millions) 5-year Total return (%) May YTD 1-yr 5-yr* Highland:Sm-Cp Eqty;A RidgeWorth:SC VE;I WellsFargo:S/MC Val;A Mairs & Power:Small Cap ProShares:Russ 2000 DG WellsFargo:SC Val;A ASTON:RR SelectVal;I Virtus:Quality Sm-Cap;I AMG:SthSun SmCp;I Frst Tr Srs:Cnfl SCV;C Large-Cap Value Deutsche CROCI EqDv;A Invesco Exchange Transam:Large Cp Val;I2 Commerce:Value Delaware Value;Inst Amer Cent:Value;Inv Delaware Pld:LgCp Va Eq Edgar Lomax Value Fund Payden:Eqty Inc;Inv Champlain Foc LCV;Adv Assets ($ millions) 8.9 N.A N.A 8.3 7.6 N.A 7.8 6.0 11.7 7.7 5.0 N.A 7.6 1.4 N.A 7.5 N.A N.A 6.9 1.2 8.6 6.9 2.6 10.6 6.8 9.5 N.A 6.6 6.3 11.1 Large-Cap Growth Assets ($ millions) Fund Data provided by Top-performing funds in each category, ranked by year-to-date total returns (changes in net asset values with reinvested distributions) as of May 31; assets are as of April 30 All data are final Total return (%) May YTD 1-yr 5-yr* 231.0 1.8 328.0 0.3 508.2 1.5 505.1 1.1 10,971.4 2.6 1,709.7 3.1 1,292.4 2.3 202.7 1.2 2,328.5 1.7 316.4 1.8 11.4 3.9 9.6 7.6 1.4 9.0 6.7 3.5 N.A 6.6 4.0 11.4 4.3 0.8 12.5 4.1 1.1 8.5 4.0 1.1 8.7 4.0 4.6 N.A 3.9 2.2 13.5 3.8 1.5 9.2 317.0 2.2 0.9 4.2 532 634 630 Fund Count 9.1 606 450 High Yield Municipal Assets ($ millions) Total return (%) May YTD 1-yr 5-yr* Assets ($ millions) 10.0 32.6 65.4 43.2 146.7 292.9 133.1 2,659.4 90.4 42.1 25.8 136.2 0.5 N.A 14.1 130.7 57.0 N.A 14.7 88.5 58.2 22.9 12.3 82.2 15.8 N.A 1.0 82.1 53.3 16.3 9.3 78.9 23.5 15.2 12.9 77.4 23.2 N.A 11.5 76.1 32.4 24.2 13.1 71.2 17.7 16.2 14.4 69.1 20.9 N.A Dreyfus High Yld Muni;Z 158.6 Oppenheimer Ro HY M;A 5,287.9 Nuveen HY Muni;I 12,958.6 AMG:GW&K Mun EY;I 251.7 MainStay:Hi Yld Muni;I 2,323.1 PIMCO:HY Muni Bd;Inst 817.2 AB Municipal Inc 1,112.6 Russell:TE Hi Yld Bd;S 283.0 Goldman:Hi Yld Mun;I 4,182.2 VnEck Vctrs:HY Muni Indx 1,882.6 276.8 11.1 Category Average: 63 Fund Count 74 62.7 19.4 15.9 74 74 64 Real Estate Category Average: Fund Count Total return (%) May YTD 1-yr 5-yr* 1.2 1.3 1.0 1.1 1.1 0.9 0.9 0.9 1.3 1.0 5.6 9.9 7.2 5.3 8.4 8.6 5.3 9.6 10.5 5.2 9.4 8.4 5.2 9.6 9.4 5.1 10.3 7.7 5.0 10.0 9.6 4.9 N.A N.A 4.8 7.9 8.0 4.8 7.9 7.4 497.5 0.8 3.9 7.2 7.3 131 160 160 144 110 General & Insured Muni Assets ($ millions) PowerShares KBW PYE REIT 120.3 VnEck Vctrs:Mtg REIT Inc 96.1 iShares:Mtge RE Cap ETF 772.1 IndexIQ:US Rl Est Sm Cap 76.7 Deutsche Rl Est SI;S 12.3 Davis:Real Estate;A 242.5 REMS RE Inc 50/50;Inst 107.8 Vanguard REIT Idx;ETF 56,493.3 ASTON:HarrisonStRE;N 10.2 Rydex:Real Estate;H 42.5 Total return (%) May YTD 1-yr 5-yr* 2.5 4.5 4.2 2.9 1.1 3.2 1.7 2.4 2.3 2.2 12.3 10.4 10.2 8.0 7.8 7.0 6.4 6.2 6.1 6.0 8.3 2.7 2.1 3.5 6.7 9.6 9.3 10.6 11.4 4.7 9.9 N.A 4.6 N.A N.A 9.0 9.3 10.2 8.4 6.4 9.2 373.8 2.0 4.4 7.9 Fund Count 229 284 277 269 192 N.A.: Not applicable; fund is too new * Annualized Category Average: Assets ($ millions) Nuveen US Infra Bd;I BlackRock BATS:Srs E Nuveen Str Muni Opptys;I Eaton Vance TABS10-20M;I Deutsche Muni Inf Rev Bd VnEck Vctrs:AMT-Fr LM Ix SEI Tx Ex:Tax-Adv Inc;A Frst Tr III:Managed Muni Perf Tr Muni Bd;Inst Schroder:Br TA Vl Bd;Inv Category Average: Fund Count 8.8 116.4 59.5 6.7 32.4 156.3 1,154.9 71.6 138.8 129.3 Total return (%) May YTD 1-yr 5-yr* 0.7 1.3 0.8 0.6 0.9 0.9 1.0 0.5 0.4 0.4 6.2 3.8 N.A 5.2 11.2 N.A 4.7 8.6 N.A 4.6 10.6 N.A 4.5 9.9 N.A 4.4 9.3 6.9 4.1 8.4 6.9 3.9 6.8 N.A 3.9 7.9 N.A 3.6 6.5 N.A 399.6 0.4 2.7 5.6 217 278 277 268 212 Note: For funds with multiple share classes, only the largest is shown 5.3 THE WALL STREET JOURNAL Monday, June 6, 2016 | R9 JOURNAL REPORT | INVESTING IN FUNDS & ETFS Q&A After 40 Years, a Throwback Goes Back to Investing John Calamos of Calamos Investments is no longer his firms CEO, and will stick to running money A MONEY MANAGER like John P Calamos Sr may not come around again soon The former Air Force combat pilot was one of the last breed of money managers who started firms in their own image, turned their name into a brand and continued managing money while running the public company created to oversee it all These days, money managers who start firms tend to pick one role or another quickly This year, Mr Calamos stepped down as chief executive of Calamos Investments, which he started 40 years ago outside of Chicago and which went public in 2004 through family-controlled Calamos Asset Management Inc In appointing John Koudounis to succeed him, Mr Calamos retained his role as the firms chairman and global chief investment officer The April movewhich came amid criticism that the parent companys assets under management, at almost $21 billion, are about half of what they were before the financial crisiswas partly about succession, but it also will allow the 76-year-old Mr Calamos to what he enjoys the most and focus on running money Here are edited excerpts from a recent interview: PATRICK T FALLON/BLOOMBERG NEWS BY CHUCK JAFFE Volatility isnt new, says John Calamos After all, I started in the 1970s. cant just the same thing over and over again WSJ: What would you tell investors to get them through a market like we are seeing now? MR CALAMOS: I think the markets right now are a bit confused as to just what is happening Obviously, theres a huge focus on what the Fed is going to I dont think theres been enough interest in fiscal policy, so I think what we have is a very confused market, and we see that week to week and day to day where it almost changes overnight So I would tell investors to think long-term and not get whipsawed in and out on some of these headlines Were a bit more positive longer-term, but we want to cushion the downside, where we damp volatility but stay invested for the longer term, which we think will be positive Confused markets WSJ: Youve been doing this a long time Are things really different with the market today, or is it the same as when you started? MR CALAMOS: I started in the 1970s, which was really a volatile period Thats what people forget: We have always had uncertainty out there and the potential for increased volatility The causes may change and how you react may change It is unusual in that we have never had a period with zero interest rates and a lack of inflation; in those terms its unusual What I learned over the years is that you have to adapt for the environment you are in You Uneasy Times Stock price of Calamos Asset Management (CLMS) on Nasdaq $30 25 Sept 2008 Global nancial crisis intensies 20 15 10 2008 2009 2010 2011 2012 2013 2014 2015 2016 THE WALL STREET JOURNAL Source: FactSet WSJ: You have always been known for your use of convertible securities, which amount to a stock-bond hybrid Given current market conditions, are you raising or lowering your expectations for convertibles? MR CALAMOS: It isnt convertibles in general that work or dont work, its really how you use them to manage risk The convertible market in general has a tendency to be more in midcaps and small-caps, so it doesnt reflect the total market, but its useful in managing risk For example, our Emerging Markets Evolving World Fund uses convertibles to damp some of the volatility of the emerging markets Mutual goals WSJ: You ran both mutual funds and the publicly traded management company that operates those funds Jack Bogle generally describes such a setup as a conflict of interest, saying that its hard to serve two masters You see it differently Why? MR CALAMOS: We want to perform well for our shareholders, both on the public side and in the funds that we manage Our goals are very much aligned The better we for our shareholders on our mutual-fund side, the better well for our shareholders on the public side, so I see no conflict of interest there WSJ: By now, youve earned the right to take it easy Why keep fighting the fight and battling with the market? MR CALAMOS: Whatever is going on in the world, the market is the pulse, and that is what attracted me to it a long time ago I still feel that way today I dont want to be disconnected from that I have always loved being right in the middle of it Besides, Im healthy, I enjoy what Im doing, and if I was retired, I would have no excuse about why my golf game is so bad I need to keep going just to have that alibi Mr Jaffe is a MarketWatch columnist in Boston He can be reached at cjaffe@marketwatch.com SPOTLIGHT INTERMEDIATE BONDS BOND-FUND INVESTORS MEET IN THE MIDDLE The narrative appeared incongruous As interest-rate risk has crept up during this quarter, ETF investors have been rushing into bonds But this time they were neither searching for yield nor seeking safetythe story lines that led to many a stampede into fixed income in recent years No, these investors were headed right for the mushy middleintermediate-maturity fixedincome funds, just close enough in not to get whipsawed by a sudden change in long-term inflation expectations and just far enough out not to get stung by shifting Federal Reserve policy on short-term interest rates While broad U.S.-bond funds have a shorter duration (a measure of sensitivity to interest-rate changes) than intermediate funds, so theyll swing less in value with a change in rates, they are also heavy in low-yielding U.S Treasury securities as well as securities backed by residential mortgages Intermediate-term, investmentgrade corporate debt, however, has emerged as a sweet spot for risk and return in the current rate environment For how long depends on the economy and the Fed Intermediate corporate spreads over Treasury securities have definitely tightened over the last three months, when we first bought VCIT [Vanguard IntermediateTerm Corporate Bond ETF], says Rob Glownia, a fixed-income analyst at RiverFront Investment Group Mid-duration corporates currently yield about 1.5 percentage points more than shorter-duration corporates, he says But if the economy keeps strengthening, he adds, a rate increase is more likely, and wed have to start considering the shorter end of the curve. Ari I Weinberg THE EXPERTS Insights on Advisers, Retirement You and Your Fund Manager May Have Conflicting Goals The Experts are an online group of industry and thought leaders who write about leading topics of interest in their fields For more, go to WSJ.com/experts Investors looking for just the right mutual fund may be surprised to learn that, according to a new research paper, there is an optimal size for funds In The Optimal Size of Hedge Funds: Conflict between Investors and Fund Managers, recently published in the Journal of Finance, Purdue University Prof Chengdong Yin explores this issue and identifies a problem: Asset managers want to maximize their personal profits, not their investors performance Those goals arent in conflict at first At first, bigger is better for investors and managers Thats because fund managers need some scale to run their business Why? Small funds have many fixed costs, such as portfolio managers, trading software and equity research If a fund is small, it cant generate enough fees to cover costs, which may cause it to underinvest in resources, which might negatively affect performance But as a fund increases assets, fees grow, the fund manager can invest in more resources, and the funds performance can improve Eventually, though, too much money causes problems For instance, if a large fund has to own a large portion of an illiquid smallcap stock, the resulting large purchases may drive up prices Also, funds with too much capital are forced out of niche opportunities and into investments that can handle large pools of capital Funds should want to get big to cover costs and maximize returns, but not so big that diseconomies of scale erode returns You might think that fund managers would want to hit this sweet spot of performance to help their clients But youd be wrong After all, what is the goal for a fund manager? Make as much money as possible Above a certain fund size, additional fund assets: 1) erode performance, but also 2) increase manager fees This creates a conflict of interest between investors, who want to maximize performance, and managers, who want more assets, even when this hurts their performance Prof Yin highlights that manager compensation is indeed maximized at a higher level of assets than would maximize fund performance So whats an investor to do? First, understand that the interests of a fund manager may not line up with your interests Next, watch fund performance, avoid lockups and beware of funds that grow large If a fund grows large, demand lower fees, or dump it and find a fund with fewer assets and, thus, more runway to generate better expected excess performance Wesley R Gray, CEO and CIO of Alpha Architect i i i Most Retirement Planners Ask the Wrong Question Many people within striking distance of retirement are focused on one question: Whats my number? It centers around the idea of how much money you will need to have squirreled away by the day you stop working to continue to provide you with enough income for the rest of your life People should be focusing on a different question: Whats my paycheck? That is, they should be looking at the income theyll be getting, rather than how theyll be drawing down the lump sum theyll be accumulating By asking the paycheck question, theyll be better off both emotionally and financially for several reasons When people spend their lives building up a capital base, it makes them sick to see the balances of their investment accounts go down While intellectually they understand that this money was accumulated for this very purpose, it is impossible for them watch the erosion of the capital base that they spent their whole lives building up The paycheck method solves this problem because you dont think about the ups and downs of your capital base when you frame it as getting a regular monthly salary. Even if you hit your lump-sum number, you still need to plan for large one-time expenses such as a new car, your childs wedding, or unexpected health expenses When you have hit this lump-sum number of cash, you will clutch even tighter every time you have a ma- jor expense at home But with the paycheck approach, youll plan your budget based on the money you will receive each month, and not focus on what to take from your lump sum each month Ted Jenkin, blogger, co-CEO and founder of oXYGen Financial i i i Financial Lessons of a Depression-Era Baby I was lucky to have been born in the Great Depression with parents who taught me many lessons about saving and investing I say lucky because it was a time where we learned to be frugal I was also lucky because my parents taught good financial principlesboth in conversation and by example My father always reminded me to save at least 10% of my income for retirement, and in years when we couldnt, to save our next raise Dad recommended that we have an emergency reserve for cash He said you cant foresee everything He was right We have had many financial surprises over our life, including things from very expensive uninsured dental care to helping distressed relatives at a time when they had no income My family had a budgetand we all knew about it Mom had a certain number of dollars she could spend for groceries When we went to the grocery store with her, she would make comments that something we might have wanted would make her run over the amount she could spend The same was true for clothing and shoes My father also taught me some things about investing Some of those lessons were good, like the advice to diversify Some advice was not so good, as I subsequently learned Dad felt he could pick a number of big companies, buy their stock, and hold until needed in retirement I followed that advice but got bum steers from my broker It wasnt until my 40s that a professional planner told me to get out of individual stocks and into low-cost index funds That was fantastic advice, as I learned over the next 40 years Henry Bud Hebeler, blogger, ex-president of the aerospace division of Boeing IN TRANSLATION CURRENCY WAR When economies start to flag, governments will occasionally start what is known as a currency war It is important that investors understand what the term means and why it can be so destructive to the countries involved Such conflicts start when one country decides to lower the value of its currency to increase its exports Exports become cheaper for foreign buyers whose currency doesnt deflate Its a beggar-thy-neighbor policy, says Robert Wright, professor of political economy at Augustana University, in Sioux Falls, S.D In other words, We arent doing so well, so well take it out on our partners. For example, if country A devalues its currency by 10% against country B, then the exports from country A likely will surge because they are now cheaper The problem is, the gains come at the expense of country B, which will see its exports decline Domestic sales by companies in country B also may be hurt, since imports from country A are now cheaper The result is that countries quickly retaliate, says Prof Wright Ultimately, the initial devaluer is no better off in terms of currency advantage But it is actually worse for both countries Investment dollars tend to flee from countries that devalue their currencies When China devalued its currency in 2015, it saw massive outflows of capital, as did many emerging markets Such capital is vital for the long-term growth of an economy, so when it leaves, countries tend to grow more slowly Overall, the capital will flow to countries that maintain the value of their currencies, says David Ranson, director of research at HCWE Worldwide Economics and trade between the devaluers will languish, if not fall Simon Constable THE WALL STREET JOURNAL R10 | Monday, June 6, 2016 JOURNAL REPORT | INVESTING IN FUNDS & ETFS NEWS CHALLENGE: THE MONTH IN FUNDS AND INVESTING Test Your Smarts on Oil, Hedge Funds, Rates company up nearly 15% BY JOSEPH ADINOLFI This German pharmaceutical giants shares dropped more than 14% in May after it offered to buy Monsanto, a U.S agrochemical company STOCK MARKETS ROSE for a fourth straight month in May, even as the Federal Reserve warned that its next rate increase could come as soon as this summer The Feds hawkish tilt helped push the dollar and short-term Treasury yields higher, but stoked uneasiness about already high stock valuations, causing some to question whether shares can keep rising in an era of higher interest rates Crude-oil prices continued to rise, but it didnt lead to sharp gains in energy shares The Dow Jones Industrial Average eked out a monthly gain of 0.08%, its smallest so far this year How much you know about last months news in fund investing and markets? Heres a quiz to test your knowledge A Roche B Merck C Bayer D Abbott ANSWER: C Some investors are saying Bayer doesnt have scope to raise its offer for Monsanto in part because of the drop in its share price BEN NELMS/BLOOMBERG NEWS A judge blocked a proposed merger of these two office-supply companies because of antitrust concerns A Staples Inc and Office Depot Inc B Office Depot Inc and OfficeMax Inc C W.B Mason Co and Staples Inc D Staples Inc and OfficeMax Inc ANSWER: A U.S District Judge Emmet G Sullivan sided with the Federal Trade Commission, which alleged that the merger would lead to higher prices on office supplies for large corporations Oil prices broke above _ a barrel in May, helped by falling U.S supplies and production disruptions in Canada, Nigeria and Libya A $60 B $65 C $50 D $30 ANSWER: C Analysts said the move was an important moment for the commodity that could drive further gains Oil hasnt traded above this level in seven months This longtime hedge-fund manager said that the industrys business model was under assault during the annual SkyBridge Alternatives Conference A Bill Ackman B Jim Chanos C Paul Brewer D Leon Cooperman Production disruptions sent oil prices higher Above, pumping in Vancouver See Question man said he was contemplating whether it was worth it to stay in the hedge-fund industry Halliburton Co said it would pay a breakup fee to Baker Hughes after the two companies called off a planned merger A $4 billion B $5 billion C $500 million D $3.5 billion Plummeting interest rates overseas are helping to distort this popular gauge of the U.S economys health A The yield curve B Fed-funds futures C Five-year swap spreads D Consumer-price index ANSWER: A The gap between short-term ANSWER: D The merger, once valued at nearly $35 billion, encountered opposition from regulators on several continents Fill in the blank: Assets under management in so-called funds have grown this year as investors sought protection during periods when stocks were sinking A Smart beta B Low volatility C Strategic beta D Volatility controlled ANSWER: D During his talk, Mr Cooper- Vol USA exchange-traded fund took in $1.2 billion in April alone ANSWER: B The iShares Edge MSCI Min and long-term U.S Treasury yields recently narrowed to its flattest point since late 2007 In an effort to beat back an unwanted takeover attempt by Gannett, Tribune Publishing sold a 12.9% stake to which investment firm? A Nant Capital LLC B Advanced Technology Ventures C Andreessen Horowitz D Oaktree Capital Management ANSWER: A Gannett would presumably need to purchase these additional shares, which could push the total cost of the Concerns about nonperforming loans have pummeled shares of this Italian bank, ultimately leading its CEO to agree to resign A Banca dItalia B Banca Monte dei Paschi di Siena C Intesa Sanpaolo D UniCredit ANSWER: D Federico Ghizzoni was criti- cized for UniCredits decision to underwrite a 1.5 billion ($1.7 billion) capital increase of troubled lender Banca Popolare di Vicenza SpA 10 Which sector was the best performer in the S&P 500 index in May as investors snapped up shares at low valuations after a selloff in April? A Energy B Information technology C Consumer discretionary D Health care ANSWER: B A series of weak earnings reports caused technology shares to miss out on a broader market rally in March and April But they made up for lost time in May, rising 4.5% Mr Adinolfi is a markets reporter for MarketWatch in New York Email him at joseph.adinolfi@dowjones.com FUND RESULTS WSJ COM Lippers A-to-Z monthly fund listings and other performance tables are available free at WSJ.com/FundsAnalysis And daily data at WSJMarkets.com COME WITH GOALS, LEAVE WITH A PLAN At TD Ameritrade, our complimentary goal planning sessions are built to help you bring your confidence to new heights Well help you set investing goals and develop a detailed strategy to pursue themwith regular check-ins all along the way No matter where today takes you, youll always have your feet on the ground The best returns arent just measured in dollars Visit tdameritrade.com/goalplanning All investments involve risks, including risk of loss This is not an offer or solicitation in any jurisdiction where we are not authorized to business TD Ameritrade, Inc., member FINRA/SIPC â 2016 TD Ameritrade IP Company, Inc [...]... library in one place.' Their lineup also includes from left, Justin Harris (bass), Louise Bartle (drums) and Russell Lissack (guitar) ALEX SCOTT FOR THE WALL STREET JOURNAL (5 ) American songwriter and guitarist Albert Hammond Jr of the Strokes has played the same Fender Stratocaster since 1998 ‘Oh, it’s priceless I’ve had it since the beginning,’ he said Behind the Big Apple stage, Mr Hammond tells the. .. was intimidated by the assignment, but the number of people initially accompanying him and running interference turned out to be zero I’d see it again over the years: In the early 1970s, in Chicago, he was preparing for a fight against a boxer named Jimmy Ellis There was a weathered little gym called the Johnny Coulon Physical Training Club, underneath the elevated-train tracks on 63rd Street on the. .. Although there’s nothing funny about the injuries themselves or the threats they pose to the season, they did survive the weekend rather well After all, they took two of three games from Miami, only losing against the utterly dominant Jose Fernandez, who struck out 14 and kept the Mets scoreless on Sunday The other reason to be cheery: The Mets’ patchwork lineup showed surprising promise The Mets scored... connect to them remotely—essentially, to put these legacy applications in the cloud In the long run, Chromebooks could prove to be a temporary blip in the history of computing or the thing that finally ends the dominance of Windows in the enterprise My bet is that Chrome will land somewhere in between—part of the evergrowing menagerie of technology we all use, including mobile and desktop operating systems... say Gilbane is being singled out partly because the company has been pushing the bounds of the size of projects being built with a mix of union and nonunion labor The protests are also a sign of the intense behind-thescenes maneuvering going on in the clash between labor and management in the city’s construction business On the surface, construction unions are attacking Gilbane for hiring nonunion contractors... years The military is also sending more troops into the swamps, even as it battles the insurgency Boko Haram in the north To secure oil infrastructure, the army recently moved a group of U.S.-trained troops from the front against Boko Haram It has also used surveillance planes to try to peer into 0 2015 ’16 Source: International Energy Agency THE WALL STREET JOURNAL the thick mangrove forests and find the. .. alcohol industry says minimum unit pricing in Scotland would set an international precedent minimum-unit pricing Scotland’s Parliament in May 2012 passed the law establishing a 50-pence floor on per-unit alcohol prices, with 86 members voting in favor of the measure The single member who voted against the measure later said she did so by mistake The alcohol industry attacked the law as illegal and ineffective,... ’15 THE WALL STREET JOURNAL Source: The Carlyle Group While on a bus, his father pointed to AIG’s office building, where people were coming and going “This looks like a good place to work,” the son recalls his father, who was a baker, saying Mr Rodriguez was among employees relocated by AIG to the U.S during the communist takeover of the country At first, the idea of leaving family in Cuba “was shocking”... translator were killed when their vehicle was struck by shellfire while traveling in an army convoy in southern Afghanistan, the news organization said Three assailants entered the appeals court building in Logar province during a ceremony to introduce the newly appointed chief prosecutor and shot at people in the hall, said Saleem Saleh, the governor’s spokesman Ten people, including the three attackers,... They Come Ne PETER GRANT /THE WALL STREET JOURNAL Builder Riles Up Labor Amid Push Into NYC Market New J John Anderson III, Alexander Cole, Brennan Gilbane Koch, and William Gilbane III, below, work for the family firm, Gilbane Building The PATH train, already bursting at the seams, stands to get more crowded amid a building boom in northern New Jersey, in another sign the transit network is straining