Market Sector Update

• The upward momentum in equities continued into the second quarter, but at a more moderate pace compared to the sharp rally at the start of the year. The Russell 3000 Growth Index, the Fund’s benchmark, advanced 4.5% for the period, with 10 of 11 sectors delivering positive returns. There were numerous market moving headlines during the period, but none more dominating than the China trade negotiations and the expected path of future interest rates.
• The U.S.-China trade story veered from news that a deal was near in April, to a complete breakdown in early May, which included significant sanctions placed on Huawei, China’s technology giant. The story appears to be rebounding again after President Donald Trump and China President Xi Jinping called a “truce” at the G20 Summit and agreed to restart talks. Investors reacted in real-time to this sequence of events by moving markets lower on fears of a prolonged trade war and then higher on renewed hope for compromise.
• With regard to interest rates, there were expectations in early 2019 the U.S. Federal Reserve (Fed) would prolonged its program of raising the federal funds rate with at least two hikes during the year. However, slowing global economic growth has led to a reversal in that forecast, with many investors anticipating the Fed to start cutting rates. Options markets are currently pricing in a 100% probability of a 25 basis points (bps) rate cut at the Fed’s July meeting and a 63% probability of another 25 bps of cuts through the remainder of 2019.

Portfolio Strategy

• The Fund had a positive return for the quarter and slightly outperformed its benchmark.
• The Fund benefited from solid stock selection, while sector allocation was a minor drag when compared to the benchmark. Strong stock selection in the communication services, industrials and information technology sectors more than offset slight weakness in the consumer discretionary space. From an allocation standpoint, relative performance was marginally impacted by the Fund’s overweight in health care, which was the second worst performing sector in the benchmark during the period.
• With regard to individual holdings, top contributors included Qualcomm, Inc., Market Axess Holdings, Inc., the Walt Disney Company, Gardner Denver Holdings and Dexcom, Inc. Conversely, the largest detractors to performance were Aerie Pharmaceuticals, Inc., Facebook, Inc., Farfetch Ltd., GoDaddy, Inc. and Apple, Inc.

Outlook

• Looking forward, we remain diligent and patient with our investment approach, recognizing that the economic environment is not always predictable. We seek companies with strong secular growth profiles, robust business models, strong competitive moats and competent management teams that are properly prepared to navigate the difficult times, as well as capitalize on future opportunities. Investing in businesses, not trading in the latest “tweet” remains our focus for generating long-term capital appreciation.
• Our efforts remain laser focused on researching individual companies of all sizes that we believe are well positioned to disrupt their markets while exceeding market averages on profitability. We continuously monitor a list of target companies to assess their potential for delivering above market returns over a three-to-five year basis, not just in the short term.

The opinions expressed are those of the Fund’s manager and are not meant as investment advice or to predict or project the future performance of any investment product. The opinions are current through June 30, 2019, are subject to change at any time based on market and other current conditions, and no forecasts can be guaranteed. This commentary is being provided as a general source of information and is not intended as a recommendation to purchase, sell, or hold any specific security or to engage in any investment strategy. Investment decisions should always be made based on an investor’s specific objectives, financial needs, risk tolerance and time horizon. Past performance is not a guarantee of future results.

All information is based on Class I shares.

Effective Feb. 21, 2019, the Fund's benchmark changed from the S&P 500 Index to the Russell 3000 Growth Index.

The S&P 500 Index is a float-adjusted market capitalization weighted index that measures the large-capitalization U.S. equity market. The Russell 3000 Growth Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market. It is not possible to invest directly in an index.

Top 10 Equity Holdings as a percent of net assets as of 06/30/2019: Microsoft Corp. 6.4, Amazon.com, Inc. 3.7, The Walt Disney Co. 3.5, The Boeing Co. 3.3, Elanco Animal Health, Inc. 3.2, Fiserv, Inc. 3.0, MasterCard, Inc. 2.9, Danaher Corp., 2.7, Take-Two Interactive Software, Inc. 2.6, Gardner Denver Holdings, Inc. 2.6.

Risk factors: The value of the Fund's shares will change, and you could lose money on your investment. Large-capitalization companies may go in and out of favor based on market and economic conditions. Prices of growth stocks may be more sensitive to changes in current or expected earnings than the prices of other stocks. Growth stocks may be more volatile or not perform as well as value stocks or the stock market in general. The Fund typically holds a limited number of stocks (generally 30 to 50). As a result, the appreciation or depreciation of any one security held by the Fund may have a greater impact on the Fund's net asset value than it would if the Fund invested in a larger number of securities. These and other risks are more fully described in the Fund's prospectus. Not all funds or fund classes may be offered at all broker/dealers.