Market Sector Update

• Despite an increasingly uncertain macroeconomic backdrop, with most leading economic indicators slowing and geopolitical concerns rising, riskier asset prices held up well during the quarter. Equities were able to produce moderate gains and riskier parts of the fixed-income market outperformed.
• One notable exception to this was emerging markets, where trade fears and slowing economic conditions took their toll on asset prices and currencies.
• The U.S. dollar resumed its status as a safe haven, appreciating against most major currencies during the quarter.
• Despite additional U.S. Federal Reserve rate hikes, the long end of the yield curve has remained anchored, resulting in additional flattening of the curve.

Portfolio Strategy

• The Fund outperformed its benchmark for the quarter, with both the equity and fixed-income portfolios contributing to relative outperformance.
• The fixed-income portfolio benefited from a shorter duration relative to the benchmark as well as significant exposure to both high-coupon securities with short call provisions and securities with floating rate coupon features.
• Within the equity portfolio, allocations to energy, financials and information technology were top relative contributors to Fund performance. On a geographic basis, allocations in Norway, Canada and the U.S. benefited performance, while Germany, Italy and Japan proved to be a drag on performance.

Outlook

• After reducing perceived risks in the portfolio in an increasingly uncertain market environment at the end of last quarter, the Fund’s positioning remained largely unchanged for the second quarter. The Fund remains slightly overweight equities with a tilt toward defensive stocks, and the fixed-income portfolio maintains its relative overweight allocation to shorter duration credit and floating rate securities.
• That said, the emerging-market debt selloff has made their yield levels more attractive. While, we remain reluctant to take on emerging-market currency risk, we believe there are several attractive opportunities appearing in emergingmarket (U.S. dollar denominated) debt.

The opinions expressed are those of the Fund’s manager for Class I shares 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, 2018, 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.

Diversification and asset allocation are investment strategies that attempt to manage risk within your portfolio but they do not guarantee profits or protect against loss in declining markets.

Risk factors: The value of the Fund’s shares will change, and you could lose money on your investment. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. International investing involves additional risks including currency fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. These risks are magnified in emerging markets. Fixed-income securities are subject to interest-rate risks and, as such, the net asset value of the Fund may fall as interest rates rise. Dividend-paying investments may not experience the same price appreciation as non-dividend-paying instruments. Dividend-paying companies may choose not to pay a dividend, or dividends may be less than was anticipated. Investing in high-income securities may carry a greater risk of nonpayment of interest or principal than higher-rated bonds. Not all funds or fund classes may be offered at all broker/dealers. These and other risks are more fully described in the Fund’s prospectus.