Market Sector Update

• Global equity markets moved higher during quarter, with European and Japanese equities outperforming the U.S. Emerging-market equities also performed well, led by strong performance in China.
• In general, small-cap equities outperformed large-cap equites, while growth-oriented stocks outperfromed thier value-oriented peers for quarter.
• The energy sector was a notable laggard, continuing the negative trend from the first quarter as commodity prices remained weak.
• The U.S. dollar was down against most major currencies as global economic data improved in the quarter.
• The U.S. Federal Reserve raised rates in June and, at the end of the quarter, both the European Central Bank and the Bank of England suggested a turn to tightening.

Portfolio Strategy

• The Fund performed in line with the benchmark (before the effects of sales charges) during the period. The Fund's allocation to emerging-market equities helped performance as developing markets typically outperformed their developed market peers.
• The Fund’s relatively large allocation to the financials and information technology sectors helped performance as those sectors performed well for the period. The relatively small allocation to energy benefitted performance as the energy sector faced headwinds from falling oil prices.
• From a country allocation standpoint, the Fund’s large allocations to the U.S., Japan and the U.K. (an approximate 66% aggregate allocation) helped performance as those markets posted gains for the period.

Outlook

• While the global economic outlook has been generally positive, a number of risks to equity markets exist that may not be fully reflected in the current market environment. For instance, Europe has to manage through the process of Britain’s exit from the European Union, which will likely cause some market uncertainty. Additionally, geopolitical tensions, particularly with North Korea, are heightening which can lead to volatility.
• While the U.S. Presidential election had an initial positive impact on equity risk appetite, President Trump’s ability to deliver on economic promises has been challenging thus far.
• Trade in Asia appears to be picking up, lifting exports of Korea and China. Despite some monetary tightening in China recently, the economy on balance is doing well as the shift to domestic services and consumption continues.

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, 2017, 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.

Risk factors: The value of the Fund’s shares will change, and you could lose money on your investment. 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. The Fund entails other risks, including imperfect benchmark correlation and market price variance that may decrease performance. While the Fund attempts to track the performance of its stated index, there is no guarantee or assurance that the methodology used to create the Index will result in the Fund achieving high, or even positive, returns. The Index may underperform, and the Fund could lose value, while other indices or measures of market performance increase in value. A number of factors may affect the Fund’s ability to achieve a high degree of correlation with the Index, and there is no guarantee that the Fund will achieve a high degree of correlation. Failure to achieve a high degree of correlation may prevent the Fund from achieving its investment objective. The Fund’s use of derivatives presents several risks, including the risk that these instruments may change in value in a manner that adversely affects the Fund’s net asset value and the risk that fluctuations in the value of the derivatives may not correlate with the reference instrument underlying the derivative. 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. 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.