Market Sector Update

• As a whole, global equities were higher for the quarter with the U.S. and Japan the standout performers. European markets were flat in local currency and in U.S. dollar terms as the dollar remained range bound over the quarter versus a basket of other currencies. Emerging market equities underperformed, with many emerging market currencies weakening and contributing to their underperformance.
• The Trump administration’s policies regarding international trade and investment emerged as an important source of downside risk for the global economy. The administration completed a revamp of the North American Free Trade Agreement (NAFTA) with Mexico and Canada, named the U.S.-Mexico-Canada Agreement (USMCA), but trade talks with China did not make similar progress.
• Central banks continued to normalize their policies, driven by strengthening economic growth and easy financial conditions. The U.S. Federal Reserve hiked the federal funds rate a 0.25-percentage point to a range of 2.00-2.25%, marking the third rate increase in 2018. In addition, the European Central Bank has announced it will end its bond market purchases by December.
• As global liquidity wanes, weaker emerging market countries such as Turkey, Argentina, Brazil and Mexico faced wider credit spreads, weaker currencies and lower stock prices. Volatility in the global fixed income markets also increased during the quarter.

Portfolio Strategy

• The Fund slightly outperformed the benchmark for the period, (before the affect of sales charges.) The Fund's allocation to developing market equities outperformed their emerging-market peers, which aided overall performance.
• At the sector level, the largest contributors to relative performance were financials, consumer staples and health care. In addition, an underweight position to real estate also contributed to relative performance. Conversely, the largest sector detractors to relative performance were utilities, communication services and information technology.
• From a country allocation standpoint, the Fund’s large allocations were to the U.S., Japan, and the U.K. The combined weight of these allocations comprised more than 65% of the fund total weight. In addition, overweight allocations to India, Malaysia and Taiwan benefitted performance as those markets posted strong gains for the period.

Outlook

• In general, monetary and fiscal policy remains very supportive for equity markets. That stated, nationalism is the rise virtually everywhere, led by the U.S. Going forward, geopolitics is likely to have a greater impact on asset performance than monetary policy. The question remains: How much longer will the cycle extend uninterrupted by looming risks? As a result, we are watching closely for signs of change and continue to seek stocks that should better withstand an economic downturn. If the trade war escalates and becomes irreversible, it would likely end the current cycle and be a detriment to equities. Outside of some emerging markets like Turkey, Brazil and China, asset prices have been relatively well behaved.
• In much of the world, global monetary policy remains at the extremes of easy and we do not see that changing materially unless inflation accelerates at a higher-than-expected rate. Despite the majority of major central banks beginning to or indicating a desire to taper their aggressive monetary policy, we believe virtually all countries are struggling with high levels of debt. As a result, we believe central banks will attempt to keep rates below nominal gross domestic product growth in order to monetize the debt. As such, we believe there is a long-term cap on how high rates can go. We anticipate the continued slow, deliberate exiting of quantitative easing and reversing of negative interest rate policy globally.

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 Sept. 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.

The Fund is a passively managed index fund designed to track the performance of its stated benchmark index. It does not invest in securities based on the managers' view of the investment merit of a particular security or company, nor does it conduct conventional investment research or analysis or forecast market movement or trends, in managing the assets of the Fund. The Fund seeks to remain fully invested at all times in securities that, in combination, provide exposure to its respective benchmark Index without regard to market conditions, trends or direction.

The MSCI ACWI Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets.The MSCI ACWI consists of 46 country indexes comprising 23 developed and 23 emerging market country indexes. The developed market country indexes included are: Australia,Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden,Switzerland, the United Kingdom and the United States. The emerging market country indexes included are: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary,India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates. It is not possible to invest directly in an index.

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.