Market Sector Update

• International markets delivered positive returns over the quarter in U.S. dollar terms. The U.S. dollar continued to weaken over the quarter and in line with year-to-date trends. U.S. dollar weakness was most notable against the euro, which gained 3.4% over the period.
• Global purchasing managers’ indices marginally improved during the quarter. Emerging-market growth has improved, and we believe will aid sales and earnings for multinational and emerging-market companies.
• During the quarter, the market debated whether the U.S. Federal Reserve (Fed) would stay the course and raise rates in December 2017, first pricing in no hike and then pricing in a hike. The Fed announced its plan to slowly unwind its multi-trillion-dollar balance sheet. Both consumer and business confidence remained high during the quarter, with the U.S. economy expected to pick up in the second half.
• Oil prices rebounded in the quarter notwithstanding the disruptions of Hurricane Harvey. This boosted returns in the energy sector as well as other commodity-producing countries.

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 information technology sector helped performance as that sector performed well for the period. The relatively small allocations to telecommunication services and utilities benefitted performance as those sectors performed relatively poorly. After poor performance last quarter, the energy sector rebounded and contributed nicely to the Fund’s performance for the period.
• From a country allocation standpoint, the Fund’s large allocations to the U.S., the U.K. and China (an approximate 59% aggregate allocation) helped performance as those markets posted gains for the period.

Outlook

• We believe the outlook for global growth remains strong. Global leading economic indicators continue to flash green. Key Asian exporters continue to show strong activity. This is a positive for commodity producers, and goods and services exporters. Brazil finally exited a deep recession which lasted more than two years. We believe India’s recently implemented GST will lead to stronger growth in the intermediate term.
• Further U.S. political problems regarding tax reform passage might hurt business, consumer and investor confidence. Further strength in the euro is a concern for European-based earning per share (EPS) growth. 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. That said, the U.S., Europe and the U.K. have clearly indicated they are tightening or have a tightening bias.
• We believe emerging-market valuations remain attractive as earnings revisions continue to be revised upwards across many regions and sectors.

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, 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.