Market Sector Update

• International equities suffered a tumultuous quarter, rocked by the U.S.-China trade war and worries of recession, with increasingly negative data from Germany and uncertainty over the U.K.’s exit from the European Union. As a result, the MSCI EAFE Index wound up in the red.
• In light of these tensions, the U.S. Federal Reserve and other central banks lowered rates, and conciliatory moves by China and the U.S. in September cheered markets somewhat. The worst performing sectors were energy, materials and financials, while health care, utilities and consumer staples performed the best.
• By geography, Hong Kong, Singapore and Sweden were the worst performing countries, while Belgium, Japan and the Netherlands were the top performers.

Portfolio Strategy

• The Fund posted a negative return and underperformed the benchmark for the quarter, with poor stock selection in financials and industrials driving relative underperformance. An overweight allocation and poor stock selection in energy also detracted from performance, though strong stock selection in communication services somewhat offset the relative underperformance.
• The top individual detractors to performance were energy services provider John Wood Group plc, independent power producer China Resources Power Holdings Co. Ltd., and industrial distributor Rexel S.A. Top contributors to Fund performance included Vodafone Group plc, which rallied on plans of tower monetization; Japanese IT service provider Fujitsu Ltd., which reported strong quarterly earnings; and ENEL S.p.A., as the market cheered its strong renewable project installations.
• During the quarter, we added four new holdings to the Fund, including chemicals companies BASF Aktiengesellsch aft and Covestro AG as well as Korean bank Shinhan Financial Group Co. Ltd. and Japanese refining and petrochemical conglomerate JXTG Holdings, Inc. We also took advantage of price moves in the quarter to add to our positions in POSCO, UBS Group AG and Amundi S.A. We exited our positions in News Corp., Class A and Total S.A. as well as trimmed our positions in Fujitsu Ltd., Royal Dutch Shell plc, Class A and Credit Suisse Group AG, Registered Shares.

Outlook

• The global economy is stuck in a phase of tepid growth. While the U.S. consumer remains healthy, weakness in global trade and manufacturing has dampened the global growth outlook. Concerns persist about a global recession, as the trade war between the US and China remains at the forefront, and monetary stimulus continues to be a feature of the global economic landscape.
• Manufacturing activity remains weak in China and the eurozone. Investment in the U.K. has been lackluster due to Brexit uncertainty and would be more concerning if not for low unemployment and solid retail sales growth.

The opinions expressed are those of the Fund’s managers 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, 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.

Top 10 equity holdings as a percent of net assets as of 09/30/2019: Roche Holdings AG, Genusscheine 3.3%, ENEL S.p.A. 3.2%, Tesco plc 2.9%, Volkswagen AG 2.9%, Honda Motor Co. Ltd. 2.8%, Schneider Electric S.A. 2.8%, Hitachi Metals Ltd. 2.7%, Travis Perkins plc 2.6%, A.P. Moller-Maersk A/S 2.6% and Rexel S.A. 2.6%.

MSCI EAFE is an unmanaged index comprised of securities that represent the securities markets in Europe, Australasia and the Far East. It is not possible to invest directly in an index.

All information is based on Class I shares.

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. The value of a security believed by the Fund's manager to be undervalued may never reach what the manager believes to be its full value, or such security's value may decrease. These and other risks are more fully described in the Fund's prospectus.