Market Sector Update

• Steady, but improving economic data was supportive of a positive market environment for second quarter, with the Russell 2000 Growth Index (Fund’s benchmark) moving higher by 4.4%.
• The U.S. economy appears on solid footing experiencing the third consecutive quarter of positive, double-digit earnings growth for the broader market. Global data also advanced, particularly in Europe, contributing to improved sentiment about a global recovery.
• In spite of the inability of the U.S. Congress to advance growth-oriented policies, domestic economic data rebounded from first quarter, including improved personal consumption, steady job gains, surging home buyer and builder confidence and decelerating core inflation.
• The Federal Reserve (Fed) is messaging a third rate hike in coming months after raising in March, signaling growing comfort with the strength of the expansion.

Portfolio Strategy

• For the quarter, the Fund delivered positive returns and outperformed its benchmark, before the effects of sales charges. Favorable stock picks within industrials, technology and consumer discretionary drove the majority of performance.
• Results were moderated by weakness in health care, primarily due to an underweight position in the resurgent biotechnology industry. Strong stock selection in the airfreight and logistics, thrifts and mortgage finance as well as internet software and services industries was additive during the quarter.
• The Fund harvested gains in certain strong technology, financials and industrials stocks, and these gains were used to supplement positions broadly across sectors. Material portfolio weighting changes did not take place during the period and the focus remains on finding attractive, improving companies with good value creation opportunities.
• The Fund remains overweight technology and industrials and underweight health care, primarily due to the limited exposure to biotechnology and pharmaceuticals industries.

Outlook

• The Fund remains positioned to potentially benefit from broadening economic strength connected to improvements in earnings growth. While our enthusiasm for significant fiscal reform is tempered, we are encouraged by positive consumer sentiment, favorable energy prices, low inflation and improvement in corporate outlook.
• We are closely monitoring the Fed’s rate hike cycle and remain positioned for modestly rising interest rates should they occur and a pro-cyclical backdrop.
• Consistent with our process, we are focused on owning companies with improving growth and earnings prospects managed by proven leadership – characteristics we believe will contribute to portfolio performance over time.

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 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.

The Russell 2000 Growth Index measures the performance of the small-cap growth segment of the U.S. equity universe. It is not possible to invest directly in an index.

Class R6 shares were Class N on March 31, 2017. Class T shares were added to the Fund on July 5, 2017.

Risk factors: The value of the Fund’s shares will change, and you could lose money on your investment. Investing in small-cap stocks may carry more risk than investing in stocks of larger more well-established companies. 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. 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.