Multi-Manager Small Cap
as of June 30, 2014
Fund Commentary
During the second quarter, U.S. small-cap stocks as measured by the Russell 2000® Index returned 2.05%, underperforming their mid- and large-cap counterparts. For the period, energy was the top-performing segment of the domestic equity market, driven in part by continued increases in oil and gas prices. With Treasury yields continuing to decline, the utilities sector was the second-best performer for the quarter, leading all sectors for the year-to-date period. In contrast, industrials and telecommunications services were the bottom-performing segments of the Index. Value outperformed growth during the quarter, with the Russell 2000® Value Index returning 2.38%, while the Russell 2000® Growth Index returned 1.72%.

The Multi-Manager Small Cap Fund trailed the benchmark during the quarter, with a return of 1.82%. Overall stock selection was additive to results, however, the Fund’s underweight allocation to the energy sector represented a drag on relative return as energy far outpaced other sectors of the market.

Among the sub-advisers, Hotchkis & Wiley delivered the strongest results, with particular success in the industrials and healthcare sectors. Quality growth sub-adviser Riverbridge struggled during the quarter, with technology stocks and consumer holdings dragging down returns.
Investor Profile

If you're a long-term investor looking to diversify your investments by pursuing the growth potential of small-company stocks, then this Fund may be right for you. It is intended for investors who are aware that small-company stocks are generally riskier than large-company stocks due to greater volatility and less liquidity.

  • Invest in small-cap stocks through a variety of external small-cap managers who have distinct investment styles and strategies.
  • Select complementary managers from a broad universe of investment managers.
  • Blend managers into a single fund in an effort to provide an attractive combination of risk and return.
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Not FDIC insured | May lose value | No bank guarantee

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