Multi-Manager Small Cap
as of March 31, 2014
Fund Commentary
The U.S. economy continues to grow, but the pace of growth declined during the winter months, due in part to unfavorable weather. In the first quarter, increased geopolitical risk from the Russia/Ukraine conflict and a more hawkish-than-expected stance from U.S. Federal Reserve Chair Janet Yellen contributed to volatility in the U.S. equity market, which nevertheless finished with a positive return. During the quarter, small-cap stocks as measured by the Russell 2000® Index returned 1.12%. The Russell 2000® Value Index returned 1.78%, outperforming the Russell 2000® Growth Index return of 0.48%. Among small caps, the energy and materials sectors led the market while consumer-oriented sectors underperformed. Retailers continued to struggle as low weather-induced store traffic led to aggressive discounting that reduced profit margins.

Following a strong 2013, the Multi-Manager Small Cap Fund trailed the benchmark during the first quarter with a return of 0.26%, compared with the Russell 2000® Index return of 1.12%. Stock selection added to relative results within the consumer discretionary sector, while positions in health care and energy detracted from returns.

Sub-adviser performance was mixed during the quarter. Cardinal Capital was the best performer, gaining over 3% based on exceptional stock selection. Growth sub-adviser Riverbridge delivered the weakest results, driven by underperformance in the technology and consumer staples sectors. Despite the relatively weak quarter,
12-month performance for the sub-advisers and the Fund remains ahead of the benchmark.
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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