Multi-Manager Small Cap
as of December 31, 2013
Fund Commentary
For the period, a series of encouraging economic releases led to the Federal Reserve's tapering decision, announced on December 18. Tapering commences in January 2014 and amounts to a $10 billion reduction in Fed asset purchases, equally split between Treasuries and mortgage-backed securities. The U.S. stock market rallied following the announcement, based on renewed hope for a sustainable economic recovery. For the quarter, the Russell 2000® Index gained 8.72%, with the Russell 2000® Value Index outperforming the Russell 2000® Growth Index by 1.1%. The financial sector, which constitutes a 38% weight in the Russell 2000® Value Index, significantly contributed to performance, as easy monetary policy and a steep yield curve continue to support earnings growth within the sector. For all of 2013, the Russell 2000® Index gained 38.82%.

The Multi-Manager Small Cap Fund trailed the benchmark during the quarter, with a return of 8.33% compared with the benchmark return of 8.72%. During the period, stock selection in the financial sector detracted from returns. The Fund also underperformed within the energy segment. Areas of strength included healthcare and consumer stocks. For the full year, the Fund returned 39.59% compared with the benchmark return of 38.82%.

Sub-adviser performance was within expectations for the quarter. The deeper-value portfolio of Hotchkis and Wiley was in favor during the quarter and generated significant outperformance. For the full year, sub-adviser performance was strong, with each sub-adviser adding value relative to their respective benchmarks.
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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