The Large Cap Value Fund posted a total return of -12.81% for the quarter, compared with -11.15% for the Fund's benchmark, the Russell 1000 Value Index. The largest detractors to relative performance included an underweighted position in the utilities sector and stock selection within the consumer discretionary and financial sectors. The energy sector provided the largest contribution to relative performance, as our underweight and favorable stock selection helped results. Stock selection was also favorable in the industrials and information technology sectors.

After the reconstitution of the Russell 1000 Value Index on June 25, many of our sector weightings shifted on a benchmark-relative basis. While our bottom-up fundamental analysis primarily drives our portfolio positioning, we will evaluate our sector weightings to address any unintended risk resulting from the benchmark change.

The dividend yield on the Fund was very competitive for the quarter, surpassing the S&P 500 Index and matching the yield on 10-year Treasuries, while providing significant opportunities for earnings and dividend growth and capital appreciation. As always, we believe price and value are the keys to long-term investing success. While volatility can be unnerving, we believe the best way to handle this situation is to focus on owning high-quality companies with well-known brands, established industry positions and a proven track record for improving cash flow, margins and dividend yields.

If you are a value-oriented investor seeking long-term capital appreciation with the relatively lower risks of large, dividend-paying stocks, this Fund may be ideal for you. With its emphasis on relatively low-priced, high-yielding stocks, it can work in tandem with a growth-oriented fund to create a well-balanced, diversified stock portfolio.

• Focus on valuation and dividend yield, which is designed to contribute positively to total return and provide a cushion against market volatility.
• Select stocks based on valuation levels, financial strength and earnings growth potential, identifying a catalyst for potential appreciation, such as a new product line or corporate restructuring.
• Maintain a strict sell discipline—systematically sell stocks that we believe have achieved their true value.