Q3 2025 Fund Commentary

Market commentary

U.S. economic activity was resilient in the third quarter. Growth was supported by steady consumer spending. However, manufacturing faced pressures from trade uncertainty. Inflation was above the U.S. Federal Reserve Board’s (Fed) 2% target. At its September meeting, the Fed lowered its federal funds rate to the 4.00% to 4.25% range.

The U.S. unemployment rate was 4.3% at the end of August 2025. Job growth slowed, but wage gains and consumer demand were supportive. The Fed signaled two additional rate cuts by year-end, balancing inflation risks with employment concerns.

U.S. small- and mid-capitalization equities rose in the third quarter. The industrials and health care sectors led performance, supported by investor interest in biotechnology and manufacturing innovation. Information technology and consumer discretionary stocks posted mixed results. While AI-related names advanced, trade pressures weighed on retail and software companies.

Performance

The Fund’s relative exposure to Cognex Corp. and Maximus Inc. contributed to performance. Cognex benefited from higher demand in consumer electronics and factory automation, which led to higher profitability. Maximus’ shares rose because of its focus on efficiencies and reduced waste. New opportunities, like Medicaid redeterminations, allowed Maximus to increase organic growth by 2% for the first half of 2025.

Relative exposure to Align Technology Inc. and PROCEPT BioRobotics Corp. detracted from the Fund’s performance. Align Technology was affected by a lower revenue forecast for the busy summer months. PROCEPT’s shares were under pressure after the surprise retirement of Chief Executive Officer Dr. Reza Zadno in July.

At the sector level, stock selection with consumer discretionary and underweight exposure to financials contributed to the Fund’s performance. Stock selection within health care and communication services detracted from performance.

Portfolio activity

Portfolio activity is an outcome of the sub-advisor’s process, which is driven by a stock selection, optimization and vetting process that runs on a daily basis. The sub-advisor added Dana Inc., Global Industrial Co. and Garrett Motion Inc., while Energy Recovery Inc. and Adeia Inc. were increased. Sprouts Farmers Market Inc. and CareTrust REIT Inc. were sold and BGC Group Inc. was reduced.