Small Cap Value Fund Second Quarter 2016

We outperformed our index in the quarter despite a macro environment that was similar to the last few years; lower global long term interest rates and an equity market response bidding up defensive bondproxies and low volatility stocks, areas our deep value style rarely allows us to own. In the quarter and year to date, Utilities, Consumer Staples and Telecom were among the leading sectors of the market in its continuing reach for dividend yield and high payout ratios.  These areas, as well as Financial Services and Producer Durables were headwinds to performance.  Recently, fundamentals have only explained a portion of equity returns, as factor trading dominates.  Bond proxies trade at an unusually wide 38% P/E premium to non proxies, despite earnings growth rates that are generally lower.