Quarterly Commentary

• In 2Q20, U.S. equities rallied from their worst quarter since 2008; S&P 500 returned 20.54%; Russell 2000 returned 25.42%. YTD at June 30, the S&P 500 returned -3.08%; Russell 2000 returned -12.98%.
• The March 23 market bottom was coincident with the Fed’s announcement of unlimited quantitative easing and the House’s passage of The CARES Act. The S&P 500 returned 41.28% since this bottom through June 30.
• The U.S. healthcare system held up to a peak of hospitalizations in mid-April. The world’s ability to adapt to COVID-19 has steadily improved.
• 1Q20 earnings and 2Q20 guidance were better than expected.
• During the quarter, low leverage and high quality factors outperformed, while small size, low volatility, high yield and value factors underperformed¹. The top industry contributors were software and tech hardware².

• In 2Q20 and year-to-date, the Fund significantly outperformed, due to almost all of its top holdings outperforming their sectors. The Fund’s overweight in information technology and its underweights in consumer staples, financials, energy, retail and utilities were all contributors to performance³.
• The Fund’s Institutional (NEAIX) and Retail classes (NEAGX) returned 35.07% and 34.85%, respectively, in 2Q20. YTD as of June 30, NEAIX returned 12.96% and NEAGX returned 12.68%, considerably outperforming the S&P 500’s -3.08% and Russell 2000’s -12.98% YTD results.
• The Fund’s top two contributors were two of its largest positions, PDF Solutions Inc. (PDFS) and Entegris Inc. (ENTG). Both companies provide technology for advanced semiconductor manufacturing.
• Vicor Corporation (VICR) was the third leading contributor and designs power conversion devices used to distribute power efficiently through a data center.
• All three of these companies benefit from the build-out of data centers. For an interesting view of the importance of data centers, read Digital Cathedrals by Mark Mills. E-commerce and other online offerings, which accelerated in response to the global pandemic, are enabled by data centers.
• The top ten holdings represented 68.62% of net assets and nine of the top ten holdings outperformed their sectors in the second quarter.
• None of the Fund’s positions were material detractors in 2Q20.

• We target companies we perceive to have significant, unrecognized growth opportunities. COVID-19 is hastening revolutionary development in technology and life sciences that will improve our quality of life. The Fund is a long-term investor in companies that build the infrastructure necessary to bring these developments to market.
• For years, we have been underweight financials, utilities, commodity and consumer-facing companies. We believe the underlying technology infrastructure is less vulnerable to economic cycles.
• The Fund’s greater-than-benchmark exposure to high quality stocks (defined by Morningstar to include profitability and moderate leverage) was helpful for the Fund’s performance this quarter. We seek current and growing profitability and sound balance sheets in stocks we hold, and believe that during a time of significant uncertainty this may continue to provide benefits for our shareholders.

1 – FTSE Russell. Market Maps Monthly Performance Report, June 2020.
2 – FTSE Russell. Market Maps Monthly Performance Report, June 2020.
3 – FactSet, Top Down Attribution, Portfolio Analysis 3.0.