U.S. stocks rose in the first quarter of 2015 despite occasional bouts of risk aversion and volatility and uncertainty about when the Federal Reserve may begin tightening its monetary policy. The market was supported by corporate merger activity, reduced energy costs, low interest rates, and massive quantitative easing efforts in the eurozone and Japan. The S&P 500 Index reached all-time highs in the middle of the quarter but gave back much of those gains and ended the period only modestly higher. The strong dollar has been taking a toll on the earnings of large-cap companies, which generate well over one-third of their revenues from overseas.
The Equity Index 500 Fund returned 0.90% in the quarter compared with 0.95% for the S&P 500 Index and 0.88% for the Lipper S&P 500 Funds Index. For the 12 months ended March 31, 2015, the fund returned 12.46% versus 12.73% for the S&P 500 Index and 12.38% for the Lipper S&P 500 Funds Index. The fund's average annual total returns were 12.46%, 14.17%, and 7.75% for the 1-, 5-, and 10-year periods, respectively, as of March 31, 2015. The fund's expense ratio was 0.28% as of its fiscal year ended December 31, 2013.
For up-to-date standardized total returns, including the most recent month-end performance, please click on the Performance tab, above.
Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results.
Share price, principal value, and return will vary and you may have a gain or loss when you sell your shares.
The Equity Index 500 Fund charges a 0.5%
redemption fee on shares held 90 days or less.
The performance information shown does not reflect the deduction of the redemption fee;
if it did, the performance would be lower.
The portfolio seeks to provide broad exposure to large-cap U.S. stocks by replicating the structure and performance of the S&P 500 Index. Sector performance in the index was broadly mixed. The health care and consumer discretionary sectors performed best. Telecommunication services marginally outperformed the broad market, while materials, consumer staples, and information technology shares performed mostly in line with the index. Utilities, financials, and energy stocks fell moderately as the market favored growth stocks over higher-yielding segments.
The U.S. economic recovery appears to be on a relatively firm footing and should benefit from stable growth driven by labor market strength and reduced fiscal headwinds. Inflation remains contained, helped by low energy prices, and the Federal Reserve is on course to begin monetary tightening later this year, which we view as indicative of growing confidence in the economy. Healthy corporate balance sheets and cash flows offer companies the flexibility to increase hiring, enhance merger and acquisition activity, and return capital to shareholders. However, the global economy remains fragile, and the strong dollar should continue to weigh on earnings for many multinational corporations. Nevertheless, unitholders should note that we do not make investment decisions based on market forecasts or prospects for individual companies.