Most major U.S. stock indexes rose in the second quarter as they recovered from steep losses late in the period following the UK referendum on June 23 to leave the European Union. Mid- and small-cap shares outperformed their large-cap counterparts. While the U.S. economy grew at a sluggish 1.1% annual rate in the first quarter of the year, preliminary data pointed to a pickup in the second quarter. Although the pace has slowed recently, jobs growth averaged 200,000 per month over the past 12 months, and the national unemployment rate was 4.7% in May, its lowest level in more than eight years.
The Equity Index 500 Fund returned 2.40% in the quarter compared with 2.46% for the S&P 500 Index and 2.38% for the Lipper S&P 500 Funds Index. For the 12 months ended June 30, 2016, the fund returned 3.70% versus 3.99% for the S&P 500 Index and 3.70% for the Lipper S&P 500 Funds Index. The fund's average annual total returns were 3.70%, 11.81%, and 7.16% for the 1-, 5-, and 10-year periods, respectively, as of June 30, 2016. The fund's expense ratio was 0.27% as of its fiscal year ended December 31, 2015.
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 returns in the S&P 500 were mostly positive. After losing ground in 2015, energy stocks rallied with crude oil prices. Stocks in the relatively small telecommunication services and utilities sectors also outperformed, helped by investors seeking attractive income versus low-yielding fixed income alternatives. Information technology produced the weakest results for the quarter.
Despite early 2016 concerns about job creation and wage growth, the U.S. economic expansion appears intact, although still subdued. The Federal Reserve's gradual pace of interest rate hikes should remain supportive for stocks, and U.S. consumers are in strong shape. Corporate earnings growth continues to be hampered by weakness in the energy and materials sectors, with second-quarter year-over-year growth expected to contract for the fifth straight quarter. However, consensus estimates suggest that a rebound in earnings is possible in the second half of the year.