The S&P 500® Index returned 5.24% during the third quarter, while the Fund returned 5.23%. Large-cap equities underperformed mid caps, as measured by the 7.54% return of the S&P MidCap 400® Index, and small caps, as gauged by the 10.73% return of the S&P 600 Index. The S&P 500® returned 19.34% for the one-year period ended September 30, with three- and five-year average annual returns of 16.27% and 10.02%, respectively.
The top-performing sectors in the Index were materials and industrials, which returned 10.30% and 8.91%, respectively, amid investors preference for stocks with the highest degree of economic sensitivity. The worst-performing sectors were telecommunications services and utilities at -4.40% and 0.19%, respectively, consistent with the general underperformance of defensive market segments.
U.S. equities performed well in July, but weakened during August on concern that the Federal Reserve would taper its stimulative quantitative easing policy. Stocks then recovered to finish strong in September. In general, stocks were supported by an environment of improving economic growth, highlighted by strength in the housing, auto and manufacturing sectors. Signs of improving economic conditions in Europe and China also provided a favorable backdrop for U.S. multinationals. Expectations for corporate earnings growth remained muted at best, but an environment of rising investor risk appetite helped to fuel an increase in valuations, which in turn supported market performance.
If you're a moderate-risk investor seeking competitive long-term investment returns through a broadly diversified portfolio, this Fund may be appropriate for you. It offers a high degree of relative predictability in an uncertain stock market by seeking investment results, before expenses, approximating the aggregate price and dividend performance of the securities included in the S&P 500 Stock Index.
- Passively managed, the Fund seeks to duplicate the investment composition and overall performance of the stocks included in the S&P 500® Index.
- Invest at least 80% of its net assets in equity securities in the Index, in weightings that approximate the relative composition of the Index.
- Use proprietary quantitative techniques designed to minimize trading costs.