as of June 30, 2014
Fund Commentary
The Russell 2000® Index returned 2.05% during the second quarter. Small-cap stocks underperformed the 5.12% return of large-cap stocks, as measured by the Russell 1000® Index. As designed, the Small Cap Index Fund closely tracked the Russell 2000® Index with a return of 2.02%.

Energy and utilities were the top-performing sectors in the Index, returning 11.41% and 8.90%, respectively. Energy stocks gained as the price of oil rose sharply amid growing concerns regarding the conflict in the Middle East, while utilities were supported by the environment of declining bond yields. The bottom-performing sectors were telecommunications services and industrials, which returned -3.08% and -0.01%, respectively.

The robust performance of U.S. equities was driven by positive economic growth, increased merger and acquisition activity and the accommodative monetary policies of global central banks. The market shrugged off mounting geopolitical risk and focused instead on positive signals from the corporate sector and the economy in general. Global growth appeared to accelerate after a dismal first quarter that was largely a result of the unusually harsh winter in the United States. Despite increased investor optimism, upward earnings revisions and positive economic results, central banks remained dovish. The U.S. Federal Reserve appears on track to keep short-term rates near their current levels through mid-2015, while the European Central Bank introduced a negative deposit rate. Together, these factors fueled strong returns for U.S. equities. Small-cap stocks underperformed, however, which was partially a function of investors’ need to digest the outstanding gains of 2013.
Investor Profile

If you are an aggressive investor seeking competitive long-term investment returns through a broadly diversified portfolio, this Fund may be appropriate for you. It seeks to offer investment results, before expenses, approximating the aggregate price and dividend performance of the securities included in the Russell 2000 Index.

Philosophy
  • Passively managed, the Fund seeks to duplicate the investment composition and overall performance of the stocks included in the Russell 2000® 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.
 
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Not FDIC insured | May lose value | No bank guarantee

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