Market Sector Update

• The yield on the 10-year Treasury broke below the 2-year note in August, triggering “inversion” fears throughout financial markets. An inverted yield curve often serves as a prelude to a recession because it indicates when monetary policy and financial conditions are too tight for the broader economy.
• The Federal Reserve (Fed) reduced the federal funds rate twice during the quarter based on the uncertain economic climate. Treasury yields remained low despite the Fed’s actions, with the yield on the 30-year Treasury hitting an alltime low of 1.91% in August.
• While the U.S. unemployment rate fell to a 50-year low during the period, signs of a potential economic slowdown are beginning to appear on weaker readings in the manufacturing sector and waning consumer confidence.

Portfolio Strategy

• A passively managed index fund, the Fund had a positive return and performed in line with its benchmark for the quarter.
• Longer-dated bonds outperformed shorter-dated bonds and BBB-rated issues modestly besting higher quality credits.
• For the second consecutive quarter, all 11 sectors were positive. The top three performing sectors were utilities, communication services and health care. Conversely, energy and financials were the bottom performers, although both produced postive returns.
• Investment grade corporate spreads remained relatively range bound throughout the quarter. BBB-rated bonds, which now make up more than half of all issues, have tightened over 50 basis point since December 2018.
• Total issuance of investment-grade corporate bonds rebounded in the third quarter, up 20% year-overyear. September saw the largest monthly issuance of U.S. investment grade bonds since January 2017.

Outlook

• Global central banks a have been actively cutting policy rates since January in efforts to continue the current global economic expansion. Markets are pricing in at least one additional rate cut by the Fed by the end of the year.
• Continued geopolitical concerns and the impact of tariff-related sanctions pose headwinds to global growth. Both the International Monetary Fund and World Bank recently warned of a deteriorating global outlook.
• As rates look more likely to fall than rise, the demand for high quality U.S. investment grade corporate bonds is likely to remain strong.

The opinions expressed are those of the Fund’s managers and are not meant as investment advice or to predict or project the future performance of any investment product. The opinions are current through Sept. 30, 2019, are subject to change at any time based on market and other current conditions, and no forecasts can be guaranteed. This commentary is being provided as a general source of information and is not intended as a recommendation to purchase, sell, or hold any specific security or to engage in any investment strategy. Investment decisions should always be made based on an investor’s specific objectives, financial needs, risk tolerance and time horizon. Past performance is not a guarantee of future results.

Diversification is an investment strategy that attempts to manage risk within your portfolio but it does not guarantee profits or protect against loss in declining markets.

The Fund is a passively managed index fund designed to track the performance of its stated benchmark index. It does not invest in securities based on the managers' view of the investment merit of a particular security or company, nor does it conduct conventional investment research or analysis or forecast market movement or trends, in managing the assets of the Fund. The Fund seeks to remain fully invested at all times in securities that, in combination, provide exposure to its respective benchmark Index without regard to market conditions, trends or direction.

The S&P 500® /MarketAxess® Investment Grade Corporate Bond Index seeks to measure the performance of corporate debt issued in the U.S. by S&P 500 companies. It is a market value-weighted subset of the S&P 500 Investment Grade Corporate Bond index that seeks to measure the performance of corporate debt issued in the U.S. by companies (and their subsidiaries in the S&P 500), subject to additional liquidity rules. Indexes are unmanaged and one cannot invest directly in any index.

Jeffrey Ploshnick served as a portfolio manager on the Fund until April 2019.

Risk factors: The value of the Fund's shares will change, and you could lose money on your investment. While the Fund attempts to track the performance of its stated index, there is no guarantee or assurance that the methodology used to create the index will result in the Fund achieving high, or even positive, returns. The Index may underperform, and the Fund could lose value, while other indices or measures of market performance increase in value. Fixed income securities are subject to interest rate risk and, as such, the net asset value of the Fund may fall as interest rates rise. Investing in below investment grade securities may carry a greater risk of nonpayment of interest or principal than higher-rated bonds. As of November 30, 2017, the index was concentrated in the financial industry group; therefore, the Fund is subject to the same risks faced by companies in the financials industry to the same extent as the index is so concentrated. Such risks include extensive government regulation, fluctuation of profitability, and credit losses resulting from financial difficulties of borrowers. A number of factors may affect the Fund's ability to achieve a high degree of correlation with the Index, and there is no guarantee that the Fund will achieve a high degree of correlation. Failure to achieve a high degree of correlation may prevent the Fund from achieving its investment objective. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. These and other risks are more fully described in the Fund's prospectus. Not all funds or fund classes may be offered at all broker/dealers.