Market Sector Update

• The U.S. yield curve experienced some steepening during the third quarter, with long-end yields rising 40 basis points from August lows. However, the 10-year yield ended the period unchanged from the previous quarter.
• Corporate credit markets, fueled by the Federal Reserve (Fed), saw yields driven down with record inflows into fixed income products. The Fed’s announcement and usage of fixed income exchange traded funds spurred strong demand with most fixed income funds hitting record levels of assets under management.
• Most economic measures continued to surprise to the upside supporting the notion of a “V” shaped recovery. However, a full global recovery will most likely hinge on additional fiscal stimulus while the world awaits a vaccine for COVID-19.

Portfolio Strategy

• A passively managed index fund, the Fund had a positive return and performed in line with its benchmark for the quarter.
• All maturities were up with intermediate duration outperforming. In addition, all 11 sectors were positive for the quarter, led by consumer discretionary and materials.
• Investment grade corporate spreads tightened during the period, with lower quality BBB-rated credits outperforming higher quality corporate bonds.
• Investment-grade corporate bonds issuance continued its record pace through the first three quarters of 2020, surpassing the previous full-year record set in 2017.

Outlook

• All eyes remain firmly fixed on the U.S. presidential election, further fiscal spending and potential economic impacts of the global pandemic.
• Credit rating downgrades and default risk have increased within lower quality corporates. Despite low interest costs, excessive leverage will continue to pose challenges if another economic slowdown occurs.
• The consensus view is that markets will remain in the current ultra-low interest environment for some time. Yieldstarved investors are likely to continue to chase higher returns by moving into riskier securities, which could present opportunities for high quality corporate bonds.

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, 2020, 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.

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.

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 impact of COVID-19, and other infectious illness outbreaks that may arise in the future, could adversely affect the economies of many nations or the entire global economy, individual issuers and capital markets in ways that cannot necessarily be foreseen. In addition, the impact of infectious illnesses in emerging market countries may be greater due to generally less established healthcare systems. Public health crises caused by the COVID-19 outbreak may exacerbate other pre-existing political, social and economic risks in certain countries or globally. The duration of the COVID-19 outbreak and its effects cannot be determined with certainty.

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, 2018, 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.