U.S. Blended Equity Fund


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Objective

Seeks to outperform a broad, market-weighted U.S. stock market index through active management.

Strategy

The U.S. Blended Equity Fund is actively managed, meaning that it attempts to outperform its benchmark, the Dow Jones U.S. Total Stock Market Index. This index is representative of the total U.S. stock market, including publicly-traded companies of all sizes. The net return will be the result of general market performance, plus or minus the managers’ active performance, less investment and administration expenses.


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Assets are allocated among several active managers who diversify their stock selections using different approaches, including, but not limited to:

  • core-style investing, which utilizes both quantitative and fundamental research to select stocks.
  • value-based investing, which seeks to identify stocks that are selling at a price believed to be lower than fair value and which may enjoy capital appreciation when they begin to sell at a higher value;
  • growth-oriented investing, which seeks to identify stocks with strong future earnings growth and therefore the potential for stock price increases; and
  • investing across the spectrum of company sizes, from large, well established companies, to smaller companies that usually have less market recognition.

This fund provides exposure to several investment styles which may each be in favor or out of favor from time to time. Smaller companies tend to be more volatile than larger companies. To moderate volatility, smaller companies comprise a much smaller proportion of the overall portfolio.

Historically, over long periods of time, the U.S. equity (stock) market has tended to provide higher returns than other investments, such as bonds or money market instruments. While there is no guarantee that this will be the case in the future, investment theory suggests that the potential for higher returns over the long term are a key reason investors would select an option like this one.

Because this fund is actively managed, the portfolio managers make conscious decisions about which stocks to include due to their favorable prospects, and which to exclude due to unfavorable prospects. These decisions are made in an attempt to produce higher returns than the broad equity market produces. A small proportion (expected to be less than 10% of the total fund) may be invested in the assets of non-U.S. companies.

Because this fund engages a variety of managers with contrasting investing styles, when one is performing less well there is the possibility that another will perform better. This usually results in a smoother investment experience than a fund which concentrates its investments in a single style. In addition, because this fund purchases stocks from a full range of companies from large to small, it has a broad opportunity set from which to access good investments.

All investments risk the loss of capital. Since this fund is invested entirely in stocks, the chance of losing a percentage of your original investment is much higher than with some other investment options.

The stock market can be volatile. Although, over long periods of time, investors may enjoy higher returns than they experience in some other options, they can also lose more money. Sharp and unpredictable changes in value, either positive or negative, can be especially acute over shorter periods of time.

Although this fund is predominantly a U.S. equity fund, from time to time an active manager may hold some non-U.S. stocks. Consequently, those non-U.S. stocks may introduce currency risk. The proportion of non-U.S. stocks is expected to be under 10% of the U.S. Blended Equity Fund.

The active decisions that the portfolio managers make with respect to which stocks to include and which to exclude may not turn out as expected and may detract from total fund return rather than enhancing it. This fund’s return may vary meaningfully from its benchmark, especially over shorter periods of time.

*If you are uncomfortable with the risks associated with the U.S. Blended Equity Fund, you may want to consider another MMBB investment option.*

The performance of the U.S. Blended Equity Fund for varying lengths of time is reported below. The longer the time period, the more likely it encompasses varying economic and market conditions.

TOTAL RETURN AS OF July 31, 2017
1-Mo YTD 1-Yr 3-Yrs 5-Yrs 8-Yrs 10-Yrs
US BLENDED EQUITY FUND 2.04% 10.21% 15.66% 6.50% 12.07% 11.61% 5.82%
Dow Jones U.S. Total Stock Market Index -0.84% 4.80% 16.96% 9.33% 12.90% 17.10% 7.53%

While it is valuable to view investment performance over long-term time horizons, looking at shorter time periods can give one insight as to how returns may fluctuate over shorter time periods. The table below displays calendar year returns.

CALENDAR YEAR RETURNS
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
U.S. Blended Eq 7.27% -36.69% 27.82% 15.32% -4.75% 20.27% 32.46% 3.26% -.23% 7.06%
Dow Jones U.S. Total Stock Market Index 5.62% -37.24% 28.57% 17.49% 1.07% 16.38% 33.47% 12.47% .44% 12.62%

Past performance is no guarantee of future results. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance is for the stated time period only; performance through the current date may be lower or higher than displayed above due to market fluctuations, manager performance or other reasons.

From time to time MMBB contracts with one or more external managers to execute the investment strategy for the U.S. Blended Equity Fund. Recently the roster for this investment option included:

AJO
LSV Asset Management
MFS
Wellington
Westfield Capital Management

Annual Expenses (As of December 31, 2016)

Fund Expenses — Year 2016
Investment Management Fees0.57%
MMBB Administrative Charge0.50%
Other Expenses0.12%
Sales Charge (Load) on PurchasesNone
Deferred Sales Charge (Load)None
Short-term or Other Redemption FeeNone
Distribution, or 12b-1, FeeNone
Dealer Commission (percent of offering price)None
Low Balance Account Service FeeNone
Total Annual Operating Expenses1.19%