N-CSRS 1 fp0022726_ncsrs.htm
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

811-21836
(Investment Company Act file number)
 
Index Funds
(Exact name of registrant as specified in charter)

1155 Kelly Johnson Boulevard, Suite 111
Colorado Springs, Colorado 80920
(Address of principal executive offices) (Zip code)

(800) 788-5680
(Registrant's telephone number)

Michael G. Willis
1155 Kelly Johnson Boulevard, Suite 111
Colorado Springs, Colorado 80920
(Name and Address of Agent for Service)
 
Date of fiscal year end:  March 31

Date of reporting period:  April 1, 2016 – September 30, 2016
 

Item 1. Reports to Stockholders.

(COVER PAGE)

TABLE OF CONTENTS

Shareholder Letter
1
Manager Commentary
2
Disclosure of Fund Expenses
4
Schedule of Investments
5
Statement of Assets and Liabilities
11
Statement of Operations
12
Statement of Changes in Net Assets
13
Financial Highlights
14
Notes to Financial Statements
15
Additional Information
19


(INDEX FUNDS LOGO)
 

Index Funds S&P 500 Equal Weight
Shareholder Letter

September 30, 2016 (Unaudited)
 
Dear Shareholders,

Since its inception in January of 2003, the S&P 500 Equal Weight Index1 has outperformed the S&P 500 Index 9 out of the past 13 calendar years. That is notable, considering that the S&P 500 Index itself beats most large cap managers, most of the time. According to the Mid-Year 2016 SPIVA report recently released by Standard & Poors, the S&P 500 Index outperformed 91% of large cap managers during the past 5 years and 85% of large cap managers over the past 10 years.

So, if it is so difficult to beat the S&P 500 Index, how has the S&P 500 Equal Weight Index been able to outperform it so consistently—nearly 70% of the time? The answer, for us, is simple. We believe that the Equal Weight version of the S&P 500 Index corrects an inherent “buy-high-sell-low” trading flaw buried within the market-cap formula that powers the S&P 500 Index. To illustrate, after purchasing the 500 stocks within the S&P 500, a portfolio manager of an index fund seeking to track the S&P 500 Index must adjust the portfolio to its underlying index as the stocks fluctuate in price. In this example, if 250 index constituents move higher and 250 index constituents move lower in price, the market-cap formula requires the portfolio manager to purchase more of the 250 stocks that went higher in price and to sell a portion of the 250 stocks that fell in price. This effectively forces the manager to “buy high and sell low”.

In our view, the methodology behind the construction of the Equal Weight Index corrects the Market-Cap “buy-high-sell-low” trading methodology and replaces it with a “buy-low-sell-high” trading methodology. When purchasing the exact same 500 stocks in the S&P 500 Index as illustrated in the example above, the portfolio manager of the Equal Weight S&P 500 Index fund is required to rebalance the portfolio periodically. In the example above, the equal weight methodology requires that the manager sell a portion of the 250 stocks that went higher in price and to purchase a portion of the 250 stocks that fell in price, until the 500 holdings are equal in value again. We believe this creates the very positive effect of requiring the manager to “buy low and sell high”, thus creating a simple solution to a traditionally complex problem.

The U.S. equity markets ended a volatile 2015 on a rather flat note after shrugging off plunging oil prices, a stock market crash in China, an unprecedented refugee crisis in Europe and terror attacks in France. The U.S. dollar continued its historic run up, rallying strong into the close of the year, but backing off its highs during the first quarter of 2016. Each of these factors influenced the performance of the 500+ constituents within the S&P 500 Index.

2015 was a significant year for us as we launched our flagship mutual fund: The Index Funds S&P 500 Equal Weight, ticker symbol INDEX. During our first 12-months of operations, INDEX outperformed its underlying index, the S&P 500 Equal Weight Index, and underperformed its benchmark, the S&P 500 Index (see chart below). 2015 was one of the 4 out of 13 years in which the S&P 500 Index beat its Equal Weight younger brother. Underperformance of our Fund relative to the market capitalization version of the S&P 500 Index, normally occurs when the largest 50 companies within the S&P 500 Index materially outperform the other 450 stocks within the index. This is because the S&P 500 Market-Cap Index overweight’s the top 50 companies within the index to over 50% of the index, whereas the Equal-Weight methodology seeks to hold all 500 companies equal over time.

Looking forward we see a mutual fund industry in transition as a new rule released by the Department of Labor (DOL) sets new fiduciary standards for financial advisors serving retirement accounts such as 401k Plans and IRAs. Morningstar analysts recently released a report stating the new ruling could send $1 trillion in new assets into index mutual funds2. Two weeks after the DOL’s April 6 announcement of its new fiduciary standard for retirement plans, Charles Schwab announced they were dumping all of their load funds3. We believe this to be the tip of the iceberg and that many mutual fund companies will need to make major changes in reaction to this new ruling.

The good news is that INDEX is already a “no-load”, low cost index fund with no 12b-1 fees and therefore stands to potentially benefit from these significant changes in the mutual fund industry. We believe that these are all exciting developments and that, depending on how things progress in the near future; low cost index funds may have a significant role to play in the reconfigured Wall Street.

Best Regards,

Michael G. Willis
President
INDEX FUNDS
 
1
The S&P 500 Equal Weight Index is an equal weighted version of the S&P 500 Index. The index includes the same constituents as the capitalization weighted S&P 500, but each company in the S&P 500 Equal Weight Index is allocated a fixed weight - or 0.2% of the index total each quarterly rebalance. It is a broad-based securities market index. Such indices are generally not actively managed and are not subject to fees and expenses typically at associated with managed accounts or funds. You cannot invest directly in a broad-based securities index.
2
Reuters.com, 10/30/2015, “$1 trillion could move to index funds if rule on financial advice passes”
3
WSJ.com, 04/27/2016, “Charles Schwab to Cease Selling Load Mutual Funds”
 

Semi-Annual Report | September 30, 2016
1

Index Funds S&P 500 Equal Weight
Manager Commentary

September 30, 2016 (Unaudited)
 
Growth of $10,000 Initial Investment (for the period ended September 30, 2016)
 
(LINE GRAPH)
 
The graph shown above represents historical performance of a hypothetical investment of $10,000 in the Fund since inception. Past performance does not guarantee future results. All returns reflect reinvested dividends, but do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

Performance (for the period ended September 30, 2016)

 
1 Month
Quarter
1 Year
Since Inception*
Index Funds S&P 500 Equal Weight
0.04%
4.39%
15.58%
4.17%
S&P 500 Total Return Index
0.02%
3.85%
15.43%
5.07%
S&P 500 Equal Weight Net Total Return
0.04%
4.37%
15.43%
3.41%
 
The performance data quoted above represents past performance. Past performance is not a guarantee of future results. Investment return and value of the Fund shares will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost. Current performance data may be lower or higher than actual performance data quoted. Fund performance current to the most recent month- end is available by calling (844) 464-6339 or by visiting www.Index.world.
 
Returns of less than 1 year are cumulative.
 
Indices are not actively managed and do not reflect deduction for fees, expenses or taxes. An investor cannot invest directly in an index.
 
The returns shown above do not reflect the deduction of taxes a shareholder would pay on Fund distributions or redemption of Fund shares.
 
The total annual operating expenses and total annual operating expenses after fee waivers and/or reimbursement you may pay as an investor in the Fund (as reported in the April 17, 2015 Prospectus) are 13.50% and 0.30%, respectively. The Fund’s investment adviser has contractually agreed to limit expenses through July 31, 2017.
 
*
The Fund’s inception date is April 30, 2015.
 
The S&P 500® is widely regarded as the best single gauge of large-cap U.S. equities. There is over USD 7.8 trillion benchmarked to the index, with index assets comprising approximately USD 2.2 trillion of this total. The index includes 500 leading companies and captures approximately 80% coverage of available market capitalization.
 

2
www.Index.world

Index Funds S&P 500 Equal Weight
Manager Commentary

September 30, 2016 (Unaudited)
 
Sector Allocation (as a % of Net Assets)*
 
(PIE CHART)

*
Holdings are subject to change and may not reflect the current or future position of the portfolio. For Fund compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by Fund management. This definition may not apply for purposes of this report, which may combine industry subclassifications for reporting ease. Industries are shown as a percentage of net assets.
 
The S&P 500 Equal Weight Index (the “Index”) is a product of S&P Dow Jones Indices LLC (“SPDJI”), and has been licensed for use by The Index Group, Inc. S&P® is a registered trademark of S&P Global (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); Standard & Poor’s® and S&P® are trademarks of the Standard & Poor’s Financial Services LLC (“S&P”); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by The Index Group, Inc. The Index Funds S&P 500 Equal Weight is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, any of their respective affiliates (collectively, “S&P Dow Jones Indices”). S&P Dow Jones Indices makes no representation or warranty, express or implied, to the owners of the Index Funds S&P 500 Equal Weight or any member of the public regarding the advisability of investing in securities generally or in Index Funds S&P 500 Equal Weight particularly or the ability of the S&P 500 Equal Weight Index to track general market performance. S&P Dow Jones Indices’ only relationship to The Index Group, Inc. with respect to the S&P 500 Equal Weight Index is the licensing of the Index and certain trademarks, service marks and/or trade names of S&P Dow Jones Indices and/or its licensors. The S&P 500 Equal Weight Index is determined, composed and calculated by S&P Dow Jones Indices without regard to The Index Group, Inc. or the Index Funds S&P 500 Equal Weight. S&P Dow Jones Indices have no obligation to take the needs of The Index Group, Inc. or the owners of the Index Funds S&P 500 Equal Weight into consideration in determining, composing or calculating the S&P 500 Equal Weight Index. S&P Dow Jones Indices are not responsible for and have not participated in the determination of the prices, and amount of the Index Funds S&P 500 Equal Weight or the timing of the issuance or sale of the Index Funds S&P 500 Equal Weight or in the determination or calculation of the equation by which the Index Funds S&P 500 Equal Weight is to be converted into cash, surrendered or redeemed, as the case may be. S&P Dow Jones Indices have no obligation or liability in connection with the administration, marketing or trading of the Index Funds S&P 500 Equal Weight. There is no assurance that investment products based on the S&P 500 Equal Weight Index will accurately track index performance or provide positive investment returns. S&P Dow Jones Indices LLC is not an investment advisor. Inclusion of a security within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is it considered to be investment advice.
 
S&P DOW JONES INDICES DOES NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE INDEX OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE (INCLUDING, WITHOUT LIMITATION, COMPLIANCE WITH SHARIAH LAW) OR AS TO RESULTS TO BE OBTAINED BY THE INDEX GROUP, INC., OWNERS OF THE INDEX FUNDS S&P 500 EQUAL WEIGHT, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE INDEX OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBLITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND THE INDEX GROUP, INC., OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.
 

Semi-Annual Report | September 30, 2016
3

Index Funds S&P 500 Equal Weight
Disclosure of Fund Expenses

September 30, 2016 (Unaudited)
 
As a shareholder of the Index Funds S&P 500 Equal Weight (the “Fund”), you will incur two types of costs: (1) transaction costs, including applicable redemption fees; and (2) ongoing costs, including management fees and other Fund expenses. The following examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The examples are based on an investment of $1,000 invested on April 1, 2016 and held until September 30, 2016.

Actual Expenses. The first line of each table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
 
Hypothetical Example for Comparison Purposes. The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. The expenses shown in the table are meant to highlight ongoing Fund costs only and do not reflect transaction fees, such as redemption fees or exchange fees. Therefore, the second line of each table below is useful in comparing ongoing costs only, and may not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
 
Index Funds S&P 500 Equal Weight
Beginning Account Value 4/1/2016
Ending Account Value 09/30/16
Expense Ratio(a)
Expenses Paid During Period 4/1/2016-9/30/16(b)
Actual
$1,000.00
$1,070.40
0.30%
$1.56
Hypothetical (5% return before expenses)
$1,000.00
$1,023.56
0.30%
$1.52
 
(a)
The Fund’s expense ratios have been based on the Fund’s most recent fiscal half-year expenses.
(b)
Expenses are equal to the Fund’s annualized net expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year (183), divided by 365.
 

4
www.Index.world

Index Funds S&P 500 Equal Weight
Schedule of Investments

September 30, 2016 (Unaudited)
 
   
Shares
   
Value
 
COMMON STOCKS: 97.67%
           
Basic Materials: 3.71%
           
Air Products & Chemicals, Inc.
   
53
   
$
7,968
 
Albemarle Corp.
   
105
     
8,977
 
Alcoa, Inc.
   
837
     
8,487
 
CF Industries Holdings, Inc.
   
322
     
7,841
 
Dow Chemical Co.
   
151
     
7,826
 
Eastman Chemical Co.
   
124
     
8,392
 
EI du Pont de Nemours & Co.
   
117
     
7,836
 
FMC Corp.
   
179
     
8,653
 
Freeport-McMoRan, Inc.
   
783
     
8,503
 
International Flavors & Fragrances, Inc.
   
60
     
8,578
 
International Paper Co.
   
169
     
8,109
 
LyondellBasell Industries NV, Class A
   
106
     
8,550
 
Monsanto Co.
   
75
     
7,665
 
Mosaic Co.
   
298
     
7,289
 
Newmont Mining Corp.
   
205
     
8,055
 
Nucor Corp.
   
172
     
8,505
 
PPG Industries, Inc.
   
80
     
8,269
 
Praxair, Inc.
   
68
     
8,216
 
Sherwin-Williams Co.
   
29
     
8,023
 
             
155,742
 
                 
Communications: 6.47%
               
Alphabet, Inc., Class A(a)
   
5
     
4,020
 
Alphabet, Inc., Class C(a)
   
5
     
3,886
 
Amazon.com, Inc.(a)
   
11
     
9,210
 
AT&T, Inc.
   
202
     
8,203
 
CBS Corp., Class B Non-Voting
   
155
     
8,485
 
CenturyLink, Inc.
   
289
     
7,927
 
Charter Communications, Inc., Class A(a)
   
30
     
8,099
 
Cisco Systems, Inc.
   
261
     
8,279
 
Comcast Corp., Class A
   
123
     
8,160
 
Discovery Communications, Inc., Class A(a)
   
134
     
3,607
 
Discovery Communications, Inc., Class C(a)
   
200
     
5,262
 
eBay, Inc.(a)
   
252
     
8,291
 
Expedia, Inc.
   
72
     
8,404
 
F5 Networks, Inc.(a)
   
68
     
8,475
 
Facebook, Inc., Class A(a)
   
63
     
8,081
 
Frontier Communications Corp.
   
1,763
     
7,334
 
Interpublic Group of Cos., Inc.
   
359
     
8,024
 
Juniper Networks, Inc.
   
347
     
8,349
 
Level 3 Communications, Inc.(a)
   
166
     
7,699
 
Motorola Solutions, Inc.
   
105
     
8,009
 
Netflix, Inc.(a)
   
83
     
8,180
 
News Corp., Class A
   
466
     
6,515
 
News Corp., Class B
   
132
     
1,877
 
Omnicom Group, Inc.
   
96
     
8,160
 
Priceline Group, Inc.(a)
   
6
     
8,829
 
   
Shares
   
Value
 
Communications (continued)
           
Scripps Networks Interactive, Inc., Class A
   
130
   
$
8,254
 
Symantec Corp.
   
328
     
8,233
 
TEGNA, Inc.
   
381
     
8,329
 
Time Warner, Inc.
   
104
     
8,279
 
TripAdvisor, Inc.(a)
   
130
     
8,213
 
Twenty-First Century Fox, Inc., Class A
   
243
     
5,885
 
Twenty-First Century Fox, Inc., Class B
   
96
     
2,375
 
VeriSign, Inc.(a)
   
107
     
8,372
 
Verizon Communications, Inc.
   
155
     
8,057
 
Viacom, Inc., Class B
   
216
     
8,230
 
Walt Disney Co.
   
87
     
8,079
 
Yahoo! Inc.(a)
   
187
     
8,060
 
             
271,731
 
                 
Consumer, Cyclical: 14.41%
               
Advance Auto Parts, Inc.
   
53
     
7,903
 
Alaska Air Group, Inc.
   
117
     
7,706
 
American Airlines Group, Inc.
   
209
     
7,651
 
AutoNation, Inc.(a)
   
170
     
8,281
 
AutoZone, Inc.(a)
   
11
     
8,452
 
Bed Bath & Beyond, Inc.
   
185
     
7,975
 
Best Buy Co., Inc.
   
218
     
8,323
 
BorgWarner, Inc.
   
235
     
8,267
 
CarMax, Inc.(a)
   
146
     
7,789
 
Carnival Corp.
   
181
     
8,836
 
Chipotle Mexican Grill, Inc.(a)
   
19
     
8,046
 
Coach, Inc.
   
220
     
8,043
 
Costco Wholesale Corp.
   
53
     
8,083
 
CVS Health Corp.
   
88
     
7,831
 
Darden Restaurants, Inc.
   
131
     
8,033
 
Delphi Automotive PLC
   
118
     
8,416
 
Delta Air Lines, Inc.
   
213
     
8,384
 
Dollar General Corp.
   
114
     
7,979
 
Dollar Tree, Inc.(a)
   
98
     
7,735
 
DR Horton, Inc.
   
266
     
8,033
 
Fastenal Co.
   
198
     
8,272
 
Foot Locker, Inc.
   
124
     
8,397
 
Ford Motor Co.
   
649
     
7,833
 
Gap, Inc.
   
344
     
7,651
 
General Motors Co.
   
264
     
8,387
 
Genuine Parts Co.
   
83
     
8,337
 
Goodyear Tire & Rubber Co.
   
266
     
8,592
 
Hanesbrands, Inc.
   
313
     
7,903
 
Harley-Davidson, Inc.
   
159
     
8,362
 
Harman International Industries, Inc.
   
99
     
8,361
 
Hasbro, Inc.
   
101
     
8,012
 
Home Depot, Inc.
   
63
     
8,107
 
Kohl's Corp.
   
187
     
8,181
 
L Brands, Inc.
   
113
     
7,997
 
Leggett & Platt, Inc.
   
163
     
7,430
 
Lennar Corp., Class A
   
178
     
7,537
 
LKQ Corp.(a)
   
230
     
8,156
 
See Notes to Financial Statements.
Semi-Annual Report | September 30, 2016
5

Index Funds S&P 500 Equal Weight
Schedule of Investments

September 30, 2016 (Unaudited)
 
   
Shares
   
Value
 
Consumer, Cyclical (continued)
           
Lowe's Cos., Inc.
   
112
   
$
8,088
 
Macy's, Inc.
   
227
     
8,410
 
Marriott International, Inc., Class A
   
206
     
13,897
 
Mattel, Inc.
   
253
     
7,661
 
McDonald's Corp.
   
70
     
8,075
 
Michael Kors Holdings, Ltd.(a)
   
168
     
7,861
 
Mohawk Industries, Inc.(a)
   
39
     
7,813
 
Newell Brands, Inc.
   
160
     
8,426
 
NIKE, Inc., Class B
   
145
     
7,634
 
Nordstrom, Inc.
   
162
     
8,405
 
O'Reilly Automotive, Inc.(a)
   
29
     
8,123
 
PACCAR, Inc.
   
143
     
8,406
 
PulteGroup, Inc.
   
401
     
8,036
 
PVH Corp.
   
75
     
8,288
 
Ralph Lauren Corp.
   
80
     
8,091
 
Ross Stores, Inc.
   
132
     
8,488
 
Royal Caribbean Cruises, Ltd.
   
122
     
9,144
 
Signet Jewelers, Ltd.
   
105
     
7,826
 
Southwest Airlines Co.
   
215
     
8,361
 
Staples, Inc.
   
944
     
8,071
 
Starbucks Corp.
   
148
     
8,013
 
Target Corp.
   
117
     
8,036
 
Tiffany & Co.
   
120
     
8,716
 
TJX Cos., Inc.
   
108
     
8,076
 
Tractor Supply Co.
   
117
     
7,880
 
Ulta Salon Cosmetics & Fragrance, Inc.(a)
   
34
     
8,091
 
Under Armour, Inc., Class A(a)
   
111
     
4,293
 
Under Armour, Inc., Class C(a)
   
111
     
3,758
 
United Continental Holdings, Inc.(a)
   
153
     
8,028
 
Urban Outfitters, Inc.(a)
   
223
     
7,698
 
VF Corp.
   
138
     
7,735
 
Walgreens Boots Alliance, Inc.
   
97
     
7,820
 
Wal-Mart Stores, Inc.
   
114
     
8,222
 
Whirlpool Corp.
   
48
     
7,784
 
WW Grainger, Inc.
   
36
     
8,094
 
Wyndham Worldwide Corp.
   
120
     
8,080
 
Wynn Resorts, Ltd.
   
82
     
7,988
 
Yum! Brands, Inc.
   
92
     
8,355
 
             
605,052
 
                 
Consumer, Non-Cyclical: 19.69%
               
Abbott Laboratories
   
196
     
8,289
 
AbbVie, Inc.
   
127
     
8,010
 
Aetna, Inc.
   
70
     
8,081
 
Alexion Pharmaceuticals, Inc.(a)
   
64
     
7,843
 
Allergan PLC(a)
   
34
     
7,831
 
Altria Group, Inc.
   
126
     
7,967
 
AmerisourceBergen Corp.
   
94
     
7,593
 
Amgen, Inc.
   
48
     
8,007
 
Anthem, Inc.
   
63
     
7,895
 
Archer-Daniels-Midland Co.
   
191
     
8,054
 
Automatic Data Processing, Inc.
   
93
     
8,203
 
   
Shares
   
Value
 
Consumer, Non-Cyclical (continued)
           
Avery Dennison Corp.
   
107
   
$
8,324
 
Baxter International, Inc.
   
178
     
8,473
 
Becton Dickinson and Co.
   
47
     
8,447
 
Biogen, Inc.(a)
   
27
     
8,452
 
Boston Scientific Corp.(a)
   
342
     
8,140
 
Bristol-Myers Squibb Co.
   
144
     
7,764
 
Brown-Forman Corp., Class B
   
176
     
8,349
 
Campbell Soup Co.
   
146
     
7,986
 
Cardinal Health, Inc.
   
102
     
7,925
 
Celgene Corp.(a)
   
77
     
8,049
 
Centene Corp.(a)
   
120
     
8,035
 
Church & Dwight Co., Inc.
   
170
     
8,146
 
Cigna Corp.
   
63
     
8,210
 
Cintas Corp.
   
71
     
7,995
 
Clorox Co.
   
65
     
8,137
 
Coca-Cola Co.
   
190
     
8,041
 
Colgate-Palmolive Co.
   
113
     
8,378
 
ConAgra Foods, Inc.
   
186
     
8,762
 
Constellation Brands, Inc., Class A
   
50
     
8,325
 
CR Bard, Inc.
   
38
     
8,523
 
Danaher Corp.
   
104
     
8,153
 
DaVita, Inc.(a)
   
126
     
8,325
 
DENTSPLY SIRONA, Inc.
   
136
     
8,082
 
Dr. Pepper Snapple Group, Inc.
   
89
     
8,127
 
Ecolab, Inc.
   
68
     
8,277
 
Edwards Lifesciences Corp.(a)
   
70
     
8,439
 
Eli Lilly & Co.
   
103
     
8,267
 
Endo International PLC(a)
   
401
     
8,080
 
Equifax, Inc.
   
61
     
8,209
 
Estee Lauder Cos., Inc., Class A
   
92
     
8,148
 
Express Scripts Holding Co.(a)
   
113
     
7,970
 
General Mills, Inc.
   
124
     
7,921
 
Gilead Sciences, Inc.
   
103
     
8,149
 
Global Payments, Inc.
   
109
     
8,367
 
H&R Block, Inc.
   
366
     
8,473
 
HCA Holdings, Inc.(a)
   
106
     
8,017
 
Henry Schein, Inc.(a)
   
51
     
8,312
 
Hershey Co.
   
84
     
8,030
 
Hologic, Inc.(a)
   
216
     
8,387
 
Hormel Foods Corp.
   
223
     
8,458
 
Humana, Inc.
   
46
     
8,137
 
Illumina, Inc.(a)
   
49
     
8,901
 
Intuitive Surgical, Inc.(a)
   
12
     
8,698
 
JM Smucker Co.
   
59
     
7,997
 
Johnson & Johnson
   
68
     
8,033
 
Kellogg Co.
   
104
     
8,057
 
Kimberly-Clark Corp.
   
65
     
8,199
 
Kraft Heinz Co.
   
94
     
8,414
 
Kroger Co.
   
255
     
7,568
 
Laboratory Corp. of America Holdings(a)
   
60
     
8,249
 
Mallinckrodt PLC(a)
   
110
     
7,676
 
 
See Notes to Financial Statements.
6
www.Index.world

Index Funds S&P 500 Equal Weight
Schedule of Investments

September 30, 2016 (Unaudited)
 
   
Shares
   
Value
 
Consumer, Non-Cyclical (continued)
           
McCormick & Co., Inc., Non-Voting Shares
   
84
   
$
8,393
 
McKesson Corp.
   
46
     
7,671
 
Mead Johnson Nutrition Co.
   
104
     
8,217
 
Medtronic PLC
   
95
     
8,208
 
Merck & Co., Inc.
   
129
     
8,051
 
Molson Coors Brewing Co., Class B
   
79
     
8,674
 
Mondelez International, Inc., Class A
   
191
     
8,385
 
Monster Beverage Corp.(a)
   
54
     
7,928
 
Moody's Corp.
   
75
     
8,121
 
Mylan NV(a)
   
202
     
7,700
 
Nielsen Holdings PLC
   
155
     
8,303
 
Patterson Cos., Inc.
   
179
     
8,223
 
PayPal Holdings, Inc.(a)
   
212
     
8,686
 
PepsiCo, Inc.
   
77
     
8,375
 
Perrigo Co. PLC
   
91
     
8,402
 
Pfizer, Inc.
   
236
     
7,993
 
Philip Morris International, Inc.
   
82
     
7,972
 
Procter & Gamble Co.
   
93
     
8,347
 
Quanta Services, Inc.(a)
   
318
     
8,901
 
Quest Diagnostics, Inc.
   
99
     
8,378
 
Regeneron Pharmaceuticals, Inc.(a)
   
21
     
8,442
 
Reynolds American, Inc.
   
171
     
8,063
 
Robert Half International, Inc.
   
216
     
8,178
 
S&P Global, Inc.
   
66
     
8,353
 
St. Jude Medical, Inc.
   
103
     
8,215
 
Stryker Corp.
   
73
     
8,498
 
Sysco Corp.
   
161
     
7,891
 
Total System Services, Inc.
   
164
     
7,733
 
Tyson Foods, Inc., Class A
   
111
     
8,288
 
United Rentals, Inc.(a)
   
103
     
8,084
 
UnitedHealth Group, Inc.
   
60
     
8,400
 
Universal Health Services, Inc., Class B
   
67
     
8,256
 
Varian Medical Systems, Inc.(a)
   
86
     
8,560
 
Verisk Analytics, Inc.(a)
   
98
     
7,965
 
Vertex Pharmaceuticals, Inc.(a)
   
86
     
7,500
 
Western Union Co.
   
387
     
8,057
 
Whole Foods Market, Inc.
   
281
     
7,966
 
Zimmer Biomet Holdings, Inc.
   
64
     
8,321
 
Zoetis, Inc.
   
160
     
8,322
 
             
826,374
 
                 
Energy: 7.46%
               
Anadarko Petroleum Corp.
   
139
     
8,807
 
Apache Corp.
   
135
     
8,622
 
Baker Hughes, Inc.
   
164
     
8,277
 
Cabot Oil & Gas Corp.
   
308
     
7,946
 
Chesapeake Energy Corp.(a)
   
1,055
     
6,615
 
Chevron Corp.
   
79
     
8,131
 
Cimarex Energy Co.
   
62
     
8,331
 
Concho Resources, Inc.(a)
   
62
     
8,516
 
ConocoPhillips
   
190
     
8,259
 
Devon Energy Corp.
   
185
     
8,160
 
   
Shares
   
Value
 
Energy (continued)
           
Diamond Offshore Drilling, Inc.
   
515
   
$
9,069
 
EOG Resources, Inc.
   
87
     
8,414
 
EQT Corp.
   
111
     
8,061
 
Exxon Mobil Corp.
   
93
     
8,117
 
First Solar, Inc.(a)
   
217
     
8,569
 
FMC Technologies, Inc.(a)
   
289
     
8,575
 
Halliburton Co.
   
192
     
8,617
 
Helmerich & Payne, Inc.
   
134
     
9,018
 
Hess Corp.
   
161
     
8,633
 
Kinder Morgan, Inc.
   
363
     
8,396
 
Marathon Oil Corp.
   
513
     
8,111
 
Marathon Petroleum Corp.
   
190
     
7,712
 
Murphy Oil Corp.
   
288
     
8,755
 
National Oilwell Varco, Inc.
   
243
     
8,928
 
Newfield Exploration Co.(a)
   
181
     
7,866
 
Noble Energy, Inc.
   
223
     
7,970
 
Occidental Petroleum Corp.
   
106
     
7,730
 
ONEOK, Inc.
   
165
     
8,479
 
Phillips 66
   
103
     
8,297
 
Pioneer Natural Resources Co.
   
45
     
8,354
 
Range Resources Corp.
   
190
     
7,362
 
Schlumberger, Ltd.
   
104
     
8,179
 
Southwestern Energy Co.(a)
   
546
     
7,557
 
Spectra Energy Corp.
   
188
     
8,037
 
Tesoro Corp.
   
102
     
8,115
 
Transocean, Ltd.(a)
   
818
     
8,720
 
Valero Energy Corp.
   
146
     
7,738
 
Williams Cos., Inc.
   
268
     
8,236
 
             
313,279
 
                 
Financials: 17.94%
               
Affiliated Managers Group, Inc.(a)
   
56
     
8,103
 
Aflac, Inc.
   
111
     
7,978
 
Alliance Data Systems Corp.(a)
   
39
     
8,367
 
Allstate Corp.
   
118
     
8,163
 
American Express Co.
   
123
     
7,877
 
American International Group, Inc.
   
137
     
8,130
 
American Tower Corp., REIT
   
73
     
8,273
 
Ameriprise Financial, Inc.
   
81
     
8,081
 
Aon PLC
   
74
     
8,324
 
Apartment Investment & Management Co., REIT, Class A
   
183
     
8,402
 
Arthur J Gallagher & Co.
   
163
     
8,292
 
Assurant, Inc.
   
90
     
8,303
 
AvalonBay Communities, Inc., REIT
   
47
     
8,358
 
Bank of America Corp.
   
511
     
7,997
 
Bank of New York Mellon Corp.
   
196
     
7,816
 
BB&T Corp.
   
210
     
7,921
 
Berkshire Hathaway, Inc., Class B(a)
   
55
     
7,946
 
BlackRock, Inc.
   
22
     
7,974
 
Boston Properties, Inc., REIT
   
59
     
8,041
 
Capital One Financial Corp.
   
112
     
8,045
 
CBRE Group, Inc., Class A(a)
   
288
     
8,058
 
 
See Notes to Financial Statements.
Semi-Annual Report | September 30, 2016
7

Index Funds S&P 500 Equal Weight
Schedule of Investments

September 30, 2016 (Unaudited)
 
   
Shares
   
Value
 
Financials (continued)
           
Charles Schwab Corp.
   
262
   
$
8,271
 
Chubb, Ltd.
   
65
     
8,167
 
Cincinnati Financial Corp.
   
106
     
7,995
 
Citigroup, Inc.
   
170
     
8,029
 
Citizens Financial Group, Inc.
   
324
     
8,006
 
CME Group, Inc.
   
76
     
7,944
 
Comerica, Inc.
   
174
     
8,234
 
Crown Castle International Corp., REIT
   
86
     
8,102
 
Digital Realty Trust, Inc., REIT
   
84
     
8,158
 
Discover Financial Services
   
137
     
7,747
 
E*Trade Financial Corp.(a)
   
303
     
8,823
 
Equinix, Inc., REIT
   
22
     
7,926
 
Equity Residential, REIT
   
128
     
8,234
 
Essex Property Trust, Inc., REIT
   
37
     
8,240
 
Extra Space Storage, Inc., REIT
   
101
     
8,020
 
Federal Realty Investment Trust, REIT
   
52
     
8,004
 
Fifth Third Bancorp
   
403
     
8,245
 
Franklin Resources, Inc.
   
226
     
8,039
 
General Growth Properties, Inc., REIT
   
286
     
7,894
 
Goldman Sachs Group, Inc.
   
48
     
7,741
 
Hartford Financial Services Group, Inc.
   
196
     
8,393
 
HCP, Inc., REIT
   
211
     
8,007
 
Host Hotels & Resorts, Inc., REIT
   
496
     
7,723
 
Huntington Bancshares, Inc.
   
815
     
8,036
 
Intercontinental Exchange, Inc.
   
28
     
7,542
 
Invesco, Ltd.
   
261
     
8,161
 
Iron Mountain, Inc., REIT
   
221
     
8,294
 
JPMorgan Chase & Co.
   
121
     
8,057
 
KeyCorp
   
656
     
7,984
 
Kimco Realty Corp., REIT
   
278
     
8,048
 
Legg Mason, Inc.
   
235
     
7,868
 
Leucadia National Corp.
   
424
     
8,073
 
Lincoln National Corp.
   
171
     
8,034
 
Loews Corp.
   
195
     
8,024
 
M&T Bank Corp.
   
69
     
8,011
 
Macerich Co., REIT
   
100
     
8,087
 
Marsh & McLennan Cos., Inc.
   
122
     
8,205
 
MasterCard, Inc., Class A
   
82
     
8,345
 
MetLife, Inc.
   
183
     
8,131
 
Morgan Stanley
   
254
     
8,143
 
NASDAQ, Inc.
   
117
     
7,902
 
Navient Corp.
   
565
     
8,176
 
Northern Trust Corp.
   
117
     
7,955
 
People's United Financial, Inc.
   
500
     
7,910
 
PNC Financial Services Group, Inc.
   
89
     
8,018
 
Principal Financial Group, Inc.
   
166
     
8,551
 
Progressive Corp.
   
257
     
8,096
 
Prologis, Inc., REIT
   
156
     
8,352
 
Prudential Financial, Inc.
   
102
     
8,328
 
Public Storage, REIT
   
37
     
8,256
 
Realty Income Corp., REIT
   
125
     
8,366
 
   
Shares
   
Value
 
Financials (continued)
           
Regions Financial Corp.
   
818
   
$
8,074
 
Simon Property Group, Inc., REIT
   
38
     
7,866
 
SL Green Realty Corp., REIT
   
72
     
7,783
 
State Street Corp.
   
115
     
8,007
 
SunTrust Banks, Inc.
   
185
     
8,103
 
Synchrony Financial
   
299
     
8,372
 
T Rowe Price Group, Inc.
   
119
     
7,914
 
Torchmark Corp.
   
125
     
7,986
 
Travelers Cos., Inc.
   
70
     
8,019
 
UDR, Inc., REIT
   
233
     
8,386
 
Unum Group
   
228
     
8,051
 
US Bancorp
   
185
     
7,935
 
Ventas, Inc., REIT
   
117
     
8,264
 
Visa, Inc., Class A
   
99
     
8,187
 
Vornado Realty Trust, REIT
   
81
     
8,198
 
Wells Fargo & Co.
   
165
     
7,306
 
Welltower, Inc., REIT
   
109
     
8,150
 
Weyerhaeuser Co., REIT
   
265
     
8,464
 
Willis Towers Watson PLC
   
66
     
8,763
 
XL Group Ltd.
   
234
     
7,869
 
Zions Bancorporation
   
263
     
8,158
 
             
753,199
 
                 
Industrials: 13.51%
               
3M Co.
   
46
     
8,107
 
Acuity Brands, Inc.
   
31
     
8,203
 
Agilent Technologies, Inc.
   
179
     
8,429
 
Allegion PLC
   
120
     
8,269
 
AMETEK, Inc.
   
168
     
8,027
 
Amphenol Corp., Class A
   
131
     
8,505
 
Ball Corp.
   
103
     
8,441
 
Boeing Co.
   
63
     
8,300
 
Caterpillar, Inc.
   
100
     
8,877
 
CH Robinson Worldwide, Inc.
   
117
     
8,244
 
Corning, Inc.
   
359
     
8,490
 
CSX Corp.
   
288
     
8,784
 
Cummins, Inc.
   
69
     
8,842
 
Deere & Co.
   
98
     
8,364
 
Dover Corp.
   
116
     
8,542
 
Eaton Corp. PLC
   
126
     
8,279
 
Emerson Electric Co.
   
158
     
8,613
 
Expeditors International of Washington, Inc.
   
159
     
8,192
 
FedEx Corp.
   
50
     
8,734
 
FLIR Systems, Inc.
   
262
     
8,232
 
Flowserve Corp.
   
174
     
8,394
 
Fluor Corp.
   
163
     
8,365
 
Fortive Corp.
   
159
     
8,093
 
Fortune Brands Home & Security, Inc.
   
137
     
7,960
 
Garmin, Ltd.
   
169
     
8,131
 
General Dynamics Corp.
   
54
     
8,379
 
General Electric Co.
   
267
     
7,909
 
Harris Corp.
   
88
     
8,062
 
 
See Notes to Financial Statements.
8
www.Index.world

Index Funds S&P 500 Equal Weight
Schedule of Investments

September 30, 2016 (Unaudited)
 
   
Shares
   
Value
 
Industrials (continued)
           
Honeywell International, Inc.
   
72
   
$
8,394
 
Illinois Tool Works, Inc.
   
69
     
8,269
 
Ingersoll-Rand PLC
   
127
     
8,628
 
Jacobs Engineering Group, Inc.(a)
   
160
     
8,275
 
JB Hunt Transport Services, Inc.
   
103
     
8,357
 
Johnson Controls International plc
   
175
     
8,145
 
Kansas City Southern
   
86
     
8,026
 
L-3 Communications Holdings, Inc.
   
55
     
8,290
 
Lockheed Martin Corp.
   
34
     
8,150
 
Martin Marietta Materials, Inc.
   
46
     
8,239
 
Masco Corp.
   
242
     
8,303
 
Mettler-Toledo International, Inc.(a)
   
21
     
8,816
 
Norfolk Southern Corp.
   
89
     
8,638
 
Northrop Grumman Corp.
   
38
     
8,130
 
Owens-Illinois, Inc.(a)
   
462
     
8,496
 
Parker-Hannifin Corp.
   
67
     
8,410
 
Pentair PLC
   
134
     
8,608
 
PerkinElmer, Inc.
   
152
     
8,529
 
Raytheon Co.
   
59
     
8,032
 
Republic Services, Inc.
   
162
     
8,173
 
Rockwell Automation, Inc.
   
71
     
8,686
 
Rockwell Collins, Inc.
   
99
     
8,350
 
Roper Technologies, Inc.
   
46
     
8,394
 
Ryder System, Inc.
   
124
     
8,178
 
Sealed Air Corp.
   
177
     
8,110
 
Snap-on, Inc.
   
54
     
8,206
 
Stanley Black & Decker, Inc.
   
67
     
8,240
 
Stericycle, Inc.(a)
   
98
     
7,854
 
TE Connectivity, Ltd.
   
132
     
8,498
 
Textron, Inc.
   
202
     
8,029
 
Thermo Fisher Scientific, Inc.
   
56
     
8,907
 
TransDigm Group, Inc.(a)
   
28
     
8,095
 
Union Pacific Corp.
   
87
     
8,485
 
United Parcel Service, Inc., Class B
   
75
     
8,202
 
United Technologies Corp.
   
78
     
7,925
 
Vulcan Materials Co.
   
75
     
8,530
 
Waste Management, Inc.
   
128
     
8,161
 
Waters Corp.(a)
   
53
     
8,400
 
WestRock Co.
   
173
     
8,387
 
Xylem, Inc.
   
165
     
8,654
 
             
566,966
 
                 
Technology: 9.02%
               
Accenture PLC, Class A
   
73
     
8,918
 
Activision Blizzard, Inc.
   
190
     
8,417
 
Adobe Systems, Inc.(a)
   
81
     
8,792
 
Akamai Technologies, Inc.(a)
   
153
     
8,107
 
Analog Devices, Inc.
   
135
     
8,701
 
Apple, Inc.
   
78
     
8,818
 
Applied Materials, Inc.
   
279
     
8,412
 
Autodesk, Inc.(a)
   
120
     
8,680
 
Broadcom, Ltd.
   
50
     
8,626
 
CA, Inc.
   
243
     
8,038
 
   
Shares
   
Value
 
Technology (continued)
           
Cerner Corp.(a)
   
129
   
$
7,966
 
Citrix Systems, Inc.(a)
   
97
     
8,266
 
Cognizant Technology Solutions Corp., Class A(a)
   
146
     
6,966
 
CSRA, Inc.
   
307
     
8,258
 
Dun & Bradstreet Corp.
   
60
     
8,197
 
Electronic Arts, Inc.(a)
   
101
     
8,625
 
Fidelity National Information Services, Inc.
   
104
     
8,011
 
Fiserv, Inc.(a)
   
80
     
7,958
 
Hewlett Packard Enterprise Co.
   
384
     
8,736
 
HP, Inc.
   
571
     
8,868
 
Intel Corp.
   
227
     
8,569
 
International Business Machines Corp.
   
52
     
8,260
 
Intuit, Inc.
   
74
     
8,141
 
KLA-Tencor Corp.
   
116
     
8,086
 
Lam Research Corp.
   
88
     
8,335
 
Linear Technology Corp.
   
139
     
8,241
 
Microchip Technology, Inc.
   
137
     
8,513
 
Micron Technology, Inc.(a)
   
478
     
8,499
 
Microsoft Corp.
   
143
     
8,237
 
NetApp, Inc.
   
235
     
8,418
 
NVIDIA Corp.
   
135
     
9,250
 
Oracle Corp.
   
201
     
7,895
 
Paychex, Inc.
   
136
     
7,870
 
Pitney Bowes, Inc.
   
452
     
8,208
 
Qorvo, Inc.(a)
   
153
     
8,528
 
QUALCOMM, Inc.
   
133
     
9,111
 
Red Hat, Inc.(a)
   
111
     
8,972
 
salesforce.com, Inc.(a)
   
108
     
7,704
 
Seagate Technology PLC
   
223
     
8,597
 
Skyworks Solutions, Inc.
   
120
     
9,137
 
Teradata Corp.(a)
   
270
     
8,370
 
Texas Instruments, Inc.
   
121
     
8,492
 
Western Digital Corp.
   
156
     
9,121
 
Xerox Corp.
   
838
     
8,489
 
Xilinx, Inc.
   
154
     
8,368
 
             
378,771
 
                 
Utilities: 5.46%
               
AES Corp.
   
652
     
8,378
 
Alliant Energy Corp.
   
216
     
8,275
 
Ameren Corp.
   
167
     
8,213
 
American Electric Power Co., Inc.
   
126
     
8,090
 
American Water Works Co., Inc.
   
111
     
8,307
 
CenterPoint Energy, Inc.
   
356
     
8,270
 
CMS Energy Corp.
   
195
     
8,192
 
Consolidated Edison, Inc.
   
110
     
8,283
 
Dominion Resources, Inc.
   
111
     
8,244
 
DTE Energy Co.
   
88
     
8,243
 
Duke Energy Corp.
   
103
     
8,244
 
Edison International
   
113
     
8,164
 

See Notes to Financial Statements.
Semi-Annual Report | September 30, 2016
9

Index Funds S&P 500 Equal Weight
Schedule of Investments

September 30, 2016 (Unaudited)
 
   
Shares
   
Value
 
Utilities (continued)
           
Entergy Corp.
   
104
   
$
7,980
 
Eversource Energy
   
151
     
8,181
 
Exelon Corp.
   
241
     
8,023
 
FirstEnergy Corp.
   
246
     
8,138
 
NextEra Energy, Inc.
   
67
     
8,195
 
NiSource, Inc.
   
344
     
8,294
 
NRG Energy, Inc.
   
693
     
7,769
 
PG&E Corp.
   
132
     
8,074
 
Pinnacle West Capital Corp.
   
109
     
8,283
 
PPL Corp.
   
239
     
8,262
 
Public Service Enterprise Group, Inc.
   
195
     
8,165
 
SCANA Corp.
   
116
     
8,395
 
Sempra Energy
   
78
     
8,361
 
Southern Co.
   
158
     
8,105
 
WEC Energy Group, Inc.
   
136
     
8,144
 
Xcel Energy, Inc.
   
197
     
8,105
 
             
229,377
 
                 
Total Common Stocks
(Cost $4,197,441)
           
4,100,491
 
                 
SHORT TERM INVESTMENTS: 2.24%
               
Fidelity® Institutional Money Market Government Portfolio, Class I (0.27% 7-day yield)
   
93,837
     
93,837
 
                 
Total Short Term Investments
(Cost $93,837)
           
93,837
 
                 
Total Investments: 99.91%
(Cost $4,291,278)
           
4,194,328
 
                 
Other Assets In Excess Of Liabilities: 0.09%
           
3,853
 
                 
Net Assets: 100.00%
         
$
4,198,181
 
 
 
(a)
Non-income producing security.

See Notes to Financial Statements.
10
www.Index.world


Index Funds S&P 500 Equal Weight
Statement of Assets and Liabilities

September 30, 2016 (Unaudited)
 
ASSETS:
     
Investments, at value
 
$
4,194,328
 
Receivable for shares sold
   
1,000
 
Receivable due from adviser
   
28,657
 
Interest and dividends receivable
   
5,083
 
Prepaid expenses and other assets
   
27,553
 
Total Assets
   
4,256,621
 
LIABILITIES:
       
Investment advisory fees payable
   
819
 
Payable to fund accounting and administration
   
22,052
 
Payable for trustee fees and expenses
   
40
 
Payable for transfer agency fees
   
5,299
 
Payable for chief compliance officer fee
   
3,357
 
Payable for professional fees
   
18,233
 
Accrued expenses and other liabilities
   
8,640
 
Total Liabilities
   
58,440
 
NET ASSETS
 
$
4,198,181
 
NET ASSETS CONSIST OF:
       
Paid-in capital
 
$
4,148,804
 
Accumulated net investment income
   
42,690
 
Accumulated net realized gain on investments
   
103,637
 
Net unrealized depreciation on investments
   
(96,950
)
NET ASSETS
 
$
4,198,181
 
INVESTMENTS, AT COST
 
$
4,291,278
 
PRICING OF SHARES
       
Net Asset Value, offering and redemption price per share
 
$
25.70
 
Net Assets
 
$
4,198,181
 
Shares of beneficial interest outstanding, without par value
   
163,358
 
 
See Notes to Financial Statements.

Semi-Annual Report | September 30, 2016
11

Index Funds S&P 500 Equal Weight
Statement of Operations

For the Six Months Ended September 30, 2016 (Unaudited)
 
INVESTMENT INCOME:
     
Dividends
 
$
32,655
 
Total Investment Income
   
32,655
 
         
EXPENSES:
       
Investment advisory fee (Note 3)
   
3,944
 
Administration fee
   
90,447
 
Custodian fee
   
2,382
 
Audit and tax fees
   
8,302
 
Legal fees
   
19,411
 
Transfer agent fee
   
19,914
 
Trustee fees and expenses
   
16
 
Registration fees
   
14,897
 
Printing fees
   
3,573
 
Chief compliance officer fee
   
10,024
 
Other
   
12,378
 
Total expenses before waiver
   
185,288
 
Less fees waived/reimbursed by investment adviser (Note 3)
   
(180,544
)
Total Net Expenses
   
4,744
 
NET INVESTMENT INCOME:
   
27,911
 
         
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
       
Net realized gain on investments
   
81,282
 
Net change in unrealized appreciation on investments
   
86,642
 
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
   
167,924
 
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
 
$
195,835
 
 
See Notes to Financial Statements.

12
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Index Funds S&P 500 Equal Weight
Statement of Changes in Net Assets

 
 
 
For the Six Months Ended September 30, 2016 (Unaudited)
   
For the Period May 1, 2015(Commencement of Operations) to March 31, 2016
 
OPERATIONS:
           
Net investment income
 
$
27,911
   
$
49,602
 
Net realized gain on investments
   
81,282
     
77,263
 
Net change in unrealized appreciation/(depreciation) on investments
   
86,642
     
(183,592
)
Net increase/(decrease) in net assets resulting from operations
   
195,835
     
(56,727
)
 
               
DISTRIBUTIONS TO SHAREHOLDERS:
   
 
     
 
From net investment income
   
     
(34,953
)
From net realized gains on investments
   
     
(54,908
)
Net decrease in net assets from distributions
   
     
(89,861
)
SHARE TRANSACTIONS:
               
Proceeds from sale of shares
   
1,426,919
     
3,683,435
 
Issued to shareholders in reinvestment of distributions
   
     
89,861
 
Cost of shares redeemed
   
(498,691
)
   
(552,690
)
Redemption fees
   
100
     
 
Net increase from share transactions
   
928,328
     
3,220,606
 
Net increase in net assets
 
$
1,124,163
   
$
3,074,018
 
NET ASSETS:
               
Beginning of period
   
3,074,018
     
0
 
End of period (including accumulated net investment income of $42,690 and $14,779)
 
$
4,198,181
   
$
3,074,018
 
 
               
Other Information:
               
SHARE TRANSACTIONS:
               
Sold
   
55,608
     
147,123
 
Distributions reinvested
   
     
3,875
 
Redeemed
   
(20,286
)
   
(22,962
)
Net increase in shares outstanding
   
35,322
     
128,036
 
 
See Notes to Financial Statements.

Semi-Annual Report | September 30, 2016
13

Index Funds S&P 500 Equal Weight
Financial Highlights

For a Share Outstanding Throughout the Periods Presented

 
 
For the Six Months Ended September 30, 2016 (Unaudited)
   
For the Period May 1, 2015(Commencement of Operations) to March 31, 2016
 
Net asset value, beginning of period
 
$
24.01
   
$
25.00
 
 
               
INCOME FROM INVESTMENT OPERATIONS:
               
Net investment income(a)
   
0.22
     
0.44
 
Net realized and unrealized gain/(loss)
   
1.47
     
(0.71
)
Total from investment operations
   
1.69
     
(0.27
)
 
               
DISTRIBUTIONS:
               
From net investment income
   
     
(0.28
)
From net realized gains
   
     
(0.44
)
Total distributions
   
     
(0.72
)
 
               
Net increase/(decrease) in net asset value
   
1.69
     
(0.99
)
Net asset value, end of period
 
$
25.70
   
$
24.01
 
 
               
TOTAL RETURN
   
7.04
%(b)
   
(1.00
)%(b)
 
               
SUPPLEMENTAL DATA:
               
Net assets, end of period (000s)
 
$
4,198
   
$
3,074
 
 
               
RATIOS TO AVERAGE NET ASSETS:
               
Ratio of expenses to average net assets excluding fee waivers and reimbursements
   
11.72
%(c)
   
13.50
%(c)
Ratio of expenses to average net assets including fee waivers and reimbursements
   
0.30
%(c)
   
0.30
%(c)
Ratio of net investment income to average net assets
   
1.76
%(c)
   
2.02
%(c)
 
               
PORTFOLIO TURNOVER RATE
   
27
%(b)
   
81
%(b)
 
(a)
Calculated using the average shares method.
(b)
Not Annualized.
(c)
Annualized.
 
See Notes to Financial Statements.

14
www.Index.world

Index Funds S&P 500 Equal Weight
Notes to Financial Statements

September 30, 2016 (Unaudited)
 
1. ORGANIZATION

The Index Funds S&P 500 Equal Weight (the “Fund”) is a separate series of Index Funds, an open-end management investment company that was organized as a trust under the laws of the State of Delaware on November 9, 2005 (the “Trust”). The Fund currently offers one class of shares: No Load Shares. The Fund is diversified, as that term is defined in the Investment Company Act of 1940, as amended (the “1940 Act”).

The Fund seeks to achieve its investment objective by investing in a portfolio of assets whose performance, before fees and expenses, is expected to match approximately the performance of the Standard & Poor’s 500 Equal Weight Index (the “Index”). The Fund expects that its portfolio will consist primarily of securities of issuers included in the Index. The Index is designed to measure the performance of approximately 500 U.S. issuers chosen for market size, liquidity and industry grouping, among other factors.
 
2. SIGNIFICANT ACCOUNTING POLICIES


The following is a summary of significant accounting policies consistently followed by the Fund. These policies are in conformity with U.S. generally accepted accounting principles (“GAAP”). The Fund is considered an investment company for financial reporting purposes under GAAP.
 
Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in financial statements. Actual results could differ from those estimates.
 
Investment Transactions Investment security transactions are accounted for on trade date. Gains and losses on securities sold are determined on a specific identification basis. Realized gains and losses from investment transactions are determined using the identified cost basis.
 
Investment Income Dividend income is recorded on the ex-dividend date. Withholding taxes on foreign dividends have been provided for in accordance with the Fund’s understanding of the applicable country’s tax rules and rates. Interest income which includes amortization of premium and accretion of discount, is recorded on the accrual basis.

Investment Valuation The Fund’s portfolio securities are valued as of the close of trading of the New York Stock Exchange (“NYSE”) (normally 4:00 p.m., Eastern Time). Each security, excluding short-term investments, is valued at the last sale price reported by the principal security  exchange on which the issue is traded. Money market funds, representing short-term investments, are valued at their daily net asset value. Securities that are traded on the Nasdaq Stock Market, Inc. are valued at the Nasdaq Official Closing Price or if no sale is reported, the mean between the bid and the ask. Securities which are traded over-the-counter are valued at the last sale price or, if no sale, at the mean between the bid and the ask. Securities for which quotations are not readily available are valued at fair value as determined by the investment adviser in accordance with procedures approved by the Board of Trustees (the “Board”). The fair value of a security is the amount which the Fund might reasonably expect to receive upon a current sale. The fair value of a security may differ from the last quoted price and the Fund may not be able to sell a security at the fair value. Market quotations may not be available, for example, if trading in particular securities was halted during the day and not resumed prior to the close of trading on the New York Stock Exchange. As of September 30, 2016 there were no securities that were internally fair valued.
 
Fair Value Measurements A three-tier hierarchy has been established to classify fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability that are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability that are developed based on the best information available. In accordance with the authoritative guidance on fair value measurements and disclosure under GAAP, the Fund discloses fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value.
 
Various inputs are used in determining the value of the Fund’s investments as of the reporting period end. These inputs are categorized in the following hierarchy under applicable financial accounting standards:
 
Level 1 —
Unadjusted quoted prices in active markets for identical, unrestricted assets or liabilities that the Fund has the ability to access at the measurement date;

Level 2 —
Quoted prices which are not active, quoted prices for similar assets or liabilities in active markets or inputs other than quoted prices that are observable (either directly or indirectly) for substantially the full term of the asset or liability; and
 

Semi-Annual Report  |  September 30, 2016
15

Index Funds S&P 500 Equal Weight
Notes to Financial Statements

September 30, 2016 (Unaudited)
 
Level 3 —
Significant unobservable prices or inputs (including the Fund’s own assumptions in determining the fair value of investments) where there is little or no market activity for the asset or liability at the measurement date.

The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type  of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
 
An investment level within the fair value hierarchy is based on the lowest level input, individually or in the aggregate, that is significant to fair value measurement. The valuation techniques used by the Fund to measure fair value during the period ended September 30, 2016 maximized the use of observable inputs and minimized the use of unobservable inputs.

The inputs or methodologies used for valuing securities are not necessarily an indication of the risk or liquidity associated with investing in those securities. The following is a summary of the inputs used in valuing the Fund’s investments as of September 30, 2016:
 
Investments in Securities at Value*
 
Level 1 - Quoted Prices
   
Level 2 - Other Significant Observable Inputs
   
Level 3 - Significant Unobservable Inputs
   
Total
 
Index Funds S&P 500 Equal Weight
                       
Common Stocks
 
$
4,100,491
   
$
   
$
   
$
4,100,491
 
Short Term Investments
   
93,837
     
     
     
93,837
 
TOTAL
 
$
4,194,328
   
$
   
$
   
$
4,194,328
 
 
*
See Schedule of Investments for industry classification.
 
It is the Fund’s policy to recognize transfers between levels at the end of the reporting period. There were no transfers between Levels 1 and 2 during the period ended September 30, 2016.

For the period ended September 30, 2016, the Fund did not have any unobservable inputs (Level 3) used in determining fair value.

Expenses
The Fund bears expenses incurred specifically for the Fund and general Trust expenses.

Distributions to Shareholders — Dividends from net investment income and distributions of net realized capital gains, if any, will be declared and paid at least annually. Income and capital gains distributions are determined in accordance with income tax regulations, which may differ from GAAP. Distributions to shareholders are recorded on the ex-dividend date.

Fees on Redemptions
The Fund charges a redemption fee of 2.00% on redemptions of Fund’s shares occurring within 30 days following the issuance of such shares. The redemption fee is not a fee to finance sales or sales promotion expenses, but is paid to the Fund to defray the costs of liquidating an investor and discouraging short-term trading of the Fund’s shares. No redemption fee will be imposed on the redemption of shares representing dividends or capital gains distributions, or on amounts representing capital appreciation of shares.

Income Taxes As of and during the period ended September 30, 2016, the Fund did not have a liability for any unrecognized tax benefits. The Fund files U.S. federal, state, and local tax returns as required. The Fund’s tax returns are subject to examination by the relevant tax authorities until expiration of the applicable statute of limitations which is generally three years after the filing of the tax return for federal purposes and four years for most state returns. Tax returns for open years have incorporated no uncertain tax positions that require a provision for income taxes. The Fund intends to continue to qualify each year as a “regulated investment company” under Subchapter M of the Internal Revenue Code of 1986, as amended. By so qualifying, the Fund will not be subject to Federal income taxes to the extent that it distributes substantially all of its taxable or tax-exempt income, if any, for its tax year ending March 31, 2016. In addition, by distributing in each calendar year substantially all of its net investment income, capital gains and certain other amounts, if any, the Fund will not be subject to a Federal excise tax. Therefore, no provision is made by the Fund for Federal income or excise taxes.
 

16
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Index Funds S&P 500 Equal Weight
Notes to Financial Statements

September 30, 2016 (Unaudited)

3.  ADVISORY FEES, ADMINISTRATION FEES AND OTHER AGREEMENTS

The Index Group, Inc., is the Investment Adviser for the Fund (the “Adviser”). The Adviser currently provides investment advisory services for individuals, trusts, estates and institutions. The Adviser commenced operations in 2004, and is registered as an investment adviser with the Securities and Exchange Commission. The Adviser is entitled to an investment advisory fee, computed daily and payable monthly, of 0.25% of the average daily net assets of the Fund.
 
The Adviser has agreed to waive and/or reimburse fees or expenses in order to limit Total Annual Fund Operating Expenses After Fee Waiver/Expense Reimbursement (excluding acquired fund fees and expenses, brokerage expenses, interest expenses, taxes and extraordinary expenses) to 0.30% of the Fund’s average daily net assets for No Load Shares. This agreement is in effect through July 31, 2017. This agreement  may not be terminated or modified by the Adviser prior to this date except with the approval of the Fund’s Board.
 
The Adviser may request a reimbursement from the Fund to recapture any reduced management fees or reimbursed Fund expenses within three years following the fee reduction or expense reimbursement, but only to the extent the Fund’s Total Annual Fund Operating Expenses, plus any requested reimbursement amount, are less than the above limit at the time of the request. Any such reimbursement is subject to review by the Board.
 
As of March 31, 2016, reimbursements that may potentially be made by the Fund to the Adviser total $323,356. These reimbursements expire March 31, 2019.
 
Fund Accounting Fees and Expenses
ALPS Fund Services, Inc. (“ALPS” or the “Administrator”) provides administrative, fund accounting and other services to the Fund under the Administration, Bookkeeping and Pricing Services Agreement (the “Administration Agreement”) with the Trust. Under the Administration Agreement, ALPS is paid fees, accrued on a daily basis and paid on a monthly basis following the end of the month. Administrator fees paid by the Fund for the six months ended September 30, 2016 are disclosed in the Statement of Operations.

The Administrator is also reimbursed by the Fund for certain out of pocket expenses.
 
Transfer Agent and Shareholder Services Agreement
ALPS serves as transfer, dividend paying and shareholder servicing agent for the Fund (the “Transfer Agent”) under a Transfer Agency and Services Agreement with the Trust. Transfer Agent fees paid by the Fund for the six months ended September 30, 2016 are disclosed in the Statement of Operations.
 
Compliance Services
ALPS provides Chief Compliance Officer services to the Fund. Additionally, ALPS provides services in monitoring and testing the policies and procedures of the Trust in conjunction with requirements under Rule 38a-1 under the 1940 Act. ALPS is compensated under the Chief Compliance Officer Services Agreement. Compliance services fees paid by the Fund for the six months ended September 30, 2016 are disclosed in the  Statement of Operations.
 
Distributor
The Fund has entered into a Distribution Agreement with ALPS Distributors, Inc. (“the Distributor”) to provide distribution services to the Fund. The Distributor serves as underwriter/distributor of shares of the Fund. Distribution services fees paid by the Fund for the six months ended September 30, 2016 are disclosed in the Statement of Operations.
 
4. PURCHASES AND SALES OF INVESTMENT SECURITIES

The aggregate cost of purchases and proceeds from sales of investment securities, excluding short-term securities, are shown below for the six months ended September 30, 2016.

Funds
 
Cost of Investments Purchased
   
Proceeds from Investments Sold
 
Index Funds S&P 500 Equal Weight
 
$
1,697,102
   
$
858,642
 
 

Semi-Annual Report  |  September 30, 2016
17

Index Funds S&P 500 Equal Weight
Notes to Financial Statements

September 30, 2016 (Unaudited)
5. TAX BASIS INFORMATION

Distributions are determined in accordance with federal income tax regulations, which differ from GAAP, and, therefore, may differ significantly in amount or character from net investment income and realized gains for financial reporting purposes. Financial reporting records are adjusted for permanent book/tax differences to reflect tax character but are not adjusted for temporary differences. The amounts and characteristics of tax basis distributions and composition of distributable earnings/(accumulated losses) are finalized at fiscal year-end.

The tax character of distributions paid during the period ended March 31, 2016, were as follows:
 
   
Ordinary Income
   
Long-Term
Capital Gain
 
Index Funds S&P 500 Equal Weight
 
$
89,396
    $ 465  

As of September 30, 2016, net unrealized appreciation/(depreciation) of investments based on the federal tax cost were as follows:
 
   
Gross Appreciation (excess of value over tax cost)
   
Gross Depreciation (excess of tax cost over value)
   
Net Unrealized Depreciation
   
Cost of Investments for Income Tax Purposes
 
Index Funds S&P 500 Equal Weight
 
$
185,345
   
$
(296,429
)
 
$
(111,084
)
 
$
4,305,412
 
  
The difference between book basis and tax basis is primarily attributable to wash sales.
 
6. BENEFICIAL OWNERSHIP
 
At September 30, 2016, two shareholders are each record owner of 25% or more of the Fund’s shares.
 
7. COMMITMENTS AND CONTINGENCIES
 
Under the Trust’s organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course of business, the Trust entered into contracts with its service providers, on behalf of the Fund, and others that provide for general indemnifications. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund. The Fund expects the risk of loss to be remote.
 

18
www.Index.world

Index Funds S&P 500 Equal Weight
Additional Information

September 30, 2016 (Unaudited)

1. PROXY VOTING POLICIES AND VOTING RECORD
 
A copy of the Trust’s Proxy Voting and Disclosure Policy and the Advisor’s Proxy Voting and Disclosure Policy are included as Appendix B to the Fund’s Statement of Additional Information and are available, (1) without charge, upon request, by calling (1-888-544-2685) and (2) on the SEC’s website at http://ww.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 will be available (1) through a link, available on the Adviser’s website at www.index.world, to the Fund’s publicly filed proxy information (2) by calling the Fund at 1-844-464-6339; and (3) on the SEC's website at www.sec.gov.
 
2. QUARTERLY PORTFOLIO HOLDINGS
 
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the SEC’s website at http://www.sec.gov. You may review and make copies at the SEC’s Public Reference Room in Washington, D.C. You may also obtain copies after paying a duplicating fee by writing the SEC’s Public Reference Section, Washington, D.C. 20549- 0102 or by electronic request to publicinfo@sec.gov, or is available without charge, upon request, by calling the Funds at 1-888-544-2685. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330, (1-800-732-0330).
 

Semi-Annual Report  |  September 30, 2016
19

(Back Cover Page)
 

Item 2.
Code of Ethics.

Not applicable to this report.

Item 3.
Audit Committee Financial Expert.

Not applicable to this report.

Item 4.
Principal Accountant Fees and Services.

Not applicable to this report.

Item 5.
Audit Committee of Listed Registrants.

Not applicable.

Item 6.
Schedule of Investments.

Schedule of Investments is included as part of the Report to Stockholders filed under Item 1 of this form.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

Not applicable.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies.

Not applicable.

Item 10.
Submission of Matters to Vote of Security Holders.

There has been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of trustees.

Item 11.
Controls and Procedures.

(a)
The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended) are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document.

(b) There was no change in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940, as amended) during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting.
 
Item 12.
Exhibits.

(a)(1) Not applicable.

(a)(2) The certifications required by Rule 30a-2(a) of the Investment Company Act of 1940, as amended, and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto as Ex99.Cert.

(a)(3)
Not applicable.

(b) The certifications by the registrant’s Principal Executive Officer and Principal Financial Officer, as required by Rule 30a-2(b) of the Investment Company Act of 1940, as amended, and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto as Ex99.906Cert.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
                                             
  Index Funds
     
 
By:
/s/ Michael G. Willis
   
Michael G. Willis, President
   
(Principal Executive Officer)
 
Date:
December 8, 2016
 
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 
By:
/s/ Michael G. Willis
   
Michael G. Willis, President
   
(Principal Executive Officer)
 
Date:
December 8, 2016
 
 
By:
/s/ Michael G. Willis
   
Michael G. Willis, President
   
(Principal Financial Officer)
 
Date:
December 8, 2016