U.S. stocks generated mixed results in the second quarter. Major indexes reached new all-time highs in May and June but closed below their best levels of the quarter, following a sharp sell-off at the end of June. For most of the period, the market was supported by merger activity, a strengthening economy, and signs that the stronger dollar and lower oil prices did not hurt first-quarter corporate earnings as much as initially feared. The equity market was largely unaffected by the likelihood that the Federal Reserve will begin raising short-term interest rates sometime later in 2015.
The Extended Equity Market Index Fund returned −0.38% in the quarter compared with −0.44% for the S&P Completion Index and −0.57% for the Lipper Mid-Cap Core Funds Index. For the 12 months ended June 30, 2015, the fund returned 6.26% versus 6.17% for the S&P Completion Index and 5.21% for the Lipper Mid-Cap Core Funds Index. The fund's average annual total returns were 6.26%, 18.38%, and 9.54% for the 1-, 5-, and 10-year periods, respectively, as of June 30, 2015. The fund's expense ratio was 0.42% as of its fiscal year ended December 31, 2014.
For up-to-date standardized total returns, including the most recent month-end performance, please click on the Performance tab, above.
Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results.
Share price, principal value, and return will vary and you may have a gain or loss when you sell your shares.
The Extended Equity Market Index Fund charges a 0.5%
redemption fee on shares held 90 days or less.
The performance information shown does not reflect the deduction of the redemption fee;
if it did, the performance would be lower.
The portfolio tracks the Standard & Poor's Completion Index, which offers investors exposure to small-, mid-cap, and micro-cap companies. Several sectors outperformed the wider index for the quarter. Health care generated solid returns as did telecommunications and information technology. The performance of the utilities sectors weighed most on results. Utilities stocks, which often behave like bonds because of their relatively high dividend yields, extended their first-quarter losses as long-term interest rates increased in response to a strengthening economy and the likelihood of a Fed rate hike later this year. Stocks in the materials and energy sectors also weighed on returns.
The outlook for U.S. equities remains generally positive. However, after a six-year bull market run without a major reversal, we think investors may have grown too complacent about volatility. Nevertheless, shareholders should note that we do not make investment decisions based on market forecasts or prospects for individual companies.