After stumbling in early April, U.S. stocks posted solid gains in the second quarter, with larger- and mid-cap shares outperforming their smaller peers. Equities climbed amid signs that the economy was recovering from the weather-driven economic contraction in the first quarter. Corporate merger activity was supportive, and signs that Russia wants to de-escalate tensions with Ukraine, whose eastern region is experiencing violent separatism, were encouraging. Investors were undeterred by the Federal Reserve's continued tapering of its asset purchases or by rising oil prices late in the quarter in response to a sharp increase in sectarian violence in Iraq.
The Extended Equity Market Index Fund returned 3.47% in the quarter compared with 3.29% for the S&P Completion Index and 4.07% for the Lipper Mid-Cap Core Funds Index. For the 12 months ended June 30, 2014, the fund returned 26.94% versus 26.89% for the S&P Completion Index and 26.11% for the Lipper Mid-Cap Core Funds Index. The fund's average annual total returns were 26.94%, 21.91%, and 10.32% for the 1-, 5-, and 10-year periods, respectively, as of June 30, 2014. The fund's expense ratio was 0.45% as of its fiscal year ended December 31, 2013.
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 offers investors exposure to small- and mid-cap U.S. stocks by seeking to track the Standard & Poor's Completion Index. In an uncertain economy, investors favored defensive stocks, led by the energy sector, which generated a stellar return that was helped by an increase in global oil prices stemming from fears of Iraqi oil production disruptions. Utilities also delivered an excellent return. The telecom services, consumer staples, and materials sectors also edged out the index. The health care sector was roughly even with the index, while financials and industrials and business services lagged. The consumer discretionary and information technology sectors delivered small positive returns.
While we don't believe that investors can expect a repeat of last year's strong stock market performance, we do expect returns to benefit from corporate earnings growth, which we think will continue through the year at a moderate pace. Nevertheless, shareholders should note that we do not make investment decisions based on market forecasts or prospects for individual companies.