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 Total Equity Market Index Fund returned 4.86% in the quarter compared with 4.85% for the S&P Total Market Index and 4.52% for the Lipper Multi-Cap Core Funds Index. For the 12 months ended June 30, 2014, the fund returned 25.14% versus 25.00% for the S&P Total Market Index and 24.42% for the Lipper Multi-Cap Core Funds Index. The fund's average annual total returns were 25.14%, 19.24%, and 8.24% for the 1-, 5-, and 10-year periods, respectively, as of June 30, 2014. The fund's expense ratio was 0.35% 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 Total 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 provides investors exposure to the entire U.S. stock market by seeking to track the Standard & Poor's Total Market Index. In an uncertain economy, investors favored defensive stocks. The energy sector produced a stellar return, helped by an increase in global oil prices stemming from fears of Iraqi oil production disruptions. Utilities followed with a very good return. Information technology delivered a solid return, and the materials sector slightly edged out the index. Consumer staples, health care, telecomm services, industrials and business services, consumer discretionary, and financials lagged the overall market.
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.