Most major stock indexes recorded modest gains in the quarter and reached new or multiyear highs as investors balanced favorable corporate earnings against economic and geopolitical concerns. Shares tumbled in January as the Federal Reserve began tapering its asset purchases, sparking a flight from riskier assets like emerging markets stocks amid fears of higher long-term rates and reduced liquidity.. But stocks rebounded strongly in February as emerging markets fears subsided and corporate earnings and economic data remained mostly favorable despite a harsh winter. Equities struggled somewhat in March amid Russia's annexation of Ukraine's Crimean peninsula and retaliatory sanctions from the U.S. and the European Union.
The Total Equity Market Index Fund returned 1.93% in the quarter compared with 2.01% for the S&P Total Market Index and 1.66% for the Lipper Multi-Cap Core Funds Index. For the 12 months ended March 31, 2014, the fund returned 22.76% versus 22.54% for the S&P Total Market Index and 21.71% for the Lipper Multi-Cap Core Funds Index. The fund's average annual total returns were 22.76%, 21.88%, and 7.86% for the 1-, 5-, and 10-year periods, respectively, as of March 31, 2014. The fund's expense ratio was 0.36% as of its fiscal year ended June 1, 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 S&P Total Market Index. In an uncertain economy, investors favored defensive stocks. Among them, utilities produced an excellent return, far outpacing other sectors and the index. Health care followed with a good return. Financials and information technology sectors outperformed the index. Energy, information and business services, consumer staples and the telecommunications services sectors all lagged the index, while consumer discretionary lost ground.
The U.S. economy should gain momentum in 2014 due to several positive factors. Monetary policy remains broadly accommodative despite the Fed slowing its monthly asset purchases. We expect fewer fiscal restraints on growth than in 2013, and consumer spending to benefit from the waning headwinds of household deleveraging and last year's tax increases. Housing construction should continue to recover, and business investment should increase. The labor market is slowly improving, supporting ongoing income growth. The strengthening economy is likely to fuel accelerating growth in corporate revenues and earnings. Finally, inflation remains under control. Therefore, we remain optimistic about the environment for equities. Shareholders should note that we do not make investment decisions based on market forecasts or prospects for individual companies.