U.S. stocks rose in the first quarter of 2015 despite occasional bouts of risk aversion and volatility, and uncertainty about when the Federal Reserve may begin tightening its monetary policy. The market was supported by corporate merger activity, reduced energy costs, low interest rates, and massive quantitative easing efforts in the eurozone and Japan. Most major U.S. indexes established new all-time highs before retreating a bit in late March. Mid- and small-cap shares strongly outperformed their larger peers. That performance was due in part to smaller-caps having lower exposure to foreign markets, which have become more challenging for large U.S. multinationals because of the strong U.S. dollar.
The Total Equity Market Index Fund returned 1.75% in the quarter compared with 1.80% for the S&P Total Market Index and 2.16% for the Lipper Multi-Cap Core Funds Index. For the 12 months ended March 31, 2015, the fund returned 12.09% versus 12.23% for the S&P Total Market Index and 10.60% for the Lipper Multi-Cap Core Funds Index. The fund's average annual total returns were 12.09%, 14.54%, and 8.37% for the 1-, 5-, and 10-year periods, respectively, as of March 31, 2015. 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 tracking the Standard & Poor's Total Market Index, which includes large-, mid-, small-, and micro-cap companies. Health care, one of the largest allocations in the index, advanced the most, returning 7.8%. The consumer discretionary sector, the third-largest allocation in the portfolio and index, returned nearly 5%. Telecommunication services, one of the smaller allocations, gained slightly more than the benchmark. Information technology, consumer staples, materials, and industrials and business services lagged but saw small gains. The remaining three sectors lost ground, with utilities declining the most, followed by energy and financials.
The U.S. economic recovery appears to be on a relatively firm footing and should benefit from stable growth driven by labor market strength and reduced fiscal headwinds. Inflation remains contained, helped by low energy prices, and the Federal Reserve is on course to begin monetary tightening later this year, which we view as indicative of growing confidence in the economy. Healthy corporate balance sheets and cash flows offer companies the flexibility to increase hiring, enhance merger and acquisition activity, and return capital to shareholders. However, the global economy remains fragile, and the strong dollar should continue to weigh on earnings for many of the larger companies. Nevertheless, shareholders should note that we do not make investment decisions based on market forecasts or prospects for individual companies.