Worries that the slowing global economy might be dragging the U.S. down caused markets to get off to a poor start in 2016, but in the second half of the quarter rising oil prices and the Federal Reserve's decision not to raise rates at its mid-March meeting helped equities recover. Large-cap and mid-cap stocks both recorded positive returns, while small-caps lost ground during the period. The underlying trend of moderate U.S. economic expansion appeared to remain in place. Jobs growth averaged more than 200,000 per month, and the national unemployment rate was 5% in March, near its lowest level in eight years. Falling domestic oil production and the strong U.S. dollar have weighed on the manufacturing sector, but weakness in the natural resources and manufacturing segments has not spilled over to the broader economy.
The Total Equity Market Index Fund returned 1.00% in the quarter compared with 0.93% for the S&P Total Market Index and 1.01% for the Lipper Multi-Cap Core Funds Index. For the 12 months ended March 31, 2016, the fund returned −0.41% versus −0.39% for the S&P Total Market Index and −2.58% for the Lipper Multi-Cap Core Funds Index. The fund's average annual total returns were −0.41%, 10.87%, and 6.85% for the 1-, 5-, and 10-year periods, respectively, as of March 31, 2016. The fund's expense ratio was 0.30% as of its fiscal year ended December 31, 2015.
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 companies across all market capitalizations. Information technology and financials are the largest components of the index. The noncyclical telecommunication services and utilities sectors, which tend to have relatively high dividend yields, far outperformed other sectors, helped by investors seeking attractive income. On the other hand, health care stocks declined amid weakness in biotechnology shares. Financials stocks also fell, as higher interest rates, which had been widely anticipated and would benefit lenders and other businesses in the sector, failed to materialize.
While equity markets have almost fully recovered from the lows reached in February, earnings growth has fallen, hampered by weakness in the energy and materials sectors. This has resulted in higher valuations. At current levels, valuations are modestly above historical averages, and there appears to be less near-term support from earnings and revenue growth. Profit margins are also declining. However, low but durable U.S. economic growth should be supportive of most sectors. While interest rates may rise, the pace of Fed rate increases should be gradual. Despite a slowdown in global economic growth, especially in China and other emerging markets, the likelihood of a U.S. recession remains low.