Developed non-U.S. stock markets advanced despite a stronger dollar versus several major currencies. Asian markets outperformed their European peers, with Japanese shares rising 10% and reaching 15-year highs due in part to increased equity purchases by public pension funds. In an attempt to boost the economy and inflation, the government expanded its quantitative easing measures. European markets did very well in local currency terms, but a sharp drop in the euro versus the dollar resulted in milder returns in dollar terms. Currency weakness is likely to act as a tailwind for economic growth by helping export businesses. Increased demand for loans, easier credit standards, and lower oil prices also bode well for eurozone growth.
The International Equity Index Fund returned 5.52% in the quarter compared with 5.14% for the FTSE All World Developed ex North America Index and 4.70% for the Lipper International Large-Cap Core Funds Average. For the 12 months ended March 31, 2015, the fund returned −1.34% versus −0.30% for the FTSE All World Developed ex North America Index and −0.27% for the Lipper International Large-Cap Core Funds Average. The fund's average annual total returns were −1.34%, 5.88%, and 4.97% for the 1-, 5-, and 10-year periods, respectively, as of March 31, 2015. The fund's expense ratio was 0.50% as of its fiscal year ended October 31, 2014.
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 International Equity Index Fund charges a 2%
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 fund strives to match the performance of the FTSE All World Developed ex North America Index, which includes the major developed market countries in Europe and the Asia/Pacific regions. We attempt to replicate the index by investing in stocks across sectors in proportion to their weighting in the index. Health care was the strongest-performing sector, generating 10%. The consumer discretionary, information technology, and industrials and business sectors also outperformed. The consumer staples sector was slightly better than par, while he financials, materials, and telecommunication services sectors lagged the overall market. The utilities sector declined more than 4.6% as the market favored growth over value shares. The energy sector also lost more than 4% as the dollar strengthened and oil prices fell.
We remain optimistic about the investment environment for international equities in the intermediate and longer term. However, we anticipate that growth in developed markets will continue in a stop-and-start fashion. The difficult, long-term adjustments that are needed in many markets in Europe and Japan to become more competitive are only in their early stages. Europe appears to offer long-term growth potential, but the near-term outlook for the region is concerning due to disappointing corporate earnings. In Japan, we remain encouraged by the changes taking place at the corporate level, including the newfound focus on return on equity, improvements in corporate governance, and generally improving returns for shareholders. As always, our mission is to provide low-cost exposure to non-U.S. equities through a diversified portfolio designed to replicate the performance of our benchmark index.