Developed Non-U.S. stocks posted solid returns overall in the second quarter, with European markets trailing the returns for Asia-Pacific markets. Europe's best-performing countries included Norway, the UK, Belgium, Spain, and Finland, while Ireland and Greece fell sharply. In the Asia-Pacific region, Japan and Hong Kong posted strong gains, while Australia generated a modest positive return, and New Zealand posted a small loss. The Japanese economy continues to make strides toward recovery as Prime Minister Shinzo Abe's reforms proceed. While economic growth In Europe appears to be slowly improving, the European Central Bank (ECB) announced new stimulus measures in an attempt to revive growth and spark inflation.
The International Equity Index Fund returned 4.11% in the quarter compared with 4.44% for the FTSE All World Developed ex North America Index and 4.21% for the Lipper International Large-Cap Core Funds Average. For the 12 months ended June 30, 2014, the fund returned 22.87% versus 23.88% for the FTSE All World Developed ex North America Index and 21.37% for the Lipper International Large-Cap Core Funds Average. The fund's average annual total returns were 22.87%, 11.57%, and 6.95% for the 1-, 5-, and 10-year periods, respectively, as of June 30, 2014. The fund's expense ratio was 0.50% as of its fiscal year ended October 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 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 major markets in the UK, Japan, and developed countries in Europe and the Pacific Rim. It is constructed by sorting the market in each country in the index by industry groups and targeting a significant portion of the stocks in these groups for inclusion. The fund attempts to replicate the index by investing in stocks in proportion to their weighting in the index. The energy sector led the index with stellar double-digit returns. Utilities, consumer staples, and health care produced very good returns. Lagging but positive sectors included telecom services, materials, consumer discretionary, information technology, industrials and business services, and financials.
We expect modest global growth over the coming months. Europe's economy continues to gradually improve as challenges in the eurozone periphery recede. Concerns remain, however, over the slow progress toward economic reforms by some member states, persistently elevated unemployment, and declining inflation. While Japan's fiscal and monetary policies have revived economic output and improved the inflation outlook, further progress will depend on the passage of structural reforms, increased real wages, and the economy's ability to weather the hike in the national sales tax that took effect this past April. Shareholders should note that we do not make investment decisions based on market forecasts or prospects for individual companies. Rather, 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 in all market conditions.