Developed non-U.S. stock markets generated strong returns in the third quarter of 2013, while emerging markets posted less robust gains. Developed European markets outperformed most markets in Asia and the Americas largely due to improving investor sentiment and signs of improving economic growth. Despite several bouts of heightened volatility, Asia's largest markets, China and Japan, returned solid third-quarter results. However, most emerging markets continued to struggle amid concerns about slowing growth, rising interest rates across developed markets, political unrest, and currency weakness. The emerging Europe, Middle East, and Africa region outperformed other emerging regions.
The International Equity Index Fund returned 11.44% in the quarter compared with 11.70% for the FTSE All World Developed ex North America Index and 10.65% for the Lipper International Large-Cap Core Funds Average. For the 12 months ended September 30, 2013, the fund returned 22.65% versus 23.30% for the FTSE All World Developed ex North America Index and 21.63% for the Lipper International Large-Cap Core Funds Average. The fund's average annual total returns were 22.65%, 6.13%, and 7.95% for the 1-, 5-, and 10-year periods, respectively, as of September 30, 2013. The fund's expense ratio was 0.50% as of its fiscal year ended October 31, 2012.
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 portfolio 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 portfolio attempts to replicate the index by investing in stocks in proportion to their weighting in the index. This quarter, most sectors posted returns in the middle to high teens. Telecom services was the best performer, while materials, industrials and business services, consumer discretionary, and financials all fared particularly well. Energy lagged but delivered double-digit returns, while consumer staples and health care posted modestly positive results.
We remain optimistic about the intermediate- and long-term prospects for non-U.S. equities. However, short-term gains may be somewhat muted as stocks have moved up in anticipation of improved fundamentals. While we believe that many economies are stable or improving, the market response may take some time and could be uneven. Although companies in Japan and Europe will likely remain challenged to generate stable revenue growth, investor sentiment in both regions is improving. As always, 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.