Stocks in developed non-U.S. markets, buffeted by volatility following the UK's vote to leave the European Union, underperformed U.S. shares. In Europe, UK equities experienced modest losses in dollar terms as the British pound dropped 7% versus the greenback. Eurozone markets Austria, Ireland, and Italy dropped close to 10%, hurt in part by the euro's 2.5% decline versus the dollar. European bank stocks were among the hardest hit after the UK referendum. Italian banks in particular struggled with substantial amounts of nonperforming loans on their balance sheets. Developed Asian markets rose slightly; Japanese stocks recorded a slight gain, helped by the yen's nearly 10% advance versus the dollar.
The International Equity Index Fund returned −0.77% in the quarter compared with −1.15% for the FTSE All World Developed ex North America Index and −0.74% for the Lipper International Large-Cap Core Funds Average. For the 12 months ended June 30, 2016, the fund returned −9.47% versus −9.19% for the FTSE All World Developed ex North America Index and −11.11% for the Lipper International Large-Cap Core Funds Average. The fund's average annual total returns were −9.47%, 1.32%, and 1.71% for the 1-, 5-, and 10-year periods, respectively, as of June 30, 2016. The fund's expense ratio was 0.45% as of its fiscal year ended October 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 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 region. We attempt to replicate the index by investing in stocks in proportion to their weighting in the index. Financials, industrials and business services, and consumer staples are the largest sectors in the fund and benchmark. Sector results were mixed for the quarter. Consumer discretionary and financials stocks recorded the largest losses. On the positive side, rising oil prices supported a rebound in the energy sector, and health care shares also produced solid gains.
The uncertainties created by Britain's decision to leave the EU are likely to impact consumer and corporate spending within Europe, weighing on already low levels of global economic growth. Further, political instability and concerns that other member states may seek to leave the EU are likely to persist. Low and negative yields are also having adverse impacts on banks within developed markets, raising concerns about credit growth and profitability. The fallout of Brexit has also had an impact on Japan as the yen has risen sharply, heightening the risk that the strong currency will weigh on exports and corporate profitability. However, relative valuations remain attractive in some areas, and many developed markets continue to be supported by aggressive quantitative easing measures.