International equity markets, as measured by the FTSE All world ex North America Index, posted modest positive returns in the second quarter. A strong stock market rally early in the period reversed in June amid renewed concerns over the fate of Greece, and the Chinese market sell-off led to global market volatility. Among the major currencies, the euro and the British pound strengthened versus the U.S. dollar, but the yen declined. U.S. dollar strength, which had been a significant factor in returns over the last several quarters, moderated in the past three months.
The International Equity Index Fund returned 0.85% in the quarter compared with 0.84% for the FTSE All World Developed ex North America Index and 1.11% for the Lipper International Large-Cap Core Funds Average. For the 12 months ended June 30, 2015, the fund returned −4.43% versus −3.74% for the FTSE All World Developed ex North America Index and −3.57% for the Lipper International Large-Cap Core Funds Average. The fund's average annual total returns were −4.43%, 9.44%, and 5.17% for the 1-, 5-, and 10-year periods, respectively, as of June 30, 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. Financials, consumer discretionary, and industrials and business services are the largest sectors of the fund and benchmark. The best absolute performing sectors in the second quarter were telecommunications services and energy. The information technology and health care sectors were the poorest performers in the fund and the benchmark.
Global economies are likely to grow at a modest pace over the coming months amid continuing accommodative monetary policies from the European Central Bank and the Bank of Japan, although we expect increasing volatility when the Federal Reserve begins raising rates sometime later in the year. Europe is experiencing gradual economic improvement overall. However, concerns remain over the slow progress some member states are making toward economic reform. While we are optimistic about Japan's intermediate-term prospects, we'd be more positive if policymakers would actively implement structural reforms in labor markets, tax and regulatory regimes, and social spending. 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.