Stocks in developed non-U.S. markets underperformed U.S. shares, but a weaker U.S. dollar versus most major currencies boosted returns in dollar terms. In Asia, Japanese stocks fell as the country's economy remained sluggish, and the government and central bank downgraded their growth expectations near the end of the quarter. European equity markets generally declined, though shares in the Netherlands and Portugal bucked the negative trend. Many markets were hurt by weakness in bank stocks amid concerns about negative interest rates and nonperforming loans. This was particularly true in Italy, where the broad market fell more than 11%.
The International Equity Index Fund returned −2.18% in the quarter compared with −2.58% for the FTSE All World Developed ex North America Index and −2.17% for the Lipper International Large-Cap Core Funds Average. For the 12 months ended March 31, 2016, the fund returned −7.99% versus −7.37% for the FTSE All World Developed ex North America Index and −9.79% for the Lipper International Large-Cap Core Funds Average. The fund's average annual total returns were −7.99%, 1.91%, and 1.84% for the 1-, 5-, and 10-year periods, respectively, as of March 31, 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 discretionary are the largest sectors in the fund and the benchmark. Sector results were mixed for the quarter. Financial and consumer discretionary stocks recorded the largest losses. On the positive side, rising oil prices supported a rebound in the energy sector.
Global growth expectations remain modest and uneven as weak global trade and lower commodity prices weigh on global economies. However, we believe international equities offer modestly more attractive valuations than U.S. stocks, although disparities in valuations exist across regions and sectors. Notably, within Europe earnings and profit margins remain well below pre-crisis levels while they remain near peak levels in the U.S. While economic cycles in Europe and Japan are less advanced than in the U.S., they are supported by aggressive monetary stimulus and relatively weaker currencies that should benefit their export competitiveness.