Firming monetary policy underpinned strong performance among non-U.S. developed markets in the quarter. The U.S. Federal Reserve decided to taper its asset purchases beginning January 2014, while Europe's central bank cut its key lending rate in November. European stocks generated strong gains, benefiting from moderating austerity measures, progress on structural reforms in some countries, and an end to the Continent's recession. Performance across developed Asia was poor, though Japan eked out a small return as it continued edging toward recovery. Conditions in emerging economies were mixed, with many opting for tighter monetary policies to defend their currencies and contain inflation. Stocks in emerging Asian markets advanced, while emerging Europe and Latin American equities declined.
The International Equity Index Fund returned 5.28% in the quarter compared with 5.55% for the FTSE All World Developed ex North America Index and 5.45% for the Lipper International Large-Cap Core Funds Average. For the 12 months ended December 31, 2013, the fund returned 20.07% versus 21.97% for the FTSE All World Developed ex North America Index and 19.98% for the Lipper International Large-Cap Core Funds Average. The fund's average annual total returns were 20.07%, 12.14%, and 6.88% for the 1-, 5-, and 10-year periods, respectively, as of December 31, 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 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. This quarter, all sectors posted positive returns. Telecommunication services was the strongest sector with outsized performance. Information technology, health care, financials, and energy sectors all did well, outpacing the index. Consumer discretionary, industrials, consumer staples, materials, and utilities sectors lagged.
Our expectations for global growth remain modest. The U.S. economic recovery continues, supported by a accommodative monetary policy. While the eurozone has emerged from recession, economic headwinds continue, and Japan's government will continue to face challenges as it attempts to undertake reforms to bolster the country's economy. Emerging markets economies face slower growth than in recent years and remain vulnerable to potential rising U.S. rates. 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.