Developed non-U.S. stock markets posted steep losses largely due to the U.S. dollar's strength versus other currencies, which reduced returns for U.S. investors. In the eurozone, the economic recovery has been faltering and some countries have slipped back into recession. In the third quarter, every market in Europe declined in dollar terms, with the largest markets, including Germany, France, and Italy, posting losses of 8% or more. Austria and Portugal were among the worst performers, declining more than 20%. In Asia, Japan, Singapore, and Hong Kong edged lower for the quarter. Hong Kong shares fared poorly in September amid student-led, pro-democracy protests.
The International Equity Index Fund returned −6.07% in the quarter compared with −5.77% for the FTSE All World Developed ex North America Index and −5.38% for the Lipper International Large-Cap Core Funds Average. For the 12 months ended September 30, 2014, the fund returned 3.57% versus 4.51% for the FTSE All World Developed ex North America Index and 4.23% for the Lipper International Large-Cap Core Funds Average. The fund's average annual total returns were 3.57%, 6.33%, and 6.30% for the 1-, 5-, and 10-year periods, respectively, as of September 30, 2014. The fund's expense ratio was 0.50% as of its fiscal year ended October 31, 2013.
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. The fund's health care and information technology sectors were the best performers for the past three months as each generated a small positive return, but all other sectors declined. The largest sectors, including financials, industrials and business services, consumer staples, and consumer discretionary, posted losses in excess of 4%. The materials and energy sectors were the poorest third-quarter performers due to falling oil prices and tepid demand for commodities.
Europe's nascent recovery has slowed considerably, and Japan has seen the progress ignited by "Abenomics" dampened by its formidable structural challenges. Still, we remain convinced that the global economy will continue trending upward and business conditions and industry dynamics will remain broadly favorable. Although the path forward for non-U.S. equities will likely continue to be somewhat volatile, we believe it remains attractive for long-term investors. 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.