Developed non-U.S. stock markets posted solid first-quarter gains, the bulk of which were recorded in January as fear about the European debt crisis receded. Although the market retreated a bit in February, most regions and countries recorded decent gains in March. While most agree that the eurozone financial crisis is not over, the European Central Bank's infusion of liquidity into its banking system and a regional agreement to slash deficits have reduced borrowing costs and assured investors about the safety of the euro. Valuations in developed markets remain selectively attractive despite the first-quarter gains.
The International Equity Index Fund returned 3.47% in the quarter compared with 4.58% for the FTSE All World Developed ex North America Index and 3.68% for the Lipper International Large-Cap Core Funds Average. For the 12 months ended March 31, 2013, the fund returned 10.37% versus 11.35% for the FTSE All World Developed ex North America Index and 9.69% for the Lipper International Large-Cap Core Funds Average. The fund's average annual total returns were 10.37%, −0.76%, and 9.67% for the 1-, 5-, and 10-year periods, respectively, as of March 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, across the index, growth stocks outperformed value stocks, and small-cap companies outperformed large-cap companies. The health care sector was the best performer; consumer staples posted a double-digit gain; and consumer discretionary stocks also performed well. The materials sector was weakest, followed by energy and utilities.
Overall, we remain optimistic on the long-term prospects for non-U.S. equities. Central banks continue to offer low interest rates to promote growth, contributing to positive sentiment and higher equity prices in most developed non-U.S. markets. Concerns about European sovereign debt have eased, and equity markets are benefiting from a shift out of low-yielding money funds. In Japan, markets have been aided by policy aimed at lifting inflation and asset prices. As always, 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.