Non-U.S. developed market stocks benefited from several positive tailwinds and performed well overall in the first quarter. The U.S. economic recovery remains modest but resilient, buoyed by accommodative monetary policies and improvements in the housing and employment markets. Despite a recent flare-up in Cyprus and an Italian election stalemate, investor concerns about the European sovereign debt crisis eased somewhat. In Japan, new government and central bank leaders signaled a policy shift to battle deflation and spur economic growth, boosting investor confidence and share prices. Concerns about weaker economic growth, lower commodity prices, and higher inflation challenged many emerging economies and markets.
The Overseas Stock Fund returned 3.53% in the quarter compared with 5.23% for the MSCI EAFE Index and 3.68% for the Lipper International Large-Cap Core Funds Average. For the 12 months ended March 31, 2013, the fund returned 9.87% versus 11.79% for the MSCI EAFE Index and 9.69% for the Lipper International Large-Cap Core Funds Average. The fund's 1-, 5-year, and Since Inception (12/29/2006) average annual total returns were 9.87%, 0.34%, and 0.04%, respectively, as of March 31, 2013. The fund's expense ratio was 0.87% 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 Overseas Stock 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.
Benchmark Definitions
Consumer staples and health care were the portfolio's top-performing sectors for the period, with investors favoring larger companies with steady earnings and stable dividends. Energy and materials shares weighed on results. However, the portfolio's positioning is largely based on stock-specific opportunities across multiple sectors and regions rather than on sector-specific or regional considerations. We recently increased financials exposure, leveraging our global research platform to identify high-quality opportunities in capital markets firms, insurance companies, and commercial banks. From a geographic perspective, Europe continues to account for the bulk of the portfolio, with a focus on its economically healthier, northern regions.
Policymakers continue to provide more monetary and fiscal support than most investors had expected, which is contributing to positive sentiment and higher equity prices in many developed non-U.S. markets. Japan's markets have been even more positively influenced by policy aimed at lifting inflation and asset prices. Emerging markets have struggled with concerns about slowing growth, but valuations are still attractive relative to developed markets, and their long-term economic and capital market growth potential remains superior. In this climate, fundamental, bottom-up research remains essential to our approach, with a focus on stocks where the underlying fundamentals are better than the current valuation indicates. We seek to identify and own stocks with accelerating earnings and cash flow, proven financial discipline through capital return, financial stability, and effective management teams.
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