Emerging Markets Equity Index
as of June 30, 2014
Fund Commentary
The Emerging Markets Equity Index Fund returned 6.54% in the second quarter, as compared to 6.60% for the MSCI Emerging Markets Index. Emerging markets outperformed developed markets for the quarter, as measured by the MSCI World Index, which posted a return of 4.86%.

The top-performing countries during the second quarter were Turkey, which returned 15.08%; India, which returned 12.67%; and Russia, which returned 10.69%. The bottom-performing countries were Greece, which returned -10.77%; and newly classified emerging markets countries Qatar and the United Arab Emirates (UAE), which returned -5.40% and -5.49%, respectively. The top-performing sectors in the Index were information technology and utilities, returning 11.18% and 10.29%, respectively. Materials, consumer staples and consumer discretionary were the bottom performers, returning 3.76%, 4.07% and 4.13%, respectively.

After a slow start to 2014, emerging markets rallied to lead second-quarter performance among major equity market segments. Positive global growth indicators, including better- than-expected data from China, accommodative central banks and the promise of economic reforms from the newly elected government in India were some of the key drivers in boosting emerging market performance. The positive growth story appeared to overshadow pockets of political instability in Ukraine and Iraq, and central banks provided even more reason for optimism. The U.S. Federal Reserve maintained its dovish stance despite a slight pickup in inflation and an improving growth picture, while the European Central Bank introduced a negative deposit rate, effectively charging banks to keep reserves with the central bank.
Investor Profile

If you are a long-term investor seeking access to the total return potential of emerging markets equities, this Fund may be right for you. Emerging markets exposure may be appropriate for investors with an above-average tolerance for market volatility who seek a global component for a broadly diversified investment portfolio.

  • Select stocks on the basis of quantitative analysis with the aim of producing a portfolio that will approximate the performance of the MSCI Emerging Markets Index.
  • Maintain industry diversification, country weightings, market capitalization and other financial characteristics similar to the Index.
  • Buy and sell securities in response to changes in the Index.
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