The International Equity Fund posted a total return of 3.78% for the quarter, compared with 4.09% for the Funds benchmark, the MSCI EAFE® Index. Stock selection in the financials, industrials and healthcare sectors detracted from performance, while stock selection in the energy, consumer discretionary and consumer staples sectors aided relative results. From a regional perspective, an overweight position in the U.S. and stock selection in Australia and Sweden contributed favorably to performance. Stock selection in the U.K., an underweight position in Japan and stock selection and an overweight position in France weighed on relative results.
We believe the market may enter a period of more normalized earnings growth and return expectations. We also believe correlations among index constituents are slowly returning to more typical levels. These factors should help create a better environment for stock selection. We remain optimistic about our active security selection, which emphasizes fundamental research to identify mispriced stocks. We seek to hold these undervalued stocks until they reach what our research identifies as their intrinsic value.
If you are a growth-oriented investor who is interested in the opportunities and portfolio diversification international investing offers, you may find this Fund suitable. You should have a more aggressive risk profile and be able to tolerate the above-average volatility and special risks that investing in foreign markets entails.