International Equity
as of June 30, 2014
Fund Commentary
Non-U.S. developed market stocks generally rebounded from a sluggish first quarter to post solid second-quarter gains. European stocks advanced on optimism surrounding the European Central Bank’s latest efforts to encourage bank lending and its willingness to do more, including launching a quantitative easing program, if necessary. In Japan, fears surrounding the effects of the April 1 consumption tax increase subsided, as the economy appeared to withstand the hike. Inflation inched higher, unemployment dropped to a 16-year low, and the prime minister proposed a corporate tax cut. Stocks responded favorably to these developments. Meanwhile, emerging markets rallied to outperform U.S. and non-U.S. developed market stocks.

The International Equity Fund posted a total return of 3.78% for the quarter, compared with 4.09% for the Fund’s 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.
Investor Profile

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.

  • Seek outstanding companies through fundamental research that is based on a deep understanding of industry and sector dynamics.
  • Combine creativity in stock analysis and selection with intelligent portfolio construction.
  • Seek to provide consistent results through disciplined risk management.
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Not FDIC insured | May lose value | No bank guarantee

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