Emerging Markets Equity Index
as of December 31, 2013
Fund Commentary
The Fund returned 2.23% in the fourth quarter, while its benchmark, the MSCI Emerging Market Index, returned 1.83%. Emerging markets underperformed the developed market return of 8.00% for the fourth quarter as measured by the MSCI World Index.

Emerging market country returns were varied, with 13 of the 21 countries posting positive returns. The top performers were Egypt, India, Greece and Mexico, returning 19.37%, 10.34%, 10.11% and 8.20%, respectively. The lowest performance came from Turkey, which returned -14.12%, followed by Colombia with -11.09% and Thailand with -10.44%. The two sectors with negative performance were energy, which returned -2.60%, and consumer staples, which returned -1.60%. The top-performing sectors were information technology with 7.87%, utilities with 4.70% and health care with 4.61%.

The quarter began well for emerging market equities, which reacted positively to the Federal Reserve announcement after its September meeting that its asset purchases would continue unadjusted. However, emerging markets posted a negative return in November and again in December, the month of the Fed announcement that asset purchases would be tapered beginning in January. Developed market economies began to pick up momentum into year end, boosting demand for emerging market exports in the fourth quarter. However, other economic data across emerging markets proved disappointing. China's data releases were mixed throughout the period as its historically rapid growth continued to moderate. Brazil experienced negative returns in the fourth quarter on data showing that its third quarter Gross Domestic Product (GDP) actually contracted.
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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