International Equity
as of March 31, 2014
Fund Commentary
After ending 2013 on a strong note, non-U.S. stocks slowed during 2014’s first quarter. Overall, Europe advanced modestly, despite concerns about deflation and the escalating tensions between Russia and Ukraine, which could disrupt energy supplies to the region. After stellar performance in 2013, Japan’s market retreated as investors began to question the effectiveness of the government’s aggressive stimulus strategy. Meanwhile, growth concerns, political instability, currency volatility and a slowdown in China’s manufacturing sector weighed on the broad emerging markets index, which lagged the non-U.S. developed market benchmark.

The International Equity Fund posted a total return of 0.30% for the quarter, compared with 0.66% for the Fund’s benchmark, the MSCI EAFE® Index. Stock selection in the financials, industrials and telecommunications services sectors detracted from performance, while stock selection in the energy, consumer staples and information technology sectors aided relative results. Additionally, positioning in Switzerland, Brazil and France contributed favorably to performance, and holdings in Italy, Australia and the United Kingdom weighed on relative results. An underweight in Japan also helped the Fund’s relative performance.

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, combined with stock prices appearing overly discounted due to recent macroeconomic influences, should 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.

Philosophy
  • 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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