The International Equity Fund posted a total return of 0.30% for the quarter, compared with 0.66% for the Funds 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 Funds 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.
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.