Non-North American (EAFE) Equities

With the notable exception of Japan, European and Asian markets recorded a fourth consecutive year of very strong returns. Economic growth in continental Europe remained relatively stable, and corporate profits continued to grow, despite the headwind of a rising currency. European equities generated returns in excess of 20% led by Germany, Spain and the Scandinavian countries. The U.K. market also performed well despite rising interest rates and a weak housing market. Pacific Rim equities were strong as the rapid economic growth in China provided a positive influence on markets throughout the region. Japan’s equity market struggled as last year’s market optimism turned to concern over the sustainability of GDP and future corporate profit growth.

Non-North American equities continue to be managed for ATRF by two external management firms to provide a diversified structure. On a combined basis these portfolios delivered a very strong return of 17.3%, which exceeded the 13.2% return of the benchmark Morgan Stanley Europe, Australasia and Far East Index (EAFE) by a wide margin.