International Equity Fund (IEF)

Manager's Quarterly Commentary

• Fund Performance
• Fund Holdings

Objective: To attain long-term capital appreciation from a diversified portfolio of international equity securities that are traded on regulated foreign stock exchanges.

Who Should Invest: Investors who seek long-term investment growth through exposure to companies based in foreign countries and who are willing to accept the risk of possible wide fluctuations in the unit price of the fund.

Investments: The fund’s investments consist primarily of stocks of companies domiciled in developed and developing (emerging) foreign countries. The fund will hold equity index futures as necessary to maintain exposure to foreign public equity markets. Additionally, the fund may invest in publicly traded internationally-based Real Estate Investment Trusts (REITs), and the fund may also invest approximately 10% of its assets in alternative investments, such as private real estate partnerships and private equity partnerships. Finally, the fund may also invest in foreign currency forward contracts.

Management: More than seven different investment management firms selected by the General Board manage the assets of IEF. A complete list of investment management firms is available here.

Strategy: IEF seeks a favorable long-term rate of return from a broadly diversified portfolio of foreign stocks domiciled in developed and developing countries.

The fund relies on the professional judgment of its investment managers to decide how to allocate fund assets among different countries and/or regions of the world, and in which equities the fund should invest. The investment managers seek to invest in attractively valued companies that represent above-average long-term investment opportunities. The investment managers accomplish this objective primarily through fundamental analysis, which may include meeting with a company’s management, competitors, suppliers and customers in order to evaluate a company’s future prospects.

Performance Benchmark: Morgan Stanley Capital International All Country World (MSCI ACWI) ex-USA IMI. This index is designed to measure performance of equities domiciled in developed and developing markets.

Performance Objective: To produce a return that, on average, exceeds that of the performance benchmark by 2% on average per year over a market cycle (three to five years).

Please see the Investment Funds Description for more detailed information regarding IEF.

Fund Performance

Fund Market Value (as of 12/31/11): $2,287,078,542

Annual Performance at Year-End, Net of Fees

Compounded Annual Performance, Net of Fees (Periods Ending 12/31/11):

* The benchmark for the International Stock Fund became the MSCI All Country World Index ex USA IMI (MSCI ACWI ex USA IMI) on January 1, 2008. From January 1, 2006 to December 31, 2007, the benchmark for the International Stock Fund had been the MSCI All Country World Index ex USA (MSCI ACWI ex USA). Prior to January 1, 2006, the benchmark had been the MSCI EAFE Index. The benchmark data reported above are blends of the three benchmarks based on the period for which each respective benchmark applies.

** The comparison universe contains all Wilshire Compass mutual funds included in the predefined universe of Lipper “Objectives” of “International”.

All returns for IEF are net of all fees and expenses, which include all investment management fees, operating expenses and bank custodial fees. The fund inception was January 1, 1998.

* In finance, standard deviation is applied to the annual rate of return of an investment to measure the investment's volatility (risk).

All returns for IEF are net of all fees and expenses, which include all investment management fees, operating expenses and bank custodial fees. The fund inception was January 1, 1998.

Fund Characteristics (12/31/11)

Fund Holdings

Top 10 Stock Holdings (12/31/11)

Fund Holdings (as of 12/31/11): Download/view fund holdings in PDF format.

Expense Ratio: All expenses of the fund are deducted from the fund’s net asset value. The expenses include investment management fees, operating expenses, bank custodial fees and miscellaneous fund administration expenses. These expenses are paid directly by IEF, and are reflected in the unit price calculated for the fund. The unit price is multiplied by the number of units held in each participant’s account to determine the total value of the participant’s holdings in the fund. IEF’s expenses in 2010 were equal to approximately 0.80% of the fund’s total assets.

Lending of Portfolio Securities: The fund seeks to earn additional income by making loans of its portfolio securities to brokers, dealers and other financial institutions. The loans will be secured at all times by cash and liquid high-grade debt obligations. As with any extension of credit, there are risks of delay in recovery and in some cases even loss of rights in the collateral should the borrower fail financially. Additionally, losses could result from the reinvestment of the cash collateral received on loaned securities.