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European and Emerging Markets Equities Still Have Room to Run

As U.S. equity markets continue to surpass nominal highs in 2013, investors may be wondering how international markets — which account for nearly half of global equity market cap these days — are faring. International markets have rebounded off their 2009 lows, and several markets have even posted double-digit positive returns over the past 12 months. [1. Source: FactSet, 5/24/13. Past performance does not guarantee future results.]

But, as you can see in the chart below, it would take fairly sizeable average annual returns in order for the broad European and Emerging Markets indices to retest their 2007 highs. We view this as encouraging news for investors. It suggests that these markets still have room to run, which in turn may translate into growth for investors’ portfolios. We believe that there are several long-term growth themes that are shaping the future of the global economy and markets. And, given our focus on who and where the customers are, not just where a company is headquartered, we see several compelling investment opportunities in Europe and the emerging markets that we believe are well positioned to capitalize on these growth themes.
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The Morgan Stanley Capital International (MSCI) Europe Index measures equity market performance in Europe. The MSCI Emerging Markets Index is designed to measure global emerging market equity performance. Each index is unmanaged and cannot be purchased directly by investors. Index performance is shown for illustrative purposes only and does not predict or depict the performance of any investment. Past performance does not guarantee future results.

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RPL0000.146 June 5, 2013