The EAFE Index is designed to track the performance of the stock markets of developed countries outside of the United States.The EAFE index includes the following markets: Australia, Canada, Denmark, France, Germany, Hong Kong, Ireland, Italy, Japan, Netherlands, Norway, Singapore, South Korea, Spain, Sweden, Switzerland, Taiwan & United Kingdom.The index is weighted to give each country in the index a percentage of the index equal to its percentage of the global market capitalization of the stock markets of all developed countries.For example, in June of 2013, the United States represented about 45 percent of the global market capitalization of developed markets. Therefore, the U.S. was given 45 percent of the weight of the EAFE index.The EAFE index is maintained by Morgan Stanley Capital International (MSCI).How Is the EAFE Index Calculated ?The EAFE index is calculated based on the stock prices of the component countries. MSCI uses a capitalization-weighted formula for its indexes. This means the weight of each country in the index is determined by the market capitalization of its publicly traded companies. Because the United States represents a large portion of the international market, the U.S. securities in the EAFE index are more heavily weighted than securities in other countries.For example, in June of 2013, the United States had a weight of 45 percent in the EAFE index. The weights of each of the component countries in the EAFE index in June of 2013 were as follows: United States: 45% Japan: 21% United Kingdom: 8% Germany: 7% France: 5% Canada: 4% Italy: 4% Hong Kong: 3%.
