Non-U.S. stocks posted solid returns in the second quarter, with emerging markets outperforming developed markets overall. In aggregate, developed European markets trailed the returns for developed Asia-Pacific markets. Europe's best-performing countries included Norway, the UK, Belgium, Spain, and Finland, while Ireland and Greece fell sharply. In the Asia-Pacific region, Japan, India, Taiwan, and Hong Kong posted strong gains, but New Zealand posted a small loss and Australia and Indonesia generated modest positive results.
The International Growth & Income Fund returned 3.98% in the quarter compared with 4.34% for the MSCI EAFE Index and 3.86% for the Lipper International Multi-Cap Value Funds Average. For the 12 months ended June 30, 2014, the fund returned 25.00% versus 24.09% for the MSCI EAFE Index and 24.67% for the Lipper International Multi-Cap Value Funds Average. The fund's average annual total returns were 25.00%, 12.78%, and 7.72% for the 1-, 5-, and 10-year periods, respectively, as of June 30, 2014. The fund's expense ratio was 0.86% as of its fiscal year ended October 31, 2013.
For up-to-date standardized total returns, including the most recent month-end performance, please click on the Performance tab, above.
Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results.
Share price, principal value, and return will vary and you may have a gain or loss when you sell your shares.
The International Growth & Income Fund charges a 2%
redemption fee on shares held 90 days or less.
The performance information shown does not reflect the deduction of the redemption fee;
if it did, the performance would be lower.
The portfolio's country and sector allocations result from bottom-up stock selection but also are influenced by an assessment of macroeconomic prospects. Financials continues to be the largest overweight in the portfolio, and we added to several holdings in the banking industry. Conversely, we extended our underweight in the consumer staples sector by trimming some positions in food retailers.
The leading indicators continue to point to a slowly improving macroeconomic picture, especially in Europe. Overall, investor sentiment is generally optimistic and improving. This is somewhat reflected in European stock prices as valuations have continued to rise. Higher prices, coupled with sluggish but improving earnings, lead us to be somewhat cautious in the near term. However, over the long term, we believe that performance will be determined by how well individual companies execute on their plans. Many European companies should benefit from reducing costs and improving their market positions over time. While we remain optimistic about Japan's intermediate-term prospects, we'd become more positive if policymakers would actively implement structural reforms to labor markets, tax and regulatory regimes, and social spending.