Stocks in non-U.S. developed markets recorded good gains in the quarter, boosted by favorable monetary policy in both Europe and the U.S. European stocks generated particularly strong gains, benefiting from reduced emphasis on austerity measures, progress on structural reforms in some countries, and signs that the region's recession had ended. Developed stock markets in the Asia-Pacific region posted mixed results and underperformed the broad MSCI Europe, Australasia, and Far East (EAFE) Index. Conditions in emerging economies were mixed, with many opting for tighter monetary policies to bolster their currencies and contain inflation. Stocks in emerging Asian markets advanced, while emerging Europe and Latin American equities declined.
The International Growth & Income Fund returned 6.89% in the quarter compared with 5.75% for the MSCI EAFE Index and 6.27% for the Lipper International Multi-Cap Value Funds Average. For the 12 months ended December 31, 2013, the fund returned 22.97% versus 23.29% for the MSCI EAFE Index and 21.97% for the Lipper International Multi-Cap Value Funds Average. The fund's average annual total returns were 22.97%, 13.45%, and 7.62% for the 1-, 5-, and 10-year periods, respectively, as of December 31, 2013. The fund's expense ratio was 0.87% as of its fiscal year ended October 31, 2012.
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.
We continue to seek long-term appreciation by building a diversified portfolio of established non-U.S. companies with prospects for capital appreciation and growing dividend payments. Although we invest primarily in developed market countries, we also maintain exposure to emerging markets. Our investment process is built upon fundamental research that can identify undervalued companies with good prospects for appreciation. This process has resulted in an overweight in the financials sector, but we reduced our position somewhat in the quarter. Conversely, the strategy's materials underweight narrowed markedly during the quarter with new positions in metals and mining stocks.
Valuations remain reasonable, if not as compelling as they were a year ago. Most important, from our standpoint, we are still finding many cases in which investors are anticipating too bleak a future and appear unable or unwilling to wait for better results. This appears especially true in emerging markets, where rising interest rates, commodity price declines, and other shorter-term factors are unlikely to derail the long-term potential of rising urbanization and a growing middle class. We will continue to rely on our fundamental research and the work of the firm's extensive team of analysts in both developed and emerging markets in attempting to identify these pockets of opportunity.