A strong stock market rally early in the second quarter reversed in June amid renewed concerns over the fate of Greece and uneven economic data. The euro and the British pound strengthened versus the U.S. dollar, but the yen declined. U.S. dollar strength, which had been a significant factor in returns over the last several quarters, moderated in the past three months. An appreciating U.S. dollar detracts from the returns for dollar-based investors who own nondollar-denominated securities. Small-cap stocks handily outperformed large-caps, while growth stocks outperformed value shares. Within emerging markets, stocks in Latin America and the Europe, Middle East, and Africa region recorded solid gains, but Asian emerging markets posted a modest loss.
The International Growth & Income Fund returned 2.80% in the quarter compared with 0.84% for the MSCI EAFE Index and 1.40% for the Lipper International Multi-Cap Value Funds Average. For the 12 months ended June 30, 2015, the fund returned −4.27% versus −3.82% for the MSCI EAFE Index and −5.67% for the Lipper International Multi-Cap Value Funds Average. The fund's average annual total returns were −4.27%, 10.14%, and 5.48% for the 1-, 5-, and 10-year periods, respectively, as of June 30, 2015. The fund's expense ratio was 0.85% as of its fiscal year ended October 31, 2014.
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 construct the portfolio from the bottom up, leveraging our global research platform to uncover undervalued stocks regardless of sector, region, or country. Although we invest primarily in developed market countries, we also maintain exposure to emerging markets. The portfolio's significant bank holdings added the most to our results in the quarter, and our industrials positions also boosted returns. Materials and health care holdings detracted from results.
We perceive few areas of the market that are clearly inexpensive. Typically, value-oriented sectors- such as consumer staples, health care, and parts of discretionary and industrials-are still pricey, in our view. We have sought to position the portfolio more defensively and continue to seek out high-quality companies rather than chase low-quality stocks that have rallied of late. The market has become more macro-driven in the last several weeks, with unresolved questions in Europe and China creating the most headline risk. The Greek-driven market gyrations have presented us with opportunities to add to our names in Europe broadly as selling was not confined to any particular area of the market. More broadly, the struggles of some emerging market equities, namely in Latin America, have made emerging markets more interesting to us, although we are still being selective in our holdings and maintain a low allocation to the region overall.