Developed non-U.S. stock markets performed well in U.S. dollar terms for the first quarter, thanks to an impressive rally in February. Local currency gains were even stronger on an overall basis, and every individual developed market logged a gain in local currency terms. Large-and small-cap stocks performed similarly, while growth stocks outperformed value shares. From a sector perspective, health care, consumer discretionary, and information technology performed best, while utilities and energy performed poorly. Within emerging markets, Asian stocks generated a solid return; the Europe, Middle East, and Africa region recorded a more modest advance; and Latin America posted losses.
The International Growth & Income Fund returned 3.92% in the quarter compared with 5.00% for the MSCI EAFE Index and 4.20% for the Lipper International Multi-Cap Value Funds Average. For the 12 months ended March 31, 2015, the fund returned −3.17% versus −0.48% for the MSCI EAFE Index and −3.64% for the Lipper International Multi-Cap Value Funds Average. The fund's average annual total returns were −3.17%, 6.18%, and 5.17% for the 1-, 5-, and 10-year periods, respectively, as of March 31, 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 seek long-term appreciation by building a diversified portfolio of established non-U.S. companies with prospects for capital appreciation and increasing 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, and our research staff looks for earnings growth potential and catalysts that help realize value. Finally, the portfolio's country and sector allocations are driven primarily by bottom-up stock selection but are also influenced by an assessment of macroeconomic prospects.
Although we were gratified to see most non-U.S. markets advance in the quarter, the gains decreased the valuation appeal of many already fully priced stocks. Opportunities in Europe have become especially difficult to find, and we have instead sought to defend or add to positions in specific names where we think strong businesses remain undervalued. Japan has seen strong gains in recent months because of the government's stimulus efforts, but we think that more difficult structural reforms will be necessary to boost the country's long-term market and economic prospects.