UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
Certified Shareholder Report of
Registered Management Investment Companies
Investment Company Act File Number: 811-22215
International Growth and Income Fund
(Exact Name of Registrant as Specified in Charter)
One Market, Steuart Tower
Suite 2000
San Francisco, California 94105
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (415) 421-9360
Date of fiscal year end: June 30
Date of reporting period: December 31, 2013
Patrick F. Quan
International Growth and Income Fund
One Market, Steuart Tower
Suite 2000
San Francisco, California 94105
(Name and Address of Agent for Service)
Copies to:
Michael Glazer
Bingham McCutchen LLP
355 South Grand Avenue, Suite 4400
Los Angeles, California 90071
(Counsel for the Registrant)
ITEM 1 – Reports to Stockholders
International Growth and Income FundSM Semi-annual report for the six months ended December 31, 2013 |
International Growth and Income Fund seeks to provide long-term growth of capital with current income by investing primarily in the stocks of larger, well-established companies outside the U.S.
This fund is one of more than 40 offered by one of the nation’s largest mutual fund families, American Funds, from Capital Group. For more than 80 years, Capital has invested with a long-term focus based on thorough research and attention to risk.
Fund results shown in this report, unless otherwise indicated, are for Class A shares at net asset value. If a sales charge (maximum 5.75%) had been deducted, the results would have been lower. Results are for past periods and are not predictive of results for future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors may lose money. Investing for short periods makes losses more likely. Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value. For current information and month-end results, visit americanfunds.com.
Here are the average annual total returns on a $1,000 investment with all distributions reinvested for periods ended December 31, 2013:
Class A shares | 1 year | 5 years | Lifetime (since 10/1/08) | |||
Reflecting 5.75% maximum sales charge | 11.34% | 12.46% | 10.02% |
For other share class results, visit americanfunds.com and americanfundsretirement.com.
The total annual fund operating expense ratio was 0.93% for Class A shares as of the prospectus dated September 1, 2013.
Investment results assume all distributions are reinvested and reflect applicable fees and expenses. When applicable, investment results reflect fee waivers and/or expense reimbursements, without which results would have been lower. Visit americanfunds.com for more information.
The fund’s 30-day yield for Class A shares as of January 31, 2014, reflecting the 5.75% maximum sales charge and calculated in accordance with the U.S. Securities and Exchange Commission formula, was 2.38%.
Investing outside the United States may be subject to risks such as currency fluctuations, periods of illiquidity and price volatility. These risks may be heightened in connection with investments in developing countries. Refer to the prospectus and the Risk Factors section of this report for more information on these and other risks associated with investing in the fund.
Fellow investors:
International equities rallied substantially during the first half of the fiscal year, bolstered by improving economic conditions in a number of advanced nations and continuing monetary stimulus worldwide.
For the six months ended December 31, 2013, International Growth and Income Fund achieved a total return of 14.9%. This result includes dividend payments totaling about 39 cents for the period.
While the fund’s gain was strong, it slightly lagged the result of its primary benchmark, the MSCI All Country World Index ex USA, which rose 15.3%. The unmanaged index reflects the returns of more than 40 developed- and developing-country stock markets. The fund also trailed the 17.4% advance of the Lipper International Funds Index, a peer group measure. As you can see in the chart below, the fund has outpaced both benchmarks over multiyear time frames.
Results at a glance
For periods ended December 31, 2013, with all distributions reinvested
Total returns | Average annual total returns | |||||||||||||||||||
6 months | 1 year | 3 years | 5 years | Lifetime (since 10/1/08) | ||||||||||||||||
International Growth and Income Fund (Class A shares) | 14.93 | % | 18.13 | % | 9.11 | % | 13.80 | % | 11.28 | % | ||||||||||
MSCI All Country World Index ex USA* | 15.34 | 15.29 | 5.14 | 12.81 | 6.76 | |||||||||||||||
Lipper International Funds Index | 17.38 | 21.23 | 7.46 | 13.27 | 7.65 |
* | The index is unmanaged and, therefore, has no expenses. |
International Growth and Income Fund | 1 |
The market environment
Most of the world’s equity markets enjoyed steady advances during the first half of the fiscal year, with major developed markets generally outgaining developing markets. European stocks posted exceptional returns as the 18-nation euro zone emerged from a lengthy recession. In an effort to stave off deflation and support the recovery, the European Central Bank reduced its key lending rate to a record low of 0.25% in November, its second rate cut of the year. A number of Europe’s most economically troubled countries, including Greece (47.1%)*, Spain (40.0%) and Ireland (30.1%), notched particularly noteworthy gains. Overall, the MSCI Europe Index rose 22.6% in U.S. dollar terms.
Japanese stocks also ended the period with solid gains, aided by the Bank of Japan’s monetary easing and the announcement of fiscal stimulus measures to help offset the effects of a consumption tax increase. The Japanese yen slid 5.5% against the dollar, dampening returns for U.S. investors. In U.S. dollar terms, Japanese stocks rose 9.1% for the period.
Equity returns were mixed in the developing markets, as economic conditions in some developing countries deteriorated and investors grew concerned that the U.S. Federal Reserve would curtail its bond-buying program — a program that, in effect, injects tens of billions of dollars into the global financial system each month. Despite increased volatility, China’s stock market gained 16.5% for the six months. Elsewhere, shares in India (4.6%) and Brazil (2.4%) rose modestly, while shares in Indonesia (–27.6%) and
* | Country returns are based on MSCI indexes, expressed in U.S. dollars, and assume the reinvestment of dividends. The indexes reflect dividends net of withholding taxes. |
Largest equity holdings
(as of December 31, 2013)
Company | Country | Percent of net assets | ||||
AXA | France | 3.1 | % | |||
Novartis | Switzerland | 2.4 | ||||
National Grid | United Kingdom | 2.3 | ||||
HSBC Holdings | United Kingdom | 2.2 | ||||
TOTAL | France | 2.1 | ||||
Prudential | United Kingdom | 2.1 | ||||
Royal Dutch Shell | United Kingdom | 1.9 | ||||
Sumitomo Mitsui Financial Group | Japan | 1.9 | ||||
STMicroelectronics | France | 1.8 | ||||
Taiwan Semiconductor Manufacturing | Taiwan | 1.8 |
2 | International Growth and Income Fund |
Where the fund’s assets are invested
Percent of net assets by country as of 12/31/13
Europe | International Growth and Income Fund | MSCI All Country World Index ex USA† | ||||||
Euro zone* | 30.9 | % | 22.3 | % | ||||
United Kingdom | 21.4 | 15.8 | ||||||
Switzerland | 4.8 | 6.4 | ||||||
Sweden | 2.6 | 2.3 | ||||||
Denmark | .3 | .8 | ||||||
Other Europe | .3 | 2.8 | ||||||
60.3 | 50.4 | |||||||
Asia/Pacific | ||||||||
Japan | 10.8 | 15.1 | ||||||
Hong Kong | 4.7 | 2.1 | ||||||
Taiwan | 2.6 | 2.4 | ||||||
Australia | 2.2 | 5.4 | ||||||
India | 1.7 | 1.3 | ||||||
China | 1.0 | 4.1 | ||||||
Thailand | .8 | .4 | ||||||
Philippines | .6 | .2 | ||||||
Other Asia/Pacific | .4 | 5.8 | ||||||
24.8 | 36.8 | |||||||
The Americas | ||||||||
Canada | 4.5 | 7.1 | ||||||
Mexico | .8 | 1.1 | ||||||
United States | .3 | — | ||||||
Other Americas | — | 2.8 | ||||||
5.6 | 11.0 | |||||||
Other | ||||||||
South Africa | .7 | 1.5 | ||||||
Other countries | — | .3 | ||||||
.7 | 1.8 | |||||||
Convertible securities, bonds, notes & other debt instruments, short-term securities & other assets less liabilities | 8.6 | — | ||||||
Total | 100.0 | % | 100.0 | % |
* | Countries using the euro as a common currency: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain. |
† | The MSCI All Country World Index ex USA is weighted by market capitalization. |
International Growth and Income Fund | 3 |
Thailand (–15.1%) lost considerable ground in U.S. dollar terms, as all four countries’ currencies slid against the dollar.
All 10 sectors that comprise the MSCI All Country World Index ex USA advanced during the period, with economically sensitive areas generally outgaining the more defensive areas of the market. The telecommunication services (22.0%), industrials (18.7%) and information technology (18.0%) sectors recorded the strongest gains.
Inside the portfolio
Against this backdrop, the fund had positive contributions from all 10 of its industry sector exposures. These exposures are the culmination of dozens of investments in individual securities — each of which was selected based on diligent fundamental research.
Stock selection in the consumer discretionary sector was particularly strong. Top contributors in this area included German TV broadcaster ProSieben.Sat (15.2%) and tax, legal and health services publisher Wolters Kluwer (34.9%), both among the fund’s 20 largest holdings. Gaming companies SJM Holdings (37.9%) and Wynn Macau (67.4%) recorded exceptional gains as casino activity surged in Macau.
A number of investments in the financials area also bolstered the fund’s return. European insurance companies AXA (41.5%) and Prudential (35.7%), the fund’s largest and sixth-largest holdings, respectively, surged during the period as both reported strong results and took steps to expand operations in developing markets.
The most significant drag on returns could be found among the fund’s investments in the information technology sector. STMicroelectronics (–10.8%) and Taiwan Semiconductor Manufacturing (–4.4%), both among the fund’s 10 largest holdings, declined on weaker demand for their products. The fund’s limited exposure to companies with internet-related businesses in developing countries held back returns on a relative basis, as a number of these companies recorded outstanding gains during the period. However, an investment in Baidu (88.2%), a Chinese-language internet search provider that benefited from growth in its mobile platforms, bolstered the fund’s overall return.
Elsewhere among the fund’s larger positions, No. 5 holding TOTAL (25.5%), a French oil and gas company, contributed meaningfully to the fund’s overall return. However, utility company National Grid (15.0%), No. 7 holding Royal Dutch Shell (14.1%), Japanese financial services company Sumitomo Mitsui Financial Group (12.2%) and Swiss pharmaceutical company Novartis (12.4%) all produced double-digit returns but trailed the broader market.
4 | International Growth and Income Fund |
Looking forward
Equity markets showed surprising strength in the past year, and we maintain a constructive view of equities. We are encouraged by the turnaround in Europe and believe that the fund is well positioned for continued recovery in the region. We are also encouraged by recent developments in Japan, including the implementation of so-called Abenomics policies (economic measures facilitated by Prime Minister Shinzo Abe). Our investment analysts remain active in Japan and we believe they are finding investments there that represent strong potential long-term value.
There are some reasons for caution. China continues to face hurdles as it seeks to redirect its economy toward consumption rather than investment and export. What’s more, the past five years has been a period of extraordinarily accommodative monetary policy on a global basis, and that has contributed to market recoveries around the world. We are closely tracking policymakers as they begin to tighten monetary policies.
As conditions evolve, we believe that through diligent research we can continue to find attractively valued companies with strong growth prospects that often pay dividends.
We thank you for your continued support and look forward to reporting back to you at the end of the fiscal year.
Cordially, | ||
Steven T. Watson | Carl Kawaja | |
Vice Chairman of the Board | President | |
February 11, 2014 |
For current information about the fund, visit americanfunds.com.
International Growth and Income Fund | 5 |
Summary investment portfolio December 31, 2013 | unaudited |
Industry sector diversification | Percent of net assets |
Country diversification | Percent of net assets | |||
Euro zone* | 30.9 | % | ||
United Kingdom | 21.4 | |||
Japan | 10.8 | |||
Switzerland | 4.8 | |||
Hong Kong | 4.7 | |||
Canada | 4.5 | |||
Sweden | 2.6 | |||
Taiwan | 2.6 | |||
Australia | 2.2 | |||
India | 1.7 | |||
Other countries | 5.2 | |||
Convertible securities, bonds, notes & other debt instruments, short-term securities & other assets less liabilities | 8.6 |
* | Countries using the euro as a common currency; those represented in the fund’s portfolio are Belgium, Finland, France, Germany, Greece, Ireland, the Netherlands, Portugal and Spain. |
6 | International Growth and Income Fund |
Common stocks 90.92% | Shares | Value (000) | Percent of net assets | |||||||||
Financials 26.40% | ||||||||||||
AXA SA | 8,627,200 | $ | 239,861 | 3.09 | % | |||||||
Prudential PLC | 7,274,148 | 161,411 | 2.08 | |||||||||
HSBC Holdings PLC (United Kingdom) | 8,903,896 | 97,667 | ||||||||||
HSBC Holdings PLC (Hong Kong) | 5,642,396 | 61,232 | 2.04 | |||||||||
Sumitomo Mitsui Financial Group, Inc. | 2,830,000 | 145,652 | 1.87 | |||||||||
Shinsei Bank, Ltd. | 34,919,000 | 85,217 | 1.10 | |||||||||
BNP Paribas SA | 1,037,530 | 80,858 | 1.04 | |||||||||
Svenska Handelsbanken AB, Class A | 1,569,000 | 77,086 | .99 | |||||||||
Banco Santander, SA1 | 8,082,000 | 72,336 | .93 | |||||||||
Link Real Estate Investment Trust | 13,415,418 | 65,050 | .84 | |||||||||
SEGRO PLC | 11,385,000 | 62,969 | .81 | |||||||||
Allianz SE | 319,100 | 57,222 | .74 | |||||||||
Suncorp Group Ltd. | 4,290,000 | 50,180 | .65 | |||||||||
AEGON NV | 5,265,000 | 49,702 | .64 | |||||||||
Other securities | 744,100 | 9.58 | ||||||||||
2,050,543 | 26.40 | |||||||||||
Consumer discretionary 13.63% | ||||||||||||
Wolters Kluwer NV | 3,456,135 | 98,634 | 1.27 | |||||||||
ProSiebenSat.1 Media AG | 1,768,000 | 87,561 | 1.13 | |||||||||
SJM Holdings Ltd. | 22,100,000 | 74,101 | .95 | |||||||||
Honda Motor Co., Ltd. | 1,604,000 | 65,951 | .85 | |||||||||
Don Quijote Holdings Co., Ltd. | 960,000 | 58,069 | .75 | |||||||||
OPAP SA | 4,291,200 | 57,086 | .73 | |||||||||
Toyota Motor Corp. | 886,000 | 54,013 | .69 | |||||||||
Bayerische Motoren Werke AG | 435,000 | 50,998 | .66 | |||||||||
Other securities | 512,504 | 6.60 | ||||||||||
1,058,917 | 13.63 | |||||||||||
Industrials 7.41% | ||||||||||||
Wolseley PLC | 1,056,686 | 59,931 | .77 | |||||||||
Meggitt PLC | 5,820,168 | 50,840 | .65 | |||||||||
Schneider Electric SA | 556,282 | 48,519 | .63 | |||||||||
BAE Systems PLC | 6,576,000 | 47,370 | .61 | |||||||||
Other securities | 369,070 | 4.75 | ||||||||||
575,730 | 7.41 | |||||||||||
Energy 7.29% | ||||||||||||
TOTAL SA | 2,667,800 | 163,429 | 2.10 | |||||||||
Royal Dutch Shell PLC, Class B | 3,908,000 | 147,549 | 1.90 | |||||||||
Enbridge Inc. | 2,191,597 | 95,751 | 1.23 | |||||||||
Crescent Point Energy Corp. | 1,260,000 | 48,929 | .63 | |||||||||
Keyera Corp. | 800,000 | 48,147 | .62 | |||||||||
Other securities | 62,504 | .81 | ||||||||||
566,309 | 7.29 | |||||||||||
Telecommunication services 6.91% | ||||||||||||
Vodafone Group PLC | 32,917,052 | 129,186 | 1.66 | |||||||||
Orange | 8,235,000 | 101,960 | 1.31 | |||||||||
KDDI Corp. | 930,000 | 57,137 | .74 | |||||||||
Other securities | 248,797 | 3.20 | ||||||||||
537,080 | 6.91 |
International Growth and Income Fund | 7 |
Common stocks (continued) | Shares | Value (000) | Percent of net assets | |||||||||
Information technology 6.65% | ||||||||||||
STMicroelectronics NV | 17,690,000 | $ | 142,123 | 1.83 | % | |||||||
Taiwan Semiconductor Manufacturing Co. Ltd. | 39,931,506 | 141,352 | 1.82 | |||||||||
Quanta Computer Inc. | 26,454,835 | 61,691 | .79 | |||||||||
Other securities | 171,644 | 2.21 | ||||||||||
516,810 | 6.65 | |||||||||||
Utilities 5.97% | ||||||||||||
National Grid PLC | 13,636,524 | 177,941 | 2.29 | |||||||||
EDP — Energias de Portugal, SA | 33,622,000 | 123,498 | 1.59 | |||||||||
Power Assets Holdings Ltd. | 8,143,500 | 64,744 | .83 | |||||||||
GDF SUEZ | 2,591,623 | 60,949 | .79 | |||||||||
Other securities | 36,490 | .47 | ||||||||||
463,622 | 5.97 | |||||||||||
Health care 5.87% | ||||||||||||
Novartis AG | 2,313,100 | 184,623 | 2.38 | |||||||||
AstraZeneca PLC | 2,085,000 | 123,415 | 1.59 | |||||||||
Other securities | 147,913 | 1.90 | ||||||||||
455,951 | 5.87 | |||||||||||
Consumer staples 5.67% | ||||||||||||
British American Tobacco PLC | 2,241,300 | 120,178 | 1.55 | |||||||||
Imperial Tobacco Group PLC | 2,975,000 | 115,180 | 1.48 | |||||||||
Other securities | 204,790 | 2.64 | ||||||||||
440,148 | 5.67 | |||||||||||
Materials 3.98% | ||||||||||||
L’Air Liquide SA, bonus shares2 | 495,511 | 70,076 | .90 | |||||||||
Other securities | 239,040 | 3.08 | ||||||||||
309,116 | 3.98 | |||||||||||
Miscellaneous 1.14% | ||||||||||||
Other common stocks in initial period of acquisition | 88,787 | 1.14 | ||||||||||
Total common stocks (cost: $5,522,871,000) | 7,063,013 | 90.92 | ||||||||||
Preferred stocks 0.16% | ||||||||||||
Financials 0.16% | ||||||||||||
HSBC Holdings PLC, Series 2, 8.00% | 472,795 | 12,714 | .16 | |||||||||
Total preferred stocks (cost: $12,000,000) | 12,714 | .16 | ||||||||||
Warrants 0.29% | ||||||||||||
Financials 0.29% | ||||||||||||
Other securities | 22,486 | .29 | ||||||||||
Total warrants (cost: $0) | 22,486 | .29 |
8 | International Growth and Income Fund |
Convertible securities 0.88% | Principal amount (000) | Value (000) | Percent of net assets | |||||||||
Consumer staples 0.60% | ||||||||||||
Shoprite Holdings Ltd. 6.50% convertible notes 2017 | ZAR | 422,560 | $ | 46,449 | .60 | % | ||||||
Financials 0.28% | ||||||||||||
Other securities | 22,101 | .28 | ||||||||||
Total convertible securities (cost: $78,977,000) | 68,550 | .88 | ||||||||||
Bonds, notes & other debt instruments 1.90% | ||||||||||||
Financials 0.33% | ||||||||||||
SMFG Preferred Capital USD 3 Ltd., junior subordinated 9.50% (undated)3,4 | $ | 5,410 | 6,722 | .09 | ||||||||
Other securities | 18,873 | .24 | ||||||||||
25,595 | .33 | |||||||||||
Consumer staples 0.03% | ||||||||||||
British American Tobacco International Finance PLC 9.50% 20183 | 2,000 | 2,635 | .03 | |||||||||
Other 1.54% | ||||||||||||
Other securities | 119,328 | 1.54 | ||||||||||
Total bonds, notes & other debt instruments (cost: $140,799,000) | 147,558 | 1.90 | ||||||||||
Short-term securities 5.35% | ||||||||||||
Federal Home Loan Bank 0.055%–0.10% due 1/8–4/2/2014 | 80,900 | 80,892 | 1.04 | |||||||||
Fannie Mae 0.14% due 9/2–9/22/2014 | 77,300 | 77,229 | .99 | |||||||||
Freddie Mac 0.12%–0.14% due 6/18–9/17/2014 | 61,800 | 61,756 | .80 | |||||||||
Wells Fargo & Co. 0.13%–0.22% due 2/4–6/17/2014 | 49,600 | 49,561 | .64 | |||||||||
Other securities | 145,698 | 1.88 | ||||||||||
Total short-term securities (cost: $415,133,000) | 415,136 | 5.35 | ||||||||||
Total investment securities (cost: $6,169,780,000) | 7,729,457 | 99.50 | ||||||||||
Other assets less liabilities | 38,842 | .50 | ||||||||||
Net assets | $ | 7,768,299 | 100.00 | % |
This summary investment portfolio is designed to streamline the report and help investors better focus on the fund’s principal holdings. See the inside back cover for details on how to obtain a complete schedule of portfolio holdings.
As permitted by U.S. Securities and Exchange Commission regulations, “Miscellaneous” securities include holdings in their first year of acquisition that have not previously been publicly disclosed.
“Other securities” includes all issues that are not disclosed separately in the summary investment portfolio.
International Growth and Income Fund | 9 |
Forward currency contracts
The fund has entered into forward currency contracts to sell currencies as shown in the following table. The average notional amount of open forward currency contracts was $177,463,000 over the prior nine-month period.
Unrealized | ||||||||||||
Contract amount | appreciation | |||||||||||
Receive | Deliver | at 12/31/2013 | ||||||||||
Settlement date | Counterparty | (000) | (000) | (000) | ||||||||
Sales: | ||||||||||||
Australian dollars | 1/14/2014 | Bank of New York Mellon | $30,136 | A$33,325 | $ 408 | |||||||
Australian dollars | 3/10/2014 | Bank of America, N.A. | $28,685 | A$31,800 | 417 | |||||||
Japanese yen | 1/15/2014 | UBS AG | $14,607 | ¥1,490,000 | 458 | |||||||
Japanese yen | 1/16/2014 | HSBC Bank | $111,450 | ¥11,372,592 | 3,449 | |||||||
Japanese yen | 2/14/2014 | Citibank | $7,046 | ¥700,000 | 398 | |||||||
Japanese yen | 2/14/2014 | Bank of New York Mellon | $24,157 | ¥2,400,000 | 1,362 | |||||||
Japanese yen | 2/14/2014 | Citibank | $10,040 | ¥1,000,000 | 542 | |||||||
Japanese yen | 3/4/2014 | Bank of America, N.A. | $5,841 | ¥600,000 | 142 | |||||||
$7,176 |
The following footnotes apply to either the individual securities noted or one or more of the securities aggregated and listed as a single line item.
1 | Security did not produce income during the last 12 months. |
2 | Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities, including those in “Miscellaneous” and “Other securities,” was $75,308,000, which represented .97% of the net assets of the fund. |
3 | Acquired in a transaction exempt from registration under Rule 144A or section 4(2) of the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities, including those in “Other securities,” was $105,194,000, which represented 1.35% of the net assets of the fund. |
4 | Coupon rate may change periodically. |
Key to abbreviation and symbols
A$ = Australian dollars
¥ = Japanese yen
ZAR = South African rand
See Notes to Financial Statements
10 | International Growth and Income Fund |
Financial statements
Statement of assets and liabilities | unaudited | |||||||
at December 31, 2013 | (dollars in thousands) | |||||||
Assets: | ||||||||
Investment securities, at value: (cost: $6,169,780) | $ | 7,729,457 | ||||||
Cash | 87 | |||||||
Unrealized appreciation on open forward currency contracts | 7,176 | |||||||
Receivables for: | ||||||||
Sales of investments | $ | 7,934 | ||||||
Sales of fund’s shares | 20,968 | |||||||
Dividends and interest | 20,931 | 49,833 | ||||||
7,786,553 | ||||||||
Liabilities: | ||||||||
Payables for: | ||||||||
Repurchases of fund’s shares | 11,359 | |||||||
Investment advisory services | 3,203 | |||||||
Services provided by related parties | 2,124 | |||||||
Trustees’ deferred compensation | 1,398 | |||||||
Other | 170 | 18,254 | ||||||
Net assets at December 31, 2013 | $ | 7,768,299 | ||||||
Net assets consist of: | ||||||||
Capital paid in on shares of beneficial interest | $ | 6,199,612 | ||||||
Distributions in excess of net investment income | (12,966 | ) | ||||||
Undistributed net realized gain | 14,435 | |||||||
Net unrealized appreciation | 1,567,218 | |||||||
Net assets at December 31, 2013 | $ | 7,768,299 |
(dollars and shares in thousands, except per-share amounts)
Shares of beneficial interest issued and outstanding (no stated par value) —
unlimited shares authorized (221,811 total shares outstanding)
Net assets | Shares outstanding | Net asset value per share | ||||||||||
Class A | $ | 4,454,309 | 127,169 | $ | 35.03 | |||||||
Class B | 17,410 | 497 | 35.00 | |||||||||
Class C | 269,062 | 7,699 | 34.95 | |||||||||
Class F-1 | 1,037,447 | 29,626 | 35.02 | |||||||||
Class F-2 | 901,112 | 25,719 | 35.04 | |||||||||
Class 529-A | 113,827 | 3,253 | 34.99 | |||||||||
Class 529-B | 761 | 22 | 34.97 | |||||||||
Class 529-C | 28,382 | 815 | 34.84 | |||||||||
Class 529-E | 4,246 | 121 | 34.99 | |||||||||
Class 529-F-1 | 8,723 | 249 | 35.03 | |||||||||
Class R-1 | 6,423 | 184 | 34.96 | |||||||||
Class R-2 | 46,577 | 1,335 | 34.88 | |||||||||
Class R-3 | 40,033 | 1,145 | 34.98 | |||||||||
Class R-4 | 34,592 | 988 | 35.01 | |||||||||
Class R-5 | 50,018 | 1,422 | 35.17 | |||||||||
Class R-6 | 755,377 | 21,567 | 35.02 |
See Notes to Financial Statements
International Growth and Income Fund | 11 |
Statement of operations | unaudited | |||||||
for the six months ended December 31, 2013 | (dollars in thousands) | |||||||
Investment income: | ||||||||
Income: | ||||||||
Dividends (net of non-U.S. taxes of $9,566) | $ | 99,076 | ||||||
Interest | 7,225 | $ | 106,301 | |||||
Fees and expenses*: | ||||||||
Investment advisory services | 17,964 | |||||||
Distribution services | 8,029 | |||||||
Transfer agent services | 3,914 | |||||||
Administrative services | 955 | |||||||
Reports to shareholders | 250 | |||||||
Registration statement and prospectus | 277 | |||||||
Trustees’ compensation | 282 | |||||||
Auditing and legal | 23 | |||||||
Custodian | 567 | |||||||
Other | 89 | 32,350 | ||||||
Net investment income | 73,951 | |||||||
Net realized gain and unrealized appreciation on investments, forward currency contracts and currency: | ||||||||
Net realized gain (loss) on: | ||||||||
Investments | 73,023 | |||||||
Forward currency contracts | 9,001 | |||||||
Currency transactions | (309 | ) | 81,715 | |||||
Net unrealized appreciation on: | ||||||||
Investments (net of non-U.S. taxes of $53) | 812,197 | |||||||
Forward currency contracts | 4,632 | |||||||
Currency translations | 709 | 817,538 | ||||||
Net realized gain and unrealized appreciation on investments, forward currency contracts and currency | 899,253 | |||||||
Net increase in net assets resulting from operations | $ | 973,204 |
* | Additional information related to class-specific fees and expenses is included in the Notes to Financial Statements. |
See Notes to Financial Statements
12 | International Growth and Income Fund |
Statements of changes in net assets
(dollars in thousands)
Six months ended December 31, 2013* | Year ended June 30, 2013 | |||||||
Operations: | ||||||||
Net investment income | $ | 73,951 | $ | 156,009 | ||||
Net realized gain on investments, forward currency contracts and currency transactions | 81,715 | 268,628 | ||||||
Net unrealized appreciation on investments, forward currency contracts and currency translations | 817,538 | 465,269 | ||||||
Net increase in net assets resulting from operations | 973,204 | 889,906 | ||||||
Dividends and distributions paid to shareholders: | ||||||||
Dividends from net investment income | (80,518 | ) | (159,324 | ) | ||||
Distributions from net realized gain on investments | (291,112 | ) | — | |||||
Total dividends and distributions paid to shareholders | (371,630 | ) | (159,324 | ) | ||||
Net capital share transactions | 816,320 | 728,944 | ||||||
Total increase in net assets | 1,417,894 | 1,459,526 | ||||||
Net assets: | ||||||||
Beginning of period | 6,350,405 | 4,890,879 | ||||||
End of period (including distributions in excess of net investment income: $(12,966) and $(6,399), respectively) | $ | 7,768,299 | $ | 6,350,405 |
* | Unaudited. |
See Notes to Financial Statements
International Growth and Income Fund | 13 |
Notes to financial statements | unaudited |
1. Organization
International Growth and Income Fund (the “fund”) is registered under the Investment Company Act of 1940 as an open-end, diversified management investment company. The fund seeks to provide long-term growth of capital with current income by investing primarily in stocks of larger, well-established companies domiciled outside the U.S.
The fund has 16 share classes consisting of five retail share classes (Classes A, B and C, as well as two F share classes, F-1 and F-2), five 529 college savings plan share classes (Classes 529-A, 529-B, 529-C, 529-E and 529-F-1) and six retirement plan share classes (Classes R-1, R-2, R-3, R-4, R-5 and R-6). The 529 college savings plan share classes can be used to save for college education. The retirement plan share classes are generally offered only through eligible employer-sponsored retirement plans. The fund’s share classes are further described:
Share class | Initial sales charge | Contingent deferred sales charge upon redemption | Conversion feature | |||
Classes A and 529-A | Up to 5.75% | None (except 1% for certain redemptions within one year of purchase without an initial sales charge) | None | |||
Classes B and 529-B* | None | Declines from 5% to 0% for redemptions within six years of purchase | Classes B and 529-B convert to Classes A and 529-A, respectively, after eight years | |||
Class C | None | 1% for redemptions within one year of purchase | Class C converts to Class F-1 after 10 years | |||
Class 529-C | None | 1% for redemptions within one year of purchase | None | |||
Class 529-E | None | None | None | |||
Classes F-1, F-2 and 529-F-1 | None | None | None | |||
Classes R-1, R-2, R-3, R-4, R-5 and R-6 | None | None | None |
* | Class B and 529-B shares of the fund are not available for purchase. |
Holders of all share classes have equal pro rata rights to assets, dividends and liquidation proceeds. Each share class has identical voting rights, except for the exclusive right to vote on matters affecting only its class. Share classes have different fees and expenses (“class-specific fees and expenses”), primarily due to different arrangements for distribution, administrative and shareholder services. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different per-share dividends by each share class.
14 | International Growth and Income Fund |
2. Significant accounting policies
The financial statements have been prepared to comply with accounting principles generally accepted in the United States of America. These principles require management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. The fund follows the significant accounting policies described in this section, as well as the valuation policies described in the next section on valuation.
Security transactions and related investment income — Security transactions are recorded by the fund as of the date the trades are executed with brokers. Realized gains and losses from security transactions are determined based on the specific identified cost of the securities. In the event a security is purchased with a delayed payment date, the fund will segregate liquid assets sufficient to meet its payment obligations. Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis. Market discounts, premiums and original issue discounts on fixed-income securities are amortized daily over the expected life of the security.
Class allocations — Income, fees and expenses (other than class-specific fees and expenses) and realized and unrealized gains and losses are allocated daily among the various share classes based on their relative net assets. Class-specific fees and expenses, such as distribution, administrative and shareholder services, are charged directly to the respective share class.
Dividends and distributions to shareholders — Dividends and distributions to shareholders are recorded on the ex-dividend date.
Currency translation — Assets and liabilities, including investment securities, denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates supplied by one or more pricing vendors on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. The effects of changes in exchange rates on investment securities are included with the net realized gain or loss and net unrealized appreciation or depreciation on investments in the fund’s statement of operations. The realized gain or loss and unrealized appreciation or depreciation resulting from all other transactions denominated in currencies other than U.S. dollars are disclosed separately.
3. Valuation
Capital Research and Management Company (“CRMC”), the fund’s investment adviser, values the fund’s investments at fair value as defined by accounting principles generally accepted in the United States of America. The net asset value of each share class of the fund is generally determined as of approximately 4:00 p.m. New York time each day the New York Stock Exchange is open.
International Growth and Income Fund | 15 |
Methods and inputs — The fund’s investment adviser uses the following methods and inputs to establish the fair value of the fund’s assets and liabilities. Use of particular methods and inputs may vary over time based on availability and relevance as market and economic conditions evolve.
Equity securities are generally valued at the official closing price of, or the last reported sale price on, the exchange or market on which such securities are traded, as of the close of business on the day the securities are being valued or, lacking any sales, at the last available bid price. Prices for each security are taken from the principal exchange or market on which the security trades.
Fixed-income securities, including short-term securities purchased with more than 60 days left to maturity, are generally valued at prices obtained from one or more pricing vendors. Vendors value such securities based on one or more of the inputs described in the following table. The table provides examples of inputs that are commonly relevant for valuing particular classes of fixed-income securities in which the fund is authorized to invest. However, these classifications are not exclusive, and any of the inputs may be used to value any other class of fixed-income security.
Fixed-income class | Examples of standard inputs | |
All | Benchmark yields, transactions, bids, offers, quotations from dealers and trading systems, new issues, spreads and other relationships observed in the markets among comparable securities; and proprietary pricing models such as yield measures calculated using factors such as cash flows, financial or collateral performance and other reference data (collectively referred to as “standard inputs”) | |
Corporate bonds & notes; convertible securities | Standard inputs and underlying equity of the issuer | |
Bonds & notes of governments & government agencies | Standard inputs and interest rate volatilities | |
Mortgage-backed; asset-backed obligations | Standard inputs and cash flows, prepayment information, default rates, delinquency and loss assumptions, collateral characteristics, credit enhancements and specific deal information |
When the fund’s investment adviser deems it appropriate to do so (such as when vendor prices are unavailable or not deemed to be representative), fixed-income securities will be valued in good faith at the mean quoted bid and ask prices that are reasonably and timely available (or bid prices, if ask prices are not available) or at prices for securities of comparable maturity, quality and type.
Securities with both fixed-income and equity characteristics, or equity securities traded principally among fixed-income dealers, are generally valued in the manner described for either equity or fixed-income securities, depending on which method is deemed most appropriate by the fund’s investment adviser. Short-term securities purchased
16 | International Growth and Income Fund |
within 60 days to maturity are valued at amortized cost, which approximates fair value. The value of short-term securities originally purchased with maturities greater than 60 days is determined based on an amortized value to par when they reach 60 days. Forward currency contracts are valued at the mean of representative quoted bid and ask prices, generally based on prices supplied by one or more pricing vendors.
Securities and other assets for which representative market quotations are not readily available or are considered unreliable by the fund’s investment adviser are fair valued as determined in good faith under fair valuation guidelines adopted by authority of the fund’s board of trustees as further described. The investment adviser follows fair valuation guidelines, consistent with U.S. Securities and Exchange Commission rules and guidance, to consider relevant principles and factors when making fair value determinations. The investment adviser considers relevant indications of value that are reasonably and timely available to it in determining the fair value to be assigned to a particular security, such as the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; significant events occurring after the close of trading in the security; and changes in overall market conditions. In addition, the closing prices of equity securities that trade in markets outside U.S. time zones may be adjusted to reflect significant events that occur after the close of local trading but before the net asset value of each share class of the fund is determined. Fair valuations and valuations of investments that are not actively trading involve judgment and may differ materially from valuations that would have been used had greater market activity occurred.
Processes and structure — The fund’s board of trustees has delegated authority to the fund’s investment adviser to make fair value determinations, subject to board oversight. The investment adviser has established a Joint Fair Valuation Committee (the “Fair Valuation Committee”) to administer, implement and oversee the fair valuation process, and to make fair value decisions. The Fair Valuation Committee regularly reviews its own fair value decisions, as well as decisions made under its standing instructions to the investment adviser’s valuation teams. The Fair Valuation Committee reviews changes in fair value measurements from period to period and may, as deemed appropriate, update the fair valuation guidelines to better reflect the results of back testing and address new or evolving issues. The Fair Valuation Committee reports any changes to the fair valuation guidelines to the board of trustees with supplemental information to support the changes. The fund’s board and audit committee also regularly review reports that describe fair value determinations and methods.
The fund’s investment adviser has also established a Fixed-Income Pricing Review Group to administer and oversee the fixed-income valuation process, including the use of fixed-income pricing vendors. This group regularly reviews pricing vendor information and market data. Pricing decisions, processes and controls over security valuation are also subject to additional internal reviews, including an annual control self-evaluation program facilitated by the investment adviser’s compliance group.
International Growth and Income Fund | 17 |
Classifications — The fund’s investment adviser classifies the fund’s assets and liabilities into three levels based on the inputs used to value the assets or liabilities. Level 1 values are based on quoted prices in active markets for identical securities. Level 2 values are based on significant observable market inputs, such as quoted prices for similar securities and quoted prices in inactive markets. Certain securities trading outside the U.S. may transfer between Level 1 and Level 2 due to valuation adjustments resulting from significant market movements following the close of local trading. Level 3 values are based on significant unobservable inputs that reflect the investment adviser’s determination of assumptions that market participants might reasonably use in valuing the securities. The valuation levels are not necessarily an indication of the risk or liquidity associated with the underlying investment. For example, U.S. government securities are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market. The following tables present the fund’s valuation levels as of December 31, 2013 (dollars in thousands):
Investment securities | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Common stocks: | ||||||||||||||||
Financials | $ | 2,050,543 | $ | — | $ | — | $ | 2,050,543 | ||||||||
Consumer discretionary | 1,058,917 | — | — | 1,058,917 | ||||||||||||
Industrials | 575,730 | — | — | 575,730 | ||||||||||||
Energy | 566,309 | — | — | 566,309 | ||||||||||||
Telecommunication services | 537,080 | — | — | 537,080 | ||||||||||||
Information technology | 516,810 | — | — | 516,810 | ||||||||||||
Utilities | 463,622 | — | — | 463,622 | ||||||||||||
Health care | 455,951 | — | — | 455,951 | ||||||||||||
Consumer staples | 440,148 | — | — | 440,148 | ||||||||||||
Materials | 239,040 | 70,076 | — | 309,116 | ||||||||||||
Miscellaneous | 83,555 | 5,232 | — | 88,787 | ||||||||||||
Preferred stocks | — | 12,714 | — | 12,714 | ||||||||||||
Warrants | 22,486 | — | — | 22,486 | ||||||||||||
Convertible securities | — | 68,550 | — | 68,550 | ||||||||||||
Bonds, notes & other debt instruments | — | 147,558 | — | 147,558 | ||||||||||||
Short-term securities | — | 415,136 | — | 415,136 | ||||||||||||
Total | $ | 7,010,191 | $ | 719,266 | $ | — | $ | 7,729,457 | ||||||||
Other investments* | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Unrealized appreciation on open forward currency contracts | $ | — | $ | 7,176 | $ | — | $ | 7,176 |
* | Forward currency contracts are not included in the investment portfolio. |
18 | International Growth and Income Fund |
4. Risk factors
Investing in the fund may involve certain risks including, but not limited to, those described below.
Market conditions — The prices of, and the income generated by, the common stocks and other securities held by the fund may decline due to market conditions and other factors, including those directly involving the issuers of securities held by the fund.
Investing outside the U.S. — Securities of issuers domiciled outside the U.S., or with significant operations outside the U.S., may lose value because of adverse political, social, economic or market developments in the countries or regions in which the issuers operate. These securities may also lose value due to changes in foreign currency exchange rates against the U.S. dollar and/or currencies of other countries. Securities markets in certain countries may be more volatile and/or less liquid than those in the U.S. Investments outside the U.S. may also be subject to different settlement and accounting practices and different regulatory, legal and reporting standards, and may be more difficult to value, than those in the U.S. The risks of investing outside the U.S. may be heightened in connection with investments in emerging markets.
Investing in emerging markets — Investing in emerging markets may involve risks in addition to and greater than those generally associated with investing in the securities markets of developed countries. For instance, developing countries may have less developed legal and accounting systems than those in developed countries. The governments of these countries may be less stable and more likely to impose capital controls, nationalize a company or industry, place restrictions on foreign ownership and on withdrawing sale proceeds of securities from the country, and/or impose punitive taxes that could adversely affect the prices of securities. In addition, the economies of these countries may be dependent on relatively few industries that are more susceptible to local and global changes. Securities markets in these countries can also be relatively small and have substantially lower trading volumes. As a result, securities issued in these countries may be more volatile and less liquid, and may be more difficult to value, than securities issued in countries with more developed economies and/or markets. Additionally, there may be increased settlement risks for transactions in local securities.
Investing in growth-oriented stocks — Growth-oriented stocks may involve larger price swings and greater potential for loss than other types of investments.
Investing in income-oriented stocks — Income provided by the fund may be reduced by changes in the dividend policies of, and the capital resources available at, the companies in which the fund invests.
Management — The investment adviser to the fund actively manages the fund’s investments. Consequently, the fund is subject to the risk that the methods and analyses employed by the investment adviser in this process may not produce the desired results. This could cause the fund to lose value or its investment results to lag relevant benchmarks or other funds with similar objectives.
International Growth and Income Fund | 19 |
5. Certain investment techniques
Forward currency contracts — The fund has entered into forward currency contracts, which represent agreements to exchange currencies on specific future dates at predetermined rates. The fund’s investment adviser uses forward currency contracts to manage the fund’s exposure to changes in exchange rates. Upon entering into these contracts, risks may arise from the potential inability of counterparties to meet the terms of their contracts and from possible movements in exchange rates.
On a daily basis, the fund’s investment adviser values forward currency contracts and records unrealized appreciation or depreciation for open forward currency contracts in the fund’s statement of assets and liabilities. Realized gains or losses are recorded at the time the forward currency contract is closed or offset by another contract with the same broker for the same settlement date and currency.
Closed forward currency contracts that have not reached their settlement date are included in the respective receivables or payables for closed forward currency contracts in the fund’s statement of assets and liabilities. Net realized gains or losses from closed forward currency contracts and net unrealized appreciation or depreciation from open forward currency contracts are recorded in the fund’s statement of operations.
The following tables present the financial statement impacts resulting from the fund’s use of forward currency contracts as of December 31, 2013 (dollars in thousands):
Asset | Liability | |||||||
Contract | Location on statement of assets and liabilities | Value | Location on statement of assets and liabilities | Value | ||||
Forward currency | Unrealized appreciation on open forward currency contracts | $7,176 | Unrealized depreciation on open forward currency contracts | $— | ||||
Net realized gain | Net unrealized appreciation | |||||||
Contract | Location on statement of operations | Value | Location on statement of operations | Value | ||||
Forward currency | Net realized gain on forward currency contracts | $9,001 | Net unrealized appreciation on forward currency contracts | $4,632 |
20 | International Growth and Income Fund |
Collateral — The fund has entered into a collateral program due to its use of forward currency contracts. The program calls for the fund to either receive or pledge collateral based on the net gain or loss on unsettled forward currency contracts by counterparty. The purpose of the collateral is to cover potential losses that could occur in the event that either party cannot meet its contractual obligations.
Rights of offset — The fund has entered into enforceable master netting agreements with certain counterparties for forward currency contracts, where amounts payable by each party to the other in the same currency, with the same settlement date and with the same counterparty are settled net of each party’s payment obligation. For financial reporting purposes, the fund does not offset financial assets and financial liabilities that are subject to netting arrangements in the statement of assets and liabilities.
The following table presents the gross amounts of recognized assets and liabilities from the fund’s use of forward currency contracts as of December 31, 2013 (dollars in thousands):
Gross amounts recognized in | Gross amounts not offset in the statement of assets and liabilities and subject to a master netting agreement | ||||||||||||||
Counterparty | the statement of assets and liabilities | Available to offset | Non-cash collateral* | Cash collateral | Net amount | ||||||||||
Assets: | |||||||||||||||
Bank of America, N.A. | $ | 559 | $ | — | $ | (559) | $ | — | $ | — | |||||
Bank of New York Mellon | 1,770 | — | (1,770) | — | — | ||||||||||
Citibank | 940 | — | (849) | — | 91 | ||||||||||
HSBC Bank | 3,449 | — | (3,300) | — | 149 | ||||||||||
UBS AG | 458 | — | (376) | — | 82 | ||||||||||
$ | 7,176 | $ | — | $ | (6,854) | $ | — | $ | 322 |
* | Non-cash collateral is shown on a settlement basis. |
International Growth and Income Fund | 21 |
6. Taxation and distributions
Federal income taxation — The fund complies with the requirements under Subchapter M of the Internal Revenue Code applicable to mutual funds and intends to distribute substantially all of its net taxable income and net capital gains each year. The fund is not subject to income taxes to the extent such distributions are made. Therefore, no federal income tax provision is required.
As of and during the period ended December 31, 2013, the fund did not have a liability for any unrecognized tax benefits. The fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the statement of operations. During the period, the fund did not incur any interest or penalties.
The fund is not subject to examination by U.S. federal tax authorities for tax years before 2009, by state tax authorities for tax years before 2008 and by tax authorities outside the U.S. for tax years before 2011.
Non-U.S. taxation — Dividend and interest income are recorded net of non-U.S. taxes paid. Gains realized by the fund on the sale of securities in certain countries are subject to non-U.S. taxes. The fund records a liability based on unrealized gains to provide for potential non-U.S. taxes payable upon the sale of these securities.
Distributions — Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to different treatment for items such as currency gains and losses; short-term capital gains and losses; capital losses related to sales of certain securities within 30 days of purchase; unrealized appreciation of certain investments in securities outside the U.S.; deferred expenses; cost of investments sold; and income on certain investments. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the fund for financial reporting purposes.
The components of distributable earnings on a tax basis are reported as of the fund’s most recent year-end. As of June 30, 2013, the fund had tax basis undistributed ordinary income of $7,211,000, and undistributed long-term capital gains of $224,838,000.
As of December 31, 2013, the tax basis unrealized appreciation (depreciation) and cost of investment securities were as follows (dollars in thousands):
Gross unrealized appreciation on investment securities | $ | 1,684,086 | |
Gross unrealized depreciation on investment securities | (136,147 | ) | |
Net unrealized appreciation on investment securities | 1,547,939 | ||
Cost of investment securities | 6,181,518 |
22 | International Growth and Income Fund |
The tax character of distributions paid to shareholders was as follows (dollars in thousands):
Six months ended December 31, 2013 | Year ended June 30, 2013 | |||||||||||||||||
Share class | Ordinary income | Long-term capital gains | Total distributions paid | Ordinary income | Long-term capital gains | Total distributions paid | ||||||||||||
Class A | $ | 46,268 | $ | 166,940 | $ | 213,208 | $ | 95,896 | $ | — | $ | 95,896 | ||||||
Class B | 126 | 657 | 783 | 348 | — | 348 | ||||||||||||
Class C | 1,818 | 10,101 | 11,919 | 4,138 | — | 4,138 | ||||||||||||
Class F-1 | 10,511 | 38,807 | 49,318 | 18,507 | — | 18,507 | ||||||||||||
Class F-2 | 9,893 | 33,681 | 43,574 | 18,570 | — | 18,570 | ||||||||||||
Class 529-A | 1,132 | 4,247 | 5,379 | 2,280 | — | 2,280 | ||||||||||||
Class 529-B | 5 | 28 | 33 | 15 | — | 15 | ||||||||||||
Class 529-C | 181 | 1,066 | 1,247 | 400 | — | 400 | ||||||||||||
Class 529-E | 36 | 156 | 192 | 71 | — | 71 | ||||||||||||
Class 529-F-1 | 93 | 336 | 429 | 160 | — | 160 | ||||||||||||
Class R-1 | 57 | 242 | 299 | 123 | — | 123 | ||||||||||||
Class R-2 | 315 | 1,746 | 2,061 | 717 | — | 717 | ||||||||||||
Class R-3 | 355 | 1,499 | 1,854 | 708 | — | 708 | ||||||||||||
Class R-4 | 342 | 1,286 | 1,628 | 607 | — | 607 | ||||||||||||
Class R-5 | 580 | 1,877 | 2,457 | 1,132 | — | 1,132 | ||||||||||||
Class R-6 | 8,806 | 28,443 | 37,249 | 15,652 | — | 15,652 | ||||||||||||
Total | $ | 80,518 | $ | 291,112 | $ | 371,630 | $ | 159,324 | $ | — | $ | 159,324 |
International Growth and Income Fund | 23 |
7. Fees and transactions with related parties
CRMC, the fund’s investment adviser, is the parent company of American Funds Distributors®, Inc. (“AFD”), the principal underwriter of the fund’s shares, and American Funds Service Company® (“AFS”), the fund’s transfer agent. CRMC, AFD and AFS are considered related parties to the fund.
Investment advisory services — The fund has an investment advisory and service agreement with CRMC that provides for monthly fees accrued daily. These fees are based on a series of decreasing annual rates beginning with 0.690% on the first $500 million of daily net assets and decreasing to 0.460% on such assets in excess of $6.5 billion. For the six months ended December 31, 2013, the investment advisory services fee was $17,964,000, which was equivalent to an annualized rate of 0.504% of average daily net assets.
Class-specific fees and expenses — Expenses that are specific to individual share classes are accrued directly to the respective share class. The principal class-specific fees and expenses are described below:
Distribution services — The fund has plans of distribution for all share classes, except Class F-2, R-5 and R-6 shares. Under the plans, the board of trustees approves certain categories of expenses that are used to finance activities primarily intended to sell fund shares and service existing accounts. The plans provide for payments, based on an annualized percentage of average daily net assets, ranging from 0.30% to 1.00% as noted in this section. In some cases, the board of trustees has limited the amounts that may be paid to less than the maximum allowed by the plans. All share classes with a plan may use up to 0.25% of average daily net assets to pay service fees, or to compensate AFD for paying service fees, to firms that have entered into agreements with AFD to provide certain shareholder services. The remaining amounts available to be paid under each plan are paid to dealers to compensate them for their sales activities.
For Class A and 529-A shares, distribution-related expenses include the reimbursement of dealer and wholesaler commissions paid by AFD for certain shares sold without a sales charge. These share classes reimburse AFD for amounts billed within the prior 15 months but only to the extent that the overall annual expense limit of 0.30% is not exceeded. As of December 31, 2013, there were no unreimbursed expenses subject to reimbursement for Class A or 529-A shares.
Share class | Currently approved limits | Plan limits | |||||||
Class A | 0.30 | % | 0.30 | % | |||||
Class 529-A | 0.30 | 0.50 | |||||||
Classes B and 529-B | 1.00 | 1.00 | |||||||
Classes C, 529-C and R-1 | 1.00 | 1.00 | |||||||
Class R-2 | 0.75 | 1.00 | |||||||
Classes 529-E and R-3 | 0.50 | 0.75 | |||||||
Classes F-1, 529-F-1 and R-4 | 0.25 | 0.50 |
24 | International Growth and Income Fund |
Transfer agent services — The fund has a shareholder services agreement with AFS under which the fund compensates AFS for providing transfer agent services to each of the fund’s share classes. These services include recordkeeping, shareholder communications and transaction processing. In addition, the fund reimburses AFS for amounts paid to third parties for performing transfer agent services on behalf of fund shareholders.
Administrative services — The fund has an administrative services agreement with CRMC under which the fund compensates CRMC for providing administrative services to Class A, C, F, 529 and R shares. These services include, but are not limited to, coordinating, monitoring, assisting and overseeing third parties that provide services to fund shareholders. Under the agreement, Class A shares pay an annual fee of 0.01% and Class C, F, 529 and R shares pay an annual fee of 0.05% of their respective average daily net assets.
529 plan services — Each 529 share class is subject to service fees to compensate the Commonwealth of Virginia for the maintenance of the 529 college savings plan. The quarterly fee is based on a series of decreasing annual rates beginning with 0.10% on the first $30 billion of the net assets invested in Class 529 shares of the American Funds and decreasing to 0.06% on such assets between $120 billion and $150 billion. The fee for any given calendar quarter is accrued and calculated on the basis of the average net assets of Class 529 shares of the American Funds for the last month of the prior calendar quarter. The fee is included in other expenses in the fund’s statement of operations. The Commonwealth of Virginia is not considered a related party.
For the six months ended December 31, 2013, class-specific expenses under the agreements were as follows (dollars in thousands):
Share class | Distribution services | Transfer agent services | Administrative services | 529 plan services | |||||||||||
Class A | $4,946 | $2,441 | $206 | Not applicable | |||||||||||
Class B | 88 | 11 | Not applicable | Not applicable | |||||||||||
Class C | 1,247 | 154 | 62 | Not applicable | |||||||||||
Class F-1 | 1,197 | 633 | 239 | Not applicable | |||||||||||
Class F-2 | Not applicable | 452 | 201 | Not applicable | |||||||||||
Class 529-A | 104 | 51 | 26 | $50 | |||||||||||
Class 529-B | 4 | — | * | — | * | — | * | ||||||||
Class 529-C | 130 | 14 | 7 | 13 | |||||||||||
Class 529-E | 9 | 1 | 1 | 2 | |||||||||||
Class 529-F-1 | — | 4 | 2 | 4 | |||||||||||
Class R-1 | 18 | 3 | 1 | Not applicable | |||||||||||
Class R-2 | 159 | 88 | 11 | Not applicable | |||||||||||
Class R-3 | 90 | 35 | 9 | Not applicable | |||||||||||
Class R-4 | 37 | 15 | 8 | Not applicable | |||||||||||
Class R-5 | Not applicable | 11 | 12 | Not applicable | |||||||||||
Class R-6 | Not applicable | 1 | 170 | Not applicable | |||||||||||
Total class-specific expenses | $8,029 | $3,914 | $955 | $69 |
* | Amount less than one thousand. |
International Growth and Income Fund | 25 |
Trustees’ deferred compensation — Trustees who are unaffiliated with CRMC may elect to defer the cash payment of part or all of their compensation. These deferred amounts, which remain as liabilities of the fund, are treated as if invested in shares of the fund or other American Funds. These amounts represent general, unsecured liabilities of the fund and vary according to the total returns of the selected funds. Trustees’ compensation of $282,000 in the fund’s statement of operations includes $172,000 in current fees (either paid in cash or deferred) and a net increase of $110,000 in the value of the deferred amounts.
Affiliated officers and trustees — Officers and certain trustees of the fund are or may be considered to be affiliated with CRMC, AFD and AFS. No affiliated officers or trustees received any compensation directly from the fund.
8. Capital share transactions
Capital share transactions in the fund were as follows (dollars and shares in thousands):
Sales* | Reinvestments of dividends and distributions | Repurchases* | Net increase (decrease) | |||||||||||||||||||||||||||||
Share class | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | ||||||||||||||||||||||||
Six months ended December 31, 2013 | ||||||||||||||||||||||||||||||||
Class A | $ | 398,668 | 11,556 | $ | 209,583 | 6,126 | $ | (205,684 | ) | (5,990 | ) | $ | 402,567 | 11,692 | ||||||||||||||||||
Class B | 1,078 | 31 | 781 | 23 | (3,114 | ) | (91 | ) | (1,255 | ) | (37 | ) | ||||||||||||||||||||
Class C | 32,248 | 938 | 11,766 | 344 | (21,305 | ) | (620 | ) | 22,709 | 662 | ||||||||||||||||||||||
Class F-1 | 154,238 | 4,493 | 49,029 | 1,434 | (90,814 | ) | (2,629 | ) | 112,453 | 3,298 | ||||||||||||||||||||||
Class F-2 | 139,678 | 4,035 | 41,952 | 1,226 | (43,706 | ) | (1,272 | ) | 137,924 | 3,989 | ||||||||||||||||||||||
Class 529-A | 11,872 | 345 | 5,376 | 158 | (5,113 | ) | (150 | ) | 12,135 | 353 | ||||||||||||||||||||||
Class 529-B | 68 | 2 | 33 | 1 | (196 | ) | (5 | ) | (95 | ) | (2 | ) | ||||||||||||||||||||
Class 529-C | 3,318 | 97 | 1,246 | 37 | (1,643 | ) | (48 | ) | 2,921 | 86 | ||||||||||||||||||||||
Class 529-E | 507 | 15 | 192 | 5 | (124 | ) | (4 | ) | 575 | 16 | ||||||||||||||||||||||
Class 529-F-1 | 2,335 | 67 | 421 | 13 | (1,494 | ) | (43 | ) | 1,262 | 37 | ||||||||||||||||||||||
Class R-1 | 590 | 17 | 232 | 7 | (360 | ) | (10 | ) | 462 | 14 | ||||||||||||||||||||||
Class R-2 | 7,941 | 231 | 2,051 | 60 | (6,908 | ) | (200 | ) | 3,084 | 91 | ||||||||||||||||||||||
Class R-3 | 7,653 | 223 | 1,843 | 54 | (5,818 | ) | (169 | ) | 3,678 | 108 | ||||||||||||||||||||||
Class R-4 | 8,215 | 237 | 1,617 | 47 | (3,735 | ) | (108 | ) | 6,097 | 176 | ||||||||||||||||||||||
Class R-5 | 6,352 | 186 | 2,454 | 71 | (2,582 | ) | (75 | ) | 6,224 | 182 | ||||||||||||||||||||||
Class R-6 | 82,082 | 2,377 | 37,249 | 1,089 | (13,752 | ) | (397 | ) | 105,579 | 3,069 | ||||||||||||||||||||||
Total net increase (decrease) | $ | 856,843 | 24,850 | $ | 365,825 | 10,695 | $ | (406,348 | ) | (11,811 | ) | $ | 816,320 | 23,734 |
26 | International Growth and Income Fund |
Sales* | Reinvestments of dividends | Repurchases* | Net increase (decrease) | |||||||||||||||||||||||||||||
Share class | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | ||||||||||||||||||||||||
Year ended June 30, 2013 | ||||||||||||||||||||||||||||||||
Class A | $ | 540,443 | 17,064 | $ | 93,379 | 2,937 | $ | (534,888 | ) | (17,283 | ) | $ | 98,934 | 2,718 | ||||||||||||||||||
Class B | 1,631 | 52 | 346 | 11 | (7,681 | ) | (249 | ) | (5,704 | ) | (186 | ) | ||||||||||||||||||||
Class C | 42,564 | 1,345 | 4,059 | 128 | (44,792 | ) | (1,454 | ) | 1,831 | 19 | ||||||||||||||||||||||
Class F-1 | 445,243 | 13,830 | 18,262 | 570 | (118,885 | ) | (3,803 | ) | 344,620 | 10,597 | ||||||||||||||||||||||
Class F-2 | 189,867 | 5,980 | 17,665 | 555 | (101,296 | ) | (3,224 | ) | 106,236 | 3,311 | ||||||||||||||||||||||
Class 529-A | 21,211 | 673 | 2,279 | 72 | (11,978 | ) | (386 | ) | 11,512 | 359 | ||||||||||||||||||||||
Class 529-B | 122 | 4 | 15 | — | † | (532 | ) | (17 | ) | (395 | ) | (13 | ) | |||||||||||||||||||
Class 529-C | 6,260 | 199 | 400 | 12 | (3,567 | ) | (116 | ) | 3,093 | 95 | ||||||||||||||||||||||
Class 529-E | 1,061 | 33 | 71 | 3 | (410 | ) | (13 | ) | 722 | 23 | ||||||||||||||||||||||
Class 529-F-1 | 2,915 | 91 | 160 | 5 | (608 | ) | (20 | ) | 2,467 | 76 | ||||||||||||||||||||||
Class R-1 | 1,743 | 54 | 90 | 3 | (1,101 | ) | (36 | ) | 732 | 21 | ||||||||||||||||||||||
Class R-2 | 13,640 | 438 | 693 | 21 | (8,354 | ) | (269 | ) | 5,979 | 190 | ||||||||||||||||||||||
Class R-3 | 14,111 | 444 | 676 | 21 | (7,419 | ) | (237 | ) | 7,368 | 228 | ||||||||||||||||||||||
Class R-4 | 12,871 | 411 | 573 | 18 | (4,761 | ) | (154 | ) | 8,683 | 275 | ||||||||||||||||||||||
Class R-5 | 11,378 | 370 | 1,130 | 36 | (10,516 | ) | (339 | ) | 1,992 | 67 | ||||||||||||||||||||||
Class R-6 | 151,296 | 4,752 | 15,652 | 491 | (26,074 | ) | (846 | ) | 140,874 | 4,397 | ||||||||||||||||||||||
Total net increase (decrease) | $ | 1,456,356 | 45,740 | $ | 155,450 | 4,883 | $ | (882,862 | ) | (28,446 | ) | $ | 728,944 | 22,177 |
* | Includes exchanges between share classes of the fund. |
† | Amount less than one thousand. |
9. Investment transactions
The fund made purchases and sales of investment securities, excluding short-term securities and U.S. government obligations, if any, of $1,498,438,000 and $1,026,030,000, respectively, during the six months ended December 31, 2013.
International Growth and Income Fund | 27 |
Financial highlights
Income (loss) from investment operations1 | ||||||||||||||||||
Net asset | Net gains (losses) | |||||||||||||||||
value, | Net | on securities | Total from | |||||||||||||||
beginning | investment | (both realized | investment | |||||||||||||||
of period | income | and unrealized) | operations | |||||||||||||||
Class A: | Six months ended 12/31/20134,5 | $ | 32.06 | $ | .36 | $ | 4.37 | $ | 4.73 | |||||||||
Year ended 6/30/2013 | 27.81 | .84 | 4.26 | 5.10 | ||||||||||||||
Year ended 6/30/2012 | 32.48 | .82 | (4.12 | ) | (3.30 | ) | ||||||||||||
Year ended 6/30/2011 | 25.86 | 1.06 | 6.80 | 7.86 | ||||||||||||||
Year ended 6/30/2010 | 24.78 | .80 | 1.39 | 2.19 | ||||||||||||||
Period from 10/1/2008 to 6/30/20094,7 | 25.00 | .62 | (.39 | ) | .23 | |||||||||||||
Class B: | Six months ended 12/31/20134,5 | 32.04 | .23 | 4.35 | 4.58 | |||||||||||||
Year ended 6/30/2013 | 27.78 | .57 | 4.30 | 4.87 | ||||||||||||||
Year ended 6/30/2012 | 32.44 | .57 | (4.09 | ) | (3.52 | ) | ||||||||||||
Year ended 6/30/2011 | 25.82 | .79 | 6.82 | 7.61 | ||||||||||||||
Year ended 6/30/2010 | 24.75 | .56 | 1.40 | 1.96 | ||||||||||||||
Period from 10/1/2008 to 6/30/20094,7 | 25.00 | .53 | (.42 | ) | .11 | |||||||||||||
Class C: | Six months ended 12/31/20134,5 | 32.00 | .22 | 4.35 | 4.57 | |||||||||||||
Year ended 6/30/2013 | 27.76 | .59 | 4.25 | 4.84 | ||||||||||||||
Year ended 6/30/2012 | 32.42 | .58 | (4.10 | ) | (3.52 | ) | ||||||||||||
Year ended 6/30/2011 | 25.81 | .80 | 6.79 | 7.59 | ||||||||||||||
Year ended 6/30/2010 | 24.75 | .57 | 1.38 | 1.95 | ||||||||||||||
Period from 10/1/2008 to 6/30/20094,7 | 25.00 | .51 | (.41 | ) | .10 | |||||||||||||
Class F-1: | Six months ended 12/31/20134,5 | 32.06 | .35 | 4.36 | 4.71 | |||||||||||||
Year ended 6/30/2013 | 27.81 | .94 | 4.16 | 5.10 | ||||||||||||||
Year ended 6/30/2012 | 32.49 | .84 | (4.16 | ) | (3.32 | ) | ||||||||||||
Year ended 6/30/2011 | 25.86 | 1.06 | 6.79 | 7.85 | ||||||||||||||
Year ended 6/30/2010 | 24.78 | .79 | 1.39 | 2.18 | ||||||||||||||
Period from 10/1/2008 to 6/30/20094,7 | 25.00 | .63 | (.39 | ) | .24 | |||||||||||||
Class F-2: | Six months ended 12/31/20134,5 | 32.07 | .39 | 4.38 | 4.77 | |||||||||||||
Year ended 6/30/2013 | 27.81 | .92 | 4.26 | 5.18 | ||||||||||||||
Year ended 6/30/2012 | 32.50 | .97 | (4.23 | ) | (3.26 | ) | ||||||||||||
Year ended 6/30/2011 | 25.87 | 1.13 | 6.79 | 7.92 | ||||||||||||||
Year ended 6/30/2010 | 24.79 | .86 | 1.39 | 2.25 | ||||||||||||||
Period from 10/1/2008 to 6/30/20094,7 | 25.00 | .60 | (.31 | ) | .29 | |||||||||||||
Class 529-A: | Six months ended 12/31/20134,5 | 32.03 | .35 | 4.36 | 4.71 | |||||||||||||
Year ended 6/30/2013 | 27.78 | .83 | 4.25 | 5.08 | ||||||||||||||
Year ended 6/30/2012 | 32.46 | .81 | (4.14 | ) | (3.33 | ) | ||||||||||||
Year ended 6/30/2011 | 25.85 | 1.09 | 6.75 | 7.84 | ||||||||||||||
Year ended 6/30/2010 | 24.77 | .82 | 1.35 | 2.17 | ||||||||||||||
Period from 10/1/2008 to 6/30/20094,7 | 25.00 | .70 | (.49 | ) | .21 |
28 | International Growth and Income Fund |
Ratio of | Ratio of | |||||||||||||||||||||||||||||||||
Dividends and distributions | expenses to | expenses to | ||||||||||||||||||||||||||||||||
Dividends | Total | average net | average net | Ratio of net | ||||||||||||||||||||||||||||||
(from net | Distributions | dividends | Net asset | Net assets, | assets before | assets after | income | |||||||||||||||||||||||||||
investment | (from capital | and | value, end | Total | end of period | reimbursements/ | reimbursements/ | to average | ||||||||||||||||||||||||||
income) | gains) | distributions | of period | return2,3 | (in millions) | waivers | waivers3 | net assets3 | ||||||||||||||||||||||||||
$ | (.39 | ) | $ | (1.37 | ) | $ | (1.76 | ) | $ | 35.03 | 14.93 | % | $ | 4,454 | .91 | %6 | .91 | %6 | 2.07 | %6 | ||||||||||||||
(.85 | ) | — | (.85 | ) | 32.06 | 18.41 | 3,703 | .93 | .93 | 2.70 | ||||||||||||||||||||||||
(.86 | ) | (.51 | ) | (1.37 | ) | 27.81 | (10.03 | ) | 3,136 | .93 | .93 | 2.85 | ||||||||||||||||||||||
(1.06 | ) | (.18 | ) | (1.24 | ) | 32.48 | 30.64 | 3,611 | .89 | .89 | 3.43 | |||||||||||||||||||||||
(.74 | ) | (.37 | ) | (1.11 | ) | 25.86 | 8.44 | 2,515 | .94 | .93 | 2.79 | |||||||||||||||||||||||
(.45 | ) | — | (.45 | ) | 24.78 | 1.04 | 1,424 | 1.11 | 6 | 1.06 | 6 | 3.73 | 6 | |||||||||||||||||||||
(.25 | ) | (1.37 | ) | (1.62 | ) | 35.00 | 14.45 | 17 | 1.67 | 6 | 1.67 | 6 | 1.34 | 6 | ||||||||||||||||||||
(.61 | ) | — | (.61 | ) | 32.04 | 17.55 | 17 | 1.69 | 1.69 | 1.85 | ||||||||||||||||||||||||
(.63 | ) | (.51 | ) | (1.14 | ) | 27.78 | (10.75 | ) | 20 | 1.70 | 1.70 | 1.98 | ||||||||||||||||||||||
(.81 | ) | (.18 | ) | (.99 | ) | 32.44 | 29.62 | 31 | 1.68 | 1.68 | 2.56 | |||||||||||||||||||||||
(.52 | ) | (.37 | ) | (.89 | ) | 25.82 | 7.60 | 28 | 1.72 | 1.71 | 1.96 | |||||||||||||||||||||||
(.36 | ) | — | (.36 | ) | 24.75 | .49 | 18 | 1.81 | 6 | 1.77 | 6 | 3.16 | 6 | |||||||||||||||||||||
(.25 | ) | (1.37 | ) | (1.62 | ) | 34.95 | 14.44 | 269 | 1.72 | 6 | 1.72 | 6 | 1.27 | 6 | ||||||||||||||||||||
(.60 | ) | — | (.60 | ) | 32.00 | 17.47 | 225 | 1.74 | 1.74 | 1.89 | ||||||||||||||||||||||||
(.63 | ) | (.51 | ) | (1.14 | ) | 27.76 | (10.75 | ) | 195 | 1.73 | 1.73 | 2.05 | ||||||||||||||||||||||
(.80 | ) | (.18 | ) | (.98 | ) | 32.42 | 29.57 | 230 | 1.73 | 1.73 | 2.58 | |||||||||||||||||||||||
(.52 | ) | (.37 | ) | (.89 | ) | 25.81 | 7.55 | 167 | 1.75 | 1.74 | 2.00 | |||||||||||||||||||||||
(.35 | ) | — | (.35 | ) | 24.75 | .48 | 87 | 1.84 | 6 | 1.80 | 6 | 3.07 | 6 | |||||||||||||||||||||
(.38 | ) | (1.37 | ) | (1.75 | ) | 35.02 | 14.87 | 1,038 | .98 | 6 | .98 | 6 | 2.00 | 6 | ||||||||||||||||||||
(.85 | ) | — | (.85 | ) | 32.06 | 18.39 | 844 | .96 | .96 | 2.97 | ||||||||||||||||||||||||
(.85 | ) | (.51 | ) | (1.36 | ) | 27.81 | (10.05 | ) | 437 | .94 | .94 | 2.92 | ||||||||||||||||||||||
(1.04 | ) | (.18 | ) | (1.22 | ) | 32.49 | 30.58 | 420 | .94 | .94 | 3.40 | |||||||||||||||||||||||
(.73 | ) | (.37 | ) | (1.10 | ) | 25.86 | 8.41 | 274 | .97 | .96 | 2.76 | |||||||||||||||||||||||
(.46 | ) | — | (.46 | ) | 24.78 | 1.06 | 164 | 1.07 | 6 | 1.03 | 6 | 3.76 | 6 | |||||||||||||||||||||
(.43 | ) | (1.37 | ) | (1.80 | ) | 35.04 | 15.04 | 901 | .71 | 6 | .71 | 6 | 2.26 | 6 | ||||||||||||||||||||
(.92 | ) | — | (.92 | ) | 32.07 | 18.64 | 697 | .73 | .73 | 2.95 | ||||||||||||||||||||||||
(.92 | ) | (.51 | ) | (1.43 | ) | 27.81 | (9.82 | ) | 512 | .70 | .70 | 3.40 | ||||||||||||||||||||||
(1.11 | ) | (.18 | ) | (1.29 | ) | 32.50 | 30.87 | 311 | .71 | .71 | 3.65 | |||||||||||||||||||||||
(.80 | ) | (.37 | ) | (1.17 | ) | 25.87 | 8.69 | 199 | .71 | .70 | 3.02 | |||||||||||||||||||||||
(.50 | ) | — | (.50 | ) | 24.79 | 1.28 | 119 | .82 | 6 | .76 | 6 | 3.57 | 6 | |||||||||||||||||||||
(.38 | ) | (1.37 | ) | (1.75 | ) | 34.99 | 14.87 | 114 | .99 | 6 | .99 | 6 | 1.99 | 6 | ||||||||||||||||||||
(.83 | ) | — | (.83 | ) | 32.03 | 18.35 | 93 | 1.00 | 1.00 | 2.66 | ||||||||||||||||||||||||
(.84 | ) | (.51 | ) | (1.35 | ) | 27.78 | (10.13 | ) | 71 | 1.00 | 1.00 | 2.84 | ||||||||||||||||||||||
(1.05 | ) | (.18 | ) | (1.23 | ) | 32.46 | 30.62 | 67 | .94 | .94 | 3.50 | |||||||||||||||||||||||
(.72 | ) | (.37 | ) | (1.09 | ) | 25.85 | 8.33 | 35 | .99 | .98 | 2.87 | |||||||||||||||||||||||
(.44 | ) | — | (.44 | ) | 24.77 | .96 | 9 | 1.20 | 6 | 1.16 | 6 | 4.16 | 6 |
See page 33 for footnotes.
International Growth and Income Fund | 29 |
Financial highlights (continued)
Income (loss) from investment operations1 | ||||||||||||||||||
Net asset | Net gains (losses) | |||||||||||||||||
value, | Net | on securities | Total from | |||||||||||||||
beginning | investment | (both realized | investment | |||||||||||||||
of period | income | and unrealized) | operations | |||||||||||||||
Class 529-B: | Six months ended 12/31/20134,5 | $ | 32.01 | $ | .21 | $ | 4.35 | $ | 4.56 | |||||||||
Year ended 6/30/2013 | 27.75 | .52 | 4.30 | 4.82 | ||||||||||||||
Year ended 6/30/2012 | 32.39 | .52 | (4.07 | ) | (3.55 | ) | ||||||||||||
Year ended 6/30/2011 | 25.80 | .78 | 6.78 | 7.56 | ||||||||||||||
Year ended 6/30/2010 | 24.74 | .55 | 1.38 | 1.93 | ||||||||||||||
Period from 10/1/2008 to 6/30/20094,7 | 25.00 | .50 | (.41 | ) | .09 | |||||||||||||
Class 529-C: | Six months ended 12/31/20134,5 | 31.91 | .20 | 4.34 | 4.54 | |||||||||||||
Year ended 6/30/2013 | 27.68 | .58 | 4.23 | 4.81 | ||||||||||||||
Year ended 6/30/2012 | 32.35 | .58 | (4.13 | ) | (3.55 | ) | ||||||||||||
Year ended 6/30/2011 | 25.77 | .83 | 6.73 | 7.56 | ||||||||||||||
Year ended 6/30/2010 | 24.72 | .59 | 1.35 | 1.94 | ||||||||||||||
Period from 10/1/2008 to 6/30/20094,7 | 25.00 | .65 | (.57 | ) | .08 | |||||||||||||
Class 529-E: | Six months ended 12/31/20134,5 | 32.03 | .30 | 4.36 | 4.66 | |||||||||||||
Year ended 6/30/2013 | 27.79 | .77 | 4.22 | 4.99 | ||||||||||||||
Year ended 6/30/2012 | 32.46 | .73 | (4.13 | ) | (3.40 | ) | ||||||||||||
Year ended 6/30/2011 | 25.85 | .97 | 6.76 | 7.73 | ||||||||||||||
Year ended 6/30/2010 | 24.78 | .75 | 1.33 | 2.08 | ||||||||||||||
Period from 10/1/2008 to 6/30/20094,7 | 25.00 | .74 | (.56 | ) | .18 | |||||||||||||
Class 529-F-1: | Six months ended 12/31/20134,5 | 32.07 | .38 | 4.36 | 4.74 | |||||||||||||
Year ended 6/30/2013 | 27.81 | .94 | 4.22 | 5.16 | ||||||||||||||
Year ended 6/30/2012 | 32.50 | .89 | (4.17 | ) | (3.28 | ) | ||||||||||||
Year ended 6/30/2011 | 25.87 | 1.25 | 6.66 | 7.91 | ||||||||||||||
Year ended 6/30/2010 | 24.79 | .91 | 1.32 | 2.23 | ||||||||||||||
Period from 10/1/2008 to 6/30/20094,7 | 24.97 | .76 | (.49 | ) | .27 | |||||||||||||
Class R-1: | Six months ended 12/31/20134,5 | 32.01 | .29 | 4.36 | 4.65 | |||||||||||||
Year ended 6/30/2013 | 27.78 | .77 | 4.27 | 5.04 | ||||||||||||||
Year ended 6/30/2012 | 32.43 | .69 | (4.12 | ) | (3.43 | ) | ||||||||||||
Year ended 6/30/2011 | 25.82 | .87 | 6.78 | 7.65 | ||||||||||||||
Year ended 6/30/2010 | 24.76 | .59 | 1.37 | 1.96 | ||||||||||||||
Period from 10/1/2008 to 6/30/20094,7 | 25.00 | .45 | (.34 | ) | .11 |
30 | International Growth and Income Fund |
Dividends and distributions | Ratio of expenses to | Ratio of expenses to | |||||||||||||||||||||||||||||||
Dividends (from net investment income) | Distributions (from capital gains) | Total dividends and distributions | Net asset value, end of period | Total return2,3 | Net assets, end of period (in millions) | average net assets before reimbursements/ waivers | average net assets after reimbursements/ waivers3 | Ratio of net income to average net assets3 | |||||||||||||||||||||||||
$ | (.23 | ) | $ | (1.37 | ) | $ | (1.60 | ) | $ | 34.97 | 14.38 | % | $ | 1 | 1.80 | %6 | 1.80 | %6 | 1.20 | %6 | |||||||||||||
(.56 | ) | — | (.56 | ) | 32.01 | 17.38 | 1 | 1.83 | 1.83 | 1.67 | |||||||||||||||||||||||
(.58 | ) | (.51 | ) | (1.09 | ) | 27.75 | (10.86 | ) | 1 | 1.83 | 1.83 | 1.81 | |||||||||||||||||||||
(.79 | ) | (.18 | ) | (.97 | ) | 32.39 | 29.47 | 2 | 1.79 | 1.79 | 2.51 | ||||||||||||||||||||||
(.50 | ) | (.37 | ) | (.87 | ) | 25.80 | 7.49 | 1 | 1.82 | 1.81 | 1.94 | ||||||||||||||||||||||
(.35 | ) | — | (.35 | ) | 24.74 | .43 | — | 8 | 1.93 | 6 | 1.88 | 6 | 3.00 | 6 | |||||||||||||||||||
(.24 | ) | (1.37 | ) | (1.61 | ) | 34.84 | 14.37 | 28 | 1.80 | 6 | 1.80 | 6 | 1.19 | 6 | |||||||||||||||||||
(.58 | ) | — | (.58 | ) | 31.91 | 17.42 | 23 | 1.82 | 1.82 | 1.85 | |||||||||||||||||||||||
(.61 | ) | (.51 | ) | (1.12 | ) | 27.68 | (10.85 | ) | 18 | 1.82 | 1.82 | 2.02 | |||||||||||||||||||||
(.80 | ) | (.18 | ) | (.98 | ) | 32.35 | 29.45 | 16 | 1.78 | 1.78 | 2.68 | ||||||||||||||||||||||
(.52 | ) | (.37 | ) | (.89 | ) | 25.77 | 7.53 | 8 | 1.81 | 1.80 | 2.08 | ||||||||||||||||||||||
(.36 | ) | — | (.36 | ) | 24.72 | .41 | 2 | 1.91 | 6 | 1.88 | 6 | 3.81 | 6 | ||||||||||||||||||||
(.33 | ) | (1.37 | ) | (1.70 | ) | 34.99 | 14.73 | 4 | 1.24 | 6 | 1.24 | 6 | 1.74 | 6 | |||||||||||||||||||
(.75 | ) | — | (.75 | ) | 32.03 | 18.01 | 3 | 1.26 | 1.26 | 2.45 | |||||||||||||||||||||||
(.76 | ) | (.51 | ) | (1.27 | ) | 27.79 | (10.34 | ) | 2 | 1.27 | 1.27 | 2.56 | |||||||||||||||||||||
(.94 | ) | (.18 | ) | (1.12 | ) | 32.46 | 30.18 | 2 | 1.27 | 1.27 | 3.12 | ||||||||||||||||||||||
(.64 | ) | (.37 | ) | (1.01 | ) | 25.85 | 8.01 | 1 | 1.30 | 1.29 | 2.64 | ||||||||||||||||||||||
(.40 | ) | — | (.40 | ) | 24.78 | .82 | — | 8 | 1.39 | 6 | 1.35 | 6 | 4.36 | 6 | |||||||||||||||||||
(.41 | ) | (1.37 | ) | (1.78 | ) | 35.03 | 14.96 | 9 | .79 | 6 | .79 | 6 | 2.18 | 6 | |||||||||||||||||||
(.90 | ) | — | (.90 | ) | 32.07 | 18.60 | 7 | .81 | .81 | 3.00 | |||||||||||||||||||||||
(.90 | ) | (.51 | ) | (1.41 | ) | 27.81 | (9.94 | ) | 4 | .81 | .81 | 3.11 | |||||||||||||||||||||
(1.10 | ) | (.18 | ) | (1.28 | ) | 32.50 | 30.80 | 3 | .77 | .77 | 3.99 | ||||||||||||||||||||||
(.78 | ) | (.37 | ) | (1.15 | ) | 25.87 | 8.60 | 1 | .79 | .78 | 3.18 | ||||||||||||||||||||||
(.48 | ) | — | (.48 | ) | 24.79 | 1.18 | — | 8 | .90 | 6 | .86 | 6 | 4.48 | 6 | |||||||||||||||||||
(.33 | ) | (1.37 | ) | (1.70 | ) | 34.96 | 14.68 | 6 | 1.28 | 6 | 1.28 | 6 | 1.70 | 6 | |||||||||||||||||||
(.81 | ) | — | (.81 | ) | 32.01 | 18.19 | 5 | 1.16 | 1.16 | 2.48 | |||||||||||||||||||||||
(.71 | ) | (.51 | ) | (1.22 | ) | 27.78 | (10.47 | ) | 4 | 1.39 | 1.39 | 2.40 | |||||||||||||||||||||
(.86 | ) | (.18 | ) | (1.04 | ) | 32.43 | 29.81 | 5 | 1.54 | 1.54 | 2.80 | ||||||||||||||||||||||
(.53 | ) | (.37 | ) | (.90 | ) | 25.82 | 7.58 | 3 | 1.71 | 1.70 | 2.06 | ||||||||||||||||||||||
(.35 | ) | — | (.35 | ) | 24.76 | .52 | 2 | 1.82 | 6 | 1.77 | 6 | 2.68 | 6 |
See page 33 for footnotes.
International Growth and Income Fund | 31 |
Financial highlights (continued)
Income (loss) from investment operations1 | ||||||||||||||||||
Net asset value, beginning of period | Net investment income | Net gains (losses) on securities (both realized and unrealized) | Total from investment operations | |||||||||||||||
Class R-2: | Six months ended 12/31/20134,5 | $ | 31.94 | $ | .22 | $ | 4.34 | $ | 4.56 | |||||||||
Year ended 6/30/2013 | 27.71 | .60 | 4.24 | 4.84 | ||||||||||||||
Year ended 6/30/2012 | 32.38 | .60 | (4.13 | ) | (3.53 | ) | ||||||||||||
Year ended 6/30/2011 | 25.79 | .85 | 6.74 | 7.59 | ||||||||||||||
Year ended 6/30/2010 | 24.74 | .61 | 1.34 | 1.95 | ||||||||||||||
Period from 10/1/2008 to 6/30/20094,7 | 25.00 | .54 | (.44 | ) | .10 | |||||||||||||
Class R-3: | Six months ended 12/31/20134,5 | 32.02 | .30 | 4.36 | 4.66 | |||||||||||||
Year ended 6/30/2013 | 27.78 | .76 | 4.23 | 4.99 | ||||||||||||||
Year ended 6/30/2012 | 32.45 | .72 | (4.13 | ) | (3.41 | ) | ||||||||||||
Year ended 6/30/2011 | 25.84 | 1.01 | 6.73 | 7.74 | ||||||||||||||
Year ended 6/30/2010 | 24.78 | .75 | 1.33 | 2.08 | ||||||||||||||
Period from 10/1/2008 to 6/30/20094,7 | 25.00 | .61 | (.42 | ) | .19 | |||||||||||||
Class R-4: | Six months ended 12/31/20134,5 | 32.05 | .35 | 4.37 | 4.72 | |||||||||||||
Year ended 6/30/2013 | 27.80 | .88 | 4.23 | 5.11 | ||||||||||||||
Year ended 6/30/2012 | 32.48 | .85 | (4.16 | ) | (3.31 | ) | ||||||||||||
Year ended 6/30/2011 | 25.86 | 1.15 | 6.70 | 7.85 | ||||||||||||||
Year ended 6/30/2010 | 24.79 | .84 | 1.33 | 2.17 | ||||||||||||||
Period from 10/1/2008 to 6/30/20094,7 | 25.00 | .61 | (.37 | ) | .24 | |||||||||||||
Class R-5: | Six months ended 12/31/20134,5 | 32.19 | .41 | 4.38 | 4.79 | |||||||||||||
Year ended 6/30/2013 | 27.91 | .94 | 4.28 | 5.22 | ||||||||||||||
Year ended 6/30/2012 | 32.60 | .91 | (4.15 | ) | (3.24 | ) | ||||||||||||
Year ended 6/30/2011 | 25.95 | 1.15 | 6.81 | 7.96 | ||||||||||||||
Year ended 6/30/2010 | 24.86 | .85 | 1.41 | 2.26 | ||||||||||||||
Period from 10/1/2008 to 6/30/20094,7 | 25.00 | .76 | (.47 | ) | .29 | |||||||||||||
Class R-6: | Six months ended 12/31/20134,5 | 32.06 | .41 | 4.36 | 4.77 | |||||||||||||
Year ended 6/30/2013 | 27.80 | .97 | 4.25 | 5.22 | ||||||||||||||
Year ended 6/30/2012 | 32.48 | .93 | (4.15 | ) | (3.22 | ) | ||||||||||||
Year ended 6/30/2011 | 25.86 | 1.17 | 6.77 | 7.94 | ||||||||||||||
Year ended 6/30/2010 | 24.78 | .90 | 1.37 | 2.27 | ||||||||||||||
Period from 5/1/2009 to 6/30/20094,9 | 22.97 | .25 | 1.90 | 2.15 |
Six months | Year ended June 30 | |||||||||||
ended December 31, 20134,5 | 2013 | 2012 | 2011 | 2010 | For the period 10/1/2008 to 6/30/20094,7 | |||||||
Portfolio turnover rate for all share classes | 15% | 37% | 24% | 31% | 16% | 33% |
32 | International Growth and Income Fund |
Dividends and distributions | Ratio of | Ratio of | |||||||||||||||||||||||||||||||
Dividends (from net investment income) | Distributions (from capital gains) | Total dividends and distributions | Net asset value, end of period | Total return2,3 | Net assets, end of period (in millions) | expenses to average net assets before waivers | expenses to average net assets after waivers3 | Ratio of net income to average net assets3 | |||||||||||||||||||||||||
$ | (.25 | ) | $ | (1.37 | ) | $ | (1.62 | ) | $ | 34.88 | 14.43 | % | $ | 47 | 1.72 | %6 | 1.72 | %6 | 1.26 | %6 | |||||||||||||
(.61 | ) | — | (.61 | ) | 31.94 | 17.48 | 40 | 1.74 | 1.74 | 1.93 | |||||||||||||||||||||||
(.63 | ) | (.51 | ) | (1.14 | ) | 27.71 | (10.80 | ) | 29 | 1.78 | 1.76 | 2.12 | |||||||||||||||||||||
(.82 | ) | (.18 | ) | (1.00 | ) | 32.38 | 29.60 | 25 | 1.77 | 1.70 | 2.74 | ||||||||||||||||||||||
(.53 | ) | (.37 | ) | (.90 | ) | 25.79 | 7.57 | 13 | 1.81 | 1.73 | 2.15 | ||||||||||||||||||||||
(.36 | ) | — | (.36 | ) | 24.74 | .48 | 3 | 1.88 | 6 | 1.78 | 6 | 3.22 | 6 | ||||||||||||||||||||
(.33 | ) | (1.37 | ) | (1.70 | ) | 34.98 | 14.72 | 40 | 1.26 | 6 | 1.26 | 6 | 1.72 | 6 | |||||||||||||||||||
(.75 | ) | — | (.75 | ) | 32.02 | 18.02 | 33 | 1.27 | 1.27 | 2.43 | |||||||||||||||||||||||
(.75 | ) | (.51 | ) | (1.26 | ) | 27.78 | (10.37 | ) | 22 | 1.29 | 1.29 | 2.53 | |||||||||||||||||||||
(.95 | ) | (.18 | ) | (1.13 | ) | 32.45 | 30.16 | 24 | 1.27 | 1.27 | 3.24 | ||||||||||||||||||||||
(.65 | ) | (.37 | ) | (1.02 | ) | 25.84 | 8.02 | 10 | 1.30 | 1.29 | 2.65 | ||||||||||||||||||||||
(.41 | ) | — | (.41 | ) | 24.78 | .85 | 3 | 1.38 | 6 | 1.33 | 6 | 3.64 | 6 | ||||||||||||||||||||
(.39 | ) | (1.37 | ) | (1.76 | ) | 35.01 | 14.89 | 35 | .93 | 6 | .93 | 6 | 2.03 | 6 | |||||||||||||||||||
(.86 | ) | — | (.86 | ) | 32.05 | 18.43 | 26 | .93 | .93 | 2.82 | |||||||||||||||||||||||
(.86 | ) | (.51 | ) | (1.37 | ) | 27.80 | (10.06 | ) | 15 | .94 | .94 | 2.98 | |||||||||||||||||||||
(1.05 | ) | (.18 | ) | (1.23 | ) | 32.48 | 30.60 | 12 | .93 | .93 | 3.69 | ||||||||||||||||||||||
(.73 | ) | (.37 | ) | (1.10 | ) | 25.86 | 8.38 | 5 | .98 | .96 | 2.93 | ||||||||||||||||||||||
(.45 | ) | — | (.45 | ) | 24.79 | 1.09 | 2 | 1.07 | 6 | 1.02 | 6 | 3.63 | 6 | ||||||||||||||||||||
(.44 | ) | (1.37 | ) | (1.81 | ) | 35.17 | 15.05 | 50 | .64 | 6 | .64 | 6 | 2.34 | 6 | |||||||||||||||||||
(.94 | ) | — | (.94 | ) | 32.19 | 18.77 | 40 | .65 | .65 | 3.00 | |||||||||||||||||||||||
(.94 | ) | (.51 | ) | (1.45 | ) | 27.91 | (9.81 | ) | 33 | .66 | .66 | 3.19 | |||||||||||||||||||||
(1.13 | ) | (.18 | ) | (1.31 | ) | 32.60 | 30.94 | 28 | .67 | .67 | 3.71 | ||||||||||||||||||||||
(.80 | ) | (.37 | ) | (1.17 | ) | 25.95 | 8.69 | 14 | .72 | .70 | 2.96 | ||||||||||||||||||||||
(.43 | ) | — | (.43 | ) | 24.86 | 1.28 | 6 | .81 | 6 | .78 | 6 | 4.65 | 6 | ||||||||||||||||||||
(.44 | ) | (1.37 | ) | (1.81 | ) | 35.02 | 15.08 | 755 | .59 | 6 | .59 | 6 | 2.39 | 6 | |||||||||||||||||||
(.96 | ) | — | (.96 | ) | 32.06 | 18.83 | 593 | .61 | .61 | 3.11 | |||||||||||||||||||||||
(.95 | ) | (.51 | ) | (1.46 | ) | 27.80 | (9.78 | ) | 392 | .61 | .61 | 3.26 | |||||||||||||||||||||
(1.14 | ) | (.18 | ) | (1.32 | ) | 32.48 | 30.99 | 341 | .62 | .62 | 3.77 | ||||||||||||||||||||||
(.82 | ) | (.37 | ) | (1.19 | ) | 25.86 | 8.74 | 206 | .66 | .65 | 3.16 | ||||||||||||||||||||||
(.34 | ) | — | (.34 | ) | 24.78 | 9.38 | 64 | .12 | .12 | 1.01 |
1 | Based on average shares outstanding. |
2 | Total returns exclude any applicable sales charges, including contingent deferred sales charges. |
3 | This column reflects the impact, if any, of certain reimbursements/waivers from CRMC. During some of the periods shown, CRMC reduced fees for investment advisory services. In addition, during some of the periods shown, CRMC paid a portion of the fund’s transfer agent fees for certain retirement plan share classes. |
4 | Based on operations for the period shown and, accordingly, is not representative of a full year. |
5 | Unaudited. |
6 | Annualized. |
7 | For the period October 1, 2008, commencement of operations, through June 30, 2009. |
8 | Amount less than $1 million. |
9 | Class R-6 shares were offered beginning May 1, 2009. |
See Notes to Financial Statements
International Growth and Income Fund | 33 |
Expense example | unaudited |
As a fund shareholder, you incur two types of costs: (1) transaction costs, such as initial sales charges on purchase payments and contingent deferred sales charges on redemptions (loads), and (2) ongoing costs, including management fees, distribution and service (12b-1) fees, and other expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund so you can compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire six-month period (July 1, 2013, through December 31, 2013).
Actual expenses:
The first line of each share class in the table on the following page provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses paid during period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes:
The second line of each share class in the table on the following page provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for the share class and an assumed rate of return of 5.00% per year before expenses, which is not the actual return of the share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5.00% hypothetical example with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.
Notes:
There are some account fees that are charged to certain types of accounts, such as individual retirement accounts and 529 college savings plan accounts (generally, a $10 fee is charged to set up the account and an additional $10 fee is charged to the account annually), that would increase the amount of expenses paid on your account. In addition, retirement plan participants may be subject to certain fees charged by the plan sponsor, and Class F-1, F-2 and 529-F-1 shareholders may be subject to fees charged by financial intermediaries, typically ranging from 0.75% to 1.50% of assets annually depending on services offered. You can estimate the impact of these fees by adding the amount of the fees to the total estimated expenses you paid on your account during the period as calculated above. In addition, your ending account value would be lower by the amount of these fees.
Note that the expenses shown in the table on the following page are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of each share class in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
34 | International Growth and Income Fund |
Beginning account value 7/1/2013 | Ending account value 12/31/2013 | Expenses paid during period* | Annualized expense ratio | ||||||||||
Class A — actual return | $ | 1,000.00 | $ | 1,149.30 | $ | 4.93 | .91 | % | |||||
Class A — assumed 5% return | 1,000.00 | 1,020.62 | 4.63 | .91 | |||||||||
Class B — actual return | 1,000.00 | 1,144.54 | 9.03 | 1.67 | |||||||||
Class B — assumed 5% return | 1,000.00 | 1,016.79 | 8.49 | 1.67 | |||||||||
Class C — actual return | 1,000.00 | 1,144.40 | 9.30 | 1.72 | |||||||||
Class C — assumed 5% return | 1,000.00 | 1,016.53 | 8.74 | 1.72 | |||||||||
Class F-1 — actual return | 1,000.00 | 1,148.66 | 5.31 | .98 | |||||||||
Class F-1 — assumed 5% return | 1,000.00 | 1,020.27 | 4.99 | .98 | |||||||||
Class F-2 — actual return | 1,000.00 | 1,150.43 | 3.85 | .71 | |||||||||
Class F-2 — assumed 5% return | 1,000.00 | 1,021.63 | 3.62 | .71 | |||||||||
Class 529-A — actual return | 1,000.00 | 1,148.72 | 5.36 | .99 | |||||||||
Class 529-A — assumed 5% return | 1,000.00 | 1,020.21 | 5.04 | .99 | |||||||||
Class 529-B — actual return | 1,000.00 | 1,143.80 | 9.73 | 1.80 | |||||||||
Class 529-B — assumed 5% return | 1,000.00 | 1,016.13 | 9.15 | 1.80 | |||||||||
Class 529-C — actual return | 1,000.00 | 1,143.73 | 9.73 | 1.80 | |||||||||
Class 529-C — assumed 5% return | 1,000.00 | 1,016.13 | 9.15 | 1.80 | |||||||||
Class 529-E — actual return | 1,000.00 | 1,147.25 | 6.71 | 1.24 | |||||||||
Class 529-E — assumed 5% return | 1,000.00 | 1,018.95 | 6.31 | 1.24 | |||||||||
Class 529-F-1 — actual return | 1,000.00 | 1,149.61 | 4.28 | .79 | |||||||||
Class 529-F-1 — assumed 5% return | 1,000.00 | 1,021.22 | 4.02 | .79 | |||||||||
Class R-1 — actual return | 1,000.00 | 1,146.76 | 6.93 | 1.28 | |||||||||
Class R-1 — assumed 5% return | 1,000.00 | 1,018.75 | 6.51 | 1.28 | |||||||||
Class R-2 — actual return | 1,000.00 | 1,144.31 | 9.30 | 1.72 | |||||||||
Class R-2 — assumed 5% return | 1,000.00 | 1,016.53 | 8.74 | 1.72 | |||||||||
Class R-3 — actual return | 1,000.00 | 1,147.17 | 6.82 | 1.26 | |||||||||
Class R-3 — assumed 5% return | 1,000.00 | 1,018.85 | 6.41 | 1.26 | |||||||||
Class R-4 — actual return | 1,000.00 | 1,148.89 | 5.04 | .93 | |||||||||
Class R-4 — assumed 5% return | 1,000.00 | 1,020.52 | 4.74 | .93 | |||||||||
Class R-5 — actual return | 1,000.00 | 1,150.52 | 3.47 | .64 | |||||||||
Class R-5 — assumed 5% return | 1,000.00 | 1,021.98 | 3.26 | .64 | |||||||||
Class R-6 — actual return | 1,000.00 | 1,150.79 | 3.20 | .59 | |||||||||
Class R-6 — assumed 5% return | 1,000.00 | 1,022.23 | 3.01 | .59 |
* | The “expenses paid during period” are equal to the “annualized expense ratio,” multiplied by the average account value over the period, multiplied by the number of days in the period, and divided by 365 (to reflect the one-half year period). |
International Growth and Income Fund | 35 |
Approval of Investment Advisory and Service Agreement
The fund’s board has approved the fund’s Investment Advisory and Service Agreement (the “agreement”) with Capital Research and Management Company (“CRMC”) for an additional one-year term through December 31, 2014. The board approved the agreement following the recommendation of the fund’s Contracts Committee (the “committee”), which is composed of all of the fund’s independent board members. The board and the committee determined that the fund’s advisory fee structure was fair and reasonable in relation to the services provided and that approving the agreement was in the best interests of the fund and its shareholders.
In reaching this decision, the board and the committee took into account information furnished to them throughout the year and otherwise provided to them, as well as information prepared specifically in connection with their review of the agreement,and were advised by their independent counsel. They considered the following factors, among others, but did not identify any single issue or particular piece of information that, in isolation, was the controlling factor, and each board and committee member did not necessarily attribute the same weight to each factor.
1. Nature, extent and quality of services
The board and the committee considered the depth and quality of CRMC’s investment management process, including its global research capabilities; the experience, capability and integrity of its senior management and other personnel; the low turnover rates of its key personnel; the overall financial strength and stability of its organization; and the ongoing evolution of CRMC’s organizational structure designed to maintain and strengthen these qualities. The board and the committee also considered the nature, extent and quality of administrative, compliance and shareholder services provided by CRMC to the fund under the agreement and other agreements, as well as the benefits to fund shareholders from investing in a fund that is part of a large family of funds. The board and the committee concluded that the nature, extent and quality of the services provided by CRMC have benefited and should continue to benefit the fund and its shareholders.
2. Investment results
The board and the committee considered the investment results of the fund in light of its objective of providing long-term growth of capital with current income. They compared the fund’s investment results with those of other relevant funds (including funds that form the basis of the Lipper index for the category in which the fund is included), and data such as relevant market and fund indexes, over various periods through June 30, 2013. This report, including the letter to shareholders and related disclosures, contains certain information about the fund’s investment results. The board and the committee reviewed the fund’s investment results measured against various indexes, including the Lipper International Funds Index and the MSCI All Country World Index ex USA. They noted that the investment results of the fund generally exceeded the results of the MSCI All Country World Index ex USA and the Lipper International Funds Index for the lifetime and three-year periods. The board and the committee concluded that the fund’s investment results have been satisfactory and that CRMC’s record in managing the fund indicated that its continued management should benefit the fund and its shareholders.
36 | International Growth and Income Fund |
3. Advisory fees and total expenses
The board and the committee compared the advisory fees and total expense levels of the fund to those of other relevant funds. They observed that the fund’s advisory fees and expenses were below the median fees and expenses of other similar funds included in the Lipper International Funds category. The board and the committee also considered the breakpoint discounts in the fund’s advisory fee structure that reduce the level of fees charged by CRMC to the fund as fund assets increase. In addition, they reviewed information regarding the effective advisory fees charged to non-mutual fund clients by CRMC and its affiliates.They noted that, to the extent there were differences between the advisory fees paid by the fund and the advisory fees paid by those clients, the differences appropriately reflected the investment, operational and regulatory differences between advising the fund and the other clients. The board and the committee concluded that the fund’s cost structure was fair and reasonable in relation to the services provided, and that the fund’s shareholders receive reasonable value in return for the advisory fees and other amounts paid to CRMC by the fund.
4. Ancillary benefits
The board and the committee considered a variety of other benefits that CRMC and its affiliates receive as a result of CRMC’s relationship with the fund and the other American Funds, including fees for administrative services provided to certain share classes; fees paid to CRMC’s affiliated transfer agent; sales charges and distribution fees received and retained by the fund’s principal underwriter,an affiliate of CRMC; and possible ancillary benefits to CRMC and its institutional management affiliates in managing other investment vehicles. The board and the committee reviewed CRMC’s portfolio trading practices, noting that while CRMC receives the benefit of research provided by broker-dealers executing portfolio transactions on behalf of the fund, it does not obtain third-party research or other services in return for allocating brokerage to such broker-dealers. The board and the committee took these ancillary benefits into account in evaluating the reasonableness of the advisory fees and other amounts paid to CRMC by the fund.
5. Adviser financial information
The board and the committee reviewed information regarding CRMC’s costs of providing services to the American Funds, including personnel, systems and resources of investment, compliance, trading, accounting and other administrative operations. They considered CRMC’s costs and willingness to invest in technology, infrastructure and staff to maintain and expand services and capabilities, respond to industry and regulatory developments, and attract and retain qualified personnel. They noted information regarding the compensation structure for CRMC’s investment professionals. The board and the committee also compared CRMC’s profitability and compensation data to the reported results and data of several large, publicly-held investment management companies. The board and the committee noted the competitiveness and cyclicality of both the mutual fund industry and the capital markets, and the importance in that environment of CRMC’s long-term profitability for maintaining its independence, company culture and management continuity. They further considered the breakpoint discounts in the fund’s advisory fee structure. The board and the committee concluded that the fund’s advisory fee structure reflected a reasonable sharing of benefits between CRMC and the fund’s shareholders.
International Growth and Income Fund | 37 |
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International Growth and Income Fund | 43 |
Office of the fund
One Market
Steuart Tower, Suite 2000
San Francisco, CA 94105-1409
Investment adviser
Capital Research and Management Company
333 South Hope Street
Los Angeles, CA 90071-1406
6455 Irvine Center Drive
Irvine, CA 92618
Transfer agent for shareholder accounts
American Funds Service Company
(Write to the address near you.)
P.O. Box 6007
Indianapolis, IN 46206-6007
P.O. Box 2280
Norfolk, VA 23501-2280
Custodian of assets
JPMorgan Chase Bank
270 Park Avenue
New York, NY 10017-2070
Counsel
Bingham McCutchen LLP
355 South Grand Avenue, Suite 4400
Los Angeles, CA 90071-3106
Independent registered public accounting firm
Deloitte & Touche LLP
695 Town Center Drive
Suite 1200
Costa Mesa, CA 92626-7188
Principal underwriter
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, CA 90071-1406
44 | International Growth and Income Fund |
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectus and summary prospectus,which can be obtained from your financial professional and should be read carefully before investing. You may also call American Funds Service Company (AFS) at (800) 421-4225 or visit the American Funds website at americanfunds.com.
“American Funds Proxy Voting Procedures and Principles” — which describes how we vote proxies relating to portfolio securities — is available on the American Funds website or upon request by calling AFS.The fund files its proxy voting record with the U.S. Securities and Exchange Commission (SEC) for the 12 months ended June 30 by August 31. The proxy voting record is available free of charge on the SEC website at sec.gov and on the American Funds website.
A complete December 31, 2013, portfolio of International Growth and Income Fund’s investments is available free of charge by calling AFS or visiting the SEC website (where it is part of Form N-CSR).
International Growth and Income Fund files a complete list of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q.This filing is available free of charge on the SEC website. You may also review or, for a fee, copy this filing at the SEC’s Public Reference Room in Washington, D.C.Additional information regarding the operation of the Public Reference Room may be obtained by calling the SEC’s Office of Investor Education and Advocacy at (800) SEC-0330.Additionally, the list of portfolio holdings is available by calling AFS.
This report is for the information of shareholders of International Growth and Income Fund, but it also may be used as sales literature when preceded or accompanied by the current prospectus or summary prospectus, which gives details about charges, expenses, investment objectives and operating policies of the fund. If used as sales material after March 31, 2014, this report must be accompanied by an American Funds statistical update for the most recently completed calendar quarter.
The American Funds Advantage
Since 1931, American Funds, part of Capital Group, has helped investors pursue long-term investment success. Our consistent approach — in combination with The Capital SystemSM — has resulted in a superior long-term track record.
Aligned with investor success
We base our decisions on a long-term perspective, which we believe aligns our goals with the interests of our clients. Our portfolio managers average 25 years of investment experience, including 20 years at our company, reflecting a career commitment to our approach.1
The Capital SystemSM
Our investment process, The Capital System, combines individual accountability with teamwork. Each fund is divided into portions that are managed independently by investment professionals with diverse backgrounds, ages and investment approaches. An extensive global research effort is the backbone of our system.
Superior long-term track record
Our equity funds have beaten their Lipper peer indexes in 90% of 10-year periods and 96% of 20-year periods. Our fixed-income funds have beaten their Lipper indexes in 58% of 10-year periods and 63% of 20-year periods.2 Our fund management fees have been among the lowest in the industry.3
1 | Portfolio manager experience as of December 31, 2012. | |
2 | Based on Class A share results for rolling periods through December 31, 2012. Periods covered are the shorter of the fund’s lifetime or since the comparable Lipper index inception date. | |
3 | Based on management fees for the 20-year period ended December 31, 2012, versus comparable Lipper categories, excluding funds of funds. |
ITEM 2 – Code of Ethics
Not applicable for filing of semi-annual reports to shareholders.
ITEM 3 – Audit Committee Financial Expert
Not applicable for filing of semi-annual reports to shareholders.
ITEM 4 – Principal Accountant Fees and Services
Not applicable for filing of semi-annual reports to shareholders.
ITEM 5 – Audit Committee of Listed Registrants
Not applicable to this Registrant, insofar as the Registrant is not a listed issuer as defined in Rule 10A-3 under the Securities Exchange Act of 1934.
ITEM 6 – Schedule of Investments
International Growth and Income FundSM Investment portfolio December 31, 2013
|
unaudited
Common stocks 90.92% | ||
Value | ||
Financials 26.40% | Shares | (000) |
AXA SA | 8,627,200 | $ 239,861 |
Prudential PLC | 7,274,148 | 161,411 |
HSBC Holdings PLC (United Kingdom) | 8,903,896 | 97,667 |
HSBC Holdings PLC (Hong Kong) | 5,642,396 | 61,232 |
Sumitomo Mitsui Financial Group, Inc. | 2,830,000 | 145,652 |
Shinsei Bank, Ltd. | 34,919,000 | 85,217 |
BNP Paribas SA | 1,037,530 | 80,858 |
Svenska Handelsbanken AB, Class A | 1,569,000 | 77,086 |
Banco Santander, SA1 | 8,082,000 | 72,336 |
Link Real Estate Investment Trust | 13,415,418 | 65,050 |
SEGRO PLC | 11,385,000 | 62,969 |
Allianz SE | 319,100 | 57,222 |
Suncorp Group Ltd. | 4,290,000 | 50,180 |
AEGON NV | 5,265,000 | 49,702 |
Grupo Financiero Santander México, SAB de CV, Class B (ADR) | 3,360,000 | 45,830 |
Piraeus Bank SA1 | 21,421,842 | 45,089 |
Sampo Oyj, Class A | 805,000 | 39,558 |
Barclays PLC | 8,600,000 | 38,729 |
Toronto-Dominion Bank | 410,600 | 38,696 |
Tokyo Tatemono Co., Ltd. | 3,475,000 | 38,542 |
Fairfax Financial Holdings Ltd. | 94,800 | 37,926 |
Investment AB Kinnevik, Class B | 810,000 | 37,516 |
AEON Financial Service Co., Ltd. | 1,340,000 | 35,883 |
Bankia, SA1 | 20,200,000 | 34,292 |
ICICI Bank Ltd. | 1,920,000 | 34,106 |
Sun Hung Kai Properties Ltd. | 2,632,131 | 33,384 |
Mizuho Financial Group, Inc. | 14,100,000 | 30,527 |
Swedbank AB, Class A | 1,030,000 | 28,985 |
Mitsubishi Estate Co., Ltd. | 905,000 | 27,027 |
Haitong Securities Co., Ltd., Class H | 14,000,000 | 24,374 |
ING Groep NV, depository receipts1 | 1,730,000 | 24,038 |
Agricultural Bank of China, Class H | 45,920,000 | 22,562 |
Bank of Nova Scotia | 300,000 | 18,761 |
Sumitomo Mitsui Trust Holdings, Inc. | 3,527,000 | 18,554 |
Credit Suisse Group AG | 594,146 | 18,163 |
ORIX Corp. | 900,000 | 15,785 |
Bank of the Philippine Islands | 8,000,000 | 15,321 |
Fibra Uno Administración, SA de CV | 4,750,000 | 15,214 |
AIA Group Ltd. | 2,837,600 | 14,235 |
Banco Bilbao Vizcaya Argentaria, SA | 893,845 | 11,003 |
2,050,543 | ||
Consumer discretionary 13.63% | ||
Wolters Kluwer NV | 3,456,135 | 98,634 |
ProSiebenSat.1 Media AG | 1,768,000 | 87,561 |
SJM Holdings Ltd. | 22,100,000 | 74,101 |
Honda Motor Co., Ltd. | 1,604,000 | 65,951 |
Common stocks | ||
Value | ||
Consumer discretionary (continued) | Shares | (000) |
Don Quijote Holdings Co., Ltd. | 960,000 | $ 58,069 |
OPAP SA | 4,291,200 | 57,086 |
Toyota Motor Corp. | 886,000 | 54,013 |
Bayerische Motoren Werke AG | 435,000 | 50,998 |
Fuji Media Holdings, Inc. | 2,250,000 | 45,936 |
Nokian Renkaat Oyj | 950,000 | 45,572 |
Carphone Warehouse Group PLC | 9,830,000 | 44,113 |
Eutelsat Communications SA | 1,340,000 | 41,782 |
HUGO BOSS AG | 272,500 | 38,800 |
Wynn Macau, Ltd. | 8,558,000 | 38,793 |
SES SA, Class A (FDR) | 1,075,000 | 34,798 |
Kingfisher PLC | 5,400,000 | 34,400 |
H & M Hennes & Mauritz AB, Class B | 735,000 | 33,848 |
Carnival PLC | 765,000 | 31,683 |
Naspers Ltd., Class N | 300,000 | 31,344 |
Liberty Global PLC, Class A1 | 164,989 | 14,682 |
Liberty Global PLC, Class C1 | 123,199 | 10,388 |
Zee Entertainment Enterprises Ltd. | 4,680,000 | 20,928 |
Industria de Diseño Textil, SA | 100,000 | 16,481 |
Cie. Financière Richemont SA, Class A | 147,000 | 14,633 |
Christian Dior SA | 75,800 | 14,323 |
1,058,917 | ||
Industrials 7.41% | ||
Wolseley PLC | 1,056,686 | 59,931 |
Meggitt PLC | 5,820,168 | 50,840 |
Schneider Electric SA | 556,282 | 48,519 |
BAE Systems PLC | 6,576,000 | 47,370 |
Randstad Holding NV | 683,000 | 44,302 |
European Aeronautic Defence and Space Co. EADS NV1 | 500,000 | 38,389 |
Abertis Infraestructuras, SA, Class A | 1,575,000 | 34,993 |
Siemens AG | 248,500 | 33,943 |
Geberit AG | 100,000 | 30,323 |
Kubota Corp. | 1,680,000 | 27,742 |
Vallourec SA | 455,489 | 24,814 |
BTS Rail Mass Transit Growth Infrastructure Fund | 84,890,300 | 22,217 |
Globaltrans Investment PLC (GDR) | 1,348,000 | 21,433 |
ASSA ABLOY AB, Class B | 400,000 | 21,132 |
Singapore Technologies Engineering Ltd | 6,095,000 | 19,126 |
Marubeni Corp. | 2,460,000 | 17,660 |
Ryanair Holdings PLC (ADR)1 | 360,000 | 16,895 |
Qantas Airways Ltd.1 | 9,941,923 | 9,721 |
Mitsubishi Corp. | 333,100 | 6,380 |
575,730 | ||
Energy 7.29% | ||
TOTAL SA | 2,667,800 | 163,429 |
Royal Dutch Shell PLC, Class B | 3,908,000 | 147,549 |
Enbridge Inc. | 2,191,597 | 95,751 |
Crescent Point Energy Corp. | 1,260,000 | 48,929 |
Keyera Corp. | 800,000 | 48,147 |
Paramount Resources Ltd.1 | 1,050,000 | 38,432 |
Coal India Ltd. | 4,000,000 | 18,754 |
Transocean Ltd. | 107,600 | 5,318 |
566,309 | ||
Common stocks | ||
Value | ||
Telecommunication services 6.91% | Shares | (000) |
Vodafone Group PLC | 32,917,052 | $ 129,186 |
Orange | 8,235,000 | 101,960 |
KDDI Corp. | 930,000 | 57,137 |
Deutsche Telekom AG | 2,700,000 | 46,170 |
Advanced Info Service PCL | 6,285,200 | 38,159 |
BT Group PLC | 5,779,000 | 36,308 |
Globe Telecom, Inc. | 847,930 | 31,332 |
SoftBank Corp. | 340,000 | 29,703 |
HKT Trust, units | 26,818,000 | 26,492 |
Hellenic Telecommunications Organization SA1 | 1,586,200 | 21,101 |
Swisscom AG | 37,000 | 19,532 |
537,080 | ||
Information technology 6.65% | ||
STMicroelectronics NV | 17,690,000 | 142,123 |
Taiwan Semiconductor Manufacturing Co. Ltd. | 39,931,506 | 141,352 |
Quanta Computer Inc. | 26,454,835 | 61,691 |
Alcatel-Lucent1 | 7,887,800 | 35,353 |
ASM Pacific Technology Ltd. | 4,122,300 | 34,502 |
Nintendo Co., Ltd. | 244,400 | 32,514 |
Baidu, Inc., Class A (ADR)1 | 165,000 | 29,350 |
Spectris PLC | 500,000 | 21,204 |
ASML Holding NV | 200,000 | 18,721 |
516,810 | ||
Utilities 5.97% | ||
National Grid PLC | 13,636,524 | 177,941 |
EDP — Energias de Portugal, SA | 33,622,000 | 123,498 |
Power Assets Holdings Ltd. | 8,143,500 | 64,744 |
GDF SUEZ | 2,591,623 | 60,949 |
Enagás, SA | 733,281 | 19,162 |
CLP Holdings Ltd. | 1,550,000 | 12,253 |
E.ON SE | 275,000 | 5,075 |
463,622 | ||
Health care 5.87% | ||
Novartis AG | 2,313,100 | 184,623 |
AstraZeneca PLC | 2,085,000 | 123,415 |
GlaxoSmithKline PLC | 1,350,000 | 36,026 |
Sanofi | 306,258 | 32,492 |
Novo Nordisk A/S, Class B | 130,000 | 23,829 |
Smith & Nephew PLC | 1,520,000 | 21,672 |
Sonic Healthcare Ltd. | 1,200,000 | 17,765 |
Bayer AG | 115,000 | 16,129 |
455,951 | ||
Consumer staples 5.67% | ||
British American Tobacco PLC | 2,241,300 | 120,178 |
Imperial Tobacco Group PLC | 2,975,000 | 115,180 |
Nestlé SA | 604,700 | 44,265 |
Casino, Guichard-Perrachon SA | 341,000 | 39,298 |
Wesfarmers Ltd. | 493,800 | 19,418 |
AMOREPACIFIC Corp. | 19,600 | 18,572 |
LAWSON, INC. | 230,000 | 17,188 |
Common stocks | ||
Value | ||
Consumer staples (continued) | Shares | (000) |
Unilever NV, depository receipts | 423,000 | $ 17,036 |
Anheuser-Busch InBev NV | 139,000 | 14,774 |
ITC Ltd. | 2,475,000 | 12,878 |
Japan Tobacco Inc. | 354,000 | 11,496 |
Shoprite Holdings Ltd. | 631,000 | 9,865 |
440,148 | ||
Materials 3.98% | ||
L’Air Liquide SA, bonus shares2 | 495,511 | 70,076 |
James Hardie Industries PLC (CDI) | 3,780,000 | 43,675 |
Syngenta AG | 80,800 | 32,173 |
Amcor Ltd. | 3,075,000 | 28,967 |
Rio Tinto PLC | 500,000 | 28,230 |
Linde AG | 116,646 | 24,399 |
BASF SE | 225,000 | 23,986 |
Givaudan SA | 16,300 | 23,279 |
Potash Corp. of Saskatchewan Inc. | 600,000 | 19,776 |
Impala Platinum Holdings Ltd. | 1,241,352 | 14,555 |
309,116 | ||
Miscellaneous 1.14% | ||
Other common stocks in initial period of acquisition | 88,787 | |
Total common stocks (cost: $5,522,871,000) | 7,063,013 | |
Preferred stocks 0.16% | ||
Financials 0.16% | ||
HSBC Holdings PLC, Series 2, 8.00% | 472,795 | 12,714 |
Total preferred stocks (cost: $12,000,000) | 12,714 | |
Warrants 0.29% | ||
Financials 0.29% | ||
Piraeus Bank, SA, warrants, expire 20181 | 21,421,842 | 22,486 |
Total Warrants (cost: $0) | 22,486 | |
Convertible securities 0.88% | ||
Principal amount | ||
Consumer staples 0.60% | (000) | |
Shoprite Holdings Ltd. 6.50% convertible notes 2017 | ZAR422,560 | 46,449 |
Financials 0.28% | ||
Bank of Ireland 10.00% convertible notes 2016 | €15,000 | 22,101 |
Total convertible securities (cost: $78,977,000) | 68,550 | |
Bonds, notes & other debt instruments 1.90% | ||
Principal amount | Value | |
U.S. Treasury bonds & notes 0.68% | (000) | (000) |
U.S. Treasury 0.25% 2015 | $11,950 | $ 11,956 |
U.S. Treasury 0.25% 2015 | 7,850 | 7,840 |
U.S. Treasury 4.00% 2015 | 31,875 | 33,232 |
53,028 | ||
Bonds & notes of governments outside the U.S. 0.35% | ||
Greek Government 2.00%/3.00% 20233 | €1,750 | 1,632 |
Greek Government 2.00%/3.00% 20243 | 1,750 | 1,566 |
Greek Government 2.00%/3.00% 20253 | 1,750 | 1,514 |
Greek Government 2.00%/3.00% 20263 | 1,750 | 1,481 |
Greek Government 2.00%/3.00% 20273 | 1,750 | 1,456 |
Greek Government 2.00%/3.00% 20283 | 1,750 | 1,408 |
Greek Government 2.00%/3.00% 20293 | 1,750 | 1,378 |
Greek Government 2.00%/3.00% 20303 | 1,750 | 1,356 |
Greek Government 2.00%/3.00% 20313 | 1,750 | 1,329 |
Greek Government 2.00%/3.00% 20323 | 1,750 | 1,316 |
Greek Government 2.00%/3.00% 20333 | 1,750 | 1,294 |
Greek Government 2.00%/3.00% 20343 | 1,750 | 1,287 |
Greek Government 2.00%/3.00% 20353 | 1,750 | 1,269 |
Greek Government 2.00%/3.00% 20363 | 1,750 | 1,270 |
Greek Government 2.00%/3.00% 20373 | 1,750 | 1,259 |
Greek Government 2.00%/3.00% 20383 | 1,750 | 1,255 |
Greek Government 2.00%/3.00% 20393 | 1,750 | 1,256 |
Greek Government 2.00%/3.00% 20403 | 1,750 | 1,250 |
Greek Government 2.00%/3.00% 20413 | 1,750 | 1,238 |
Greek Government 2.00%/3.00% 20423 | 1,750 | 1,248 |
27,062 | ||
Financials 0.33% | ||
Société Générale, junior subordinated 6.999% (undated)4 | 6,200 | 9,303 |
SMFG Preferred Capital USD 3 Ltd., junior subordinated 9.50% (undated)4,5 | $5,410 | 6,722 |
Westfield Group 5.70% 20165 | 4,540 | 5,071 |
Bank of Ireland 10.24% 2049 | €3,085 | 4,499 |
25,595 | ||
Consumer discretionary 0.28% | ||
Myriad International Holdings 6.00% 20205 | $20,000 | 21,500 |
Telecommunication services 0.23% | ||
NII Capital Corp. 8.875% 2019 | 4,775 | 2,077 |
NII Capital Corp. 11.375% 20195 | 7,200 | 6,048 |
NII Capital Corp. 7.625% 2021 | 23,025 | 9,613 |
17,738 | ||
Consumer staples 0.03% | ||
British American Tobacco International Finance PLC 9.50% 20185 | 2,000 | 2,635 |
Total bonds, notes & other debt instruments (cost: $140,799,000) | 147,558 | |
Short-term securities 5.35% | ||
Federal Home Loan Bank 0.055%–0.10% due 1/8–4/2/2014 | 80,900 | 80,892 |
Fannie Mae 0.14% due 9/2–9/22/2014 | 77,300 | 77,229 |
Freddie Mac 0.12%–0.14% due 6/18–9/17/2014 | 61,800 | 61,756 |
Wells Fargo & Co. 0.13%–0.22% due 2/4–6/17/2014 | 49,600 | 49,561 |
Bank of Nova Scotia 0.165% due 4/7/2014 | 37,700 | 37,683 |
Mizuho Funding LLC 0.205%–0.225% due 1/15–3/3/20145 | 23,100 | 23,094 |
Victory Receivables Corp. 0.16% due 1/9/20145 | 16,000 | 15,999 |
Gotham Funding Corp. 0.14% due 1/7/20145 | 5,600 | 5,600 |
Toyota Motor Credit Corp. 0.15% due 2/27/2014 | 19,300 | 19,297 |
International Bank for Reconstruction and Development 0.065% due 1/17/2014 | 14,700 | 14,700 |
Nestlé Capital Corp. 0.10% due 1/7/20145 | 12,400 | 12,400 |
General Electric Capital Corp. 0.05% due 1/2/2014 | 10,800 | 10,800 |
Thunder Bay Funding, LLC 0.15% due 2/20/20145 | 6,127 | 6,125 |
Total short-term securities (cost: $415,133,000) | 415,136 | |
Total investment securities (cost: $6,169,780,000) | 7,729,457 | |
Other assets less liabilities | 38,842 | |
Net assets | $7,768,299 |
As permitted by U.S. Securities and Exchange Commission regulations, “Miscellaneous” securities include holdings in their first year of acquisition that have not previously been publicly disclosed.
1 | Security did not produce income during the last 12 months. |
2 | Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities, including those in “Miscellaneous,” was $75,308,000, which represented .97% of the net assets of the fund. |
3 | Step bond; coupon rate will increase at a later date. |
4 | Coupon rate may change periodically. |
5 | Acquired in a transaction exempt from registration under Rule 144A or section 4(2) of the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities was $105,194,000, which represented 1.35% of the net assets of the fund. |
Key to abbreviations and symbol
ADR = American Depositary Receipts
CDI = CREST Depository Interest
FDR = Fiduciary Depositary Receipts
GDR = Global Depositary Receipts
€ = Euros
ZAR = South African rand
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectus and summary prospectus, which can be obtained from your financial professional and should be read carefully before investing. You may also call American Funds Service Company (AFS) at (800) 421-4225 or visit the American Funds website at americanfunds.com.
MFGEFPX-034-0214O-S37747
ITEM 7 – Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.
ITEM 8 – Portfolio Managers of Closed-End Management Investment Companies
Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.
ITEM 9 – Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.
ITEM 10 – Submission of Matters to a Vote of Security Holders
There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s board of trustees since the Registrant last submitted a proxy statement to its shareholders. The procedures are as follows. The Registrant has a nominating and governance committee comprised solely of persons who are not considered ‘‘interested persons’’ of the Registrant within the meaning of the Investment Company Act of 1940, as amended. The committee periodically reviews such issues as the board’s composition, responsibilities, committees, compensation and other relevant issues, and recommends any appropriate changes to the full board of trustees. While the committee normally is able to identify from its own resources an ample number of qualified candidates, it will consider shareholder suggestions of persons to be considered as nominees to fill future vacancies on the board. Such suggestions must be sent in writing to the nominating and governance committee of the Registrant, c/o the Registrant’s Secretary, and must be accompanied by complete biographical and occupational data on the prospective nominee, along with a written consent of the prospective nominee for consideration of his or her name by the nominating and governance committee.
ITEM 11 – Controls and Procedures
(a) | The Registrant’s Principal Executive Officer and Principal Financial Officer have concluded, based on their evaluation of the Registrant’s disclosure controls and procedures (as such term is defined in Rule 30a-3 under the Investment Company Act of 1940), that such controls and procedures are adequate and reasonably designed to achieve the purposes described in paragraph (c) of such rule. |
(b) | There were no changes in the Registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the Registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
ITEM 12 – Exhibits
(a)(1) | Not applicable for filing of semi-annual reports to shareholders. |
(a)(2) | The certifications required by Rule 30a-2 of the Investment Company Act of 1940 and Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are attached as exhibits hereto. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
INTERNATIONAL GROWTH AND INCOME FUND | |
By /s/ Paul F. Roye | |
Paul F. Roye, Executive Vice President and Principal Executive Officer | |
Date: February 28, 2014 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By /s/ Paul F. Roye |
Paul F. Roye, Executive Vice President and Principal Executive Officer |
Date: February 28, 2014 |
By /s/ Jeffrey P. Regal |
Jeffrey P. Regal, Treasurer and Principal Financial Officer |
Date: February 28, 2014 |