Retirement Target Date Funds R-6 Version. Our target date funds have produced superior lifetime results.

Transcription

1 Retirement Target Date Funds R-6 Version Our target date funds have produced superior lifetime results.

2 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 prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.

3 American Funds Target Date Retirement Series : Among the best in class While many asset managers in the industry offer target date funds, not all funds are created equal. American Funds Target Date Retirement Series features a glide path within a glide path that helps mitigate market and longevity risk to deliver tangible lifetime value for participants. The Series has a proven record of delivering riskadjusted, higher returns through intelligent allocation. 1 Highlighted below are five key factors that distinguish our Series from its peers. 1 An objective-based approach designed for investor success Our objective-based fund construction is crafted to address participants lifetime investment goals of appreciation, income and preservation. 2 The highest manager retention rate in the industry The members of the Portfolio Oversight Committee have an average of 26 years of industry experience. The average tenure of the managers of the underlying American Funds is more than twice that of the target date industry average according to a 2013 Morningstar survey based on prospectuses as of December 31, Underlying funds that have consistently outpaced their peers Our underlying funds have beaten their respective Lipper indexes in 93% of rolling 10-year periods. 2 4 Among the lowest cost target date funds The funds in our Series have lower expenses than the Morningstar peer averages for target date funds. 5 Superior lifetime results All of the advantages cited above have produced strong results relative to their Morningstar peer averages since the Series launched in Based on three-year Sharpe ratio as of December 31, Based on the underlying funds Class R-6 share results for rolling periods through December 31, Periods covered are the shorter of the fund s lifetime or since the comparable Lipper index inception date. 1

4 Selecting a target date family is a key decision Target date funds are a mainstay investment option Selecting a target date fund family for a retirement plan is one of the most important decisions that a plan sponsor must make. Target date funds have grown in popularity in recent years largely due to the Pension Protection Act of The Department of Labor (DOL) stated that target date funds were one of the types of investments that could serve as a qualified default investment alternative (QDIA) for retirement plans. In 2013, the DOL offered guidelines that stated that plan sponsors should engage in an objective process of evaluating and selecting a target date family. Check the numbers 86% of defined contribution plans offer target date funds 1 59% of plans have automatic enrollment 1 41% of 401(k) participants held target date funds at year-end % of defined contribution assets may be invested in target date funds by $1.1 trillion in assets are projected to be held in target date funds by Trends & Experience in Defined Contribution Plans. Source: Aon Hewitt. 2 Investment Company Institute/Employee Benefits Research Institute. 3 Investment consultant Casey Quirk. 4 Cerulli Associates. Choose wisely 2 americanfundsretirement.com

5 1 An objective-based approach designed for investor success Our glide path within a glide path seeks to address market and longevity risk All target date glide paths reduce the amount of equities over time. However, our unique glide path within a glide path gradually shifts the type of equities held in the funds, moving from growth-oriented equities to income-oriented equities. This approach seeks to mitigate market risk while simultaneously addressing longevity risk. American Funds Target Date Retirement Series glide path American Funds Target Date Glide Path Although the target date funds are managed for investors on a projected retirement date time frame, the fund s allocation approach does not guarantee that investors retirement goals will be met. American Funds investment professionals actively manage each target date fund s portfolio, moving it from a more growthoriented approach to a more income-oriented focus as the fund gets closer to its target date. The target date is the year in which an investor is assumed to retire and begin taking withdrawals. Planned retirement year % Growth-and-income Growth 10 Bond Equity-income/Balanced Money market/ Short-term funds Fixed income Distinguishing points of our glide path The funds in the Series are actively managed 30 years past retirement so that participants can use a single fund for their entire lives. The funds have meaningful equity exposure approaching and throughout retirement to help participants manage the risk of outliving their savings. The funds place a growing emphasis on dividends with the objective of generating income and managing volatility. Income Years before retirement Retirement Equity Years after retirement 45 0 Retirement 30 Growth Typical glide path Our glide path within a glide path equity approach Typical static equity approach Money market/ Short-term funds Fixed income Income Income Equity 45 0 Retirement 30 Growth Growth Income 3

6 1 An objective-based approach designed for investor success A transparent view of our 2030 Fund For a better understanding of how a target date fund can serve as a complete diversified portfolio, take a look inside the American Funds 2030 Target Date Retirement Fund. For a look inside all the funds in the Series, visit americanfunds.com/advisor. Inside American Funds 2030 Target Date Retirement Fund 100% American Funds Target Date Glide Path Planned retirement year Growth-and-income Growth Years before retirement Retirement Years after retirement Began operations: 2030: February 1, 2007 Bond Equity-income/Balanced Investment objectives: Depending on the proximity to its target date, the fund will seek to achieve the following objectives to varying degrees: growth, income and conservation of capital. The fund will increasingly emphasize income and conservation of capital by investing a greater portion of its assets in bond, equity-income and balanced funds as it approaches and passes its target date. Once the fund reaches its target date, American Funds investment professionals continue to manage it for 30 years. The target date is the year in which an investor is assumed to retire and begin taking withdrawals % Bond funds U.S. Government Securities Fund 5.0% Details on page 5 20% 35% 40% Equity-income/Balanced funds American Balanced Fund 8.0 Capital Income Builder 6.0 Details on page 5 The Income Fund of America 6.0 Growth-and-income funds Washington Mutual Investors Fund SM 8.0 The Investment Company of America 7.0 American Mutual Fund 6.0 Fundamental Investors 6.0 Details on page 5 Capital World Growth and Income Fund 5.0 International Growth and Income Fund SM 3.0 Growth funds AMCAP Fund 7.0 The Growth Fund of America 7.0 New Perspective Fund 7.0 Details on page 5 SMALLCAP World Fund 7.0 EuroPacific Growth Fund 4.0 The New Economy Fund 4.0 New World Fund 4.0 Total series assets: $18.7 billion (Figure shown is for the month ending December 31, Assets are for all funds and share/unit classes in the Series.) Data as of December 31, This fund is designed for investors who plan to retire in, or close to, the year 2030 and begin withdrawing their money. Although the target date fund is managed for investors on a projected retirement date time frame, the fund s allocation approach does not guarantee that investors retirement goals will be met. Investment allocations and underlying funds are as of December 31, Allocation percentages and underlying funds are subject to the Portfolio Oversight Committee s discretion and will evolve over time. Underlying funds may be added or removed during the year. For quarterly updates of the underlying fund allocations and for information on other funds in the Series, visit americanfundsretirement.com. 4 americanfundsretirement.com

7 17 The 2030 Fund is made up of 17 underlying American Funds. 63 Reflects the investment ideas of 63 experienced portfolio managers. U.S. Government Securities Fund The fund s investment objective is to provide a high level of current income consistent with prudent investment risk and preservation of capital. Primarily invests in direct obligations of the U.S. Treasury, GNMA mortgage-backed securities, securities issued by U.S. government agencies or instrumentalities that are not backed by the full faith and credit of the U.S. government. Not required to maintain any particular maturity. Capital Income Builder The fund has two primary investment objectives. It seeks (1) to provide a level of current income that exceeds the average yield on U.S. stocks generally and (2) to provide a growing stream of income over the years. The fund s secondary objective is to provide growth of capital. Strives to provide a growing dividend with higher income distributions every quarter if possible together with a current yield that exceeds that paid by U.S. stocks in general. Normally, at least 50% of assets will be invested in common stocks of large, established companies with proven records of increasing dividends. May also invest in preferred stocks, convertibles, bonds and cash. Fundamental Investors The fund s investment objective is to achieve long-term growth of capital and income. Using principles of fundamental analysis, the fund seeks undervalued and overlooked opportunities with the potential for long-term growth. Companies under consideration for the portfolio often have strong balance sheets, high-quality products and leading market share. The fund seeks to invest in companies that represent good value and possess above-average potential for growth in sales, earnings and dividends. The fund primarily invests in common stocks or securities convertible into common stocks, bonds, U.S. government securities and cash Asset mix of the 2030 Fund U.S. equity 56.1% Non-U.S. equity 28.2% Cash 6.4% Non-U.S. bonds 1.0% U.S. bonds 8.2% Totals may not reconcile due to rounding. New Perspective Fund The fund s primary investment objective is to provide long-term growth of capital. Future income is a secondary objective. Diversifies among blue chip companies in the United States and abroad, emphasizing multinational or global companies and focusing on opportunities generated by changes in global trade patterns and economic and political relationships. The fund invests primarily in common stocks, convertibles, preferred stocks, bonds and cash. Each target date fund is composed of a mix of the American Funds and is subject to the risks and returns of the underlying funds. Investing outside the United States involves risks such as currency fluctuations, periods of illiquidity and price volatility as more fully described in the funds prospectuses. These risks may be heightened in connection with investments in developing countries. Small-company stocks entail additional risks, and they can fluctuate in price more than larger company stocks. Lower rated bonds are subject to greater fluctuations in value and risk of loss of income and principal than are higher rated bonds. The return of principal for bond funds and for funds with underlying bond holdings is not guaranteed. Fund shares are subject to the same interest rate, inflation and credit risks associated with the underlying bond holdings. Shares of U.S. Government Securities Fund are not guaranteed by the U.S. government. Bond ratings, which typically range from AAA/Aaa (highest) to D (lowest), are assigned by credit rating agencies such as Standard & Poor s, Moody s and/or Fitch, as an indication of an issuer s creditworthiness. 5

8 1 An objective-based approach designed for investor success Our dividend focus has lowered volatility Our investment process places meaningful emphasis on dividend income, which has generally reduced the funds volatility relative to their Morningstar peers, allowing us to use greater equity exposure across most of the Series. The scattergram below compares the volatility and equity exposure of the funds in the Series with that of their Morningstar peers. The chart below illustrates the volatility gap between our funds and their peers. Results for the three-year period ended December 31, 2013 Figures shown are past results for Class R-6 shares at net asset value and are not predictive of future results. Current and future results may be lower or higher than those shown here. Share prices and returns will vary, so investors may lose money. Investing for short periods makes losses more likely. Class R shares do not require an upfront or deferred sales charge. For current information and month-end results, visit americanfundsretirement.com. Equity (%) Volatility (standard deviation) American Funds Target Date Retirement Series Morningstar peer averages Data as of December 31, Volatility measured by annualized standard deviation (based on monthly returns) over the three-year period ended December 31, 2013, calculated at net asset value by Morningstar. 6 americanfundsretirement.com

9 Results for the three-year period ended December 31, 2013 Equity exposure (%) Three-year standard deviation (%) Three-year average annual total return (%) Three-year Sharpe ratio Retirement efficiency ratio American Funds 2055 Target Date Retirement Fund (R-6) Morningstar Target Date Funds American Funds 2050 Target Date Retirement Fund (R-6) Morningstar Target Date Funds American Funds 2045 Target Date Retirement Fund (R-6) Morningstar Target Date Funds American Funds 2040 Target Date Retirement Fund (R-6) Morningstar Target Date Funds American Funds 2035 Target Date Retirement Fund (R-6) Morningstar Target Date Funds American Funds 2030 Target Date Retirement Fund (R-6) Morningstar Target Date Funds American Funds 2025 Target Date Retirement Fund (R-6) Morningstar Target Date Funds American Funds 2020 Target Date Retirement Fund (R-6) Morningstar Target Date Funds American Funds 2015 Target Date Retirement Fund (R-6) Morningstar Target Date Funds American Funds 2010 Target Date Retirement Fund (R-6) Morningstar Target Date Funds Equity exposure, three-year standard deviation, three-year average annual total return and three-year Sharpe ratio are calculated by Morningstar. Volatility measured by annualized standard deviation (based on monthly returns) over the three-year period ended December 31, 2013, calculated at net asset value by Morningstar. Investment results assume all distributions are reinvested and reflect applicable fees and expenses. For the American Funds target date funds, the investment adviser is currently waiving its management fee of 0.10%. After December 31, 2014, the adviser may modify or terminate the waiver, but only with fund board approval. In addition, the investment adviser has in the past reimbursed certain expenses for all share classes. Investment results and net expense ratios reflect the waiver and reimbursements, without which the results would have been lower and the expenses would have been higher. The expense ratios are as of each fund s prospectus available at the time of publication and include the weighted average expenses of the underlying American Funds. Sharpe ratio is calculated by using standard deviation and excess return to determine reward per unit of risk. The higher the Sharpe ratio, the better the portfolio s risk-adjusted performance. The Retirement efficiency ratio illustrates a target date fund s amount of equity per unit of volatility, which indicates how the fund balances market and longevity risk. It is calculated by dividing the equity exposure as of December 31, 2013 by the three-year standard deviation. A higher number indicates greater efficiency in addressing both risks. 7

10 2 The highest manager retention rate in the industry According to Morningstar, our managers have formidable experience At American Funds, we have what we believe to be a compelling advantage: We draw from a deep roster of talented investment professionals, each with different knowledge and experience to bring to bear on our target date funds. The funds in the Series are monitored by our Portfolio Oversight Committee, a team of veteran investment professionals with diverse backgrounds. The team meets regularly to review the results of the target date funds. While the committee will not react based on investment fads or short-term trends, it can make changes in the allocations of the underlying funds when deemed in the best interest of the long-term needs of fund investors. Portfolio Oversight Committee Portfolio managers Alan Berro Equity 28 years of experience Los Angeles James Lovelace Equity 32 years of experience Los Angeles Wesley Phoa Fixed income 20 years of experience Los Angeles Funds on which they have portfolio management responsibilities Washington Mutual Investors Fund American Balanced Fund American Mutual Fund The Investment Company of America Capital Income Builder The Bond Fund of America U.S. Government Securities Fund American Funds Mortgage Fund About the committee Each portfolio manager manages assets in the underlying funds Meets regularly to evaluate fund results and the allocations of the underlying American Funds Adjusts fund allocations as appropriate Average years of investment experience: 26 John Smet Fixed income 32 years of experience Los Angeles American Balanced Fund The Income Fund of America Intermediate Bond Fund of America The Bond Fund of America U.S. Government Securities Fund Andrew Suzman Equity 21 years of experience New York EuroPacific Growth Fund The International Growth and Income Fund The Income Fund of America Bradley Vogt Equity 26 years of experience Washington, D.C. The Growth Fund of America Capital Income Builder The data for the investment professionals shown here are reflected in each fund s most recent prospectus as of January 1, Investment professional responsibilities may have changed since that date. 8 americanfundsretirement.com

11 Investment professionals with more than twice the industry s average tenure In addition to the experience of the Portfolio Oversight Committee, the investment professionals who manage the underlying funds have vast experience as well. A recent Morningstar study found that the average tenure of the managers of our underlying funds is more than twice that of the industry average. The figures shown below highlight the strength of our portfolio managers. Average manager tenure of underlying funds by target date series* Target date fund industry average American Funds Target Date Retirement Series average 5.02 years years Strength in numbers 88% of our portfolio managers have 10+ years experience. 83% of our fixed-income portfolio managers experienced the difficult 1994 bond market. 45% of our portfolio managers experienced the October 1987 crash. Of the underlying fund managers, few in the industry can match their formidable experience. Morningstar Target-Date Fund Series Report, December 31, * Fund tenures as of December 31, Source: Morningstar, Inc. Based on all American Funds portfolio managers industry experience as shown in the fund prospectuses as of January 1,

12 3 Underlying funds that have consistently outpaced their peers Built on an exceptional foundation Our underlying funds have beaten their respective Lipper indexes in 93% of rolling 10-year periods through December 31, 2013.* Capital Group s active management offers a proven history of solid results since Many of the underlying funds have long and distinguished track records. In fact, The Investment Company of America was launched 80 years ago. Our underlying funds have outpaced their respective Lipper peer indexes in 93% of rolling 10-year periods* 93% did outpace peers 7% did not outpace peers Few other target-date series have as many highly regarded underlying holdings. Morningstar Target-Date Fund Series Report, December 31, * Based on Class R-6 share results for rolling periods through December 31, Periods covered are the shorter of the fund s lifetime or since the comparable Lipper inception date. 10 americanfundsretirement.com

13 More funds on Morningstar s Fantastic 51 than any other series For the second year in a row, more than half of the underlying equity funds in each of our target date funds are on Morningstar s Fantastic list. Ten American Funds were named to the list that s more than any other target date series in the industry.* Ten underlying funds made Morningstar s Fantastic 51 New World Fund AMCAP Fund The Growth Fund of America American Mutual Fund Fundamental Investors The Investment Company of America Washington Mutual Investors Fund SM American Balanced Fund Capital Income Builder The Income Fund of America American Funds Target Date Retirement Funds Growth investments Growth and income investments Equity-income/Balanced investments * Morningstar, FundInvestor, May Morningstar evaluated funds based on five key criteria: investment results, expenses, parent rating, manager investment of at least $500,000 and analyst rating. The target date funds holdings are as of 12/31/13. Not all 10 funds listed in the Fantastic 51 are in each target date fund. Not all of the underlying funds in the target date series are shown here. Underlying funds may change over time. 11

14 3 Underlying funds that have consistently outpaced their peers Highly ranked equity funds have helped power the Series Here you can see how the individual underlying equity funds have fared in their Morningstar peer categories over various rolling time periods from 1980 to You ll note that the majority of funds are in the top two quartiles for every time period. Average relative percentile rankings of equity funds vs. Morningstar peer groups (rolling periods ) 1st quartile 2nd quartile 3rd quartile 4th quartile American Funds (Class R-6) Morningstar peer group category NWF EUPAC AMCAP GFA NEF NPF SCWF WGI AMF FI ICA IGI WMIF CIB IFA AMBAL New World Fund Diversified emerging markets EuroPacific Growth Fund Foreign stock AMCAP Fund Large growth The Growth Fund of America Large growth The New Economy Fund Large growth New Perspective Fund World stock SMALLCAP World Fund World stock Capital World Growth and Income Fund World stock American Mutual Fund Large value Fundamental Investors Large blend The Investment Company of America Large blend Int'l Growth and Income Fund Foreign stock Washington Mutual Investors Fund Large value Capital Income Builder World allocation The Income Fund of America Moderate allocation American Balanced Fund Moderate allocation One-year average rank (%) Three-year average rank (%) Five-year average rank (%) year average rank (%) N/A * Average number of funds in Morningstar peer groups Foreign stock Large growth World stock Large value Large blend World allocation Moderate allocation Diversified emerging One-year rolling periods Three-year rolling periods Five-year rolling periods year rolling periods Source: Morningstar. Rankings are based on the funds average annual total returns (Class R-6 shares at net asset value) within the applicable Morningstar categories. The Morningstar rankings do not reflect the effects of sales charges, account fees or taxes. Past results are not predictive of future results. When applicable, investment results reflect fee waivers and/or expense reimbursements, without which results would have been lower. Not all individual underlying funds in the target date funds are shown here. Please see americanfundsretirement.com for more information. * IGI s inception date is October 1, The fund count was zero for rolling periods beginning from americanfundsretirement.com

15 4 Among the lowest cost target date funds Low cost is crucial to positive investor outcomes Low costs can help plan sponsors demonstrate that they have participants best interests in mind. We offer a range of share classes designed to meet the needs of plan sponsors and participants. The different share classes incorporate varying levels of advisor compensation and service provider payments. American Funds Target Date Retirement Series Class R-6 net expense ratios vs. Morningstar peer averages Plan fees and expenses are 1.09 important considerations for all types of retirement 1.04 plans. The cumulative effect of fees and expenses on 1.09 retirement savings can be substantial U.S. Department of Labor American Funds Target Date Retirement Series Funds (Class R-6) net of waivers and reimbursements Morningstar category average institutional share classes Source: Morningstar. The Morningstar average expense ratios are based on fund statistics for the most recent prospectus available as of January 1, The expense ratio is one aspect of plan fees and expenses. For the American Funds target date funds, the investment adviser is currently waiving its management fee of 0.10%. After December 31, 2014, the adviser may modify or terminate the waiver, but only with fund board approval. In addition, the investment adviser has in the past reimbursed certain expenses for all share classes. Net expense ratios reflect the waiver and reimbursements, without which the expenses would have been higher. The expense ratios are as of each fund s prospectus available at the time of publication and include the weighted average expenses of the underlying American Funds. 13

16 5 Superior lifetime results A history of above-average results and low relative volatility The scattergram below shows how the funds in the Series have fared based on return and volatility since their launch. Figures shown are past results for Class R-6 shares at net asset value and are not predictive of future results. Current and future results may be lower or higher than those shown here. Share prices and returns will vary, so investors may lose money. Investing for short periods makes losses more likely. Class R shares do not require an upfront or deferred sales charge. For current information and month-end results, visit americanfundsretirement.com. Fund returns compared to broad market indexes (February 1, 2007 to December 31, 2013*) Average annual total returns (%) 15 Higher return, lower volatility 2055 Higher return, higher volatility Barclays U.S. Aggregate Index Morningstar average funds S&P MSCI ACWI ex USA Lower return, lower volatility Lower return, higher volatility Volatility (standard deviation) American Funds Target Date Retirement Series funds Class R-6 Morningstar peer averages Indexes * Results for the 2055 Fund are for the period February 1, 2010 to December 31, Volatility is measured by annualized standard deviation (based on monthly returns) over the funds lifetime, calculated at net asset value by Morningstar. The Barclays U.S. Aggregate Index is a measure of the broad fixed-income market. The S&P 500 is a measure of large company U.S. stocks. MSCI ACWI ex USA measures stock markets in more than 40 developed and developing countries except for the U.S. Indexes are unmanaged and, therefore, have no expenses. Investors cannot invest directly in an index. There have been periods when the funds have lagged the indexes. 14 americanfundsretirement.com

17 The Series has generated superior results while effectively managing volatility This table shows how well our target date funds have fared against their Morningstar peer group averages. Our target date fund R-6 shares have been honored with a 2014 Lipper Award 1 R-6 lifetime fund returns compared to their Morningstar peer group averages (February 1, 2007 to December 31, ) Standard deviation (%) Average annual lifetime total return (%) American Funds 2055 Target Date Retirement Fund (R-6) Morningstar Average Fund American Funds 2050 Target Date Retirement Fund (R-6) Morningstar Average Fund American Funds 2045 Target Date Retirement Fund (R-6) Morningstar Average Fund American Funds 2040 Target Date Retirement Fund (R-6) Morningstar Average Fund American Funds 2035 Target Date Retirement Fund (R-6) Morningstar Average Fund American Funds 2030 Target Date Retirement Fund (R-6) Morningstar Average Fund American Funds 2025 Target Date Retirement Fund (R-6) Morningstar Average Fund American Funds 2020 Target Date Retirement Fund (R-6) Morningstar Average Fund American Funds 2015 Target Date Retirement Fund (R-6) Morningstar Average Fund American Funds 2010 Target Date Retirement Fund (R-6) Morningstar Average Fund S&P MSCI ACWI ex USA Barclays U.S. Aggregate Index Based on the three-year Consistent Return as defined by superior consistency and risk-adjusted return when compared to Lipper Mixed-Asset Target Date Fund peer groups. All funds in the American Funds Target Date Retirement Series (R-6 share class) except the 2015 Fund received the award. 2 Results for the 2055 Fund are for the period February 1, 2010 to December 31, Volatility is measured by annualized standard deviation (based on monthly returns) over the funds lifetime, calculated at net asset value by Morningstar. The Barclays U.S. Aggregate Index is a measure of the broad fixed-income market. The S&P 500 is a measure of large company U.S. stocks. MSCI ACWI ex USA measures stock markets in more than 40 developed and developing countries except for the U.S. Indexes are unmanaged and, therefore, have no expenses. Investors cannot invest directly in an index. There have been periods when the funds have lagged the indexes. 15

18 5 Superior lifetime results Our Series stacks up well against its peers The table below shows how our target date funds rank within their Morningstar categories over various periods of time. Engage with us Contact us today at (800) for more information about the American Funds Target Date Retirement Series. Morningstar rankings as of December 31, 2013 (R-6) American Funds Target Date Retirement Series Morningstar category Morningstar Target Date Morningstar Target Date Morningstar Target Date Morningstar Target Date Morningstar Target Date Morningstar Target Date Morningstar Target Date Morningstar Target Date Morningstar Target Date Morningstar Target Date Rank 1 year 3 years 5 years Lifetime* Funds in Percentile Rank Funds in Percentile Rank Funds in Percentile Rank Funds in Percentile category rank category rank category rank category rank Over the last three- and five-year trailing periods through the end of 2013, almost all of the funds in the series rank in the top quintiles of their groups; all of the funds handily beat their category medians. Morningstar Target-Date Fund Series Report, December 31, 2013 Source: Morningstar. * Lifetime results are annualized and measured from the funds inception (February 1, 2007) through December 31, Lifetime results for the 2055 Fund represent the annualized return from the fund s inception (February 1, 2010) through December 31, Class R-6 shares were first offered on May 1, Class R-6 share results prior to the date of first sale are hypothetical based on Morningstar calculations. Rankings are based on the funds average annual total returns (Class R-6 shares at net asset value) within the applicable Morningstar categories. The Morningstar rankings do not reflect the effects of sales charges, account fees or taxes. Past results are not predictive of future results. When applicable, investment results reflect fee waivers and/or expense reimbursements, without which results would have been lower. 16 americanfundsretirement.com

19 Results Figures shown are past results for Class R-6 shares at net asset value and are not predictive of future results. Current and future results may be lower or higher than those shown here. Share prices and returns will vary, so investors may lose money. Investing for short periods makes losses more likely. Class R shares do not require an upfront or deferred sales charge. For current information and month-end results, visit americanfundsretirement.com. Class R-6 average annual total returns (%) as of March 31, 2014 Fund name Inception date Lifetime 10 years 5 years 3 years 1 year Expense ratios* (%) Growth funds AMCAP Fund 5/1/ % 8.40% 22.72% 16.23% 28.09% 0.38% EuroPacific Growth Fund 4/16/ The Growth Fund of America 12/1/ The New Economy Fund 12/1/ New Perspective Fund 3/13/ New World Fund 6/17/ SMALLCAP World Fund 4/30/ Growth-and-income funds American Mutual Fund 2/21/ Capital World Growth and Income Fund 3/26/ Fundamental Investors 8/1/ International Growth and Income Fund 10/1/ The Investment Company of America 1/1/ Washington Mutual Investors Fund 7/31/ Equity-income funds Capital Income Builder 7/30/ The Income Fund of America 12/1/ Balanced funds American Balanced Fund 7/26/ American Funds Global Balanced Fund 2/1/ Bond funds American Funds Inflation Linked Bond Fund 12/14/ American Funds Mortgage Fund 11/1/ American High-Income Trust 2/19/ The Bond Fund of America 5/28/ Capital World Bond Fund 8/4/ Intermediate Bond Fund of America 2/19/ Short-Term Bond Fund of America 10/2/ U.S. Government Securities Fund 10/17/ Target date funds American Funds 2055 Target Date Retirement Fund 2/1/ American Funds 2050 Target Date Retirement Fund 2/1/ American Funds 2045 Target Date Retirement Fund 2/1/ American Funds 2040 Target Date Retirement Fund 2/1/ American Funds 2035 Target Date Retirement Fund 2/1/ American Funds 2030 Target Date Retirement Fund 2/1/ American Funds 2025 Target Date Retirement Fund 2/1/ American Funds 2020 Target Date Retirement Fund 2/1/ American Funds 2015 Target Date Retirement Fund 2/1/ American Funds 2010 Target Date Retirement Fund 2/1/ net gross * Expense ratios are as of each underlying fund s prospectus available at the time of publication and include the weighted average expenses of the underlying American Funds. Investment results assume all distributions are reinvested and reflect applicable fees and expenses. The investment adviser is currently waiving its management fee of 0.10%. After December 31, 2014, the adviser may modify or terminate the waiver, but only with fund board approval. In addition, the investment adviser has in the past reimbursed certain expenses for all share classes. Investment results and net expense ratios reflect the waiver and reimbursements, without which the results would have been lower and the expenses would have been higher. The expense ratios are as of each fund s prospectus available at the time of publication and include the weighted average expenses of the underlying funds. Class R-6 shares were first offered on May 1, American Funds Target Date Retirement Series Funds first invested in Class R-6 shares of American Funds Inflation Linked Bond Fund on November 1, Results prior to that date are hypothetical based on Class A share results without a sales charge, adjusted for typical estimated expenses. Please see the funds most recent prospectus for more information on specific expenses. Class R-6 share results prior to the date of first sale are hypothetical based on Class A share results without a sales charge, adjusted for typical estimated expenses. Please see each fund s prospectus for more information on specific expenses. When applicable, investment results reflect fee waivers and/or expense reimbursements, without which results would have been lower. Please see americanfundsretirement.com for more information. 17

20 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 System SM 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 21 years at our company, reflecting a career commitment to our long-term approach. 1 The Capital System SM 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 56% of 10-year periods and 57% 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, Based on Class A share results for rolling periods through December 31, Periods covered are the shorter of the fund s lifetime or since the comparable Lipper index inception date (except SMALLCAP World Fund, for which the Lipper average was used). Although Class A shares are available for purchase by retirement plans only in limited instances, their results reflect the investment management experience of the American Funds without retirement plan recordkeeping expenses. American Funds offers plan sponsors flexibility in how they pay for plan operating expenses (such as recordkeeping fees) through distinct retirement plan classes. Expenses differ for each class, so results will vary. If applicable, group annuity contracts are subject to additional expenses. For current information and month-end results for Class A shares and for all classes, visit americanfundsretirement.com. 3 Based on management fees for the 20-year period ended December 31, 2013, versus comparable Lipper categories, excluding funds of funds. Past results are not predictive of future results. Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing. If used after June 30, 2014, this brochure must be accompanied by a current American Funds retirement plan quarterly statistical update. Lit. No. RPGEBR P Litho in USA CGD/9768-S American Funds Distributors, Inc. Printed on recycled paper