Braving The Bear

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Investing in today\'s market

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  • Figures are past results and are not predictive of results in future periods. Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so investors may lose money.
  • Braving The Bear

    1. 1. © 2009 American Funds Distributors, Inc. AI-99998
    2. 2. © American Funds Distributors, Inc. STOCKS SLIP AND CRASH — Violent Plunge Brings Panic — Los Angeles Times, October 4, 1929 PANIC RAGES IN MARKET — Los Angeles Times, October 24, 1929 No place to hide; it’s been a rough year on stock exchanges around the globe — Barrons, January 9, 1967 Another big collapse of buyer confidence — BusinessWeek, November 23, 1974 AI-34958
    3. 3. Braving the bear AI-34959 © American Funds Distributors, Inc. © American Funds Distributors, Inc.
    4. 4. © American Funds Distributors, Inc. S&P 500 Index weekly price changes, 9/7/29 – 4/28/42 The Great Depression AI-34960 *Without dividends. 35 30 20 10 5 0 15 25 Index value* ’ 30 ’ 31 ’ 32 ’ 33 ’ 34 ’ 40 ’ 35 ’ 36 ’ 37 ’ 38 ’ 39 ’ 41
    5. 5. © American Funds Distributors, Inc. AI-34961 Some people say they want to wait for a clearer view of the future. But when the future is again clear, the present bargains will have vanished. In fact, does anyone think that today’s prices will prevail once full confidence has been restored? — Dean Witter May 1932
    6. 6. © American Funds Distributors, Inc. *Inception of The Investment Company of America. † Without dividends. Results reflect reinvestment of all distributions. $10,000 investment in S&P 500 and ICA, 1/1/34 * – 4/28/42 The Great Depression AI-34962 35 30 20 10 5 0 15 25 Figures are past results and are not predictive of results in future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so you may lose money. For current information and month-end results, visit americanfunds.com. Fund results are for Class A shares and reflect deduction of maximum sales charge (5.75%). ICA 3 years later – $48,168 5 years later – $51,011 $20,675 $11,422 S&P 500 3 years later – $26,794 5 years later – $28,372 $35,000 30,000 20,000 10,000 5,000 0 15,000 25,000 Index value † ’ 30 ’ 31 ’ 32 ’ 33 ’ 34 ’ 40 ’ 35 ’ 36 ’ 37 ’ 38 ’ 39 ’ 41
    7. 7. © American Funds Distributors, Inc. S&P 500 Index weekly price changes, 2/9/66 – 8/12/82 The 1970s AI-34963 *Without dividends. 150 140 100 80 70 60 90 130 110 120 Index value* ’ 67 ’ 68 ’ 69 ’ 73 ’ 74 ’ 80 ’ 75 ’ 76 ’ 77 ’ 78 ’ 79 ’ 81 ’ 72 ’ 71 ’ 70 ’ 82 ’ 66
    8. 8. © American Funds Distributors, Inc. AI-34964 Courage! We have been here before. Bear markets have lasted this long before. Well-managed mutual funds have gone down this much before. And shareholders in those funds and we the industry survived and prospered. — Jim Fullerton November 1974
    9. 9. © American Funds Distributors, Inc. *Without dividends. Results reflect reinvestment of all distributions. $10,000 investment in S&P 500 and ICA, 2/9/66 – 8/12/82 The 1970s AI-34965 Figures are past results and are not predictive of results in future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so you may lose money. For current information and month-end results, visit americanfunds.com. Fund results are for Class A shares and reflect deduction of maximum sales charge (5.75%). ICA 3 years later – $64,900 5 years later – $118,666 $30,974 $21,446 S&P 500 3 years later – $45,093 5 years later – $85,605 $36,000 32,000 20,000 12,000 4,000 0 16,000 28,000 150 140 100 80 70 60 90 130 110 120 24,000 8,000 Index value* ’ 67 ’ 68 ’ 69 ’ 73 ’ 74 ’ 80 ’ 75 ’ 76 ’ 77 ’ 78 ’ 79 ’ 81 ’ 72 ’ 71 ’ 70 ’ 82 ’ 66
    10. 10. © American Funds Distributors, Inc. S&P 500 Index weekly price changes, 3/24/00 – 12/31/08 Now AI-34966 *Without dividends. 1,600 1,200 1,000 800 1,400 Index value* ’ 01 ’ 02 ’ 07 ’ 08 ’ 05 ’ 04 ’ 03 ’ 06 ’ 00
    11. 11. © American Funds Distributors, Inc. AI-34967 — Jim Lovelace December 2001 A lesson I’ve learned from the older hands around here is that what works is to invest in good companies over long periods of time. To put it another way, our way is a lot more patient than the market.
    12. 12. © American Funds Distributors, Inc. *Without dividends. Results reflect reinvestment of all distributions. $10,000 investment in S&P 500 and ICA, 3/24/00 – 12/31/08 Now AI-34968 $20,000 10,000 0 15,000 1,600 1,200 1,000 800 1,400 5,000 ICA $9,113 S&P 500 $6,900 Figures are past results and are not predictive of results in future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so you may lose money. For current information and month-end results, visit americanfunds.com. Fund results are for Class A shares and reflect deduction of maximum sales charge (5.75%). Index value* ’ 01 ’ 02 ’ 07 ’ 08 ’ 05 ’ 04 ’ 03 ’ 06 ’ 00
    13. 13. © American Funds Distributors, Inc. *Domestic and international equity mutual funds and exchange-traded funds (ETFs). Source: Strategic Insight. Avoid buying high and selling low AI-34969 S&P 500 Index (left scale) 1,800 1,200 0 1,500 900 300 – 300 – 600 – 900 2,100 600 Index value Q1 ’00 Large inflow at market peak Q1 ’04 Large inflow after 2003 gains Q3 ’02 Large outflow at market bottom Q4 ’08 Fund flows* (right scale) 100,000 60,000 0 80,000 140,000 40,000 20,000 – 20,000 – 40,000 – 60,000 120,000 Net fund flows ($ millions) 20 01 20 02 20 07 2008 20 05 20 04 20 03 20 06 20 00 1999 Market cycle Q1 ’00 – Q3 ’07
    14. 14. © American Funds Distributors, Inc. AI-34970 Braving the bear
    15. 15. © American Funds Distributors, Inc. <ul><li>Gain confidence from the past </li></ul><ul><li>Don’t underestimate the power of time and dividends </li></ul><ul><li>Understand the importance of an active, research-driven investment approach </li></ul>Braving the bear AI-34971 Summary
    16. 16. © American Funds Distributors, Inc. <ul><li>Talk with your financial adviser </li></ul><ul><li>Put time on your side </li></ul><ul><li>Buy at lower prices </li></ul><ul><li>Invest regularly </li></ul>How to cope with a market decline AI-34972 Action steps
    17. 17. The Investment Company of America ® – 38.49% – 2.38% 1.01% 0.59% Average annual total returns for periods ended 12/31/08 American Funds investment results Figures are past results and are not predictive of results in future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so you may lose money. For current information and month-end results, visit americanfunds.com. Fund results are for Class A shares and reflect deduction of maximum sales charge (5.75%). © American Funds Distributors, Inc. AI-10163 Results are based on an initial $1,000 investment at the beginning of the stated periods. Investment results assume all distributions are reinvested and reflect applicable fees and expenses. Expenses are as of the fund’s most recent fiscal year-end. From 9/1/04–12/31/08, the investment adviser to the American Funds waived a portion of its management fees as described in the fund’s annual report. Investment results reflect the waiver, without which the results would have been lower. Please see the fund’s most recent shareholder report or prospectus for details. 1 year 5 years 10 years Expense ratio
    18. 18. Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds. This and other important information is contained in the prospectus(es), which can be obtained from their financial professional and should be read carefully before investing. © American Funds Distributors, Inc. AI-99980
    19. 19. Standard & Poor's 500 Composite Index is a market-capitalization-weighted index that tracks the stocks of 500 primarily large-cap U.S. companies chosen for market, liquidity, and industry group to represent U.S. equity performance. Indexes are unmanaged. They include reinvested distributions but do not reflect sales charges, commissions or expenses. © American Funds Distributors, Inc. AI-44440
    20. 20. If used after March 31, 2009, this presentation must be accompanied by a current American Funds quarterly statistical update. Equity investments are subject to market fluctuations. Diversifying investments does not ensure against market loss. Investing outside the U.S. (especially in developing countries) entails additional risks, such as currency fluctuations, as more fully described in the prospectus. Regular investing neither ensures a profit nor protects against loss in a declining market. © American Funds Distributors, Inc. AI-44440
    21. 21. © 2009 American Funds Distributors, Inc. AI-99997

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