Dedicated to helping you manage your nonprofit assets · The multiple portfolio counselor system: A...
Transcript of Dedicated to helping you manage your nonprofit assets · The multiple portfolio counselor system: A...
The right choice for the long term®
Dedicated to helping you manage your nonprofit assets
Helping those who do good to do well.
We can help you preserve the value of your assets
We are one of the nation’s largest and most experienced investment management firms.American Funds is one of the oldest mutual fund companies, with roots dating back to 1931. We’re also among the nation’s largest, with 30 funds representing more than $900 billion and more than 40 million shareholder accounts.*
We take a conservative, long-term, value-oriented approach to investing.Our investment approach is based on buying securities at reasonable prices and holding them for the long term. We use extensive global research to locate investments that have the potential to provide above-average returns with below-average risks; the resulting low portfolio turnover is well below the industry average for all equity and fixed-income funds.
We have an outstanding long-term investment record.American Funds has a consistent track record and a time-tested management approach. For 75 years — through wars, recessions, prosperity and inflation — we’ve always believed that our shareholders come first.
We believe in attracting and retaining talented investment professionals.More than half of the portfolio counselors who serve American Funds were in the investment industry before the October 1987 market decline.*
We offer distinguished investment management at a reasonable cost.All of the American Funds have operating expenses that are below industry averages, resulting in considerable savings for the long-term investor. Investors who make Class A share purchases of $1 million or more pay no sales charges on assets that remain invested for at least one year.
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so investors may lose money.
Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds. This and other important information is contained in the funds’ prospectuses, which can be obtained from a financial adviser and should be read carefully before investing.*As of December 31, 2006
An investment presentation
Presented to: [CLIENT NAME]
On behalf of: [ADVISER NAME]
[ADVISER CONTACT INFO]
[ADVISER CONTACT INFO]
[ADVISER CONTACT INFO]
[ADVISER CONTACT INFO]
An investment presentation
Presented to: Sample Nonprofit Company, Inc.
On behalf of: John Q. Adviser 123 Anystreet Hometown, USA
Sample nonprofit presentation
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Presentation overview
nNeedsofnonprofitinvestors
n IntroductiontoAmericanFunds
nWhyAmericanFundsistherightchoicefornonprofits
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The needs of nonprofit investors
Fiduciary obligations
n Two main fiduciary obligations:
• Duty of care
— Requires director to be adequately informed to function effectively
— Discharges duties in good faith using care of a prudent person
— Create an investment policy statement designed to meet current and future financial needs
• Duty of loyalty
— Requires director to act in the best interest of the nonprofit organization, not for personal benefit
— Specifies guidelines to avoid conflicts of interest; ongoing monitoring
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The needs of nonprofit investors
Primary investment goals
nProtect the principal investment
n Establish and adhere to an annual spending rate, as outlined in your investment policy statement
nKeep pace with inflation while balancing the risk of losing principal
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Introduction to American Funds
n American Funds is the country’s largest mutual fund family offered exclusively through financial advisers, who can assist you in your initial investment selection, asset allocation and ongoing monitoring.
n For 75 years, American Funds has been dedicated to earning — and keeping — the trust of shareholders.
n We continue that tradition by offering thoughtful, conservative and ongoing fund manage-ment to individuals, families, retirement plans, nonprofit organizations, foundations and endowments.
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Introduction to American Funds
American Funds in the marketplace
n One of the three largest mutual fund firms in the country — with more than $900 billion in assets under management
n American Funds currently has more than �0 million shareholder accounts
n Over $5 billion in assets for more than 8,500 nonprofit organizations
All figures shown are as of December 31, 2006.
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Introduction to American Funds
What makes American Funds different?
nA long-term, value-oriented approach
nAn extensive global research effort
nThe multiple portfolio counselor system
nExperienced investment professionals
nA commitment to low operating expenses
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Introduction to American Funds
A long-term, value-oriented approach
nLook for unrecognized potential at reasonable prices
n Determine the difference between the fundamental value of a company and its price in the marketplace
n Pay attention to risk and help shareholders participate in the long-term growth of companies
n Invest in companies for the long term — Instead of asking “Where will this stock be in three to six months?” we prefer to ask “Where will this company be in five to 10 years?”
Why American Funds?
It’s … modesty — and
Capital Research’s dem-
onstrated commitment to
excellence — that investors
came to appreciate after the
excesses of the late 1990s …
Since launching its first fund,
[The] Investment Company of
America,® in 1934, [American
Funds] has built a record of
doing right by its investors.
— Kiplinger’s Personal Finance Magazine, July 1, 2005
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Introduction to American Funds
American Funds global presence
n Research offices worldwide (dates shown are when offices opened)
n We spend more than $130 million on research visits annually
n We visited thou-sands of companies in more than 65 countries in 2006
Countries visited in 2006
San Francisco(1975)
Los Angeles(1931)
New York (19�3)Washington, D.C.
(197�)
Tokyo (1982)
Hong Kong (1983)
London(1979)
Geneva(1962)
Singapore(1989)
American Funds offices
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Introduction to American Funds
The multiple portfolio counselor system: A unique method of portfolio management
n Assets of each fund are divided into smaller, more manageable portions
n Portfolio counselors make independent investment decisions according to their strongest convictions
n Investment analysts typically manage a portion — as much as 25% of assets — demonstrating their conviction through the research portfolio
n Investments are subject to fund objectives and overall guidelines
Investment analysts
Portfolio counselors
Diversity Continuity
Manageability Consistency
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Introduction to American Funds
Experienced investment professionals
nWe believe in attracting — and keeping — talented associates
n Foster creativity and encourage independent thinking
n Base current year compensation primarily on results over a rolling four-year period
Investment analysts• Specialists
• Career position at Capital
• Average 11 years of experience (six with our organization)
• Demonstrate conviction through research portfolio
Portfolio counselors• Generalists
• More than half of our portfolio counselors have been in the investment business for over 20 years
• One in five portfolio counselors experienced the 1973–197� bear market
• Average 2� years of experience (21 with our organization)
All figures shown are as of December 31, 2006.
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Introduction to American Funds
Our commitment to low operating expenses
n Economies of scale due to large asset base and fewer funds
n Provide exceptional service at a reasonable cost
n Low portfolio turnover rates
n Low expenses directly affect the bottom line
Lower is better: American Funds annual operating expenses (%)
Balanced Taxable bond Money market
Growth Growth-and-income International/Global equity
Equity-income
American Funds (net) Industry average
0.69
1.23
0.56
1.26
0.83
1.58
0.54 0.70
0.580.96
0.721.03
0.51 0.65
Expenses are for Class A shares and are as of the most recent fiscal year-ends available as of December 31, 2006. Expense ratios do not reflect sales charges.
Sources for industry averages: Lipper front-end load funds, except money markets are compared against no–load funds.
The funds’ investment adviser is waiving a portion of its management fees. The net expense ratio reflects the waiver; the gross expense ratio does not. The waiver may be discontinued at any time in consultation with each fund’s board, but is expected to continue at the current level until further review. The funds’ investment adviser and boards intend to review the waiver as circumstances warrant. Please see each fund’s most recent share-holder report for details.
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Introduction to American Funds
How American Funds can meet the needs of nonprofit investors
nConservative investment philosophy; 75 years of consistent investment results
n A long-term focus based on thorough analysis and attention to risk
n To help protect investors’ money, we try to sidestep short-term market trends and investment fads
nAmerican Funds strives to keep fund investment management fees as low as possible
nWe offer a wide array of funds with a variety of investment objectives
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Why American Funds?
American Funds investments
The American Funds depicted here are positioned according to their primary investment categories. However, due to market fluctuations, SMALLCAP World Fund may have significant exposure to stocks of mid-sized companies. Fundamental Investors and The New Economy Fund have the potential for significant exposure to non-U.S. equities. In addition, The Income Fund of America has a combined equity/fixed-income limit of up to 30% of its assets outside the United States. The Bond Fund of America and Capital World Bond Fund may have up to 10% and 25% exposure, respectively, to below-investment-grade bonds.
Most investments carry some degree of risk. For example, the return of principal in bond funds and in a fund’s bond holdings is not guaranteed. Fund shares are subject to the same interest rate, inflation and credit risks that are associated with the underlying bonds owned by the funds. Lower rated bonds are subject to greater fluctuations in value and risk of loss of income and principal. Investing outside the United States (especially in developing countries) involves additional risks, such as currency fluctuations, as does invest-ing in smaller companies, as more fully described in the funds’ prospectuses. Although the money market funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the funds.
Lower volatility
Cash-equivalent funds
Bond funds Equity-income and balanced funds
Growth-and-income funds
Growth funds
The Cash Management Trust of America®
The U.S. Treasury Money Fund of AmericaSM
The Bond Fund of AmericaSM
Capital World Bond Fund®
Intermediate Bond Fund of America®
Short-Term Bond Fund of AmericaSM
U.S. Government Securities FundSM
The Income Fund of America®
American Balanced Fund®
American Mutual Fund®
Fundamental InvestorsSM
The Investment Company of America®
Washington Mutual Investors FundSM
AMCAP Fund®
The Growth Fund of America®
The New Economy Fund® SMALLCAP World Fund® New World FundSM
Money market investments
Investment- grade bonds
Domestic equities and bonds
Large domestic companies
Large domestic companies
Smaller companies Developing-
country exposureNon-investment-
grade bondsGlobal
equities and bondsLarge
global companiesLarge
global companiesMid-sized companies
American High-Income TrustSM
Capital Income Builder® Capital World Growth and Income FundSM
EuroPacific Growth Fund®
New Perspective Fund®
Higher volatility
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Why American Funds?
Ongoing services and support
nAssist you and your financial advisers with service, account management and education
• Periodic conference calls and other events on a wide variety of relevant topics
• Ability to customize the services clients and financial advisers receive from us
nSupport you and your financial advisers with analytical and other investment services
• Portfolio reviews; investment monitoring
• Assistance with your fiduciary responsibilities managing a nonprofit organization
• Access to a variety of resources regarding your funds
nOnline support at americanfunds.com
• Fund prices and information
• Specific information on your investments/accounts
• Additional resources
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Nonprofit client list
American Savings Foundation
Arkansas Community Foundation
The Arizona Community Foundation
Battle Creek Community Foundation
Bentley College
Berklee College of Music
California Community Foundation
California Pacific Medical Center
Central Minnesota Community Foundation
Central New York Community Foundation
Children’s Hospital & Regional Medical Center
Christian Church Foundation, Inc.
Clark University
The Cleveland Foundation
Coastal Community Foundation of South Carolina
The Columbus Foundation & Affiliated Organizations
The Community Foundation for Greater Atlanta, Inc.
Community Foundation for Greater Buffalo
Community Foundation for Monterey County
Community Foundation for Muskegon County, Inc.
Community Foundation for Northeast Georgia
Community Foundation for the Capital Region (Albany)
Community Foundation of Central Florida
Community Foundation of Central Georgia
The Community Foundation of Greater Birmingham
Community Foundation of Greater Fort Wayne
The Community Foundation of Herkimer & Oneida Counties
Community Foundation of Howard County, Inc.
The Community Foundation of Middle Tennessee
The Community Foundation of New Jersey
Community Foundation of the Rappahannock River Region
Community Foundation of Western North Carolina
The Community Foundation Serving Richmond & Central Virginia
The Community Foundation Serving Riverside and San Bernardino Counties
Community Foundation Sonoma County
Connecticut Community Foundation
Cooper Foundation
Cumberland Community Foundation
The Dallas Foundation
El Pomar Foundation
Fairview Health Services
Foundation for Roanoke Valley, Inc.
Gettysburg College
Glendale Community Foundation
Grand Rapids Community Foundation
The Greater Cincinnati Foundation
The Greater Kansas City Community Foundation
The Greater New Orleans Foundation
Greater Saint Louis Community Foundation
Greater Tacoma Community Foundation
Greater Worcester Community Foundation
Guide Dogs for the Blind, Inc.
Indianapolis Symphony Orchestra Foundation
Johnson & Wales University
Kalamazoo Community Foundation
Kansas State University Foundation
Marin Community Foundation
The Minneapolis Foundation
Minnesota Orchestral Association
New Hampshire Charitable Foundation
The Norfolk Foundation
North Georgia Community Foundation
North Memorial Medical Center
Oklahoma Medical Research Foundation
Orange County Community Foundation
The Philadelphia Foundation
The Pittsburgh Foundation
Presbyterian Health Foundation
Randolph-Macon Woman’s College
Regents of the University of Michigan
Richland County Foundation
Rochester Area Foundation
Rowan University Foundation
The Saint Paul Foundation
The San Diego Foundation
The San Francisco Foundation
Santa Barbara Foundation
Sioux Falls Area Foundation, Inc.
University of North Dakota Foundation
University of the Sciences in Philadelphia
University of Vermont
Wabash College
Worcester Polytechnic Institute
The following is a partial list of nonprofit organizations with investments in the American Funds.
Permission granted by entity or listed in Money Market Directory. Updated January 2007
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Summary
AmericanFunds:
nRecognizestheneedsofnonprofitorganizations
nHasalong-termhistoryofconsistentresultswithlowexpenses
nHasaconservativeinvestmentphilosophythatisappropriatefornonprofitclients
nOffersclientservicesandsupport
The right choice for the long term®
Visit us at americanfunds.com.
The Capital Group CompaniesAmerican Funds Capital Research and Management Capital International Capital Guardian Capital Bank and Trust