The Select Investment Scorecard. Don t Settle for Average.

The Select Investment Scorecard Don t Settle for Average.

A Group of Select Equity Funds Has, on Average, Consistently Beaten the Index Research proves that two simple screens can help identify a group of funds that has beaten the indexes over one-, three-, five- and 1-year rolling periods. Indexing Advocates Ignore an Important Truth It s become investing gospel, seemingly confirmed by study after study: The average investment manager cannot beat the benchmark. While technically accurate, a closer look reveals a subtler but essential truth. Namely, that not all investment managers are average. Indeed, research based on data from Morningstar and other objective sources identifies two simple screens that uncover a group of what we call Select Equity funds (as defined below) that, when taking the average for the group, has generated better results than both their peers and their indexes. And as shown here in our Select Investment Scorecard and its corresponding digital tool on our website (americanfunds.com/selectinvestmentscorecard), the Select Equity group s advantage over the indexes widened to more than 1 basis points per year over time. Figures shown are past results for Class A shares 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 investors may lose money. Investing for short periods makes losses more likely. Unless otherwise indicated, fund results shown are at net asset value with all distributions reinvested. Results shown do not include sales charge. If a sales charge (maximum 5.75%) had been deducted, results would have been lower. For current information and month-end results, visit americanfunds.com. Results Tell the Story: Select Equity Funds Outpaced the Index Average returns for monthly rolling one-, three-, five- and 1-year periods for the 2 years ended December 31, 216 American Funds Select Equity Index Average Equity This chart shows average results for funds in the U.S. Large-Cap Equity category, a highly efficient market where indexing advocates contend investment managers have a low likelihood of adding value. 1 year 3 year 5 year 9.6% 8.9% 8.4% 7.4% 8.1% 7.4% 6.4% 5.8% 6.9% 6.4% 5.2% 4.7% 1 year 6.3% 5.8% 4.7% 4.3% Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value. Source: Capital Group, based on Morningstar data. Based on monthly rolling periods from January 1997 to December 216. U.S. large-cap equity funds in the Select Equity group are those in the Morningstar Large Value, Large Blend and Large Growth categories. U.S. index is S&P 5. The index is unmanaged and, therefore, has no expenses. Investors cannot invest directly in an index. Past results are not predictive of future results. For more information, see Methodology on back page. 2

Invest Based on the Facts, Not the Myths Myths Fueled by Three Measurement Flaws Index investing proponents draw conclusions based on studies flawed in three simple but critical ways: 1. The emphasis on averages disguises the presence of consistent outperformers Index investing proponents base their claims on the average results of the entire universe of funds, the majority of which have not consistently beaten their benchmarks over long periods. Yet these studies make no attempt to distinguish the subset of funds that, on average, has outpaced the indexes over the long term. Research shows, however, that the methodology used to identify Select Equity funds has the potential to isolate funds with the potential to best their indexes. 2. A belief that superior track records have no correlation with future results We agree that a superior track record will not necessarily be repeated in the future. However, we have developed a screen that serves as a starting point to identify funds that we believe have a greater potential of generating returns that outpace their benchmarks. Our analysis uncovered two simple screens that identify Select Equity funds that have generated higher returns over time. Those traits are low expense ratios and high manager ownership. 3. Studies often use measurement periods that don t match investor time horizons Many index proponents use the latest annual results as their proof that you can t beat the index. While Select Equity funds have on average outpaced their indexes over the majority of rolling one-year time frames, the period is nonetheless arbitrary in that it s not aligned with the investment horizon of most investors. A more meaningful measure of success? A manager s ability to consistently outpace over longer periods which comport with the time frames of many key investor objectives. Research shows that the longer the period, the greater the advantage of Select Equity funds. Thus, by extrapolating the results of the average fund manager to all managers and attributing outliers to luck, the indexing case is built. Those who allow for the existence of benchmark-beating funds caution that it s impossible to identify this small Select Equity group. Use Facts to Identify Select Equity Funds Our analysis uncovered two simple screens that identify a group of Select Equity funds that has generated higher returns over time. Those traits are low expense ratios and high manager ownership. We filtered the entire Morningstar database of U.S. large-cap equity funds for the quartile with the lowest net expense ratios (NER) and the quartile with the highest manager ownership. Funds at the intersection of these two groups compose the Select Equity group that, on average, delivered higher results when compared to market indexes over time. SCREEN 2 High Manager Ownership SCREEN 1 Low Expenses Select Equity 3

Select Equity Funds Beat the Index 55% 86% of the Time Over One-, Three-, Five- and 1-Year Rolling Periods From January 1997 to December 216 Return profile across percentiles Select Equity Average Equity How to Read the Charts Charts show results for all specified time periods for Select Equity funds and the Average Equity universe from worst (far left) to best (far right). is represented as. When data points are above, the fund group outpaced the index by the margin shown; when below, it trailed. Rolling 1-Year Results Return vs. Index +15% +1 +5 5 Select Equity beat the index 55% of the time by an average of 292 bps 1 15 25 5 75 1 Rolling 3-Year Results Return vs. Index +6% +4 +2 4 6 Select Equity beat the index 66% of the time by an average of 22 bps 8 25 5 75 1 An Advantage That Has Grown Over Time Looking at the rolling returns of all equity funds it s easy to see why the index superiority myth has become dogma. Little over one-third of investment managers beat their benchmarks over the 12 months ended December 31, 216, a number that gets even worse over time, shrinking to just 33% over the 1-year period. In striking contrast, however, the Select Equity group outpaced the index in the majority of each rolling time period. On a rolling one-year basis, the Select Equity group beat the index 55% of the time. That advantage grew over the long term, reaching 86% over rolling 1-year periods. About Our Process We calculated the percentage of time the Select Equity group and the Average Equity group beat the index by building an equal-weighted portfolio using the average monthly returns of the funds and then calculating a relative return against the index for each rolling period indicated (one-, three-, five- and 1-year) over the period from January 1997 to December 216. For example, to derive rolling one-year results for the Select Equity group, we started with the compound monthly returns for January 1997 to December 1997 and subtracted the compound monthly index returns over the same period. Next, we ran the same calculations using the 12 monthly returns for February 1997 to January 1998. We did this for every rolling 12-month period through December 31, 216, and then calculated the percentage of 12-month periods that the Select Equity group beat the index. We used the same process for the Average Equity group of funds. Rolling 5-Year Results Return vs. Index Select Equity beat the index 76% of the time by +4 an average of 182 bps +3 +2 +1 1 3 25 5 75 1 Rolling 1-Year Results Return vs. Index +3% +2 +1 1 Select Equity beat the index 86% of the time by an average of 138 bps 25 5 75 1 4 American Funds Outpaced the Index and the Select Equity Group All seven American Funds in the U.S. Large-Cap category passed through the ownership and expense screens, and as a group provided index-beating returns in the one-, three-, five- and 1-year rolling periods. Monthly rolling periods for the 2 years ended December 31, 216 Percent of Time Beat the Index Average Annualized Return Premium 1 year 57% 119 bps 3 year 73% 168 bps 5 year 76% 175 bps 1 year 93% 169 bps

Over all rolling 1-year periods during the 2 years ended December 31, 216, investments in the group of Select Equity funds would have generated, on average, 9% more wealth than an equivalent index investment. Select Equity Funds Have Reliably Built More Wealth To illustrate how Select Equity funds would have reliably generated greater wealth over the short and long term, we calculated a hypothetical $1, investment in the Select Equity group, the Average Equity universe and the index for all the one-, three-, five- and 1-year periods in the 2 years ended December 31, 216. The results are clear. The Select Equity funds consistently outpaced the indexes and the Average Equity universe regardless of the time period. A 1-year investment in the Select Equity funds ending at any time between 25 and 216, would have fared better than their active peers and the indexes a truer measure of the fund managers skill. The American Funds did even better. Reliable, Even in Volatile Markets Despite a global selloff in equities that sparked a divergence in market and sector returns, the Select Equity group of funds outpaced their benchmarks through the range of rolling periods ended December 31, 216. The relative success of the Select Equity funds amid a diverse set of challenges from the bursting tech bubble to the mortgage meltdown to China s economic softening and plunging commodity prices demonstrates the screens ability to identify funds that have thrived over market cycles. Figures shown are past results for Class A shares 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 investors may lose money. Investing for short periods makes losses more likely. Unless otherwise indicated, fund results shown are at net asset value with all distributions reinvested. Results shown do not include sales charge. If a sales charge (maximum 5.75%) had been deducted, results would have been lower. For current information and month-end results, visit americanfunds.com. For Select Equity Funds, the Longer the Time Period, the Bigger the Advantage Ending Value of $1, invested (rolling monthly time periods during the 2 years ended December 31, 216) American Funds Select Equity Index Average Equity This chart shows results for funds in the U.S. Large-Cap Equity category, a highly efficient market where indexing advocates contend active managers have a low likelihood of adding value. 1 year 3 year $19,595 $18,892 $18,43 $17,432 $128,767 $126,513 $123,851 $121,428 About Our Process We calculated the Select Equity, Average Equity and American Funds groups by building equal-weighted portfolios using the average monthly returns of the funds and then calculating a growth of $1, for the groups and the index for each rolling period indicated (one-, three-, five- and 1-year) over the period from January 1997 to December 216. 5 year 1 year $143,947 $14,29 $134,488 $13,488 $19,293 $18,914 $165,187 $157,421 Data from published sources calculated internally. Based on monthly returns from January 1997 to December 216. Hypothetical results assume reinvestment of all dividends and are based on averages of monthly returns for all one-, three-, five- and 1-year rolling periods from January 1997 to December 216. Portfolios were rebalanced monthly. Past results are not predictive of results in future periods. The index measured is the S&P 5. The index is unmanaged and, therefore, has no expenses. Investors cannot invest directly in an index. Within the Select Equity group, there were funds whose returns meaningfully trailed the index, just as there were funds whose returns significantly outpaced it. Information on the constituents of the Select Equity and Average Equity investments can be found in the Methodology section, which is on the back page of this brochure. 5

METHODOLOGY Compiling the Fund Universe The database built to represent the universe of large-cap domestic funds drew from Morningstar s U.S. Open-End Large Value, Large Blend and Large Growth U.S. categories, with live and dead funds combined to eliminate survivorship bias. For live funds, only the oldest share class was used. For dead funds with multiple share classes, the median monthly returns were used. For fee-related illustrations that include dead funds with multiple share classes, the median expense ratios were used. This screening resulted in seven qualifying domestic American Funds (AMCAP Fund, The Growth Fund of America, The New Economy Fund, American Mutual Fund, Fundamental Investors, The Investment Company of America and Washington Mutual Investors Fund). Funds are identified as domestic based on Morningstar categories, although a number of the U.S.-focused American Funds can invest some assets in non-u.s. securities. Tracking Least Expensive Quartile/Highest Manager Ownership In conducting our research, we searched Morningstar s database for large-cap actively managed funds that were in both the lowest quartile ranked by expense ratio and the highest quartile ranked by manager ownership at the firm level. For this analysis we relied on Morningstar Direct data analysis software. Least expensive quartile was calculated using annual report Net Expense Ratio (NER) for all observed Morningstar categories for the Results as of March 31, 217 Class A Shares at MOP (Maximum Offering Price) 2-year period indicated. For funds with missing expense ratios, gaps between two available data points were filled in using linear interpolation. Linear interpolation is a statistical method used to estimate the values between two known data points in a time series. Highest manager ownership quartile was calculated using weighted averages of Morningstar screens of manager holdings at the firm level. Each fund was assigned the weighted average of its firm manager holding. Funds without values were excluded from the quartile rankings. The combination of least expensive NER and highest manager ownership quartiles (the screened active core) was the result of a cross-section of the two screens. Only those funds with both the lowest expense ratios and the highest manager ownership were included. Investors who wish to identify funds that ranked in the least expensive quartile by NER can rely on the following rule of thumb: The least expensive quartile of funds ranked by net expense ratio roughly corresponded with those reporting expenses below 1.% for large-cap domestic funds. Expense ratios for institutional and advisory share classes would be approximately 25 basis points lower, or below.75% for large-cap domestic funds. Investors who wish to identify funds that ranked in the top quartile by manager ownership can rely on the following rule of thumb: The top quartile of funds ranked by manager ownership roughly corresponded with firms that had 55% or more assets in the Inception Date fund family complex in which at least one fund manager had invested a minimum of $1 million. The Securities and Exchange Commission (SEC) requires that mutual funds disclose all fees and expenses in a standardized table published in the front portion of the fund prospectus. The SEC also requires that a fund disclose in its statements of additional information (SAI) certain information about its portfolio managers, including ownership of securities in the fund. Ownership disclosure is made using the following seven ranges: none; $1 to $1,; $1,1 to $5,; $5,1 to $1,; $1,1 to $5,; $5,1 to $1,,; and over $1,,. Investment Disclosure Investing outside the United States involves risks, such as currency fluctuations, periods of illiquidity and price volatility, as more fully described in the prospectus. These risks may be heightened in connection with investments in developing countries. The return of principal for bond funds and for funds with significant 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. Investments in mortgage-related securities involve additional risks, such as prepayment risk, as more fully described in the prospectus. Higher yielding, higher risk bonds can fluctuate in price more than investment-grade bonds, so investors should maintain a long-term perspective. Figures shown are past results for Class A shares 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 investors may lose money. Investing for short periods makes losses more likely. Fund results reflect deduction of maximum sales charge (5.75% for equity funds). For current information and month-end results, visit americanfunds.com. Average Annual Total Returns (%) 1 Year 5 Years 1 Years Lifetime Expense Ratio (%) AMCAP Fund 5/1/67 8.38 11.54 7.37 11.31.67 American Mutual Fund 2/21/5 8.57 1.48 6.37 11.52.59 Fundamental Investors 8/1/78 12.51 11.95 6.94 12.28.61 The Growth Fund of America 12/1/73 13.41 12.36 6.99 13.37.66 The Investment Company of America 1/1/34 1.74 11.68 6.23 12.6.59 The New Economy Fund 12/1/83 9.83 11.98 7.32 1.91.81 Washington Mutual Investors Fund SM 7/31/52 9.5 11.27 6.21 11.73.58 Investment results assume all distributions are reinvested and reflect applicable fees and expenses. Expense ratios are as of each fund s prospectus available at the time of publication. When applicable, investment results reflect fee waivers and/or expense reimbursements, without which results would have been lower. Please see americanfunds.com for more information. 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 3, 217, this brochure must be accompanied by the most recent American Funds quarterly statistical update. The S&P 5 Index is a product of S&P Dow Jones Indices LLC and/or its affiliates and has been licensed for use by Capital Group. Copyright 217 S&P Dow Jones Indices LLC, a division of S&P Global, and/or its affiliates. All rights reserved. Redistribution or reproduction in whole or in part are prohibited without written permission of S&P Dow Jones Indices LLC. Lit. No. MFCPBR-63-617P Litho in USA CGD/SCG/8254-S6246 217 American Funds Distributors, Inc. Printed on recycled paper