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As Of Filer Filing For·On·As Docs:Size Issuer Agent 3/30/07 American Fds Target Date … Series 487 3/30/07 1:397K Investment Co of America |
Document/Exhibit Description Pages Size 1: 487 American Funds Target Retirement Series HTML 347K
| Exchange |
AMERICAN FUNDS 2050 TARGET DATE RETIREMENT FUND(SM) AMERICAN FUNDS 2045 TARGET DATE RETIREMENT FUND(SM) AMERICAN FUNDS 2040 TARGET DATE RETIREMENT FUND(SM) AMERICAN FUNDS 2035 TARGET DATE RETIREMENT FUND(SM) AMERICAN FUNDS 2030 TARGET DATE RETIREMENT FUND(SM) AMERICAN FUNDS 2025 TARGET DATE RETIREMENT FUND(SM) AMERICAN FUNDS 2020 TARGET DATE RETIREMENT FUND(SM) AMERICAN FUNDS 2015 TARGET DATE RETIREMENT FUND(SM) AMERICAN FUNDS 2010 TARGET DATE RETIREMENT FUND(SM) EACH A FUND OF AMERICAN FUNDS TARGET DATE RETIREMENT SERIES,(SM) INC. Part B Statement of Additional Information February 1, 2007 (as supplemented April 1, 2007) This document is not a prospectus but should be read in conjunction with the current prospectus of American Funds Target Date Retirement Series (the "series") dated February 1, 2007. You may obtain a prospectus from your financial adviser or by writing to the series at the following address: American Funds Target Date Retirement Series Attention: Secretary 333 South Hope Street Los Angeles, California 90071 213/486-9200 Certain privileges and/or services described below may not be available to all shareholders (including shareholders who purchase shares at net asset value through eligible retirement plans) depending on the shareholder's investment dealer or retirement plan recordkeeper. Please see your financial adviser, investment dealer, plan recordkeeper or employer for more information. TABLE OF CONTENTS Item Page no. ---- -------- Certain investment limitations and guidelines . . . . . . . . . . . 2 Description of certain securities and investment techniques . . . . 2 Fundamental policies and investment restrictions. . . . . . . . . . 13 Management of the series . . . . . . . . . . . . . . . . . . . . . 24 Execution of portfolio transactions . . . . . . . . . . . . . . . . 36 Disclosure of portfolio holdings. . . . . . . . . . . . . . . . . . 36 Price of shares . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Taxes and distributions . . . . . . . . . . . . . . . . . . . . . . 40 Purchase and exchange of shares . . . . . . . . . . . . . . . . . . 41 Sales charges . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Sales charge reductions and waivers . . . . . . . . . . . . . . . . 45 Selling shares. . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Shareholder account services and privileges . . . . . . . . . . . . 50 General information . . . . . . . . . . . . . . . . . . . . . . . . 52 Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Financial statements American Funds Target Date Retirement Series -- Page 1
CERTAIN INVESTMENT LIMITATIONS AND GUIDELINES The following limitations and guidelines are considered at the time of purchase, under normal circumstances, and are based on a percentage of each fund's net assets unless otherwise noted. This summary is not intended to reflect all of the funds' investment limitations. * * * * * * DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT TECHNIQUES The descriptions below are intended to supplement the material in the prospectus under "Investment objectives, strategies and risks" which provides information about the series and the underlying funds. INVESTMENT TECHNIQUES RELATING TO THE FUNDS IN THE SERIES -- In addition to its investments in the underlying funds, a portion of each fund's assets, which will normally be less than 20%, may be held in cash or cash equivalents, including but not limited to obligations of banks, such as time deposits or invested in high-quality taxable short-term securities of up to one year in maturity. Such investments may include: (a) obligations of the U.S. Treasury; (b) obligations of agencies and instrumentalities of the U.S. government; (c) money market instruments, such as certificates of deposit issued by domestic banks, corporate commercial paper, and bankers' acceptances and (d) repurchase agreements. Each fund may take temporary defensive measures in response to adverse market, economic, political, or other conditions as determined by the adviser. Such measures could include, but are not limited to, investments in cash (including foreign currency) or cash equivalents, including, but not limited to, obligations of banks (including certificates of deposit, bankers' acceptances, time deposits and repurchase agreements), commercial paper, short-term notes, U.S. Government Securities and related repurchase agreements. There is no limit on the extent to which each fund may take temporary defensive measures. In taking such measures, each fund may fail to achieve its investment objective. INVESTMENT TECHNIQUES RELATING TO THE UNDERLYING FUNDS -- Because the following is a combined summary of investment strategies of all of the underlying funds, certain matters described herein will only apply to your fund to the extent it is invested in an underlying fund that engages in such a strategy. Unless a strategy or policy described below is specifically prohibited by the investment restrictions explained in the fund's prospectus or "Fundamental policies and investment restrictions" of this SAI, or by applicable law, each fund in the series may engage in each of the practices described below. The underlying funds may experience difficulty liquidating certain portfolio securities during significant market declines or periods of heavy redemptions. EQUITY SECURITIES -- An underlying fund may invest in equity securities. Equity securities represent an ownership position in a company. Equity securities held by an underlying fund typically consist of common stocks and may also include securities with equity conversion or purchase rights. The prices of equity securities fluctuate based on, among other things, events specific to their issuers and market, economic and other conditions. The prices of these securities can also be adversely affected by the outcome of financial contracts (such as derivatives) held by third parties relating to various assets or indices. American Funds Target Date Retirement Series -- Page 2
There may be little trading in the secondary market for particular equity securities, which may adversely affect an underlying fund's ability to value accurately or dispose of such equity securities. Adverse publicity and investor perceptions, whether or not based on fundamental analysis, may decrease the value and/or liquidity of equity securities. DEBT SECURITIES -- An underlying fund may invest in debt securities. Debt securities are used by issuers to borrow money. Generally, issuers pay investors periodic interest and repay the amount borrowed either periodically during the life of the security and/or at maturity. Some debt securities, such as zero coupon bonds, do not pay current interest, but are purchased at a discount from their face values and accrue interest at the applicable coupon rate over a specified time period. The market prices of debt securities fluctuate depending on such factors as interest rates, credit quality and maturity. In general, market prices of debt securities decline when interest rates rise and increase when interest rates fall. The prices of these securities can be adversely affected by the outcome of financial contracts (such as derivatives) held by third parties relating to various assets or indices. SECURITIES WITH EQUITY AND DEBT CHARACTERISTICS -- An underlying fund may invest in securities that have a combination of equity and debt characteristics. These securities may at times behave more like equity than debt and vice versa. Some types of convertible bonds or preferred stocks automatically convert into common stocks and some may be subject to redemption at the option of the issuer at a predetermined price. The prices and yields of nonconvertible preferred stocks generally move with changes in interest rates and the issuer's credit quality, similar to the factors affecting debt securities. Certain of these securities will be treated as debt for investment limit purposes of an underlying fund. Convertible bonds, convertible preferred stocks and other securities may sometimes be converted, or may automatically convert, into common stocks or other securities at a stated conversion ratio. These securities, prior to conversion, may pay a fixed rate of interest or a dividend. Because convertible securities have both debt and equity characteristics, their value varies in response to many factors, including the value of the underlying assets, general market and economic conditions, and convertible market valuations, as well as changes in interest rates, credit spreads and the credit quality of the issuer. WARRANTS AND RIGHTS -- An underlying fund may purchase warrants, which may be issued together with bonds or preferred stocks. Warrants generally entitle the holder to buy a proportionate amount of common stock at a specified price, usually higher than the current market price. Warrants may be issued with an expiration date or in perpetuity. Rights are similar to warrants except that they normally entitle the holder to purchase common stock at a lower price than the current market price. INVESTING IN SMALLER CAPITALIZATION STOCKS -- An underlying fund may invest in the stocks of smaller capitalization companies (typically companies with market capitalizations of less than $3.5 billion at the time of purchase). The investment adviser believes that the issuers of smaller capitalization stocks often provide attractive investment opportunities. However, investing in smaller capitalization stocks can involve greater risk than is customarily associated with investing in stocks of larger, more established companies. For example, smaller companies often have limited product lines, limited markets or financial resources, may be dependent for management on one or a few key persons and can be more susceptible to losses. Also, their securities may be thinly traded (and therefore have to be sold at a discount from current prices or sold in small lots over an extended period of time), may be followed by fewer investment research analysts and American Funds Target Date Retirement Series -- Page 3
may be subject to wider price swings, thus creating a greater chance of loss than securities of larger capitalization companies. INVESTING IN PRIVATE COMPANIES -- An underlying fund may invest in companies that have not publicly offered their securities. Investing in private companies can involve greater risks than those associated with investing in publicly traded companies. For example, the securities of a private company may be subject to the risk that market conditions, developments within the company, investor perception, or regulatory decisions may delay or prevent the company from ultimately offering its securities to the public. Furthermore, these investments are generally considered to be illiquid until a company's public offering and are often subject to additional contractual restrictions on resale that would prevent the underlying fund from selling its company shares for a period of time following the public offering. Investments in private companies can offer an underlying fund significant growth opportunities at attractive prices. However these investments can pose greater risk, and, consequently, there is no guarantee that positive results can be achieved in the future. INVESTING IN VARIOUS COUNTRIES -- Investing outside the United States may involve additional risks caused by, among other things, currency controls and fluctuating currency values; different accounting, auditing, financial reporting and legal standards and practices in some countries; changing local, regional and global economic, political and social conditions; expropriation; changes in tax policy; greater market volatility; differing securities market structures; higher transaction costs; and various administrative difficulties, such as delays in clearing and settling portfolio transactions or in receiving payment of dividends. However, in the opinion of the investment adviser, investing outside the United States also can reduce certain portfolio risks due to greater diversification opportunities. The risks described above may be heightened in connection with investments in developing countries. Although there is no universally accepted definition, the investment adviser generally considers a developing country as a country that is in the earlier stages of its industrialization cycle with a low per capita gross domestic product ("GDP") and a low market capitalization to GDP ratio relative to those in the United States and the European Union. Historically, the markets of developing countries have been more volatile than the markets of developed countries. An underlying fund may invest in securities of issuers in developing countries only to a limited extent. Additional costs could be incurred in connection with an underlying fund's investment activities outside the United States. Brokerage commissions may be higher outside the United States, and the underlying fund will bear certain expenses in connection with its currency transactions. Furthermore, increased custodian costs may be associated with maintaining assets in certain jurisdictions. CERTAIN RISK FACTORS RELATED TO DEVELOPING COUNTRIES CURRENCY FLUCTUATIONS -- An underlying fund's investments may be valued in currencies other than the U.S. dollar. Certain developing countries' currencies have experienced and may in the future experience significant declines against the U.S. dollar. For example, if the U.S. dollar appreciates against foreign currencies, the value of the underlying fund's securities holdings would generally depreciate and vice versa. Consistent with its investment objective, an underlying fund may engage in certain currency transactions to hedge against currency fluctuations. See "Currency Transactions" below. American Funds Target Date Retirement Series -- Page 4
GOVERNMENT REGULATION -- The political, economic and social structures of certain developing countries may be more volatile and less developed than those in the United States. Certain developing countries lack uniform accounting, auditing and financial reporting standards, have less governmental supervision of financial markets than in the United States, and do not honor legal rights enjoyed in the United States. Certain governments may be more unstable and present greater risks of nationalization or restrictions on foreign ownership of local companies. Repatriation of investment income, capital and the proceeds of sales by foreign investors may require governmental registration and/or approval in some developing market countries. While an underlying fund may only invest in markets where these restrictions are considered acceptable, a country could impose new or additional repatriation restrictions after the underlying fund's investment. If this happened, the underlying fund's response might include, among other things, applying to the appropriate authorities for a waiver of the restrictions or engaging in transactions in other markets designed to offset the risks of decline in that country. Such restrictions will be considered in relation to the underlying fund's liquidity needs and all other positive and negative factors. Further, some attractive equity securities may not be available to the underlying fund due to foreign shareholders already holding the maximum amount legally permissible. While government involvement in the private sector varies in degree among developing countries, such involvement may in some cases include government ownership of companies in certain sectors, wage and price controls or imposition of trade barriers and other protectionist measures. With respect to any developing country, there is no guarantee that some future economic or political crisis will not lead to price controls, forced mergers of companies, expropriation, or creation of government monopolies to the possible detriment of the underlying fund's investments. LESS DEVELOPED SECURITIES MARKETS -- Developing countries may have less well-developed securities markets and exchanges. These markets have lower trading volumes than the securities markets of more developed countries. These markets may be unable to respond effectively to increases in trading volume. Consequently, these markets may be substantially less liquid than those of more developed countries, and the securities of issuers located in these markets may have limited marketability. These factors may make prompt liquidation of substantial portfolio holdings of an underlying fund difficult or impossible at times. SETTLEMENT RISKS -- Settlement systems in developing countries are generally less well organized than developed markets. Supervisory authorities may also be unable to apply standards comparable to those in developed markets. Thus, there may be risks that settlement may be delayed and that cash or securities belonging to the underlying fund may be in jeopardy because of failures of or defects in the systems. In particular, market practice may require that payment be made before receipt of the security being purchased or that delivery of a security be made before payment is received. In such cases, default by a broker or bank (the "counterparty") through whom the transaction is effected might cause the underlying fund to suffer a loss. An underlying fund will seek, where possible, to use counterparties whose financial status is such that this risk is reduced. However, there can be no certainty that the underlying fund will be successful in eliminating this risk, particularly as counterparties operating in developing countries frequently lack the substance or financial resources of those in developed countries. There may also American Funds Target Date Retirement Series -- Page 5
be a danger that, because of uncertainties in the operation of settlement systems in individual markets, competing claims may arise with respect to securities held by or to be transferred to the underlying fund. INVESTOR INFORMATION -- An underlying fund may encounter problems assessing investment opportunities in certain developing securities markets in light of limitations on available information and different accounting, auditing and financial reporting standards. In such circumstances, the underlying fund's investment adviser will seek alternative sources of information, and to the extent the investment adviser may not be satisfied with the sufficiency of the information obtained with respect to a particular market or security, the underlying fund will not invest in such market or security. TAXATION -- Taxation of dividends and capital gains received by non-residents varies among developing countries and, in some cases, is comparatively high. In addition, developing countries typically have less well-defined tax laws and procedures and such laws may permit retroactive taxation so that an underlying fund could in the future become subject to local tax liability that it had not reasonably anticipated in conducting its investment activities or valuing its assets. LITIGATION -- An underlying fund and its shareholders may encounter substantial difficulties in obtaining and enforcing judgments against non-U.S. resident individuals and companies. FRAUDULENT SECURITIES -- Securities purchased by an underlying fund may subsequently be found to be fraudulent or counterfeit, resulting in a loss to the underlying fund. U.S. GOVERNMENT OBLIGATIONS -- U.S. government obligations are securities backed by the full faith and credit of the U.S. government. U.S. government obligations include the following types of securities: U.S. TREASURY SECURITIES -- U.S. Treasury securities include direct obligations of the U.S. Treasury, such as Treasury bills, notes and bonds. For these securities, the payment of principal and interest is unconditionally guaranteed by the U.S. government, and thus they are of the highest possible credit quality. Such securities are subject to variations in market value due to fluctuations in interest rates, but, if held to maturity, will be paid in full. FEDERAL AGENCY SECURITIES BACKED BY "FULL FAITH AND CREDIT" -- The securities of certain U.S. government agencies and government-sponsored entities are guaranteed as to the timely payment of principal and interest by the full faith and credit of the U.S. government. Such agencies and entities include the Government National Mortgage Association (Ginnie Mae), the Veterans Administration (VA), the Federal Housing Administration (FHA), the Export-Import Bank (Exim Bank), the Overseas Private Investment Corporation (OPIC), the Commodity Credit Corporation (CCC) and the Small Business Administration (SBA). OTHER FEDERAL AGENCY OBLIGATIONS -- Additional federal agency securities are neither direct obligations of, nor guaranteed by, the U.S. government. These obligations include securities issued by certain U.S. government agencies and government-sponsored entities. However, they generally involve some form of federal sponsorship: some operate under a government charter; some are backed by specific types of collateral; some are supported by the issuer's right to American Funds Target Date Retirement Series -- Page 6
borrow from the Treasury; and others are supported only by the credit of the issuing government agency or entity. These agencies and entities include, but are not limited to: Federal Home Loan Bank, Federal Home Loan Mortgage Corporation (Freddie Mac), Federal National Mortgage Association (Fannie Mae), Tennessee Valley Authority and Federal Farm Credit Bank System. PASS-THROUGH SECURITIES -- An underlying fund may invest in various debt obligations backed by pools of mortgages or other assets including, but not limited to, loans on single family residences, home equity loans, mortgages on commercial buildings, credit card receivables and leases on airplanes or other equipment. Principal and interest payments made on the underlying asset pools backing these obligations are typically passed through to investors, net of any fees paid to any guarantor of the securities. Pass-through securities may have either fixed or adjustable coupons. These securities include: MORTGAGE-BACKED SECURITIES -- These securities may be issued by U.S. government agencies and government-sponsored entities, such as Ginnie Mae, Fannie Mae and Freddie Mac, and by private entities. The payment of interest and principal on mortgage-backed obligations issued by U.S. government agencies may be guaranteed by the full faith and credit of the U.S. government (in the case of Ginnie Mae), or may be guaranteed by the issuer (in the case of Fannie Mae and Freddie Mac). However, these guarantees do not apply to the market prices and yields of these securities, which vary with changes in interest rates. Mortgage-backed securities issued by private entities are structured similarly to those issued by U.S. government agencies. However, these securities and the underlying mortgages are not guaranteed by any government agencies. These securities generally are structured with one or more types of credit enhancement such as insurance or letters of credit issued by private companies. Mortgage-backed securities generally permit borrowers to prepay their underlying mortgages. Prepayments can alter the effective maturity of these instruments. COLLATERALIZED MORTGAGE OBLIGATIONS (CMOS) -- CMOs are also backed by a pool of mortgages or mortgage loans, which are divided into two or more separate bond issues. CMOs issued by U.S. government agencies are backed by agency mortgages, while privately issued CMOs may be backed by either government agency mortgages or private mortgages. Payments of principal and interest are passed through to each bond issue at varying schedules resulting in bonds with different coupons, effective maturities and sensitivities to interest rates. Some CMOs may be structured in a way that when interest rates change, the impact of changing prepayment rates on the effective maturities of certain issues of these securities is magnified. CMOs may be less liquid or may exhibit greater price volatility than other types of mortgage or asset-backed securities. COMMERCIAL MORTGAGE-BACKED SECURITIES -- These securities are backed by mortgages on commercial property, such as hotels, office buildings, retail stores, hospitals and other commercial buildings. These securities may have a lower prepayment uncertainty than other mortgage-related securities because commercial mortgage loans generally prohibit or impose penalties on prepayments of principal. In addition, commercial mortgage-related securities often are structured with some form of credit enhancement to protect against potential losses on the underlying mortgage loans. Many of the risks of investing in commercial mortgage-backed securities reflect the risks of investing in the real estate securing the underlying mortgage loans, including the effects American Funds Target Date Retirement Series -- Page 7
of local and other economic conditions on real estate markets, the ability of tenants to make rental payments and the ability of a property to attract and retain tenants. Commercial mortgage-backed securities may be less liquid or exhibit greater price volatility than other types of mortgage or asset-backed securities. ASSET-BACKED SECURITIES -- These securities are backed by other assets such as credit card, automobile or consumer loan receivables, retail installment loans or participations in pools of leases. Credit support for these securities may be based on the underlying assets and/or provided through credit enhancements by a third party. The values of these securities are sensitive to changes in the credit quality of the underlying collateral, the credit strength of the credit enhancement, changes in interest rates and at times the financial condition of the issuer. Some asset-backed securities also may receive prepayments that can change their effective maturities. "IOs" and "POs" are issued in portions or tranches with varying maturities and characteristics. Some tranches may only receive the interest paid on the underlying mortgages (IOs) and others may only receive the principal payments (POs). The values of IOs and POs are extremely sensitive to interest rate fluctuations and prepayment rates, and IOs are also subject to the risk of early repayment of the underlying mortgages that will substantially reduce or eliminate interest payments. CURRENCY TRANSACTIONS -- An underlying fund may purchase and sell currencies to facilitate securities transactions and enter into forward currency contracts to protect against changes in currency exchange rates. A forward currency contract is an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days from the date of the contract agreed upon by the parties, at a price set at the time of the contract. Forward currency contracts entered into by an underlying fund will involve the purchase or sale of one currency against the U.S. dollar. While entering into forward currency transactions could minimize the risk of loss due to a decline in the value of the hedged currency, it could also limit any potential gain that may result from an increase in the value of the currency. Such underlying fund will not generally attempt to protect against all potential changes in exchange rates. The underlying fund will segregate liquid assets that will be marked to market daily to meet its forward contract commitments to the extent required by the Securities and Exchange Commission. Certain provisions of the Internal Revenue Code may affect the extent to which an underlying fund may enter into forward contracts. Such transactions also may affect the character and timing of income, gain or loss recognized by the fund for U.S. federal income tax purposes. FORWARD COMMITMENT, WHEN ISSUED AND DELAYED DELIVERY TRANSACTIONS -- An underlying fund may enter into commitments to purchase or sell securities at a future date. When an underlying fund agrees to purchase such securities, it assumes the risk of any decline in value of the security from the date of the agreement. If the other party to such a transaction fails to deliver or pay for the securities, the fund could miss a favorable price or yield opportunity, or could experience a loss. An underlying fund will not use these transactions for the purpose of leveraging and will segregate liquid assets that will be marked to market daily in an amount sufficient to meet its payment obligations in these transactions. Although these transactions will not be entered into for leveraging purposes, to the extent the underlying fund's aggregate commitments in connection with these transactions exceed its segregated assets, the underlying fund temporarily could be in American Funds Target Date Retirement Series -- Page 8
a leveraged position (because it may have an amount greater than its net assets subject to market risk). Should market values of the underlying fund's portfolio securities decline while the underlying fund is in a leveraged position, greater depreciation of its net assets would likely occur than if it were not in such a position. An underlying fund will not borrow money to settle these transactions and, therefore, will liquidate other portfolio securities in advance of settlement if necessary to generate additional cash to meet its obligations. After a transaction is entered into, the underlying fund may still dispose of or renegotiate the transaction. Additionally, prior to receiving delivery of securities as part of a transaction, the underlying fund may sell such securities. REPURCHASE AGREEMENTS -- An underlying fund may enter into repurchase agreements under which the underlying fund buys a security and obtains a simultaneous commitment from the seller to repurchase the security at a specified time and price. Repurchase agreements permit an underlying fund to maintain liquidity and earn income over periods of time as short as overnight. The seller must maintain with the underlying fund's custodian collateral equal to at least 100% of the repurchase price, including accrued interest, as monitored daily by the investment adviser. An underlying fund will only enter into repurchase agreements involving securities in which it could otherwise invest and with selected banks and securities dealers whose financial condition is monitored by the investment adviser. If the seller under the repurchase agreement defaults, the underlying fund may incur a loss if the value of the collateral securing the repurchase agreement has declined and may incur disposition costs in connection with liquidating the collateral. If bankruptcy proceedings are commenced with respect to the seller, realization of the collateral by the underlying fund may be delayed or limited. An underlying fund may also enter into reverse repurchase agreements and "roll" transactions. A reverse repurchase agreement involves the sale of a security by a fund and its agreement to repurchase the security at a specified time and price. A "roll" transaction involves the sale of mortgage-backed or other securities together with a commitment to purchase similar, but not identical, securities at a later date. An underlying fund assumes the risk of price and yield fluctuations during the time of the commitment. Such fund will segregate liquid assets that will be marked to market daily in an amount sufficient to meet its payment obligations under "roll" transactions and reverse repurchase agreements with broker-dealers (no collateral is required for reverse repurchase agreements with banks). INFLATION-INDEXED BONDS -- An underlying fund may invest in inflation-indexed bonds issued by governments, their agencies or instrumentalities and corporations. The principal value of this type of bond is adjusted in response to changes in the level of the consumer price index. The interest rate is fixed at issuance as a percentage of this adjustable principal. The actual interest income may therefore both rise and fall as the level of the consumer price index rises and falls. In particular, in a period of deflation the interest income would fall. While the interest income may adjust upward or downward without limit in response to changes in the consumer price index, the principal has a floor at par, meaning that the investor receives at least the par value at redemption. Repayment of the original bond principal upon maturity (as adjusted for inflation) is guaranteed in the case of U.S. Treasury inflation-indexed bonds, even during a period of deflation. However, the current market value of the bonds is not guaranteed and will fluctuate. MATURITY -- The maturity of a debt instrument is normally its ultimate maturity date unless it is likely that a maturity shortening device (such as a call, put, refunding or redemption provision) will cause the debt instrument to be repaid. The investment adviser seeks to anticipate American Funds Target Date Retirement Series -- Page 9
movements in interest rates and may adjust the maturity distribution of an underlying fund's portfolio accordingly. Keeping in mind the underlying fund's objective, the investment adviser may increase the underlying fund's exposure to price volatility when it appears likely to increase current income without undue risk of capital losses. The investment adviser will consider the impact on effective maturity of potential changes in the financial condition of issuers and in market interest rates in making investment selections for the underlying fund. Under normal market conditions, longer term securities yield more than shorter term securities, but are subject to greater price fluctuations. REINSURANCE RELATED NOTES AND BONDS -- An underlying fund may invest in reinsurance related notes and bonds. These instruments, which are typically issued by special purpose reinsurance companies, transfer an element of insurance risk to the note or bond holders. For example, such a note or bond could provide that the reinsurance company would not be required to repay all or a portion of the principal value of the note or bond if losses due to a catastrophic event under the policy (such as a major hurricane) exceed certain dollar thresholds. Consequently, an underlying fund may lose the entire amount of its investment in such bonds or notes if such an event occurs and losses exceed certain dollar thresholds. In this instance, investors would have no recourse against the insurance company. These instruments may be issued with fixed or variable interest rates and rated in a variety of credit quality categories by the rating agencies. INVERSE FLOATING RATE NOTES -- An underlying fund may invest to a very limited extent (no more than 1.5% of its assets) in inverse floating rate notes (a type of derivative instrument). These notes have rates that move in the opposite direction of prevailing interest rates. A change in prevailing interest rates will often result in a greater change in the instruments' interest rates. As a result, these instruments may have a greater degree of volatility than other types of interest-bearing securities. VARIABLE AND FLOATING RATE OBLIGATIONS -- The interest rates payable on certain securities in which an underlying fund may invest may not be fixed but may fluctuate based upon changes in market rates or credit ratings. Variable and floating rate obligations bear coupon rates that are adjusted at designated intervals, based on the then current market rates of interest or credit ratings. The rate adjustment features tend to limit the extent to which the market value of the obligations will fluctuate. LOWER RATED DEBT SECURITIES -- Lower rated debt securities, rated Ba or below by Moody's and/ or BB or below by S&P or unrated but determined to be of equivalent quality, are described by the rating agencies as speculative and involve greater risk of default or price changes due to changes in the issuer's creditworthiness than higher rated debt securities, or they may already be in default. The market prices of these securities may fluctuate more than higher quality securities and may decline significantly in periods of general economic difficulty. It may be more difficult to dispose of, and to determine the value of, lower rated debt securities. Certain additional risk factors relating to debt securities are discussed below: SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES -- Debt securities may be sensitive to economic changes, political and corporate developments, and interest rate changes. In addition, during an economic downturn or substantial period of rising interest rates, issuers that are highly leveraged may experience increased financial stress that would adversely affect their ability to meet projected business goals, to obtain additional financing and to service their principal and interest payment obligations. Periods of American Funds Target Date Retirement Series -- Page 10
economic change and uncertainty also can be expected to result in increased volatility of market prices and yields of certain debt securities. PAYMENT EXPECTATIONS -- Debt securities may contain redemption or call provisions. If an issuer exercises these provisions in a lower interest rate market, the fund would have to replace the security with a lower yielding security, resulting in decreased income to investors. If the issuer of a debt security defaults on its obligations to pay interest or principal or is the subject of bankruptcy proceedings, an underlying fund may incur losses or expenses in seeking recovery of amounts owed to it. LIQUIDITY AND VALUATION -- There may be little trading in the secondary market for particular debt securities, which may affect adversely an underlying fund's ability to value accurately or dispose of such debt securities. Adverse publicity and investor perceptions, whether or not based on fundamental analysis, may decrease the value and/or liquidity of debt securities. The investment adviser attempts to reduce the risks described above through diversification of an underlying fund's portfolio and by credit analysis of each issuer, as well as by monitoring broad economic trends and corporate and legislative developments, but there can be no assurance that it will be successful in doing so. DEPOSITARY RECEIPTS - ADRs, in registered form, are designed for use in the U.S. securities markets and are generally dollar denominated. EDRs, in bearer form, are designed for use in the European securities markets and may be dollar denominated. GDRs, in bearer form, primarily are designed for use in the European and the U.S. securities markets, and may be dollar denominated. Depositary receipts represent and may be converted into the underlying foreign security. OPTIONS ON U.S. TREASURY SECURITIES - An underlying fund may purchase put and call options on U.S. Treasury securities ("Treasury securities"). A put (call) option gives the fund as purchaser of the option the right (but not the obligation) to sell (buy) a specified amount of Treasury securities at the exercise price until the expiration of the option. The value of a put (call) option on Treasury securities generally increases (decreases) with an increase (decrease) in prevailing interest rates. Accordingly, the underlying fund would purchase puts (calls) in anticipation of, or to protect against, an increase in interest rates. These options are listed on an exchange or traded over-the-counter ("OTC options"). Exchange-traded options have standardized exercise prices and expiration dates; OTC options are two-party contracts with negotiated exercise prices and expiration dates. OTC options differ from exchange-traded options in that OTC options are transacted with dealers directly and not through a clearing corporation (which guarantees performance). Consequently, there is a risk of non-performance by the dealer. Since no exchange is involved, OTC options are valued on the basis of a quote provided by the dealer. In the case of OTC options, there can be no assurance that a liquid secondary market will exist for any particular option at any specific time. LOAN PARTICIPATIONS AND ASSIGNMENTS -- Loan participations are loans or other direct debt instruments that are interests in amounts owed by a corporate, governmental or other borrower to another party. They may represent amounts owed to lenders or lending syndicates to suppliers of goods or services, or to other parties. An underlying fund may have the right to receive payments of principal, interest and any fees to which it is entitled only from the lender selling the participation and only upon receipt by the lender of the payments from the borrower. In American Funds Target Date Retirement Series -- Page 11
connection with purchasing participations, an underlying fund generally will have no right to enforce compliance by the borrower with the terms of the loan agreement relating to the loan, nor any rights of set-off against the borrower, and the underlying fund may not directly benefit from any collateral supporting the loan in which it has purchased the participation. As a result, the underlying fund will be subject to the credit risk of both the borrower and the lender that is selling the participation. In the event of the insolvency of the lender selling a participation, a fund may be treated as a general creditor of the lender and may not benefit from any set-off between the lender and the borrower. When an underlying fund purchases assignments from lenders, it acquires direct rights against the borrower on the loan. However, because assignments are arranged through private negotiations between potential assignees and potential assignors, the rights and obligations acquired by an underlying fund as the purchaser of an assignment may differ from, and be more limited than, those held by the assigning lender. Investments in loan participations and assignments present the possibility that the underlying fund could be held liable as a co-lender under emerging legal theories of lender liability. In addition, if the loan is foreclosed, the underlying fund could be part owner of any collateral and could bear the costs and liabilities of owning and disposing of the collateral. Such underlying fund anticipates that loan participations could be sold only to a limited number of institutional investors. In addition, some loan participations and assignments may not be rated by major rating agencies and may not be protected by the securities laws. REAL ESTATE INVESTMENT TRUSTS -- An underlying fund may invest in securities issued by real estate investment trusts (REITs), which primarily invest in real estate or real estate-related loans. Equity REITs own real estate properties, while mortgage REITs hold construction, development and/or long-term mortgage loans. The values of REITs may be affected by changes in the value of the underlying property of the trusts, the creditworthiness of the issuer, property taxes, interest rates, tax laws and regulatory requirements, such as those relating to the environment. Both types of REITs are dependent upon management skill and the cash flows generated by their holdings, the real estate market in general and the possibility of failing to qualify for any applicable pass-through tax treatment or failing to maintain any applicable exemptive status afforded under relevant laws. CASH AND CASH EQUIVALENTS -- These include (a) commercial paper (for example, short-term notes with maturities typically up to 12 months in length issued by corporations, governmental bodies or bank/corporation sponsored conduits (asset-backed commercial paper)) (b) short-term bank obligations (for example, certificates of deposit, bankers' acceptances (time drafts on a commercial bank where the bank accepts an irrevocable obligation to pay at maturity)) or bank notes, (c) savings association and savings bank obligations (for example, bank notes and certificates of deposit issued by savings banks or savings associations), (d) securities of the U.S. government, its agencies or instrumentalities that mature, or may be redeemed, in one year or less, and (e) corporate bonds and notes that mature, or that may be redeemed, in one year or less. Cash and cash equivalents may be denominated in U.S. dollars, non-U.S. currencies or multinational currency units. 4(2) COMMERCIAL PAPER -- An underlying fund may purchase commercial paper issued pursuant to Section 4(2) of the Securities Act of 1933 (the "1933 Act"). 4(2) commercial paper has substantially the same price and liquidity characteristics as commercial paper generally, except that the resale of 4(2) commercial paper is limited to the institutional investor marketplace. Such a restriction on resale makes 4(2) commercial paper technically a restricted security under the American Funds Target Date Retirement Series -- Page 12
1933 Act. In practice, however, 4(2) commercial paper can be resold as easily as any other unrestricted security held by the fund. Accordingly, 4(2) commercial paper has been determined to be liquid under procedures adopted by the fund's board of directors. LOANS OF PORTFOLIO SECURITIES -- An underlying fund is authorized to lend portfolio securities to selected securities dealers or other institutional investors whose financial condition is monitored by the investment adviser. The borrower must maintain with the series' custodian collateral consisting of cash, cash equivalents or U.S. government securities equal to at least 100% of the value of the borrowed securities, plus any accrued interest. The investment adviser will monitor the adequacy of the collateral on a daily basis. An underlying fund may at any time call a loan of its portfolio securities and obtain the return of the loaned securities. Such underlying fund will receive any interest paid on the loaned securities and a fee or a portion of the interest earned on the collateral. RESTRICTED OR ILLIQUID SECURITIES -- An underlying fund may purchase securities subject to restrictions on resale. Restricted securities may only be sold pursuant to an exemption from registration under the Securities Act of 1933 (the "1933 Act"), or in a registered public offering. Where registration is required, the holder of a registered security may be obligated to pay all or part of the registration expense and a considerable period may elapse between the time it decides to seek registration and the time it may be permitted to sell a security under an effective registration statement. Difficulty in selling such securities may result in a loss to the underlying fund or cause it to incur additional administrative costs. Securities (including restricted securities) not actively traded will be considered illiquid unless they have been specifically determined to be liquid under procedures adopted by the underlying fund's board of directors, taking into account factors such as the frequency and volume of trading, the commitment of dealers to make markets and the availability of qualified investors, all of which can change from time to time. An underlying fund may incur certain additional costs in disposing of illiquid securities. INVESTMENTS IN REGISTERED OPEN-END INVESTMENT COMPANIES AND UNIT INVESTMENT TRUSTS -- An underlying fund shall not acquire securities of open-end investment companies or investment unit trusts registered under the Investment Company Act of 1940 in reliance on Sections 12(d)(1)(F) or 12(d)(1)(G) of the Investment Company Act. * * * * * * FUNDAMENTAL POLICIES AND INVESTMENT RESTRICTIONS FUNDAMENTAL POLICIES -- The series has adopted the following fundamental policies and investment restrictions, which may not be changed without approval by holders of a majority of its outstanding shares. Such majority is defined in the Investment Company Act of 1940, as amended (the "1940 Act"), as the vote of the lesser of (a) 67% or more of the outstanding voting securities present at a shareholder meeting, if the holders of more than 50% of the outstanding voting securities are present in person or by proxy, or (b) more than 50% of the outstanding voting securities. All percentage limitations are considered at the time securities are purchased and are based on the fund's net assets unless otherwise indicated. None of the following investment restrictions involving a maximum percentage of assets will be considered violated unless the excess occurs immediately after, and is caused by, an acquisition by the fund. American Funds Target Date Retirement Series -- Page 13
Each fund in the series may not: 1. Act as underwriter of securities issued by other persons. 2. Borrow money in excess of 33-1/3% of the value of its total assets (not including the amount borrowed). 3. Buy or sell real estate in the ordinary course of business; however, the fund may invest in securities secured by real estate or interests therein or issued by companies, including real estate investment trusts, which invest in real estate or interests therein. 4. Purchase or deal in commodities or commodity contracts in the ordinary course of its business; provided, however, that this restriction shall not prohibit the fund from purchasing, selling or holding foreign currencies or entering into forward foreign currency contracts. 5. Lend any security or make any other loan if, as a result, more than 15% of its total assets would be lent to third parties, but this limitation does not apply to purchases of debt securities or to repurchase agreements. 6. Purchase securities of any company for the purpose of exercising control or management. 7. Purchase any securities of any issuer, except the U.S. government (or its instrumentalities) or securities issued by investment companies, if immediately after and as a result of such investment (1) the market value of the securities of such other issuer shall exceed 5% of the market value of the total assets of the fund, or (2) the fund shall own more than 10% of the outstanding voting securities of such issuer, provided that this restriction shall apply only as to 75% of the fund's total assets. 8. Purchase any securities (other than securities issued or guaranteed by the U.S. government or its agencies or instrumentalities or securities issued by investment companies) if immediately after and as a result of such purchase 25% or more of the market value of the total assets of the fund would be invested in securities of companies in any one industry. (None of the underlying funds has a policy to concentrate in any one industry.) 9. Issue senior securities except as permitted by the 1940 Act, as amended, or any rule thereunder, any SEC or SEC staff interpretation thereof or any exemptions therefrom, which may be granted by the SEC. American Funds Target Date Retirement Series -- Page 14
The following table details the percentage allocation of the 2050 fund to the underlying American Funds as of February 1, 2007: [graphic] AMERICAN FUNDS 2050 TARGET DATE RETIREMENT FUND (SM) [chart illustrating the investment strategy of the 2050 fund over time.] [end graphic] YEARS TO AND AFTER RETIREMENT 45 40 35 30 25 20 15 10 5 RETIRE 5 10 15 20 25 30 GROWTH AMCAP FUND 7% 7% 7% 7% 7% 7% 6% 5% 4% 3% 1% 0% 0% 0% 0% 0% ------------------------------------------------------------------------------------------------------------------ EUROPACIFIC GROWTH FUND 4 4 4 4 4 4 4 3 3 0 0 0 0 0 0 0 ------------------------------------------------------------------------------------------------------------------ THE GROWTH FUND 7 7 7 7 7 7 6 5 4 3 1 0 0 0 0 0 OF AMERICA ------------------------------------------------------------------------------------------------------------------ THE NEW ECONOMY FUND 4 4 4 4 4 4 3 0 0 0 0 0 0 0 0 0 ------------------------------------------------------------------------------------------------------------------ NEW PERSPECTIVE FUND 7 7 7 7 7 7 7 6 5 4 3 0 0 0 0 0 ------------------------------------------------------------------------------------------------------------------ NEW WORLD FUND 4 4 4 4 4 4 3 2 2 0 0 0 0 0 0 0 ------------------------------------------------------------------------------------------------------------------ SMALLCAP WORLD FUND 7 7 7 7 7 7 6 4 2 0 0 0 0 0 0 0 ------------------------------------------------------------------------------------------------------------------ GROWTH ALLOCATION 40 40 40 40 40 40 35 25 20 10 5 0 0 0 0 0 GROWTH-AND-INCOME AMERICAN MUTUAL FUND 5% 5% 5% 5% 5% 5% 5% 5% 7% 7% 7% 6% 5% 4% 3% 0% ------------------------------------------------------------------------------------------------------------------ CAPITAL WORLD GROWTH AND 10 10 10 10 9 7 7 7 7 6 6 5 4 2 0 0 INCOME FUND ------------------------------------------------------------------------------------------------------------------ FUNDAMENTAL INVESTORS 10 10 10 10 8 7 7 7 7 5 5 4 3 0 0 0 ------------------------------------------------------------------------------------------------------------------ THE INVESTMENT COMPANY 10 10 10 10 9 8 8 8 7 6 6 5 4 2 1 0 OF AMERICA ------------------------------------------------------------------------------------------------------------------ WASHINGTON MUTUAL 10 10 10 10 9 8 8 8 7 6 6 5 4 2 1 0 INVESTORS FUND ------------------------------------------------------------------------------------------------------------------ GROWTH-AND-INCOME ALLOCATION 45 45 45 45 40 35 35 35 35 30 30 25 20 10 5 0 EQUITY-INCOME AND BALANCED AMERICAN BALANCED FUND 4% 4% 4% 4% 5% 8% 8% 8% 8% 7% 7% 6% 6% 5% 5% 4% ------------------------------------------------------------------------------------------------------------------ CAPITAL INCOME BUILDER 3 3 3 3 5 6 6 6 6 9 9 12 12 15 15 18 ------------------------------------------------------------------------------------------------------------------ THE INCOME FUND OF AMERICA 3 3 3 3 5 6 6 6 6 9 9 12 12 15 15 18 ------------------------------------------------------------------------------------------------------------------ EQUITY-INCOME AND BALANCED ALLOCATION 10 10 10 10 15 20 20 20 20 25 25 30 30 35 35 40 BOND AMERICAN HIGH-INCOME TRUST 0% 0% 0% 0% 0% 0% 0% 0% 5% 10% 10% 5% 0% 0% 0% 0% ------------------------------------------------------------------------------------------------------------------ THE BOND FUND OF AMERICA 0 0 0 0 0 0 0 5 10 15 15 10 10 10 10 10 ------------------------------------------------------------------------------------------------------------------ CAPITAL WORLD BOND FUND 0 0 0 0 0 0 0 5 5 10 5 5 0 0 0 0 ------------------------------------------------------------------------------------------------------------------ INTERMEDIATE BOND FUND 0 0 0 0 0 0 0 0 0 0 10 20 25 25 25 25 OF AMERICA ------------------------------------------------------------------------------------------------------------------ SHORT-TERM BOND FUND 0 0 0 0 0 0 0 0 0 0 0 5 15 20 25 25 OF AMERICA ------------------------------------------------------------------------------------------------------------------ U.S. GOVERNMENT 5 5 5 5 5 5 10 10 5 0 0 0 0 0 0 0 SECURITIES FUND ------------------------------------------------------------------------------------------------------------------ BOND ALLOCATION 5 5 5 5 5 5 10 20 25 35 40 45 50 55 60 60 American Funds Target Date Retirement Series -- Page 15
The following table details the percentage allocation of the 2045 fund to the underlying American Funds as of February 1, 2007: [graphic] AMERICAN FUNDS 2045 TARGET DATE RETIREMENT FUND (SM) [chart illustrating the investment strategy of the 2045 fund over time.] [end graphic] YEARS TO AND AFTER RETIREMENT 40 35 30 25 20 15 10 5 RETIRE 5 10 15 20 25 30 GROWTH AMCAP FUND 7% 7% 7% 7% 7% 6% 5% 4% 3% 1% 0% 0% 0% 0% 0% ------------------------------------------------------------------------------------------------------------- EUROPACIFIC GROWTH FUND 4 4 4 4 4 4 3 3 0 0 0 0 0 0 0 ------------------------------------------------------------------------------------------------------------- THE GROWTH FUND 7 7 7 7 7 6 5 4 3 1 0 0 0 0 0 OF AMERICA ------------------------------------------------------------------------------------------------------------- THE NEW ECONOMY FUND 4 4 4 4 4 3 0 0 0 0 0 0 0 0 0 ------------------------------------------------------------------------------------------------------------- NEW PERSPECTIVE FUND 7 7 7 7 7 7 6 5 4 3 0 0 0 0 0 ------------------------------------------------------------------------------------------------------------- NEW WORLD FUND 4 4 4 4 4 3 2 2 0 0 0 0 0 0 0 ------------------------------------------------------------------------------------------------------------- SMALLCAP WORLD FUND 7 7 7 7 7 6 4 2 0 0 0 0 0 0 0 ------------------------------------------------------------------------------------------------------------- GROWTH ALLOCATION 40 40 40 40 40 35 25 20 10 5 0 0 0 0 0 GROWTH-AND-INCOME AMERICAN MUTUAL FUND 5% 5% 5% 5% 5% 5% 5% 7% 7% 7% 6% 5% 4% 3% 0% ------------------------------------------------------------------------------------------------------------- CAPITAL WORLD GROWTH AND 10 10 10 9 7 7 7 7 6 6 5 4 2 0 0 INCOME FUND ------------------------------------------------------------------------------------------------------------- FUNDAMENTAL INVESTORS 10 10 10 8 7 7 7 7 5 5 4 3 0 0 0 ------------------------------------------------------------------------------------------------------------- THE INVESTMENT COMPANY 10 10 10 9 8 8 8 7 6 6 5 4 2 1 0 OF AMERICA ------------------------------------------------------------------------------------------------------------- WASHINGTON MUTUAL 10 10 10 9 8 8 8 7 6 6 5 4 2 1 0 INVESTORS FUND ------------------------------------------------------------------------------------------------------------- GROWTH-AND-INCOME ALLOCATION 45 45 45 40 35 35 35 35 30 30 25 20 10 5 0 EQUITY-INCOME AND BALANCED AMERICAN BALANCED FUND 4% 4% 4% 5% 8% 8% 8% 8% 7% 7% 6% 6% 5% 5% 4% ------------------------------------------------------------------------------------------------------------- CAPITAL INCOME BUILDER 3 3 3 5 6 6 6 6 9 9 12 12 15 15 18 ------------------------------------------------------------------------------------------------------------- THE INCOME FUND OF AMERICA 3 3 3 5 6 6 6 6 9 9 12 12 15 15 18 ------------------------------------------------------------------------------------------------------------- EQUITY-INCOME AND BALANCED ALLOCATION 10 10 10 15 20 20 20 20 25 25 30 30 35 35 40 BOND AMERICAN HIGH-INCOME TRUST 0% 0% 0% 0% 0% 0% 0% 5% 10% 10% 5% 0% 0% 0% 0% ------------------------------------------------------------------------------------------------------------- THE BOND FUND OF AMERICA 0 0 0 0 0 0 5 10 15 15 10 10 10 10 10 ------------------------------------------------------------------------------------------------------------- CAPITAL WORLD BOND FUND 0 0 0 0 0 0 5 5 10 5 5 0 0 0 0 ------------------------------------------------------------------------------------------------------------- INTERMEDIATE BOND FUND 0 0 0 0 0 0 0 0 0 10 20 25 25 25 25 OF AMERICA ------------------------------------------------------------------------------------------------------------- SHORT-TERM BOND FUND 0 0 0 0 0 0 0 0 0 0 5 15 20 25 25 OF AMERICA ------------------------------------------------------------------------------------------------------------- U.S. GOVERNMENT 5 5 5 5 5 10 10 5 0 0 0 0 0 0 0 SECURITIES FUND ------------------------------------------------------------------------------------------------------------- BOND ALLOCATION 5 5 5 5 5 10 20 25 35 40 45 50 55 60 60 American Funds Target Date Retirement Series -- Page 16
The following table details the percentage allocation of the 2040 fund to the underlying American Funds as of February 1, 2007: [graphic] AMERICAN FUNDS 2040 TARGET DATE RETIREMENT FUND (SM) [chart illustrating the investment strategy of the 2040 fund over time.] [end graphic] YEARS TO AND AFTER RETIREMENT 35 30 25 20 15 10 5 RETIRE 5 10 15 20 25 30 GROWTH AMCAP FUND 7% 7% 7% 7% 6% 5% 4% 3% 1% 0% 0% 0% 0% 0% -------------------------------------------------------------------------------------------------------- EUROPACIFIC GROWTH FUND 4 4 4 4 4 3 3 0 0 0 0 0 0 0 -------------------------------------------------------------------------------------------------------- THE GROWTH FUND 7 7 7 7 6 5 4 3 1 0 0 0 0 0 OF AMERICA -------------------------------------------------------------------------------------------------------- THE NEW ECONOMY FUND 4 4 4 4 3 0 0 0 0 0 0 0 0 0 -------------------------------------------------------------------------------------------------------- NEW PERSPECTIVE FUND 7 7 7 7 7 6 5 4 3 0 0 0 0 0 -------------------------------------------------------------------------------------------------------- NEW WORLD FUND 4 4 4 4 3 2 2 0 0 0 0 0 0 0 -------------------------------------------------------------------------------------------------------- SMALLCAP WORLD FUND 7 7 7 7 6 4 2 0 0 0 0 0 0 0 -------------------------------------------------------------------------------------------------------- GROWTH ALLOCATION 40 40 40 40 35 25 20 10 5 0 0 0 0 0 GROWTH-AND-INCOME AMERICAN MUTUAL FUND 5% 5% 5% 5% 5% 5% 7% 7% 7% 6% 5% 4% 3% 0% -------------------------------------------------------------------------------------------------------- CAPITAL WORLD GROWTH AND 10 10 9 7 7 7 7 6 6 5 4 2 0 0 INCOME FUND -------------------------------------------------------------------------------------------------------- FUNDAMENTAL INVESTORS 10 10 8 7 7 7 7 5 5 4 3 0 0 0 -------------------------------------------------------------------------------------------------------- THE INVESTMENT COMPANY 10 10 9 8 8 8 7 6 6 5 4 2 1 0 OF AMERICA -------------------------------------------------------------------------------------------------------- WASHINGTON MUTUAL 10 10 9 8 8 8 7 6 6 5 4 2 1 0 INVESTORS FUND -------------------------------------------------------------------------------------------------------- GROWTH-AND-INCOME ALLOCATION 45 45 40 35 35 35 35 30 30 25 20 10 5 0 EQUITY-INCOME AND BALANCED AMERICAN BALANCED FUND 4% 4% 5% 8% 8% 8% 8% 7% 7% 6% 6% 5% 5% 4% -------------------------------------------------------------------------------------------------------- CAPITAL INCOME BUILDER 3 3 5 6 6 6 6 9 9 12 12 15 15 18 -------------------------------------------------------------------------------------------------------- THE INCOME FUND OF AMERICA 3 3 5 6 6 6 6 9 9 12 12 15 15 18 -------------------------------------------------------------------------------------------------------- EQUITY-INCOME AND BALANCED ALLOCATION 10 10 15 20 20 20 20 25 25 30 30 35 35 40 BOND AMERICAN HIGH-INCOME TRUST 0% 0% 0% 0% 0% 0% 5% 10% 10% 5% 0% 0% 0% 0% -------------------------------------------------------------------------------------------------------- THE BOND FUND OF AMERICA 0 0 0 0 0 5 10 15 15 10 10 10 10 10 -------------------------------------------------------------------------------------------------------- CAPITAL WORLD BOND FUND 0 0 0 0 0 5 5 10 5 5 0 0 0 0 -------------------------------------------------------------------------------------------------------- INTERMEDIATE BOND FUND 0 0 0 0 0 0 0 0 10 20 25 25 25 25 OF AMERICA -------------------------------------------------------------------------------------------------------- SHORT-TERM BOND FUND 0 0 0 0 0 0 0 0 0 5 15 20 25 25 OF AMERICA -------------------------------------------------------------------------------------------------------- U.S. GOVERNMENT 5 5 5 5 10 10 5 0 0 0 0 0 0 0 SECURITIES FUND -------------------------------------------------------------------------------------------------------- BOND ALLOCATION 5 5 5 5 10 20 25 35 40 45 50 55 60 60 American Funds Target Date Retirement Series -- Page 17
The following table details the percentage allocation of the 2035 fund to the underlying American Funds as of February 1, 2007: [graphic] AMERICAN FUNDS 2035 TARGET DATE RETIREMENT FUND (SM) [chart illustrating the investment strategy of the 2035 fund over time.] [end graphic] YEARS TO AND AFTER RETIREMENT 30 25 20 15 10 5 RETIRE 5 10 15 20 25 30 GROWTH AMCAP FUND 7% 7% 7% 6% 5% 4% 3% 1% 0% 0% 0% 0% 0% --------------------------------------------------------------------------------------------------- EUROPACIFIC GROWTH FUND 4 4 4 4 3 3 0 0 0 0 0 0 0 --------------------------------------------------------------------------------------------------- THE GROWTH FUND 7 7 7 6 5 4 3 1 0 0 0 0 0 OF AMERICA --------------------------------------------------------------------------------------------------- THE NEW ECONOMY FUND 4 4 4 3 0 0 0 0 0 0 0 0 0 --------------------------------------------------------------------------------------------------- NEW PERSPECTIVE FUND 7 7 7 7 6 5 4 3 0 0 0 0 0 --------------------------------------------------------------------------------------------------- NEW WORLD FUND 4 4 4 3 2 2 0 0 0 0 0 0 0 --------------------------------------------------------------------------------------------------- SMALLCAP WORLD FUND 7 7 7 6 4 2 0 0 0 0 0 0 0 --------------------------------------------------------------------------------------------------- GROWTH ALLOCATION 40 40 40 35 25 20 10 5 0 0 0 0 0 GROWTH-AND-INCOME AMERICAN MUTUAL FUND 5% 5% 5% 5% 5% 7% 7% 7% 6% 5% 4% 3% 0% --------------------------------------------------------------------------------------------------- CAPITAL WORLD GROWTH AND 10 9 7 7 7 7 6 6 5 4 2 0 0 INCOME FUND --------------------------------------------------------------------------------------------------- FUNDAMENTAL INVESTORS 10 8 7 7 7 7 5 5 4 3 0 0 0 --------------------------------------------------------------------------------------------------- THE INVESTMENT COMPANY 10 9 8 8 8 7 6 6 5 4 2 1 0 OF AMERICA --------------------------------------------------------------------------------------------------- WASHINGTON MUTUAL 10 9 8 8 8 7 6 6 5 4 2 1 0 INVESTORS FUND --------------------------------------------------------------------------------------------------- GROWTH-AND-INCOME ALLOCATION 45 40 35 35 35 35 30 30 25 20 10 5 0 EQUITY-INCOME AND BALANCED AMERICAN BALANCED FUND 4% 5% 8% 8% 8% 8% 7% 7% 6% 6% 5% 5% 4% --------------------------------------------------------------------------------------------------- CAPITAL INCOME BUILDER 3 5 6 6 6 6 9 9 12 12 15 15 18 --------------------------------------------------------------------------------------------------- THE INCOME FUND OF AMERICA 3 5 6 6 6 6 9 9 12 12 15 15 18 --------------------------------------------------------------------------------------------------- EQUITY-INCOME AND BALANCED ALLOCATION 10 15 20 20 20 20 25 25 30 30 35 35 40 BOND AMERICAN HIGH-INCOME TRUST 0% 0% 0% 0% 0% 5% 10% 10% 5% 0% 0% 0% 0% --------------------------------------------------------------------------------------------------- THE BOND FUND OF AMERICA 0 0 0 0 5 10 15 15 10 10 10 10 10 --------------------------------------------------------------------------------------------------- CAPITAL WORLD BOND FUND 0 0 0 0 5 5 10 5 5 0 0 0 0 --------------------------------------------------------------------------------------------------- INTERMEDIATE BOND FUND 0 0 0 0 0 0 0 10 20 25 25 25 25 OF AMERICA --------------------------------------------------------------------------------------------------- SHORT-TERM BOND FUND 0 0 0 0 0 0 0 0 5 15 20 25 25 OF AMERICA --------------------------------------------------------------------------------------------------- U.S. GOVERNMENT 5 5 5 10 10 5 0 0 0 0 0 0 0 SECURITIES FUND --------------------------------------------------------------------------------------------------- BOND ALLOCATION 5 5 5 10 20 25 35 40 45 50 55 60 60 American Funds Target Date Retirement Series -- Page 18
The following table details the percentage allocation of the 2030 fund to the underlying American Funds as of February 1, 2007: [graphic] AMERICAN FUNDS 2030 TARGET DATE RETIREMENT FUND (SM) [chart illustrating the investment strategy of the 2030 fund over time.] [end graphic] YEARS TO AND AFTER RETIREMENT 25 20 15 10 5 RETIRE 5 10 15 20 25 30 GROWTH AMCAP FUND 7% 7% 6% 5% 4% 3% 1% 0% 0% 0% 0% 0% ---------------------------------------------------------------------------------------------- EUROPACIFIC GROWTH FUND 4 4 4 3 3 0 0 0 0 0 0 0 ---------------------------------------------------------------------------------------------- THE GROWTH FUND 7 7 6 5 4 3 1 0 0 0 0 0 OF AMERICA ---------------------------------------------------------------------------------------------- THE NEW ECONOMY FUND 4 4 3 0 0 0 0 0 0 0 0 0 ---------------------------------------------------------------------------------------------- NEW PERSPECTIVE FUND 7 7 7 6 5 4 3 0 0 0 0 0 ---------------------------------------------------------------------------------------------- NEW WORLD FUND 4 4 3 2 2 0 0 0 0 0 0 0 ---------------------------------------------------------------------------------------------- SMALLCAP WORLD FUND 7 7 6 4 2 0 0 0 0 0 0 0 ---------------------------------------------------------------------------------------------- GROWTH ALLOCATION 40 40 35 25 20 10 5 0 0 0 0 0 GROWTH-AND-INCOME AMERICAN MUTUAL FUND 5% 5% 5% 5% 7% 7% 7% 6% 5% 4% 3% 0% ---------------------------------------------------------------------------------------------- CAPITAL WORLD GROWTH AND 9 7 7 7 7 6 6 5 4 2 0 0 INCOME FUND ---------------------------------------------------------------------------------------------- FUNDAMENTAL INVESTORS 8 7 7 7 7 5 5 4 3 0 0 0 ---------------------------------------------------------------------------------------------- THE INVESTMENT COMPANY 9 8 8 8 7 6 6 5 4 2 1 0 OF AMERICA ---------------------------------------------------------------------------------------------- WASHINGTON MUTUAL 9 8 8 8 7 6 6 5 4 2 1 0 INVESTORS FUND ---------------------------------------------------------------------------------------------- GROWTH-AND-INCOME ALLOCATION 40 35 35 35 35 30 30 25 20 10 5 0 EQUITY-INCOME AND BALANCED AMERICAN BALANCED FUND 5% 8% 8% 8% 8% 7% 7% 6% 6% 5% 5% 4% ---------------------------------------------------------------------------------------------- CAPITAL INCOME BUILDER 5 6 6 6 6 9 9 12 12 15 15 18 ---------------------------------------------------------------------------------------------- THE INCOME FUND OF AMERICA 5 6 6 6 6 9 9 12 12 15 15 18 ---------------------------------------------------------------------------------------------- EQUITY-INCOME AND BALANCED ALLOCATION 15 20 20 20 20 25 25 30 30 35 35 40 BOND AMERICAN HIGH-INCOME TRUST 0% 0% 0% 0% 5% 10% 10% 5% 0% 0% 0% 0% ---------------------------------------------------------------------------------------------- THE BOND FUND OF AMERICA 0 0 0 5 10 15 15 10 10 10 10 10 ---------------------------------------------------------------------------------------------- CAPITAL WORLD BOND FUND 0 0 0 5 5 10 5 5 0 0 0 0 ---------------------------------------------------------------------------------------------- INTERMEDIATE BOND FUND 0 0 0 0 0 0 10 20 25 25 25 25 OF AMERICA ---------------------------------------------------------------------------------------------- SHORT-TERM BOND FUND 0 0 0 0 0 0 0 5 15 20 25 25 OF AMERICA ---------------------------------------------------------------------------------------------- U.S. GOVERNMENT 5 5 10 10 5 0 0 0 0 0 0 0 SECURITIES FUND ---------------------------------------------------------------------------------------------- BOND ALLOCATION 5 5 10 20 25 35 40 45 50 55 60 60 American Funds Target Date Retirement Series -- Page 19
The following table details the percentage allocation of the 2025 fund to the underlying American Funds as of February 1, 2007: [graphic] AMERICAN FUNDS 2025 TARGET DATE RETIREMENT FUND (SM) [chart illustrating the investment strategy of the 2025 fund over time.] [end graphic] YEARS TO AND AFTER RETIREMENT 20 15 10 5 RETIRE 5 10 15 20 25 30 GROWTH AMCAP FUND 7% 6% 5% 4% 3% 1% 0% 0% 0% 0% 0% ----------------------------------------------------------------------------------------- EUROPACIFIC GROWTH FUND 4 4 3 3 0 0 0 0 0 0 0 ----------------------------------------------------------------------------------------- THE GROWTH FUND 7 6 5 4 3 1 0 0 0 0 0 OF AMERICA ----------------------------------------------------------------------------------------- THE NEW ECONOMY FUND 4 3 0 0 0 0 0 0 0 0 0 ----------------------------------------------------------------------------------------- NEW PERSPECTIVE FUND 7 7 6 5 4 3 0 0 0 0 0 ----------------------------------------------------------------------------------------- NEW WORLD FUND 4 3 2 2 0 0 0 0 0 0 0 ----------------------------------------------------------------------------------------- SMALLCAP WORLD FUND 7 6 4 2 0 0 0 0 0 0 0 ----------------------------------------------------------------------------------------- GROWTH ALLOCATION 40 35 25 20 10 5 0 0 0 0 0 GROWTH-AND-INCOME AMERICAN MUTUAL FUND 5% 5% 5% 7% 7% 7% 6% 5% 4% 3% 0% ----------------------------------------------------------------------------------------- CAPITAL WORLD GROWTH AND 7 7 7 7 6 6 5 4 2 0 0 INCOME FUND ----------------------------------------------------------------------------------------- FUNDAMENTAL INVESTORS 7 7 7 7 5 5 4 3 0 0 0 ----------------------------------------------------------------------------------------- THE INVESTMENT COMPANY 8 8 8 7 6 6 5 4 2 1 0 OF AMERICA ----------------------------------------------------------------------------------------- WASHINGTON MUTUAL 8 8 8 7 6 6 5 4 2 1 0 INVESTORS FUND ----------------------------------------------------------------------------------------- GROWTH-AND-INCOME ALLOCATION 35 35 35 35 30 30 25 20 10 5 0 EQUITY-INCOME AND BALANCED AMERICAN BALANCED FUND 8% 8% 8% 8% 7% 7% 6% 6% 5% 5% 4% ----------------------------------------------------------------------------------------- CAPITAL INCOME BUILDER 6 6 6 6 9 9 12 12 15 15 18 ----------------------------------------------------------------------------------------- THE INCOME FUND OF AMERICA 6 6 6 6 9 9 12 12 15 15 18 ----------------------------------------------------------------------------------------- EQUITY-INCOME AND BALANCED ALLOCATION 20 20 20 20 25 25 30 30 35 35 40 BOND AMERICAN HIGH-INCOME TRUST 0% 0% 0% 5% 10% 10% 5% 0% 0% 0% 0% ----------------------------------------------------------------------------------------- THE BOND FUND OF AMERICA 0 0 5 10 15 15 10 10 10 10 10 ----------------------------------------------------------------------------------------- CAPITAL WORLD BOND FUND 0 0 5 5 10 5 5 0 0 0 0 ----------------------------------------------------------------------------------------- INTERMEDIATE BOND FUND 0 0 0 0 0 10 20 25 25 25 25 OF AMERICA ----------------------------------------------------------------------------------------- SHORT-TERM BOND FUND 0 0 0 0 0 0 5 15 20 25 25 OF AMERICA ----------------------------------------------------------------------------------------- U.S. GOVERNMENT 5 10 10 5 0 0 0 0 0 0 0 SECURITIES FUND ----------------------------------------------------------------------------------------- BOND ALLOCATION 5 10 20 25 35 40 45 50 55 60 60 American Funds Target Date Retirement Series -- Page 20
The following table details the percentage allocation of the 2020 fund to the underlying American Funds as of February 1, 2007: [graphic] AMERICAN FUNDS 2020 TARGET DATE RETIREMENT FUND (SM) [chart illustrating the investment strategy of the 2020 fund over time.] [end graphic] YEARS TO AND AFTER RETIREMENT 15 10 5 RETIRE 5 10 15 20 25 30 GROWTH AMCAP FUND 6% 5% 4% 3% 1% 0% 0% 0% 0% 0% --------------------------------------------------------------------------------------------- EUROPACIFIC GROWTH FUND 4 3 3 0 0 0 0 0 0 0 --------------------------------------------------------------------------------------------- THE GROWTH FUND 6 5 4 3 1 0 0 0 0 0 OF AMERICA --------------------------------------------------------------------------------------------- THE NEW ECONOMY FUND 3 0 0 0 0 0 0 0 0 0 --------------------------------------------------------------------------------------------- NEW PERSPECTIVE FUND 7 6 5 4 3 0 0 0 0 0 --------------------------------------------------------------------------------------------- NEW WORLD FUND 3 2 2 0 0 0 0 0 0 0 --------------------------------------------------------------------------------------------- SMALLCAP WORLD FUND 6 4 2 0 0 0 0 0 0 0 --------------------------------------------------------------------------------------------- GROWTH ALLOCATION 35 25 20 10 5 0 0 0 0 0 GROWTH-AND-INCOME AMERICAN MUTUAL FUND 5% 5% 7% 7% 7% 6% 5% 4% 3% 0% --------------------------------------------------------------------------------------------- CAPITAL WORLD GROWTH AND 7 7 7 6 6 5 4 2 0 0 INCOME FUND --------------------------------------------------------------------------------------------- FUNDAMENTAL INVESTORS 7 7 7 5 5 4 3 0 0 0 --------------------------------------------------------------------------------------------- THE INVESTMENT COMPANY 8 8 7 6 6 5 4 2 1 0 OF AMERICA --------------------------------------------------------------------------------------------- WASHINGTON MUTUAL 8 8 7 6 6 5 4 2 1 0 INVESTORS FUND --------------------------------------------------------------------------------------------- GROWTH-AND-INCOME ALLOCATION 35 35 35 30 30 25 20 10 5 0 EQUITY-INCOME AND BALANCED AMERICAN BALANCED FUND 8% 8% 8% 7% 7% 6% 6% 5% 5% 4% --------------------------------------------------------------------------------------------- CAPITAL INCOME BUILDER 6 6 6 9 9 12 12 15 15 18 --------------------------------------------------------------------------------------------- THE INCOME FUND OF AMERICA 6 6 6 9 9 12 12 15 15 18 --------------------------------------------------------------------------------------------- EQUITY-INCOME AND BALANCED ALLOCATION 20 20 20 25 25 30 30 35 35 40 BOND AMERICAN HIGH-INCOME TRUST 0% 0% 5% 10% 10% 5% 0% 0% 0% 0% --------------------------------------------------------------------------------------------- THE BOND FUND OF AMERICA 0 5 10 15 15 10 10 10 10 10 --------------------------------------------------------------------------------------------- CAPITAL WORLD BOND FUND 0 5 5 10 5 5 0 0 0 0 --------------------------------------------------------------------------------------------- INTERMEDIATE BOND FUND 0 0 0 0 10 20 25 25 25 25 OF AMERICA --------------------------------------------------------------------------------------------- SHORT-TERM BOND FUND 0 0 0 0 0 5 15 20 25 25 OF AMERICA --------------------------------------------------------------------------------------------- U.S. GOVERNMENT 10 10 5 0 0 0 0 0 0 0 SECURITIES FUND --------------------------------------------------------------------------------------------- BOND ALLOCATION 10 20 25 35 40 45 50 55 60 60 American Funds Target Date Retirement Series -- Page 21
The following table details the percentage allocation of the 2015 fund to the underlying American Funds as of February 1, 2007: [graphic] AMERICAN FUNDS 2015 TARGET DATE RETIREMENT FUND (SM) [chart illustrating the investment strategy of the 2015 fund over time.] [end graphic] YEARS TO AND AFTER RETIREMENT 10 5 RETIRE 5 10 15 20 25 30 GROWTH AMCAP FUND 5% 4% 3% 1% 0% 0% 0% 0% 0% --------------------------------------------------------------------------------------- EUROPACIFIC GROWTH FUND 3 3 0 0 0 0 0 0 0 --------------------------------------------------------------------------------------- THE GROWTH FUND 5 4 3 1 0 0 0 0 0 OF AMERICA --------------------------------------------------------------------------------------- THE NEW ECONOMY FUND 0 0 0 0 0 0 0 0 0 --------------------------------------------------------------------------------------- NEW PERSPECTIVE FUND 6 5 4 3 0 0 0 0 0 --------------------------------------------------------------------------------------- NEW WORLD FUND 2 2 0 0 0 0 0 0 0 --------------------------------------------------------------------------------------- SMALLCAP WORLD FUND 4 2 0 0 0 0 0 0 0 --------------------------------------------------------------------------------------- GROWTH ALLOCATION 25 20 10 5 0 0 0 0 0 GROWTH-AND-INCOME AMERICAN MUTUAL FUND 5% 7% 7% 7% 6% 5% 4% 3% 0% --------------------------------------------------------------------------------------- CAPITAL WORLD GROWTH AND 7 7 6 6 5 4 2 0 0 INCOME FUND --------------------------------------------------------------------------------------- FUNDAMENTAL INVESTORS 7 7 5 5 4 3 0 0 0 --------------------------------------------------------------------------------------- THE INVESTMENT COMPANY 8 7 6 6 5 4 2 1 0 OF AMERICA --------------------------------------------------------------------------------------- WASHINGTON MUTUAL 8 7 6 6 5 4 2 1 0 INVESTORS FUND --------------------------------------------------------------------------------------- GROWTH-AND-INCOME ALLOCATION 35 35 30 30 25 20 10 5 0 EQUITY-INCOME AND BALANCED AMERICAN BALANCED FUND 8% 8% 7% 7% 6% 6% 5% 5% 4% --------------------------------------------------------------------------------------- CAPITAL INCOME BUILDER 6 6 9 9 12 12 15 15 18 --------------------------------------------------------------------------------------- THE INCOME FUND OF AMERICA 6 6 9 9 12 12 15 15 18 --------------------------------------------------------------------------------------- EQUITY-INCOME AND BALANCED ALLOCATION 20 20 25 25 30 30 35 35 40 BOND AMERICAN HIGH-INCOME TRUST 0% 5% 10% 10% 5% 0% 0% 0% 0% --------------------------------------------------------------------------------------- THE BOND FUND OF AMERICA 5 10 15 15 10 10 10 10 10 --------------------------------------------------------------------------------------- CAPITAL WORLD BOND FUND 5 5 10 5 5 0 0 0 0 --------------------------------------------------------------------------------------- INTERMEDIATE BOND FUND 0 0 0 10 20 25 25 25 25 OF AMERICA --------------------------------------------------------------------------------------- SHORT-TERM BOND FUND 0 0 0 0 5 15 20 25 25 OF AMERICA --------------------------------------------------------------------------------------- U.S. GOVERNMENT 10 5 0 0 0 0 0 0 0 SECURITIES FUND --------------------------------------------------------------------------------------- BOND ALLOCATION 20 25 35 40 45 50 55 60 60 American Funds Target Date Retirement Series -- Page 22
The following table details the percentage allocation of the 2010 fund to the underlying American Funds as of February 1, 2007: [graphic] AMERICAN FUNDS 2010 TARGET DATE RETIREMENT FUND (SM) [chart illustrating the investment strategy of the 2010 fund over time.] [end graphic] YEARS TO AND AFTER RETIREMENT 5 RETIRE 5 10 15 20 25 30 GROWTH AMCAP FUND 4% 3% 1% 0% 0% 0% 0% 0% ---------------------------------------------------------------------------------------- EUROPACIFIC GROWTH FUND 3 0 0 0 0 0 0 0 ---------------------------------------------------------------------------------------- THE GROWTH FUND 4 3 1 0 0 0 0 0 OF AMERICA ---------------------------------------------------------------------------------------- THE NEW ECONOMY FUND 0 0 0 0 0 0 0 0 ---------------------------------------------------------------------------------------- NEW PERSPECTIVE FUND 5 4 3 0 0 0 0 0 ---------------------------------------------------------------------------------------- NEW WORLD FUND 2 0 0 0 0 0 0 0 ---------------------------------------------------------------------------------------- SMALLCAP WORLD FUND 2 0 0 0 0 0 0 0 ---------------------------------------------------------------------------------------- GROWTH ALLOCATION 20 10 5 0 0 0 0 0 GROWTH-AND-INCOME AMERICAN MUTUAL FUND 7% 7% 7% 6% 5% 4% 3% 0% ---------------------------------------------------------------------------------------- CAPITAL WORLD GROWTH AND 7 6 6 5 4 2 0 0 INCOME FUND ---------------------------------------------------------------------------------------- FUNDAMENTAL INVESTORS 7 5 5 4 3 0 0 0 ---------------------------------------------------------------------------------------- THE INVESTMENT COMPANY 7 6 6 5 4 2 1 0 OF AMERICA ---------------------------------------------------------------------------------------- WASHINGTON MUTUAL 7 6 6 5 4 2 1 0 INVESTORS FUND ---------------------------------------------------------------------------------------- GROWTH-AND-INCOME ALLOCATION 35 30 30 25 20 10 5 0 EQUITY-INCOME AND BALANCED AMERICAN BALANCED FUND 8% 7% 7% 6% 6% 5% 5% 4% ---------------------------------------------------------------------------------------- CAPITAL INCOME BUILDER 6 9 9 12 12 15 15 18 ---------------------------------------------------------------------------------------- THE INCOME FUND OF AMERICA 6 9 9 12 12 15 15 18 ---------------------------------------------------------------------------------------- EQUITY-INCOME AND BALANCED ALLOCATION 20 25 25 30 30 35 35 40 BOND AMERICAN HIGH-INCOME TRUST 5% 10% 10% 5% 0% 0% 0% 0% ---------------------------------------------------------------------------------------- THE BOND FUND OF AMERICA 10 15 15 10 10 10 10 10 ---------------------------------------------------------------------------------------- CAPITAL WORLD BOND FUND 5 10 5 5 0 0 0 0 ---------------------------------------------------------------------------------------- INTERMEDIATE BOND FUND 0 0 10 20 25 25 25 25 OF AMERICA ---------------------------------------------------------------------------------------- SHORT-TERM BOND FUND 0 0 0 5 15 20 25 25 OF AMERICA ---------------------------------------------------------------------------------------- U.S. GOVERNMENT 5 0 0 0 0 0 0 0 SECURITIES FUND ---------------------------------------------------------------------------------------- BOND ALLOCATION 25 35 40 45 50 55 60 60 American Funds Target Date Retirement Series -- Page 23
MANAGEMENT OF THE SERIES BOARD OF DIRECTORS AND OFFICERS "INDEPENDENT" DIRECTORS/1/ NUMBER OF NAME, AGE AND PORTFOLIOS/3/ POSITION WITH SERIES PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS/4/ HELD (YEAR FIRST ELECTED/2/) DURING PAST FIVE YEARS BY DIRECTOR BY DIRECTOR ------------------------------------------------------------------------------------------------------------- Lee A. Ault III, 70 Private investor; former 2 Anworth Mortgage Asset Corporation; Chairman of the Board Chairman of the Board, Office Depot, Inc. (Independent and Non- In-Q-Tel, Inc. (an Executive) (2007) independent technology venture company funded principally by the Central Intelligence Agency); former Chairman of the Board, President and CEO, Telecredit, Inc. ------------------------------------------------------------------------------------------------------------- H. Frederick Christie, Private investor; former 21 Ducommun Incorporated; 73 President and CEO, The IHOP Corporation; Director (2007) Mission Group Southwest Water Company (non-utility holding company, subsidiary of Southern California Edison Company) ------------------------------------------------------------------------------------------------------------- Joe E. Davis, 72 Private investor; former 2 Anworth Mortgage Asset Corporation; Director (2007) Chairman of the Board, Natural Alternatives Inc. Linear Corporation (linear motor design and production); former President and CEO, National Health Enterprises, Inc. ------------------------------------------------------------------------------------------------------------- Martin Fenton, 71 Chairman of the Board, 18 None Director (2007) Senior Resource Group LLC (development and management of senior living communities) ------------------------------------------------------------------------------------------------------------- Leonard R. Fuller, 60 President and CEO, 16 None Director (2007) Fuller Consulting (financial management consulting firm) ------------------------------------------------------------------------------------------------------------- W. Scott Hedrick, 61 Founding General 2 Hot Topic, Inc.; Office Depot, Inc. Director (2007) Partner, Inter West Partners (a venture capital firm focused on information technology and life sciences); lecturer, Stanford Graduate School of Business ------------------------------------------------------------------------------------------------------------- Mary Myers Kauppila, 52 Private investor; 6 None Director (2007) Chairman of the Board and CEO, Ladera Management Company (venture capital and agriculture); former owner and President, Energy Investment, Inc. ------------------------------------------------------------------------------------------------------------- Kirk P. Pendleton, 67 Chairman of the Board 7 None Director (2007) and CEO, Cairnwood, Inc. (venture capital investment) ------------------------------------------------------------------------------------------------------------- American Funds Target Date Retirement Series -- Page 24
"INTERESTED" DIRECTOR/5,6/ PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS NAME, AGE AND AND POSITIONS NUMBER OF POSITION WITH SERIES HELD WITH AFFILIATED ENTITIES PORTFOLIOS/3/ (YEAR FIRST ELECTED OR THE PRINCIPAL UNDERWRITER OVERSEEN OTHER DIRECTORSHIPS/4/ HELD AS A DIRECTOR/OFFICER/2/) OF THE SERIES BY DIRECTOR BY DIRECTOR -------------------------------------------------------------------------------------------------------------- James B. Lovelace, 50 Senior Vice President and 3 None Vice Chairman of the Board Director, Capital Research and (2007) Management Company -------------------------------------------------------------------------------------------------------------- Michael J. Downer, 51 Senior Vice President - Fund 1 None President (2006) Business Management Group and Coordinator of Legal and Compliance, Capital Research and Management Company; Director, American Funds Distributors, Inc.*; Director, Capital Bank and Trust Company -------------------------------------------------------------------------------------------------------------- American Funds Target Date Retirement Series -- Page 25
OTHER OFFICERS/6/ NAME, AGE AND POSITION WITH FUND PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS (YEAR FIRST ELECTED AND POSITIONS HELD WITH AFFILIATED ENTITIES AS AN OFFICER/2/) OR THE PRINCIPAL UNDERWRITER OF THE FUND ------------------------------------------------------------------------------- Catherine L. Heron, Senior Vice President - Fund Business Management 59 Group, Capital Research and Management Company; Executive Vice Senior Vice President, Capital Bank and Trust President (2007) Company* ------------------------------------------------------------------------------- Alan N. Berro, 45 Senior Vice President, Capital Research Company* Senior Vice President (2007) ------------------------------------------------------------------------------- Joyce E. Gordon, 50 Senior Vice President and Director, Capital Research Senior Vice President and Management Company (2007) ------------------------------------------------------------------------------- Nicholas J. Grace, 40 Senior Vice President, Capital Research Company* Senior Vice President (2007) ------------------------------------------------------------------------------- John H. Smet, 50 Senior Vice President, Capital Research and Senior Vice President Management Company; Director, American Funds (2007) Distributors, Inc. ------------------------------------------------------------------------------- Steven I. Koszalka, Assistant Vice President - Fund Business Management 42 Group, Capital Research and Management Company Secretary (2006) ------------------------------------------------------------------------------- Sheryl F. Johnson, 38 Vice President - Fund Business Management Group, Treasurer (2007) Capital Research and Management Company ------------------------------------------------------------------------------- Gregory F. Niland, 35 Vice President - Fund Business Management Assistant Treasurer Group, Capital Research and Management Company (2007) ------------------------------------------------------------------------------- * Company affiliated with Capital Research and Management Company. 1 An "independent" director refers to a director who is not an "interested person" within the meaning of the 1940 Act. 2 Directors and officers of the series serve until their resignation, removal or retirement. 3 Funds managed by Capital Research and Management Company, including the American Funds, American Funds Insurance Series,(R) which serves as the underlying investment vehicle for certain variable insurance contracts and Endowments, whose shareholders are limited to certain nonprofit organizations. 4 This includes all directorships (other than those in the American Funds) that are held by each director as a director of a public company or a registered investment company. 5 "Interested persons," within the meaning of the 1940 Act, on the basis of their affiliation with the series' investment adviser, Capital Research and Management Company, or affiliated entities (including the fund's principal underwriter). 6 All of the officers listed are officers and/or directors/trustees of one or more of the other funds for which Capital Research and Management Company serves as investment adviser. THE ADDRESS FOR ALL DIRECTORS AND OFFICERS OF THE SERIES IS 333 SOUTH HOPE STREET, 55TH FLOOR, LOS ANGELES, CALIFORNIA 90071, ATTENTION: SECRETARY. American Funds Target Date Retirement Series -- Page 26
DIRECTOR COMPENSATION -- No compensation is paid by the series to any officer or director who is a director, officer or employee of the investment adviser or its affiliates. The series generally will pay to independent directors fees of (a) $2,500 for each board of directors meeting attended and (b) $1,500 for each meeting attended as a member of a committee of the board of directors. No pension or retirement benefits are accrued as part of series expenses. Independent directors may elect, on a voluntary basis, to defer all or a portion of their fees through a deferred compensation plan in effect for the series. The series also reimburses certain expenses of the independent directors. SERIES ORGANIZATION AND THE BOARD OF DIRECTORS -- The series, an open-end, diversified management investment company, was organized as a Maryland corporation on November 6, 2006. Although the board of directors has delegated day-to-day oversight to the investment adviser, all series operations are supervised by its board, which meets periodically and performs duties required by applicable state and federal laws. Under Maryland law, the business affairs of a corporation are managed under the direction of the board of directors, and all powers of the corporation are exercised by or under the authority of the board except as reserved to the shareholders by law or the corporation's charter or by-laws. Maryland law requires each director to perform his/her duties as a director, including his/her duties as a member of any board committee on which he/she serves, in good faith, in a manner he/she reasonably believes to be in the best interest of the series, and with the care that an ordinarily prudent person in a like position would use under similar circumstances. The series currently consists of separate funds which have separate assets and liabilities, and invest in separate investment portfolios. The board of directors may create additional funds in the future. Income, direct liabilities and direct operating expenses of a fund will be allocated directly to that fund and general liabilities and expenses of the series will be allocated among the funds in proportion to the total net assets of each fund. Each fund has several different classes of shares. Shares of each class represent an interest in the same investment portfolio. Each class has pro rata rights as to voting, redemption, dividends and liquidation, except that each class bears different distribution expenses and may bear different transfer agent fees and other expenses properly attributable to the particular class as approved by the board of directors and set forth in the series's rule 18f-3 Plan. Each class' shareholders have exclusive voting rights with respect to the respective class' rule 12b-1 plans adopted in connection with the distribution of shares and on other matters in which the interests of one class are different from interests in another class. Shares of each class of the series vote together on matters that affect all classes in substantially the same manner. Each class votes as a class on matters that affect that class alone. The series does not hold annual meetings of shareholders. However, significant matters that require shareholder approval, such as certain elections of board members or a change in a fundamental investment policy, will be presented to shareholders at a meeting called for such purpose. Shareholders have one vote per share owned. At the request of the holders of at least 10% of the shares, the series will hold a meeting at which any member of the board could be removed by a majority vote. The series' articles of incorporation and by-laws as well as separate indemnification agreements that the series has entered into with independent directors provide in effect that, subject to American Funds Target Date Retirement Series -- Page 27
certain conditions, the series will indemnify its officers and directors against liabilities or expenses actually and reasonably incurred by them relating to their service to the series. However, directors are not protected from liability by reason of their willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of their office. Certain directors and officers of the series may also serve in similar positions with some of the underlying funds. Thus, if the interests of one of the funds in the series and the underlying funds were ever to diverge, it is possible that an issue could arise and affect how the directors and officers fulfill their fiduciary duties to that fund. The series has been structured to minimize these concerns. However, conceivably, a situation could occur where proper action for one of the funds in the series could be adverse to the interests of an underlying fund, or the reverse. If such a possibility arises, the directors and officers of the affected funds and Capital Research and Management Company, will carefully analyze the situation and take all steps they believe reasonable to minimize and, where possible, eliminate the potential issue. COMMITTEES OF THE BOARD OF DIRECTORS -- The series has an audit committee comprised of H. Frederick Christie, Joe E. Davis, Martin Fenton and Leonard R. Fuller, none of whom is an "interested person" of the series within the meaning of the 1940 Act. The committee provides oversight regarding the series' accounting and financial reporting policies and practices, its internal controls and the internal controls of the series' principal service providers. The committee acts as a liaison between the series' independent registered public accounting firm and the full board of directors. The series has a contracts committee comprised of Lee A. Ault III, H. Frederick Christie, Joe E. Davis, Martin Fenton, Leonard R. Fuller, W. Scott Hedrick, Mary Myers Kauppila and Kirk P. Pendleton, none of whom is an "interested person" of the series within the meaning of the 1940 Act. The committee's principal function is to request, review and consider the information deemed necessary to evaluate the terms of certain agreements between the series and its investment adviser or the investment adviser's affiliates, such as the Investment Advisory and Service Agreement, Principal Underwriting Agreement, Administrative Services Agreement and Plans of Distribution adopted pursuant to rule 12b-1 under the 1940 Act, that the series may enter into, renew or continue, and to make its recommendations to the full board of directors on these matters. The series has a nominating committee comprised of Lee A. Ault III, Joe E. Davis, Martin Fenton and Mary Myers Kauppila, none of whom is an "interested person" of the series within the meaning of the 1940 Act. 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 directors. The committee also evaluates, selects and nominates independent director candidates to the full board of directors. While the committee normally is able to identify from its own and other 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 committee of the series, addressed to the series' 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 committee. PROXY VOTING PROCEDURES AND GUIDELINES -- The series and its investment adviser have adopted Proxy Voting Guidelines for American Funds Target Date Retirement Series (the American Funds Target Date Retirement Series -- Page 28
"Guidelines") with respect to voting proxies of securities held by the funds. The American Funds Target Date Retirement Series and its investment adviser, Capital Research and Management Company, are committed to acting in the best interests of the shareholders of each fund in the series ("the funds"). The funds will principally invest in other American Funds (the "underlying funds"). If an underlying fund has a shareholder meeting, a fund will vote its shares in the underlying fund in the same proportion as the votes of the other shareholders of the underlying fund. In the unlikely event that a fund should have to vote a proxy that is not a proxy of an underlying fund, the fund will vote in accordance with the Capital Research and Management Company Proxy Voting Guidelines. For information on the proxy voting procedures and guidelines for each of the underlying funds, please see the statement of additional information for each underlying fund. Information regarding how the series and each underlying fund voted proxies relating to portfolio securities during the 12-month period ended June 30 of each year will be available on or about September 1 of each year (a) without charge, upon request by calling American Funds Service Company at 800/421-0180, (b) on the American Funds website at americanfunds.com and (c) on the SEC's website at sec.gov. A copy of the full Guidelines is available upon request, free of charge, by calling American Funds Service Company at 800/421-0180 or visiting the American Funds website. American Funds Target Date Retirement Series -- Page 29
INVESTMENT ADVISER -- Capital Research and Management Company, the series' investment adviser, founded in 1931, maintains research facilities in the United States and abroad (Los Angeles, San Francisco, New York, Washington, DC, London, Geneva, Hong Kong, Singapore and Tokyo). These facilities are staffed with experienced investment professionals. The investment adviser is located at 333 South Hope Street, Los Angeles, CA 90071 and 135 South State College Boulevard, Brea, CA 92821. It is a wholly owned subsidiary of The Capital Group Companies, Inc., a holding company for several investment management subsidiaries. The investment adviser manages equity assets for the American Funds through two divisions. These divisions generally function separately from each other with respect to investment research activities and they make investment decisions for the underlying funds on a separate basis. COMPENSATION OF INVESTMENT PROFESSIONALS -- The series is managed by a Portfolio Oversight Committee consisting of investment professionals employed by the investment adviser. The investment professionals serving on the Portfolio Oversight Committee are paid competitive salaries by Capital Research and Management Company and may participate in profit-sharing plans. Members of the Portfolio Oversight Committee will not be compensated based on the size of the series or the underlying funds in which the series invests, but rather over a long-term period based, among other things, on how successful each fund in the series has been in achieving its objectives, i.e., growth, income and conservation of capital. The investment adviser believes that this method of compensation minimizes any incentive to favor one target date fund or underlying fund over another in the allocation process for reasons other than meeting the investment objectives of the funds. INVESTMENT PROFESSIONAL FUND HOLDINGS AND OTHER MANAGED ACCOUNTS -- As described below, investment professionals may personally own shares of the funds. In addition, investment professionals may manage portions of other mutual funds or accounts advised by Capital Research and Management Company or its affiliates. THE FOLLOWING TABLE REFLECTS INFORMATION AS OF OCTOBER 31, 2006: NUMBER NUMBER OF OTHER OF OTHER NUMBER REGISTERED POOLED OF OTHER INVESTMENT INVESTMENT ACCOUNTS COMPANIES (RICS) VEHICLES (PIVS) THAT THAT THAT INVESTMENT INVESTMENT INVESTMENT PROFESSIONAL DOLLAR RANGE PROFESSIONAL PROFESSIONAL MANAGES OF FUND MANAGES MANAGES (ASSETS OF INVESTMENT SHARES (ASSETS OF RICS (ASSETS OF PIVS OTHER ACCOUNTS PROFESSIONAL OWNED/1/ IN BILLIONS)/2/ IN BILLIONS)/3/ IN BILLIONS)/4/ -------------------------------------------------------------------------------------------- James B. not 3 $184.3 1 $0.05 None Lovelace applicable -------------------------------------------------------------------------------------------- Alan N. Berro not 3 $223.8 None None applicable -------------------------------------------------------------------------------------------- Joyce E. Gordon not 3 $184.3 None None applicable -------------------------------------------------------------------------------------------- Nicholas J. not 2 $177.6 None None Grace applicable -------------------------------------------------------------------------------------------- John H. Smet not 7 $249.9 None 3 $2.45 applicable -------------------------------------------------------------------------------------------- 1 Ownership disclosure is made using the following ranges: None; $1 - $10,000; $10,001 - $50,000; $50,001 - $100,000; $100,001 - $500,000; $500,001 - $1,000,000; and Over $1,000,000. The amounts listed include shares owned through The Capital Group Companies, Inc. retirement plan and 401(k) plan. 2 Indicates fund(s) where the investment professional also has significant responsibilities for the day to day management of the fund(s). Assets noted are the total net assets of the registered investment companies and are not indicative of the total assets managed by the individual, which is a substantially lower amount. No fund or account has an advisory fee that is based on the performance of the fund or account. American Funds Target Date Retirement Series -- Page 30
3 Represents funds advised or sub-advised by Capital Research and Management Company and sold outside the United States and/ or fixed-income assets in institutional accounts managed by investment adviser subsidiaries of Capital Group International, Inc., an affiliate of Capital Research and Management Company. Assets noted are the total net assets of the funds or accounts and are not indicative of the total assets managed by the individual, which is a substantially lower amount. No fund or account has an advisory fee that is based on the performance of the fund or account. 4 Reflects other professionally managed accounts held at companies affiliated with Capital Research and Management Company. Personal brokerage accounts of portfolio counselors and their families are not reflected. INVESTMENT ADVISORY AND SERVICE AGREEMENT -- The Investment Advisory and Service Agreement (the "Agreement") between the series and the investment adviser will continue in effect until January 31, 2008, unless sooner terminated, and may be renewed from year to year thereafter, provided that any such renewal has been specifically approved at least annually by (a) the board of directors, or by the vote of a majority (as defined in the 1940 Act) of the outstanding voting securities of the series, and (b) the vote of a majority of directors who are not parties to the Agreement or interested persons (as defined in the 1940 Act) of any such party, cast in person at a meeting called for the purpose of voting on such approval. The Agreement provides that the investment adviser has no liability to the series for its acts or omissions in the performance of its obligations to the series not involving willful misfeasance, bad faith, gross negligence or reckless disregard of its obligations under the Agreement. The Agreement also provides that either party has the right to terminate it, without penalty, upon 60 days' written notice to the other party, and that the Agreement automatically terminates in the event of its assignment (as defined in the 1940 Act). In addition to providing investment advisory services, the investment adviser furnishes the services and pays the compensation and travel expenses of persons to perform the series' executive, administrative, clerical and bookkeeping functions, and provides suitable office space, necessary small office equipment and utilities, general purpose accounting forms, supplies and postage used at the series' offices. The series will pay all expenses not assumed by the investment adviser, including, but not limited to: custodian, stock transfer and dividend disbursing fees and expenses; shareholder recordkeeping and administrative expenses; costs of the designing, printing and mailing of reports, prospectuses, proxy statements and notices to its shareholders; taxes; expenses of the issuance and redemption of fund shares (including stock certificates, registration and qualification fees and expenses); expenses pursuant to the series' plans of distribution (described below); legal and auditing expenses; compensation, fees and expenses paid to independent directors; association dues; costs of stationery and forms prepared exclusively for the fund; and costs of assembling and storing shareholder account data. As described in the prospectus, the investment adviser is currently waiving its management fee. However, the investment advisory and services agreement authorizes the adviser to be paid a fee up to .10%. The investment adviser has no current intention of removing the waiver and, in any case, would not do so without approval of the series' board. Since each fund pursues its investment objective by investing in other mutual funds, you will bear your proportionate share of a fund's operating expenses and also, indirectly, the operating expenses of the underlying funds in which the fund invests. American Funds Target Date Retirement Series -- Page 31
The following table provides the effective annual advisory fee rates for each of the underlying funds. UNDERLYING AMERICAN FUNDS ANNUAL FEE RATE ----------------------------------------------------------------------------- AMCAP Fund .29 % ----------------------------------------------------------------------------- The Growth Fund of America .25 ----------------------------------------------------------------------------- The New Economy Fund .37 ----------------------------------------------------------------------------- EuroPacific Growth Fund .39 ----------------------------------------------------------------------------- New Perspective Fund .35 ----------------------------------------------------------------------------- New World Fund .56 ----------------------------------------------------------------------------- SMALLCAP World Fund .58 ----------------------------------------------------------------------------- American Mutual Fund .24 ----------------------------------------------------------------------------- Capital World Growth and Income Fund .34 ----------------------------------------------------------------------------- Fundamental Investors .24 ----------------------------------------------------------------------------- The Investment Company of America .22 ----------------------------------------------------------------------------- Washington Mutual Investors Fund .23* ----------------------------------------------------------------------------- Capital Income Builder .23 ----------------------------------------------------------------------------- The Income Fund of America .22 ----------------------------------------------------------------------------- American Balanced Fund .22 ----------------------------------------------------------------------------- American High-Income Trust .30 ----------------------------------------------------------------------------- The Bond Fund of America .23 ----------------------------------------------------------------------------- Capital World Bond Fund .47 ----------------------------------------------------------------------------- Intermediate Bond Fund of America .26 ----------------------------------------------------------------------------- Short-Term Bond Fund of America .32 ----------------------------------------------------------------------------- U.S. Government Securities Fund .28 ----------------------------------------------------------------------------- * Includes fees for services provided by Washington Management Corporation. ADMINISTRATIVE SERVICES AGREEMENT -- The Administrative Services Agreement (the "Administrative Agreement") between the series and the investment adviser relating to the series' Class A and R shares will continue in effect until January 31, 2008, unless sooner terminated, and may be renewed from year to year thereafter, provided that any such renewal has been specifically approved at least annually by the vote of a majority of directors who are not parties to the Administrative Agreement or interested persons (as defined in the 1940 Act) of any such party, cast in person at a meeting called for the purpose of voting on such approval. The series may terminate the Administrative Agreement at any time by vote of a majority of independent directors. The investment adviser has the right to terminate the Administrative Agreement upon 60 days' written notice to the series. The Administrative Agreement automatically terminates in the event of its assignment (as defined in the 1940 Act). Under the Administrative Agreement, the investment adviser provides certain transfer agent and administrative services for shareholders of each fund's Class A and Class R shares. The investment adviser may contract with third parties, including American Funds Service Company, the series' Transfer Agent, to provide these services. Services include, but are not limited to, shareholder account maintenance, transaction processing, tax information reporting and American Funds Target Date Retirement Series -- Page 32
shareholder and fund communications. In addition, the investment adviser monitors, coordinates and oversees the activities performed by third parties providing such services. The investment adviser receives an administrative services fee at the annual rate of up to .05% of the average daily net assets for Class A and R (excluding Class R-5 shares) for administrative services provided to these share classes. An additional .10% will be paid by the R-5 shares of the underlying funds. Administrative services fees are paid monthly and accrued daily. The investment adviser uses a portion of this fee to compensate third parties for administrative services provided to the fund. Of the remainder, the investment adviser does not retain more than .05% of the average daily net assets for each applicable share class. For Class R-5 shares, no additional services fee is paid. The administrative services fee includes compensation for transfer agent and shareholder services provided to each fund's Class A and R shares. In addition to making administrative service fee payments to unaffiliated third parties, the investment adviser also makes payments from the administrative services fee to American Funds Service Company according to a fee schedule contained in a Shareholder Services Agreement between the series and American Funds Service Company. PRINCIPAL UNDERWRITER AND PLANS OF DISTRIBUTION -- American Funds Distributors, Inc. (the "Principal Underwriter") is the principal underwriter of the series' shares. The Principal Underwriter is located at 333 South Hope Street, Los Angeles, CA 90071; 135 South State College Boulevard, Brea, CA 92821; 15370 Barranca Parkway, Irvine, CA 92618; 3500 Wiseman Boulevard, San Antonio, TX 78251; 8332 Woodfield Crossing Boulevard, Indianapolis, IN 46240; and 5300 Robin Hood Road, Norfolk, VA 23513. The Principal Underwriter receives revenues from sales of the funds' shares. For Class A shares, the Principal Underwriter receives commission revenue consisting of that portion of the Class A sales charge remaining after the allowances by the Principal Underwriter to investment dealers. For Class R-1, R-2, R-3 and R-4 shares, the fund pays the Principal Underwriter for advancing the immediate service fees paid to qualified dealers and advisers who sell Class R-1, R-2, R-3 and R-4 shares. The series has adopted plans of distribution (the "Plans") pursuant to rule 12b-1 under the 1940 Act. The Principal Underwriter receives amounts payable pursuant to the Plans (see below). As required by rule 12b-1 and the 1940 Act, the Plans (together with the Principal Underwriting Agreement) have been approved by the full board of directors and separately by a majority of the independent directors of the series who have no direct or indirect financial interest in the operation of the Plans or the Principal Underwriting Agreement. Potential benefits of the Plans to the series include quality shareholder services; savings to the series in transfer agency costs; and benefits to the investment process from growth or stability of assets. The selection and nomination of independent directors are committed to the discretion of the independent directors during the existence of the Plans. The Plans may not be amended to increase materially the amount spent for distribution without shareholder approval. Plan expenses are reviewed quarterly and the Plans must be renewed annually by the board of directors. Under the Plans, the series may annually expend the following amounts to finance any activity primarily intended to result in the sale of fund shares, provided the fund's board of directors has approved the category of expenses for which payment is being made: (a) for Class A shares of each fund, up to .30% of the average daily net assets attributable to Class A shares of such fund; (b) for Class R-1 shares of each fund, up to 1.00% of the average daily net assets attributable to Class R-1 shares of such fund; (c) for Class R-2 shares of each fund, up to 1.00% of the average American Funds Target Date Retirement Series -- Page 33
daily net assets attributable to Class R-2 shares; (d) for Class R-3 shares of each fund, up to .75% of the average daily net assets attributable to Class R-3 shares; and (e) for Class R-4 shares of each fund, up to .50% of the average daily net assets attributable to Class R-4 shares of such fund. The fund has not adopted a Plan for Class R-5 shares; accordingly, no 12b-1 fees are paid from Class R-5 share assets. For Class A shares: (a) up to .25% is reimbursed to the Principal Underwriter for paying service-related expenses, including paying service fees to qualified dealers, and (b) up to the amount allowable under the fund's Class A 12b-1 limit, after reimbursement for paying service-related expenses, is reimbursed to the Principal Underwriter for paying distribution-related expenses, including dealer commissions and wholesaler compensation paid on sales of shares of $1 million or more purchased without a sales charge (including purchases by employer-sponsored defined contribution-type retirement plans investing $1 million or more or with 100 or more eligible employees, and retirement plans, endowments and foundations with $50 million or more in assets -- "no load purchases"). Commissions on no load purchases of Class A shares in excess of the Class A limitations not reimbursed to the Principal Underwriter during the most recent fiscal quarter are recoverable for five quarters, provided the amount recovered does not cause the series to exceed the annual expense limit. After five quarters, these commissions are not recoverable. For Class R-1 shares: (a) up to .25% is paid to the Principal Underwriter for paying service-related expenses, including paying service fees to qualified dealers, and (b) up to 0.75% is paid to the Principal Underwriter for distribution-related expenses, including commissions paid to qualified dealers. For Class R-2 shares: currently (a) up to 0.25% is paid to the Principal Underwriter for paying service-related expenses, including paying service fees to qualified dealers, and (b) up to 0.50% is paid to the Principal Underwriter for paying distribution-related expenses, including commissions paid to qualified dealers. For Class R-3 shares: currently (a) up to 0.25% is paid to the Principal Underwriter for paying service-related expenses, including paying service fees to qualified dealers, and (b) up to 0.25% is paid to the Principal Underwriter for paying distribution-related expenses, including commissions paid to qualified dealers. For Class R-4 shares: currently up to 0.25% is paid to the Principal Underwriter for paying service-related expenses, including paying service fees to qualified dealers or advisers. OTHER COMPENSATION TO DEALERS -- As of January 2007, the top dealers (or their affiliates) that American Funds Distributors anticipates will receive additional compensation (as described in the prospectus) include: A. G. Edwards & Sons, Inc. AIG Advisors Group: Advantage Capital Corporation AIG Financial Advisors, Inc. American General Securities Incorporated FSC Securities Corporation Royal Alliance Associates, Inc. AXA Advisors, LLC Cadaret, Grant & Co., Inc. American Funds Target Date Retirement Series -- Page 34
Cambridge Investment Research, Inc. Commonwealth Financial Network Cuna Brokerage Services, Inc. Deutsche Bank Securities Inc. Edward Jones Genworth Financial Securities Corporation Hefren-Tillotson, Inc. HTK/Janney Montgomery Group: Hornor, Townsend & Kent, Inc. Janney Montgomery Scott LLC ING Advisors Network Inc.: Bancnorth Investment Group, Inc. Financial Network Investment Corporation Guaranty Brokerage Services, Inc. ING Financial Partners, Inc. Multi-Financial Securities Corporation Primevest Financial Services, Inc. InterSecurities/Transamerica: InterSecurities, Inc. Transamerica Financial Advisors, Inc. J.J.B. Hilliard/PNC Bank: J.J.B. Hilliard, W.L. Lyons, Inc. PNC Bank, National Association PNC Brokerage Corp. PNC Investments LLC Lincoln Financial Advisors Corporation: Lincoln Financial Advisors Corporation Jefferson Pilot Securities Corporation LPL Financial Services: Linsco/Private Ledger Corp. Uvest Investment Services Merrill Lynch, Pierce, Fenner & Smith Incorporated Metlife Enterprises: Metlife Securities Inc. Tower Square Securities New England Securities Walnut Street Securities, Inc. MML Investors Services, Inc. Morgan Keegan & Company, Inc. Morgan Stanley DW Inc. National Planning Holdings Inc.: Invest Financial Corporation Investment Centers of America, Inc. National Planning Corporation SII Investments, Inc. NFP Securities, Inc. Northwestern Mutual Investment Services, LLC Pacific Select Distributors Inc.: Associated Securities Corp. Contemporary Financial Solutions, Inc. American Funds Target Date Retirement Series -- Page 35
M.L. Stern & Co., LLC Mutual Service Corporation Sorrento Pacific Financial, LLC United Planners' Financial Services of America Waterstone Financial Group, Inc. Park Avenue Securities LLC Princor Financial Services Corporation Raymond James Group: Raymond James & Associates, Inc. Raymond James Financial Services Inc. RBC Dain Rauscher Inc. Robert W. Baird & Co. Incorporated Securian/C.R.I. CRI Securities, LLC Securian Financial Services, Inc. Smith Barney U.S. Bancorp Investments, Inc. UBS Financial Services Inc. First Clearing LLC Wells Fargo Investments, L.L.C. EXECUTION OF PORTFOLIO TRANSACTIONS The series does not incur any brokerage commissions for purchasing shares of the underlying funds. However, the series may incur brokerage commissions and/or investment dealer concessions when purchasing short-term debt securities for the funds. Portfolio transactions for the series may be executed as part of concurrent authorizations to purchase or sell the same security for other funds served by the investment adviser, or for trusts or other accounts served by affiliated companies of the investment adviser. When such concurrent authorizations occur, the objective is to allocate the executions in an equitable manner. The series is required to disclose information regarding investments in the securities of its "regular" broker-dealers (or parent companies of its regular broker-dealers) that derive more than 15% of their revenue from broker-dealer, underwriter or investment adviser activities. A regular broker-dealer is (a) one of the 10 broker-dealers that received from the series the largest amount of brokerage commissions by participating, directly or indirectly, in the series' portfolio transactions during the series' most recent fiscal year; (b) one of the 10 broker-dealers that engaged as principal in the largest dollar amount of portfolio transactions of the series during the series' most recent fiscal year; or (c) one of the 10 broker-dealers that sold the largest amount of securities of the series during the series' most recent fiscal year. DISCLOSURE OF PORTFOLIO HOLDINGS The series' investment adviser, on behalf of the funds, has adopted policies and procedures with respect to the disclosure of information about the funds' portfolio securities. These policies and procedures have been reviewed by the series' board of directors and compliance will be periodically assessed by the board in connection with reporting from the series' Chief Compliance Officer. These policies and procedures are similar to those adopted by the underlying funds. Under these policies and procedures, each fund's complete list of portfolio holdings available for public disclosure, dated as of the end of each calendar quarter, is permitted to be posted on the American Funds Target Date Retirement Series -- Page 36
American Funds website no earlier than the tenth day after such calendar quarter. In practice, the public portfolio typically is posted on the website approximately 45 days after the end of the calendar quarter. Such portfolio holdings information may then be disclosed to any person pursuant to an ongoing arrangement to disclose portfolio holdings information to such person no earlier than one day after the day on which the information is posted on the American Funds website. The series' custodian, outside counsel and auditor, each of which require portfolio holdings information for legitimate business and fund oversight purposes, may receive the information earlier. Information regarding the portfolio holdings of the underlying funds will be available on the American Funds website. Affiliated persons of the series as described above who receive portfolio holdings information are subject to restrictions and limitations on the use and handling of such information pursuant to applicable codes of ethics, including requirements to maintain the confidentiality of such information, preclear securities trades and report securities transactions activity, as applicable. Third party service providers of the series receiving such information are subject to confidentiality obligations. When portfolio holdings information is disclosed other than through the American Funds website to persons not affiliated with the series (which, as described above, would typically occur no earlier than one day after the day on which the information is posted on the American Funds website, such persons may be bound by agreements (including confidentiality agreements) that restrict and limit their use of the information to legitimate business uses only. Neither the series nor its investment adviser or any affiliate thereof receives compensation or other consideration in connection with the disclosure of information about portfolio securities. Subject to board policies, the authority to disclose a fund's portfolio holdings, and to establish policies with respect to such disclosure, resides with the appropriate investment-related committees of the series' investment adviser. In exercising their authority, the committees determine whether disclosure of information about the funds' portfolio securities is appropriate and in the best interest of series shareholders. The investment adviser has implemented policies and procedures to address issues that may arise from the disclosure of fund holdings. For example, the investment adviser's code of ethics specifically requires, among other things, the safeguarding of information about fund holdings and contains prohibitions designed to prevent the personal use of confidential, proprietary investment information in a way that would conflict with fund transactions. In addition, the investment adviser believes that its current policy of not selling portfolio holdings information and not disclosing such information to unaffiliated third parties until such holdings have been made public on the American Funds website (other than to certain series service providers for legitimate business and series oversight purposes) helps reduce potential issues between series shareholders and the investment adviser and its affiliates. PRICE OF SHARES Shares are purchased at the offering price or sold at the net asset value price next determined after the purchase or sell order is received and accepted by the series or the Transfer Agent; the offering or net asset value price is effective for orders received prior to the time of determination of the net asset value and, in the case of orders placed with dealers or their authorized designees, accepted by the Principal Underwriter, the Transfer Agent, a dealer or any of their designees. In the case of orders sent directly to a fund in the series or the Transfer Agent, an investment dealer should be indicated. The dealer is responsible for promptly transmitting purchase and sell orders to the Principal Underwriter. American Funds Target Date Retirement Series -- Page 37
Orders received by the investment dealer or authorized designee, the Transfer Agent or the series after the time of the determination of the net asset value will be entered at the next calculated offering price. Note that investment dealers or other intermediaries may have their own rules about share transactions and may have earlier cut-off times than those of the fund. For more information about how to purchase through your intermediary, contact your intermediary directly. Prices that appear in the newspaper do not always indicate prices at which you will be purchasing and redeeming shares of each fund, since such prices generally reflect the previous day's closing price, while purchases and redemptions are made at the next calculated price. The price you pay for shares, the offering price, is based on the net asset value per share, which is calculated once daily as of approximately 4:00 p.m. New York time, which is the normal close of trading on the New York Stock Exchange, each day the Exchange is open. If, for example, the Exchange closes at 1:00 p.m., each fund's share price would still be determined as of 4:00 p.m. New York time. The New York Stock Exchange is currently closed on weekends and on the following holidays: New Year's Day; Martin Luther King, Jr. Day; Presidents' Day; Good Friday; Memorial Day; Independence Day; Labor Day; Thanksgiving; and Christmas Day. Each share class of the fund has a separately calculated net asset value (and share price). As noted in the prospectus, the principal assets of the funds consist of investments in the underlying funds. All portfolio securities of the funds are valued, and the net asset values per share for each share class are determined, as indicated below. The funds follow standard industry practice by typically reflecting changes in its holdings of portfolio securities on the first business day following a portfolio trade. 1. Underlying funds are priced based on the net asset value of each underlying fund, calculated as of approximately 4:00 p.m. New York time each day the New York Stock Exchange is open. Equity securities, including depositary receipts, are 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 in which the security trades. Fixed-income securities are valued at prices obtained from an independent pricing service, when such prices are available; however, in circumstances where the investment adviser deems it appropriate to do so, such securities will be valued at the mean quoted bid and asked prices (or bid prices, if asked prices are not available) or at prices for securities of comparable maturity, quality and type. The pricing services base bond prices on, among other things, an evaluation of the yield curve as of approximately 3:00 p.m. New York time. The fund's investment adviser performs certain checks on these prices prior to calculation of the underlying fund's net asset value. Securities with both fixed-income and equity characteristics (e.g., convertible bonds, preferred stocks, units comprised of more than one type of security, etc.), or equity securities traded principally among fixed-income dealers, are valued in the manner described above for either equity or fixed-income securities, depending on which method is deemed most appropriate by the investment adviser. Securities with original maturities of one year or less having 60 days or less to maturity are amortized to maturity based on their cost if acquired within 60 days of maturity, or if already held on the 60th day, based on the value determined on the 61st day. Forward currency contracts are valued at the mean of representative quoted bid and asked prices. American Funds Target Date Retirement Series -- Page 38
Assets or liabilities initially expressed in terms of non-U.S. currencies are translated prior to the next determination of the net asset value of the fund's shares into U.S. dollars at the prevailing market rates. Securities and assets for which market quotations are not readily available or are considered unreliable are valued at fair value as determined in good faith under policies approved by the underlying fund's board. Subject to board oversight, the fund's board has delegated the obligation to make fair valuation determinations to a valuation committee established by the fund's investment adviser. The board receives regular reports describing fair-valued securities and the valuation methods used. The valuation committee has adopted guidelines and procedures (consistent with SEC rules and guidance) to ensure that certain basic principles and factors are considered when making all fair value determinations. As a general principle, securities lacking readily available market quotations, or that have quotations that are considered unreliable by the investment adviser, are valued in good faith by the valuation committee based upon what the fund might reasonably expect to receive upon their current sale. The valuation committee considers all indications of value available to it in determining the fair value to be assigned to a particular security, including, without limitation, 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. The valuation committee employs additional fair value procedures to address issues related to investing substantial portions of applicable fund portfolios outside the United States. Securities owned by these funds trade in markets that open and closedifferent times, reflecting time zone differences. If significant events occur after the close of a market (and before these fund's net asset values are next determined) which affect the value of portfolio securities, appropriate adjustments from closing market prices may be made to reflect these events. Events of this type could include, for example, earthquakes and other natural disasters or significant price changes in other markets (e.g., U.S. stock markets). The series follows standard industry practice by typically reflecting changes in its holdings of portfolio securities on the first business day following a portfolio trade. 2. Each class of shares represents interests in the same portfolio of investments and is identical in all respects to each other class, except for differences relating to distribution, service and other charges and expenses, certain voting rights, differences relating to eligible investors, the designation of each class of shares, conversion features and exchange privileges. Expenses attributable to the fund, but not to a particular class of shares, are borne by each class pro rata based on relative aggregate net assets of the classes. Expenses directly attributable to a class of shares are borne by that class of shares. Liabilities, including accruals of taxes and other expense items attributable to particular share classes, are deducted from total assets attributable to such share classes. 3. Net assets so obtained for each share class are then divided by the total number of shares outstanding of that share class, and the result, rounded to the nearer cent, is the net asset value per share for that share class. American Funds Target Date Retirement Series -- Page 39
TAXES AND DISTRIBUTIONS FUND TAXATION -- Each fund has elected to be treated as a regulated investment company under Subchapter M of the Internal Revenue Code (the "Code"). A regulated investment company qualifying under Subchapter M of the Code is required to distribute to its shareholders at least 90% of its investment company taxable income (including the excess of net short-term capital gain over net long-term capital losses) and generally is not subject to federal income tax to the extent that it distributes annually 100% of its investment company taxable income and net realized capital gains in the manner required under the Code. Each fund intends to distribute annually all of its investment company taxable income and net realized capital gains and therefore does not expect to pay federal income tax, although in certain circumstances, a fund may determine that it is in the interest of shareholders to distribute less than that amount. To be treated as a regulated investment company under Subchapter M of the Code, each fund must also (a) derive at least 90% of its gross income from dividends, interest, payments with respect to securities loans, net income from certain publicly traded partnerships and gains from the sale or other disposition of securities or foreign currencies, or other income (including, but not limited to, gains from options, futures or forward contracts) derived with respect to the business of investing in such securities or currencies, and (b) diversify its holdings so that, at the end of each fiscal quarter, (i) at least 50% of the market value of the fund's assets is represented by cash, U.S. government securities and securities of other regulated investment companies, and other securities (for purposes of this calculation, generally limited in respect of any one issuer, to an amount not greater than 5% of the market value of the fund's assets and 10% of the outstanding voting securities of such issuer) and (ii) not more than 25% of the value of its assets is invested in the securities of (other than U.S. government securities or the securities of other regulated investment companies) any one issuer; two or more issuers which the fund controls and which are determined to be engaged in the same or similar trades or businesses; or the securities of certain publicly traded partnerships. Under the Code, a nondeductible excise tax of 4% is imposed on the excess of a regulated investment company's "required distribution" for the calendar year ending within the regulated investment company's taxable year over the "distributed amount" for such calendar year. The term "required distribution" means the sum of (a) 98% of ordinary income (generally net investment income) for the calendar year, (b) 98% of capital gain (both long-term and short-term) for the one-year period ending on October 31 (as though the one-year period ending on October 31 were the regulated investment company's taxable year) and (c) the sum of any untaxed, undistributed net investment income and net capital gains of the regulated investment company for prior periods. The term "distributed amount" generally means the sum of (a) amounts actually distributed by each fund from its current year's ordinary income and capital gain net income and (b) any amount on which the fund pays income tax during the periods described above. Although each fund intends to distribute its net investment income and net capital gains so as to avoid excise tax liability, the fund may determine that it is in the interest of shareholders to distribute a lesser amount. The following information may not apply to you if you hold fund shares in a tax-deferred account, such as a retirement plan. Please see your tax adviser for more information. DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS -- Dividends and capital gain distributions on fund shares generally will be reinvested in shares of the fund of the same class. American Funds Target Date Retirement Series -- Page 40
Distributions of investment company taxable income and net realized capital gains to shareholders will be taxable whether received in shares or in cash, unless such shareholders are exempt from taxation. Dividends and capital gain distributions by each fund to a tax-deferred retirement plan account are not taxable currently. DIVIDENDS -- Each fund intends to follow the practice of distributing substantially all of its investment company taxable income. Investment company taxable income generally includes dividends, interest, net short-term capital gains in excess of net long-term capital losses, and certain foreign currency gains, if any, less expenses and certain foreign currency losses. CAPITAL GAIN DISTRIBUTIONS -- The funds also intend to follow the practice of distributing the entire excess of net realized long-term capital gains over net realized short-term capital losses. Net capital gains for a fiscal year are computed by taking into account any capital loss carry forward of the funds. If any net long-term capital gains in excess of net short-term capital losses are retained by each fund for reinvestment, requiring federal income taxes to be paid thereon by the fund, the fund intends to elect to treat such capital gains as having been distributed to shareholders. Shareholders should consult their tax advisers about the application of federal, state and local tax law in light of their particular situation. PURCHASE AND EXCHANGE OF SHARES PURCHASES BY EMPLOYER-SPONSORED RETIREMENT PLANS -- As noted in the prospectus, participants in an eligible retirement plan should contact their plan's administrator or recordkeeper for information regarding purchases, sales and exchanges. PURCHASES BY INDIVIDUAL-TYPE RETIREMENT ACCOUNTS -- As described in the prospectus, you may generally open an account and purchase fund shares by contacting a financial adviser or investment dealer authorized to sell the fund's shares. You may make investments by any of the following means: CONTACTING YOUR FINANCIAL ADVISER -- Deliver or mail a check to your financial adviser. BY MAIL -- for initial investments, you may mail a check, made payable to the fund, directly to the address indicated on the account application. Please indicate an investment dealer on the account application. You may make additional investments by filling out the "Account Additions" form at the bottom of a recent account statement and mailing the form, along with a check made payable to the fund, using the envelope provided with your account statement. The amount of time it takes for us to receive regular U.S. postal mail may vary and there is no assurance that we will receive such mail on the day you expect. Mailing addresses for regular U.S. postal mail can be found in the prospectus. To send investments or correspondence to us via overnight mail or courier service, use any of the following addresses: American Funds Target Date Retirement Series -- Page 41
American Funds 8332 Woodfield Crossing Blvd. Indianapolis, IN 46240-2482 American Funds 3500 Wiseman Blvd. San Antonio, TX 78251-4321 American Funds 5300 Robin Hood Rd. Norfolk, VA 23513-2407 BY TELEPHONE -- using the American FundsLine. Please see the "Shareholder account services and privileges" section of this document for more information regarding this service. BY INTERNET -- using americanfunds.com. Please see the "Shareholder account services and privileges" section of this document for more information regarding this service. BY WIRE -- If you are making a wire transfer, instruct your bank to wire funds to: Wells Fargo Bank ABA Routing No. 121000248 Account No. 4600-076178 Your bank should include the following information when wiring funds: For credit to the account of: American Funds Service Company (fund's name) For further credit to: (shareholder's fund account number) (shareholder's name) You may contact American Funds Service Company at 800/421-0180 if you have questions about making wire transfers. OTHER PURCHASE INFORMATION -- Class R-5 shares are also available for tax- deferred retirement plans and IRAs of clients of the Personal Investment Management group of Capital Guardian Trust Company who do not have an intermediary associated with their accounts and without regard to the $1 million purchase minimum. The series and the Principal Underwriter receive the right to reject any purchase order. PURCHASE MINIMUMS AND MAXIMUMS FOR INDIVIDUAL-TYPE RETIREMENT ACCOUNTS -- All investments are subject to the purchase minimums and maximums described in the prospectus. As noted in the prospectus, purchase minimums may be waived or reduced in certain cases. American Funds Target Date Retirement Series -- Page 42
In the case of American Funds non-tax-exempt funds, the initial purchase minimum of $25 may be waived for the following account types: . Payroll deduction retirement plan accounts (such as, but not limited to, 403(b), 401(k), SIMPLE IRA, SARSEP and deferred compensation plan accounts). The following account types may be established without meeting the initial purchase minimum: . Retirement accounts that are funded with employer contributions; and . Accounts that are funded with monies set by court decree. The following account types may be established without meeting the initial purchase minimum, but shareholders wishing to invest in two or more funds must meet the normal initial purchase minimum of each fund: . Accounts that are funded with (a) transfers of assets, (b) rollovers from retirement plans or (c) required minimum distribution automatic exchanges. Certain accounts held on the series' books, known as omnibus accounts, contain multiple underlying accounts that are invested in shares of the series. These underlying accounts are maintained by entities such as financial intermediaries and are subject to the applicable initial purchase minimums as described in the prospectus and statement of additional information. However, in the case where the entity maintaining these accounts aggregates the accounts' purchase orders for fund shares, such accounts are not required to meet the minimum amount for subsequent purchases. EXCHANGES -- Shares of each fund in the series generally may be exchanged into shares of the same class of other funds in the American Funds. Exchange purchases are subject to the minimum investment requirements of the fund purchased and no sales charge generally applies. However, exchanges of Class A shares from the money market funds purchased without a sales charge generally will be subject to the appropriate sales charge, unless the money market fund shares were acquired by an exchange from a fund having a sales charge. Shares may be exchanged into other American Funds by contacting your plan administrator or recordkeeper. Shares held in corporate-type retirement plans for which Capital Bank and Trust Company serves as trustee may not be exchanged by telephone, internet, fax or telegraph. Exchange redemptions and purchases are processed simultaneously at the share prices next determined after the exchange order is received. FREQUENT TRADING OF FUND SHARES -- As noted in the prospectus, all transactions in fund shares are subject to the series' and American Funds Distributors' right to restrict potentially abusive trading. OTHER POTENTIALLY ABUSIVE ACTIVITY -- In addition to reserving the right to restrict potentially abusive trading, American Funds Service Company will monitor for other types of activity that could potentially be harmful to the American Funds - for example, short-term trading activity in multiple funds. When identified, American Funds Service Company will request that the shareholder discontinue the activity. If the activity continues, American Funds Service Company will freeze the shareholder account to prevent all activity other than redemptions of fund shares. American Funds Target Date Retirement Series -- Page 43
MOVING FROM CLASS A TO CLASS R SHARES -- Provided it is eligible to invest in Class R shares, a retirement plan currently invested in Class A shares may redeem its shares and purchase Class R shares with the redemption proceeds. Any Class A sales charges that the retirement plan previously paid will not be credited back to the plan's account. SALES CHARGES CLASS A PURCHASES PURCHASES BY CERTAIN 403(B) PLANS Individual 403(b) plans may be treated similarly to employer-sponsored plans for Class A sales charge purposes (i.e., individual participant accounts are eligible to be aggregated together) if: (a) the American Funds are principal investment options; (b) the employer facilitates the enrollment process by, for example, allowing for onsite group enrollment meetings held during working hours; and (c) there is only one dealer firm assigned to the plans. OTHER PURCHASES Pursuant to a determination of eligibility by a vice president or more senior officer of the Capital Research and Management Company Fund Administration Unit, or by his or her designee, Class A shares of the American Funds stock, stock/bond and bond funds and funds in the series may be sold at net asset value to: (1) current or retired directors, trustees, officers and advisory board members of, and certain lawyers who provide services to, the funds managed by Capital Research and Management Company, current or retired employees of Washington Management Corporation, current or retired employees and partners of The Capital Group Companies, Inc. and its affiliated companies, certain family members and employees of the above persons, and trusts or plans primarily for such persons; (2) currently registered representatives and assistants directly employed by such representatives, retired registered representatives with respect to accounts established while active, or full-time employees (collectively, "Eligible Persons") (and their (a) spouses or equivalents if recognized under local law, (b) parents and children, including parents and children in step and adoptive relationships, sons-in-law and daughters-in-law, and (c) parents-in-law, if the Eligible Persons or the spouses, children or parents of the Eligible Persons are listed in the account registration with the parents-in-law) of dealers who have sales agreements with the Principal Underwriter (or who clear transactions through such dealers), plans for the dealers, and plans that include as participants only the Eligible Persons, their spouses, parents and/or children; (3) currently registered investment advisers ("RIAs") and assistants directly employed by such RIAs, retired RIAs with respect to accounts established while active, or full-time employees (collectively, "Eligible Persons") (and their (a) spouses or equivalents if recognized under local law, (b) parents and children, including parents and children in step and adoptive relationships, sons-in-law and daughters-in-law and (c) parents-in-law, if the Eligible Persons or the spouses, American Funds Target Date Retirement Series -- Page 44
children or parents of the Eligible Persons are listed in the account registration with the parents-in-law) of RIA firms that are authorized to sell shares of the funds, plans for the RIA firms, and plans that include as participants only the Eligible Persons, their spouses, parents and/or children; (4) companies exchanging securities with the fund through a merger, acquisition or exchange offer; (5) insurance company separate accounts; (6) accounts managed by subsidiaries of The Capital Group Companies, Inc.; (7) The Capital Group Companies, Inc., its affiliated companies and Washington Management Corporation; (8) an individual or entity with a substantial business relationship with The Capital Group Companies, Inc. or its affiliates, or an individual or entity related or relating to such individual or entity; (9) wholesalers and full-time employees directly supporting wholesalers involved in the distribution of insurance company separate accounts whose underlying investments are managed by any affiliate of The Capital Group Companies, Inc.; and (10) full-time employees of banks that have sales agreements with the Principal Underwriter, who are solely dedicated to directly supporting the sale of mutual funds. Shares are offered at net asset value to these persons and organizations due to anticipated economies in sales effort and expense. Once an account is established under this net asset value privilege, additional investments can be made at net asset value for the life of the account. MOVING BETWEEN ACCOUNTS Investments in certain account types may be moved to other account types without incurring additional Class A sales charges. These transactions include, for example: .. redemption proceeds from a non-retirement account (for example, a joint tenant account) used to purchase fund shares in an IRA or other individual-type retirement account; .. required minimum distributions from an IRA or other individual-type retirement account used to purchase fund shares in a non-retirement account; and .. death distributions paid to a beneficiary's account that are used by the beneficiary to purchase fund shares in a different account LOAN REPAYMENTS Repayments on loans taken from a retirement plan or an individual-type retirement account are not subject to sales charges if American Funds Service Company is notified of the repayment. DEALER COMMISSIONS AND COMPENSATION -- Commissions (up to 1.00%) are paid to dealers who initiate and are responsible for certain Class A share purchases not subject to sales charges. Purchases by employer-sponsored defined contribution-type retirement plans investing $1 million or more or with 100 or more eligible employees, and purchases made at net asset value by certain retirement plans with assets of $50 million or more. Commissions on such investments (other than IRA rollover assets that roll over at no sales charge under the fund's IRA rollover policy as described in the prospectus) are paid to dealers at the following rates: 1.00% on amounts to $4 million, 0.50% on amounts over $4 million to $10 million and 0.25% on amounts over $10 million. Commissions are based on cumulative investments and are not annually reset. A dealer concession of up to 1% may be paid by the series under its Class A plan of distribution to reimburse the Principal Underwriter in connection with dealer and wholesaler compensation paid by it with respect to investments made with no initial sales charge. SALES CHARGE REDUCTIONS AND WAIVERS REDUCING YOUR CLASS A SALES CHARGE -- As described in the prospectus, there are various ways to reduce your sales charge when purchasing Class A shares. Additional information about Class A sales charge reductions is provided below. American Funds Target Date Retirement Series -- Page 45
STATEMENT OF INTENTION -- By establishing a statement of intention (the "Statement"), you enter into a nonbinding commitment to purchase shares of American Funds non-money market funds over a 13-month period and receive the same sales charge (expressed as a percentage of your purchases) as if all shares had been purchased at once. The market value of your existing holdings eligible to be aggregated (see below) as of the day immediately before the start of the Statement period may be credited toward satisfying the Statement. The Statement may be revised upward at any time during the Statement period, and such a revision will be treated as a new Statement, except that the Statement period during which the purchases must be made will remain unchanged. Purchases made from the date of revision will receive the reduced sales charge, if any, resulting from the revised Statement. The Statement will be considered completed if the shareholder dies within the 13-month Statement period. Commissions to dealers will not be adjusted or paid on the difference between the Statement amount and the amount actually invested before the shareholder's death. When a shareholder elects to use a Statement, shares equal to 5% of the dollar amount specified in the Statement may be held in escrow in the shareholder's account out of the initial purchase (or subsequent purchases, if necessary) by the Transfer Agent. All dividends and any capital gain distributions on shares held in escrow will be credited to the shareholder's account in shares (or paid in cash, if requested). If the intended investment is not completed within the specified Statement period, the purchaser may be required to remit to the Principal Underwriter the difference between the sales charge actually paid and the sales charge which would have been paid if the total of such purchases had been made at a single time. Any dealers assigned to the shareholder's account at the time a purchase was made during the Statement period will receive a corresponding commission adjustment if appropriate. If the difference is not paid by the close of the Statement period, the appropriate number of shares held in escrow will be redeemed to pay such difference. If the proceeds from this redemption are inadequate, the purchaser may be liable to the Principal Underwriter for the balance still outstanding. Certain payroll deduction retirement plans purchasing Class A shares under a Statement on or before November 12, 2006, may continue to purchase Class A shares at the sales charge determined by that particular Statement until the plans' values reach the amounts specified in their Statements. Upon reaching such amounts, the Statements for these plans will be deemed completed and will terminate at that time. After such termination, these plans are eligible for additional sales charge reductions by meeting the criteria under the fund's rights of accumulation policy. If you make an American Funds purchase under a statement of intention prior to April 1, 2007, purchases of American Legacy variable annuity contracts and variable life insurance policies may also be credited toward completion of that statement of intention. Shareholders purchasing shares at a reduced sales charge under a Statement indicate their acceptance of these terms and those in the prospectus with their first purchase. AGGREGATION -- Qualifying investments for aggregation include those made by you and your "immediate family" as defined in the prospectus, if all parties are purchasing shares for their own accounts and/or: American Funds Target Date Retirement Series -- Page 46
. individual-type employee benefit plans, such as an IRA, individual 403(b) plan (see exception in "Purchases by certain 403(b) plans" under "Sales charges") or single-participant Keogh-type plan; . business accounts solely controlled by you or your immediate family (for example, you own the entire business); . trust accounts established by you or your immediate family (for trusts with only one primary beneficiary, upon the trustor's death the trust account may be aggregated with such beneficiary's own accounts; for trusts with multiple primary beneficiaries, upon the trustor's death the trustees of the trust may instruct American Funds Service Company to establish separate trust accounts for each primary beneficiary; each primary beneficiary's separate trust account may then be aggregated with such beneficiary's own accounts); . endowments or foundations established and controlled by you or your immediate family; or . 529 accounts, which will be aggregated at the account owner level (Class 529-E accounts may only be aggregated with an eligible employer plan). Individual purchases by a trustee(s) or other fiduciary(ies) may also be aggregated if the investments are: . for a single trust estate or fiduciary account, including employee benefit plans other than the individual-type employee benefit plans described above; . made for two or more employee benefit plans of a single employer or of affiliated employers as defined in the 1940 Act, excluding the individual-type employee benefit plans described above; . for a diversified common trust fund or other diversified pooled account not specifically formed for the purpose of accumulating fund shares; . for nonprofit, charitable or educational organizations, or any endowments or foundations established and controlled by such organizations, or any employer-sponsored retirement plans established for the benefit of the employees of such organizations, their endowments, or their foundations; or . for individually established participant accounts of a 403(b) plan that is treated similarly to an employer-sponsored plan for sales charge purposes (see "Purchases by certain 403(b) plans" under "Sales charges" above), or made for two or more such 403(b) plans that are treated similarly to employer-sponsored plans for sales charge purposes, in each case of a single employer or affiliated employers as defined in the 1940 Act. Purchases made for nominee or street name accounts (securities held in the name of an investment dealer or another nominee such as a bank trust department instead of the customer) may not be aggregated with those made for other accounts and may not be aggregated with other nominee or street name accounts unless otherwise qualified as described above. CONCURRENT PURCHASES -- As described in the prospectus, you may reduce your Class A sales charge by combining purchases of all classes of shares in the American Funds, as American Funds Target Date Retirement Series -- Page 47
well as individual holdings in Endowments, (American Legacy variable annuity contracts through March 31, 2007 and variable life insurance policies). Shares of money market funds purchased through an exchange, reinvestment or cross-reinvestment from a fund having a sales charge also qualify. However, direct purchases of American Funds money market funds are excluded. RIGHTS OF ACCUMULATION -- Subject to the limitations described in the aggregation policy, you may take into account your accumulated holdings in all share classes of the American Funds, as well as your holdings in Endowments, to determine your sales charge on investments in accounts eligible to be aggregated. Subject to your investment dealer's or recordkeeper's capabilities, your accumulated holdings will be calculated as the higher of (a) the current value of your existing holdings (the "market value") or (b) the amount you invested (including reinvested dividends and capital gains, but excluding capital appreciation) less any withdrawals (the "cost value"). Depending on the entity on whose books your account is held, the value of your holdings in that account may not be eligible for calculation at cost value. For example, accounts held in nominee or street name are not eligible for calculation at cost value and instead will be calculated at market value for purposes of rights of accumulation. The value of all of your holdings in accounts established in calendar year 2005 or earlier will be assigned an initial cost value equal to the market value of those holdings as of the last business day of 2005. Thereafter, the cost value of such accounts will increase or decrease according to actual investments or withdrawals. You must contact your financial adviser or American Funds Service Company if you have additional information that is relevant to the calculation of the value of your holdings. An employer-sponsored retirement plan may also take into account the market value of its investments in American Legacy Retirement Investment Plans through March 31, 2007. Direct purchases of American Funds money market funds are excluded. RIGHT OF REINVESTMENT As described in the prospectus, shareholders may be able to reinvest proceeds from a redemption, dividend payment or capital gain distribution without a sales charge. For purposes of this right of reinvestment, beginning April 1, 2007, if the account from which the proceeds originated has been closed, reinvestment can be made without a sales charge if the receiving account has the same registration as the closed account. In addition, beginning April 1, 2007, redemption proceeds from a systematic withdrawal plan are not entitled to a right of reinvestment. CDSC WAIVERS FOR CLASS A SHARES -- As noted in the prospectus, a contingent deferred sales charge ("CDSC") may be waived for redemptions due to death or postpurchase disability of a shareholder (this generally excludes accounts registered in the names of trusts and other entities). In addition, a CDSC may be waived for the following types of transactions, if together they do not exceed 12% of the value of an "account" (defined below) annually (the "12% limit"): . Required minimum distributions taken from retirement accounts upon the shareholder's attainment of age 70-1/2 (required minimum distributions that continue to be taken by the beneficiary(ies) after the account owner is deceased also qualify for a waiver). . Redemptions through a systematic withdrawal plan (SWP) (see "Automatic withdrawals" under "Shareholder account services and privileges" below). For each SWP payment, assets that are not subject to a CDSC, such as appreciation on shares and shares acquired through reinvestment of dividends and/or capital gain distributions, will be redeemed first and will count toward the 12% limit. If there is an insufficient amount of assets not subject to a CDSC to cover a particular SWP payment, shares subject to the lowest CDSC will be redeemed American Funds Target Date Retirement Series -- Page 48
next until the 12% limit is reached. Any dividends and/or capital gain distributions taken in cash by a shareholder who receives payments through a SWP will also count toward the 12% limit. In the case of a SWP, the 12% limit is calculated at the time a systematic redemption is first made, and is recalculated at the time each additional systematic redemption is made. Shareholders who establish a SWP should be aware that the amount of a payment not subject to a CDSC may vary over time depending on fluctuations in the value of their accounts. This privilege may be revised or terminated at any time. For purposes of this paragraph, "account" means: . in the case of Class A shares, your investment in Class A shares of all American Funds (investments representing direct purchases of American Funds money market funds are excluded). CDSC waivers are allowed only in the cases listed here and in the prospectus. For information regarding the sale of shares, please refer to the prospectus. SELLING SHARES EMPLOYER-SPONSORED RETIREMENT ACCOUNTS -- Shares of the series may be sold by contacting your plan administrator or recordkeeper. FOR INDIVIDUAL-TYPE RETIREMENT ACCOUNTS -- The methods for selling (redeeming) shares are described more fully in the prospectus. If you wish to sell your shares by contacting American Funds Service Company directly, any such request must be signed by the registered shareholders. To contact American Funds Service Company via overnight mail or courier service, see "Purchase and exchange of shares." A signature guarantee may be required for certain redemptions. In such an event, your signature may be guaranteed by a domestic stock exchange or the National Association of Securities Dealers, Inc., bank, savings association or credit union that is an eligible guarantor institution. The Transfer Agent reserves the right to require a signature guarantee on any redemptions. Additional documentation may be required for sales of shares held in corporate, partnership or fiduciary accounts. You must include with your written request any shares you wish to sell that are in certificate form. If you sell Class A shares and request a specific dollar amount to be sold, we will sell sufficient shares so that the sale proceeds, after deducting any applicable CDSC, equals the dollar amount requested. Redemption proceeds will not be mailed until sufficient time has passed to provide reasonable assurance that checks or drafts (including certified or cashier's checks) for shares purchased have cleared (which may take up to 10 business days from the purchase date). Except for delays relating to clearance of checks for share purchases or in extraordinary circumstances (and as American Funds Target Date Retirement Series -- Page 49
permissible under the 1940 Act), sale proceeds will be paid on or before the seventh day following receipt and acceptance of an order. Interest will not accrue or be paid on amounts that represent uncashed distribution or redemption checks. SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES The following services and privileges are generally available to shareholders whose accounts are held on the books of the funds, but are generally not applicable to employer-sponsored retirement plans. AUTOMATIC INVESTMENT PLAN -- An automatic investment plan enables you to make monthly or quarterly investments in the American Funds through automatic debits from your bank account. To set up a plan, you must fill out an account application and specify the amount that you would like to invest ($50 minimum per fund) and the date on which you would like your investments to occur. The plan will begin within 30 days after your account application is received. Your bank account will be debited on the day or a few days before your investment is made, depending on the bank's capabilities. The Transfer Agent will then invest your money into the fund you specified on or around the date you specified. If the date you specified falls on a weekend or holiday, your money will be invested on the following business day. However, if the following business day falls in the next month, your money will be invested on the business day immediately preceding the weekend or holiday. If your bank account cannot be debited due to insufficient funds, a stop-payment or the closing of the account, the plan may be terminated and the related investment reversed. You may change the amount of the investment or discontinue the plan at any time by contacting the Transfer Agent. AUTOMATIC REINVESTMENT -- Dividends and capital gain distributions are reinvested in additional shares of the same class and fund at net asset value unless you indicate otherwise on the account application. You also may elect to have dividends and/or capital gain distributions paid in cash by informing the fund, the Transfer Agent or your investment dealer. Dividends and capital gain distributions paid to retirement plan shareholders will be automatically reinvested. If you have elected to receive dividends and/or capital gain distributions in cash, and the postal or other delivery service is unable to deliver checks to your address of record, or you do not respond to mailings from American Funds Service Company with regard to uncashed distribution checks, your distribution option will automatically be converted to having all dividends and other distributions reinvested in additional shares. CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS -- For all share classes, you may cross-reinvest dividends and capital gains (distributions) into other American Funds in the same share class at net asset value, subject to the following conditions: (1) the aggregate value of your account(s) in the fund(s) paying distributions equals or exceeds $5,000 (this is waived if the value of the account in the fund receiving the distributions equals or exceeds that fund's minimum initial investment requirement); (2) if the value of the account of the fund receiving distributions is below the minimum initial investment requirement, distributions must be automatically reinvested; and (3) if you discontinue the cross-reinvestment of distributions, the value of the account of the fund receiving distributions must equal or exceed the minimum initial investment requirement. If American Funds Target Date Retirement Series -- Page 50
you do not meet this requirement within 90 days of notification, the fund has the right to automatically redeem the account. AUTOMATIC EXCHANGES -- For all share classes, you may automatically exchange shares of the same class in amounts of $50 or more among any of the American Funds on any day (or preceding business day if the day falls on a nonbusiness day) of each month you designate. AUTOMATIC WITHDRAWALS -- You may automatically withdraw Class A shares from any of the funds. You can make automatic withdrawals of $50 or more. You can designate the day of each period for withdrawals and request that checks be sent to you or someone else. Withdrawals may also be electronically deposited to your bank account. The Transfer Agent will withdraw your money from the fund you specify on or around the date you specify. If the date you specified falls on a weekend or holiday, the redemption will take place on the previous business day. However, if the previous business day falls in the preceding month, the redemption will take place on the following business day after the weekend or holiday. Withdrawal payments are not to be considered as dividends, yield or income. Automatic investments may not be made into a shareholder account from which there are automatic withdrawals. Withdrawals of amounts exceeding reinvested dividends and distributions and increases in share value would reduce the aggregate value of the shareholder's account. The Transfer Agent arranges for the redemption by the fund of sufficient shares, deposited by the shareholder with the Transfer Agent, to provide the withdrawal payment specified. ACCOUNT STATEMENTS -- Your account is opened in accordance with your registration instructions. Transactions in the account, such as additional investments, will be reflected on regular confirmation statements from the Transfer Agent. Dividend and capital gain reinvestments, purchases through automatic investment plans and certain retirement plans, as well as automatic exchanges and withdrawals will be confirmed at least quarterly. AMERICAN FUNDSLINE AND AMERICANFUNDS.COM -- You may check your share balance, the price of your shares or your most recent account transaction; redeem shares (up to $75,000 per American Funds shareholder each day) from nonretirement plan accounts; or exchange shares around the clock with American FundsLine or using americanfunds.com. To use American FundsLine, call 800/325-3590 from a TouchTone(TM) telephone. Redemptions and exchanges through American FundsLine and americanfunds.com are subject to the conditions noted above and in "Telephone and Internet purchases, redemptions and exchanges" below. You will need your fund number (see the list of the American Funds under "General information -- fund numbers"), personal identification number (generally the last four digits of your Social Security number or other tax identification number associated with your account) and account number. Generally, all shareholders are automatically eligible to use these services. However, if you are not currently authorized to do so, you may complete an American FundsLink Authorization Form. Once you establish this privilege, you, your financial adviser or any person with your account information may use these services. TELEPHONE AND INTERNET PURCHASES, REDEMPTIONS AND EXCHANGES -- By using the telephone (including American FundsLine) or the Internet (including americanfunds.com), or fax purchase, redemption and/or exchange options, you agree to hold the series, the Transfer Agent, any of its affiliates or mutual funds managed by such affiliates, and each of their respective directors, trustees, officers, employees and agents harmless from any losses, expenses, costs or liability American Funds Target Date Retirement Series -- Page 51
(including attorney fees) that may be incurred in connection with the exercise of these privileges. Generally, all shareholders are automatically eligible to use these services. However, you may elect to opt out of these services by writing the Transfer Agent (you may also reinstate them at any time by writing the Transfer Agent). If the Transfer Agent does not employ reasonable procedures to confirm that the instructions received from any person with appropriate account information are genuine, it and/or the series may be liable for losses due to unauthorized or fraudulent instructions. In the event that shareholders are unable to reach the series by telephone because of technical difficulties, market conditions or a natural disaster, redemption and exchange requests may be made in writing only. SHARE CERTIFICATES -- Shares are credited to your account and certificates are not available. GENERAL INFORMATION CUSTODIAN OF ASSETS -- Securities and cash owned by all funds, including proceeds from the sale of shares of the funds and of securities in the funds' portfolio, are held by JPMorgan Chase Bank, 270 Park Avenue, New York, NY 10017-2070, as Custodian. If the funds hold non-U.S. securities, the Custodian may hold these securities pursuant to subcustodial arrangements in non-U.S. banks or non-U.S. branches of U.S. banks. TRANSFER AGENT -- American Funds Service Company, a wholly owned subsidiary of the investment adviser, maintains the records of shareholder accounts, processes purchases and redemptions of the funds' shares, acts as dividend and capital gain distribution disbursing agent, and performs other related shareholder service functions. The principal office of American Funds Service Company is located at 135 South State College Boulevard, Brea, CA 92821-5823. American Funds Service Company is also compensated for certain transfer agency services provided to all other share classes from the administrative services fees paid to Capital Research and Management Company, as described under "Administrative services agreement." In the case of certain shareholder accounts, third parties who may be unaffiliated with the investment adviser provide transfer agency and shareholder services in place of American Funds Service Company. These services are rendered under agreements with American Funds Service Company or its affiliates and the third parties receive compensation according to such agreements. Compensation for transfer agency and shareholder services, whether paid to American Funds Service Company or such third parties, is ultimately paid from fund assets and is reflected in the expenses of the funds as disclosed in the prospectus. INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM -- Deloitte & Touche LLP, 695 Town Center Drive, Costa Mesa, California 92626, serves as the series' independent registered public accounting firm, providing audit services, preparation of tax returns and review of certain documents to be filed with the Securities and Exchange Commission. The selection of the series' independent registered public accounting firm is reviewed and determined annually by the board of directors. INDEPENDENT LEGAL COUNSEL -- Paul, Hastings, Janofsky & Walker LLP, 515 South Flower Street, Los Angeles, CA 90071, serves as counsel for the series and for independent directors in their capacities as such. Counsel does not provide legal services to the series' investment adviser or any of its affiliated companies. A determination with respect to the independence of the series' "independent legal counsel" will be made at least annually by the independent directors of the series, as prescribed by the 1940 Act and related rules. American Funds Target Date Retirement Series -- Page 52
PROSPECTUSES, REPORTS TO SHAREHOLDERS AND PROXY STATEMENTS -- The series' fiscal year ends on October 31. Shareholders are provided updated prospectuses annually and at least semiannually with reports showing the funds' investment portfolio or summary investment portfolio, financial statements and other information. The series' annual financial statements are audited by the fund's independent registered public accounting firm, Deloitte & Touche LLP. (In addition, shareholders may also receive proxy statements for each fund.) In an effort to reduce the volume of mail shareholders receive from the fund when a household owns more than one account, the Transfer Agent has taken steps to eliminate duplicate mailings of prospectuses, shareholder reports and proxy statements. To receive additional copies of a prospectus, report or proxy statement, shareholders should contact the Transfer Agent. CODES OF ETHICS -- Capital Research and Management Company and its affiliated companies, including the series' Principal Underwriter, have adopted codes of ethics that allow for personal investments. These codes include a ban on acquisitions of securities pursuant to an initial public offering; restrictions on acquisitions of private placement securities; preclearance and reporting requirements; review of duplicate confirmation statements; annual recertification of compliance with codes of ethics; blackout periods on personal investing for certain investment personnel; ban on short-term trading profits for investment personnel; limitations on service as a director of publicly traded companies; and disclosure of personal securities transactions. LEGAL PROCEEDINGS -- On February 16, 2005, the NASD filed an administrative complaint against the Principal Underwriter. The complaint alleges violations of certain NASD rules by the Principal Underwriter with respect to the selection of broker-dealer firms that buy and sell securities for mutual fund investment portfolios. The complaint seeks sanctions, restitution and disgorgement. On August 30, 2006, the NASD Hearing Panel ruled against the Principal Underwriter and imposed a $5 million fine. The Principal Underwriter has appealed this decision to the NASD's National Adjudicatory Council. On March 24, 2005, the investment adviser and Principal Underwriter filed a complaint against the Attorney General of the State of California in Los Angeles County Superior Court. The complaint alleged that the Attorney General threatened to take enforcement actions against the investment adviser and Principal Underwriter that are without merit and preempted by federal law. On the same day, following the filing of the investment adviser's and Principal Underwriter's complaint, the Attorney General of the State of California filed a complaint against the Principal Underwriter and investment adviser. Filed in Los Angeles County Superior Court, the Attorney General's complaint alleged violations of certain sections of the California Corporations Code with respect to so-called "revenue sharing" disclosures in mutual fund prospectuses and statements of additional information. On November 22, 2005, the Los Angeles Superior Court dismissed the Attorney General's complaint. The Attorney General subsequently appealed the Superior Court's decision to California's Court of Appeal for the Second Appellate District. On January 26, 2007, the Court of Appeal issued a ruling allowing the California Attorney General to proceed with his civil action. The investment adviser and Principal Underwriter believe that the likelihood that these matters could have a material adverse effect on the fund or on the ability of the investment adviser or Principal Underwriter to perform their contracts with the fund is remote. The SEC is conducting a related investigation as of the date of this statement of additional information. The investment adviser and Principal Underwriter are cooperating fully. In addition, class action lawsuits have been filed in the U.S. District Court, Central District of California, relating to these matters. The investment adviser believes that these suits are without merit and will defend itself vigorously. Further updates on these issues will be available on the American Funds website (americanfunds.com) under "American Funds regulatory matters." American Funds Target Date Retirement Series -- Page 53
FUND NUMBERS -- Here are the fund numbers for use with our automated telephone line, American FundsLine/(R)/, or when making share transactions: FUND NUMBERS ------------------------------------ FUND CLASS A CLASS B CLASS C CLASS F ----------------------------------------------------------------------------------------------------- STOCK AND STOCK/BOND FUNDS AMCAP Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . . 002 202 302 402 American Balanced Fund/(R)/ . . . . . . . . . . . . . . . . . 011 211 311 411 American Mutual Fund/(R)/ . . . . . . . . . . . . . . . . . . 003 203 303 403 Capital Income Builder/(R)/ . . . . . . . . . . . . . . . . . 012 212 312 412 Capital World Growth and Income Fund/SM/ . . . . . . . . . . . 033 233 333 433 EuroPacific Growth Fund/(R)/ . . . . . . . . . . . . . . . . . 016 216 316 416 Fundamental Investors/SM/ . . . . . . . . . . . . . . . . . . 010 210 310 410 The Growth Fund of America/(R)/ . . . . . . . . . . . . . . . 005 205 305 405 The Income Fund of America/(R)/ . . . . . . . . . . . . . . . 006 206 306 406 The Investment Company of America/(R)/ . . . . . . . . . . . . 004 204 304 404 The New Economy Fund/(R)/ . . . . . . . . . . . . . . . . . . 014 214 314 414 New Perspective Fund/(R)/ . . . . . . . . . . . . . . . . . . 007 207 307 407 New World Fund/SM/ . . . . . . . . . . . . . . . . . . . . . . 036 236 336 436 SMALLCAP World Fund/(R)/ . . . . . . . . . . . . . . . . . . . 035 235 335 435 Washington Mutual Investors Fund/SM/ . . . . . . . . . . . . . 001 201 301 401 BOND FUNDS American High-Income Municipal Bond Fund/(R)/ . . . . . . . . 040 240 340 440 American High-Income Trust/SM/ . . . . . . . . . . . . . . . . 021 221 321 421 The Bond Fund of America/SM/ . . . . . . . . . . . . . . . . . 008 208 308 408 Capital World Bond Fund/(R)/ . . . . . . . . . . . . . . . . . 031 231 331 431 Intermediate Bond Fund of America/SM/ . . . . . . . . . . . . 023 223 323 423 Limited Term Tax-Exempt Bond Fund of America/SM/ . . . . . . . 043 243 343 443 Short-Term Bond Fund of America/SM/ . . . . . . . . . . . . . 048 248 348 448 The Tax-Exempt Bond Fund of America/(R)/ . . . . . . . . . . . 019 219 319 419 The Tax-Exempt Fund of California/(R)/* . . . . . . . . . . . 020 220 320 420 The Tax-Exempt Fund of Maryland/(R)/* . . . . . . . . . . . . 024 224 324 424 The Tax-Exempt Fund of Virginia/(R)/* . . . . . . . . . . . . 025 225 325 425 U.S. Government Securities Fund/SM/ . . . . . . . . . . . . . 022 222 322 422 MONEY MARKET FUNDS The Cash Management Trust of America/(R)/ . . . . . . . . . . 009 209 309 409 The Tax-Exempt Money Fund of America/SM/ . . . . . . . . . . . 039 N/A N/A N/A The U.S. Treasury Money Fund of America/SM/ . . . . . . . . . 049 N/A N/A N/A ___________ *Qualified for sale only in certain jurisdictions. FUND NUMBERS --------------------------------------------- CLASS CLASS CLASS CLASS CLASS FUND 529-A 529-B 529-C 529-E 529-F ------------------------------------------------------------------------------- STOCK AND STOCK/BOND FUNDS AMCAP Fund . . . . . . . . . . 1002 1202 1302 1502 1402 American Balanced Fund . . . . 1011 1211 1311 1511 1411 American Mutual Fund . . . . . 1003 1203 1303 1503 1403 Capital Income Builder . . . . 1012 1212 1312 1512 1412 Capital World Growth and Income Fund . . . . . . . . . . . . . 1033 1233 1333 1533 1433 EuroPacific Growth Fund . . . . 1016 1216 1316 1516 1416 Fundamental Investors . . . . . 1010 1210 1310 1510 1410 The Growth Fund of America . . 1005 1205 1305 1505 1405 The Income Fund of America . . 1006 1206 1306 1506 1406 The Investment Company of America . . . . . . . . . . . . 1004 1204 1304 1504 1404 The New Economy Fund . . . . . 1014 1214 1314 1514 1414 New Perspective Fund . . . . . 1007 1207 1307 1507 1407 New World Fund . . . . . . . . 1036 1236 1336 1536 1436 SMALLCAP World Fund . . . . . . 1035 1235 1335 1535 1435 Washington Mutual Investors Fund . . . . . . . . . . . . . . . 1001 1201 1301 1501 1401 BOND FUNDS American High-Income Trust . . 1021 1221 1321 1521 1421 The Bond Fund of America . . . 1008 1208 1308 1508 1408 Capital World Bond Fund . . . . 1031 1231 1331 1531 1431 Intermediate Bond Fund of America . . . . . . . . . . . . 1023 1223 1323 1523 1423 Short-Term Bond Fund of America 1048 1248 1348 1548 1448 U.S. Government Securities Fund 1022 1222 1322 1522 1422 MONEY MARKET FUND The Cash Management Trust of America . . . . . . . . . . . . 1009 1209 1309 1509 1409 American Funds Target Date Retirement Series -- Page 54
FUND NUMBERS ---------------------------------------- CLASS CLASS CLASS CLASS CLASS FUND R-1 R-2 R-3 R-4 R-5 ------------------------------------------------------------------------------- STOCK AND STOCK/BOND FUNDS AMCAP Fund . . . . . . . . . . . . . 2102 2202 2302 2402 2502 American Balanced Fund . . . . . . . 2111 2211 2311 2411 2511 American Mutual Fund . . . . . . . . 2103 2203 2303 2403 2503 Capital Income Builder . . . . . . . 2112 2212 2312 2412 2512 Capital World Growth and Income Fund 2133 2233 2333 2433 2533 EuroPacific Growth Fund . . . . . . 2116 2216 2316 2416 2516 Fundamental Investors . . . . . . . 2110 2210 2310 2410 2510 The Growth Fund of America . . . . . 2105 2205 2305 2405 2505 The Income Fund of America . . . . . 2106 2206 2306 2406 2506 The Investment Company of America . 2104 2204 2304 2404 2504 The New Economy Fund . . . . . . . . 2114 2214 2314 2414 2514 New Perspective Fund . . . . . . . . 2107 2207 2307 2407 2507 New World Fund . . . . . . . . . . . 2136 2236 2336 2436 2536 SMALLCAP World Fund . . . . . . . . 2135 2235 2335 2435 2535 Washington Mutual Investors Fund . . 2101 2201 2301 2401 2501 BOND FUNDS American High-Income Municipal Bond Fund . . . . . . . . . . . . . . . . N/A N/A N/A N/A 2540 American High-Income Trust . . . . . 2121 2221 2321 2421 2521 The Bond Fund of America . . . . . . 2108 2208 2308 2408 2508 Capital World Bond Fund . . . . . . 2131 2231 2331 2431 2531 Intermediate Bond Fund of America . 2123 2223 2323 2423 2523 Limited Term Tax-Exempt Bond Fund of America. . . . . . . . . . . . . . . N/A N/A N/A N/A 2543 Short-Term Bond Fund of America. . . 2148 2248 2348 2448 2548 The Tax-Exempt Bond Fund of America N/A N/A N/A N/A 2519 The Tax-Exempt Fund of California* . N/A N/A N/A N/A 2520 The Tax-Exempt Fund of Maryland* . . N/A N/A N/A N/A 2524 The Tax-Exempt Fund of Virginia* . . N/A N/A N/A N/A 2525 U.S. Government Securities Fund . . 2122 2222 2322 2422 2522 MONEY MARKET FUNDS The Cash Management Trust of America 2109 2209 2309 2409 2509 The Tax-Exempt Money Fund of America N/A N/A N/A N/A 2539 The U.S. Treasury Money Fund of America . . . . . . . . . . . . . . 2149 2249 2349 2449 2549 ___________ *Qualified for sale only in certain jurisdictions. American Funds Target Date Retirement Series -- Page 55
FUND NUMBERS --------------------------------------------------- CLASS CLASS CLASS CLASS CLASS FUND CLASS A R-1 R-2 R-3 R-4 R-5 ------------------------------------------------------------------------------- AMERICAN FUNDS TARGET DATE RETIREMENT SERIES American Funds 2050 Target Date Retirement Fund . . 069 2169 2269 2369 2469 2569 American Funds 2045 Target Date Retirement Fund . . 068 2168 2268 2368 2468 2568 American Funds 2040 Target Date Retirement Fund . . 067 2167 2267 2367 2467 2567 American Funds 2035 Target Date Retirement Fund . . 066 2166 2266 2366 2466 2566 American Funds 2030 Target Date Retirement Fund . . 065 2165 2265 2365 2465 2565 American Funds 2025 Target Date Retirement Fund . . 064 2164 2264 2364 2464 2564 American Funds 2020 Target Date Retirement Fund . . 063 2163 2263 2363 2463 2563 American Funds 2015 Target Date Retirement Fund . . 062 2162 2262 2362 2462 2562 American Funds 2010 Target Date Retirement Fund . . 061 2161 2261 2361 2461 2561 American Funds Target Date Retirement Series -- Page 56
APPENDIX The following descriptions of debt security ratings are based on information provided by Moody's Investors Service and Standard & Poor's Corporation. DESCRIPTION OF BOND RATINGS MOODY'S LONG-TERM RATING DEFINITIONS Aaa Obligations rated Aaa are judged to be of the highest quality, with minimal credit risk. Aa Obligations rated Aa are judged to be of high quality and are subject to very low credit risk. A Obligations rated A are considered upper-medium grade and are subject to low credit risk. Baa Obligations rated Baa are subject to moderate credit risk. They are considered medium-grade and as such may possess certain speculative characteristics. Ba Obligations rated Ba are judged to have speculative elements and are subject to substantial credit risk. B Obligations rated B are considered speculative and are subject to high credit risk. Caa Obligations rated Caa are judged to be of poor standing and are subject to very high credit risk. Ca Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest. C Obligations rated C are the lowest rated class of bonds and are typically in default, with little prospect for recovery of principal or interest. NOTE: Moody's appends numerical modifiers 1, 2, and 3 to each generic rating classification from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category. American Funds Target Date Retirement Series -- Page 57
STANDARD & POOR'S LONG-TERM ISSUE CREDIT RATINGS AAA An obligation rated AAA has the highest rating assigned by Standard & Poor's. The obligor's capacity to meet its financial commitment on the obligation is extremely strong. AA An obligation rated AA differs from the highest-rated obligations only in small degree. The obligor's capacity to meet its financial commitment on the obligation is very strong. A An obligation rated A is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories. However, the obligor's capacity to meet its financial commitment on the obligation is still strong. BBB An obligation rated BBB exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation. BB, B, CCC, CC, AND C Obligations rated BB, B, CCC, CC, and C are regarded as having significant speculative characteristics. BB indicates the least degree of speculation and C the highest. While such obligations will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposures to adverse conditions. BB An obligation rated BB is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to the obligor's inadequate capacity to meet its financial commitment on the obligation. B An obligation rated B is more vulnerable to nonpayment than obligations rated BB, but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial, or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitment on the obligation. CCC An obligation rated CCC is currently vulnerable to nonpayment and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation. CC An obligation rated CC is currently highly vulnerable to nonpayment. American Funds Target Date Retirement Series -- Page 58
C The C rating may be used to cover a situation where a bankruptcy petition has been filed or similar action has been taken, but payments on this obligation are being continued. D An obligation rated D is in payment default. The D rating category is used when payments on an obligation are not made on the date due even if the applicable grace period has not expired, unless Standard & Poor's believes that such payments will be made during such grace period. The D rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action if payments on an obligation are jeopardized. PLUS (+) OR MINUS (-) The ratings from AA to CCC may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories. FITCH LONG-TERM CREDIT RATINGS AAA Highest credit quality. 'AAA' ratings denote the lowest expectation of credit risk. They are assigned only in case of exceptionally strong capacity for payment of financial commitments. This capacity is highly unlikely to be adversely affected by foreseeable events. AA Very high credit quality. 'AA' ratings denote expectations of very low credit risk. They indicate very strong capacity for payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events. A High credit quality. 'A' ratings denote expectations of low credit risk. The capacity for payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to changes in circumstances or in economic conditions than is the case for higher ratings. BBB Good credit quality. 'BBB' ratings indicate that there is currently expectations of low credit risk. The capacity for payment of financial commitments is considered adequate but adverse changes in circumstances and economic conditions are more likely to impair this capacity. This is the lowest investment grade category. BB Speculative. 'BB' ratings indicate that there is a possibility of credit risk developing, particularly as the result of adverse economic change over time; however, business or financial alternatives may be available to allow financial commitments to be met. Securities rated in this category are not investment grade. American Funds Target Date Retirement Series -- Page 59
B Highly speculative. . For issuers and performing obligations, 'B' ratings indicate that significant credit risk is present, but a limited margin of safety remains. Financial commitments are currently being met; however, capacity for continued payment is contingent upon a sustained, favorable business and economic environment. . For individual obligations, may indicate distressed or defaulted obligations with potential for extremely high recoveries. Such obligations would possess a Recovery Rating of 'R1' (outstanding). CCC . For issuers and performing obligations, default is a real possibility. Capacity for meeting financial commitments is solely reliant upon sustained, favorable business or economic conditions. . For individual obligations, may indicate distressed or defaulted obligations with potential for average to superior levels of recovery. Differences in credit quality may be denoted by plus/minus distinctions. Such obligations typically would possess a Recovery Rating of 'R2' (superior), or 'R3' (good) or 'R4' (average). CC . For issuers and performing obligations, default of some kind appears probable. . For individual obligations, may indicate distressed or defaulted obligations with a Recovery Rating of 'R4' (average) or 'R5' (below average). C . For issuers and performing obligations, default is imminent. . For individual obligations, may indicate distressed or defaulted obligations with potential for below-average to poor recoveries. Such obligations would possess a Recovery Rating of 'R6' (poor). RD Indicates an entity that has failed to make due payments (within the applicable grace period) on some but not all material financial obligations, but continues to honor other classes of obligations. D Indicates an entity or sovereign that has defaulted on all of its financial obligations. Default generally is defined as the following: The modifiers "+" or "-" may be appended to a rating to denote relative status within major rating categories. Such suffixes are not added to the 'AAA' Long-term rating category, to categories below 'CCC', or to Short-term ratings other than 'F1'. (The +/- modifiers are only used to denote issues within the CCC category, whereas issuers are only rated CCC without the use of modifiers. American Funds Target Date Retirement Series -- Page 60
DESCRIPTION OF COMMERCIAL PAPER RATINGS MOODY'S COMMERCIAL PAPER RATINGS (HIGHEST THREE RATINGS) P-1 Issuers (or supporting institutions) rated Prime-1 have a superior ability to repay short-term debt obligations. P-2 Issuers (or supporting institutions) rated Prime-2 have a strong ability to repay short-term debt obligations. P-3 Issuers (or supporting institutions) rated Prime-3 have an acceptable ability to repay short-term obligations. STANDARD & POOR'S COMMERCIAL PAPER RATINGS (HIGHEST THREE RATINGS) A-1 A short-term obligation rated A-1 is rated in the highest category by Standard & Poor's. The obligor's capacity to meet its financial commitment on the obligation is strong. Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligor's capacity to meet its financial commitment on these obligations is extremely strong. A-2 A short-term obligation rated A-2 is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rating categories. However, the obligor's capacity to meet its financial commitment on the obligation is satisfactory. A-3 A short-term obligation rated A-3 exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation. American Funds Target Date Retirement Series -- Page 61
|
Financial
Statements
|
|||||||||||||||||||||||||||||||
|
American
Funds Target Date Retirement Series, Inc.
|
|||||||||||||||||||||||||||||||
|
Statements
of
assets and liabilities
|
|||||||||||||||||||||||||||||||
|
2010
Fund
|
2015
Fund
|
2020
Fund
|
2025
Fund
|
2030
Fund
|
2035
Fund
|
2040
Fund
|
2045
Fund
|
2050
Fund
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
Assets:
|
|||||||||||||||||||||||||||||||
|
Cash
|
$
|
60,000
|
$
|
60,000
|
$
|
60,000
|
$
|
60,000
|
$
|
60,000
|
$
|
60,000
|
$
|
60,000
|
$
|
60,000
|
$
|
60,000
|
|||||||||||||
|
Total
assets
|
$
|
60,000
|
$
|
60,000
|
$
|
60,000
|
$
|
60,000
|
$
|
60,000
|
$
|
60,000
|
$
|
60,000
|
$
|
60,000
|
$
|
60,000
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
Net
assets
consist of:
|
|||||||||||||||||||||||||||||||
|
Capital
paid
in on shares of capital stock
|
$
|
60,000
|
$
|
60,000
|
$
|
60,000
|
$
|
60,000
|
$
|
60,000
|
$
|
60,000
|
$
|
60,000
|
$
|
60,000
|
$
|
60,000
|
|||||||||||||
|
Net
assets:
|
|||||||||||||||||||||||||||||||
|
Total
authorized capital stock - 1,000,000,000 shares per fund, $0.001
par
value
|
|||||||||||||||||||||||||||||||
|
Class
A
|
Net
assets
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
||||||||||||
|
Shares
outstanding
|
1,000
|
1,000
|
1,000
|
1,000
|
1,000
|
1,000
|
1,000
|
1,000
|
1,000
|
||||||||||||||||||||||
|
Net
asset
value per share
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
|||||||||||||
|
Class
R-1
|
Net
assets
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
||||||||||||
|
Shares
outstanding
|
1,000
|
1,000
|
1,000
|
1,000
|
1,000
|
1,000
|
1,000
|
1,000
|
1,000
|
||||||||||||||||||||||
|
Net
asset
value per share
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
|||||||||||||
|
Class
R-2
|
Net
assets
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
||||||||||||
|
Shares
outstanding
|
1,000
|
1,000
|
1,000
|
1,000
|
1,000
|
1,000
|
1,000
|
1,000
|
1,000
|
||||||||||||||||||||||
|
Net
asset
value per share
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
|||||||||||||
|
Class
R-3
|
Net
assets
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
||||||||||||
|
Shares
outstanding
|
1,000
|
1,000
|
1,000
|
1,000
|
1,000
|
1,000
|
1,000
|
1,000
|
1,000
|
||||||||||||||||||||||
|
Net
asset
value per share
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
|||||||||||||
|
Class
R-4
|
Net
assets
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
||||||||||||
|
Shares
outstanding
|
1,000
|
1,000
|
1,000
|
1,000
|
1,000
|
1,000
|
1,000
|
1,000
|
1,000
|
||||||||||||||||||||||
|
Net
asset
value per share
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
|||||||||||||
|
Class
R-5
|
Net
assets
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
$
|
10,000
|
||||||||||||
|
Shares
outstanding
|
1,000
|
1,000
|
1,000
|
1,000
|
1,000
|
1,000
|
1,000
|
1,000
|
1,000
|
||||||||||||||||||||||
|
Net
asset
value per share
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
$
|
10.00
|
|||||||||||||
|
See
Notes to
Statements of Assets and Liabilities.
|
|||||||||||||||||||||||||||||||
| 1. |
Organization
- American Funds Target Date Retirement Series, Inc. (the “series”) was
organized on November 6, 2006 as a Maryland corporation. The series
will,
upon declaration of effectiveness by the Securities and Exchange
Commission (“SEC”), be registered under the Investment Company Act of 1940
(the “1940 Act”), as an open-end, diversified management investment
company. The series initially includes nine funds - 2010 Fund, 2015
Fund,
2020 Fund, 2025 Fund, 2030 Fund, 2035 Fund, 2040 Fund, 2045 Fund,
and 2050
Fund - (the “funds). To date, the funds have had no transactions other
than those relating to organizational matters and the sale of 1,000
shares
each of Class A, R-1, R-2, R-3, R-4, and R-5 capital stock to Capital
Research and Management Company (“CRMC”), the series’ investment adviser.
The series’ fiscal year ends on October 31.
|
| 2. |
Significant
accounting policies - The statements of assets and liabilities 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.
|
| 3. |
Fees
and
transactions with related parties - The series has entered into an
Investment Advisory and Service Agreement with CRMC, a Principal
Underwriting Agreement with American Funds Distributors, Inc.SM
("AFD"), and
a Shareholder Services Agreement with American Funds Service Company
SM
("AFS").
CRMC is the parent company of AFD and AFS.
|
| 4. |
Federal
income taxation and distributions - It is the series’ policy to comply in
its initial year and thereafter with the requirements under Subchapter
M
of the Internal Revenue Code applicable to mutual funds and to distribute
substantially all of its net taxable income and net capital
gains.
|
| This ‘487’ Filing | Date | Other Filings | ||
|---|---|---|---|---|
 | ||||
| 1/31/08 | N-Q | |||
| 4/1/07 | ||||
| 3/31/07 | ||||
| Filed on / Effective on: | 3/30/07 | |||
| 2/1/07 | ||||
| 1/26/07 | ||||
| 1/19/07 | ||||
| 1/17/07 | ||||
| 11/12/06 | ||||
| 11/6/06 | ||||
| 10/31/06 | ||||
| 8/30/06 | ||||
| 11/22/05 | ||||
| 3/24/05 | ||||
| 2/16/05 | ||||
| List all Filings | ||||