Is there a place for this mutual fund in investors'

portfolios?

Does American Funds Investment Company of America's mandate and

huge asset base leave it betwixt and between?

There's plenty to like about this large-value fund. Like most of its siblings, it's run

by a sizable roster of veteran managers (each working independently), who are in

turn supported by a very large analyst staff. The fund also has a low 0.54%

expense ratio, making it one of the cheapest actively managed large-value funds

around. That means that more of the dividend yield from this fund's

holdings--which is substantial, because the managers seek income as part of their

strategy--flows through to shareholders.

The fund's approach also holds some appeal. Its preference for dividend payers

results in a portfolio dominated by financially stable companies with distinct

competitive advantages. And yet the fund is more opportunistic than large-value

siblings American Mutual AMRMX and Washington Mutual AWSHX; the managers

are more willing to include growth-oriented names like software maker

Oracle ORCL at the top of the portfolio. Because the managers have recently found

such companies to be relatively cheap, the fund's portfolios have lately landed in

the large-blend portion of the Morningstar Style Box.

Until very recently, the fund's less-value-oriented tack has been out of favor--

witness the fund's subpar relative returns for much of 2003 to 2006. However, as

investors have turned to larger companies with stable earnings growth more

recently, the fund has thrived, and we expect it to continue to look good if

mega-caps stay in favor.

However, we think investors have better options in the American Funds lineup.

Those seeking a dividend-focused large-value fund would be better off with Analyst

Pick Washington Mutual, while those who like this fund's opportunistic streak

should check out the more aggressive--and nimble--Fundamental Investors ANCFX.

Process Pillar: | Greg Carlson 08/14/2007

The fund favors established blue-chip companies, many of which pay dividends. As

a result, the fund devotes a decent portion of assets to stocks in industries such as

oil services, financials, and tobacco. But management is also willing to scoop up

shares in depressed growth names. Thus, it isn't surprising to see stocks that are

typically considered growth stocks in its portfolio. Management will also keep a

decent chunk of assets parked in bonds and cash at times.

People Pillar: | Greg Carlson 08/14/2007

The fund is managed by a veteran nine-person team. The firm's research

capabilities are hard to match as it employs more than 140 investment pros

globally. Investors will also be hard-pressed to find analysts with greater industry

expertise. Joyce Gordon, for example, has followed banks since 1987. Both

managers and analysts are compensated in part based on how their picks perform

versus a benchmark over a four-year moving average.

Parent Pillar: Positive | Janet Yang, CFA 07/19/2013

The deep roots of American Funds' more than 80 years of investing success are

many and intertwined, though for the most part, they can be traced to a few

sources: the firm's trademark multimanager system; a stable and long-tenured

team of investment professionals; and an incentive system that allows those

professionals to take the long-term view in an increasingly myopic market.

Combined, American and its parent company, Capital Group, have leveraged those

characteristics to impressive results, particularly on the equity side of their

business, where the vast majority of American's assets under management reside.

The firm's fixed-income efforts haven't always enjoyed the same level of

performance success. American continues to search for ways to adapt its

multimanager process to the bond markets, and while there are signs that the firm

remains several years behind its similarly resourced peers, recent high-level,

Morningstar's Take AIVSX

Morningstar Pillars

Parent Positive

Role in Portfolio

Core. This fund's all-weather potential makes it a terrific core

holding.

AIVSX : Analyst Report | Analyst Report http://analysisreport.morningstar.com/fund/archive?t=AIVSX&region=U...

1 of 2 1/19/2014 2:34 PM

outside hires bring with them the possibility that it will not take as long to catch up

with the competition.

Other aspects of the business have been changing too, including new product

launches and adjustments to the firm's organization. Overall, though, combined

with the firm's unique manager incentives and peer-beating fees, American Funds

remains a model steward of investor assets.

S&P 500 index data: S&P 500 Copyright @ 2014

All data from Morningstar except U.S. intraday real-time exchange quotes, which are provided by BATS when

available. End-of-day quotes for Nasdaq, NYSE, and Amex securities will appear 15 minutes after close. Graph

times are Eastern Standard. @ Copyright 2014 Morningstar, Inc.

AIVSX : Analyst Report | Analyst Report http://analysisreport.morningstar.com/fund/archive?t=AIVSX&region=U...

2 of 2 1/19/2014 2:34 PM