Description
Capital Research and Management Company, a wholly-owned subsidiary of The Capital Group Companies, Inc., is a Delaware corporation that traces its roots to 1931. The Capital Group Companies form one of the most experienced families of investment management firms in the world. Capital Research and Management Company and The Capital Group Companies have always been privately held.
CAPITAL RESEARCH AND MANAGEMENT COMPANY
333 South Hope Street, 55
th
Floor
Los Angeles, California 90071
Phone: (213) 486-9200
www.thecapitalgroup.com
Form ADV, Part 2A
Date: September 28, 2015
This brochure provides information about the qualification and business practices of Capital
Research and Management Company. Throughout this brochure and related materials, Capital
Research and Management Company may refer to itself as a “registered investment adviser” or
“being registered.” You should be aware that registration with the United States Securities and
Exchange Commission (“SEC”) or a state securities authority does not imply a certain level of
skill or training.
If you have any questions about the contents of this brochure, please contact us at
[email protected].
The information in this brochure has not been approved or verified by the SEC or by any state
securities authority.
Additional information about Capital Research and Management Company also is available on
the SEC’s website at www.adviserinfo.sec.gov
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ITEM 2: MATERIAL CHANGES
There are no material changes since the last update of Capital Research and Management
Company’s Form ADV, Part 2A brochure dated J anuary 16, 2015.
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ITEM 3: TABLE OF CONTENTS
Item Page
1 Cover Page………………………………………………………………………….……………….1
2 Material Changes ............................................................................................................................... 2
3 Table of Contents ............................................................................................................................... 3
4 Advisory Business ............................................................................................................................. 4
5 Fees and Compensation ..................................................................................................................... 6
6 Performance-Based Fees and Side-by-Side Management ................................................................. 8
7 Type of Clients ................................................................................................................................... 9
8 Methods of Analysis, Investment Strategies and Risk of Loss ........................................................ 10
9 Disciplinary Information .................................................................................................................. 15
10 Other Financial Industry Activities and Affiliations ........................................................................ 16
11 Code of Ethics .................................................................................................................................. 19
12 Brokerage Practices ......................................................................................................................... 21
13 Review of Accounts ......................................................................................................................... 30
14 Client Referrals and Other Compensation ....................................................................................... 31
15 Custody ............................................................................................................................................ 32
16 Investment Discretion ...................................................................................................................... 33
17 Voting Client Securities ................................................................................................................... 34
18 Financial Information ....................................................................................................................... 37
19 Requirements for State-Registered Advisers ................................................................................... 38
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ITEM 4: ADVISORY BUSINESS
Capital Research and Management Company, a wholly-owned subsidiary of The Capital Group
Companies, Inc., is a Delaware corporation that traces its roots to 1931. The Capital Group
Companies form one of the most experienced families of investment management firms in the
world. Capital Research and Management Company and The Capital Group Companies have
always been privately held.
Capital Research and Management Company is the investment adviser to the American Funds
family of mutual funds, including American Funds Target Date Retirement Series, American
Funds Portfolio Series, American Funds College Target Date Series and American Funds
Insurance Series, four asset pools of the Capital International Fund, a Luxembourg investment
company, and is the sub-adviser to two asset pools of Capital International Asset Management
(Canada), Inc., whose adviser is an affiliate of Capital Research and Management Company. In
addition, Capital Research and Management Company serves as the investment adviser to
Capital Bank and Trust Company in its capacity as the trustee of certain collective investment
trusts that are exempt from SEC registration. Capital Bank and Trust Company is an affiliate of
Capital Research and Management Company.
Capital Research and Management Company manages equity assets through three equity
investment divisions and fixed-income assets through its fixed-income division. The three
equity divisions, Capital World Investors, Capital Research Global Investors and Capital
International Investors make investment decisions on an independent basis. Portfolio Managers
in Capital International Investors rely on a research team that also provides investment services
to institutional clients and other accounts advised by affiliates of Capital Research and
Management Company. Capital Research and Management Company’s only business is
investment management and related services. Capital Research and Management Company
typically builds portfolios for funds and accounts (collectively referred to as “funds” throughout
the brochure) from the bottom-up using rigorous fundamental research to find attractive
investments and manage risks. Research is produced for internal use only, and is not published
or sold to external parties. Investment decisions are subject to a fund’s objective, policies and
restrictions and the oversight of the appropriate investment-related committees of Capital
Research and Management Company and its investment divisions. The objective, policies and
restrictions of each of the funds managed by Capital Research and Management Company are set
forth in its prospectus and statement of additional information or other disclosure documents.
Depending on a fund’s objective, policies and restrictions, Capital Research and Management
Company generally invests in equity securities, fixed-income securities or a combination of both.
When consistent with a fund’s or account’s objectives, strategies and guidelines, Capital
Research and Management may also invest in other types of securities or investment instruments,
including, but not limited to, futures, forward contracts, swaps and repurchase agreements.
Please also refer to Item 8 (Methods of Analysis, Investment Strategies and Risk of Loss) in this
Brochure for further information.
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Capital Research and Management Company may be retained as an investment adviser to a
portion of the assets administered under “wrap fee” programs sponsored by broker-dealers or
other financial institutions where a sponsor offers bundled investment management, custody,
brokerage or other services for a single “wrap fee” charged by the sponsor. In cases where
Capital Research and Management Company is an investment adviser to a wrap program, Capital
Research and Management Company does not negotiate brokerage commissions for the
execution of transactions in the client’s account that are executed by or through the sponsor.
These commissions are generally included in the wrap fee charged by the sponsor. Please also
refer to the “Wrap Fee Program” section under Item 12 (Brokerage Practices) in this brochure for
further information. For some wrap fee programs, Capital Research and Management Company
may only provide model portfolios to the sponsor and the sponsor will have ultimate decision
making and discretionary authority for those accounts. Generally, Capital Research and
Management Company is paid an investment management fee based on the amount of assets it
manages in the wrap program by the wrap program’s sponsor. Clients who enroll in wrap fee
programs should carefully review the fee structure and other program documents provided by the
sponsor.
Capital Research and Management Company also provides investment management to high-net
worth individuals, foundations, trusts and other investors through “managed account programs”
sponsored by broker-dealers or other financial institutions. In such managed account programs,
the sponsor provides a platform where investors can choose a variety of service providers to
invest and manage their account, which services are generally offered on an unbundled
basis. Managed accounts are generally managed in a manner similar to wrap programs as
discussed throughout this brochure.
As of J une 30, 2015 Capital Research and Management Company managed approximately
$1,440,717,591,249 in discretionary assets under management. Capital Research and
Management Company also provides model portfolios to certain managed account program
clients on a non-discretionary basis and as of J une 30, 2015 had approximately $696,593,282 in
non-discretionary assets under management.
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ITEM 5: FEES AND COMPENSATION
Capital Research and Management Company’s fees are generally not negotiable. Capital Research and
Management Company’s management fees are paid pursuant to investment advisory agreements,
or in the case of Capital Bank and Trust Company and Capital International Assets Management
(Canada), Inc., advisory or sub-advisory agreements. Capital Research and Management
Company’s management fees are generally based on a percentage of assets under management
and, for certain funds, a combination of assets under management and gross investment income.
Management fees are paid monthly by the American Funds to Capital Research and Management
Company based on the previous month’s daily net asset levels. Management fees for each of the
American Funds are described in such fund’s prospectus and statement of additional information.
The annual fees for advisory services provided by Capital Research and Management Company
to Capital Bank and Trust Company, in its capacity as trustee to certain collective investment
trusts, are agreed upon from time to time in writing. The fees that Capital Bank and Trust
Company receives for such collective investment trusts are described in the characteristic
documents.
The annual fees for Capital International Assets Management (Canada), Inc. are agreed to from
time to time in writing and are based on the following asset levels for Capital International –
Global Equity: 0.58% on the first US$500 million; 0.48% from US$500 million to US$1 billion;
0.44% from US$1 billion to US$1.5 billion; and 0.41% from US$1.5 billion to US$2.5 billion.
The annual fees for Capital International – U.S. Equity are: 0.39% on the first US $1 billion;
0.336% from US $1 billion to US$ 2 billion; and 0.300% from US$ 2 billion. The annual fees for
the sub-funds of the Capital International Fund are agreed to from time to time in writing and are
0.40% of assets for Capital International US Growth and Income; 0.51% of assets for Capital
International European Growth and Income; 0.51% of assets for Capital International Global
Growth and Income; and 0.51% of assets for Capital International Global Allocation.
The funds incur fees and expenses in addition to the management fees described above,
including administrative service fees, custodial fees and other fund expenses. With respect to the
American Funds, Capital Research and Management Company provides certain transfer agent
and administrative services for shareholders of the funds pursuant to an administrative service
agreement. Capital Research and Management Company may contract with third parties,
including American Funds Service Company, the funds’ Transfer Agent, and American Funds
Distributors, Inc., the funds’ principal underwriter, to provide some of these services. In
addition, the funds will incur brokerage and other transaction costs. Please refer to Item 12
(Brokerage Practices) below for a discussion of Capital Research and Management Company’s
brokerage practices.
Capital Research and Management Company investment advisory services are also available
through various consulting, or bundled “wrap fee” programs sponsored by certain broker-dealers
or other financial institutions. Fees charged to the wrap program’s sponsor for such services will
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vary based on the relationship, services provided and other factors. The end investor of the wrap
fee programs generally pays a “wrap fee” to the sponsor based on a percentage of assets; the
advisory fees charged by Capital Research and Management Company to the sponsor are
generally included in this wrap fee.
The annual fee schedule for investment management services for managed account programs are
expressed as a percentage of total assets. All assets are stated in U.S. dollars. Investment
mandates in currencies other than U.S. dollars will reflect fee breakpoints that historically have
approximated those breakpoints in the local currency. In addition to the fee schedules outlined
below, different fee schedules may apply for long standing clients as well as clients with
customized mandates or special service needs.
U.S. Equity
Fee calculated on total assets: Rate:
Accounts under $10 million:
All Assets 0.650%
Accounts over $10 million:
First $25 million 0.600%
Next $25 million 0.450%
Over $50 million 0.325%
International/Global Equity, World Dividend Growers
Fee calculated on total assets: Rate:
Accounts under $10 million:
All Assets 0.750%
Accounts over $10 million:
First $25 million 0.700%
Next $25 million 0.550
Next $200 million 0.425%
Over $250 million 0.375%
U.S. Fixed Income
(Core Bond, Short-term Municipal Bond and Core Municipal Bond)
Fee calculated on total assets: Rate:
Accounts under $10 million:
All Assets 0.350%
Accounts over $10 million:
First $50 million 0.300%
Next $50 million 0.200%
Next $200 million 0.180%
Over $300 million 0.150%
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ITEM 6: PERFORMANCE-BASED FEES AND SIDE-BY-SIDE MANAGEMENT
Capital Research and Management Company charges the funds asset-based fees for providing
investment advisory services. However, certain fixed-income portfolio managers and portfolio
managers in the Capital International Investors division may manage assets for the funds advised
by Capital Research and Management Company and accounts advised by an affiliate of Capital
Research and Management Company. In limited circumstances, Capital Research and
Management Company’s affiliate may receive fees that are based on the performance of the
account. Managing both types of accounts simultaneously creates a risk of conflicts for the
portfolio manager to (i) allocate more attractive investment opportunities to accounts with
performance-based fees and/or (ii) make investments for those accounts that are more
speculative than for accounts that do not have performance-based fees.
Capital Research and Management Company and its affiliates have adopted allocation policies
that are designed in part to address these potential conflicts of interest. See Item 12 (Brokerage
Practices) of this Brochure for Capital Research and Management Company’s policy on
allocating trades fairly, which is designed to allocate trades to clients in a fair and equitable
manner over time, taking into consideration the interests of each client. Non-investment factors,
such as fee arrangements, are not considered in selecting clients or allocating trades.
In addition, while Capital Research and Management Company and its affiliates provide
individual investment advice and treatment to each fund, portfolio managers focus on particular
investment mandates, using similar investment strategies in connection with the management of
multiple portfolios, which helps minimize the potential for conflicts of interest. Capital Research
and Management Company reviews funds with similar objectives managed by Capital Research
and Management Company and its affiliate at least annually. These reviews generally include,
among other things, information related to investment results, including dispersion of results
among funds and reasons for such dispersion, if any, significant fund guidelines and the
investment structure of the portfolio.
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ITEM 7: TYPES OF CLIENTS
Capital Research and Management Company provides investment management services to
Registered Investment Companies and other pooled investment vehicles. In addition, Capital
Research and Management Company serves as the investment adviser to Capital Bank and Trust
Company in its capacity as the trustee of certain collective investment trusts that are exempt
from SEC registration. Capital Research and Management Company also provides investment
management and related services to participants in wrap programs and managed account
program clients.
Minimum account sizes for fund investments are disclosed in each fund’s prospectus, statement
of additional information, characteristics, annual information form or other disclosure
documents.
The minimum account size for managed account program clients is generally $1 million.
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ITEM 8: METHODS OF ANALYSIS, INVESTMENT STRATEGIES AND RISK OF
LOSS
Capital Research and Management Company maintains an investment philosophy that is
distinguished by four key beliefs:
• Solid research is fundamental to sound investment decisions. Capital Research and
Management Company employs teams of experienced analysts who regularly gather in-
depth, first-hand information on markets and companies around the globe.
• Investment decisions should not be made lightly. In addition to providing extensive research,
our investment professionals go to great lengths to determine the difference between the
fundamental value of a company and its price in the marketplace.
• A long-term approach. It's part of the big-picture view our investment professionals take of
the companies in which we invest. This is reflected by the typically low turnover of portfolio
holdings in the funds we manage. In addition, our investment professionals usually remain
with us for many years and are compensated according to their investment results over time.
• The Capital System. Capital Research and Management Company uses a system of multiple
portfolio managers in managing most account and fund assets. Under this approach, the
portfolio of a fund is divided into segments managed by individual managers who decide
how their respective segments will be invested. In addition, Capital Research and
Management Company’s investment analysts may make investment decisions with respect to
a portion of a fund’s or client’s portfolio. Over time, this method has contributed to
consistency of results and continuity of management.
Investment decisions are subject to a fund’s objectives, policies and restrictions and the oversight
of the appropriate investment-related committees of Capital Research and Management
Company and its investment divisions. The objectives, policies and restrictions of each of the
funds managed by Capital Research and Management Company are set forth in its prospectus
and statement of additional information. Depending on a fund’s objective, policies and
restrictions, Capital Research and Management Company generally invests in equity securities,
fixed-income securities or a combination of both. Capital Research and Management Company
invests in U.S. and international equity securities, including common stocks, preferred stocks and
convertible securities, of companies with varying market capitalizations. Capital Research and
Management Company also invests in U.S. and international fixed-income securities, including
bonds, loan participations, mortgage-backed securities and municipal bonds of varying quality
and duration. When consistent with a fund’s or account’s objectives, strategies and guidelines,
Capital Research and Management may also invest in other types of securities or investment
instruments, including, but not limited to, futures, forward contracts, swaps and repurchase
agreements.
Investing in securities involves risk of loss that funds and their shareholders or other clients
should be prepared to bear. Each fund or account is subject to certain risks associated with the
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investments made by Capital Research and Management Company in accordance with that
fund’s policies and restrictions. The risks associated with an investment in each fund are set
forth in that fund’s prospectus and statement of additional information or other disclosure
documents. These risks may include, but are not limited to, certain of the risks set forth below.
• Management — Capital Research and Management Company actively manages investments.
Consequently, the accounts and funds are subject to the risk that the methods and analyses
employed by the investment adviser in this process which may not produce the desired
results. This could cause a fund to lose value or their investment results to lag relevant
benchmarks or other funds with similar objectives.
• Market conditions — The prices of, and income generated by, the common stocks and other
securities may decline – sometimes rapidly or unpredictably – due to market conditions and
other factors, including events or conditions affecting the general economy or particular
industries; overall market changes; local, regional or global political, social or economic
instability; governmental or governmental agency responses to economic conditions; and
currency, interest rate and commodity price fluctuations. Investing in stocks — Investing in
stocks may involve larger price swings and greater potential for loss than other types of
investments. As a result, the value of the funds may be subject to sharp, short-term declines
in value.
• Investing in growth-oriented stocks — Growth-oriented common stocks and other equity-
type securities (such as preferred stocks, convertible preferred stocks and convertible bonds)
may involve larger price swings and greater potential for loss than other types of
investments. These risks may be heightened in the case of smaller capitalization stocks.
• Investing in income-oriented stocks — Income provided by the funds may be reduced by
changes in the dividend policies of, and the capital resources available for dividend at, the
companies in which a fund or account invests.
• Investing in small companies — Investing in smaller companies may pose additional risks.
For example, it is often more difficult to value or dispose of small company stocks and more
difficult to obtain information about smaller companies than about larger companies.
Furthermore, smaller companies often have limited product lines, operating histories,
markets and/or financial resources, may be dependent on one or a few key persons for
management, and can be more susceptible to losses. Moreover, the prices of their stocks may
be more volatile than stocks of larger, more established companies.
• Investing outside the United States — Securities of issuers domiciled outside the United
States, or with significant operations outside the United States, may lose value because of
adverse political, social, economic or market developments (including social instability,
regional conflicts, terrorism and war) in the countries or regions in which the issuer operates.
These securities may also lose value due to changes in foreign currency exchange rates
against the U.S. dollar and/or currencies of other countries. Securities markets in certain
countries may be more volatile and/or less liquid than those in the United States. Investments
outside the United States may also be subject to different settlement and accounting practices
and different regulatory, legal and reporting standards, and may be more difficult to value,
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than those in the United States. In addition, the value of investments outside the United
States may be reduced by foreign taxes, including foreign withholding taxes on interest and
dividends. Further, there may be increased risks of delayed settlement of securities
transactions. These risks may be heightened in connection with investments in emerging
market and developing countries.
• Investing in emerging market countries — Investing in emerging markets may involve risks
in addition to and greater than those generally associated with investing in developed
countries. For instance, emerging market and developing countries may have less developed
legal and accounting systems than those in developed countries. The governments of these
countries may be more unstable and more likely to impose capital controls, nationalize a
company or industry, place restrictions on foreign ownership and on withdrawing sale
proceeds of securities from the country, and/or impose punitive taxes that could adversely
affect the prices of securities. In addition, the economies of these countries may be dependent
on relatively few industries that are more susceptible to local and global changes. Securities
markets in these countries can also be relatively small and have substantially lower trading
volumes. As a result, securities issued in these countries may be more volatile and less liquid,
and may be more difficult to value, than securities issued in countries with more developed
economies and/or markets. Less certainty with respect to security valuations may lead to
additional challenges and risks in calculating for a fund’s net asset value. Additionally, there
may be increased settlement risks for transactions in local securities.
• Investing in debt instruments — The prices of, and the income generated by, bonds and
other debt securities held by the fund may be affected by changing interest rates and by
changes in the effective maturities and credit ratings of these securities. Rising interest rates
will generally cause the prices of bonds and other debt securities to fall. Falling interest rates
may cause an issuer to redeem, call or refinance a debt security before its stated maturity,
which may result in the fund having to reinvest the proceeds in lower yielding securities.
Longer maturity debt securities generally have greater sensitivity to changes in interest rates
and may be subject to greater price fluctuations than shorter maturity debt securities. Bonds
and other debt securities are also subject to credit risk, which is the possibility that the credit
strength of an issuer will weaken and/or an issuer of a debt security will fail to make timely
payments of principal or interest and the security will go into default. Lower quality debt
securities generally have higher rates of interest and may be subject to greater price
fluctuations than higher quality debt securities. Credit risk is gauged, in part, by the credit
ratings of the debt securities in which the fund invests. However, ratings are only the
opinions of the rating agencies issuing them and are not guarantees as to credit quality or an
evaluation of market risk. Capital Research and Management Company and its affiliates rely
on their own credit analysts to research issuers and issues in seeking to mitigate various
credit and default risks.
• Investing in lower rated bonds — Lower rated bonds and other lower rated debt securities
generally have higher rates of interest and involve greater risk of default or price declines due
to changes in the issuer’s creditworthiness than those of higher quality debt securities. The
market prices of these securities may fluctuate more than the prices of higher quality debt
securities and may decline significantly in periods of general economic difficulty. These risks
may be increased with respect to investments in lower quality, higher yielding debt securities
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(generally rated Ba1 or below and BB+or below or unrated but determined by Capital
Research and Management Company to be of equivalent quality (“junk bonds”)).
• Investing in mortgage-related and other asset backed securities —Mortgage-related
securities, such as mortgage-backed securities, and other asset-backed securities, include debt
obligations that represent interests in pools of mortgages or other income-bearing assets, such
as consumer loans or receivables. Such securities often involve risks that are different from
or more acute than the risks associated with investing in other types of debt securities.
Mortgage-backed and other asset-backed securities are subject to changes in the payment
patterns of borrowers of the underlying debt. When interest rates fall, borrowers are more
likely to refinance or prepay their debt before its stated maturity. This may result in the fund
having to reinvest the proceeds in lower yielding securities, effectively reducing the fund’s
income. Conversely, if interest rates rise and borrowers repay their debt more slowly than
expected, the time in which the mortgage-backed and other asset-backed securities are paid
off could be extended, reducing the fund’s cash available for reinvestment in higher yielding
securities.
• Investing in future delivery contracts — A fund or account may enter into contracts, such as
to-be-announced contracts and mortgage dollar rolls, that involve selling mortgage-related
securities and simultaneously contracting to repurchase similar securities for delivery at a
future date at a predetermined price. This can increase the fund’s market exposure and the
market price of the securities the fund contracts to repurchase could drop below their
purchase price. While the fund can preserve and generate capital through the use of such
contracts by, for example, realizing the difference between the sale price and the future
purchase price, the income generated by the fund may be reduced by engaging in such
transactions. In addition, these transactions may increase the turnover rate of the fund.
• Investing in futures – A futures contract is considered a derivative because it derives its
value from the price of the underlying security or financial index. Losses on futures contracts
may exceed the amount invested. The prices of futures contracts can be volatile, and futures
contracts may be illiquid. In addition, there may be imperfect or even negative correlation
between the price of a futures contract and the price of the underlying securities.
• Investing in thinly traded securities – There may be little trading in the secondary market for
particular bonds or other debt securities, which may make them more difficult to value,
acquire, or sell.
• Hedging – There may be imperfect or even negative correlation between the price of the
futures contracts and the price of the underlying securities. For example, futures contracts
may not provide an effective hedge because changes in futures contract prices may not track
those of the underlying securities or indexes they are intended to hedge. In addition, there are
significant differences between the securities and futures markets that could result in an
imperfect correlation between the markets, causing a given hedge not to achieve its
objectives. The degree of imperfection of correlation depends on circumstances such as
variations in speculative market demand for futures, including technical influences in futures
trading, and differences between the financial instruments being hedged and the instruments
14
underlying the standard contracts available for trading. A decision as to whether, when and
how to hedge involves the exercise of skill and judgment, and even a well-conceived hedge
may be unsuccessful to some degree because of market behavior or unexpected interest rate
trends. In addition, a fund’s investment in exchange-traded futures and their resulting costs
could limit the fund’s gains in rising markets relative to those of unhedged funds.
• Currency — The prices of, and the income generated by, many securities may also be
affected by changes in relative currency values. If the U.S. dollar appreciates against foreign
currencies, the value in U.S. dollars of the fund or account’s securities denominated in such
currencies would generally fall and vice versa. U.S. dollar denominated securities of foreign
issuers may also be affected by changes in relative currency values.
• Investing in interest rate swaps — The use of interest rate swaps involves the risk that the
investment adviser will not accurately predict anticipated changes in interest rates, which
may result in losses. Interest rate swaps also involve the possible failure of a counterparty to
perform in accordance with the terms of the swap agreement. If a counterparty defaults on its
obligations under a swap agreement, the fund may lose any amount it expected to receive
from the counterparty, potentially including amounts in excess of a fund’s initial investment.
• Loss of investment — An investor may lose money by investing in a fund. The likelihood of
loss may be greater if the investor invests for a shorter period of time.
• Investments are not guaranteed — Investments in a fund or account are not bank deposits
and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other
governmental agency, entity or person.
• Past investment results are not predictive of future investment results.
Please see each fund’s prospectus and statement of additional information, account
guidelines, or other disclosure documents for further information on methods of analysis,
investment strategies and risks specific to that fund or account.
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ITEM 9: DISCIPLINARY INFORMATION
Neither Capital Research and Management Company nor its management persons have been the
subject of legal or regulatory findings, or are the subject of any pending criminal proceedings
that are material to a client’s or prospective client’s evaluation of our advisory business or the
integrity of our firm.
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ITEM 10: OTHER FINANCIAL INDUSTRY ACTIVITIES AND AFFILIATIONS
Capital Research and Management Company is registered as a commodity pool operator and a
member of the National Futures Association. Some of Capital Research and Management
Company’s Associated Persons are also management persons of Capital Research and
Management Company and/or one or more of the affiliates listed below. Capital Research and
Management Company has the following arrangements that are material to clients or its advisory
business with certain affiliated entities. Some of Capital Research and Management Company’s
directors and executive officers and employees are also directors, officers or employees of one or
more affiliates.
Broker-dealer
American Funds Distributors, Inc., a wholly-owned subsidiary of Capital Research and
Management Company, is a registered broker-dealer and a member of the Financial Industry
Regulatory Authority and Municipal Securities Rulemaking Board. American Funds
Distributors, Inc. acts as the principal underwriter and distributor of mutual funds advised by
Capital Research and Management Company and its affiliates and provides related services. In
addition, certain of Capital Research and Management Company’s management persons are
registered representatives of American Funds Distributors, Inc. American Funds Distributors,
Inc. is also registered as an insurance agency or producer in certain states. American Funds
Distributors, Inc. is also an investment adviser which provides investment advisory related
services to Capital Research and Management Company’s activity related to various wrap-fee
programs sponsored by broker-dealers or other financial institutions.
Investment Companies
Capital Research and Management Company serves as investment adviser to investment
companies registered under the Investment Company Act of 1940 and other pooled investment
vehicles. Capital Research and Management Company will receive advisory and other fees and
expenses from each fund based upon the value of the fund’s assets; those fees are described in
each fund’s prospectus and statement of additional information or other disclosure documents.
Other Investment Advisers
Because our funds and our personnel are located around the world, we conduct business through
a number of affiliated entities licensed to offer services in various jurisdictions and to perform
particular business functions. Though legally distinct, our affiliates function as a unified, global
business. We believe that our globally integrated model helps us to serve our clients’ needs
better. We may engage one or more of our affiliates and their personnel to assist in managing
client mandates. For example, we may engage affiliated personnel to provide research, portfolio
management or trading services to client accounts.
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Capital Research Company, a wholly-owned subsidiary of Capital Research and Management
Company, is a registered investment adviser and provides investment advisory research, trading,
and related services to Capital Research and Management Company. This may include managing
assets, subject to the supervision and control of Capital Research and Management Company.
American Funds Distributors, Inc., a wholly-owned subsidiary of Capital Research and
Management Company, is a registered investment adviser.
Capital Guardian Trust Company is an affiliated registered investment adviser with which
Capital Research and Management shares supervised persons. Capital Guardian Trust Company
is also a non-depository trust company chartered under California banking laws.
Capital International, Inc. is an affiliated registered investment adviser with which Capital
Research and Management Company shares supervised persons.
Capital Bank and Trust Company is an affiliated registered investment adviser with which
Capital Research and Management shares supervised persons.
Capital International K.K., a J apan-based investment adviser provides research information and
services to Capital Research and Management Company.
Capital International, Inc. and Capital International Limited, an affiliated U.K.-based investment
adviser, provide portfolio control, administrative and trading services to Capital Research and
Management Company.
In addition, certain portfolio managers employed by Capital Research Company or the following
affiliated investment advisers based outside the U.S. may, under the supervision and review of
Capital Research and Management Company, determine the securities to be purchased and sold
for Capital Research and Managements clients:
Capital International Limited is based in the U.K. and has been authorized by the U.K. Financial
Services Authority to provide investment advisory and asset management services.
Capital International Sarl is based in Switzerland and has been authorized by the Financial
Markets Supervisory Authority to provide investment advisory services.
Neither Capital International Limited nor Capital International Sarl is registered as an investment
adviser under the Investment Advisers Act of 1940 and each is deemed to be a “Participating
Affiliate” of Capital Research and Management Company, as this term has been used by the
SEC’s Division of Investment Management in various no-action letters granting relief from the
Advisers Act’s registration requirements for certain affiliates of registered investment advisers.
Trust Company
Capital Bank and Trust Company, a federal savings bank, is a wholly-owned subsidiary of The
Capital Group Companies. Capital Bank and Trust Company provides directed trustee services
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and custodial services to employer-sponsored retirement plans and individual retirement
accounts invested in the American Funds and other outside assets. Capital Bank and Trust
Company serves as trustee to certain collective investment trusts.
Unregistered Collective Investment Trust
Capital Research and Management Company serves as the investment adviser to Capital Bank
and Trust Company, the trustee of collective investment funds that are exempt from SEC
registration. Capital Research and Management Company will receive advisory fees from Capital
Bank and Trust as agreed upon in writing from time to time.
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ITEM 11: CODE OF ETHICS, PARTICIPATION OR INTEREST IN CLIENT
TRANSACTIONS AND PERSONAL TRADING
Capital Research and Management Company and its affiliated companies have adopted a Code
of Ethics for its associates (Code of Ethics) that requires all associates: (1) act with integrity,
competence and in an ethical manner; (2) comply with applicable U.S. federal securities laws, as
well as all other applicable laws, rules and regulations; and (3) promptly report violations of the
Code of Ethics. All associates are required to certify at least annually that they have read and
understand the Code. A copy of the Code of Ethics is available to clients and prospective clients
upon request and on americanfunds.com.
The Code of Ethics includes:
• Protection of Non-Public Information: Policies and procedures designed to prevent and
detect the misuse of material non-public information by our associates. These procedures
require all associates who believe they may be in possession of material non-public
information regarding an issuer to notify the Legal Department, which will determine the
appropriate actions to be taken.
• Personal Investing: Policies related to personal investing by our associates. The policies ban
excessive trading of any Capital-managed investment vehicles worldwide, including the
American Funds. Associates generally may not participate in the acquisitions of securities in
initial public offerings. Additional restrictions apply to associates with access to non-public
information relating to current or imminent fund/client transactions, investment
recommendations or fund portfolio holdings (covered associates). Covered associates
generally may not effect securities transactions for their own account when any investment
advisory account is transacting in the issuer in question. All such covered associates must
report their securities transactions on a quarterly basis and disclose their holdings annually.
Covered associates must pre-clear certain personal security transactions and special review of
private placements is required. Additional restrictions and reporting apply to investment
professionals, including blackout periods on personal investing and a ban on short-term
trading.
• Gifts and Entertainment: Policy prohibiting the acceptance and extension of gifts or
entertainment that are excessive, repetitive or extravagant, if such gifts or entertainment are
in relation to Capital’s business. Procedures include quarterly reporting of gifts or
entertainment received or offered, a dollar limit on gifts that can be accepted from any one
source during a calendar year, and pre-clearance of entertainment beyond a certain dollar
limit.
• Political Contributions: Policy governing political contributions and/or other activities that
directly support officials, candidates, or organizations that may be in a position to influence
decisions to award business to investment management firms. Specific rules exist for
political contributions and activities within the U.S. and associates are required to seek
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preclearance and approval for political contributions to state and local government officials
(or a candidate for those positions).
Participation or Interest in Client Transactions
In addition, Capital Research and Management Company or its affiliates may recommend that
clients invest in limited partnerships, pooled funds or mutual funds managed by the Investment
Adviser or its affiliates. Additionally, an affiliate of Capital Research and Management
Company, in its fiduciary capacity, may invest client assets in certain of these funds. In all
cases, the nature and scope of the financial interest (e.g., investment management fees or
economic interest in such partnerships or funds) is disclosed.
Capital Research and Management Company's employees may also purchase shares in certain
pooled funds managed by Capital Research and Management Company or an affiliate of Capital
Research and Management Company. Such purchases may take place either through their
personal account or through retirement plans sponsored by The Capital Group Companies, Inc.,
the ultimate parent company of Capital Research and Management Company. All such
transactions are conducted at net asset value and in accordance with the purchase and redemption
provisions as described in either the prospectus or offering memorandum of the fund.
Capital Research and Management Company may manage investments made by it or an affiliate
either in a separate account or through investing in a pooled vehicle. In those instances in which
Capital Research and Management Company or an affiliate makes an investment in a pooled
vehicle, they may be the first participants in such vehicle and may be the only participant for one
or more years. Capital Research and Management Company treats these separate and pooled
vehicle accounts the same as any client account.
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ITEM 12: BROKERAGE PRACTICES
Selecting Broker-Dealers
Portfolio Transactions
Capital Research and Management Company places orders with broker-dealers for its clients’
portfolio transactions. Purchases and sales of equity securities on a securities exchange or an
over-the-counter market are affected through broker-dealers who receive commissions for their
services. Purchases and sales of fixed-income securities and currency foreign exchange
transactions are generally made with an issuer or a primary market-maker acting as principal
with no stated brokerage commission. Prices for fixed-income securities in secondary trades
usually include undisclosed compensation to the market-maker reflecting the spread between the
bid and ask prices for the securities. The prices for equity and fixed-income securities purchased
in primary market transactions, such as initial public offerings, new fixed-income issues,
secondary offerings and private placements, may include underwriting fees.
Best Execution
In selecting broker-dealers, Capital Research and Management Company strives to obtain “best
execution” (the most favorable total price reasonably attainable under the circumstances) for its
clients’ portfolio transactions, taking into account a variety of factors. These factors include the
size and type of transaction, the nature and character of the markets for the security to be
purchased or sold, the cost, quality, likely speed and reliability of execution and settlement, the
broker-dealer’s or execution venue’s ability to offer liquidity and anonymity and the potential for
minimizing market impact. Capital Research and Management Company considers these
factors, which involve qualitative judgments, when selecting broker-dealers and execution
venues for its clients’ portfolio transactions. Capital Research and Management Company views
best execution as a process that should be evaluated over time as part of an overall relationship
with particular broker-dealer firms. In this regard, Capital Research and Management Company
does not consider itself as having an obligation to obtain the lowest available commission rate
available for a portfolio transaction to the exclusion of price, service and qualitative
considerations. Brokerage commissions are only a small part of total execution costs and other
factors, such as market impact and speed of execution, contribute significantly to overall
transaction costs.
Oversight
The Capital Group Companies Equity Trading Best Execution Committee, the Capital Group
Companies Equity Trading Steering Committee, and the Capital Group Companies Fixed-
Income Best Execution Committee provide oversight to Capital Research and Management
Company’s policies, procedures and practices relating to best execution.
The Equity Trading Best Execution Committee meets periodically to review current equity
trading practices and reviews overall quality of execution and trades. The Equity Trading
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Steering Committee and other senior managers oversee the brokerage services and receive
periodic commission reports produced from an automated system. The Equity Trading Steering
Committee also reviews equity trading policies and approves changes as appropriate.
The Fixed-Income Best Execution Committee meets periodically to review current fixed-income
trading practices and overall quality of execution for fixed-income and foreign exchange trades.
Commission Rates
Capital Research and Management Company and its affiliates negotiate commission rates with
brokers based on what they believe is reasonably necessary to obtain best execution. Capital
Research and Management Company and its affiliates do not consider the appropriate
commission to necessarily be the lowest available commission, but attempt to maximize the
overall benefits received by their clients for their commissions. Commission rates vary based on
the nature of the transaction, the market in which the security is traded and the venue chosen for
trading, among other factors.
Capital Research and Management Company and its affiliates seek, on an ongoing basis, to
determine what the reasonable levels of commission rates are in the marketplacein respect of
both execution and research, taking various considerations into account, including the extent to
which a broker-dealer has put its own capital at risk historical commission rates, commission
rates that other institutional investors are paying, and the provision of brokerage and research
products and services.
Brokerage and Investment Research Services
Capital Research and Management Company and its affiliates may execute portfolio transactions
with broker-dealers who provide certain brokerage and/or investment research services to Capital
Research and Management Company and its affiliates, either directly or through a commission
sharing arrangement, but only when in Capital Research and Management Company’s and its
affiliates’ judgment the broker-dealer is capable of providing best execution for that transaction.
The receipt of these services permits Capital Research and Management Company and each
affiliate to supplement its own research and analysis and makes available the views of, and
information from, individuals and the research staffs of other firms. These services may include,
among other things, reports and other communications with respect to individual companies,
industries, countries and regions, economic, political and legal developments, as well as
scheduling meetings with corporate executives and seminars and conferences related to relevant
subject matters. This information may be provided in the form of written reports, telephone
contacts and meetings with securities analysts. Capital Research and Management Company and
its affiliates consider these services to be supplemental to their own internal research efforts and
therefore the receipt of investment research from broker-dealers does not tend to reduce the
expenses involved in Capital Research and Management Company’s and its affiliates’ research
efforts. If broker-dealers were to discontinue providing such services it is unlikely Capital
Research and Management Company and its affiliates would attempt to replicate them on their
own, in part because such services would no longer provide an independent, supplemental
viewpoint. Nonetheless, if it were to attempt to do so, Capital Research and Management
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Company and its affiliates would incur substantial additional costs. Capital Research and
Management Company and its affiliates could be perceived to have an incentive to select a
broker-dealer based on their interest in receiving such research services. Capital Research and
Management Company and its affiliates have processes in place to minimize the potential for
conflicts of interest in this area.
Capital Research and Management Company and its affiliates may pay commissions in excess of
what other broker-dealers might have charged for certain portfolio transactions in recognition of
brokerage and/or investment research services. In this regard, Capital Research and
Management Company and its affiliates have adopted a brokerage allocation procedure
consistent with the requirements of Section 28(e) of the U.S. Securities Exchange Act of 1934.
Section 28(e) permits an investment adviser to cause an account to pay a higher commission to a
broker-dealer to compensate the broker-dealer or another service provider for certain brokerage
and/or investment research services provided to Capital Research and Management Company
and its affiliates, if Capital Research and Management Company and each affiliate makes a good
faith determination that such commissions are reasonable in relation to the value of the services
provided to Capital Research and Management Company and its affiliates in terms of that
particular transaction or Capital Research and Management Company’s or its affiliates’ overall
responsibility to their clients.
Certain brokerage and/or investment research services may not necessarily benefit all accounts
paying commissions to a broker-dealer, therefore, Capital Research and Management Company
and its affiliates assess the reasonableness of commissions in light of the total brokerage and
investment research services provided to Capital Research and Management Company and its
affiliates. Further, research services may be used by all investment associates of Capital
Research and Management and its affiliates, regardless of whether they advise accounts with
trading activity that generates eligible commissions. In accordance with its internal brokerage
allocation procedure, Capital Research and Management Company and its affiliates periodically
assess the brokerage and investment research services provided by each broker-dealer and each
other service provider from whom they receive such services.
As part of ongoing relationships, Capital Research and Management Company and its affiliates
routinely meet with firms to discuss the level and quality of the brokerage and research services
provided, as well as the value and cost of such services. In valuing the brokerage and investment
research services Capital Research and Management Company and its affiliates receive from
broker-dealers and other research providers in connection with their good faith determinations of
reasonableness, Capital Research and Management Company and its affiliates take various
factors into consideration, including the quantity, quality and usefulness of the services to
Capital Research and Management Company and its affiliates. Based on this information and
applying their judgment, Capital Research and Management Company and its affiliates set an
annual research budget.
Research analysts and portfolio managers periodically participate in a research poll to determine
the usefulness and value of the research provided by individual broker-dealers and research
providers. Based on the results of this research poll, Capital Research and Management
Company and its affiliates may, through commission sharing arrangements with certain broker-
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dealers, direct a portion of commissions paid to a broker-dealer to be used to compensate the
broker-dealer for proprietary research or to be paid to a third-party research provider for research
it has provided. Capital Research and Management Company and its affiliates believe that by
allocating eligible commissions between research and execution they are better able to obtain the
highest quality execution and research services. While Capital Research and Management
Company and its affiliates may negotiate commission rates and enter into commission sharing
arrangements with certain broker-dealers with the expectation that such broker-dealers will be
providing brokerage and research services, none of Capital Research and Management
Company, any of its affiliates or any of their clients incurs any obligation to any broker-dealer to
pay for research by generating trading commissions.
Cross Trades
As part of its authority to invest client assets on a discretionary basis, Capital Research and
Management Company may place cross-trades between client accounts managed by Capital
Research and Management Company and its affiliates from time to time. Capital Research and
Management Company recognizes that a potential conflict of interest may exist when placing
trades between client accounts. To address such potential conflicts, Capital Research and
Management Company maintains cross-trade policies and procedures and places a cross-trade
under those limited circumstances when such a trade: (a) is in the best interest of all participating
clients and (b) is not prohibited by the participating clients’ investment management agreement
or applicable law.
Exchange or alternative trading system ownership
CRMC currently owns an interest in IEX Group and Luminex Trading and Analytics. CRMC
may place orders on these or other exchanges or alternative trading systems in which it, or one of
its affiliates, has an ownership interest, provided such ownership interest is less than five percent
of the total ownership interests in the entity. CRMC is subject to the same best execution
obligations when trading on any such exchange or alternative trading system.
Sale of Fund Shares Not Considered
Capital Research and Management Company may place orders for a client’s portfolio
transactions with broker-dealers who have sold shares in the funds managed by Capital Research
and Management Company or its affiliated companies; however, it does not consider whether a
broker-dealer has sold shares of the funds managed by Capital Research and Management
Company or its affiliated companies when placing any such orders for a client’s portfolio
transactions.
Client Referrals
Capital Research and Management Company does not consider client referrals from a broker-
dealer or third party in selecting or recommending broker-dealers.
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Directed Brokerage
Capital Research and Management Company does not direct any trading activity for its mutual
fund clients to a particular broker-dealer based on instructions from a fund. In some instances, an
affiliate of Capital Research and Management Company will accept a client’s instructions to
direct a portion of the account’s brokerage commissions to a particular broker or group of
brokers so long as the direction is consistent with such affiliate’s policy of seeking best
execution. The affiliate’s ability to meet client direction requests will depend on the broker(s)
selected by the client and the securities and markets in which the account invests, among other
factors.
Where Capital Research and Management Company is retained as an investment adviser under
certain wrap fee programs sponsored by broker-dealers or other financial institutions, Capital
Research and Management Company does not negotiate brokerage commissions for the
execution of transactions in the wrap fee program accounts that are executed by or through the
sponsor. These commissions are generally included in the “wrap fee” charged by the sponsor.
Capital Research and Management Company may have discretion to select broker-dealers to
execute trades for the wrap fee program advisory accounts it manages. However, Capital
Research and Management Company generally places such trades through the sponsor because
the wrap fee paid by each wrap fee program accounts typically only covers execution costs on
trades executed through the sponsor or its affiliates. Such trades may be executed subsequent to
trades for other Capital Research and Management Company accounts. If Capital Research and
Management Company selects a broker-dealer other than the sponsor or its affiliates to affect a
trade for a wrap fee program account, any execution costs charged by that other broker-dealer
typically will be charged separately to the wrap fee program account. Investors who enroll in
wrap fee programs should satisfy themselves that the sponsor is able to provide best execution of
transactions. See below under the heading “Wrap Fee Programs” for more information about the
handling of equity security trading with respect to such programs.
Certain managed account program clients direct Capital Research and Management Company to
place all trades for equity accounts through the client’s custodian or third party platform and/or
their affiliates. These directed trades will not be subject to Capital Research and Management
Company’s policy of seeking best execution and are not aggregated with trades for Capital
Research and Management Company’s other clients and funds. In these cases, Capital Research
and Management Company will not negotiate commissions for such accounts or otherwise
monitor the execution of trades. These accounts may therefore pay higher commissions than
those that do not direct brokerage in this way. Further, such trades may be executed subsequent
to trades for other Capital Research and Management Company accounts. With directed
brokerage arrangements of this type, Capital Research and Management Company cannot assure
clients that they will be able to obtain best execution and these clients should confirm with their
custodian that they are able to provide best execution of transactions.
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Aggregation and Allocation of Portfolio Transactions
Frequently, Capital Research and Management Company places orders to purchase or sell the
same security for a number of clients. Capital Research and Management Company typically
aggregates such orders when they are substantially similar. As an aggregated order is executed,
securities are allocated to clients in accordance with Capital Research and Management
Company’s allocation policy summarized below. Capital Research and Management Company
believes that placing aggregated or “block” trades is consistent with its duty to seek best
execution.
This policy is designed to allocate trades of the same security to clients in a fair and equitable
manner over time, taking into consideration the interests of each client. Non-investment factors,
such as fee arrangements, are not considered in selecting clients or allocating trades.
Equity Securities
When executing portfolio transactions in the same equity security for the funds, or portion of
funds, or other client accounts, over which Capital Research and Management Company,
through its equity investment divisions, has investment discretion, each of the divisions normally
aggregates its respective purchases or sales and executes them as part of the same transaction or
series of transactions. In addition, the Capital International Investors division of Capital
Research and Management Company normally aggregates its purchases or sales with those of
certain affiliates that provide investment management services to institutional clients and other
accounts and executes them as part of the same transaction or series of transactions.
Sometimes trade orders are not aggregated due to significant differences in terms, such as price
sensitivity or urgency to complete the trade. For example, some orders may be subject to a price
limit that does not permit them to trade with other orders for the same security that do not
contain such a restriction. Occasionally when there is a relatively small remaining open order
and a very large new order is placed, trading may complete the small order before proceeding
with the larger new order, rather than aggregating the orders.
As an aggregated order is filled, executed equity trades are generally allocated pro rata to clients
based on the authorized order size for each client at the time the trade is executed. All clients
receive shares at the average execution price and pay a pro rata portion of all transaction costs.
Allocated amounts will be rounded to take into account Capital Research and Management
Company’s and market practices for lot sizes.
Special instructions. In certain circumstances, parts of an aggregated order may, under certain
circumstances, be subject to special instructions, such as a price limit, that do not apply to the
entire aggregated order. This may result in an allocation other than pro rata to all accounts in the
aggregated order. For example, trades executed above a price limit (in the case of purchases) or
below the limit (in the case of sales), would be allocated on a pro rata basis only to orders that
were not subject to the price limit.
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Additional equity authorizations. If trading receives additional orders for a particular security
after it has begun working existing orders for that security, the additional orders may be added to
the initial orders over a reasonable period of time during the trading day. This may occur for
example if trading believes that the additional orders are based on the same news event or analyst
recommendation that prompted the initial order or an order for the same security that is subject to
additional compliance approvals. If the additional orders are not aggregated in this manner, any
trades executed prior to the additional orders are allocated to participating clients on the basis of
the existing orders. After any such allocation, the additional authorizations are included with the
existing orders and trades are allocated based on the size of the remaining open orders without
consideration for the timing of the orders.
Initial Public Offerings
Clients are selected to participate in initial public offerings of equity securities (“IPOs”) in the
same manner as described above. The trading department aggregates authorized orders it
receives for IPOs and places a block trade with the underwriting syndicate.
If the resulting allocation we receive from the underwriting syndicate is not sufficient to fill all
orders, each equity investment division generally allocates the transaction on a pro rata basis
based on each account’s authorized order size, unless the relevant investment committee
approves another allocation. In certain circumstances orders may be placed based on
approximate fund asset size; however, no fund will be allocated more than its indication.
Fixed-Income Securities
When executing portfolio transactions in the same fixed-income security for the funds and other
clients over which Capital Research and Management Company or one of its affiliated
companies has investment discretion, Capital Research and Management Company normally
aggregates such purchases or sales and executes them as part of the same transaction or series of
transactions.
Fixed-income investment professionals select participating client accounts and place trade orders
with the fixed-income trading department. Most trades are allocated on the day the trade is
executed (“trade date”), but trades may be allocated on the next business day after the trade date.
Executed trades are allocated considering portfolio guidelines and a variety of other factors,
including: (1) other securities held in the portfolios; (2) appropriateness of the security for the
portfolios’ objectives; (3) industry/sector, issue/issuer holdings, portfolio analytic data; (4) size
of the portfolios; (5) the size of the confirmed, executed transaction; (6) invested position of the
portfolio; and (7) marketability of the security. Once a fixed-income trade has been executed
and participating client accounts are identified as described above, all accounts receive the same
purchase price when participating in a block trade.
Wrap Fee Programs & Managed Account Programs
When Capital Research and Management Company serves as investment adviser under wrap fee
programs, equity portfolio transactions are typically executed by the sponsor firm. When Capital
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Research and Management Company serves as investment advisor under a managed account
program the client directs Capital Research and Management Company to trade equity securities
through the client’s custodian, third party platform or one of their affiliates. As a result, equity
transactions for wrap fee program and managed account program accounts are generally not
aggregated with orders for other accounts for which Capital Research and Management
Company or an affiliate serves as investment manager. Wrap fee program and managed account
program accounts therefore may not receive the same quality of execution that Capital Research
and Management Company and its affiliates are able to obtain for other advisory clients.
Capital Research and Management Company may provide similar investment management
services to multiple wrap fee program sponsors or managed account program clients, and this
may result in investment recommendations for the same security being provided to multiple
program sponsors at a similar time. In such cases, Capital Research and Management Company
may rotate the order in which it places equity transactions among the relevant sponsors or other
trading entities under managed account programs. Capital Research and Management Company
uses a rotation methodology designed to avoid systematically favoring one entity over another
and to treat similarly situated groups of accounts equitably over time. Capital Research and
Management Company may provide portfolio transaction instructions simultaneously in lieu of
using the rotation methodology if, for example, the trade represents a relatively small proportion
of the average daily trading volume of the particular security.
Capital Research and Management Company and its affiliates manage investment company,
institutional and other accounts with similar or identical investment objectives, as well as
accounts with different objectives that may trade in the same securities as the wrap fee program
or managed account program accounts managed by Capital Research and Management
Company. These other accounts will not be rotated with wrap fee program and managed account
program accounts, and will trade prior to wrap fee program and managed account program
accounts a high percentage of the time. As a result, the market price of securities may rise or fall
before a wrap fee program or managed account program transaction is executed (and, in certain
circumstances, as a direct result of other portfolio transactions placed by, or on the advice of,
Capital Research and Management Company or its affiliates), causing wrap fee program or
managed account program accounts to purchase the same securities at a higher price (or sell the
same securities at a lower price) than Capital Research and Management Company and its
affiliates. Institutional or other discretionary accounts of Capital Research and Management
Company and its affiliates may therefore over time obtain better execution, including more
favorable prices for their transactions, than wrap fee program or managed account program
accounts purchasing or selling the same securities. See above under the heading “Directed
Brokerage” for more information about the handling of equity security trading with respect to
such programs.
Fixed-Income portfolio transactions for wrap fee program and managed account program
accounts are generally executed by Capital Research and Management Company or its affiliates.
Transactions in the same fixed income security for wrap fee program and managed account
program accounts will generally be aggregated with transactions for funds, accounts and other
clients over which Capital Research and Management Company or one of its affiliated
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companies has investment discretion, as described above under the heading “Fixed-Income
Securities.”
Forward Currency Exchange Transactions
Capital Research and Management Company generally executes foreign currency transactions
for funds over which it has investment discretion directly through broker-dealers; however, a
fund's custodian may be used to execute certain foreign exchange transactions. These include
transactions in markets with legal restrictions or operational risks that make executing directly in
those markets impractical.
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ITEM 13: REVIEW OF ACCOUNTS
Capital Research and Management Company compliance and investment control associates
monitor funds on an on-going basis and perform periodic reviews. This monitoring and review
is conducted to verify that funds are in compliance with their objectives and guidelines. In
addition, certain portfolio data for funds is periodically reviewed by investment professionals,
including portfolio managers, in the relevant investment committee or as part of group review of
similar funds.
The boards of directors/trustees of each of the American Funds are furnished the following
information: audited semiannual and annual financial statements, registration statements and
proxy material. Additional information concerning portfolio activity and results are presented at
meetings of the boards held at least quarterly, and extensive additional information is furnished,
generally annually, in connection with investment advisory agreement renewals. The boards of
the Capital International Fund (Luxembourg), the Capital International Assets Management
(Canada), Inc. and the trustees of the collective investment trusts are furnished audited annual
and unaudited semiannual financial statements, and additional information concerning portfolio
activity and results. Other information (e.g. foreign country registration and service agreements)
is furnished as needed.
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ITEM 14: CLIENT REFERRALS AND OTHER COMPENSATION
Capital Research and Management Company and its affiliates compensate certain other affiliates
for client relations and marketing services.
Capital Research and Management Company’s affiliates may from time to time compensate third
parties for client referrals pursuant to a written solicitation agreement. The solicitor must provide
the affiliate with a copy of the solicitor’s separate written disclosure document provided to the
client. No solicitation payments may be made prior to the affiliate receiving a signed copy of the
solicitation agreement and client acknowledgement letter that contains the applicable referral fee
disclosures and acknowledgement of the fee arrangement.
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ITEM 15: CUSTODY
Capital Research and Management Company does not retain custody of client funds or securities.
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ITEM 16: INVESTMENT DISCRETION
Capital Research and Management Company is generally retained by the funds, accounts and
other clients it advises on a discretionary basis pursuant to an investment advisory agreement, or
in the case of Capital International Asset Management (Canada), Inc. a sub-advisory agreement.
Capital Research and Management Company is authorized by these funds, accounts and clients
to, among other things, determine without consultation with the fund or its board of
directors/trustees:
• what securities are to be bought or sold;
• the amount of securities to be bought or sold;
• the prices at which securities are to be bought or sold;
• the broker or dealer to be used; and
• the commissions to be paid.
In all cases, such discretion is to be exercised in accordance with the applicable fund’s,
account’s, program’s or other client’s objectives, policies and restrictions.
Capital Research and Management Company is the investment adviser to Capital Bank and Trust
Company, with respect to certain collective investment trusts, for which Capital Bank and Trust
Company is the discretionary trustee.
Capital Research and Management Company occasionally provides non-discretionary investment
advisory services, in which it provides a program sponsor with non-discretionary
recommendations to assist the sponsor in the development of one or more portfolios that the
sponsor may determine to be suitable for its end investors.
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ITEM 17: VOTING CLIENT SECURITIES
Capital Research and Management Company accepts proxy voting authority from its clients and
follows its Proxy Voting Policy and Procedures, which are summarized below. If Capital
Research and Management Company has voting authority for a client account, it generally does
not provide the client the option to direct a proxy vote with respect to a particular solicitation.
Capital Research and Management Company, in consultation with the boards of
directors/trustees of the funds it manages, has adopted Proxy Voting Procedures and Principles
(the “Principles”) with respect to voting proxies of securities held by the funds and other
accounts it manages. Proxies are voted by a committee of the appropriate equity investment
division of Capital Research and Management Company under authority delegated by the funds’
boards, and Capital Research and Management Company’s other clients. Therefore, if more than
one fund or account invests in the same company, they may vote differently on the same
proposal. In addition, the boards of the American Funds monitor the proxy voting process and
generally provide guidance with respect to the Principles through a joint proxy committee of the
American Funds.
In cases where an American Fund is co-managed and a portfolio company is held by more than
one of CRMC’s equity investment divisions, voting ties are resolved by one of the following
methods. For those funds that have delegated tie-breaking authority to CRMC, the outcome will
be determined by the equity investment division or divisions with the larger position in the
portfolio company as of the record date for the shareholder meeting. For the remaining funds,
members of the joint proxy committee representing those funds will determine the outcome
based on a review of the same information provided to the relevant investment analysts, proxy
coordinators and proxy committee members.
All U.S. proxies are voted. Proxies for companies outside the U.S. also are voted, provided there
is sufficient time and information available. After a proxy statement is received, the investment
adviser prepares a summary of the proposals contained in the proxy statement. A notation of any
potential conflicts of interest also is included in the summary. For proxies of securities managed
by a particular investment division of Capital Research and Management Company, the initial
voting recommendation is made by one or more of the division’s investment analysts familiar
with the company and industry. A second recommendation is made by a proxy coordinator (an
investment analyst or other individual with experience in corporate governance and proxy voting
matters) within the appropriate investment division, based on knowledge of these Principles and
familiarity with proxy-related issues. The proxy summary and voting recommendations are made
available to the appropriate proxy voting committee for a final voting decision.
In addition to CRMC’s proprietary proxy voting, governance and executive compensation
research, CRMC may utilize research provided by Institutional Shareholder Services (ISS),
Glass-Lewis & Co. or other third party advisory firms (“Advisory Firms”) on a case-by-case
basis. We do not, as a policy, follow the voting recommendations provided by these firms. We
periodically assess the information provided by the Advisory Firms, as appropriate.
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From time to time CRMC may vote proxies issued by, or on proposals sponsored or publicly
supported by (1) a client with substantial assets managed by CRMC or its affiliates, (2) an entity
with a significant business relationship with the organization, or (3) a company with a director of
an American Fund on its board (each referred to as an “Interested Party”). Other persons or
entities may also be deemed an Interested Party if facts or circumstances appear to give rise to a
potential conflict. CRMC analyzes these proxies and proposals on their merits and does not
consider these relationships when casting its vote.
CRMC has developed procedures to identify and address instances where a vote could appear to
be influenced by such a relationship. Under the procedures, prior to a final vote being cast by
CRMC, the relevant proxy committees’ voting results for proxies issued by Interested Parties are
reviewed by a Special Review Committee (“SRC”) of the investment division voting the proxy if
the vote was in favor of the Interested Party.
If a potential conflict is identified according to the procedure above, the SRC will be provided
with a summary of any relevant communications with the Interested Party, the rationale for the
voting decision, information on the organization’s relationship with the party and any other
pertinent information. The SRC will evaluate the information and determine whether the decision
was in the best interest of fund shareholders. It will then accept or override the voting decision or
determine alternative action. The SRC includes senior investment professionals and legal and
compliance professionals.
The Principles, which have been in effect in substantially their current form for many years,
provide an important framework for analysis and decision-making by all funds. However, they
are not exhaustive and do not address all potential issues. The Principles provide a certain
amount of flexibility so that all relevant facts and circumstances can be considered in connection
with every vote. As a result, each proxy received is voted on a case-by-case basis considering the
specific circumstances of each proposal. The voting process reflects the funds’ understanding of
the company’s business, its management and its relationship with shareholders over time.
Information regarding how the American Funds voted proxies relating to portfolio securities
during the 12- month period ended J une 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
800/421-4225, (b) on the American Funds website and (c) on the SEC’s website at sec.gov.
The following summary sets forth the general positions of the funds and Capital Research and
Management Company on various proposals. A copy of the full Principles for the American
Funds is available upon request, free of charge, by calling American Funds Service Company or
visiting the American Funds website at americanfunds.com.
Director matters — The election of a company’s slate of nominees for director generally is
supported. Votes may be withheld for some or all of the nominees if this is determined to be in
the best interest of shareholders or if, in CRMC’s opinion, they have not fulfilled their fiduciary
duties. Separation of the chairman and CEO positions also may be supported.
36
Governance provisions — Typically, proposals to declassify a board (elect all directors
annually) are supported based on the belief that this increases the directors’ sense of
accountability to shareholders. Proposals for cumulative voting generally are supported in order
to promote management and board accountability and an opportunity for leadership change.
Proposals designed to make director elections more meaningful, either by requiring a majority
vote or by requiring any director receiving more withhold votes than affirmative votes to tender
his or her resignation, generally are supported.
Shareholder rights — Proposals to repeal an existing poison pill generally are supported.
(There may be certain circumstances, however, when a proxy voting committee of a fund or an
investment division of Capital Research and Management Company believes that a company
needs to maintain anti-takeover protection.) Proposals to eliminate the right of shareholders to
act by written consent or to take away a shareholder’s right to call a special meeting typically are
not supported.
Compensation and benefit plans —Option plans are complicated, and many factors are
considered in evaluating a plan. Each plan is evaluated based on protecting shareholder interests
and a knowledge of the company and its management. Considerations include the pricing (or
repricing) of options awarded under the plan and the impact of dilution on existing shareholders
from past and future equity awards. Compensation packages should be structured to attract,
motivate and retain existing employees and qualified directors; however, they should not be
excessive. For advisory votes on compensation we generally support management proposals
unless we have specific concerns about compensation at a particular company. If we are
dissatisfied with a component of the overall compensation policy we generally vote against these
proposals in order to deliver a consistent message to company management. With respect to the
frequency of Say-on-Pay proposals, we generally support the triennial option (every three years),
but also may consider supporting an annual vote for certain industries or companies where we
historically have had concerns about compensation
Routine matters — The ratification of auditors, procedural matters relating to the annual
meeting and changes to company name are examples of items considered routine. Such items
generally are voted in favor of management’s recommendations unless circumstances indicate
otherwise.
37
ITEM 18: FINANCIAL INFORMATION
Capital Research and Management Company does not generally require or solicit pre-payment of
fees; however, certain sponsors of wrap fee programs may pay Capital Research and
Management Company fees in advance of its provision of services related to such program, but
in no case more than six months in advance. Investors who enroll in wrap fee programs should
refer to their disclosure documents from the sponsor for details on programs that may require
payment in advance and the treatment of fees upon termination of an account.
Capital Research and Management Company is not aware of any financial condition that is
reasonably likely to impair its ability to meet its contractual commitments to clients.
38
ITEM 19: REQUIREMENTS FOR STATE-REGISTERED ADVISERS
Capital Research and Management Company is not registered with any state securities authority.
CAPITAL RESEARCH AND MANAGEMENT COMPANY
333 South Hope Street, 55
th
Floor
Los Angeles, California 90071
Phone: (213) 486-9200
www.thecapitalgroup.com
Form ADV, Part 2B
BROCHURE SUPPLEMENT
Date: September 28, 2015
This brochure supplement provides information that supplements Capital Research and
Management Company’s (“CRMC”) Form ADV brochure which was previously provided to
you.
Please contact us at [email protected] if you would like a copy of CRMC’s brochure or
if you have any questions about the contents of this supplement.
Additional information about CRMC is available on the United States Securities and Exchange
Commission (“SEC”) website at www.adviserinfo.sec.gov.
2
CRMC is a wholly-owned subsidiary of The Capital Group Companies, Inc. ("CGC"). CGC
owns 100%, either directly or indirectly, of each of the following entities, which may be
discussed from time to time throughout this brochure (certain of which are SEC-registered
investment advisers whose SEC File Numbers are as indicated):
American Funds Distributors, Inc. ("AFD") (SEC File Number: 801-77946)
American Funds Service Company ("AFS")
Capital Bank and Trust Company ("CB&T") (SEC File Number: 801-79234)
Capital Group Companies, Inc. ("CGC")
Capital Group Corporate International ("CGCInt'l")
Capital Group International, Inc. ("CGII")
Capital Group Research, Inc. ("CGRI")
Capital Guardian (Canada), Inc. ("CGCI") (SEC File Number: 801-56526)
Capital Guardian Trust Company (“CGTC”) (SEC File Number: 801-60145)
Capital Guardian Trust Company, a Nevada corporation ("CGTN")
Capital International Asset Management (Canada), Inc. ("CIAM-C")
Capital International Financial Services, Inc. ("CIFS")
Capital International Funds Company ("CIFCo")
Capital International Funds Group ("CIFG")
Capital International, Inc. ("CIInc") (SEC File Number: 801-32104)
Capital International K.K. ("CIKK")
Capital International Limited ("CIL")
Capital International Management Company S.A. ("CIMC")
Capital International Research, Inc. ("CIRI") (SEC File Number: 801-54943)
Capital International Sarl ("CISA") (SEC File Number: 802-75723)
Capital Investment Research Services Private Limited ("CIRS")
Capital Management Services, Inc. ("CMS")
Capital Research Company ("CRC") (SEC File Number: 801-54942)
Capital Research and Management Company ("CRMC") (SEC File Number: 801- 8055)
Capital Strategy Research, Inc. ("CSR")
Other Abbreviations used in this brochure include:
Capital Group Private Client Services (“CGPCS”), a division of Capital Guardian Trust Company
(“CGTC”)
Capital International Investors (“CII”) and Capital Fixed Income Investors (“CFII”), both divisions of
CRMC and some of its affiliates as noted in this brochure
3
CAPITAL RESEARCH AND MANAGEMENT COMPANY
333 South Hope Street, 55
th
Floor
Los Angeles, California 90071
Phone: (213) 486-9200
www.thecapitalgroup.com
Form ADV, Part 2B
BROCHURE SUPPLEMENT
Date: September 28, 2015
This brochure supplement provides information about Gerald C. Du Manoir that supplements
CRMC Form ADV brochure which was previously provided to you.
Please contact us at [email protected] if you would like a copy of CRMC’s brochure or
if you have any questions about the contents of this supplement.
GERALD C. DU MANOIR
Birth Year: 1966
Education: Institut Superieur de Gestion, B.A., 1989
Business Background: CII division of CRMC Partner since 2015, Senior Vice President
2013-2014;
CII division of CB&T Partner since 2015, Senior Vice President
2013-2014;
CII division of CGTC Senior Vice President 2013 - 2014;
CGTC Director 2010-2013, Senior Vice President 2007-2013;
CGTC-CGPCS Senior Vice President 2001-2013;
CIAM-C Senior Vice President since 2008;
CGCI Vice President since 1998.
Disciplinary Information: None
Other Business Activities: None
Additional Compensation: None
Supervision: The relevant investment committee provides oversight of the
investment management process and investment professionals. For
additional information, please contact 213-486-9676.
4
CAPITAL RESEARCH AND MANAGEMENT COMPANY
333 South Hope Street, 55
th
Floor
Los Angeles, California 90071
Phone: (213) 486-9200
www.thecapitalgroup.com
Form ADV, Part 2B
BROCHURE SUPPLEMENT
Date: September 28, 2015
This brochure supplement provides information about Gregory D. Fuss that supplements CRMC
Form ADV brochure which was previously provided to you.
Please contact us at [email protected] if you would like a copy of CRMC’s brochure or
if you have any questions about the contents of this supplement.
GREGORY D. FUSS
Birth Year: 1959
Education: University of Southern California, M.B.A., 1987
University of California at San Diego, B.A., 1982
Business Background: CII division of CRMC Partner since 2015, Senior Vice President
2013-2014;
CGTC-CGPCS Senior Vice President and Portfolio Manager
since 2013; Senior Vice President and Portfolio Specialist 2006 -
2013.
Disciplinary Information: None
Other Business Activities: None
Additional Compensation: None
Supervision: The relevant investment committee provides oversight of the
investment management process and investment professionals.
You may contact the investment committee at 213-486-9676.
5
CAPITAL RESEARCH AND MANAGEMENT COMPANY
333 South Hope Street, 55
th
Floor
Los Angeles, California 90071
Phone: (213) 486-9200
www.thecapitalgroup.com
Form ADV, Part 2B
BROCHURE SUPPLEMENT
Date: September 28, 2015
This brochure supplement provides information about William L. Robbins that supplements
CRMC Form ADV brochure which was previously provided to you.
Please contact us at [email protected] if you would like a copy of CRMC’s brochure or
if you have any questions about the contents of this supplement.
WILLIAM L. ROBBINS
Birth Year: 1968
Education: Harvard College, B.A., 1990
Harvard Business School, M.B.A., 1995
Business Background: CGC Director since 2014;
CII division of CRMC Partner since 2015, Senior Vice President
2013-2014;
CII division of CGTC Senior Vice President January 2014-July
2014;
CIRI Chairman, Director, and Global Research Coordinator 2012-
2014;
CRC Co-President 2009-2013, Executive Vice President and
Research Director 2005-2009;
CRGI division of CRC Senior Vice President 2007-2013.
Disciplinary Information: None
Other Business Activities: None
Additional Compensation: None
Supervision: The relevant investment committee provides oversight of the
investment management process and investment professionals.
You may contact the investment committee at 213-486-9676.
6
CAPITAL RESEARCH AND MANAGEMENT COMPANY
333 South Hope Street, 55
th
Floor
Los Angeles, California 90071
Phone: (213) 486-9200
www.thecapitalgroup.com
Form ADV, Part 2B
BROCHURE SUPPLEMENT
Date: September 28, 2015
This brochure supplement provides information about Theodore R. Samuels that supplements
CRMC Form ADV brochure which was previously provided to you.
Please contact us at [email protected] if you would like a copy of CRMC’s brochure or
if you have any questions about the contents of this supplement.
THEODORE R. SAMUELS
Birth Year: 1955
Education: Harvard University Graduate School of Business Administration,
M.B.A., 1981
Harvard University, B.A., 1977
Business Background: CII division of CB&T Partner since 2015, Senior Vice President
September 2014-December 2014;
CII division of CRMC Partner since 2015, Senior Vice President
2013-2014;
CII division of CGTC Partner since 2015, Senior Vice President
2013-2014;
CGTC President since 2010, Director since 1995, Senior Vice
President 1994-2010;
CIAM-C Senior Vice President since 2008.
Disciplinary Information: None
Other Business Activities: None
Additional Compensation: None
Supervision: The relevant investment committee provides oversight of the
investment management process and investment professionals.
For additional information, please contact 213-486-9676.
7
CAPITAL RESEARCH AND MANAGEMENT COMPANY
333 South Hope Street, 55
th
Floor
Los Angeles, California 90071
Phone: (213) 486-9200
www.thecapitalgroup.com
Form ADV, Part 2B
BROCHURE SUPPLEMENT
Date: September 28, 2015
This brochure supplement provides information about Philip Winston that supplements CRMC
Form ADV brochure which was previously provided to you.
Please contact us at [email protected] if you would like a copy of CRMC’s brochure or
if you have any questions about the contents of this supplement.
PHILIP WINSTON
Birth Year: 1955
Education: Cambridge University, Ph.D., 1982
Cambridge University, B.A., 1976
Business background: CII division of CRMC Partner since 2015, Senior Vice President
January 2014-December 2014;
CII division of CIL Partner since 2015, Senior Vice President
2013-2014;
CIL Senior Vice President since 2000, Director 2008-2011;
Investment Analyst since 1997.
Disciplinary Information: None
Other Business Activities: None
Additional Compensation: None
Supervision: The relevant investment committee provides oversight of the
investment management process and investment professionals.
For additional information, please contact 213-486-9676.
Privacy Policy
June 1, 2015
Capital Group considers the privacy of its investors to be of fundamental importance and has established a policy to maintain the
confdentiality of the information you share with us.
Personal Information We Collect
We do not sell any information to any third parties. However, we may collect and retain certain nonpublic personal information about you, including:
• information we receive from you or your fnancial intermediary, such as your name, address, birthdate and tax identifcation number;
• information from third-party data services (for example, to update your address when you have moved and demographic information to
better understand your investment and service needs);
• information, such as account balance and transaction activity, about your investment transactions (including, to the extent necessary for
our servicing your account(s) with us, your investments with third parties); and
• information collected from you online (for example, HTTP headers, IP address, pixel tags and/or cookies that collect your online
preferences, allow us to recognize your browser to help improve your Web experience and provide you with information about our
products and services tailored to your interests).
Personal Information We May Disclose
We occasionally disclose nonpublic personal information about you to affliates and nonaffliates as permitted by law. Some instances when
we have shared information include:
• disclosing information to a third party in order to process account transactions that you request or authorize;
• sharing information with companies related to us, as permitted by law, to make you aware of new funds or other services that we offer;
• disclosing your name and address to companies that mail account-related materials, such as shareholder reports (note that these
companies may not use the information for any other purpose);
• disclosing information to research companies to assess and improve our fnancial services; and
• disclosing information in connection with legal proceedings, such as responding to a subpoena.
When information is shared with third parties, they are not permitted to use the information for any purpose other than to assist our
servicing of your account(s), including helping us improve the services we offer, or as permitted by law.
If you close your account(s) or if we lose contact with you, we will continue to share information in accordance with our current privacy
policy and practices.
We restrict access to your nonpublic personal information to authorized persons. We maintain physical, electronic and procedural
safeguards that comply with federal standards to guard your nonpublic personal information.
These measures refect our commitment to maintaining the privacy of your confdential information. We appreciate the confdence you have
shown by entrusting us with your assets.
To comply with federal regulations, information we receive from you will be used to verify your identity.
The Internet: The Capital Group websites are proprietary. While we strive to protect all information we receive when you log on to the
websites, we cannot guarantee the security of any information you transmit to us online, and you do so at your own risk. By entering
the password-protected areas of our websites, you consent to our contacting you to discuss our products and services. We do not look for
Web browser “do not track” requests.
This privacy disclosure applies to investment and shareholder services offered by:
American Funds Distributors,® Inc.
American Funds Service Company®
Capital Research and Management Company
SM
Capital Bank and Trust Company
SM
and all of the American Funds listed below:
AMCAP Fund®
American Balanced Fund®
American Funds Developing World Growth and
Income Fund
SM
American Funds Global Balanced Fund
SM
American Funds Infation Linked Bond Fund®
American Funds Money Market Fund®
American Funds Mortgage Fund®
American Funds Short-Term Tax-Exempt
Bond Fund®
American Funds Tax-Exempt Fund of New York®
American High-Income Municipal Bond Fund®
American High-Income Trust®
American Mutual Fund®
The Bond Fund of America®
Capital Income Builder®
Capital World Bond Fund®
Capital World Growth and Income Fund®
EuroPacifc Growth Fund®
Fundamental Investors®
The Growth Fund of America®
The Income Fund of America®
Intermediate Bond Fund of America®
International Growth and Income Fund
SM
The Investment Company of America®
Limited Term Tax-Exempt Bond Fund of America®
The New Economy Fund®
New Perspective Fund®
New World Fund®
Short-Term Bond Fund of America®
SMALLCAP World Fund®
The Tax-Exempt Bond Fund of America®
The Tax-Exempt Fund of California®
The Tax-Exempt Fund of Maryland®
The Tax-Exempt Fund of Virginia®
U.S. Government Securities Fund®
Washington Mutual Investors Fund
SM
This privacy disclosure also applies to funds
within the:
American Funds Portfolio Series
SM
• American Funds Balance Portfolio
SM
• American Funds Global Growth Portfolio
SM
• American Funds Growth and Income Portfolio
SM
• American Funds Growth Portfolio
SM
• American Funds Income Portfolio
SM
• American Funds Preservation Portfolio
SM
• American Funds Tax-Advantaged Income
Portfolio
SM
• American Funds Tax-Exempt Preservation
Portfolio
SM
American Funds College Target Date Series®
and American Funds Target Date Retirement
Series.®
continued on back
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This policy is effective June 1, 2015. If there are changes to the terms of our privacy policy, documents containing the policy and relevant
information on our website will be updated.
For More Information
For information about your account or our services, please contact your fnancial intermediary. American Funds investors may also review
and correct any personal information by accessing our website, americanfunds.com, or by contacting us at (800) 421-4225.
Capital Group Private Client Services (“CGPCS”) clients may direct any questions to (866) 421-2166 or go to thecapitalgroup.com/pcs.
All others should contact their fnancial intermediary.
For American Funds Investors:
Household mailings and e-delivery
Each year, you are automatically sent an updated summary prospectus and annual and semi-annual reports for the fund. You may also
occasionally receive proxy statements for the fund. In order to reduce the volume of mail you receive, when possible, only one copy of
these documents will be sent to shareholders who are part of the same family and share the same household address. If you would like
to opt out of household-based mailings, please call American Funds Service Company at (800) 421-4225 or write to the secretary of the
fund at 333 South Hope Street, Los Angeles, California 90071. You may elect to receive these documents electronically in lieu of paper
form by enrolling in e-delivery on our website, americanfunds.com/paperless.
FINRA BrokerCheck®
FINRA makes available BrokerCheck, a search tool which provides important information about FINRA-registered securities frms and
brokers. You may contact the FINRA BrokerCheck Hotline at (800) 289-9999, access this service on their website at fnra.org/brokercheck
or contact FINRA for a copy of their investor brochure.
Unclaimed property
If there is no activity in your account within a time period specifed by state law, we may be required to transfer the account to the
appropriate state.
34
ITEM 17: VOTING CLIENT SECURITIES
Capital Research and Management Company accepts proxy voting authority from its clients and
follows its Proxy Voting Policy and Procedures, which are summarizedbelow. If Capital
Research and Management Company has voting authority for a client account, it generally does
not provide the client the option to direct a proxy vote with respect to a particular solicitation.
Capital Research and Management Company, in consultation with the boards of
directors/trustees of the funds it manages, has adopted Proxy Voting Procedures and Principles
(the “Principles”) with respect to voting proxies of securities held by the funds and other
accounts it manages. Proxies are voted by a committee of the appropriate equity investment
division of Capital Research and Management Company under authority delegated by the funds’
boards, and Capital Research and Management Company’s other clients. Therefore, if more than
one fund or account invests in the same company, they may vote differently on the same
proposal. In addition, the boards of the American Funds monitor the proxy voting process and
generally provide guidance with respect to the Principles through a joint proxy committee of the
American Funds.
In cases where an American Fund is co-managed and a portfolio company is held by more than
one of CRMC’s equity investment divisions, voting ties are resolved by one of the following
methods. For those funds that have delegated tie-breaking authority to CRMC, the outcome will
be determined by the equity investment division or divisionswith thelarger position in the
portfolio company as of the record date for the shareholder meeting. For the remaining funds,
members of the joint proxy committee representing those funds will determine the outcome
based on a review of the same information provided to the relevant investment analysts, proxy
coordinators and proxy committee members.
All U.S. proxies are voted. Proxies for companies outside the U.S. also are voted, provided there
is sufficient time and information available. After a proxy statement is received, the investment
adviser prepares a summary of the proposals contained in the proxy statement. A notation of any
potential conflicts of interest also is included in the summary. For proxies of securities managed
by a particular investment division of Capital Research and Management Company, the initial
voting recommendation is made by one or more of the division’s investment analysts familiar
with the company and industry. A second recommendation is made by a proxy coordinator (an
investment analyst or other individual with experience in corporate governance and proxy voting
matters) within the appropriate investment division, based on knowledge of these Principles and
familiarity with proxy-related issues. The proxy summary and voting recommendations are made
available to the appropriate proxy voting committee for a final voting decision.
In addition to CRMC’s proprietary proxy voting, governance and executive compensation
research, CRMC may utilize research provided by Institutional Shareholder Services (ISS),
Glass-Lewis & Co. or other third party advisory firms (“Advisory Firms”) on a case-by-case
basis. We do not, as a policy, follow the voting recommendations provided by these firms. We
periodically assess the information provided by the Advisory Firms, as appropriate.
(As extracted from CRMC ADV PART 2A ITEM 17: VOTING CLIENT SECURITIES September 2015)
35
From time to time CRMC may vote proxies issued by, or on proposals sponsored or publicly
supported by (1) a client with substantial assets managed by CRMC or its affiliates, (2) an entity
with a significant business relationship with the organization, or (3) a company with a director of
an American Fund on its board (each referred to as an “Interested Party”). Other persons or
entities may also be deemed an Interested Party if facts or circumstances appear to give rise to a
potential conflict. CRMC analyzes these proxies and proposals on their merits and does not
consider these relationships when casting its vote.
CRMC has developed procedures to identify and address instances where a vote could appear to
be influenced by such a relationship. Under the procedures, prior to a final vote being cast by
CRMC, the relevant proxy committees’ voting results for proxies issued by Interested Parties are
reviewed by a Special Review Committee (“SRC”) of the investment division voting the proxy if
the vote was in favor of the Interested Party.
If a potential conflict is identified according to the procedure above, the SRC will be provided
with a summary of any relevant communications with the Interested Party, the rationale for the
voting decision, information on the organization’s relationship with the party and any other
pertinent information. The SRC will evaluate the information and determine whether the decision
was in the best interest of fund shareholders. It will then accept or override the voting decision or
determine alternative action. The SRC includes senior investment professionals and legal and
compliance professionals.
The Principles, which have been in effect in substantially their current form for many years,
provide an important framework for analysis and decision-making by all funds. However, they
are not exhaustive and do not address all potential issues. The Principles provide a certain
amount of flexibility so that all relevant facts and circumstances can be considered in connection
with every vote. As a result, each proxy received is voted on a case-by-case basis considering the
specific circumstances of each proposal. The voting process reflects the funds’ understanding of
the company’s business, its management and its relationship with shareholders over time.
Information regarding how the American Funds voted proxies relating to portfolio securities
during the 12- month period ended J une 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
800/421-4225, (b) on the American Funds website and (c) on the SEC’s website at sec.gov.
The following summary sets forth the general positions of the funds and Capital Research and
Management Company on various proposals. A copy of the full Principles for the American
Funds is available upon request, free of charge, by calling American Funds Service Company or
visiting the American Funds website at americanfunds.com.
Director matters —The election of a company’s slate of nominees for director generally is
supported. Votes may be withheld for some or all of the nominees if this is determined to be in
the best interest of shareholdersor if, in CRMC’s opinion, they have not fulfilled their fiduciary
duties. Separation of the chairman and CEO positions also may be supported.
36
Governance provisions —Typically, proposals to declassify a board (elect all directors
annually) are supported based on the belief that this increases the directors’ sense of
accountability to shareholders. Proposals for cumulative voting generally are supported in order
to promote management and board accountability and an opportunity for leadership change.
Proposals designed to make director elections more meaningful, either by requiring a majority
vote or by requiring any director receiving more withhold votes than affirmative votes to tender
his or her resignation, generally are supported.
Shareholder rights —Proposals to repeal an existing poison pill generally are supported.
(There may be certain circumstances, however, when a proxy voting committee of a fund or an
investment division of Capital Research and Management Company believes that a company
needs to maintain anti-takeover protection.) Proposals to eliminate the right of shareholders to
act by written consent or to take away a shareholder’s right to call a special meeting typically are
not supported.
Compensation and benefit plans —Option plans are complicated, and many factors are
considered in evaluating a plan. Each plan is evaluated based on protecting shareholder interests
and a knowledge of the company and its management. Considerations include the pricing (or
repricing) of options awarded under the plan and the impact of dilution on existing shareholders
from past and future equity awards. Compensation packages should be structured to attract,
motivate and retain existing employees and qualified directors; however, they should not be
excessive. For advisory votes on compensation we generally support management proposals
unless we have specific concerns about compensation at a particular company. If we are
dissatisfied with a component of the overall compensation policy we generally vote against these
proposals in order to deliver a consistent message to company management. With respect to the
frequency of Say-on-Pay proposals, we generally support the triennial option (every three years),
but also may consider supporting an annual vote for certain industries or companies where we
historically have had concerns about compensation
Routine matters —The ratification of auditors, procedural matters relating to the annual
meeting and changes to company name are examples of items considered routine. Such items
generally are voted in favor of management’srecommendations unless circumstances indicate
otherwise.
doc_182790744.pdf
Capital Research and Management Company, a wholly-owned subsidiary of The Capital Group Companies, Inc., is a Delaware corporation that traces its roots to 1931. The Capital Group Companies form one of the most experienced families of investment management firms in the world. Capital Research and Management Company and The Capital Group Companies have always been privately held.
CAPITAL RESEARCH AND MANAGEMENT COMPANY
333 South Hope Street, 55
th
Floor
Los Angeles, California 90071
Phone: (213) 486-9200
www.thecapitalgroup.com
Form ADV, Part 2A
Date: September 28, 2015
This brochure provides information about the qualification and business practices of Capital
Research and Management Company. Throughout this brochure and related materials, Capital
Research and Management Company may refer to itself as a “registered investment adviser” or
“being registered.” You should be aware that registration with the United States Securities and
Exchange Commission (“SEC”) or a state securities authority does not imply a certain level of
skill or training.
If you have any questions about the contents of this brochure, please contact us at
[email protected].
The information in this brochure has not been approved or verified by the SEC or by any state
securities authority.
Additional information about Capital Research and Management Company also is available on
the SEC’s website at www.adviserinfo.sec.gov
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ITEM 2: MATERIAL CHANGES
There are no material changes since the last update of Capital Research and Management
Company’s Form ADV, Part 2A brochure dated J anuary 16, 2015.
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ITEM 3: TABLE OF CONTENTS
Item Page
1 Cover Page………………………………………………………………………….……………….1
2 Material Changes ............................................................................................................................... 2
3 Table of Contents ............................................................................................................................... 3
4 Advisory Business ............................................................................................................................. 4
5 Fees and Compensation ..................................................................................................................... 6
6 Performance-Based Fees and Side-by-Side Management ................................................................. 8
7 Type of Clients ................................................................................................................................... 9
8 Methods of Analysis, Investment Strategies and Risk of Loss ........................................................ 10
9 Disciplinary Information .................................................................................................................. 15
10 Other Financial Industry Activities and Affiliations ........................................................................ 16
11 Code of Ethics .................................................................................................................................. 19
12 Brokerage Practices ......................................................................................................................... 21
13 Review of Accounts ......................................................................................................................... 30
14 Client Referrals and Other Compensation ....................................................................................... 31
15 Custody ............................................................................................................................................ 32
16 Investment Discretion ...................................................................................................................... 33
17 Voting Client Securities ................................................................................................................... 34
18 Financial Information ....................................................................................................................... 37
19 Requirements for State-Registered Advisers ................................................................................... 38
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ITEM 4: ADVISORY BUSINESS
Capital Research and Management Company, a wholly-owned subsidiary of The Capital Group
Companies, Inc., is a Delaware corporation that traces its roots to 1931. The Capital Group
Companies form one of the most experienced families of investment management firms in the
world. Capital Research and Management Company and The Capital Group Companies have
always been privately held.
Capital Research and Management Company is the investment adviser to the American Funds
family of mutual funds, including American Funds Target Date Retirement Series, American
Funds Portfolio Series, American Funds College Target Date Series and American Funds
Insurance Series, four asset pools of the Capital International Fund, a Luxembourg investment
company, and is the sub-adviser to two asset pools of Capital International Asset Management
(Canada), Inc., whose adviser is an affiliate of Capital Research and Management Company. In
addition, Capital Research and Management Company serves as the investment adviser to
Capital Bank and Trust Company in its capacity as the trustee of certain collective investment
trusts that are exempt from SEC registration. Capital Bank and Trust Company is an affiliate of
Capital Research and Management Company.
Capital Research and Management Company manages equity assets through three equity
investment divisions and fixed-income assets through its fixed-income division. The three
equity divisions, Capital World Investors, Capital Research Global Investors and Capital
International Investors make investment decisions on an independent basis. Portfolio Managers
in Capital International Investors rely on a research team that also provides investment services
to institutional clients and other accounts advised by affiliates of Capital Research and
Management Company. Capital Research and Management Company’s only business is
investment management and related services. Capital Research and Management Company
typically builds portfolios for funds and accounts (collectively referred to as “funds” throughout
the brochure) from the bottom-up using rigorous fundamental research to find attractive
investments and manage risks. Research is produced for internal use only, and is not published
or sold to external parties. Investment decisions are subject to a fund’s objective, policies and
restrictions and the oversight of the appropriate investment-related committees of Capital
Research and Management Company and its investment divisions. The objective, policies and
restrictions of each of the funds managed by Capital Research and Management Company are set
forth in its prospectus and statement of additional information or other disclosure documents.
Depending on a fund’s objective, policies and restrictions, Capital Research and Management
Company generally invests in equity securities, fixed-income securities or a combination of both.
When consistent with a fund’s or account’s objectives, strategies and guidelines, Capital
Research and Management may also invest in other types of securities or investment instruments,
including, but not limited to, futures, forward contracts, swaps and repurchase agreements.
Please also refer to Item 8 (Methods of Analysis, Investment Strategies and Risk of Loss) in this
Brochure for further information.
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Capital Research and Management Company may be retained as an investment adviser to a
portion of the assets administered under “wrap fee” programs sponsored by broker-dealers or
other financial institutions where a sponsor offers bundled investment management, custody,
brokerage or other services for a single “wrap fee” charged by the sponsor. In cases where
Capital Research and Management Company is an investment adviser to a wrap program, Capital
Research and Management Company does not negotiate brokerage commissions for the
execution of transactions in the client’s account that are executed by or through the sponsor.
These commissions are generally included in the wrap fee charged by the sponsor. Please also
refer to the “Wrap Fee Program” section under Item 12 (Brokerage Practices) in this brochure for
further information. For some wrap fee programs, Capital Research and Management Company
may only provide model portfolios to the sponsor and the sponsor will have ultimate decision
making and discretionary authority for those accounts. Generally, Capital Research and
Management Company is paid an investment management fee based on the amount of assets it
manages in the wrap program by the wrap program’s sponsor. Clients who enroll in wrap fee
programs should carefully review the fee structure and other program documents provided by the
sponsor.
Capital Research and Management Company also provides investment management to high-net
worth individuals, foundations, trusts and other investors through “managed account programs”
sponsored by broker-dealers or other financial institutions. In such managed account programs,
the sponsor provides a platform where investors can choose a variety of service providers to
invest and manage their account, which services are generally offered on an unbundled
basis. Managed accounts are generally managed in a manner similar to wrap programs as
discussed throughout this brochure.
As of J une 30, 2015 Capital Research and Management Company managed approximately
$1,440,717,591,249 in discretionary assets under management. Capital Research and
Management Company also provides model portfolios to certain managed account program
clients on a non-discretionary basis and as of J une 30, 2015 had approximately $696,593,282 in
non-discretionary assets under management.
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ITEM 5: FEES AND COMPENSATION
Capital Research and Management Company’s fees are generally not negotiable. Capital Research and
Management Company’s management fees are paid pursuant to investment advisory agreements,
or in the case of Capital Bank and Trust Company and Capital International Assets Management
(Canada), Inc., advisory or sub-advisory agreements. Capital Research and Management
Company’s management fees are generally based on a percentage of assets under management
and, for certain funds, a combination of assets under management and gross investment income.
Management fees are paid monthly by the American Funds to Capital Research and Management
Company based on the previous month’s daily net asset levels. Management fees for each of the
American Funds are described in such fund’s prospectus and statement of additional information.
The annual fees for advisory services provided by Capital Research and Management Company
to Capital Bank and Trust Company, in its capacity as trustee to certain collective investment
trusts, are agreed upon from time to time in writing. The fees that Capital Bank and Trust
Company receives for such collective investment trusts are described in the characteristic
documents.
The annual fees for Capital International Assets Management (Canada), Inc. are agreed to from
time to time in writing and are based on the following asset levels for Capital International –
Global Equity: 0.58% on the first US$500 million; 0.48% from US$500 million to US$1 billion;
0.44% from US$1 billion to US$1.5 billion; and 0.41% from US$1.5 billion to US$2.5 billion.
The annual fees for Capital International – U.S. Equity are: 0.39% on the first US $1 billion;
0.336% from US $1 billion to US$ 2 billion; and 0.300% from US$ 2 billion. The annual fees for
the sub-funds of the Capital International Fund are agreed to from time to time in writing and are
0.40% of assets for Capital International US Growth and Income; 0.51% of assets for Capital
International European Growth and Income; 0.51% of assets for Capital International Global
Growth and Income; and 0.51% of assets for Capital International Global Allocation.
The funds incur fees and expenses in addition to the management fees described above,
including administrative service fees, custodial fees and other fund expenses. With respect to the
American Funds, Capital Research and Management Company provides certain transfer agent
and administrative services for shareholders of the funds pursuant to an administrative service
agreement. Capital Research and Management Company may contract with third parties,
including American Funds Service Company, the funds’ Transfer Agent, and American Funds
Distributors, Inc., the funds’ principal underwriter, to provide some of these services. In
addition, the funds will incur brokerage and other transaction costs. Please refer to Item 12
(Brokerage Practices) below for a discussion of Capital Research and Management Company’s
brokerage practices.
Capital Research and Management Company investment advisory services are also available
through various consulting, or bundled “wrap fee” programs sponsored by certain broker-dealers
or other financial institutions. Fees charged to the wrap program’s sponsor for such services will
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vary based on the relationship, services provided and other factors. The end investor of the wrap
fee programs generally pays a “wrap fee” to the sponsor based on a percentage of assets; the
advisory fees charged by Capital Research and Management Company to the sponsor are
generally included in this wrap fee.
The annual fee schedule for investment management services for managed account programs are
expressed as a percentage of total assets. All assets are stated in U.S. dollars. Investment
mandates in currencies other than U.S. dollars will reflect fee breakpoints that historically have
approximated those breakpoints in the local currency. In addition to the fee schedules outlined
below, different fee schedules may apply for long standing clients as well as clients with
customized mandates or special service needs.
U.S. Equity
Fee calculated on total assets: Rate:
Accounts under $10 million:
All Assets 0.650%
Accounts over $10 million:
First $25 million 0.600%
Next $25 million 0.450%
Over $50 million 0.325%
International/Global Equity, World Dividend Growers
Fee calculated on total assets: Rate:
Accounts under $10 million:
All Assets 0.750%
Accounts over $10 million:
First $25 million 0.700%
Next $25 million 0.550
Next $200 million 0.425%
Over $250 million 0.375%
U.S. Fixed Income
(Core Bond, Short-term Municipal Bond and Core Municipal Bond)
Fee calculated on total assets: Rate:
Accounts under $10 million:
All Assets 0.350%
Accounts over $10 million:
First $50 million 0.300%
Next $50 million 0.200%
Next $200 million 0.180%
Over $300 million 0.150%
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ITEM 6: PERFORMANCE-BASED FEES AND SIDE-BY-SIDE MANAGEMENT
Capital Research and Management Company charges the funds asset-based fees for providing
investment advisory services. However, certain fixed-income portfolio managers and portfolio
managers in the Capital International Investors division may manage assets for the funds advised
by Capital Research and Management Company and accounts advised by an affiliate of Capital
Research and Management Company. In limited circumstances, Capital Research and
Management Company’s affiliate may receive fees that are based on the performance of the
account. Managing both types of accounts simultaneously creates a risk of conflicts for the
portfolio manager to (i) allocate more attractive investment opportunities to accounts with
performance-based fees and/or (ii) make investments for those accounts that are more
speculative than for accounts that do not have performance-based fees.
Capital Research and Management Company and its affiliates have adopted allocation policies
that are designed in part to address these potential conflicts of interest. See Item 12 (Brokerage
Practices) of this Brochure for Capital Research and Management Company’s policy on
allocating trades fairly, which is designed to allocate trades to clients in a fair and equitable
manner over time, taking into consideration the interests of each client. Non-investment factors,
such as fee arrangements, are not considered in selecting clients or allocating trades.
In addition, while Capital Research and Management Company and its affiliates provide
individual investment advice and treatment to each fund, portfolio managers focus on particular
investment mandates, using similar investment strategies in connection with the management of
multiple portfolios, which helps minimize the potential for conflicts of interest. Capital Research
and Management Company reviews funds with similar objectives managed by Capital Research
and Management Company and its affiliate at least annually. These reviews generally include,
among other things, information related to investment results, including dispersion of results
among funds and reasons for such dispersion, if any, significant fund guidelines and the
investment structure of the portfolio.
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ITEM 7: TYPES OF CLIENTS
Capital Research and Management Company provides investment management services to
Registered Investment Companies and other pooled investment vehicles. In addition, Capital
Research and Management Company serves as the investment adviser to Capital Bank and Trust
Company in its capacity as the trustee of certain collective investment trusts that are exempt
from SEC registration. Capital Research and Management Company also provides investment
management and related services to participants in wrap programs and managed account
program clients.
Minimum account sizes for fund investments are disclosed in each fund’s prospectus, statement
of additional information, characteristics, annual information form or other disclosure
documents.
The minimum account size for managed account program clients is generally $1 million.
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ITEM 8: METHODS OF ANALYSIS, INVESTMENT STRATEGIES AND RISK OF
LOSS
Capital Research and Management Company maintains an investment philosophy that is
distinguished by four key beliefs:
• Solid research is fundamental to sound investment decisions. Capital Research and
Management Company employs teams of experienced analysts who regularly gather in-
depth, first-hand information on markets and companies around the globe.
• Investment decisions should not be made lightly. In addition to providing extensive research,
our investment professionals go to great lengths to determine the difference between the
fundamental value of a company and its price in the marketplace.
• A long-term approach. It's part of the big-picture view our investment professionals take of
the companies in which we invest. This is reflected by the typically low turnover of portfolio
holdings in the funds we manage. In addition, our investment professionals usually remain
with us for many years and are compensated according to their investment results over time.
• The Capital System. Capital Research and Management Company uses a system of multiple
portfolio managers in managing most account and fund assets. Under this approach, the
portfolio of a fund is divided into segments managed by individual managers who decide
how their respective segments will be invested. In addition, Capital Research and
Management Company’s investment analysts may make investment decisions with respect to
a portion of a fund’s or client’s portfolio. Over time, this method has contributed to
consistency of results and continuity of management.
Investment decisions are subject to a fund’s objectives, policies and restrictions and the oversight
of the appropriate investment-related committees of Capital Research and Management
Company and its investment divisions. The objectives, policies and restrictions of each of the
funds managed by Capital Research and Management Company are set forth in its prospectus
and statement of additional information. Depending on a fund’s objective, policies and
restrictions, Capital Research and Management Company generally invests in equity securities,
fixed-income securities or a combination of both. Capital Research and Management Company
invests in U.S. and international equity securities, including common stocks, preferred stocks and
convertible securities, of companies with varying market capitalizations. Capital Research and
Management Company also invests in U.S. and international fixed-income securities, including
bonds, loan participations, mortgage-backed securities and municipal bonds of varying quality
and duration. When consistent with a fund’s or account’s objectives, strategies and guidelines,
Capital Research and Management may also invest in other types of securities or investment
instruments, including, but not limited to, futures, forward contracts, swaps and repurchase
agreements.
Investing in securities involves risk of loss that funds and their shareholders or other clients
should be prepared to bear. Each fund or account is subject to certain risks associated with the
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investments made by Capital Research and Management Company in accordance with that
fund’s policies and restrictions. The risks associated with an investment in each fund are set
forth in that fund’s prospectus and statement of additional information or other disclosure
documents. These risks may include, but are not limited to, certain of the risks set forth below.
• Management — Capital Research and Management Company actively manages investments.
Consequently, the accounts and funds are subject to the risk that the methods and analyses
employed by the investment adviser in this process which may not produce the desired
results. This could cause a fund to lose value or their investment results to lag relevant
benchmarks or other funds with similar objectives.
• Market conditions — The prices of, and income generated by, the common stocks and other
securities may decline – sometimes rapidly or unpredictably – due to market conditions and
other factors, including events or conditions affecting the general economy or particular
industries; overall market changes; local, regional or global political, social or economic
instability; governmental or governmental agency responses to economic conditions; and
currency, interest rate and commodity price fluctuations. Investing in stocks — Investing in
stocks may involve larger price swings and greater potential for loss than other types of
investments. As a result, the value of the funds may be subject to sharp, short-term declines
in value.
• Investing in growth-oriented stocks — Growth-oriented common stocks and other equity-
type securities (such as preferred stocks, convertible preferred stocks and convertible bonds)
may involve larger price swings and greater potential for loss than other types of
investments. These risks may be heightened in the case of smaller capitalization stocks.
• Investing in income-oriented stocks — Income provided by the funds may be reduced by
changes in the dividend policies of, and the capital resources available for dividend at, the
companies in which a fund or account invests.
• Investing in small companies — Investing in smaller companies may pose additional risks.
For example, it is often more difficult to value or dispose of small company stocks and more
difficult to obtain information about smaller companies than about larger companies.
Furthermore, smaller companies often have limited product lines, operating histories,
markets and/or financial resources, may be dependent on one or a few key persons for
management, and can be more susceptible to losses. Moreover, the prices of their stocks may
be more volatile than stocks of larger, more established companies.
• Investing outside the United States — Securities of issuers domiciled outside the United
States, or with significant operations outside the United States, may lose value because of
adverse political, social, economic or market developments (including social instability,
regional conflicts, terrorism and war) in the countries or regions in which the issuer operates.
These securities may also lose value due to changes in foreign currency exchange rates
against the U.S. dollar and/or currencies of other countries. Securities markets in certain
countries may be more volatile and/or less liquid than those in the United States. Investments
outside the United States may also be subject to different settlement and accounting practices
and different regulatory, legal and reporting standards, and may be more difficult to value,
12
than those in the United States. In addition, the value of investments outside the United
States may be reduced by foreign taxes, including foreign withholding taxes on interest and
dividends. Further, there may be increased risks of delayed settlement of securities
transactions. These risks may be heightened in connection with investments in emerging
market and developing countries.
• Investing in emerging market countries — Investing in emerging markets may involve risks
in addition to and greater than those generally associated with investing in developed
countries. For instance, emerging market and developing countries may have less developed
legal and accounting systems than those in developed countries. The governments of these
countries may be more unstable and more likely to impose capital controls, nationalize a
company or industry, place restrictions on foreign ownership and on withdrawing sale
proceeds of securities from the country, and/or impose punitive taxes that could adversely
affect the prices of securities. In addition, the economies of these countries may be dependent
on relatively few industries that are more susceptible to local and global changes. Securities
markets in these countries can also be relatively small and have substantially lower trading
volumes. As a result, securities issued in these countries may be more volatile and less liquid,
and may be more difficult to value, than securities issued in countries with more developed
economies and/or markets. Less certainty with respect to security valuations may lead to
additional challenges and risks in calculating for a fund’s net asset value. Additionally, there
may be increased settlement risks for transactions in local securities.
• Investing in debt instruments — The prices of, and the income generated by, bonds and
other debt securities held by the fund may be affected by changing interest rates and by
changes in the effective maturities and credit ratings of these securities. Rising interest rates
will generally cause the prices of bonds and other debt securities to fall. Falling interest rates
may cause an issuer to redeem, call or refinance a debt security before its stated maturity,
which may result in the fund having to reinvest the proceeds in lower yielding securities.
Longer maturity debt securities generally have greater sensitivity to changes in interest rates
and may be subject to greater price fluctuations than shorter maturity debt securities. Bonds
and other debt securities are also subject to credit risk, which is the possibility that the credit
strength of an issuer will weaken and/or an issuer of a debt security will fail to make timely
payments of principal or interest and the security will go into default. Lower quality debt
securities generally have higher rates of interest and may be subject to greater price
fluctuations than higher quality debt securities. Credit risk is gauged, in part, by the credit
ratings of the debt securities in which the fund invests. However, ratings are only the
opinions of the rating agencies issuing them and are not guarantees as to credit quality or an
evaluation of market risk. Capital Research and Management Company and its affiliates rely
on their own credit analysts to research issuers and issues in seeking to mitigate various
credit and default risks.
• Investing in lower rated bonds — Lower rated bonds and other lower rated debt securities
generally have higher rates of interest and involve greater risk of default or price declines due
to changes in the issuer’s creditworthiness than those of higher quality debt securities. The
market prices of these securities may fluctuate more than the prices of higher quality debt
securities and may decline significantly in periods of general economic difficulty. These risks
may be increased with respect to investments in lower quality, higher yielding debt securities
13
(generally rated Ba1 or below and BB+or below or unrated but determined by Capital
Research and Management Company to be of equivalent quality (“junk bonds”)).
• Investing in mortgage-related and other asset backed securities —Mortgage-related
securities, such as mortgage-backed securities, and other asset-backed securities, include debt
obligations that represent interests in pools of mortgages or other income-bearing assets, such
as consumer loans or receivables. Such securities often involve risks that are different from
or more acute than the risks associated with investing in other types of debt securities.
Mortgage-backed and other asset-backed securities are subject to changes in the payment
patterns of borrowers of the underlying debt. When interest rates fall, borrowers are more
likely to refinance or prepay their debt before its stated maturity. This may result in the fund
having to reinvest the proceeds in lower yielding securities, effectively reducing the fund’s
income. Conversely, if interest rates rise and borrowers repay their debt more slowly than
expected, the time in which the mortgage-backed and other asset-backed securities are paid
off could be extended, reducing the fund’s cash available for reinvestment in higher yielding
securities.
• Investing in future delivery contracts — A fund or account may enter into contracts, such as
to-be-announced contracts and mortgage dollar rolls, that involve selling mortgage-related
securities and simultaneously contracting to repurchase similar securities for delivery at a
future date at a predetermined price. This can increase the fund’s market exposure and the
market price of the securities the fund contracts to repurchase could drop below their
purchase price. While the fund can preserve and generate capital through the use of such
contracts by, for example, realizing the difference between the sale price and the future
purchase price, the income generated by the fund may be reduced by engaging in such
transactions. In addition, these transactions may increase the turnover rate of the fund.
• Investing in futures – A futures contract is considered a derivative because it derives its
value from the price of the underlying security or financial index. Losses on futures contracts
may exceed the amount invested. The prices of futures contracts can be volatile, and futures
contracts may be illiquid. In addition, there may be imperfect or even negative correlation
between the price of a futures contract and the price of the underlying securities.
• Investing in thinly traded securities – There may be little trading in the secondary market for
particular bonds or other debt securities, which may make them more difficult to value,
acquire, or sell.
• Hedging – There may be imperfect or even negative correlation between the price of the
futures contracts and the price of the underlying securities. For example, futures contracts
may not provide an effective hedge because changes in futures contract prices may not track
those of the underlying securities or indexes they are intended to hedge. In addition, there are
significant differences between the securities and futures markets that could result in an
imperfect correlation between the markets, causing a given hedge not to achieve its
objectives. The degree of imperfection of correlation depends on circumstances such as
variations in speculative market demand for futures, including technical influences in futures
trading, and differences between the financial instruments being hedged and the instruments
14
underlying the standard contracts available for trading. A decision as to whether, when and
how to hedge involves the exercise of skill and judgment, and even a well-conceived hedge
may be unsuccessful to some degree because of market behavior or unexpected interest rate
trends. In addition, a fund’s investment in exchange-traded futures and their resulting costs
could limit the fund’s gains in rising markets relative to those of unhedged funds.
• Currency — The prices of, and the income generated by, many securities may also be
affected by changes in relative currency values. If the U.S. dollar appreciates against foreign
currencies, the value in U.S. dollars of the fund or account’s securities denominated in such
currencies would generally fall and vice versa. U.S. dollar denominated securities of foreign
issuers may also be affected by changes in relative currency values.
• Investing in interest rate swaps — The use of interest rate swaps involves the risk that the
investment adviser will not accurately predict anticipated changes in interest rates, which
may result in losses. Interest rate swaps also involve the possible failure of a counterparty to
perform in accordance with the terms of the swap agreement. If a counterparty defaults on its
obligations under a swap agreement, the fund may lose any amount it expected to receive
from the counterparty, potentially including amounts in excess of a fund’s initial investment.
• Loss of investment — An investor may lose money by investing in a fund. The likelihood of
loss may be greater if the investor invests for a shorter period of time.
• Investments are not guaranteed — Investments in a fund or account are not bank deposits
and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other
governmental agency, entity or person.
• Past investment results are not predictive of future investment results.
Please see each fund’s prospectus and statement of additional information, account
guidelines, or other disclosure documents for further information on methods of analysis,
investment strategies and risks specific to that fund or account.
15
ITEM 9: DISCIPLINARY INFORMATION
Neither Capital Research and Management Company nor its management persons have been the
subject of legal or regulatory findings, or are the subject of any pending criminal proceedings
that are material to a client’s or prospective client’s evaluation of our advisory business or the
integrity of our firm.
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ITEM 10: OTHER FINANCIAL INDUSTRY ACTIVITIES AND AFFILIATIONS
Capital Research and Management Company is registered as a commodity pool operator and a
member of the National Futures Association. Some of Capital Research and Management
Company’s Associated Persons are also management persons of Capital Research and
Management Company and/or one or more of the affiliates listed below. Capital Research and
Management Company has the following arrangements that are material to clients or its advisory
business with certain affiliated entities. Some of Capital Research and Management Company’s
directors and executive officers and employees are also directors, officers or employees of one or
more affiliates.
Broker-dealer
American Funds Distributors, Inc., a wholly-owned subsidiary of Capital Research and
Management Company, is a registered broker-dealer and a member of the Financial Industry
Regulatory Authority and Municipal Securities Rulemaking Board. American Funds
Distributors, Inc. acts as the principal underwriter and distributor of mutual funds advised by
Capital Research and Management Company and its affiliates and provides related services. In
addition, certain of Capital Research and Management Company’s management persons are
registered representatives of American Funds Distributors, Inc. American Funds Distributors,
Inc. is also registered as an insurance agency or producer in certain states. American Funds
Distributors, Inc. is also an investment adviser which provides investment advisory related
services to Capital Research and Management Company’s activity related to various wrap-fee
programs sponsored by broker-dealers or other financial institutions.
Investment Companies
Capital Research and Management Company serves as investment adviser to investment
companies registered under the Investment Company Act of 1940 and other pooled investment
vehicles. Capital Research and Management Company will receive advisory and other fees and
expenses from each fund based upon the value of the fund’s assets; those fees are described in
each fund’s prospectus and statement of additional information or other disclosure documents.
Other Investment Advisers
Because our funds and our personnel are located around the world, we conduct business through
a number of affiliated entities licensed to offer services in various jurisdictions and to perform
particular business functions. Though legally distinct, our affiliates function as a unified, global
business. We believe that our globally integrated model helps us to serve our clients’ needs
better. We may engage one or more of our affiliates and their personnel to assist in managing
client mandates. For example, we may engage affiliated personnel to provide research, portfolio
management or trading services to client accounts.
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Capital Research Company, a wholly-owned subsidiary of Capital Research and Management
Company, is a registered investment adviser and provides investment advisory research, trading,
and related services to Capital Research and Management Company. This may include managing
assets, subject to the supervision and control of Capital Research and Management Company.
American Funds Distributors, Inc., a wholly-owned subsidiary of Capital Research and
Management Company, is a registered investment adviser.
Capital Guardian Trust Company is an affiliated registered investment adviser with which
Capital Research and Management shares supervised persons. Capital Guardian Trust Company
is also a non-depository trust company chartered under California banking laws.
Capital International, Inc. is an affiliated registered investment adviser with which Capital
Research and Management Company shares supervised persons.
Capital Bank and Trust Company is an affiliated registered investment adviser with which
Capital Research and Management shares supervised persons.
Capital International K.K., a J apan-based investment adviser provides research information and
services to Capital Research and Management Company.
Capital International, Inc. and Capital International Limited, an affiliated U.K.-based investment
adviser, provide portfolio control, administrative and trading services to Capital Research and
Management Company.
In addition, certain portfolio managers employed by Capital Research Company or the following
affiliated investment advisers based outside the U.S. may, under the supervision and review of
Capital Research and Management Company, determine the securities to be purchased and sold
for Capital Research and Managements clients:
Capital International Limited is based in the U.K. and has been authorized by the U.K. Financial
Services Authority to provide investment advisory and asset management services.
Capital International Sarl is based in Switzerland and has been authorized by the Financial
Markets Supervisory Authority to provide investment advisory services.
Neither Capital International Limited nor Capital International Sarl is registered as an investment
adviser under the Investment Advisers Act of 1940 and each is deemed to be a “Participating
Affiliate” of Capital Research and Management Company, as this term has been used by the
SEC’s Division of Investment Management in various no-action letters granting relief from the
Advisers Act’s registration requirements for certain affiliates of registered investment advisers.
Trust Company
Capital Bank and Trust Company, a federal savings bank, is a wholly-owned subsidiary of The
Capital Group Companies. Capital Bank and Trust Company provides directed trustee services
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and custodial services to employer-sponsored retirement plans and individual retirement
accounts invested in the American Funds and other outside assets. Capital Bank and Trust
Company serves as trustee to certain collective investment trusts.
Unregistered Collective Investment Trust
Capital Research and Management Company serves as the investment adviser to Capital Bank
and Trust Company, the trustee of collective investment funds that are exempt from SEC
registration. Capital Research and Management Company will receive advisory fees from Capital
Bank and Trust as agreed upon in writing from time to time.
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ITEM 11: CODE OF ETHICS, PARTICIPATION OR INTEREST IN CLIENT
TRANSACTIONS AND PERSONAL TRADING
Capital Research and Management Company and its affiliated companies have adopted a Code
of Ethics for its associates (Code of Ethics) that requires all associates: (1) act with integrity,
competence and in an ethical manner; (2) comply with applicable U.S. federal securities laws, as
well as all other applicable laws, rules and regulations; and (3) promptly report violations of the
Code of Ethics. All associates are required to certify at least annually that they have read and
understand the Code. A copy of the Code of Ethics is available to clients and prospective clients
upon request and on americanfunds.com.
The Code of Ethics includes:
• Protection of Non-Public Information: Policies and procedures designed to prevent and
detect the misuse of material non-public information by our associates. These procedures
require all associates who believe they may be in possession of material non-public
information regarding an issuer to notify the Legal Department, which will determine the
appropriate actions to be taken.
• Personal Investing: Policies related to personal investing by our associates. The policies ban
excessive trading of any Capital-managed investment vehicles worldwide, including the
American Funds. Associates generally may not participate in the acquisitions of securities in
initial public offerings. Additional restrictions apply to associates with access to non-public
information relating to current or imminent fund/client transactions, investment
recommendations or fund portfolio holdings (covered associates). Covered associates
generally may not effect securities transactions for their own account when any investment
advisory account is transacting in the issuer in question. All such covered associates must
report their securities transactions on a quarterly basis and disclose their holdings annually.
Covered associates must pre-clear certain personal security transactions and special review of
private placements is required. Additional restrictions and reporting apply to investment
professionals, including blackout periods on personal investing and a ban on short-term
trading.
• Gifts and Entertainment: Policy prohibiting the acceptance and extension of gifts or
entertainment that are excessive, repetitive or extravagant, if such gifts or entertainment are
in relation to Capital’s business. Procedures include quarterly reporting of gifts or
entertainment received or offered, a dollar limit on gifts that can be accepted from any one
source during a calendar year, and pre-clearance of entertainment beyond a certain dollar
limit.
• Political Contributions: Policy governing political contributions and/or other activities that
directly support officials, candidates, or organizations that may be in a position to influence
decisions to award business to investment management firms. Specific rules exist for
political contributions and activities within the U.S. and associates are required to seek
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preclearance and approval for political contributions to state and local government officials
(or a candidate for those positions).
Participation or Interest in Client Transactions
In addition, Capital Research and Management Company or its affiliates may recommend that
clients invest in limited partnerships, pooled funds or mutual funds managed by the Investment
Adviser or its affiliates. Additionally, an affiliate of Capital Research and Management
Company, in its fiduciary capacity, may invest client assets in certain of these funds. In all
cases, the nature and scope of the financial interest (e.g., investment management fees or
economic interest in such partnerships or funds) is disclosed.
Capital Research and Management Company's employees may also purchase shares in certain
pooled funds managed by Capital Research and Management Company or an affiliate of Capital
Research and Management Company. Such purchases may take place either through their
personal account or through retirement plans sponsored by The Capital Group Companies, Inc.,
the ultimate parent company of Capital Research and Management Company. All such
transactions are conducted at net asset value and in accordance with the purchase and redemption
provisions as described in either the prospectus or offering memorandum of the fund.
Capital Research and Management Company may manage investments made by it or an affiliate
either in a separate account or through investing in a pooled vehicle. In those instances in which
Capital Research and Management Company or an affiliate makes an investment in a pooled
vehicle, they may be the first participants in such vehicle and may be the only participant for one
or more years. Capital Research and Management Company treats these separate and pooled
vehicle accounts the same as any client account.
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ITEM 12: BROKERAGE PRACTICES
Selecting Broker-Dealers
Portfolio Transactions
Capital Research and Management Company places orders with broker-dealers for its clients’
portfolio transactions. Purchases and sales of equity securities on a securities exchange or an
over-the-counter market are affected through broker-dealers who receive commissions for their
services. Purchases and sales of fixed-income securities and currency foreign exchange
transactions are generally made with an issuer or a primary market-maker acting as principal
with no stated brokerage commission. Prices for fixed-income securities in secondary trades
usually include undisclosed compensation to the market-maker reflecting the spread between the
bid and ask prices for the securities. The prices for equity and fixed-income securities purchased
in primary market transactions, such as initial public offerings, new fixed-income issues,
secondary offerings and private placements, may include underwriting fees.
Best Execution
In selecting broker-dealers, Capital Research and Management Company strives to obtain “best
execution” (the most favorable total price reasonably attainable under the circumstances) for its
clients’ portfolio transactions, taking into account a variety of factors. These factors include the
size and type of transaction, the nature and character of the markets for the security to be
purchased or sold, the cost, quality, likely speed and reliability of execution and settlement, the
broker-dealer’s or execution venue’s ability to offer liquidity and anonymity and the potential for
minimizing market impact. Capital Research and Management Company considers these
factors, which involve qualitative judgments, when selecting broker-dealers and execution
venues for its clients’ portfolio transactions. Capital Research and Management Company views
best execution as a process that should be evaluated over time as part of an overall relationship
with particular broker-dealer firms. In this regard, Capital Research and Management Company
does not consider itself as having an obligation to obtain the lowest available commission rate
available for a portfolio transaction to the exclusion of price, service and qualitative
considerations. Brokerage commissions are only a small part of total execution costs and other
factors, such as market impact and speed of execution, contribute significantly to overall
transaction costs.
Oversight
The Capital Group Companies Equity Trading Best Execution Committee, the Capital Group
Companies Equity Trading Steering Committee, and the Capital Group Companies Fixed-
Income Best Execution Committee provide oversight to Capital Research and Management
Company’s policies, procedures and practices relating to best execution.
The Equity Trading Best Execution Committee meets periodically to review current equity
trading practices and reviews overall quality of execution and trades. The Equity Trading
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Steering Committee and other senior managers oversee the brokerage services and receive
periodic commission reports produced from an automated system. The Equity Trading Steering
Committee also reviews equity trading policies and approves changes as appropriate.
The Fixed-Income Best Execution Committee meets periodically to review current fixed-income
trading practices and overall quality of execution for fixed-income and foreign exchange trades.
Commission Rates
Capital Research and Management Company and its affiliates negotiate commission rates with
brokers based on what they believe is reasonably necessary to obtain best execution. Capital
Research and Management Company and its affiliates do not consider the appropriate
commission to necessarily be the lowest available commission, but attempt to maximize the
overall benefits received by their clients for their commissions. Commission rates vary based on
the nature of the transaction, the market in which the security is traded and the venue chosen for
trading, among other factors.
Capital Research and Management Company and its affiliates seek, on an ongoing basis, to
determine what the reasonable levels of commission rates are in the marketplacein respect of
both execution and research, taking various considerations into account, including the extent to
which a broker-dealer has put its own capital at risk historical commission rates, commission
rates that other institutional investors are paying, and the provision of brokerage and research
products and services.
Brokerage and Investment Research Services
Capital Research and Management Company and its affiliates may execute portfolio transactions
with broker-dealers who provide certain brokerage and/or investment research services to Capital
Research and Management Company and its affiliates, either directly or through a commission
sharing arrangement, but only when in Capital Research and Management Company’s and its
affiliates’ judgment the broker-dealer is capable of providing best execution for that transaction.
The receipt of these services permits Capital Research and Management Company and each
affiliate to supplement its own research and analysis and makes available the views of, and
information from, individuals and the research staffs of other firms. These services may include,
among other things, reports and other communications with respect to individual companies,
industries, countries and regions, economic, political and legal developments, as well as
scheduling meetings with corporate executives and seminars and conferences related to relevant
subject matters. This information may be provided in the form of written reports, telephone
contacts and meetings with securities analysts. Capital Research and Management Company and
its affiliates consider these services to be supplemental to their own internal research efforts and
therefore the receipt of investment research from broker-dealers does not tend to reduce the
expenses involved in Capital Research and Management Company’s and its affiliates’ research
efforts. If broker-dealers were to discontinue providing such services it is unlikely Capital
Research and Management Company and its affiliates would attempt to replicate them on their
own, in part because such services would no longer provide an independent, supplemental
viewpoint. Nonetheless, if it were to attempt to do so, Capital Research and Management
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Company and its affiliates would incur substantial additional costs. Capital Research and
Management Company and its affiliates could be perceived to have an incentive to select a
broker-dealer based on their interest in receiving such research services. Capital Research and
Management Company and its affiliates have processes in place to minimize the potential for
conflicts of interest in this area.
Capital Research and Management Company and its affiliates may pay commissions in excess of
what other broker-dealers might have charged for certain portfolio transactions in recognition of
brokerage and/or investment research services. In this regard, Capital Research and
Management Company and its affiliates have adopted a brokerage allocation procedure
consistent with the requirements of Section 28(e) of the U.S. Securities Exchange Act of 1934.
Section 28(e) permits an investment adviser to cause an account to pay a higher commission to a
broker-dealer to compensate the broker-dealer or another service provider for certain brokerage
and/or investment research services provided to Capital Research and Management Company
and its affiliates, if Capital Research and Management Company and each affiliate makes a good
faith determination that such commissions are reasonable in relation to the value of the services
provided to Capital Research and Management Company and its affiliates in terms of that
particular transaction or Capital Research and Management Company’s or its affiliates’ overall
responsibility to their clients.
Certain brokerage and/or investment research services may not necessarily benefit all accounts
paying commissions to a broker-dealer, therefore, Capital Research and Management Company
and its affiliates assess the reasonableness of commissions in light of the total brokerage and
investment research services provided to Capital Research and Management Company and its
affiliates. Further, research services may be used by all investment associates of Capital
Research and Management and its affiliates, regardless of whether they advise accounts with
trading activity that generates eligible commissions. In accordance with its internal brokerage
allocation procedure, Capital Research and Management Company and its affiliates periodically
assess the brokerage and investment research services provided by each broker-dealer and each
other service provider from whom they receive such services.
As part of ongoing relationships, Capital Research and Management Company and its affiliates
routinely meet with firms to discuss the level and quality of the brokerage and research services
provided, as well as the value and cost of such services. In valuing the brokerage and investment
research services Capital Research and Management Company and its affiliates receive from
broker-dealers and other research providers in connection with their good faith determinations of
reasonableness, Capital Research and Management Company and its affiliates take various
factors into consideration, including the quantity, quality and usefulness of the services to
Capital Research and Management Company and its affiliates. Based on this information and
applying their judgment, Capital Research and Management Company and its affiliates set an
annual research budget.
Research analysts and portfolio managers periodically participate in a research poll to determine
the usefulness and value of the research provided by individual broker-dealers and research
providers. Based on the results of this research poll, Capital Research and Management
Company and its affiliates may, through commission sharing arrangements with certain broker-
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dealers, direct a portion of commissions paid to a broker-dealer to be used to compensate the
broker-dealer for proprietary research or to be paid to a third-party research provider for research
it has provided. Capital Research and Management Company and its affiliates believe that by
allocating eligible commissions between research and execution they are better able to obtain the
highest quality execution and research services. While Capital Research and Management
Company and its affiliates may negotiate commission rates and enter into commission sharing
arrangements with certain broker-dealers with the expectation that such broker-dealers will be
providing brokerage and research services, none of Capital Research and Management
Company, any of its affiliates or any of their clients incurs any obligation to any broker-dealer to
pay for research by generating trading commissions.
Cross Trades
As part of its authority to invest client assets on a discretionary basis, Capital Research and
Management Company may place cross-trades between client accounts managed by Capital
Research and Management Company and its affiliates from time to time. Capital Research and
Management Company recognizes that a potential conflict of interest may exist when placing
trades between client accounts. To address such potential conflicts, Capital Research and
Management Company maintains cross-trade policies and procedures and places a cross-trade
under those limited circumstances when such a trade: (a) is in the best interest of all participating
clients and (b) is not prohibited by the participating clients’ investment management agreement
or applicable law.
Exchange or alternative trading system ownership
CRMC currently owns an interest in IEX Group and Luminex Trading and Analytics. CRMC
may place orders on these or other exchanges or alternative trading systems in which it, or one of
its affiliates, has an ownership interest, provided such ownership interest is less than five percent
of the total ownership interests in the entity. CRMC is subject to the same best execution
obligations when trading on any such exchange or alternative trading system.
Sale of Fund Shares Not Considered
Capital Research and Management Company may place orders for a client’s portfolio
transactions with broker-dealers who have sold shares in the funds managed by Capital Research
and Management Company or its affiliated companies; however, it does not consider whether a
broker-dealer has sold shares of the funds managed by Capital Research and Management
Company or its affiliated companies when placing any such orders for a client’s portfolio
transactions.
Client Referrals
Capital Research and Management Company does not consider client referrals from a broker-
dealer or third party in selecting or recommending broker-dealers.
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Directed Brokerage
Capital Research and Management Company does not direct any trading activity for its mutual
fund clients to a particular broker-dealer based on instructions from a fund. In some instances, an
affiliate of Capital Research and Management Company will accept a client’s instructions to
direct a portion of the account’s brokerage commissions to a particular broker or group of
brokers so long as the direction is consistent with such affiliate’s policy of seeking best
execution. The affiliate’s ability to meet client direction requests will depend on the broker(s)
selected by the client and the securities and markets in which the account invests, among other
factors.
Where Capital Research and Management Company is retained as an investment adviser under
certain wrap fee programs sponsored by broker-dealers or other financial institutions, Capital
Research and Management Company does not negotiate brokerage commissions for the
execution of transactions in the wrap fee program accounts that are executed by or through the
sponsor. These commissions are generally included in the “wrap fee” charged by the sponsor.
Capital Research and Management Company may have discretion to select broker-dealers to
execute trades for the wrap fee program advisory accounts it manages. However, Capital
Research and Management Company generally places such trades through the sponsor because
the wrap fee paid by each wrap fee program accounts typically only covers execution costs on
trades executed through the sponsor or its affiliates. Such trades may be executed subsequent to
trades for other Capital Research and Management Company accounts. If Capital Research and
Management Company selects a broker-dealer other than the sponsor or its affiliates to affect a
trade for a wrap fee program account, any execution costs charged by that other broker-dealer
typically will be charged separately to the wrap fee program account. Investors who enroll in
wrap fee programs should satisfy themselves that the sponsor is able to provide best execution of
transactions. See below under the heading “Wrap Fee Programs” for more information about the
handling of equity security trading with respect to such programs.
Certain managed account program clients direct Capital Research and Management Company to
place all trades for equity accounts through the client’s custodian or third party platform and/or
their affiliates. These directed trades will not be subject to Capital Research and Management
Company’s policy of seeking best execution and are not aggregated with trades for Capital
Research and Management Company’s other clients and funds. In these cases, Capital Research
and Management Company will not negotiate commissions for such accounts or otherwise
monitor the execution of trades. These accounts may therefore pay higher commissions than
those that do not direct brokerage in this way. Further, such trades may be executed subsequent
to trades for other Capital Research and Management Company accounts. With directed
brokerage arrangements of this type, Capital Research and Management Company cannot assure
clients that they will be able to obtain best execution and these clients should confirm with their
custodian that they are able to provide best execution of transactions.
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Aggregation and Allocation of Portfolio Transactions
Frequently, Capital Research and Management Company places orders to purchase or sell the
same security for a number of clients. Capital Research and Management Company typically
aggregates such orders when they are substantially similar. As an aggregated order is executed,
securities are allocated to clients in accordance with Capital Research and Management
Company’s allocation policy summarized below. Capital Research and Management Company
believes that placing aggregated or “block” trades is consistent with its duty to seek best
execution.
This policy is designed to allocate trades of the same security to clients in a fair and equitable
manner over time, taking into consideration the interests of each client. Non-investment factors,
such as fee arrangements, are not considered in selecting clients or allocating trades.
Equity Securities
When executing portfolio transactions in the same equity security for the funds, or portion of
funds, or other client accounts, over which Capital Research and Management Company,
through its equity investment divisions, has investment discretion, each of the divisions normally
aggregates its respective purchases or sales and executes them as part of the same transaction or
series of transactions. In addition, the Capital International Investors division of Capital
Research and Management Company normally aggregates its purchases or sales with those of
certain affiliates that provide investment management services to institutional clients and other
accounts and executes them as part of the same transaction or series of transactions.
Sometimes trade orders are not aggregated due to significant differences in terms, such as price
sensitivity or urgency to complete the trade. For example, some orders may be subject to a price
limit that does not permit them to trade with other orders for the same security that do not
contain such a restriction. Occasionally when there is a relatively small remaining open order
and a very large new order is placed, trading may complete the small order before proceeding
with the larger new order, rather than aggregating the orders.
As an aggregated order is filled, executed equity trades are generally allocated pro rata to clients
based on the authorized order size for each client at the time the trade is executed. All clients
receive shares at the average execution price and pay a pro rata portion of all transaction costs.
Allocated amounts will be rounded to take into account Capital Research and Management
Company’s and market practices for lot sizes.
Special instructions. In certain circumstances, parts of an aggregated order may, under certain
circumstances, be subject to special instructions, such as a price limit, that do not apply to the
entire aggregated order. This may result in an allocation other than pro rata to all accounts in the
aggregated order. For example, trades executed above a price limit (in the case of purchases) or
below the limit (in the case of sales), would be allocated on a pro rata basis only to orders that
were not subject to the price limit.
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Additional equity authorizations. If trading receives additional orders for a particular security
after it has begun working existing orders for that security, the additional orders may be added to
the initial orders over a reasonable period of time during the trading day. This may occur for
example if trading believes that the additional orders are based on the same news event or analyst
recommendation that prompted the initial order or an order for the same security that is subject to
additional compliance approvals. If the additional orders are not aggregated in this manner, any
trades executed prior to the additional orders are allocated to participating clients on the basis of
the existing orders. After any such allocation, the additional authorizations are included with the
existing orders and trades are allocated based on the size of the remaining open orders without
consideration for the timing of the orders.
Initial Public Offerings
Clients are selected to participate in initial public offerings of equity securities (“IPOs”) in the
same manner as described above. The trading department aggregates authorized orders it
receives for IPOs and places a block trade with the underwriting syndicate.
If the resulting allocation we receive from the underwriting syndicate is not sufficient to fill all
orders, each equity investment division generally allocates the transaction on a pro rata basis
based on each account’s authorized order size, unless the relevant investment committee
approves another allocation. In certain circumstances orders may be placed based on
approximate fund asset size; however, no fund will be allocated more than its indication.
Fixed-Income Securities
When executing portfolio transactions in the same fixed-income security for the funds and other
clients over which Capital Research and Management Company or one of its affiliated
companies has investment discretion, Capital Research and Management Company normally
aggregates such purchases or sales and executes them as part of the same transaction or series of
transactions.
Fixed-income investment professionals select participating client accounts and place trade orders
with the fixed-income trading department. Most trades are allocated on the day the trade is
executed (“trade date”), but trades may be allocated on the next business day after the trade date.
Executed trades are allocated considering portfolio guidelines and a variety of other factors,
including: (1) other securities held in the portfolios; (2) appropriateness of the security for the
portfolios’ objectives; (3) industry/sector, issue/issuer holdings, portfolio analytic data; (4) size
of the portfolios; (5) the size of the confirmed, executed transaction; (6) invested position of the
portfolio; and (7) marketability of the security. Once a fixed-income trade has been executed
and participating client accounts are identified as described above, all accounts receive the same
purchase price when participating in a block trade.
Wrap Fee Programs & Managed Account Programs
When Capital Research and Management Company serves as investment adviser under wrap fee
programs, equity portfolio transactions are typically executed by the sponsor firm. When Capital
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Research and Management Company serves as investment advisor under a managed account
program the client directs Capital Research and Management Company to trade equity securities
through the client’s custodian, third party platform or one of their affiliates. As a result, equity
transactions for wrap fee program and managed account program accounts are generally not
aggregated with orders for other accounts for which Capital Research and Management
Company or an affiliate serves as investment manager. Wrap fee program and managed account
program accounts therefore may not receive the same quality of execution that Capital Research
and Management Company and its affiliates are able to obtain for other advisory clients.
Capital Research and Management Company may provide similar investment management
services to multiple wrap fee program sponsors or managed account program clients, and this
may result in investment recommendations for the same security being provided to multiple
program sponsors at a similar time. In such cases, Capital Research and Management Company
may rotate the order in which it places equity transactions among the relevant sponsors or other
trading entities under managed account programs. Capital Research and Management Company
uses a rotation methodology designed to avoid systematically favoring one entity over another
and to treat similarly situated groups of accounts equitably over time. Capital Research and
Management Company may provide portfolio transaction instructions simultaneously in lieu of
using the rotation methodology if, for example, the trade represents a relatively small proportion
of the average daily trading volume of the particular security.
Capital Research and Management Company and its affiliates manage investment company,
institutional and other accounts with similar or identical investment objectives, as well as
accounts with different objectives that may trade in the same securities as the wrap fee program
or managed account program accounts managed by Capital Research and Management
Company. These other accounts will not be rotated with wrap fee program and managed account
program accounts, and will trade prior to wrap fee program and managed account program
accounts a high percentage of the time. As a result, the market price of securities may rise or fall
before a wrap fee program or managed account program transaction is executed (and, in certain
circumstances, as a direct result of other portfolio transactions placed by, or on the advice of,
Capital Research and Management Company or its affiliates), causing wrap fee program or
managed account program accounts to purchase the same securities at a higher price (or sell the
same securities at a lower price) than Capital Research and Management Company and its
affiliates. Institutional or other discretionary accounts of Capital Research and Management
Company and its affiliates may therefore over time obtain better execution, including more
favorable prices for their transactions, than wrap fee program or managed account program
accounts purchasing or selling the same securities. See above under the heading “Directed
Brokerage” for more information about the handling of equity security trading with respect to
such programs.
Fixed-Income portfolio transactions for wrap fee program and managed account program
accounts are generally executed by Capital Research and Management Company or its affiliates.
Transactions in the same fixed income security for wrap fee program and managed account
program accounts will generally be aggregated with transactions for funds, accounts and other
clients over which Capital Research and Management Company or one of its affiliated
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companies has investment discretion, as described above under the heading “Fixed-Income
Securities.”
Forward Currency Exchange Transactions
Capital Research and Management Company generally executes foreign currency transactions
for funds over which it has investment discretion directly through broker-dealers; however, a
fund's custodian may be used to execute certain foreign exchange transactions. These include
transactions in markets with legal restrictions or operational risks that make executing directly in
those markets impractical.
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ITEM 13: REVIEW OF ACCOUNTS
Capital Research and Management Company compliance and investment control associates
monitor funds on an on-going basis and perform periodic reviews. This monitoring and review
is conducted to verify that funds are in compliance with their objectives and guidelines. In
addition, certain portfolio data for funds is periodically reviewed by investment professionals,
including portfolio managers, in the relevant investment committee or as part of group review of
similar funds.
The boards of directors/trustees of each of the American Funds are furnished the following
information: audited semiannual and annual financial statements, registration statements and
proxy material. Additional information concerning portfolio activity and results are presented at
meetings of the boards held at least quarterly, and extensive additional information is furnished,
generally annually, in connection with investment advisory agreement renewals. The boards of
the Capital International Fund (Luxembourg), the Capital International Assets Management
(Canada), Inc. and the trustees of the collective investment trusts are furnished audited annual
and unaudited semiannual financial statements, and additional information concerning portfolio
activity and results. Other information (e.g. foreign country registration and service agreements)
is furnished as needed.
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ITEM 14: CLIENT REFERRALS AND OTHER COMPENSATION
Capital Research and Management Company and its affiliates compensate certain other affiliates
for client relations and marketing services.
Capital Research and Management Company’s affiliates may from time to time compensate third
parties for client referrals pursuant to a written solicitation agreement. The solicitor must provide
the affiliate with a copy of the solicitor’s separate written disclosure document provided to the
client. No solicitation payments may be made prior to the affiliate receiving a signed copy of the
solicitation agreement and client acknowledgement letter that contains the applicable referral fee
disclosures and acknowledgement of the fee arrangement.
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ITEM 15: CUSTODY
Capital Research and Management Company does not retain custody of client funds or securities.
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ITEM 16: INVESTMENT DISCRETION
Capital Research and Management Company is generally retained by the funds, accounts and
other clients it advises on a discretionary basis pursuant to an investment advisory agreement, or
in the case of Capital International Asset Management (Canada), Inc. a sub-advisory agreement.
Capital Research and Management Company is authorized by these funds, accounts and clients
to, among other things, determine without consultation with the fund or its board of
directors/trustees:
• what securities are to be bought or sold;
• the amount of securities to be bought or sold;
• the prices at which securities are to be bought or sold;
• the broker or dealer to be used; and
• the commissions to be paid.
In all cases, such discretion is to be exercised in accordance with the applicable fund’s,
account’s, program’s or other client’s objectives, policies and restrictions.
Capital Research and Management Company is the investment adviser to Capital Bank and Trust
Company, with respect to certain collective investment trusts, for which Capital Bank and Trust
Company is the discretionary trustee.
Capital Research and Management Company occasionally provides non-discretionary investment
advisory services, in which it provides a program sponsor with non-discretionary
recommendations to assist the sponsor in the development of one or more portfolios that the
sponsor may determine to be suitable for its end investors.
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ITEM 17: VOTING CLIENT SECURITIES
Capital Research and Management Company accepts proxy voting authority from its clients and
follows its Proxy Voting Policy and Procedures, which are summarized below. If Capital
Research and Management Company has voting authority for a client account, it generally does
not provide the client the option to direct a proxy vote with respect to a particular solicitation.
Capital Research and Management Company, in consultation with the boards of
directors/trustees of the funds it manages, has adopted Proxy Voting Procedures and Principles
(the “Principles”) with respect to voting proxies of securities held by the funds and other
accounts it manages. Proxies are voted by a committee of the appropriate equity investment
division of Capital Research and Management Company under authority delegated by the funds’
boards, and Capital Research and Management Company’s other clients. Therefore, if more than
one fund or account invests in the same company, they may vote differently on the same
proposal. In addition, the boards of the American Funds monitor the proxy voting process and
generally provide guidance with respect to the Principles through a joint proxy committee of the
American Funds.
In cases where an American Fund is co-managed and a portfolio company is held by more than
one of CRMC’s equity investment divisions, voting ties are resolved by one of the following
methods. For those funds that have delegated tie-breaking authority to CRMC, the outcome will
be determined by the equity investment division or divisions with the larger position in the
portfolio company as of the record date for the shareholder meeting. For the remaining funds,
members of the joint proxy committee representing those funds will determine the outcome
based on a review of the same information provided to the relevant investment analysts, proxy
coordinators and proxy committee members.
All U.S. proxies are voted. Proxies for companies outside the U.S. also are voted, provided there
is sufficient time and information available. After a proxy statement is received, the investment
adviser prepares a summary of the proposals contained in the proxy statement. A notation of any
potential conflicts of interest also is included in the summary. For proxies of securities managed
by a particular investment division of Capital Research and Management Company, the initial
voting recommendation is made by one or more of the division’s investment analysts familiar
with the company and industry. A second recommendation is made by a proxy coordinator (an
investment analyst or other individual with experience in corporate governance and proxy voting
matters) within the appropriate investment division, based on knowledge of these Principles and
familiarity with proxy-related issues. The proxy summary and voting recommendations are made
available to the appropriate proxy voting committee for a final voting decision.
In addition to CRMC’s proprietary proxy voting, governance and executive compensation
research, CRMC may utilize research provided by Institutional Shareholder Services (ISS),
Glass-Lewis & Co. or other third party advisory firms (“Advisory Firms”) on a case-by-case
basis. We do not, as a policy, follow the voting recommendations provided by these firms. We
periodically assess the information provided by the Advisory Firms, as appropriate.
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From time to time CRMC may vote proxies issued by, or on proposals sponsored or publicly
supported by (1) a client with substantial assets managed by CRMC or its affiliates, (2) an entity
with a significant business relationship with the organization, or (3) a company with a director of
an American Fund on its board (each referred to as an “Interested Party”). Other persons or
entities may also be deemed an Interested Party if facts or circumstances appear to give rise to a
potential conflict. CRMC analyzes these proxies and proposals on their merits and does not
consider these relationships when casting its vote.
CRMC has developed procedures to identify and address instances where a vote could appear to
be influenced by such a relationship. Under the procedures, prior to a final vote being cast by
CRMC, the relevant proxy committees’ voting results for proxies issued by Interested Parties are
reviewed by a Special Review Committee (“SRC”) of the investment division voting the proxy if
the vote was in favor of the Interested Party.
If a potential conflict is identified according to the procedure above, the SRC will be provided
with a summary of any relevant communications with the Interested Party, the rationale for the
voting decision, information on the organization’s relationship with the party and any other
pertinent information. The SRC will evaluate the information and determine whether the decision
was in the best interest of fund shareholders. It will then accept or override the voting decision or
determine alternative action. The SRC includes senior investment professionals and legal and
compliance professionals.
The Principles, which have been in effect in substantially their current form for many years,
provide an important framework for analysis and decision-making by all funds. However, they
are not exhaustive and do not address all potential issues. The Principles provide a certain
amount of flexibility so that all relevant facts and circumstances can be considered in connection
with every vote. As a result, each proxy received is voted on a case-by-case basis considering the
specific circumstances of each proposal. The voting process reflects the funds’ understanding of
the company’s business, its management and its relationship with shareholders over time.
Information regarding how the American Funds voted proxies relating to portfolio securities
during the 12- month period ended J une 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
800/421-4225, (b) on the American Funds website and (c) on the SEC’s website at sec.gov.
The following summary sets forth the general positions of the funds and Capital Research and
Management Company on various proposals. A copy of the full Principles for the American
Funds is available upon request, free of charge, by calling American Funds Service Company or
visiting the American Funds website at americanfunds.com.
Director matters — The election of a company’s slate of nominees for director generally is
supported. Votes may be withheld for some or all of the nominees if this is determined to be in
the best interest of shareholders or if, in CRMC’s opinion, they have not fulfilled their fiduciary
duties. Separation of the chairman and CEO positions also may be supported.
36
Governance provisions — Typically, proposals to declassify a board (elect all directors
annually) are supported based on the belief that this increases the directors’ sense of
accountability to shareholders. Proposals for cumulative voting generally are supported in order
to promote management and board accountability and an opportunity for leadership change.
Proposals designed to make director elections more meaningful, either by requiring a majority
vote or by requiring any director receiving more withhold votes than affirmative votes to tender
his or her resignation, generally are supported.
Shareholder rights — Proposals to repeal an existing poison pill generally are supported.
(There may be certain circumstances, however, when a proxy voting committee of a fund or an
investment division of Capital Research and Management Company believes that a company
needs to maintain anti-takeover protection.) Proposals to eliminate the right of shareholders to
act by written consent or to take away a shareholder’s right to call a special meeting typically are
not supported.
Compensation and benefit plans —Option plans are complicated, and many factors are
considered in evaluating a plan. Each plan is evaluated based on protecting shareholder interests
and a knowledge of the company and its management. Considerations include the pricing (or
repricing) of options awarded under the plan and the impact of dilution on existing shareholders
from past and future equity awards. Compensation packages should be structured to attract,
motivate and retain existing employees and qualified directors; however, they should not be
excessive. For advisory votes on compensation we generally support management proposals
unless we have specific concerns about compensation at a particular company. If we are
dissatisfied with a component of the overall compensation policy we generally vote against these
proposals in order to deliver a consistent message to company management. With respect to the
frequency of Say-on-Pay proposals, we generally support the triennial option (every three years),
but also may consider supporting an annual vote for certain industries or companies where we
historically have had concerns about compensation
Routine matters — The ratification of auditors, procedural matters relating to the annual
meeting and changes to company name are examples of items considered routine. Such items
generally are voted in favor of management’s recommendations unless circumstances indicate
otherwise.
37
ITEM 18: FINANCIAL INFORMATION
Capital Research and Management Company does not generally require or solicit pre-payment of
fees; however, certain sponsors of wrap fee programs may pay Capital Research and
Management Company fees in advance of its provision of services related to such program, but
in no case more than six months in advance. Investors who enroll in wrap fee programs should
refer to their disclosure documents from the sponsor for details on programs that may require
payment in advance and the treatment of fees upon termination of an account.
Capital Research and Management Company is not aware of any financial condition that is
reasonably likely to impair its ability to meet its contractual commitments to clients.
38
ITEM 19: REQUIREMENTS FOR STATE-REGISTERED ADVISERS
Capital Research and Management Company is not registered with any state securities authority.
CAPITAL RESEARCH AND MANAGEMENT COMPANY
333 South Hope Street, 55
th
Floor
Los Angeles, California 90071
Phone: (213) 486-9200
www.thecapitalgroup.com
Form ADV, Part 2B
BROCHURE SUPPLEMENT
Date: September 28, 2015
This brochure supplement provides information that supplements Capital Research and
Management Company’s (“CRMC”) Form ADV brochure which was previously provided to
you.
Please contact us at [email protected] if you would like a copy of CRMC’s brochure or
if you have any questions about the contents of this supplement.
Additional information about CRMC is available on the United States Securities and Exchange
Commission (“SEC”) website at www.adviserinfo.sec.gov.
2
CRMC is a wholly-owned subsidiary of The Capital Group Companies, Inc. ("CGC"). CGC
owns 100%, either directly or indirectly, of each of the following entities, which may be
discussed from time to time throughout this brochure (certain of which are SEC-registered
investment advisers whose SEC File Numbers are as indicated):
American Funds Distributors, Inc. ("AFD") (SEC File Number: 801-77946)
American Funds Service Company ("AFS")
Capital Bank and Trust Company ("CB&T") (SEC File Number: 801-79234)
Capital Group Companies, Inc. ("CGC")
Capital Group Corporate International ("CGCInt'l")
Capital Group International, Inc. ("CGII")
Capital Group Research, Inc. ("CGRI")
Capital Guardian (Canada), Inc. ("CGCI") (SEC File Number: 801-56526)
Capital Guardian Trust Company (“CGTC”) (SEC File Number: 801-60145)
Capital Guardian Trust Company, a Nevada corporation ("CGTN")
Capital International Asset Management (Canada), Inc. ("CIAM-C")
Capital International Financial Services, Inc. ("CIFS")
Capital International Funds Company ("CIFCo")
Capital International Funds Group ("CIFG")
Capital International, Inc. ("CIInc") (SEC File Number: 801-32104)
Capital International K.K. ("CIKK")
Capital International Limited ("CIL")
Capital International Management Company S.A. ("CIMC")
Capital International Research, Inc. ("CIRI") (SEC File Number: 801-54943)
Capital International Sarl ("CISA") (SEC File Number: 802-75723)
Capital Investment Research Services Private Limited ("CIRS")
Capital Management Services, Inc. ("CMS")
Capital Research Company ("CRC") (SEC File Number: 801-54942)
Capital Research and Management Company ("CRMC") (SEC File Number: 801- 8055)
Capital Strategy Research, Inc. ("CSR")
Other Abbreviations used in this brochure include:
Capital Group Private Client Services (“CGPCS”), a division of Capital Guardian Trust Company
(“CGTC”)
Capital International Investors (“CII”) and Capital Fixed Income Investors (“CFII”), both divisions of
CRMC and some of its affiliates as noted in this brochure
3
CAPITAL RESEARCH AND MANAGEMENT COMPANY
333 South Hope Street, 55
th
Floor
Los Angeles, California 90071
Phone: (213) 486-9200
www.thecapitalgroup.com
Form ADV, Part 2B
BROCHURE SUPPLEMENT
Date: September 28, 2015
This brochure supplement provides information about Gerald C. Du Manoir that supplements
CRMC Form ADV brochure which was previously provided to you.
Please contact us at [email protected] if you would like a copy of CRMC’s brochure or
if you have any questions about the contents of this supplement.
GERALD C. DU MANOIR
Birth Year: 1966
Education: Institut Superieur de Gestion, B.A., 1989
Business Background: CII division of CRMC Partner since 2015, Senior Vice President
2013-2014;
CII division of CB&T Partner since 2015, Senior Vice President
2013-2014;
CII division of CGTC Senior Vice President 2013 - 2014;
CGTC Director 2010-2013, Senior Vice President 2007-2013;
CGTC-CGPCS Senior Vice President 2001-2013;
CIAM-C Senior Vice President since 2008;
CGCI Vice President since 1998.
Disciplinary Information: None
Other Business Activities: None
Additional Compensation: None
Supervision: The relevant investment committee provides oversight of the
investment management process and investment professionals. For
additional information, please contact 213-486-9676.
4
CAPITAL RESEARCH AND MANAGEMENT COMPANY
333 South Hope Street, 55
th
Floor
Los Angeles, California 90071
Phone: (213) 486-9200
www.thecapitalgroup.com
Form ADV, Part 2B
BROCHURE SUPPLEMENT
Date: September 28, 2015
This brochure supplement provides information about Gregory D. Fuss that supplements CRMC
Form ADV brochure which was previously provided to you.
Please contact us at [email protected] if you would like a copy of CRMC’s brochure or
if you have any questions about the contents of this supplement.
GREGORY D. FUSS
Birth Year: 1959
Education: University of Southern California, M.B.A., 1987
University of California at San Diego, B.A., 1982
Business Background: CII division of CRMC Partner since 2015, Senior Vice President
2013-2014;
CGTC-CGPCS Senior Vice President and Portfolio Manager
since 2013; Senior Vice President and Portfolio Specialist 2006 -
2013.
Disciplinary Information: None
Other Business Activities: None
Additional Compensation: None
Supervision: The relevant investment committee provides oversight of the
investment management process and investment professionals.
You may contact the investment committee at 213-486-9676.
5
CAPITAL RESEARCH AND MANAGEMENT COMPANY
333 South Hope Street, 55
th
Floor
Los Angeles, California 90071
Phone: (213) 486-9200
www.thecapitalgroup.com
Form ADV, Part 2B
BROCHURE SUPPLEMENT
Date: September 28, 2015
This brochure supplement provides information about William L. Robbins that supplements
CRMC Form ADV brochure which was previously provided to you.
Please contact us at [email protected] if you would like a copy of CRMC’s brochure or
if you have any questions about the contents of this supplement.
WILLIAM L. ROBBINS
Birth Year: 1968
Education: Harvard College, B.A., 1990
Harvard Business School, M.B.A., 1995
Business Background: CGC Director since 2014;
CII division of CRMC Partner since 2015, Senior Vice President
2013-2014;
CII division of CGTC Senior Vice President January 2014-July
2014;
CIRI Chairman, Director, and Global Research Coordinator 2012-
2014;
CRC Co-President 2009-2013, Executive Vice President and
Research Director 2005-2009;
CRGI division of CRC Senior Vice President 2007-2013.
Disciplinary Information: None
Other Business Activities: None
Additional Compensation: None
Supervision: The relevant investment committee provides oversight of the
investment management process and investment professionals.
You may contact the investment committee at 213-486-9676.
6
CAPITAL RESEARCH AND MANAGEMENT COMPANY
333 South Hope Street, 55
th
Floor
Los Angeles, California 90071
Phone: (213) 486-9200
www.thecapitalgroup.com
Form ADV, Part 2B
BROCHURE SUPPLEMENT
Date: September 28, 2015
This brochure supplement provides information about Theodore R. Samuels that supplements
CRMC Form ADV brochure which was previously provided to you.
Please contact us at [email protected] if you would like a copy of CRMC’s brochure or
if you have any questions about the contents of this supplement.
THEODORE R. SAMUELS
Birth Year: 1955
Education: Harvard University Graduate School of Business Administration,
M.B.A., 1981
Harvard University, B.A., 1977
Business Background: CII division of CB&T Partner since 2015, Senior Vice President
September 2014-December 2014;
CII division of CRMC Partner since 2015, Senior Vice President
2013-2014;
CII division of CGTC Partner since 2015, Senior Vice President
2013-2014;
CGTC President since 2010, Director since 1995, Senior Vice
President 1994-2010;
CIAM-C Senior Vice President since 2008.
Disciplinary Information: None
Other Business Activities: None
Additional Compensation: None
Supervision: The relevant investment committee provides oversight of the
investment management process and investment professionals.
For additional information, please contact 213-486-9676.
7
CAPITAL RESEARCH AND MANAGEMENT COMPANY
333 South Hope Street, 55
th
Floor
Los Angeles, California 90071
Phone: (213) 486-9200
www.thecapitalgroup.com
Form ADV, Part 2B
BROCHURE SUPPLEMENT
Date: September 28, 2015
This brochure supplement provides information about Philip Winston that supplements CRMC
Form ADV brochure which was previously provided to you.
Please contact us at [email protected] if you would like a copy of CRMC’s brochure or
if you have any questions about the contents of this supplement.
PHILIP WINSTON
Birth Year: 1955
Education: Cambridge University, Ph.D., 1982
Cambridge University, B.A., 1976
Business background: CII division of CRMC Partner since 2015, Senior Vice President
January 2014-December 2014;
CII division of CIL Partner since 2015, Senior Vice President
2013-2014;
CIL Senior Vice President since 2000, Director 2008-2011;
Investment Analyst since 1997.
Disciplinary Information: None
Other Business Activities: None
Additional Compensation: None
Supervision: The relevant investment committee provides oversight of the
investment management process and investment professionals.
For additional information, please contact 213-486-9676.
Privacy Policy
June 1, 2015
Capital Group considers the privacy of its investors to be of fundamental importance and has established a policy to maintain the
confdentiality of the information you share with us.
Personal Information We Collect
We do not sell any information to any third parties. However, we may collect and retain certain nonpublic personal information about you, including:
• information we receive from you or your fnancial intermediary, such as your name, address, birthdate and tax identifcation number;
• information from third-party data services (for example, to update your address when you have moved and demographic information to
better understand your investment and service needs);
• information, such as account balance and transaction activity, about your investment transactions (including, to the extent necessary for
our servicing your account(s) with us, your investments with third parties); and
• information collected from you online (for example, HTTP headers, IP address, pixel tags and/or cookies that collect your online
preferences, allow us to recognize your browser to help improve your Web experience and provide you with information about our
products and services tailored to your interests).
Personal Information We May Disclose
We occasionally disclose nonpublic personal information about you to affliates and nonaffliates as permitted by law. Some instances when
we have shared information include:
• disclosing information to a third party in order to process account transactions that you request or authorize;
• sharing information with companies related to us, as permitted by law, to make you aware of new funds or other services that we offer;
• disclosing your name and address to companies that mail account-related materials, such as shareholder reports (note that these
companies may not use the information for any other purpose);
• disclosing information to research companies to assess and improve our fnancial services; and
• disclosing information in connection with legal proceedings, such as responding to a subpoena.
When information is shared with third parties, they are not permitted to use the information for any purpose other than to assist our
servicing of your account(s), including helping us improve the services we offer, or as permitted by law.
If you close your account(s) or if we lose contact with you, we will continue to share information in accordance with our current privacy
policy and practices.
We restrict access to your nonpublic personal information to authorized persons. We maintain physical, electronic and procedural
safeguards that comply with federal standards to guard your nonpublic personal information.
These measures refect our commitment to maintaining the privacy of your confdential information. We appreciate the confdence you have
shown by entrusting us with your assets.
To comply with federal regulations, information we receive from you will be used to verify your identity.
The Internet: The Capital Group websites are proprietary. While we strive to protect all information we receive when you log on to the
websites, we cannot guarantee the security of any information you transmit to us online, and you do so at your own risk. By entering
the password-protected areas of our websites, you consent to our contacting you to discuss our products and services. We do not look for
Web browser “do not track” requests.
This privacy disclosure applies to investment and shareholder services offered by:
American Funds Distributors,® Inc.
American Funds Service Company®
Capital Research and Management Company
SM
Capital Bank and Trust Company
SM
and all of the American Funds listed below:
AMCAP Fund®
American Balanced Fund®
American Funds Developing World Growth and
Income Fund
SM
American Funds Global Balanced Fund
SM
American Funds Infation Linked Bond Fund®
American Funds Money Market Fund®
American Funds Mortgage Fund®
American Funds Short-Term Tax-Exempt
Bond Fund®
American Funds Tax-Exempt Fund of New York®
American High-Income Municipal Bond Fund®
American High-Income Trust®
American Mutual Fund®
The Bond Fund of America®
Capital Income Builder®
Capital World Bond Fund®
Capital World Growth and Income Fund®
EuroPacifc Growth Fund®
Fundamental Investors®
The Growth Fund of America®
The Income Fund of America®
Intermediate Bond Fund of America®
International Growth and Income Fund
SM
The Investment Company of America®
Limited Term Tax-Exempt Bond Fund of America®
The New Economy Fund®
New Perspective Fund®
New World Fund®
Short-Term Bond Fund of America®
SMALLCAP World Fund®
The Tax-Exempt Bond Fund of America®
The Tax-Exempt Fund of California®
The Tax-Exempt Fund of Maryland®
The Tax-Exempt Fund of Virginia®
U.S. Government Securities Fund®
Washington Mutual Investors Fund
SM
This privacy disclosure also applies to funds
within the:
American Funds Portfolio Series
SM
• American Funds Balance Portfolio
SM
• American Funds Global Growth Portfolio
SM
• American Funds Growth and Income Portfolio
SM
• American Funds Growth Portfolio
SM
• American Funds Income Portfolio
SM
• American Funds Preservation Portfolio
SM
• American Funds Tax-Advantaged Income
Portfolio
SM
• American Funds Tax-Exempt Preservation
Portfolio
SM
American Funds College Target Date Series®
and American Funds Target Date Retirement
Series.®
continued on back
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This policy is effective June 1, 2015. If there are changes to the terms of our privacy policy, documents containing the policy and relevant
information on our website will be updated.
For More Information
For information about your account or our services, please contact your fnancial intermediary. American Funds investors may also review
and correct any personal information by accessing our website, americanfunds.com, or by contacting us at (800) 421-4225.
Capital Group Private Client Services (“CGPCS”) clients may direct any questions to (866) 421-2166 or go to thecapitalgroup.com/pcs.
All others should contact their fnancial intermediary.
For American Funds Investors:
Household mailings and e-delivery
Each year, you are automatically sent an updated summary prospectus and annual and semi-annual reports for the fund. You may also
occasionally receive proxy statements for the fund. In order to reduce the volume of mail you receive, when possible, only one copy of
these documents will be sent to shareholders who are part of the same family and share the same household address. If you would like
to opt out of household-based mailings, please call American Funds Service Company at (800) 421-4225 or write to the secretary of the
fund at 333 South Hope Street, Los Angeles, California 90071. You may elect to receive these documents electronically in lieu of paper
form by enrolling in e-delivery on our website, americanfunds.com/paperless.
FINRA BrokerCheck®
FINRA makes available BrokerCheck, a search tool which provides important information about FINRA-registered securities frms and
brokers. You may contact the FINRA BrokerCheck Hotline at (800) 289-9999, access this service on their website at fnra.org/brokercheck
or contact FINRA for a copy of their investor brochure.
Unclaimed property
If there is no activity in your account within a time period specifed by state law, we may be required to transfer the account to the
appropriate state.
34
ITEM 17: VOTING CLIENT SECURITIES
Capital Research and Management Company accepts proxy voting authority from its clients and
follows its Proxy Voting Policy and Procedures, which are summarizedbelow. If Capital
Research and Management Company has voting authority for a client account, it generally does
not provide the client the option to direct a proxy vote with respect to a particular solicitation.
Capital Research and Management Company, in consultation with the boards of
directors/trustees of the funds it manages, has adopted Proxy Voting Procedures and Principles
(the “Principles”) with respect to voting proxies of securities held by the funds and other
accounts it manages. Proxies are voted by a committee of the appropriate equity investment
division of Capital Research and Management Company under authority delegated by the funds’
boards, and Capital Research and Management Company’s other clients. Therefore, if more than
one fund or account invests in the same company, they may vote differently on the same
proposal. In addition, the boards of the American Funds monitor the proxy voting process and
generally provide guidance with respect to the Principles through a joint proxy committee of the
American Funds.
In cases where an American Fund is co-managed and a portfolio company is held by more than
one of CRMC’s equity investment divisions, voting ties are resolved by one of the following
methods. For those funds that have delegated tie-breaking authority to CRMC, the outcome will
be determined by the equity investment division or divisionswith thelarger position in the
portfolio company as of the record date for the shareholder meeting. For the remaining funds,
members of the joint proxy committee representing those funds will determine the outcome
based on a review of the same information provided to the relevant investment analysts, proxy
coordinators and proxy committee members.
All U.S. proxies are voted. Proxies for companies outside the U.S. also are voted, provided there
is sufficient time and information available. After a proxy statement is received, the investment
adviser prepares a summary of the proposals contained in the proxy statement. A notation of any
potential conflicts of interest also is included in the summary. For proxies of securities managed
by a particular investment division of Capital Research and Management Company, the initial
voting recommendation is made by one or more of the division’s investment analysts familiar
with the company and industry. A second recommendation is made by a proxy coordinator (an
investment analyst or other individual with experience in corporate governance and proxy voting
matters) within the appropriate investment division, based on knowledge of these Principles and
familiarity with proxy-related issues. The proxy summary and voting recommendations are made
available to the appropriate proxy voting committee for a final voting decision.
In addition to CRMC’s proprietary proxy voting, governance and executive compensation
research, CRMC may utilize research provided by Institutional Shareholder Services (ISS),
Glass-Lewis & Co. or other third party advisory firms (“Advisory Firms”) on a case-by-case
basis. We do not, as a policy, follow the voting recommendations provided by these firms. We
periodically assess the information provided by the Advisory Firms, as appropriate.
(As extracted from CRMC ADV PART 2A ITEM 17: VOTING CLIENT SECURITIES September 2015)
35
From time to time CRMC may vote proxies issued by, or on proposals sponsored or publicly
supported by (1) a client with substantial assets managed by CRMC or its affiliates, (2) an entity
with a significant business relationship with the organization, or (3) a company with a director of
an American Fund on its board (each referred to as an “Interested Party”). Other persons or
entities may also be deemed an Interested Party if facts or circumstances appear to give rise to a
potential conflict. CRMC analyzes these proxies and proposals on their merits and does not
consider these relationships when casting its vote.
CRMC has developed procedures to identify and address instances where a vote could appear to
be influenced by such a relationship. Under the procedures, prior to a final vote being cast by
CRMC, the relevant proxy committees’ voting results for proxies issued by Interested Parties are
reviewed by a Special Review Committee (“SRC”) of the investment division voting the proxy if
the vote was in favor of the Interested Party.
If a potential conflict is identified according to the procedure above, the SRC will be provided
with a summary of any relevant communications with the Interested Party, the rationale for the
voting decision, information on the organization’s relationship with the party and any other
pertinent information. The SRC will evaluate the information and determine whether the decision
was in the best interest of fund shareholders. It will then accept or override the voting decision or
determine alternative action. The SRC includes senior investment professionals and legal and
compliance professionals.
The Principles, which have been in effect in substantially their current form for many years,
provide an important framework for analysis and decision-making by all funds. However, they
are not exhaustive and do not address all potential issues. The Principles provide a certain
amount of flexibility so that all relevant facts and circumstances can be considered in connection
with every vote. As a result, each proxy received is voted on a case-by-case basis considering the
specific circumstances of each proposal. The voting process reflects the funds’ understanding of
the company’s business, its management and its relationship with shareholders over time.
Information regarding how the American Funds voted proxies relating to portfolio securities
during the 12- month period ended J une 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
800/421-4225, (b) on the American Funds website and (c) on the SEC’s website at sec.gov.
The following summary sets forth the general positions of the funds and Capital Research and
Management Company on various proposals. A copy of the full Principles for the American
Funds is available upon request, free of charge, by calling American Funds Service Company or
visiting the American Funds website at americanfunds.com.
Director matters —The election of a company’s slate of nominees for director generally is
supported. Votes may be withheld for some or all of the nominees if this is determined to be in
the best interest of shareholdersor if, in CRMC’s opinion, they have not fulfilled their fiduciary
duties. Separation of the chairman and CEO positions also may be supported.
36
Governance provisions —Typically, proposals to declassify a board (elect all directors
annually) are supported based on the belief that this increases the directors’ sense of
accountability to shareholders. Proposals for cumulative voting generally are supported in order
to promote management and board accountability and an opportunity for leadership change.
Proposals designed to make director elections more meaningful, either by requiring a majority
vote or by requiring any director receiving more withhold votes than affirmative votes to tender
his or her resignation, generally are supported.
Shareholder rights —Proposals to repeal an existing poison pill generally are supported.
(There may be certain circumstances, however, when a proxy voting committee of a fund or an
investment division of Capital Research and Management Company believes that a company
needs to maintain anti-takeover protection.) Proposals to eliminate the right of shareholders to
act by written consent or to take away a shareholder’s right to call a special meeting typically are
not supported.
Compensation and benefit plans —Option plans are complicated, and many factors are
considered in evaluating a plan. Each plan is evaluated based on protecting shareholder interests
and a knowledge of the company and its management. Considerations include the pricing (or
repricing) of options awarded under the plan and the impact of dilution on existing shareholders
from past and future equity awards. Compensation packages should be structured to attract,
motivate and retain existing employees and qualified directors; however, they should not be
excessive. For advisory votes on compensation we generally support management proposals
unless we have specific concerns about compensation at a particular company. If we are
dissatisfied with a component of the overall compensation policy we generally vote against these
proposals in order to deliver a consistent message to company management. With respect to the
frequency of Say-on-Pay proposals, we generally support the triennial option (every three years),
but also may consider supporting an annual vote for certain industries or companies where we
historically have had concerns about compensation
Routine matters —The ratification of auditors, procedural matters relating to the annual
meeting and changes to company name are examples of items considered routine. Such items
generally are voted in favor of management’srecommendations unless circumstances indicate
otherwise.
doc_182790744.pdf