The series’ board has approved the continuation of the series’ Investment Advisory and Service Agreement (the “agreement”) with Capital Research and Management Company (“CRMC”) for an additional one-year term through April 30, 2027. The board approved the agreement following the recommendation of the series’ Contracts Committee (the “committee”), which is composed of all the series’ independent board members. The board and the committee determined in the exercise
of their business judgment that the advisory fee structure for each fund within the series was fair and reasonable in relation to the
services provided, and that approving the agreement was in the best interests of each fund and its shareholders.
In reaching this decision, the board and the committee took into account their interactions
with CRMC and information furnished to them throughout the year and otherwise provided to them, as well as information prepared
specifically in connection with their review of the agreement, and they were advised by their independent counsel with respect to the
matters considered. They considered the following factors, among others, but did not identify any single issue or particular piece of
information that, in isolation, was the controlling factor, and each board and committee member did not necessarily attribute the same weight
to each factor.
1. Nature, extent and quality of services
The board and the committee considered the depth and quality of CRMC’s investment management process, including its global research capabilities; the experience, capability and integrity of its senior management
and other personnel; the low turnover rates of its key personnel; the overall financial strength and stability of CRMC and the Capital
Group organization; the resources and systems CRMC devotes to investment management (the manner in which each fund’s assets are managed, including liquidity management), financial, investment operations, compliance, trading, proxy voting, shareholder communications,
and other services; and the ongoing evolution of CRMC’s organizational structure designed to maintain and strengthen these qualities. The board and the committee also considered the nature, extent and quality of administrative and shareholder services provided by
CRMC to the funds under the agreement and other agreements, as well as the benefits to each fund’s shareholders from investing in a fund that is part of a large family of funds. The board and the committee considered the risks assumed by CRMC in providing services to the
funds, including operational, business, financial, reputational, regulatory and litigation risks. The board and the committee concluded
that the nature, extent and quality of the services provided by CRMC have benefited and should continue to benefit each fund and its shareholders.
The board and the committee considered the investment results of each fund in light of its objectives. They compared each fund’s investment results with those of other funds (including funds that currently form
the basis of the Lipper index for the category in which each fund is included) and data such as publicly disclosed benchmarks, including applicable
market and fund indexes over various periods (including each fund’s lifetime) through September 30, 2025. They generally placed greater emphasis on investment results over longer term periods and relative to benchmarks consistent with each fund’s objective. On the basis of this evaluation and the board’s and the committee’s ongoing review of investment results, and considering the relative market conditions during certain reporting periods, the board and the committee concluded that each fund’s investment results have been satisfactory for renewal of the agreement, and that CRMC’s record in managing the funds indicated that its continued management should benefit each fund and its shareholders.
3. Advisory fees and total expenses
The board and the committee compared the total expense levels of each fund to those
of other relevant funds. They observed that each fund’s total expenses were generally competitive with, and in many cases compared favorably to, those of other similar funds included in the comparable Lipper category.
The board and the committee also reviewed the fee schedule of the funds (including
the fees and total expenses of the underlying American Funds in which the funds invest) to those of other relevant funds. The board and the committee noted CRMC’s prior elimination of the entire advisory fee payable by the funds under the agreement. The board and
committee also considered the breakpoint discounts in each underlying fund’s advisory fee structure that reduce the level of fees charged by CRMC to the underlying fund as its assets increase. In addition, they reviewed information regarding the effective advisory
fees charged to non-mutual fund clients by CRMC and its affiliates. They noted that, to the extent there were differences between the advisory
fees paid by the underlying American Funds and the advisory fees paid by those clients, the differences appropriately reflected the investment,
operational, regulatory and market differences between advising the underlying funds and the other clients. The board and the committee concluded that each fund’s cost structure was fair and reasonable in relation to the services provided, as well as in relation to
the risks assumed by the adviser in sponsoring and managing each fund, and that each fund’s shareholders receive reasonable value in return for other amounts paid to CRMC by the funds.
