The fund’s board has approved the continuation of the fund’s Investment Advisory and Service Agreement (the “agreement”) with Capital Research and Management Company (“CRMC”) for an additional one-year term through January 31, 2027. The agreement was amended to add an additional advisory fee breakpoint for when the fund’s net assets exceed $144 billion. The board approved the agreement following the recommendation of the fund’s Contracts Committee (the “committee”), which is composed of all the fund’s independent board members. The board and the committee determined in the exercise of their business judgment that the fund’s advisory fee structure was fair and reasonable in relation to the services provided, and that approving
the agreement was in the best interests of the 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 the 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 fund under the agreement and other agreements, as well as the benefits to fund 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 fund,
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 the fund and its shareholders.
The board and the committee considered the investment results of the fund in light of its objective. They compared the 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 the fund is included), and data such as publicly disclosed benchmarks, including applicable market
and fund indexes over various periods (including the fund’s lifetime) through June 30, 2025. They generally placed greater emphasis on investment results over longer term periods and relative to benchmarks consistent with the 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 the fund’s investment results have been satisfactory for renewal of the agreement, and that CRMC’s record in managing the fund indicated that its continued management should benefit the fund
and its shareholders.
3. Advisory fees and total expenses
The board and the committee compared the advisory fees and total expense levels of
the fund to those of other relevant funds. They observed that the fund’s advisory fees and expenses are competitive with, and compared favorably to those of other similar funds included in the comparable Lipper category. The board and the committee also considered the breakpoint discounts in the fund’s advisory fee structure that reduce the level of fees charged by CRMC to the fund as
fund 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 fund and the advisory
fees paid by those clients, the differences appropriately reflected the investment, operational, regulatory and market differences
between advising the fund and the other clients. The board and the committee concluded that the 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 the fund, and that the fund’s shareholders receive reasonable value in return for the advisory fees and other amounts paid to CRMC by
the fund.
