Form 485BPOS AMERICAN FUNDS TAX EXEMP
Tweet
Share
E-mailTHE AMERICAN FUNDS TAX-EXEMPT SERIES II
AMENDED AND RESTATED
INVESTMENT ADVISORY AND SERVICE AGREEMENT
THIS investment advisory and service AGREEMENT, dated and effective as of the 1st day of May, 2020, is made and entered into by and between THE AMERICAN FUNDS TAX-EXEMPT SERIES II (the “Trust”), a Delaware statutory trust series consisting of one fund, The Tax-Exempt Fund of California (the “Fund”), and CAPITAL RESEARCH AND MANAGEMENT COMPANY, a Delaware corporation (the “Investment Adviser”).
W I T N E S S E T H
The Trust is an open-end diversified investment company of the management type, registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The Investment Adviser is registered under the Investment Advisers Act of 1940, as amended, and is engaged in the business of providing investment advisory and related services to the Fund and to other investment companies.
NOW, THEREFORE, in consideration of the premises and the mutual undertaking of the parties, it is covenanted and agreed as follows:
1. The Trust hereby employs the Investment Adviser to provide investment advisory and fund administration services to the Fund. The Investment Adviser hereby accepts such employment and agrees to render the services to the extent herein set forth, for the compensation herein provided. The Investment Adviser shall, for all purposes herein, be deemed an independent contractor and not an agent of the Trust or the Fund.
2. (a) The Investment Adviser shall provide general management services to the Fund, including overall supervisory responsibility for the general management and investment of the Fund’s assets, giving due consideration to the policies of the Trust as expressed in the Trust’s agreement and declaration of trust, by-laws, registration statement under the 1940 Act and registration statement under the Securities Act of 1933, as amended (the “1933 Act”), as well as to the factors affecting the Fund’s status as a regulated investment company under the Internal Revenue Code of 1986, as amended.
(b) The Investment Adviser may delegate its investment management responsibilities under paragraph 2(a), or a portion thereof, to one or more entities that are direct or indirect subsidiaries of the Investment Adviser or at least majority owned subsidiaries of The Capital Group Companies, Inc. and registered as investment advisers under the Investment Advisers Act of 1940 (each a
“Subsidiary”), pursuant to an agreement between the Investment Adviser and the Subsidiary (the “Subsidiary Agreement”). The Subsidiary Agreement with any Subsidiary to which the Investment Adviser proposes to delegate its investment management responsibilities must be approved by the Trust’s Board of Trustees, including a majority of the Trustees who are not parties to this Agreement or interested persons of any such party within the meaning of the 1940 Act (“Independent Trustees”). Any delegation of duties pursuant to this paragraph shall comply with all applicable provisions of Section 15 of the 1940 Act, except to the extent permitted by any exemptive order of the U.S. Securities and Exchange Commission (“SEC”) or similar relief.
(c) The Investment Adviser will, subject to the review and approval of the Board of Trustees of the Trust: (i) set the Fund’s overall investment strategies; (ii) except to the extent delegated to one or more Subsidiaries, have full investment discretion for the Fund and make all determinations with respect to the investment of the Fund’s assets, the purchase and sale of portfolio securities with those assets, and any steps that may be necessary to implement any investment decisions; (iii) evaluate, select and recommend Subsidiaries to manage all or a part of the Fund’s assets; (iv) when appropriate, allocate and reallocate the Fund’s assets among multiple Subsidiaries; (v) monitor and evaluate the performance of Subsidiaries; and (vi) implement procedures reasonably designed to ensure that the Subsidiaries comply with the Fund’s investment objective, policies and restrictions. The Investment Adviser shall be solely responsible for paying the fees of any Subsidiary.
(d) Any Subsidiary Agreement may provide that the Subsidiary, subject to the control and supervision of the Trust’s Board of Trustees and the Investment Adviser, shall have full investment discretion for the Fund and shall make all determinations with respect to (i) the investment of the Fund’s assets assigned to the Subsidiary; (ii) the purchase and sale of portfolio securities with those assets, and (iii) any steps that may be necessary to implement an investment decision. The Investment Adviser shall periodically evaluate the continued advisability of retaining any Subsidiary and shall make recommendations to the Trust’s Board of Trustees, as needed.
(e) The Investment Adviser shall furnish the services of persons to perform the executive, administrative, clerical, and bookkeeping functions of the Trust and the Fund, including the daily determination of net asset value per share. The Investment Adviser shall pay the compensation and travel expenses of all such persons, and they shall serve without any additional compensation from the Trust or the Fund. The Investment Adviser shall also, at its expense, provide the Trust and the Fund with necessary office space (which may be in the offices of the Investment Adviser); all necessary office equipment and utilities; and general purpose forms, supplies, and postage used at the offices of the Trust.
(f) The Investment Adviser shall maintain (and cause each Subsidiary to maintain) all books and records with respect to the Fund’s investment management activities that are required to be maintained pursuant to the 1940 Act
and the rules thereunder, as well as any other applicable legal requirements. The Investment Adviser acknowledges and agrees that all such records are the property of the Fund, and it shall maintain and preserve such records in accordance with applicable law and provide such records promptly to the Fund upon request.
(g) The Investment Adviser shall prepare and submit to the Fund all data on the performance of its duties as investment adviser for required filings with governmental agencies or for the preparation of reports to the Board of Trustees or the shareholders of the Fund and shall cause each Subsidiary to do so.
(h) The Investment Adviser shall furnish from time to time such other appropriate information as may be reasonably requested by the Fund.
3. Each of the Trust and the Fund shall pay all its expenses not assumed by the Investment Adviser as provided herein. Such expenses shall include, but shall not be limited to, expenses incurred in connection with the organization of the Trust, its qualification to do business in the State of California, and its registration as an investment company under the 1940 Act; custodian, stock transfer and dividend disbursing fees and expenses; service and distribution expenses pursuant to a plan adopted in accordance with Rule 12b-1 under the 1940 Act; expenses incurred for shareholder servicing, recordkeeping, transactional services, tax and informational returns and fund and shareholder communications; costs of designing and of printing and mailing to its shareholders reports, prospectuses, proxy statements, and notices to its shareholders; taxes; expenses of the issuance, sale, redemption, or repurchase of shares of the Fund (including registration and qualification expenses); legal and auditing fees and expenses; compensation, fees, and expenses paid to Independent Trustees; association dues; and costs of any share certificates, stationery and forms prepared exclusively for the Trust or the Fund.
4. (a) The Fund shall pay to the Investment Adviser on or before the tenth (10th) day of each month, as compensation for the services rendered by the Investment Adviser during the preceding month a fee calculated at the annual rate of:
| (a) | 0.30% on the first $60 million of net assets; plus |
0.21% on net assets over $60 million to $1 billion; plus
0.18% on net assets over $1 billion to $3 billion; plus
0.16% on net assets over $3 billion ("Net Asset Portion"); plus
| (b) | 3% on the first $3,333,333 of monthly gross income; plus |
2.5% on income over $3,333,333 (“Income Portion”).
(b) Such fee shall be accrued daily and the daily rate shall be computed based on the actual number of days per year. For the purposes hereof, the net assets of the Fund shall be determined in the manner set forth in the agreement and declaration of trust and registration statement of the Trust. The income portion shall be accrued daily and “gross income” for this purpose shall be determined in the same manner as gross income is determined for and reported in
financial statements and shall not include gains or losses from the sale of securities. The advisory fee shall be payable for the period commencing on the date on which operations of the Fund begin and ending on the date of termination hereof and shall be prorated for any fraction of a month at the beginning or the termination of such period.
5. This Agreement may be terminated at any time, without payment of any penalty, by the Board of Trustees of the Trust or by vote of a majority (within the meaning of the 1940 Act) of the outstanding voting securities of the Fund, on sixty (60) days’ written notice to the Investment Adviser, or by the Investment Adviser on like notice to the Trust. Unless sooner terminated in accordance with this provision, this Agreement shall continue until April 30, 2021. It may thereafter be renewed from year to year by mutual consent, provided that such renewal shall be specifically approved at least annually by the Board of Trustees of the Trust, or by vote of a majority (within the meaning of the 1940 Act) of the outstanding voting securities of the Fund. In either event, any such renewal must be approved by a majority of the Independent Trustees at a meeting called for the purpose of voting on such approval.
6. This Agreement shall not be assignable by either party hereto, and in the event of assignment (within the meaning of the 1940 Act) by the Investment Adviser shall automatically be terminated forthwith.
7. Nothing contained in this Agreement shall be construed to prohibit the Investment Adviser from performing investment advisory, management, or distribution services for other investment companies and other persons or companies, nor to prohibit affiliates of the Investment Adviser from engaging in such businesses or in other related or unrelated businesses.
8. The Investment Adviser shall not be liable to the Trust, the Fund or Fund shareholders for any error of judgment, for any mistake of law, for any loss arising out of any investment or for any act, or omission not involving willful misfeasance, bad faith, gross negligence, or reckless disregard of its obligations and duties hereunder.
9. The obligations of the Trust and the Fund under this Agreement are not binding upon any of the trustees, officers, employees, agents or shareholders of the Trust or the Fund individually, but bind only the Trust’s and the Fund’s estates. The Investment Adviser agrees to look solely to the assets of the Fund for the satisfaction of any liability in respect of the Fund under this Agreement and will not seek recourse against such trustees, officers, employees, agents or shareholders, or any of them, or any of their personal assets for such satisfaction.
10. The Trust acknowledges and agrees that the names, “American Funds” and “Capital” or any derivatives thereof or logo associated with those names are the valuable property of the Investment Adviser and its affiliates, and that the Trust shall have the right to use such names (or derivatives or logos) only so long as this
Agreement shall continue in effect. Upon termination of this Agreement the Trust shall forthwith cease to use such names (or derivatives or logos).
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers thereunto duly authorized, as of May 1, 2020.
| CAPITAL RESEARCH AND MANAGEMENT COMPANY | THE AMERICAN FUNDS TAX-EXEMPT SERIES II |
| By /s/ Robert W. Lovelace | By /s/ Steven I. Koszalka |
| Robert W. Lovelace | Steven I. Koszalka |
| President and Chief Executive Officer | Secretary |
DEFERRED COMPENSATION PLAN
(Amended and restated, effective as of January 1, 2020)
TABLE OF CONTENTS
| Paragraph Title | Page No | ||
| 1. | Definitions | 2 | |
| 2. | Introduction | 5 | |
| 3. | Plan Oversight; Administration and Amendment | 5 | |
| 3.1. | Plan Oversight and Operation | 5 | |
| 3.2. | Plan Interpretation and Administration | 5 | |
| 3.3. | Plan Amendment | 5 | |
| 3.4. | Plan Termination | 6 | |
| 4. | Election to Defer Payments | 6 | |
| 4.1. | Election to Defer | 6 | |
| 4.2. | Current Independent Board Members | 6 | |
| 4.2.a. Newly Elected or Appointed Independent Board Members | 6 | ||
| 4.3. | Modification or Revocation of Election to Defer | 6 | |
| 5. | Beneficiary Designation | 6 | |
| 6. | Deferred Payment Account | 7 | |
| 6.1. | Crediting Amounts | 7 | |
| 6.2. | Change of Investment Designation | 7 | |
| 6.3. | Exchange Requests | 7 | |
| 6.4. | Plan Participants Serving on Money Market Fund Boards | 8 | |
| 6.5. | Plan Participant Electing Installment Payout Option under Section 7.4.a | 8 | |
| 6.5a Alternative Instructions under Section 6.5 | 8 | ||
| 7. | Timing and Manner of Payments | 8 | |
| 7.1. | Timing of Payments | 8 | |
| 7.2. | Manner of Payment – Lump Sum | 8 | |
| 7.3. | Alternative Payment Methods | 9 | |
| 7.4. | Death of Plan Participant | 9 | |
| 7.4.a Optional Payment Method upon Death for Post-2004 Deferrals | 9 | ||
| 7.5. | Disability of Plan Participant | 10 | |
| 7.6. | Unforeseeable Emergency | 10 | |
| 7.7. | Modification or Revocation for Post-2004 Deferrals | 10 | |
| 7.7.a. Special Transition Rule | 11 | ||
| 7.8. | Modification or Revocation for Pre-2005 Deferrals | 11 | |
| 8. | Miscellaneous | 11 | |
| 1. DEFINITIONS |
1.1. Administrator. An individual designated by CRMC to process forms and receive Plan related communications from Plan Participants and otherwise assist the Committee in the administration of the Plan.
1.2. Beneficiary(ies). The person or persons last designated in writing by a Plan Participant in accordance with procedures established by the Committee to receive the amounts payable under the Plan in the event of the Plan Participant’s death. A Plan Participant may designate a Primary Beneficiary(ies) to receive amounts payable under the Plan upon the Plan Participant’s death. A Plan Participant may also name a Contingent Beneficiary(ies) to receive amounts payable under the Plan upon the Participant’s death if there is no surviving Primary Beneficiary(ies).
1.3. Board(s). The Board of Directors or Trustees of a Fund(s).
1.4. Committee. A group of Independent Board Members responsible for oversight and operation of the Plan. The Committee must consist of a minimum of three members, each currently serving as an Independent Board Member of at least one Fund. Each Fund, by the affirmative vote of at least a majority of its Board (including a majority of the Fund’s Independent Board Members) shall appoint the initial members of the Committee. Thereafter, the Committee shall determine its membership by majority vote.
1.5. CRMC. Capital Research and Management Company.
1.6. Date of Crediting. The Date of Crediting for compensation deferred by a Plan Participant will be as soon as administratively practicable after the date such compensation would otherwise be paid.
1.7. Deferred Payment Account(s). An account established in the name of the Plan Participant on the books of each Fund serviced by the Plan Participant. Such account shall reflect the number of Phantom Shares credited to the Plan Participant under the Plan.
| (i) | A Deferred Payment Account will be divided into two separate Deferred Payment Accounts. One account will contain deferrals made prior to January 1, 2005, including any earnings thereon (“pre-2005 deferrals”). The other account will contain deferrals made on or after January 1, 2005, including any earnings thereon (“post-2004 deferrals”). |
| (ii) | For those participants residing outside the U.S., Deferred Payment Accounts will further be divided into two separate accounts, “U.S.” and “Non-U.S.,” to provide appropriate tax reporting. |
1.8. Disabled or Disability. A Plan Participant is disabled when he or she is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.
1.9. Election Forms. The three forms listed below as prescribed by the Administrator:
| (i) | Beneficiary Designation Form. A form indicating the beneficiary designations of a Plan Participant. |
| (ii) | Deferral Election Form. A form indicating the compensation to be deferred under the Plan and the timing and manner of distribution. This form must be filed with the Administrator prior to the first day of the calendar year to which it first applies. Notwithstanding the foregoing, any person who is first elected or appointed an Independent Board Member of the Fund may file this form before or within 30 days after first becoming an Independent Board Member. |
| (iii) | Rate of Return Election Form. A form indicating the percentages of deferrals allocated to each Fund. |
1.10. Fixed Dollar Installment Method. One of the two alternative methods to a lump-sum available for payments under the Plan other than for reasons of death, Disability or Unforeseeable Emergency. The amount of each installment shall equal the fixed dollar amount previously selected by the Plan Participant on the Deferral Election Form. A Plan Participant’s Deferred Payment Account subject to the Fixed Dollar Installment method shall be adjusted by the amount of each such installment payment by reducing the number of Phantom Shares of each Fund credited to the Deferred Payment Account using the net asset values per Class F-2 share as of the last day of the calendar quarter immediately preceding the date of payment. These reductions shall occur proportionately so that, with respect to each such Fund, the ratio of the value of all Phantom Shares of the Fund to the value of the Deferred Payment Account shall remain the same before and after each installment payment.
1.11. Fund(s). A mutual fund advised by CRMC, collectively the “Funds.”
1.12. Independent Board Member(s). Directors or trustees, and as applicable, advisory board members and director or trustee emeriti who are not considered “interested persons” of any Participating Fund.
1.13 Money Market Fund. A mutual fund managed by CRMC that invests solely in money market instruments.
1.14. Participating Funds. Mutual funds managed by CRMC that have adopted the Plan.
1.15. Permissible Payment Event. A Permissible Payment Event is any one of the following:
| (i) | The date specified on the Deferral Election Form by the Plan Participant that is objectively determinable at the time compensation is deferred under the Plan and is at least twenty-four months past the date of the first deferral election made by the Plan Participant; or |
| (ii) | The date on which the Plan Participant is no longer an Independent Board Member of any Fund; or |
| (iii) | The date the Plan Participant dies; or |
| (iv) | The date the Administrator receives notification that the Plan Participant is Disabled; or |
| (v) | The date the Committee determines that the Plan Participant has an Unforeseeable Emergency; or |
| (vi) | For pre-2005 deferrals only, a distribution event permissible under the terms of the Plan in effect on January 1, 2004. |
1.16. Phantom Shares. Fictional shares of the Fund(s) that a Plan Participant has selected on the Rate of Return Election Form that have been credited to his or her Deferred Payment Account(s). Phantom Shares shall have the same economic characteristics as actual Class F-2 shares in terms of mirroring changes in net asset value and reflecting corporate actions (including, without limitation, receipt of dividends and capital gains distributions). However, because Phantom Shares are fictional, they shall not entitle any Plan Participant to vote on matters of any sort, including those affecting the Funds.
1.17. Plan or Deferred Compensation Plan. The deferred compensation plan adopted by the Participating Funds.
1.18. Plan Participant(s). An Independent Board Member who has elected to defer compensation under the Plan, or is receiving payments under the Plan in respect of prior service as an Independent Board Member.
1.19. Unforeseeable Emergency. The following events may constitute an Unforeseeable Emergency under the Plan: (i) severe financial hardship of the Plan Participant or his or her Beneficiary(ies) resulting from illness or accident of the Plan Participant or Beneficiary(ies) and such spouses or dependents of the Plan Participant or Beneficiary(ies); (ii) loss of the Plan Participant’s or Beneficiary(ies)’ property due to casualty or (iii) similar extraordinary unforeseeable circumstances beyond the control of the Plan Participant or the Beneficiary(ies). The Committee, in its sole discretion, will determine if the Plan Participant has an Unforeseeable Emergency, after taking into account the extent to which such Unforeseeable Emergency is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the Plan Participant's assets (to the extent the liquidation of such assets would not itself cause an Unforeseeable Emergency).
1.20. Variable Dollar Installment Method. One of the two alternative methods to a lump-sum available for payments under the Plan other than for reasons of death, Disability or Unforeseeable Emergency. The amount of each installment shall be determined for a Deferred Payment Account by multiplying the number of Phantom Shares of a Fund(s) allocated to the Deferred Payment Account by a fraction, the numerator of which shall be one and the denominator of which shall be the then remaining number of unpaid installments (including the installment then to be paid), and multiplying the resulting number of Phantom Shares by the net asset value per
Class F-2 share of such Fund(s) as of the last day of the calendar quarter immediately preceding the date of payment. A Plan Participant’s Deferred Payment Account subject to the Variable Dollar Installment method shall be adjusted by the amount of each such installment payment by reducing the number of Phantom Shares of each Fund credited to the Deferred Payment Account. These reductions shall occur proportionately so that, with respect to each such Fund, the ratio of the value of all Phantom Shares of the Fund to the value of the Deferred Payment Account shall remain the same before and after each installment payment. For this purpose, net asset values per Class F-2 share as of the last day of the calendar quarter immediately preceding the date of payment shall be used in calculating pre- and post-payment values.
| 2. INTRODUCTION |
With effect on January 1, 2005, each Participating Fund has adopted, by the affirmative vote of at least a majority of its Board (including a majority of its Board members who are not interested persons of the mutual fund), this Plan for Independent Board Members.
| 3. PLAN OVERSIGHT; ADMINISTRATION AND AMENDMENT |
3.1. Plan Oversight and Operation. The Committee shall enforce the Plan in accordance with its terms, shall be charged with the general administration of the Plan, and shall have all powers necessary to accomplish its purposes. The Committee may utilize the services of the Administrator to conduct routine Plan administration.
3.2. Plan Interpretation and Administration. The Committee shall have full discretion to construe and interpret the terms and provisions of the Plan, which interpretation or construction shall be final and binding on all parties, including, but not limited to, the Funds and any Plan Participant or Beneficiary. The Committee shall administer such terms and provisions in a uniform and non-discriminatory manner and in full accordance with any and all laws and regulations applicable to the Plan.
3.3. Plan Amendment. The Committee may approve any amendment to the Plan; provided, however, (i) that no such amendment shall adversely affect the right of Plan Participants to receive amounts previously credited to their Deferred Payment Accounts; and (ii) each Independent Board Member shall receive notification of any such proposed amendment to the Plan at least ten (10) days prior to the Committee’s consideration of such amendment. Upon receipt of such notification, an Independent Board Member may communicate to the Committee for its consideration any concern or objection to the proposed amendment.
3.4. Plan Termination. The Committee may recommend to the Boards the termination of the Plan; provided, however, that no such termination shall adversely affect the right of Plan Participants to receive amounts previously credited to their Deferred Payment Accounts.
| 4. ELECTION TO DEFER PAYMENTS |
4.1. Election to Defer. Pursuant to the Plan, Independent Board Members may elect to have all or any portion of payment of their compensation deferred as provided herein. An Independent Board Member who elects to participate in the Plan shall file copies of the Election Forms with the Administrator. An Independent Board Member will not be treated as a Plan Participant and no amount will be deferred under the Plan until the Election Forms are received by the Administrator and determined by the Administrator to be complete and in good order.
4.2. Current Independent Board Members. A deferral election made by a Plan Participant who timely files the Election Forms with the Administrator shall become effective and apply with respect to compensation earned during the calendar year following the filing of the deferral election, and each subsequent calendar year, unless modified or revoked in accordance with the terms of this Plan. During the period from such filing and prior to the effectiveness of such election, the most recently filed and effective Deferral Election Form shall apply to all amounts payable to the Plan Participant under the Plan.
4.2.a. Newly Elected or Appointed Independent Board Members. Any person who is first elected or appointed an Independent Board Member of the Fund during a calendar year and who timely files the Election Forms with the Administrator may elect to defer any unpaid and future compensation during such calendar year. Unless revoked or modified in accordance with the terms of this Plan, a deferral election made pursuant to this paragraph will apply for each subsequent calendar year after the year of the deferral election.
4.3. Modification or Revocation of an Election to Defer. A Plan Participant may modify or revoke an election to defer, as to future compensation, effective on the first day of the next calendar year, which modification or revocation shall remain in effect for each subsequent calendar year (until modified or revoked in accordance with the Plan), by filing a new Deferral Election Form with the Administrator prior to the beginning of such next calendar year.
| 5. BENEFICIARY DESIGNATION |
Each Plan Participant shall designate on the Beneficiary Election Form the Primary and, if applicable, Contingent Beneficiary(ies) he or she desires to receive
amounts payable under the Plan in the event of the Plan Participant’s death. A Plan Participant may from time to time change his or her designated Primary or Contingent Beneficiary(ies) without the consent of such Beneficiary(ies) by filing a new Beneficiary Election Form with the Administrator.
At the time of death of a Plan Participant, if there is no living designated Primary Beneficiary(ies), the designated Contingent Beneficiary(ies), if any, shall be the Beneficiary. If there are no living Primary or Contingent Beneficiary(ies), the Plan Participant’s surviving spouse shall be the Beneficiary. If there is no surviving spouse, the Plan Participant’s estate shall be the Beneficiary.
| 6. DEFERRED PAYMENT ACCOUNT |
6.1. Crediting Amounts. A Plan Participant may select one or more Funds in which his or her deferred compensation is invested for purposes of crediting earnings, by filing the Rate of Return Election Form with the Administrator. Any compensation deferred by a Plan Participant shall be credited to his or her Deferred Payment Account on the books of each Fund served by the Plan Participant in the form of Phantom Shares of the Fund(s) that the Plan Participant has selected.
The number of Phantom Shares credited to a Plan Participant’s Deferred Payment Account shall be the number of whole and fractional Phantom Shares determined by dividing the amount of the deferred compensation invested in the particular Fund(s) by the net asset value per Class F-2 share of such Fund(s) as of the Date of Crediting.
6.2. Change of Investment Designation. A Plan Participant may change the designation of the Fund(s) in which his or her future deferred compensation is invested through the participant website or by filing a revised Rate of Return Election Form with, or by telephoning, the Administrator. The Administrator will confirm promptly in writing to the Plan Participant any change of investment designation accomplished by telephone. Any change of investment designation shall be effective only with respect to compensation deferred after receipt of such request. If a request is received after 1:00pm PT, the change in investment designation will be effective the next business day.
6.3. Exchange Requests. By contacting the Administrator or using the participant website, a Plan Participant may request to exchange Phantom Shares of one or more Funds previously credited to a Deferred Payment Account for Phantom Shares of another Fund(s) based on their relative net asset values per Class F-2 share next determined. The Administrator will confirm promptly in writing to the Plan Participant any exchange request made by telephone. An exchange request will be effective after receipt of such request. If a request is received after the close of the New York Stock Exchange, the exchange will be effective on the next business day. An exchange request may relate to one or more Deferred Payment Accounts; however, no more than 12 exchange requests will be processed each calendar year
for all amounts credited under this Plan to any one Plan Participant. For purposes of this limitation, all exchange requests received in one day shall be treated as one exchange request.
6.4. Plan Participants Serving on Money Market Fund Boards. Notwithstanding the other provisions of Section 6, a Plan Participant serving on the Board of a Money Market Fund may select only that Money Market Fund in which his or her compensation is invested for purposes of crediting earnings. In addition, no exchanges will be permitted in a Deferred Payment Account on the books of a Money Market Fund.
6.5. Plan Participant Electing Installment Payout Option under Section 7.4.a. When a Plan Participant elects the limited installment payout option described in Section 7.4.a, all post-2004 deferrals will be exchanged into the appropriate American Funds Target Date Retirement Fund based upon the age of the surviving spouse Beneficiary at the time of the Participant’s death unless alternative instructions are provided in accordance with Section 6.5.a. Such exchange will occur as soon as administratively practicable, but in no event later than thirty (30) days from the date that the Plan Administrator is notified of the Plan Participant’s death. Once this exchange occurs, no further exchanges will be permitted for post-2004 deferrals.
6.5.a. Alternative Instructions under Section 6.5. A Plan Participant electing the limited installment payout option described in Section 7.4.a. may instruct the Administrator to exchange all post-2004 deferrals into one or more Funds, rather than the appropriate American Funds Target Date Retirement Fund as provided for in Section 6.5. A Plan Participant may change instructions provided under this Section 6.5.a. no more than 12 times each calendar year. To be effective, such instructions must be received by the Administrator prior to the Plan Participant’s death.
| 7. TIMING AND MANNER OF PAYMENTS |
7.1. Timing of Payments. Amounts credited to a Deferred Payment Account under the Plan to a Plan Participant shall be paid to the Plan Participant in accordance with the terms of the Plan only upon the occurrence of a Permissible Payment Event.
7.2. Manner of Payment – Lump Sum. Upon the occurrence of a Permissible Payment Event, the amount of payment to a Participant shall be determined by multiplying the number of Phantom Shares of a Fund(s) that have been allocated to the Plan Participant’s Deferred Payment Account subject to the Permissible Payment Event, by the net asset value per Class F-2 share of such Fund(s) as of the date of the Permissible Payment Event.
The payment shall be made to the Plan Participant as soon as administratively practicable, but in no event later than thirty (30) days from the date of the Permissible
Payment Event.
7.3. Alternative Payment Methods. A Plan Participant entitled to payment for reasons other than death, Disability or Unforeseeable Emergency, may elect, instead of a lump-sum payment, to receive annual or quarterly installment payments as specified by the Plan Participant on the Deferral Election Form.
The Plan Participant may elect either the Variable Dollar Installment Method or the Fixed Dollar Installment Method for a period not to exceed thirty (30) years. Once installment payments begin under either method, they cannot be stopped, except in case of death, Disability or Unforeseeable Emergency. Under either method, the first payment to a Plan Participant shall be calculated as of last day of the calendar quarter that contains the Permissible Payment Event. This first payment shall be made to the Plan Participant as soon as administratively practicable thereafter, but in no event later than thirty (30) days after the end of the calendar quarter that contains the Permissible Payment Event. Subsequent payments shall be made within thirty (30) days of the close of future calendar quarters or years, consistent with the Plan Participant’s election of either quarterly or annual installments. As of December 31, 2006, Plan Participants receiving payments under either one of the alternative payment methods will continue to receive payments under the payment schedule existing on that date.
In no event shall a payment under the Fixed Dollar Installment Method relating to a Deferred Payment Account exceed the value of the Deferred Payment Account as of the last day of the calendar quarter immediately preceding the date of payment. If any balance credited to a Plan Participant’s Deferred Payment Account remains positive on the date 30 years from the date of the initial payment to the Plan Participant, then such remaining balance shall be paid to the Plan Participant as soon as practicable thereafter in a single lump sum payment.
The right to a series of installment payments with respect to post-2004 deferrals under the Plan shall be treated as a right to a series of separate payments.
7.4. Death of Plan Participant. If the Plan Participant dies at any time before all amounts in his or her Deferred Payment Accounts have been paid, such remaining amounts shall be paid in a lump-sum to the Plan Participant’s Beneficiary(ies).
7.4.a. Optional Payment Method upon Death for Post-2004 Deferrals. With respect to post-2004 deferrals under the Plan, a Plan Participant may elect for his or her spouse Beneficiary to receive any remaining installment payments due the Plan Participant at his or her death if all four of the following conditions are met:
| (i) | The spouse was married to the Plan Participant at the time of the Plan Participant’s death. |
| (ii) | The spouse was designated as the sole Beneficiary under the |
Plan.
| (iii) | At the time of the Plan Participant’s death, the timing and manner of distribution election in effect for such Plan Participant was one of the alternative payment methods described in Section 7.3 of the Plan. |
| (iv) | The Plan Participant had begun receiving installment payments described under Section 7.3 of the Plan at the time of his or her death. |
An election under this Section 7.4.a must be made at least 12 months before the first scheduled payment under the Plan Participant’s current timing and manner of payment designation.
All installment payments made to a spouse Beneficiary under this section will be made under the same timing and manner of payment election made by the Plan Participant and in effect at the time of the Plan Participant’s death. No changes to the timing or manner of payment will be permitted.
If the spouse Beneficiary dies while there are still post-2004 account balances in the Plan, all remaining post-2004 account balances will be paid to the estate of the spouse Beneficiary as soon as administratively practicable, but in no event later than thirty (30) days from the date of the spouse Beneficiary’s death.
7.5. Disability of Plan Participant. In the event the Plan Participant shall become Disabled before all amounts credited to the Plan Participant’s Deferred Payment Accounts have been paid to him or her, such remaining amounts shall be paid in a lump sum to the Plan Participant.
7.6. Unforeseeable Emergency. If the Committee determines that the Plan Participant has an Unforeseeable Emergency, the Committee may make a lump sum payment to the Plan Participant from his or her Deferred Payment Account(s) in an amount not to exceed the amount necessary to satisfy the emergency need plus any taxes that may be owed on the payment. In the event the payment is less than the value of all of the Plan Participant’s Deferred Payment Accounts, the Deferred Payment Accounts shall be reduced proportionately so that, with respect to each such Fund, the ratio of the value of all Phantom Shares of the Fund to the value of the Deferred Payment Account shall remain the same before and after payment.
7.7. Modification or Revocation for Post-2004 Deferrals. A Plan Participant’s designation as to timing and manner of payments of post-2004 deferrals under the Plan may be modified or revoked by filing a written election with the Administrator. Such designation will not be effective for at least 12 months. To be valid the new designation must (i) be made at least 12 months before the first scheduled payment under the current designation and (ii) delay the first payment by at least 5 years from the date the first payment would otherwise have been made under the current designation. No other modification of the designation as to the timing or manner of
payment will be valid.
7.7.a. Special Transition Rule. Under U.S. Treasury transition relief that extends through December 31, 2008 (or such later date as may be included in further Treasury guidance) a Plan Participant may change the timing or manner of payment of post-2004 deferrals without regard to the limitations described in paragraph 7.7. A Plan Participant may not, however, change the timing of payment with respect to deferrals that would have been paid in the year that he or she uses the transition relief. Furthermore, a Plan Participant may not accelerate post-2004 deferrals into the year that he or she takes advantage of the transition relief.
7.8. Modification or Revocation for Pre-2005 Deferrals. A Plan Participant’s designation as to timing and manner of payments of pre-2005 deferrals under the Plan may be modified or revoked by filing a written election with the Administrator. However, any subsequent designation that would result in a change in the timing of a payment under the Plan or a change in the manner of payments under the Plan shall not be effective unless such subsequent designation is made not less than 12 months prior to the date of the first scheduled payment under the Plan. With respect to such pre-2005 deferrals, the Committee may, in its sole discretion, accelerate the payment of any pre-2005 deferral.
| 8. MISCELLANEOUS |
8.1. Purchase of Underlying Shares. To the extent a Plan Participant’s Deferred Payment Account has been credited with Phantom Shares of a Fund other than the Fund responsible for payment of the compensation being deferred, a Fund may, but shall not be obligated to, purchase and maintain Class F-2 shares of such other Fund in amounts equal in value to such Phantom Shares.
8.2. Unsecured Promise to Pay. Amounts credited to a Plan Participant’s Deferred Payment Account under this Plan shall not be evidenced by any note or other security, funded or secured in any way. No assets of a Fund (including, without limitation, shares of other Funds) shall be segregated for the account of any Plan Participant (or Beneficiary), and Plan Participants (and Beneficiaries) shall be general unsecured creditors for payments due under the Plan.
8.3. Withholding Taxes. The Administrator shall deduct, any federal, state or local taxes and other charges required by law to be withheld.
8.4. Statements. The Administrator, on behalf of each Fund, shall furnish to each Plan Participant a statement showing the balance credited to his or her Deferred Payment Account at least annually.
8.5. Assignment. No amount in a Plan Participant’s Deferred Payment Account may be assigned or transferred by the Plan Participant except by will or the law of descent and distribution.
8.6. Governing Law; Severability. The Plan shall be construed, governed and administered in accordance with the laws and regulations of the United States Treasury Department and the State of California. The Plan is subject to applicable law and regulation and, in the event of changes in such law or regulation, shall be construed and applied in a manner in which the intent of its terms and provisions are best preserved. In the event that one or more provisions of the Plan are held invalid, illegal or unenforceable in any respect on the basis of any particular circumstances or in any jurisdiction, the validity, legality and enforceability of such provision or provisions under other circumstances or in other jurisdictions and of the remaining provisions shall not in any way be affected or impaired.
8.7. Washington Management Corporation. Washington Management Corporation (“WMC”) provided services to the Washington Mutual Investors Fund, The Tax Exempt Fund of Maryland, and The Tax Exempt Fund of Virginia (collectively, the “WMC Funds”). WMC became a wholly-owned subsidiary of CRMC, effective as of December 21, 2012, and ceased to provide services to the WMC Funds after September 1, 2014.
The WMC Funds maintained the Deferred Compensation Plan for Independent Board Members of the WMC Funds (the “WMC Plan”). Effective as of March 21, 2013, each WMC Fund, by the affirmative vote of at least a majority of its Board (including a majority of its Board members who are not interested persons of the mutual fund), merged the WMC Plan into, and adopted, the Plan.
The terms of the Plan shall govern amounts deferred under the WMC Plan, provided that, in the case of a former participant in the WMC Plan, a reference to the terms of the Plan in effect on January 1, 2004 shall be deemed a reference to the terms of the WMC Plan in effect on January 1, 2004. The timing and form of payments of amounts deferred under the WMC Plan as well as elections to defer made under the terms of the WMC Plan shall not be affected by the merger. The terms of this Plan and the merger of the WMC Plan into the Plan are intended to comply with section 409A of the Code.
I am a participant in the Deferred Compensation Plan and I wish my compensation from Board service to all funds deferred as follows:
|
I elect to defer the following portion of my compensation from the Participating Funds and designated above:[1] |
· Compensation as an Independent Board Member: _______% or · Compensation as an Independent Board Member excluding money market funds (MMF and CCF): _______%
I understand that, to be effective, this election must be filed with the Administrator of the Plan prior to the first day of the first calendar year to which it applies, except as provided in Section 4.2.a. of the Plan. Once effective, this election will continue until revoked or modified in accordance with the terms of the Plan. |
|
I hereby specify that I shall be entitled to payment of my deferred compensation upon the occurrence of either Permissible Payment Event indicated in the corresponding box (check one), or any other Permissible Payment Event: |
q The date on which I am no longer an Independent Board Member of any fund managed by CRMC; or
q The following date which is objectively determinable at the time my compensation is deferred and is at least twenty-four months past the date of the first deferral election made by me (cannot be an “event”):
________________________________________________________
|
|
I hereby specify that payments from my Deferred Payment Account(s) for the fund(s) listed above be made beginning within thirty (30) days of the close of the calendar quarter containing the Permissible Payment Event (outlined above): |
q In a single lump sum payment;
OR
q In annual q In quarterly variable dollar installment payments over a period of q 5 years q 10 years q 15 years q years (not to exceed 30);
OR
q In annual q In quarterly fixed dollar payments of $___________each; however, in no event shall any installment payment exceed the balance credited to my Deferred Payment Account on the date immediately preceding the date of payment.
AND (for multiple payments)
q Applicable to Post-2004 deferrals only; continue any remaining installment payments due at my death to my surviving spouse beneficiary per the conditions stated in section 7.4.a of the Plan. Absent this election, post-2004 deferrals will be paid in a lump sum at death. |
________________________________________________________________
Name (please print)
___________________________
Date
______________________________________________________________________
Signature
___________________________
SSN or ITIN
I hereby designate the following beneficiary(ies) to receive any death benefit payable on account of my participation in the Deferred Compensation Plan.
|
Primary Beneficiary(ies): |
1. Name:______________________________________ % Share:_____________________ Address:__________________________________________________________________ Relationship:______________________________________________________________ Date of Birth:___________________ Social Security #:_____________________ Trust Name and Date (if beneficiary is a trust):_________________________________ Trustee of Trust:____________________________________________________________
2. Name:______________________________________ % Share:_____________________ Address:__________________________________________________________________ Relationship:______________________________________________________________ Date of Birth:___________________ Social Security #:_____________________ Trust Name and Date (if beneficiary is a trust):_________________________________ Trustee of Trust:____________________________________________________________ |
|
Contingent Beneficiary(ies): |
1. Name:______________________________________ % Share:_____________________ Address:__________________________________________________________________ Relationship:______________________________________________________________ Date of Birth:___________________ Social Security #:_____________________ Trust Name and Date (if beneficiary is a trust):_________________________________ Trustee of Trust:____________________________________________________________
2. Name:______________________________________ % Share:_____________________ Address:__________________________________________________________________ Relationship:______________________________________________________________ Date of Birth:____________________ Social Security #:_____________________ Trust Name and Date (if beneficiary is a trust):_________________________________ Trustee of Trust:____________________________________________________________ |
I understand that payment will be made to my Contingent Beneficiary(ies) only if there is no surviving Primary
Beneficiary(ies).
__________________________________________________________________
Participant’s Name (please print)
______________________
Date
__________________________________________________________________
Participant’s Signature
I am a participant in the Deferred Compensation Plan and I wish my compensation from Board service to all funds invested as follows:
|
With respect to future earnings, I hereby elect to have amounts credited to my Deferred Payment Account(s) for the fund(s) listed above invested in Class F-2 shares of the specified funds:
*I understand that if I serve on the Board of a money market fund, I may only have amounts credited to my Deferred Payment Account for that money market fund with respect to future earnings invested in the applicable Class F-2 or M shares of that particular money market fund.
|
FUNDS AMCAP Fund (AMCAP) American Balanced Fund (AMBAL) American Funds Corporate Bond Fund (CBF) American Funds Developing World Growth and Income Fund (DWGI) American Funds Emerging Markets Bond Fund (EMBF) American Funds Fundamental Investors (FI) American Funds Global Insight Fund (GIF) American Funds Global Balanced Fund (GBAL) American Funds Inflation Linked Bond Fund (ILBF) American Funds International Vantage Fund (IVE) American Funds U.S. Government Money Market Fund* (MMF) American Funds Mortgage Fund (AFMF) American Funds Short-Term Tax-Exempt Bond Fund (STEX) American Funds Strategic Bond Fund (SBF) American Funds Tax-Exempt Fund of New York (TEFNY) American High-Income Municipal Bond Fund (AHIM) American High-Income Trust (AHIT) American Mutual Fund (AMF) The Bond Fund of America (BFA) Capital Group Central Cash Fund* (CCF) Capital Income Builder (CIB) Capital World Bond Fund (WBF) Capital World Growth and Income Fund (WGI) EuroPacific Growth Fund (EUPAC) The Growth Fund of America (GFA) The Income Fund of America (IFA) Intermediate Bond Fund of America (IBFA) International Growth and Income Fund (IGI) The Investment Company of America (ICA) Limited Term Tax-Exempt Bond Fund of America (LTEX) The New Economy Fund (NEF) New Perspective Fund (NPF) New World Fund, Inc. (NWF) Short-Term Bond Fund of America (STBF) SMALLCAP World Fund, Inc. (SCWF) The Tax-Exempt Bond Fund of America (TEBF) The Tax-Exempt Fund of California (TEFCA) U.S. Government Securities Fund (GVT) |
% ALLOCATION ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % |
|
With respect to future earnings, I hereby elect to have amounts credited to my Deferred Payment Account(s) for the fund(s) listed above invested in Class F-2 shares of the specified funds:
*I understand that if I serve on the Board of a money market fund, I may only have amounts credited to my Deferred Payment Account for that money market fund with respect to future earnings invested in the applicable Class F-2 or M shares of that particular money market fund. |
FUNDS Washington Mutual Investors Fund (WMIF) American Funds 2060 Target Date Retirement Fund (AFTD60) American Funds 2055 Target Date Retirement Fund (AFTD55) American Funds 2050 Target Date Retirement Fund (AFTD50) American Funds 2045 Target Date Retirement Fund (AFTD45) American Funds 2040 Target Date Retirement Fund (AFTD40) American Funds 2035 Target Date Retirement Fund (AFTD35) American Funds 2030 Target Date Retirement Fund (AFTD30) American Funds 2025 Target Date Retirement Fund (AFTD25) American Funds 2020 Target Date Retirement Fund (AFTD20) American Funds 2015 Target Date Retirement Fund (AFTD15) American Funds 2010 Target Date Retirement Fund (AFTD10) American Funds Global Growth Portfolio (PSGG) American Funds Growth Portfolio (PSG) American Funds Growth and Income Portfolio (PSGI) American Funds Moderate Growth and Income Portfolio (PSMGI) American Funds Multi-Sector Income Fund (MSI) American Funds Conservative Growth and Income Portfolio (PSCGI) American Funds Tax-Aware Conservative Growth and Income Portfolio (PSTACGI) American Funds Preservation Portfolio (PSP) American Funds Tax-Exempt Preservation Portfolio (PSTEP) American Funds Retirement Income Portfolio Series – Conservative (RIC) American Funds Retirement Income Portfolio Series – Moderate (RIM) American Funds Retirement Income Portfolio Series – Enhanced (RIE) |
% ALLOCATION ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ % ____ %
|
I have read and understand this Rate of Return Election Form. I understand that earnings credited to my Deferred Payment Account(s) under the Plan in accordance with this Form shall be credited in the form of Phantom Shares rather than actual shares. I further state that I have reviewed the prospectus for each designated mutual fund.
___________________________________________________________
Name (please print)
______________________
Date
___________________________________________________________
Signature
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the use in this Registration Statement on Form N-1A of American Funds Short-Term Tax-Exempt Bond Fund, Limited Term Tax-Exempt Bond Fund of America, The Tax-Exempt Bond Fund of America, American High-Income Municipal Bond Fund, The American Funds Tax-Exempt Series II, and American Funds Tax-Exempt Fund of New York of our reports dated September 14, 2020, relating to the financial statements and financial highlights of American Funds Short-Term Tax-Exempt Bond Fund, Limited Term Tax-Exempt Bond Fund of America, The Tax-Exempt Bond Fund of America, American High-Income Municipal Bond Fund, The Tax-Exempt Fund of California (the sole fund constituting The American Funds Tax-Exempt Series II), and American Funds Tax-Exempt Fund of New York, which appears in such Registration Statement. We also consent to the references to us under the headings “Financial highlights”, “Independent registered public accounting firm” and “Prospectuses, reports to shareholders and proxy statements” in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
Los Angeles, California
September 25, 2020
The American Funds Tax-Exempt Series II
AMENDED AND RESTATED MULTIPLE CLASS PLAN
WHEREAS, The American Funds Tax-Exempt Series II (the “Trust”), a Delaware statutory trust series consisting of one fund, The Tax-Exempt Fund of California (the “Fund”), is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company that offers shares of beneficial interest;
WHEREAS, American Funds Distributors, Inc. (the “Distributor”) serves as the principal underwriter for the Trust;
WHEREAS, the Trust has adopted Plans of Distribution (each a “12b-1 Plan”) under which the Fund may bear expenses of distribution and servicing of its shares, including payments to and/or reimbursement of certain expenses incurred by the Distributor in connection with its distribution of the Fund’s shares;
WHEREAS, the Trust has entered into an Amended and Restated Administrative Services Agreement with Capital Research and Management Company under which the Fund may bear certain administrative expenses for certain classes of shares;
WHEREAS, the Trust has entered into an Amended and Restated Shareholder Services Agreement with American Funds Service Company under which the Fund may bear certain transfer agency expenses for its shares;
WHEREAS, the Fund is authorized to issue the following classes of shares of beneficial interest: Class A shares; Class C shares; Class T shares; as well as Class F-1 shares, Class F-2 shares and Class F-3 shares (“Class F shares”);
WHEREAS, Rule 18f-3 under the 1940 Act permits open-end management investment companies to issue multiple classes of voting shares representing interests in the same portfolio if, among other things, an investment company adopts a written Multiple Class Plan setting forth the separate arrangement and expense allocation of each class and any related conversion features or exchange privileges; and
WHEREAS, the Board of Trustees of the Trust has determined, that it is in the best interest of each class of shares of the Fund individually, and the Trust as a whole, to adopt this Amended and Restated Multiple Class Plan (the “Plan”) effective June 30, 2020;
NOW THEREFORE, the Trust adopts the Plan as follows:
1. Each class of shares will represent interests in the same portfolio of investments of the Fund, and be identical in all respects to each other class, except as set forth below. The differences among the various classes of shares of the Fund will relate to: (i) distribution, service and other charges and expenses as provided for in paragraph 3 of this Plan; (ii) the exclusive right of each class of shares to vote on matters submitted to shareholders that relate solely to that class or the separate voting right of each class on matters for which the interests of one class differ from the interests of another class; and (iii) such differences relating to (a) eligible investors, (b) the designation of each class of shares, (c) conversion features, and (d) exchange privileges each as may be set forth in the Fund’s prospectus and statement of additional information (“SAI”), as the same may be amended or supplemented from time to time.
2. (a) Certain expenses may be attributable to the Fund, but not a particular class of shares thereof. All such expenses will be borne by each class on the basis of the relative aggregate net assets of the classes. Notwithstanding the foregoing, the Distributor, the investment adviser or other provider of services to the Trust and the Fund may waive or reimburse the expenses of a specific class or classes to the extent permitted by Rule 18f-3 under the 1940 Act and any other applicable law.
(b) A class of shares may be permitted to bear expenses that are directly attributable to that class, including: (i) any distribution service fees associated with any rule 12b-1 Plan for a particular class and any other costs relating to implementing or amending such rule 12b-1 Plan; (ii) any administrative service fees attributable to such class; and (iii) any transfer agency, sub-transfer agency and shareholder servicing fees attributable to such class.
(c) Any additional incremental expenses not specifically identified above that are subsequently identified and determined to be applied properly to one class of shares of the Fund shall be so applied upon approval by votes of the majority of both (i) the Board of Trustees of the Trust; and (ii) those Trustees of the Trust who are not “interested persons” of the Trust (as defined in the 1940 Act) (“Independent Trustees”).
3. Consistent with the general provisions of section 2(b), above, each class of shares of the Fund shall differ in the amount of, and the manner in which costs are borne by shareholders as follows:
(a) Class A shares
| (i) | Class A shares shall be sold at net asset value plus a front-end sales charge, at net asset value without a front-end sales charge but subject to a contingent deferred sales charge (“CDSC”), and at net asset value without any sales charge, as set forth in the Fund’s prospectus and SAI. |
| (ii) | Class A shares shall be subject to an annual distribution expense under the Trust’s Class A Plan of Distribution of up to 0.25% of average daily net assets, as set forth in the Fund’s prospectus, SAI, and Plan of Distribution. This expense consists of a service fee of up to 0.25%. The amount remaining, if any, may be used for distribution expenses. |
| (iii) | Class A shares shall be subject to a transfer agent fee (including sub-transfer agent fees) according to the Shareholder Services Agreement between the Trust and its transfer agent. In calculating transfer agent fees allocable to Class A shares, the fees generated shall be charged to the Fund and allocated to Class A shares based on their aggregate net assets relative to those of Class C shares. |
| (iv) | Class A shares shall be subject to an administrative services fee of 0.05% of average daily net assets, as set forth in the Fund’s prospectus, SAI, and the Trust’s Administrative Services Agreement. |
(b) Class C shares
| (i) | Class C shares shall be sold at net asset value without a front-end sales charge, but subject to a CDSC and maximum purchase limits as set forth in the Fund’s prospectus and SAI. |
| (ii) | Class C shares shall be subject to an annual 12b-1 expense under the Trust’s Class C Plan of Distribution of up to 1.00% of average daily net assets, as set forth in the Fund’s prospectus, SAI, and Class C Plan of Distribution. This expense shall consist of a distribution fee of up to 0.75% and a service fee of up to 0.25% of such average daily net assets. |
| (iii) | Class C shares shall be subject to a transfer agent fee (including sub-transfer agent fees) according to the Shareholder Services Agreement between the Trust and its transfer agent. In calculating transfer agent fees allocable to Class C shares, the fees generated shall be charged to the Fund and allocated to Class C shares based on their aggregate net assets relative to those of Class A shares. |
| (iv) | Class C shares shall be subject to an administrative services fee of 0.05% of average daily net assets, as set forth in the Fund’s prospectus, SAI, and the Trust’s Administrative Services Agreement. |
| (v) | Class C shares will automatically convert to Class A shares of the Fund approximately eight years after purchase, subject to the limitations described in the Fund’s prospectus and SAI. All conversions shall be effected on the basis of the relative net asset values of the two classes of shares without the imposition of any sales load or other charge. |
| (vi) | Class C shares shall be subject to a fee, if any, (included within the transfer agency expense) for additional costs associated with tracking the age of each Class C share. |
| (c) | Class T shares |
| (i) | Class T shares shall be sold at net asset value plus a front-end sales charge, as set forth in the Fund’s prospectus and SAI. |
| (ii) | Class T shares shall be subject to an annual 12b-1 expense under the Trust’s Class T Plan of Distribution of up to 0.50% of average daily net assets, as set forth in the Fund’s prospectus, SAI, and Class T Plan of Distribution. This expense shall consist of a distribution fee of up to 0.25% and a service fee of up to 0.25% of such average daily net assets. |
| (iii) | Class T shares shall be subject to a transfer agent fee (including sub-transfer agent fees) according to the Shareholder Services Agreement between the Trust and its transfer agent. Class T shares will pay only those transfer |
agent fees and third party pass-through fees (e.g., DST Systems, Inc. (DST) and National Securities Clearing Corporation (NSCC) fees) that are directly attributed to accounts of and activities generated by Class T shares.
| (iv) | Class T shares shall be subject to an administrative services fee of 0.05% of average daily net assets, as set forth in the Fund’s prospectus, SAI, and the Trust’s Administrative Services Agreement. |
| (d) | Class F shares consisting of Class F-1 shares, Class F-2 shares and Class F-3 shares |
| (i) | Class F shares shall be sold at net asset value without a front-end or back-end sales charge. |
| (ii) | Class F-1 shares shall be subject to an annual 12b-1 expense under the Trust’s Class F-1 Plan of Distribution of up to 0.50% of average daily net assets, as set forth in the Fund’s prospectus, SAI, and Class F-1 Plan of Distribution. This expense shall consist of a distribution fee of up to 0.25% and a service fee of up to 0.25% of such average daily net assets. |
| (iii) | Class F-2 shares and Class F-3 shares shall not be subject to an annual 12b-1 expense. |
| (iv) | Class F shares shall be subject to a transfer agent fee (including sub-transfer agent fees, except for Class F-3 shares) according to the Shareholder Services Agreement between the Trust and its transfer agent. Class F shares will pay only those transfer agent fees and third party pass-through fees (e.g., DST and NSCC fees) that are directly attributed to accounts of and activities generated by Class F shares. |
| (v) | Class F shares shall be subject to an administrative services fee of 0.05% of average daily net assets, as set forth in the Fund’s prospectus, SAI, and the Trust’s Administrative Services Agreement. |
All other rights and privileges of Fund shareholders are identical regardless of which class of shares is held.
4. This Plan shall not take effect until it has been approved by votes of the majority of both (i) the Board of Trustees of the Trust and (ii) the Independent Trustees.
5. This Plan shall become effective with respect to any class of shares of the Fund, other than Class A shares, Class C shares, Class T shares or Class F shares, upon the commencement of the initial public offering thereof (provided that the Plan has previously been approved with respect to such additional class by votes of the majority of both (i) the Board of Trustees of the Trust; and (ii) Independent Trustees prior to the offering of such additional class of shares), and shall continue in effect with respect to such additional class or classes until terminated in accordance with paragraph 7. An addendum setting forth such specific and different terms of such additional class or classes shall be attached to and made part of this Plan.
6. No material amendment to the Plan shall be effective unless it is approved by the votes of the majority of both (i) the Board of Trustees of the Trust and (ii) Independent Trustees.
7. This Plan may be terminated at any time with respect to the Trust as a whole or any class of shares individually, by the votes of the majority of both (i) the Board of Trustees of the Trust and (ii) Independent Trustees. This Plan may remain in effect with respect to a particular class or classes of shares of the Fund even if it has been terminated in accordance with this paragraph with respect to any other class of shares.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, the Trust has caused this Plan to be executed by its officer(s) thereunto duly authorized, as of June 30, 2020.
The American Funds Tax-Exempt Series II
By: /Steven I. Koszalka
Steven I. Koszalka
Secretary
[logo - The Capital Group]
Code of Ethics
April 2020
Guidelines
Capital Group associates are responsible for maintaining the highest ethical standards. The Code of Ethics is intended to help associates observe exemplary standards of integrity, honesty and trust. It sets out standards for our personal conduct, including personal investing, gifts and entertainment, outside business interests and affiliations, political contributions, insider trading, and client confidentiality.
Our fund shareholders and clients have placed their trust in Capital to manage their assets. As investment advisers, we act as fiduciaries to our clients. This means we owe them both a duty of care and a duty of loyalty.
Capital has earned a reputation over many years for acting with the highest integrity and ethics. Reputations are fragile, however, and Capital’s reputation can be harmed if any of us fails to act ethically and in the best interests of our clients. We each must hold ourselves to the highest standards of behavior, regardless of business custom, and strive to avoid even the appearance of impropriety. We all share this responsibility — if you have any doubt whether an action or circumstance is consistent with our standards, raise it.
Associates should be aware that their actions outside of the workplace can reflect on the ethics of our organization and potentially harm our reputation. For this reason, associates should exercise caution and good judgment in order to avoid having their actions outside of the workplace impact Capital, our workplace or our associates.
No set of rules can anticipate every possible situation, so it is essential that associates adhere to the spirit as well as the letter of the Code of Ethics. Any activity that compromises the trust our clients have placed in us, even if it does not expressly violate a rule, has the potential to harm our reputation. Associates are reminded of one of Capital’s core principles: that we must do the right thing as a matter of principle, not just in observance of policy.
In addition to the specific policies described below, associates have the following fundamental obligations under the Code of Ethics:
| · Associates must avoid those situations that might place, or appear to place, their personal interests in conflict with the interests of Capital, our clients or fund shareholders. |
| · Associates must not take advantage of their role with Capital to benefit themselves or another party. |
| · Associates must comply with the laws, rules and regulations that apply to us in the conduct of our business. |
| · Associates must promptly report violations of the Code of Ethics. |
It is important that all associates comply with the Code of Ethics, including its related guidelines and policies. Failure to do so could result in disciplinary action, including termination.
Questions regarding the Code of Ethics may be directed to the Code of Ethics Team.
Protecting sensitive information
Antifraud provisions of U.S. securities laws as well as the laws of other countries generally prohibit persons in possession of material non-public information from trading on or communicating the information to others. Associates who believe they may have material non-public information should contact a member of the Legal staff.
Capital Group regularly creates, collects and maintains valuable proprietary information, which is essential to our business operations and the performance of services for our clients. This information derives its value, in part, from not being generally known outside of Capital (hereinafter “Confidential Information”). It includes confidential electronic information in any medium, hard-copy information, and information shared orally or visually (such as by telephone or video conference). The confidentiality, integrity and limited availability of such information is regarded as fundamental to the successful business operations of Capital Group. The purpose of this Confidential Information Policy is to protect our information from disclosure – intentional or inadvertent – and to ensure that associates understand their obligation to protect and maintain its confidentiality.
Extravagant or excessive gifts and entertainment
Associates should not accept extravagant or excessive gifts or entertainment from persons or companies that conduct or may conduct business with Capital. Please see below for a summary of the Gifts and Entertainment Policy.
No special treatment from broker-dealers
Associates may not accept negotiated commission rates or any other terms they believe may be more favorable than the broker-dealer grants to accounts with similar characteristics. U.S. broker-dealers are subject to certain rules designed to prevent favoritism toward such accounts. Favors or preferential treatment from broker-dealers may not be accepted. This rule applies to the associate’s spouse/spouse equivalent and any immediate family member residing in the same household.
No excessive trading of Capital-affiliated funds
Associates should not engage in excessive trading of the American Funds or other Capital-managed investment vehicles worldwide in order to take advantage of short-term market movements. Excessive activity, such as a frequent pattern of exchanges, could involve actual or
potential harm to shareholders or clients. This rule applies to the associate’s spouse/spouse equivalent and any immediate family member residing in the same household.
Ban on Initial Public Offerings (IPOs) and Initial Coin Offerings (ICOs)
All associates and immediate family members residing in the same household may not participate in IPOs or ICOs.
Exceptions for participation in IPOs are rarely granted; however, they will be considered on a case-by-case basis (for example, where a family member is employed by the IPO company and IPO shares are considered part of that family member’s compensation).
Avoiding conflicts
Associates must avoid conflicts of interest that can occur when their business, financial or other interests interfere, or reasonably appear to interfere, with their duty to serve the interests of Capital and our clients. Conflicts of interest include any situation where financial or other personal factors compromise objectivity or professional judgment. Even the appearance of conflict could negatively impact Capital and harm our reputation.
Portfolio managers and investment analysts should be aware of the potential conflicts that can arise when they invest on behalf of fund shareholders and clients. The investments we make for our clients must be based on their best interests, and should not be, or appear to be, based on the self-interest of our associates. Accordingly, members of the investment group must disclose to the Code of Ethics Team if they or any of their family members, such as parents, children, siblings, in-laws or other family members with whom they have a close relationship, has a material business, financial or personal relationship with a company that they hold or are eligible to purchase professionally. Examples of a material relationship include: (1) a family member serving as a senior officer or executive of a portfolio company, (2) significant beneficial ownership of a portfolio company by the associate or their family members, and (3) involvement by the associate or a family member in a significant transaction or business opportunity with a portfolio company.
In addition, associates should avoid conflicts related to Capital’s business, and therefore must not:
| · Engage in a business that competes, directly or indirectly, with the interests of Capital, or is related to their role or responsibilities at Capital; |
| · Act for Capital in any transaction or business relationship that involves the associate, members of their family or other people or organizations with whom the associate or their family member(s) have a significant personal connection or financial interest; |
| · Negotiate with Capital on behalf of any such people or organizations; or |
| · Use or attempt to use their position at Capital to obtain any improper personal benefit for themselves, family member(s) or any other party. |
No policy can anticipate every possible conflict of interest and all associates must be vigilant in guarding against anything that could color our judgment. Any associate who is aware of a transaction or relationship that could reasonably be expected to give rise to a conflict of interest or perceived conflict of interest must disclose the matter promptly to a member of the Code of Ethics Team. If there is any doubt or if something does not feel consistent with our standards, raise the issue.
Any changes in a previously disclosed potential conflict, outside business interest or affiliation that could be relevant to an evaluation of a potential conflict must also be promptly disclosed. Examples of changes to disclose include: (1) a change in research coverage of an investment analyst to include a company with a family member serving as a senior executive (even if the senior executive relationship had previously been disclosed) and (2) a change in an associate’s role to trader if the associate had previously disclosed a sibling who works as a sell-side trader.
Outside business interests/affiliations
Associates must obtain approval from the Code of Ethics Team to serve on the board of directors or as an advisory board member of any public or private company. This rule does not apply to: (1) boards of Capital companies or funds; (2) board service that is a direct result of the associate’s responsibilities at Capital, such as for portfolio companies of private equity funds managed by Capital; or (3) boards of non-profit and charitable organizations.
In addition, associates must disclose to the Code of Ethics Team if they or any of their family members, such as parents, children, siblings, in-laws or other family members with whom they have a close relationship:
| · serves as a board director or as an advisory board member of, |
| · holds a senior officer position, such as CEO, CFO or Treasurer with, or |
| · owns 5% or more, individually or together with other such family members, of any public company or any private company that may be reasonably expected to go public. |
Family members employed by a financial institution
Associates who are “Covered Associates” (as defined below) must disclose if any of their family members, such as parents, children, siblings, in-laws or other family members with whom they have a close relationship, is employed by a broker-dealer, investment adviser or other firm that provides investment research or trade execution services to Capital.
Requests for approval or questions may be directed to the Code of Ethics Team.
Other guidelines
Statements and disclosures about Capital, including those made to fund shareholders and clients and in regulatory filings, should be accurate and not misleading.
Reporting requirements
Annual certification of the Code of Ethics
All associates are required to certify at least annually that they have read and understand the Code of Ethics. Questions or issues relating to the Code of Ethics should be directed to the associate’s manager or the Code of Ethics Team.
Reporting violations
All associates are responsible for complying with the Code of Ethics. As part of that responsibility, associates are obligated to report violations of the Code of Ethics promptly, including: (1) fraud or illegal acts involving any aspect of Capital’s business; (2) noncompliance with applicable laws, rules and regulations; (3) intentional or material misstatements in regulatory filings, internal books and records, or client records and reports; or (4) activity that is harmful to fund shareholders or clients. Deviations from controls or procedures that safeguard Capital, including the assets of shareholders and clients, should also be reported. Reported violations of the Code of Ethics will be investigated and appropriate action will be taken, which may include reporting the matter to the firm’s regulator if determined to be appropriate by legal counsel. Once a violation has been reported, all associates are required to cooperate with Capital in the internal investigation of any matter by providing honest, truthful and complete information.
Associates may report confidentially to a manager/department head or to the Open Line Committee.
Associates may also contact the Chief Compliance Officers of CB&T, CIInc, CRC, or CRMC, or legal counsel employed with Capital.
Capital strictly prohibits retaliation against any associate who in good faith makes a complaint, raises a concern, provides information or otherwise assists in an investigation regarding any conduct that he or she reasonably believes to be in violation of the Code of Ethics. This policy is designed to ensure that associates comply with their obligations to report violations without fear of retaliation.
Policies
Capital’s policies regarding gifts and entertainment, political contributions, insider trading and personal investing are summarized below.
Gifts and Entertainment Policy
Under the Gifts and Entertainment Policy, associates may not receive or extend gifts or entertainment that are excessive, repetitive or extravagant, if such gifts or entertainment involve a government official or are due to a third party’s business relationship (or prospective business relationship) with Capital. The Policy is intended to ensure that gifts and entertainment involving associates do not raise questions of propriety regarding Capital’s business relationships or prospective business relationships, or Capital’s interactions with government officials. Accordingly, for gifts and entertainment involving those who conduct, or may conduct, business with Capital:
| · An associate may not accept gifts from (or give gifts to) the same person or entity worth more than $100 (or the local currency equivalent) in a 12-month calendar year period. |
| · An associate may not accept or extend entertainment valued at over $500 (or the local currency equivalent) unless a business reason exists for such entertainment and the entertainment is pre-approved by the associate’s manager and the Code of Ethics Team. Trading department associates are prohibited from accepting entertainment, regardless of value. |
Gifts or entertainment extended to a private-sector person by a Capital associate and approved by the associate’s manager for reimbursement by Capital do not need to be reported (or precleared). Trading department associates should report gifts and entertainment extended regardless of reimbursement. Note: Separate policies regarding extending business gifts or entertainment apply to AFD and CGIIS associates. Dollar amounts refer to U.S. dollars.
Capital Group is registered as a federal lobbyist and special rules apply to gifts and entertainment involving government officials and employees as a result. Associates must receive approval from Capital’s Code of Ethics Team prior to either: (1) hosting a federal government official or employee at a Capital facility if anything of value (e.g. food, tangible item) will be presented to that individual; or (2) providing anything of value to a federal government official or employee if Capital will pay or reimburse for the related cost.
Reporting
The limitations relating to gifts and entertainment apply to all associates as described above, and associates will be asked to complete quarterly disclosures. Associates must report any gift exceeding $50 and business entertainment in which an event exceeds $75 (although it is recommended that associates report all gifts and entertainment). Trading department associates should notify the Code of Ethics Team when gifts are received and report such gifts quarterly, whether the gift is received by an individual associate or by a department. In addition, trading associates should report gifts and entertainment extended regardless of reimbursement.
Charitable contributions
Associates must not allow Capital’s present or anticipated business to be a factor in soliciting political or charitable contributions from outside parties. In addition, it is generally not appropriate to solicit these outside parties or Capital associates for donations to a family-run non-profit organization, family foundation, donor-advised fund or other charitable organization in which an associate or their family members are significantly involved. Board membership alone would not be considered significant involvement.
Gifts and Entertainment Committee
The Gifts and Entertainment Committee oversees administration of the Policy. Questions regarding the Gifts and Entertainment Policy may be directed to the Code of Ethics Team.
Political Contributions Policy
Associates must be cautious when engaging in personal political activities, particularly when supporting officials, candidates, or organizations that may be in a position to influence decisions to award business to investment management firms. Associates should not make political contributions to officials or candidates (in any country) for the purpose of influencing the hiring of a Capital Group company as an advisor to a governmental entity. Associates are encouraged to contact the Code of Ethics Team with any questions about this policy.
Associates may not use Capital offices or equipment to engage in political fundraising or solicitation activity, for example, hosting a fundraising event at the office or using Capital phones or email systems to help solicit donations for an elected official, a candidate, Political Action Committee (PAC) or political party. Associates may volunteer their time on behalf of a candidate or political organization but should limit volunteer activities to non-work hours.
For contributions or activities supporting candidates
or political organizations within the U.S., we have adopted the guidelines set forth below, which apply to associates classified
as “Restricted Associates.”
Guidelines for political contributions and activities within the U.S.
U.S. Securities and Exchange Commission (SEC) regulations limit political contributions to certain Covered Government Officials
by certain employees of investment advisory firms and certain affiliated companies. “Covered Government Official,”
for purposes of the Political Contributions Policy, is defined as: (1) a state or local official; (2) a candidate for state or
local office; or (3) a federal candidate currently holding state or local office.
Many U.S. cities and states have also adopted regulations restricting political contributions by associates of investment management firms seeking to provide services to a governmental entity. Some associates are also subject to these regulations.
Restricted Associates
Certain associates are deemed “Restricted Associates” under this Policy. Restricted Associates include (1) “covered associates” as defined in the SEC’s rule relating to political contributions by investment advisers (Rule 206(4)-5 under the Investment Advisors Act of 1940); and (2) other associates who do not meet that definition but whom Capital has determined should be subject to the restrictions on political contributions contained in the Policy based on their roles and responsibilities at Capital. Contributions by Restricted Associates and their spouse/spouse equivalent are subject to specific limitations, preclearance, and reporting requirements as described below.
Preclearance of political contributions
Contributions by Restricted Associates to any of the following must be precleared:
| · State or local officials, or candidates for state or local office |
| · Federal candidate campaigns and affiliated committees, including federal incumbents and presidential candidates |
| · Political organizations such as Political Action Committees (PACs), Super PACs and 527 organizations and ballot measure committees |
| · Non-profit organizations that may engage in political activities, such as 501(c)(4) and 501(c)(6) organizations |
Restricted Associates must also preclear U.S. political contributions by their spouse/spouse equivalent to any of the foregoing, as well as contributions to any state, local or federal political party or political party committee, if the aggregate contributions by the Restricted Associate and spouse/spouse equivalent to any one candidate or political entity exceed $50,000 in a calendar year.
Certain documentation is required for contributions to Covered Governmental Officials, PACs or Super PACs, and may be required for contributions to other entities that engage in political activity. See “Required documentation” below for further details. To preclear a contribution, please contact the Code of Ethics Team.
Contributions include:
| · Monetary contributions, gifts or loans |
| · “In kind” contributions (for example, donations of goods or services or underwriting or hosting fundraisers) |
| · Contributions to help pay a debt incurred in connection with an election (including transition or inaugural expenses, and purchasing tickets to inaugural events) |
| · Contributions to joint fund-raising committees |
| · Contributions made by a Political Action Committee (PAC) controlled by a Restricted Associate[1] |
| Please contact the Code of Ethics Team to preclear a contribution. |
| [1] “Control” for this purpose includes service as an officer or member of the board (or other governing body) of a PAC. |
Required documentation
Restricted Associates must obtain additional documentation from an independent legal authority before they will be approved to contribute to Covered Government Officials. The purpose of the legal documentation is to verify that a specific state or local office does not have the ability to directly or indirectly influence the awarding of business to an investment manager. For contributions to PACs, Super PACs, or other entities that engage in political activities, Restricted Associates may be required to obtain a certification that the entity does not contribute to Covered Government Officials. The Code of Ethics Team will provide language for the documentation when you preclear the contribution.
If a candidate currently holds a state/local office and is running for a different state/local office, legal documentation must be obtained for both the current position and the office for which the candidate is running. Exceptions to the documentation requirements may be granted on a case-by-case basis.
Special political contribution requirements – CollegeAmerica
Certain associates involved with “CollegeAmerica,” the American Funds 529 college savings plan sponsored by the Commonwealth of Virginia, are subject to additional restrictions which prohibit them from contributing to Virginia political candidates or parties.
Administration of the Political Contributions Policy
The U.S. Public Policy Coordinating Group oversees the administration of this Policy, including considering and granting possible exceptions. Questions regarding the Political Contributions Policy may be directed to the Code of Ethics Team.
Insider Trading Policy
Antifraud provisions of U.S. securities laws as well as the laws of other countries generally prohibit persons in possession of material non-public information from trading on or communicating the information to others. Sanctions for violations can include civil injunctions, permanent bars from the securities industry, civil penalties up to three times the profits made or losses avoided, criminal fines and jail sentences. In addition, trading in fund shares while in possession of material, non-public information that may have an immediate impact on the value of the fund’s shares may constitute insider trading.
While investment research analysts are most likely to come in contact with material non-public information, the rules (and sanctions) in this area apply to all Capital associates and extend to activities both within and outside each associate's duties. Associates who believe they have material non-public information should contact any lawyer in the organization.
Personal Investing Policy
This policy applies only to “Covered Associates.” Special rules apply to certain associates in some non-U.S. offices.
The Personal Investing Policy (Policy) sets forth specific rules regarding personal investments that apply to "covered" associates. These associates may have access to confidential information that places them in a position of special trust. Under the Code of Ethics, associates are responsible for maintaining the highest ethical standards. Associates are reminded that the requirements of the Code of Ethics apply to personal investing activities, even if the matter is not covered by a specific provision of the Policy.
Personal investing should be viewed as a privilege, not a right. As such, the Personal Investing Committee may place limitations on the number of preclearance requests and/or transactions associates make.
Covered Associates
“Covered Associates” are associates with access to non-public
information relating to current or imminent fund/client transactions, investment recommendations or fund portfolio holdings.
The Policy applies to the personal investments of Covered Associates and their spouses/spouse equivalents, significant other (commingling
expenses), and other immediate family members residing in their household (for example, children, siblings and parents –
including adoptive, step and in-law relationships).
Questions regarding coverage status should be directed to the Code of Ethics Team.
Additional rules apply to Investment Professionals
“Investment Professionals” include portfolio managers, research directors, investment counselors, investment analysts and research associates, investment group administrative assistants, trading associates, and global investment control associates, including assistants. See “Additional policies for Investment Professionals and CIKK associates” below for more details.
Prohibited transactions
The following transactions are prohibited:
| · Initial Public Offering (IPO) investments (this prohibition applies to all Capital associates) |
| Note: Exceptions are rarely granted; however, they will be considered on a case-by-case basis (for example, where a family member is employed by the IPO company and IPO shares are considered part of that family member’s compensation). |
| · Initial Coin Offering (ICO) investments (this prohibition applies to all Capital associates) |
| · Derivatives on securities and financial contracts, such as futures and forwards contracts, with limited exceptions described below |
| · Short selling of securities including short selling “against the box” and transactions in inverse or inverse/long ETFs, with limited exceptions described below |
| · Spread betting/contracts for difference (CFD) on securities |
| · Interest rate swaps (IRS), with limited exceptions described below |
Exceptions:
| · Derivatives, financial contracts, short selling and investments in inverse or inverse/long ETF transactions are permitted only if they are based on non-reportable instruments (such as currencies and commodities) or if they are based on the S&P 500, Russell 2000 or MSCI EAFE indices. |
| · Interest rate swaps are permitted if based on currencies and government bonds of the G7. |
Reporting requirements
Covered Associates are required to report any securities accounts, holdings and transactions: (1) in which the Covered Associate or any immediate family member residing in their household has a pecuniary interest (in other words, the ability to obtain an economic benefit or otherwise profit from a security) or (2) over which the Covered Associate or any immediate family member residing in their household exercises investment discretion or has direct or indirect influence or control. Quarterly and annual certifications of accounts, holdings and transactions must also be submitted. An electronic reporting platform is available for these disclosures.
Examples of accounts that must be disclosed include: (1) trusts if the Covered Associate or family member are the grantor or serve as trustee or custodian or have the ability to appoint or remove the trustee, (2) trusts that you or a family member have the power to revoke, (3) trusts for which you or a family member are a beneficiary and exercise investment discretion or have direct or indirect influence or control and (4) accounts of another person or entity if the Covered Associate or family member makes or influences investment decisions, such as by suggesting purchases and sales of securities in the account. The obligation to disclose accounts includes professionally managed accounts.
Covered Associates should immediately notify the Code of Ethics Team when opening new securities accounts; associates may also disclose accounts by logging into Protegent PTA and entering the account information directly.
Newly hired associates and associates transferring into a position designated as “covered” are required to maintain their U.S.-based brokerage accounts with electronic reporting firms. This requirement includes immediate family members living in their household. All Covered Associates and immediate family members residing in their household must use an electronic reporting firm for any new U.S.-based brokerage accounts. There are some exceptions to this requirement which include professionally managed accounts, employer-sponsored retirement accounts, and employee stock purchase plans.
Duplicate statements and trade confirmations (or approved equivalent documentation) are required for accounts holding securities subject to preclearance and/or reporting and due no later than 30 days after the documents’ issuance date. This requirement includes employer-sponsored retirement accounts and employee stock purchase plans (ESPP, ESOP, 401(k)). Documentation allowing the acquisition of shares via an employer-sponsored plan may be required.
Preclearance procedures
Certain transactions may be exempt from preclearance; please refer to the Personal Investing Policy for more details.
Before any purchase or sale of securities subject to preclearance, including securities that are not publicly traded, Covered Associates must receive approval from the Code of Ethics Team. This requirement applies to any purchase or sale of securities in which the Covered Associate or any immediate family member residing in the same household (1) has, or by reason of such transaction may acquire, pecuniary interest (in other words, the ability to obtain an economic benefit or
otherwise profit from a security), or (2) exercises investment discretion or direct or indirect influence or control. Transactions in an approved professionally managed accounts are not subject to preclearance. Please refer to the Personal Investing Policy for more details on preclearable securities.
Submitting preclearance requests
To submit a preclear request, log into Protegent PTA. Covered Associates should then click on the Preclear button on the Dashboard and enter the request details.
For assistance or questions, please contact the Code of Ethics Team.
Preclearance requests will be handled during the hours the New York Stock Exchange (NYSE) is open, generally 6:30am to 1:00pm Pacific Time. A response to requests will generally be sent within one business day.
Transactions will generally not be permitted in securities on days the funds or clients are transacting in the issuer in question. In the case of Investment Professionals, permission to transact will be denied if the transaction would violate the seven-day blackout or short-term trading policies (see “Additional policies for Investment Professionals and CIKK associates” below). Preclearance requests by Investment Professionals are subject to special review.
Preclearance will generally not be approved for analysts’ transactions involving securities held in their professional portfolio(s) or if the issuer of such securities falls within their industry research responsibilities or a related industry.
Unless a different period is specified, clearance is good until the close of the NYSE on the day of the request. Associates from offices outside the U.S. and/or associates trading on non-U.S. exchanges are usually granted enough time to complete their transaction during the next available trading day.
If the precleared trade has not been executed within the cleared timeframe, preclearance must be requested again. For this reason, the following are strongly discouraged:
| · Limit orders (for example, stop loss and good-till-canceled orders) |
| · Margin accounts |
Private investments or other limited offerings
Participation in private investments or other limited offerings are subject to special review. The following types of private investments must be precleared:
| · Hedge funds |
| · Private companies |
| · Limited Liability Companies (LLCs) |
| · Limited Partnerships (LPs) |
| · Private equity funds |
| · Private funds |
| · Private placements |
| · Private real estate investment companies |
| · Venture capital funds |
In addition, opportunities to acquire a stock that is "limited" (that is, a broker-dealer is only given a certain number of shares to sell and is offering the opportunity to buy) may be subject to the Gifts and Entertainment Policy.
Preclearance procedures for private investments
Preclear private investments by contacting the Code of Ethics Team.
To make a subsequent investment, or increase a previously approved investment, a new Private Investment Preclear Form must be submitted, and approval received before making the subsequent or increased investment.
Additional policies for Investment Professionals and CIKK associates
Disclosure of personal and professional holdings (cross-holdings) for certain Investment Professionals
Portfolio managers, research directors and investment analysts will be asked to disclose securities they own both personally and professionally on a quarterly basis. Research directors and analysts will also be required to disclose securities they hold personally that are within their research responsibilities. This disclosure must be made to the Code of Ethics Team, and may be reviewed by various Capital committees.
If disclosure has not already been made to the Code of Ethics Team, any associate who is in a position to recommend a security that the associate owns personally for purchase or sale in a fund or client account should first disclose such personal ownership either in writing (in a company write-up) or verbally (when discussing the company at investment meetings) prior to making a recommendation. This disclosure requirement is consistent with both the CFA Institute standards as well as the ICI Advisory Group Guidelines.
Blackout periods
Investment Professionals may not buy or sell a security during the period seven calendar days after a fund or client account transacts in that issuer. The blackout period applies to trades in the same management company with which the associate is affiliated.
If a fund or client account transaction takes place in the seven calendar days following a transaction executed by an Investment Professional, the personal transaction may be reviewed
by the Personal Investing Committee to determine the appropriate action, if any. For example, the Personal Investing Committee may recommend the associate be subject to a price adjustment.
Ban on short-term trading
Investment Professionals and CIKK associates are prohibited from engaging in short-term trading of reportable securities and economically equivalent instruments.
Associates and their family members may not buy and then sell or sell and then buy the same security and/or economically equivalent instruments:
| · Within 60 calendar days for Investment Professionals |
| · Within 6 months for CIKK associates |
Economically equivalent instruments include derivatives or other securities or instruments with a value derived from the value of the subject security. Additionally, they may not enter into an option or other derivative instrument that expires within 60 days from purchase.
Investment Professionals and CIKK associates should contact the Code of Ethics Team before transacting if they have any questions about the application of this rule to transactions in derivatives.
Failure to comply with this requirement may result in remedial action, including disgorgement of the profits.
Penalties for violating the Personal Investing Policy
Covered Associates may be subject to penalties for violating the Personal Investing Policy, such as restrictions on personal trading, disgorgement of profits, and other disciplinary action, up to and including termination. Violations to the Policy include failing to preclear or report securities transactions, failing to report securities accounts or submit statements, and failing to submit timely initial, quarterly and annual certification forms.
Personal Investing Committee
The Personal Investing Committee oversees the administration of the Policy. Among other duties, the Committee considers certain types of preclearance requests as well as requests for exceptions to the Policy.
Questions regarding the Personal Investing Policy may be directed to the Code of Ethics Team.
* * * * *
Questions regarding the Code of Ethics may be directed to the Code of Ethics Team.
[Logo – American Funds®]
The following is representative of the Code of Ethics in effect for each Fund:
CODE OF ETHICS
With respect to non-affiliated Board members and all other access persons to the extent that they are not covered by The Capital Group Companies, Inc. policies:
| · | No Board member shall so use his or her position or knowledge gained therefrom as to create a conflict between his or her personal interest and that of the Fund. |
| · | No Board member shall engage in excessive trading of shares of the fund or any other affiliated fund to take advantage of short-term market movements. |
| · | Each non-affiliated Board member shall report to the Secretary of the Fund not later than thirty (30) days after the end of each calendar quarter any transaction in securities which such Board member has effected during the quarter which the Board member then knows to have been effected within fifteen (15) days before or after a date on which the Fund purchased or sold, or considered the purchase or sale of, the same security. |
| · | For purposes of this Code of Ethics, transactions involving United States Government securities as defined in the Investment Company Act of 1940, bankers’ acceptances, bank certificates of deposit, commercial paper, or shares of registered open-end investment companies are exempt from reporting as are non-volitional transactions such as dividend reinvestment programs and transactions over which the Board member exercises no control. |
* * * *
In addition, the Fund has adopted the following standards in accordance with the requirements of Form N-CSR adopted by the Securities and Exchange Commission pursuant to Section 406 of the Sarbanes-Oxley Act of 2002 for the purpose of deterring wrongdoing and promoting: 1) honest and ethical conduct, including handling of actual or apparent conflicts of interest between personal and professional relationships; 2) full, fair, accurate, timely and understandable disclosure in reports and documents that a fund files with or submits to the Commission and in other public communications made by the fund; 3) compliance with applicable governmental laws, rules and regulations; 4) the prompt internal reporting of violations of the Code of Ethics to an appropriate person or persons identified in the Code of Ethics; and 5) accountability for adherence to the Code of Ethics. These provisions shall apply to the principal executive officer or chief executive officer and treasurer (“Covered Officers”) of the Fund.
| 1. | It is the responsibility of Covered Officers to foster, by their words and actions, a corporate culture that encourages honest and ethical conduct, including the ethical resolution of, and appropriate disclosure of conflicts of interest. Covered Officers should work to assure a working environment that is characterized by respect for law and compliance with applicable rules and regulations. |
| 2. | Each Covered Officer must act in an honest and ethical manner while conducting the affairs of the Fund, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships. Duties of Covered Officers include: |
| · | Acting with integrity; |
| · | Adhering to a high standard of business ethics; and |
| · | Not using personal influence or personal relationships to improperly influence investment decisions or financial reporting whereby the Covered Officer would benefit personally to the detriment of the Fund. |
| 3. | Each Covered Officer should act to promote full, fair, accurate, timely and understandable disclosure in reports and documents that the Fund files with or submits to, the Securities and Exchange Commission and in other public communications made by the Fund. |
| · | Covered Officers should familiarize themselves with disclosure requirements applicable to the Fund and disclosure controls and procedures in place to meet these requirements; and |
| · | Covered Officers must not knowingly misrepresent, or cause others to misrepresent facts about the Fund to others, including the Fund’s auditors, independent directors, governmental regulators and self-regulatory organizations. |
| 4. | Any existing or potential violations of this Code of Ethics should be reported to The Capital Group Companies’ Personal Investing Committee. The Personal Investing Committee is authorized to investigate any such violations and report their findings to the Chairman of the Audit Committee of the Fund. The Chairman of the Audit Committee may report violations of the Code of Ethics to the Board or other appropriate entity including the Audit Committee, if he or she believes such a reporting is appropriate. The Personal Investing Committee may also determine the appropriate sanction for any violations of this Code of Ethics, including removal from office, provided that removal from office shall only be carried out with the approval of the Board. |
| 5. | Application of this Code of Ethics is the responsibility of the Personal Investing Committee, which shall report periodically to the Chairman of the Audit Committee of the Fund. |
| 6. | Material amendments to these provisions must be ratified by a majority vote of the Board. As required by applicable rules, substantive amendments to the Code of Ethics must be filed or appropriately disclosed. |
Create E-mail Alert Related Categories
SEC FilingsRelated Entities
The Capital Group CompaniesSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
