Here is the cumulative total return on a $1,000 investment with
all distributions reinvested for the period ended June 30, 2013 (the most recent calendar quarter-end):
The fund’s estimated gross expense ratio for Class A shares
is 1.01% as of the prospectus dated August 1, 2013 (unaudited).
Investment results assume all distributions are reinvested and
reflect applicable fees and expenses. The investment adviser is currently reimbursing a portion of certain expenses. Investment
results and net expense ratios shown reflect the reimbursements, without which the results would have been lower and the expenses
would have been higher. The fund expects the reimbursement, which can only be extended, modified or terminated with the approval
of the fund’s board of trustees, will be in effect through July 14, 2014. Refer to the fund’s most recent prospectus
for details.
The return of principal for bond funds and for funds with significant
underlying bond holdings is not guaranteed. Fund shares are subject to the same interest rate, inflation and credit risks associated
with the underlying bond holdings. Investing in bonds issued outside the U.S. may be subject to additional risks. They include
currency fluctuations, political and social instability, differing securities regulations and accounting standards, higher transaction
costs, possible changes in taxation, illiquidity and price volatility. These risks may be heightened in connection with investments
in developing countries. Refer to the fund prospectus and the Risk Factors section of this report for more information on these
and other risks associated with investing in the fund.
We are pleased to present you with the first annual report for
American Funds Corporate Bond Fund. This report encapsulates the fund’s results since its inception on December 14, 2012.
For the period ended May 31, 2013, the fund lost 0.6%,
with all dividends reinvested. By way of comparison, the Barclays U.S. Corporate Investment Grade Index (which is unmanaged
and has no expenses) fell 0.6%, while the fund’s peer group, as measured by the Lipper Corporate Debt Funds BBB-Rated
Average, gained 0.1%.
During this time, the fund generated dividends totaling about
9 cents a share, providing investors with an income return of 0.9%, whether that return was reinvested or taken in cash.
As of the fiscal year-end, the fund’s corporate holdings,
representing 95% of the portfolio, were spread among a variety of sectors. Financial sector bonds made up 23.3% of the portfolio,
followed by energy at 12.3% and health care at 11.3%. Less than 4% of the portfolio was invested in government securities, primarily
municipal bonds. A complete list of fund holdings can be found beginning on page 2.
Roughly 75% of the fund consisted of U.S. securities, with the
rest primarily invested in European and Asian bonds. A small portion of the fund, less than 5%, was invested in bonds from emerging
markets.
We thank you for making American Funds Corporate Bond Fund part
of your portfolio and look forward to reporting to you again in six months.
Andrew F. Barth
Statement of assets
and liabilities
at May 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
Investment securities, at value (cost: $49,980)
|
|
|
|
|
|
$
|
49,217
|
|
Cash
|
|
|
|
|
|
|
183
|
|
Receivables for:
|
|
|
|
|
|
|
|
|
Sales of investments
|
|
$
|
370
|
|
|
|
|
|
Interest
|
|
|
403
|
|
|
|
773
|
|
|
|
|
|
|
|
|
50,173
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Payables for:
|
|
|
|
|
|
|
|
|
Purchases of investments
|
|
|
899
|
|
|
|
|
|
Dividends on fund’s shares
|
|
|
6
|
|
|
|
|
|
Investment advisory services
|
|
|
20
|
|
|
|
|
|
Services provided by related parties
|
|
|
—
|
*
|
|
|
|
|
Other
|
|
|
3
|
|
|
|
928
|
|
Net assets at May 31, 2013
|
|
|
|
|
|
$
|
49,245
|
|
|
|
|
|
|
|
|
|
|
Net assets consist of:
|
|
|
|
|
|
|
|
|
Capital paid in on shares of beneficial interest
|
|
|
|
|
|
$
|
50,000
|
|
Undistributed net investment income
|
|
|
|
|
|
|
3
|
|
Undistributed net realized gain
|
|
|
|
|
|
|
5
|
|
Net unrealized depreciation
|
|
|
|
|
|
|
(763
|
)
|
Net assets at May 31, 2013
|
|
|
|
|
|
$
|
49,245
|
|
(dollars
and shares in thousands, except per-share amounts)
Shares
of beneficial interest issued and outstanding (no stated par value) —
unlimited
shares authorized (5,000 total shares outstanding)
|
|
Net assets
|
|
|
Shares
outstanding
|
|
|
|
Net asset value
per share
|
|
Class A
|
$
|
49,245
|
|
|
5,000
|
|
|
$
|
9.85
|
|
*Amount less than one thousand.
See Notes to Financial Statements
American Funds Corporate Bond Fund
|
5
|
Statement of operations
for the period December 14, 2012
1
to May 31, 2013
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands
)
|
|
|
|
|
|
Investment income:
|
|
|
|
|
|
|
|
Income:
|
|
|
|
|
|
|
|
Interest
|
|
|
|
|
$
|
575
|
|
Fees and expenses
2
:
|
|
|
|
|
|
|
|
Investment advisory services
|
|
$
|
106
|
|
|
|
|
Administrative services
|
|
|
2
|
|
|
|
|
Registration statement and prospectus
|
|
|
8
|
|
|
|
|
Auditing and legal
|
|
|
38
|
|
|
|
|
Custodian
|
|
|
—
|
3
|
|
|
|
Other
|
|
|
11
|
|
|
|
|
Total fees and expenses before reimbursement
|
|
|
165
|
|
|
|
|
Less reimbursement of fees and expenses
|
|
|
44
|
|
|
|
|
Total fees and expenses after reimbursement
|
|
|
|
|
|
121
|
|
Net investment income
|
|
|
|
|
|
454
|
|
|
|
|
|
|
|
|
|
Net realized gain and unrealized depreciation on investments:
|
|
|
|
|
|
|
|
Net realized gain on investments
|
|
|
|
|
|
5
|
|
Net unrealized depreciation on investments
|
|
|
|
|
|
(763
|
)
|
Net realized gain and unrealized depreciation on investments
|
|
|
|
|
|
(758
|
)
|
Net decrease in net assets resulting from operations
|
|
|
|
|
$
|
(304
|
)
|
1
|
Commencement of operations.
|
2
|
Additional information related to class-specific fees and expenses is included in the Notes to Financial Statements.
|
3
|
Amount less than one thousand.
|
Statement of changes
in net assets
for the period December 14, 2012* to May 31, 2013
|
|
|
|
|
(dollars in thousands)
|
|
|
|
|
|
Operations:
|
|
|
|
|
Net investment income
|
|
$
|
454
|
|
Net realized gain on investments
|
|
|
5
|
|
Net unrealized depreciation on investments
|
|
|
(763
|
)
|
Net decrease in net assets resulting from operations
|
|
|
(304
|
)
|
|
|
|
|
|
Dividends paid or accrued to shareholders from net investment income
|
|
|
(451
|
)
|
|
|
|
|
|
Net capital share transactions
|
|
|
50,000
|
|
|
|
|
|
|
Total increase in net assets
|
|
|
49,245
|
|
|
|
|
|
|
Net assets:
|
|
|
|
|
Beginning of period
|
|
|
—
|
|
End of period (including undistributed net investment income: $3)
|
|
$
|
49,245
|
|
*Commencement of operations.
See Notes to Financial Statements
American Funds Corporate Bond Fund
|
6
|
Notes to financial statements
1. Organization
American Funds Corporate Bond Fund (the “fund”) was
organized on May 25, 2012, as a Delaware statutory trust. To date, the fund has had no capital share transactions other than those
relating to organization matters and the sale of 10,000 Class A shares of beneficial interest to Capital Research and Management
Company (“CRMC”), the fund’s investment adviser. Operations commenced on December 14, 2012, upon the initial
purchase of investment securities. The fund’s fiscal year ends on May 31. The fund is registered under the Investment Company
Act of 1940 as an open-end, diversified management investment company. The fund seeks to provide, over the long term, a high level
of total return largely comprised of current income.
The fund has 16 share classes consisting of five retail share
classes (Classes A, B and C, as well as two F share classes, F-1 and F-2), five 529 college savings plan share classes (Classes
529-A, 529-B, 529-C, 529-E and 529-F-1) and six retirement plan share classes (Classes R-1, R-2, R-3, R-4, R-5 and R-6). The 529
college savings plan share classes can be used to save for college education. The retirement plan share classes are generally offered
only through eligible employer-sponsored retirement plans. The fund’s share classes are further described below:
Share class
|
|
Initial sales charge
|
|
Contingent deferred sales
charge upon redemption
|
|
Conversion feature
|
|
Classes A and 529-A
|
|
Up to 3.75%
|
|
None (except 1% for certain redemptions
within one year of purchase without an
initial sales charge)
|
|
None
|
|
Classes B and 529-B*
|
|
None
|
|
Declines from 5% to 0% for redemptions
within six years of purchase
|
|
Classes B and 529-B convert to
Classes A and 529-A, respectively,
after eight years
|
|
Class C
|
|
None
|
|
1% for redemptions within one
year of purchase
|
|
Class C converts to Class F-1
after 10 years
|
|
Class 529-C
|
|
None
|
|
1% for redemptions within one
year of purchase
|
|
None
|
|
Class 529-E
|
|
None
|
|
None
|
|
None
|
|
Classes F-1, F-2 and 529-F-1
|
|
None
|
|
None
|
|
None
|
|
Classes
R-1, R-2, R-3, R-4, R-5 and R-6
|
|
None
|
|
None
|
|
None
|
|
*Class B and 529-B shares of the fund are not available for purchase.
Holders of all share classes have equal pro rata rights to assets,
dividends and liquidation proceeds. Each share class has identical voting rights, except for the exclusive right to vote on matters
affecting only its class. Share classes have different fees and expenses (“class-specific fees and expenses”), primarily
due to different arrangements for distribution, administrative and shareholder services. Differences in class-specific fees and
expenses will result in differences in net investment income and, therefore, the payment of different per-share dividends by each
share class.
2. Significant accounting policies
The financial statements have been prepared to comply with accounting
principles generally accepted in the United States of America. These principles require management to make estimates and assumptions
that affect reported amounts and disclosures. Actual results could differ from those estimates. The fund follows the significant
accounting policies described below, as well as the valuation policies described in the next section on valuation.
Security transactions and related investment income
— Security
transactions are recorded by the fund as of the date the trades are executed with brokers. Realized gains and losses from security
transactions are determined based on the specific identified cost of the securities. In the event a security is purchased with
a delayed payment date, the fund will segregate liquid assets sufficient to meet its payment obligations. Interest income is recognized
on an accrual basis. Market discounts, premiums and original issue discounts on fixed-income securities are amortized daily over
the expected life of the security.
Class allocations
— Income, fees and expenses (other than
class-specific fees and expenses) are allocated daily among the various share classes based on the relative value of their settled
shares. Realized and unrealized gains and losses are allocated daily among the various share classes based on their relative net
assets. Class-specific fees and expenses, such as distribution, administrative and shareholder services, are charged directly to
the respective share class.
American Funds Corporate Bond Fund
|
7
|
Dividends
and distributions to shareholders
— Dividends to shareholders are declared daily after the determination of the
fund’s net investment income and are paid to shareholders monthly. Distributions to shareholders are recorded on the ex-dividend
date.
3. Valuation
CRMC values the fund’s investments at fair value as defined
by accounting principles generally accepted in the United States of America. The net asset value of each share class of the fund
is generally determined as of approximately 4:00 p.m. New York time each day the New York Stock Exchange is open.
Methods and inputs
— The fund’s investment adviser
uses the following methods and inputs to establish the fair value of the fund’s assets and liabilities. Use of particular
methods and inputs may vary over time based on availability and relevance as market and economic conditions evolve.
Fixed-income securities, including short-term securities purchased
with more than 60 days left to maturity, are generally valued at prices obtained from one or more pricing vendors. Vendors value
such securities based on one or more of the inputs described in the following table. The table provides examples of inputs that
are commonly relevant for valuing particular classes of fixed-income securities in which the fund is authorized to invest. However,
these classifications are not exclusive, and any of the inputs may be used to value any other class of fixed-income security.
Fixed-income class
|
Examples of standard
inputs
|
All
|
Benchmark yields, transactions, bids, offers, quotations from dealers and
trading systems, new issues, spreads and other relationships observed in the
markets among comparable securities; and proprietary pricing models such
as yield measures calculated using factors such as cash flows, financial or
collateral performance and other reference data (collectively referred to
as “standard inputs”)
|
Corporate bonds & notes; convertible securities
|
Standard inputs and underlying equity of the issuer
|
Bonds & notes of governments & government agencies
|
Standard inputs and interest rate volatilities
|
Mortgage-backed; asset-backed obligations
|
Standard inputs and cash flows, prepayment information, default rates,
delinquency and loss assumptions, collateral characteristics, credit
enhancements and specific deal information
|
Municipal securities
|
Standard inputs and, for certain distressed securities, cash flows or
liquidation values using a net present value calculation based on inputs that
include, but are not limited to, financial statements and debt contracts
|
When the fund’s investment adviser deems it appropriate
to do so (such as when vendor prices are unavailable or not deemed to be representative), fixed-income securities will be valued
in good faith at the mean quoted bid and ask prices that are reasonably and timely available (or bid prices, if ask prices are
not available) or at prices for securities of comparable maturity, quality and type.
Short-term securities purchased within 60 days to maturity are
valued at amortized cost, which approximates fair value. The value of short-term securities originally purchased with maturities
greater than 60 days is determined based on an amortized value to par when they reach 60 days.
Securities and other assets for which representative market quotations
are not readily available or are considered unreliable by the fund’s investment adviser are fair valued as determined in
good faith under fair valuation guidelines adopted by authority of the fund’s board of trustees as further described below.
The investment adviser follows fair valuation guidelines, consistent with U.S. Securities and Exchange Commission (SEC) rules and
guidance, to consider relevant principles and factors when making fair value determinations. The investment adviser considers relevant
indications of value that are reasonably and timely available to it in determining the fair value to be assigned to a particular
security, such as the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial
or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security;
related corporate actions; significant events occurring after the close of trading in the security; and changes in overall market
conditions. Fair valuations and valuations of investments that are not actively trading involve judgment and may differ materially
from valuations that would have been used had greater market activity occurred.
American Funds Corporate Bond Fund
|
8
|
Processes and structure
— The fund’s board of trustees
has delegated authority to the fund’s investment adviser to make fair value determinations, subject to board oversight. The
investment adviser has established a Joint Fair Valuation Committee (the “Fair Valuation Committee”) to administer,
implement and oversee the fair valuation process, and to make fair value decisions. The Fair Valuation Committee regularly reviews
its own fair value decisions, as well as decisions made under its standing instructions to the investment adviser’s valuation
teams. The Fair Valuation Committee reviews changes in fair value measurements from period to period and may, as deemed appropriate,
update the fair valuation guidelines to better reflect the results of back testing and address new or evolving issues. The Fair
Valuation Committee reports any changes to the fair valuation guidelines to the board of trustees with supplemental information
to support the changes. The fund’s board and audit committee also regularly review reports that describe fair value determinations
and methods.
The fund’s investment adviser has also established a Fixed-Income
Pricing Review Group to administer and oversee the fixed-income valuation process, including the use of fixed-income pricing vendors.
This group regularly reviews pricing vendor information and market data. Pricing decisions, processes and controls over security
valuation are also subject to additional internal reviews, including an annual control self-evaluation program facilitated by the
investment adviser’s compliance group.
Classifications
— The fund’s investment adviser classifies
the fund’s assets and liabilities into three levels based on the inputs used to value the assets or liabilities. Level 1
values are based on quoted prices in active markets for identical securities. Level 2 values are based on significant observable
market inputs, such as quoted prices for similar securities and quoted prices in inactive markets. Level 3 values are based on
significant unobservable inputs that reflect the investment adviser’s determination of assumptions that market participants
might reasonably use in valuing the securities. The valuation levels are not necessarily an indication of the risk or liquidity
associated with the underlying investment. For example, U.S. government securities are reflected as Level 2 because the inputs
used to determine fair value may not always be quoted prices in an active market. At May 31, 2013, all of the fund’s investment
securities were classified as Level 2.
4. Risk factors
Investing in the fund may involve certain risks including, but
not limited to, those described below.
Market conditions
— The prices of, and the income generated
by, the securities held by the fund may decline due to market conditions and other factors, including those directly involving
the issuers of securities held by the fund.
Investing in bonds
— Rising interest rates will
generally cause the prices of bonds and other debt securities to fall. Longer maturity debt securities may be subject to greater
price fluctuations than shorter maturity debt securities. In addition, falling interest rates may cause an issuer to redeem, call
or refinance a debt security before its stated maturity, which may result in the fund having to reinvest the proceeds in lower
yielding securities.
Bonds and other debt securities are subject to credit risk, which
is the possibility that the credit strength of an issuer will weaken and/or an issuer of a debt security will fail to make timely
payments of principal or interest and the security will go into default. Lower quality debt securities generally have higher rates
of interest and may be subject to greater price fluctuations than higher quality debt securities. Credit risk is gauged, in part,
by the credit ratings of the securities in which the fund invests. However, ratings are only the opinions of the rating agencies
issuing them and are not guarantees as to credit quality or an evaluation of market risk. The fund’s investment adviser relies
on its own credit analysts to research issuers and issues in seeking to mitigate the risks of an issuer defaulting on its obligations.
Investing in securities backed by the U.S. government
— Securities backed by the U.S. Treasury or the full faith and credit of the U.S. government are guaranteed only as to the
timely payment of interest and principal when held to maturity. Accordingly, the current market values for these securities will
fluctuate with changes in interest rates. Securities issued by government-sponsored entities and federal agencies and instrumentalities
that are not backed by the full faith and credit of the U.S. government are neither issued nor guaranteed by the U.S. government.
Thinly traded securities
— There may be little
trading in the secondary market for particular bonds or other debt securities, which may make them more difficult to value, acquire
or sell.
American Funds Corporate Bond Fund
|
9
|
Investing outside the U.S
. — Securities of issuers
domiciled outside the U.S., or with significant operations outside the U.S., may lose value because of adverse political, social,
economic or market developments in the countries or regions in which the issuers operate. These securities may also lose value
due to changes in foreign currency exchange rates against the U.S. dollar and/or currencies of other countries. Securities markets
in certain countries may be more volatile and/or less liquid than those in the U.S. Investments outside the U.S. may also be subject
to different settlement and accounting practices and different regulatory, legal and reporting standards, and may be more difficult
to value, than those in the U.S. The risks of investing outside the U.S. may be heightened in connection with investments in emerging
markets.
Investing in emerging markets
— Investing in emerging
markets may involve risks in addition to and greater than those generally associated with investing in developed countries. For
instance, developing countries may have less developed legal and accounting systems than those in developed countries. The governments
of these countries may be less stable and more likely to impose capital controls, nationalize a company or industry, place restrictions
on foreign ownership and on withdrawing sale proceeds of securities from the country, and/or impose punitive taxes that could
adversely affect the prices of securities. In addition, the economies of these countries may be dependent on relatively few industries
that are more susceptible to local and global changes. Securities markets in these countries can also be relatively small and
have substantially lower trading volumes. As a result, securities issued in these countries may be more volatile and less liquid,
and may be more difficult to value, than securities issued in countries with more developed economies and/or markets. Additionally,
there may be increased settlement risks for transactions in local securities.
Management
— The investment adviser to the fund
actively manages the fund’s investments. Consequently, the fund is subject to the risk that the methods and analyses employed
by the investment adviser in this process may not produce the desired results. This could cause the fund to lose value or its
investment results to lag relevant benchmarks or other funds with similar objectives.
5. Taxation and distributions
Federal income taxation
— The fund complies with
the requirements under Subchapter M of the Internal Revenue Code applicable to mutual funds and intends to distribute substantially
all of its net taxable income and net capital gains each year. The fund is not subject to income taxes to the extent such distributions
are made. Therefore, no federal income tax provision is required.
As of and during the period ended May 31, 2013, the fund did
not have a liability for any unrecognized tax benefits. The fund recognizes interest and penalties, if any, related to unrecognized
tax benefits as income tax expense in the statement of operations. During the period, the fund did not incur any interest or penalties.
The fund is not subject to examination by U.S. federal and state
tax authorities for tax years before 2012, the year the fund commenced operations.
Non-U.S. taxation
— Interest income is recorded
net of non-U.S. taxes paid.
Distributions
— Distributions paid to shareholders
are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income
and net realized gains for financial reporting purposes. These differences are due primarily to different treatment for items
such as short-term capital gains and losses; and income on certain investments. The fiscal year in which amounts are distributed
may differ from the year in which the net investment income and net realized gains are recorded by the fund for financial reporting
purposes.
As of May 31, 2013, the tax basis components of distributable
earnings, unrealized appreciation (depreciation) and cost of investment securities were as follows (dollars in thousands):
Undistributed ordinary income
|
|
$
|
9
|
|
|
Gross unrealized appreciation on investment securities
|
|
|
100
|
|
|
Gross unrealized depreciation on investment securities
|
|
|
(863
|
)
|
|
Net unrealized depreciation on investment securities
|
|
|
(763
|
)
|
|
Cost of investment securities
|
|
|
49,980
|
|
|
American Funds Corporate Bond Fund
|
10
|
Tax-basis distributions paid or accrued to shareholders from
ordinary income were as follows (dollars in thousands):
Share class
|
|
For the period December 14, 2012*
to May 31, 2013
|
|
Class A
|
|
|
$
|
451
|
|
|
|
Total
|
|
|
$
|
451
|
|
|
|
*Commencement of operations.
6. Fees and transactions with related parties
CRMC, the fund’s investment adviser, is the parent company
of American Funds Distributors,
®
Inc. (“AFD”), the principal underwriter of the fund’s shares,
and American Funds Service Company
®
(“AFS”), the fund’s transfer agent. CRMC, AFD and AFS are
considered related parties to the fund.
Investment advisory services
— The fund has an
investment advisory and service agreement with CRMC that provides for monthly fees accrued daily. These fees are based on an annual
rate of 0.460% of average daily net assets. For the period ended May 31, 2013, the investment advisory services fee was $106,000.
CRMC has agreed to reimburse a portion of the fees and expenses
of the fund during its startup period. This reimbursement may be adjusted or discontinued by CRMC, subject to any restrictions
in the fund’s prospectus. For the period ended May 31, 2013, total fees and expenses reimbursed by CRMC were $44,000. Fees
and expenses in the statement of operations are presented gross of any reimbursements from CRMC.
Class-specific fees and expenses
— Expenses that
are specific to individual share classes are accrued directly to the respective share class. The principal class-specific fees
and expenses are described below:
Distribution
services
— The fund has plans of distribution for all share classes, except Class F-2, R-5 and R-6 shares. Under the
plans, the board of trustees approves certain categories of expenses that are used to finance activities primarily intended to
sell fund shares and service existing accounts. The plans provide for payments, based on an annualized percentage of average daily
net assets, ranging from 0.30% to 1.00% as noted below. In some cases, the board of trustees has limited the amounts that may
be paid to less than the maximum allowed by the plans. All share classes with a plan may use up to 0.25% of average daily net
assets to pay service fees, or to compensate AFD for paying service fees, to firms that have entered into agreements with AFD
to provide certain shareholder services. The remaining amounts available to be paid under each plan are paid to dealers to compensate
them for their sales activities.
For Class
A and 529-A shares, distribution-related expenses include the reimbursement of dealer and wholesaler commissions paid by AFD for
certain shares sold without a sales charge. These share classes reimburse AFD for amounts billed within the prior 15 months but only to the extent that the overall annual expense
limit of 0.30% is not exceeded. As of May 31, 2013, there were no unreimbursed expenses subject to reimbursement for Class A or
529-A shares.
Share class
|
|
Currently approved limits
|
|
Plan limits
|
|
Class A
|
|
|
0.30
|
%
|
|
|
0.30
|
%
|
|
Class 529-A
|
|
|
0.30
|
|
|
|
0.50
|
|
|
Classes B and 529-B
|
|
|
1.00
|
|
|
|
1.00
|
|
|
Classes C, 529-C and R-1
|
|
|
1.00
|
|
|
|
1.00
|
|
|
Class R-2
|
|
|
0.75
|
|
|
|
1.00
|
|
|
Classes 529-E and R-3
|
|
|
0.50
|
|
|
|
0.75
|
|
|
Classes F-1, 529-F-1 and R-4
|
|
|
0.25
|
|
|
|
0.50
|
|
|
Transfer
agent services
— The fund has a shareholder services agreement with AFS under which the fund compensates AFS for providing
transfer agent services to each of the fund’s share classes. These services include recordkeeping, shareholder communications
and transaction processing. In addition, the fund reimburses AFS for amounts paid to third parties for performing transfer agent
services on behalf of fund shareholders.
American Funds Corporate Bond Fund
|
11
|
Administrative
services
— The fund has an administrative services agreement with CRMC under which the fund compensates CRMC for providing
administrative services to Class A, C, F, 529 and R shares. These services include, but are not limited to, coordinating, monitoring,
assisting and overseeing third parties that provide services to fund shareholders. Under the agreement, Class
A shares pay an annual fee of 0.01% and Class C, F, 529 and R shares pay an annual fee of 0.05% of their respective average daily
net assets.
529
plan services
— Each 529 share class is subject to service fees to compensate the Commonwealth of Virginia for the maintenance
of the 529 college savings plan. The quarterly fee is based on a series of decreasing annual rates beginning with 0.10% on the
first $30 billion of the net assets invested in Class 529 shares of the American Funds and decreasing to 0.06% on such assets
between $120 billion and $150 billion. The fee for any given calendar quarter is accrued and calculated on the basis of the average
net assets of Class 529 shares of the American Funds for the last month of the prior calendar quarter. The fee is included in
other expenses on the accompanying financial statements. The Commonwealth of Virginia is not considered a related party.
For the
period ended May 31, 2013, class-specific expenses under the agreements were as follows (dollars in thousands):
|
|
|
Distribution
|
|
|
Transfer agent
|
|
Administrative
|
|
529 plan
|
|
Share class
|
|
services
|
|
|
services
|
|
services
|
|
services
|
|
Class A
|
|
|
$—
|
|
|
|
$—
|
|
|
|
$2
|
|
|
Not applicable
|
|
Total class-specific expenses
|
|
|
$—
|
|
|
|
$—
|
|
|
|
$2
|
|
|
Not applicable
|
Trustees’ deferred compensation
— Trustees
who are unaffiliated with CRMC may elect to defer the cash payment of part or all of their compensation. These deferred amounts,
which remain as liabilities of the fund, are treated as if invested in shares of the fund or other American Funds. These amounts
represent general, unsecured liabilities of the fund and vary according to the total returns of the selected funds. The fund did
not incur any expenses for trustees’ compensation during the period ended May 31, 2013.
Affiliated officers and trustees
— Officers and
certain trustees of the fund are or may be considered to be affiliated with CRMC, AFD and AFS. No affiliated officers or trustees
received any compensation directly from the fund.
7. Capital share transactions
Capital share transactions in the fund were as follows (dollars
and shares in thousands):
|
|
Sales
|
|
|
Reinvestments of
dividends
|
|
|
Repurchases
|
|
|
Net increase
|
|
Share class
|
|
Amount
|
|
|
|
Shares
|
|
|
Amount
|
|
|
|
Shares
|
|
|
Amount
|
|
|
|
Shares
|
|
|
Amount
|
|
|
|
Shares
|
|
For the period December 14, 2012* to May 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A
|
|
$
|
50,000
|
|
|
|
5,000
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
50,000
|
|
|
|
5,000
|
|
Total net increase
|
|
$
|
50,000
|
|
|
|
5,000
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
50,000
|
|
|
|
5,000
|
|
*Commencement of operations.
8. Investment transactions and other disclosures
The fund made purchases and sales of investment securities, excluding
short-term securities and U.S. government obligations, if any, of $78,900,000 and $29,993,000, respectively, during the period
ended May 31, 2013.
CRMC has agreed to bear all offering and organizational expenses
of the fund. The offering costs include state and SEC registration fees. Organizational costs include administrative and legal
fees. The total amount of offering and organizational expenses borne by CRMC was $19,000. These expenses are not included in the
accompanying financial statements.
9. Ownership concentration
At May 31, 2013, CRMC held 100% of the fund’s outstanding
shares. The ownership represents the seed money invested in the fund when it began operations on December 14, 2012.
American Funds Corporate Bond Fund
|
12
|
Financial highlights
|
|
|
|
|
Loss
from investment operations
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset
value,
beginning
of period
|
|
Net
investment
income
|
|
Net losses
on securities
(both
realized and
unrealized)
|
|
|
Total from
investment
operations
|
|
|
Dividends
(from net
investment
income)
|
|
|
Net asset
value, end
of periood
|
|
|
Total
return
2,3
|
|
|
Net assets,
end of period
(in thousands)
|
|
|
Ratio of
expenses to
average net
assets before
reimbursements
|
|
|
Ratio
of
expenses to
average
net
assets after
reimbursements
3
|
|
|
Ratio of
net income
to average
net assets
3
|
|
Class A:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period
from 12/14/2012
4
to 5/31/2013
5
|
|
$
|
10.00
|
|
$
|
.09
|
|
$
|
(.15
|
)
|
|
$
|
(.06
|
)
|
|
$
|
(.09
|
)
|
|
$
|
9.85
|
|
|
|
(.60
|
)%
|
|
$
|
49,245
|
|
|
|
.33
|
%
|
|
|
.24
|
%
|
|
|
.91
|
%
|
|
|
For the period 12/14/2012
4
to 5/31/2013
5
|
|
Portfolio turnover rate
|
|
|
65%
|
|
1
|
Based on average shares outstanding.
|
2
|
Total returns exclude any applicable sales charges, including contingent deferred sales charges.
|
3
|
This column reflects the impact of certain reimbursements from CRMC. During the period shown, CRMC reimbursed other fees and expenses.
|
4
|
Commencement of operations.
|
5
|
Based on operations for the period shown and, accordingly, is not representative of a full year.
|
See Notes to Financial Statements
American Funds Corporate Bond Fund
|
13
|
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and Shareholders of American Funds Corporate
Bond Fund
In our opinion, the accompanying statement of assets and liabilities,
including the investment portfolio, and the related statements of operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of American Funds Corporate Bond Fund (the “Fund”)
at May 31, 2013, and the results of its operations, the changes in its net assets and the financial highlights for the period December
14, 2012 (commencement of operations) through May 31, 2013, in conformity with accounting principles generally accepted in the
United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”)
are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements
based on our audit. We conducted our audit of these financial statements in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation. We believe that our audit, which included confirmation
of securities at May 31, 2013 by correspondence with the custodian and brokers, provides a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Los Angeles, California
July 16, 2013
American Funds Corporate Bond Fund
|
14
|
Tax information
|
unaudited
|
We are required to advise you of the federal tax status of certain
distributions received by shareholders during the fiscal year. The fund hereby designates the following amount for the fund’s
fiscal period ended May 31, 2013:
U.S. government income that may be exempt from state taxation
|
|
$
|
1,000
|
Individual shareholders should refer to their Form 1099 or
other tax information, which will be mailed in January 2014, to determine the calendar year amounts to be included on their 2013
tax returns. Shareholders should consult their tax advisors.
American Funds Corporate Bond Fund
|
15
|
Expense
example
|
unaudited
|
As a shareholder of the fund, you incur two types of costs: (1)
transaction costs, such as initial sales charges on purchase payments and contingent deferred sales charges on redemptions (loads),
and (2) ongoing costs, including management fees, distribution and service (12b-1) fees, and other expenses. This example is intended
to help you understand your ongoing costs (in dollars) of investing in the fund so you can compare these costs with the ongoing
costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period
and held for the entire period.
Actual expenses:
The first line of the share class in the table on the next page
provides information about actual account values and actual expenses. You may use the information in this line, together with the
amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example,
an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled
“Expenses paid during period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes:
The second line of the share class in the table on the next page
provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for the share
class and an assumed rate of return of 5.00% per year before expenses, which is not the actual return of the share class. The hypothetical
account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5.00%
hypothetical example with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.
Notes:
There are some account fees that are charged to certain types
of accounts, such as individual retirement accounts and 529 college savings plan accounts (generally, a $10 fee is charged to set
up the account and an additional $10 fee is charged to the account annually), that would increase the amount of expenses paid on
your account. In addition, retirement plan participants may be subject to certain fees charged by the plan sponsor, and Class F-1,
F-2 and 529-F-1 shareholders may be subject to fees charged by financial intermediaries, typically ranging from 0.75% to 1.50%
of assets annually depending on services offered. You can estimate the impact of these fees by adding the amount of the fees to
the total estimated expenses you paid on your account during the period as calculated above. In addition, your ending account value
would be lower by the amount of these fees.
Note that the expenses shown in the table are meant to highlight
your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of
the share class in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs
of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
American Funds Corporate Bond Fund
|
16
|
|
|
|
Beginning
account
value
|
|
|
|
Ending
account
value
5/31/2013
|
|
|
|
Expenses
paid
during
period
|
|
|
|
Annualized
expense
ratio
|
|
Class A — actual return
|
|
$
|
1,000.00
|
|
|
$
|
993.96
|
|
|
$
|
2.43
|
|
|
|
.53
|
%
|
Class A — assumed 5% return
|
|
|
1,000.00
|
|
|
|
1,022.29
|
|
|
|
2.67
|
|
|
|
.53
|
|
The “expenses paid during period” are equal to the
“annualized expense ratio,” multiplied by the average account value over the period, multiplied by the number of days
in the period, and divided by 365 (to reflect the current period).
The period for the “annualized expense ratio” and
“actual return” line is based on the number of days since the initial sale of the share class on
December 14, 2012. The “assumed 5% return” line is
based on 182 days.
American Funds Corporate Bond Fund
|
17
|
Approval of Investment Advisory and Service Agreement
The fund’s board has approved the fund’s Investment
Advisory and Service Agreement (the “agreement”) with Capital Research and Management Company (“CRMC”)
for an initial term through March 31, 2014. The board determined that the fund’s proposed advisory fee structure was fair
and reasonable in relation to the services proposed to be provided and that approving the agreement was in the best interests of
the fund and its shareholders.
In reaching this decision, the board took into account information
furnished to them throughout the year in connection with their service on boards of other American Funds, as well as information
prepared specifically in connection with their review of the agreement, and were advised by their independent counsel. The board
considered the factors discussed below, among others, but did not identify any single issue or particular piece of information
that, in isolation, was the controlling factor.
1. Nature, extent and quality of services
The board considered the depth and quality of CRMC’s
investment management process, including its global research capabilities; the experience, capability and integrity of its senior
management and other personnel; the low turnover rates of its key personnel; the overall financial strength and stability of its
organization; and the ongoing evolution of CRMC’s organizational structure designed to maintain and strengthen these qualities.
The board also considered the nature, extent and quality of administrative, compliance and shareholder services that would be provided
by CRMC to the funds under the agreement and other agreements, as well as the benefits to fund shareholders from investing in funds
that are part of a large family of funds. The board concluded that the nature, extent and quality of the services provided by CRMC
would benefit the fund and its shareholders.
2. Investment results
The board considered the manner in which CRMC proposed to manage
the fund in light of its investment objective of providing, over the long term, a high level of total return largely comprised
of current income. It also considered the proposed investment policies and restrictions of the fund and CRMC’s experience
in managing similar funds. The board concluded that CRMC’s record indicated that its management of the fund should benefit
the fund and its shareholders.
3. Advisory fees and total expenses
The board reviewed the proposed advisory fee schedule and projected
total expenses of the fund compared to those of other relevant funds. They observed that the fund’s proposed advisory fees
and estimated expenses were at the median levels of other investment-grade corporate bond funds. In addition, the board reviewed
information regarding the advisory fees paid by clients of an affiliate of CRMC. It noted that, to the extent there were differences
between the advisory fee schedule for the fund and the advisory fees paid by those clients, the differences appropriately reflected
the investment, operational and regulatory differences between advising the fund and the other clients. The board took into account
the fund’s projected total cost structure and concluded that it would be fair and reasonable in relation to the services
that CRMC proposed to provide, and that the shareholders would receive reasonable value in return for the advisory fees and other
amounts paid to CRMC by the fund.
American Funds
Corporate Bond Fund
|
18
|
4. Ancillary benefits
The board considered a variety of other benefits that would
be received by CRMC and its affiliates as a result of CRMC’s proposed relationship with the fund and the other American Funds,
including fees for administrative services provided to certain share classes; fees paid to CRMC’s affiliated transfer agent;
sales charges and distribution fees received and retained by the fund’s principal underwriter, an affiliate of CRMC; and
possible ancillary benefits to CRMC’s institutional management affiliates. The board considered CRMC’s portfolio trading
practices, noting that while CRMC would receive the benefit of research provided by broker-dealers executing portfolio transactions
on behalf of the fund, it does not obtain third-party research or other services in return for allocating brokerage to such broker-dealers.
The board took these ancillary benefits into account in evaluating the reasonableness of the advisory fees and other amounts that
were proposed to be paid to CRMC by the fund.
5. Adviser financial information
The board noted that it had previously reviewed information
regarding CRMC’s costs of providing services to the American Funds, including personnel, systems and resources of investment,
compliance, trading, accounting and other administrative operations. It considered CRMC’s costs and willingness to invest
in technology, infrastructure and staff to maintain and expand services and capabilities, respond to industry and regulatory developments,
and attract and retain qualified personnel. It noted information regarding the compensation structure for CRMC’s investment
professionals. The board had also compared CRMC’s profitability to the reported results of several large, publicly held investment
management companies. The board noted the competitiveness and cyclicality of both the mutual fund industry and the capital markets,
and the importance in that environment of CRMC’s long-term profitability for maintaining its independence, company culture
and management continuity. The board concluded that the fund’s advisory fee structure reflected a reasonable sharing of benefits
between CRMC and the fund’s shareholders.
American Funds
Corporate Bond Fund
|
19
|
Board of trustees and other officers
“Independent” trustees
1
Name
and age
|
|
Year
first
elected
a trustee
of the fund
2
|
|
Principal
occupation(s)
during past five years
|
|
Number
of
portfolios in fund
complex
3
overseen
by trustee
|
|
Other
directorships
4
held by trustee
|
William
H. Baribault,
68
|
|
2012
|
|
Chairman
of the Board and CEO, Oakwood Enterprises (private investment and consulting)
|
|
68
|
|
None
|
James
G. Ellis,
66
|
|
2012
|
|
Dean
and Professor of Marketing, Marshall School of Business, University of Southern California
|
|
69
|
|
Quiksilver,
Inc.
|
Leonard
R. Fuller,
67
|
|
2012
|
|
President
and CEO, Fuller Consulting (financial management consulting firm)
|
|
69
|
|
None
|
W.
Scott Hedrick,
67
|
|
2012
|
|
Founding
General Partner, InterWest Partners (venture capital firm)
|
|
65
|
|
Hot
Topic, Inc.;
Office Depot, Inc.
|
R.
Clark Hooper,
67
Chairman of the Board
(Independent and
Non-Executive)
|
|
2012
|
|
Private
investor
|
|
71
|
|
JPMorgan
Value Opportunities Fund, Inc.;
The Swiss Helvetia Fund, Inc.
|
Merit
E. Janow,
55
|
|
2012
|
|
Professor,
Columbia University, School of International and Public Affairs; former Member, World Trade Organization Appellate Body (2003–2007)
|
|
68
|
|
The
NASDAQ Stock Market LLC;
Trimble Navigation Limited
|
Laurel
B. Mitchell, Ph.D.,
58
|
|
2012
|
|
Clinical
Professor and Director, Accounting Program, University of Redlands
|
|
65
|
|
None
|
Frank
M. Sanchez,
69
|
|
2012
|
|
Principal,
The Sanchez Family Corporation dba McDonald’s Restaurants (McDonald’s licensee)
|
|
65
|
|
None
|
Margaret
Spellings,
55
|
|
2012
|
|
President,
George W. Bush Foundation (effective September 2013); President and CEO, Margaret Spellings & Company (public policy and
strategic consulting); President, U.S. Forum for Policy Innovation and Senior Advisor to the President and CEO, U.S. Chamber
of Commerce; former United States Secretary of Education, United States Department of Education
|
|
68
|
|
Apollo
Group
|
Steadman
Upham, Ph. D.,
64
|
|
2012
|
|
President
and University Professor, The University of Tulsa
|
|
68
|
|
None
|
“Interested” trustee
5,6
Name,
age and
position with fund
|
|
Year
first
elected
a trustee
or officer
of the fund
2
|
|
Principal
occupation(s) during past five years
and positions held with affiliated entities or
the principal underwriter of the fund
|
|
Number
of
portfolios in fund
complex
3
overseen
by trustee
|
|
Other
directorships
4
held by trustee
|
John H. Smet,
56
|
|
2012
|
|
Senior Vice President — Fixed Income,
Capital Research and Management Company; Director, The Capital Group Companies, Inc.
7
|
|
20
|
|
None
|
The fund’s statement
of additional information includes further details about fund trustees and is available without charge upon request by calling
American Funds Service Company at (800) 421-4225 or by visiting the American Funds website at americanfunds.com. The address for
all trustees and officers of the fund is 333 South Hope Street, Los Angeles, CA 90071, Attention: Secretary.
See page 21 for footnotes.
American Funds Corporate Bond Fund
|
20
|
Other
officers
6
Name,
age and
position with fund
|
|
Year
first elected
an officer
of the fund
2
|
|
Principal
occupation(s) during past five years and positions held with affiliated entities or the principal underwriter of the fund
|
Andrew
F. Barth,
52
President
|
|
2012
|
|
Senior
Vice President — Fixed Income, Capital Research and Management Company; Director, The
Capital
Group Companies, Inc.;
7
Director, Capital Group International, Inc.;
7
Chairman of the Board,
Capital Guardian Trust Company;
7
Senior Vice President
— Capital Fixed Income Investors, Capital
Guardian Trust
Company
|
|
|
|
|
|
Kristine
M. Nishiyama,
43
Senior Vice President
|
|
2012
|
|
Senior
Vice President and Senior Counsel — Fund Business Management Group, Capital Research
and
Management Company; Senior Vice President and General Counsel, Capital Bank and Trust
Company
7
|
|
|
|
|
|
Courtney
R. Taylor,
38
Secretary
|
|
2012
|
|
Assistant
Vice President — Fund Business Management Group, Capital Research and Management
Company
|
|
|
|
|
|
Karl
C. Grauman,
45
Treasurer
|
|
2012
|
|
Vice
President — Fund Business Management Group, Capital Research and Management Company
|
|
|
|
|
|
Steven
I. Koszalka,
49
Assistant Secretary
|
|
2012
|
|
Vice
President — Fund Business Management Group, Capital Research and Management Company
|
|
|
|
|
|
Brian
C. Janssen,
41
Assistant Treasurer
|
|
2012
|
|
Vice
President — Fund Business Management Group, Capital Research and Management Company
|
|
|
|
|
|
Dori
Laskin,
61
Assistant Treasurer
|
|
2012
|
|
Vice
President — Fund Business Management Group, Capital Research and Management Company
|
1
|
The term “independent” trustee refers to a trustee who is not an “interested person” of the fund within the meaning of the Investment Company Act of 1940.
|
2
|
Trustees and officers of the fund serve until their resignation, removal or retirement.
|
3
|
Capital Research and Management
Company manages the American Funds. Capital Research and Management Company also manages American Funds Insurance Series,
®
which is composed of 23 funds and serves as the underlying investment vehicle for certain variable insurance contracts;
American Funds Target Date Retirement Series,
®
which is composed of 10 funds and is available through tax-deferred
retirement plans and IRAs; American Funds Portfolio Series,
SM
which is composed of eight funds; and American Funds
College Target Date Series,
SM
which is composed of seven funds.
|
4
|
This includes all directorships (other than those in the American Funds or other funds managed by Capital Research and Management Company) that are held by each trustee as a trustee or director of a public company or a registered investment company.
|
5
|
“Interested persons” within the meaning of the Investment Company Act of 1940, on the basis of their affiliation with the fund’s investment adviser, Capital Research and Management Company, or affiliated entities (including the fund’s principal underwriter).
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6
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All of the officers listed are officers and/or directors/trustees of one or more of the other funds for which Capital Research and Management Company serves as investment adviser.
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7
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Company affiliated with Capital Research and Management Company.
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American Funds Corporate Bond Fund
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21
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Offices of the fund and of
the investment adviser
Capital Research and Management Company
333 South Hope Street
Los Angeles, CA 90071-1406
6455 Irvine Center Drive
Irvine, CA 92618
Transfer agent for shareholder accounts
American Funds Service Company
(Write to the address near you.)
P.O. Box 6007
Indianapolis, IN 46206-6007
P.O. Box 2280
Norfolk, VA 23501-2280
Custodian of assets
Bank of New York Mellon
One Wall Street
New York, NY 10286
Counsel
Bingham McCutchen LLP
355 South Grand Avenue, Suite 4400
Los Angeles, CA 90071-3106
Independent registered public accounting firm
PricewaterhouseCoopers LLP
601 South Figueroa Street
Los Angeles, CA 90017-3874
Principal underwriter
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, CA 90071-1406
Investors should carefully
consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectus
and summary prospectus, which can be obtained from your financial professional and should be read carefully before investing.
You may also call American Funds Service Company (AFS) at (800) 421-4225 or visit the American Funds website at americanfunds.com.
“American Funds Proxy Voting Procedures and Principles”
— which describes how we vote proxies relating to portfolio securities — is available on the American Funds website
or upon request by calling AFS. The fund files its proxy voting record with the U.S. Securities and Exchange Commission (SEC) for
the 12 months ended June 30 by August 31. The proxy voting record is available free of charge on the SEC website at sec.gov and
on the American Funds website.
American Funds Corporate Bond Fund files a complete list of
its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. This filing is available
free of charge on the SEC website. You may also review or, for a fee, copy this filing at the SEC’s Public Reference Room
in Washington, D.C. Additional information regarding the operation of the Public Reference Room may be obtained by calling the
SEC’s Office of Investor Education and Advocacy at (800) SEC-0330. Additionally, the list of portfolio holdings is available
by calling AFS.
This
report is for the information of shareholders of American Funds Corporate Bond Fund, but it also may be used as sales literature
when preceded or accompanied by the current prospectus or summary prospectus, which gives details about charges, expenses, investment
objectives and operating policies of the fund. If used as sales material after September 30, 2013, this report must be accompanied
by an American Funds statistical update for the most recently completed calendar quarter.
American Funds Corporate Bond Fund
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22
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The American Funds Advantage
Since 1931, American Funds,
part of Capital Group, has helped investors pursue long-term investment success. Our consistent approach — in combination
with The Capital System
SM
— has resulted in a superior long-term track record.
Aligned with investor success
We base our decisions on a long-term perspective, which we
believe aligns our goals with the interests of our clients. Our portfolio managers average 25 years of investment experience, including
20 years at our company, reflecting a career commitment to our long-term approach.
1
The Capital System
SM
Our investment process, The Capital System, combines individual
accountability with teamwork. Each fund is divided into portions that are managed independently by investment professionals with
diverse backgrounds, ages and investment approaches. An extensive global research effort is the backbone of our system.
Superior long-term track record
Our equity funds have beaten their Lipper peer indexes in 90%
of 10-year periods and 96% of 20-year periods. Our fixed-income funds have beaten their Lipper indexes in 58% of 10-year periods
and 63% of 20-year periods.
2
Our fund management fees have been among the lowest in the industry.
3
1
|
Portfolio manager experience as of December 31, 2012.
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|
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2
|
Based on Class A share results for rolling periods through December 31, 2012. Periods covered are the shorter of the fund’s lifetime or since the comparable Lipper index inception date.
|
|
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3
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Based on management fees for the 20-year period ended December 31, 2012, versus comparable Lipper categories, excluding funds of funds.
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Lit.
No. MFGEARX-032-0713P CT/10275-S38367