Investors Against Genocide's Take

Investors Against Genocide's Take

Investors Against Genocide's Take

Investors Against Genocide's Take

Investors Against Genocide's Take

Investors Against Genocide's Take

Investors Against Genocide's Take

Investors Against Genocide's Take

Investors Against Genocide's Take

Investors Against Genocide's Take

Investors Against Genocide's Take

Investors Against Genocide's Take

TO CONSIDER A SHAREHOLDER PROPOSAL THAT REQUESTS THE BOARD TO INSTITUTE PROCEDURES TO PREVENT HOLDING INVESTMENTS IN COMPANIES THAT, IN THE JUDGMENT OF THE BOARD, SUBSTANTIALLY CONTRIBUTE TO GENOCIDE OR CRIMES AGAINST HUMANITY, THE MOST EGREGIOUS VIOLATIONS OF HUMAN RIGHTS American Funds portfolio managers make investment decisions based on financial and legal considerations while seeming to ignore other issues. Even in the face of the most egregious violations of human rights, such as genocide, American Funds has released no policy to prevent investments that help fund or support such human rights violations. Ordinary individuals, through their investments in American Funds, may inadvertently invest in companies funding genocide because of investment decisions made on their behalf by American Funds. With no policy to prevent these problem investments, American Funds may at any time increase its holdings or involve new funds in such problem investments. We believe that this problem is not merely theoretical, since many mutual funds are large holders of PetroChina, which, through its closely related parent, China National Petroleum Company, is providing funding that the Government of Sudan uses to conduct genocide in Darfur. We believe that in the face of the most extreme human rights crises investors share responsibility to act, individually and collectively, in addition to the role and responsibility of governments. We believe that investors do not want their pensions and family savings connected to genocide. In KRC Research’s 2007 study, 71% of respondents said companies should take extreme cases of human rights abuses, such as genocide, into account rather than base investment decisions solely on economic criteria. Further, over 150,000 people have objected to financial firms about such problem investments. Reasonable people may disagree about what constitutes socially responsible investing, but few people want their savings to be complicit in genocide. We believe that negative publicity resulting from the many national press reports and widespread consumer protests can damage the company’s reputation, hurt employee morale, increase its cost to acquire customers, and reduce the shareholder base for distributing expenses, all of which can negatively impact American Funds shareholders. We see no compelling reason to invest in companies that fund genocide. We believe there are ample competitive alternatives and flexibility of investment choices, even with index funds. As noted by Gary Brinson’s classic study, investment returns are affected much more by asset allocation than individual security selections, so avoiding a small number of problem companies need not result in any significant effect on performance. Investor pressure has proven effective in influencing foreign governments. The campaign against Talisman Energy contributed to the January 2005 Comprehensive Peace Agreement between Khartoum and South Sudan.