Statement of Additional Information - American Funds Mortgage Fund

Maturity — There are no restrictions on the maturity composition of the portfolio. Under normal market conditions, longer termsecurities yield more than shorter term securities, but are subject to greater price fluctuations.Adjustment of maturities — The investment adviser seeks to anticipate movements in interest rates and may adjust the maturitydistribution of the portfolio accordingly, keeping in mind the fund’s objectives.* * * * * *Portfolio turnover — Portfolio changes will be made without regard to the length of time particular investments may have been held.Short-term trading profits are not the fund’s objective, and changes in its investments are generally accomplished gradually, thoughshort-term transactions may occasionally be made. High portfolio turnover may involve correspondingly greater transaction costs inthe form of dealer spreads or brokerage commissions. It may also result in the realization of net capital gains, which are taxable whendistributed to shareholders, unless the shareholder is exempt from taxation or his or her account is tax-deferred.Fixed-income securities are generally traded on a net basis and usually neither brokerage commissions nor transfer taxes areinvolved. Transaction costs are usually reflected in the spread between the bid and asked price. Certain investments, such as to beannounced contracts and mortgage dollar rolls may increase a fund’s portfolio turnover rate.The fund’s portfolio turnover rates for the fiscal year ended August 31, 2012 and for the period November 1, 2010 to August 31, 2011were 442% and 240%, respectively. The fund’s portfolio turnover rate is largely attributable to mortgage dollar roll transactions, whichare accounted for as purchase and sale transactions. The portfolio turnover rate would equal 100% if each security in a fund’sportfolio were replaced once per year.Page 10