New Economy Fund Seeks Shareholder Approval for Board, Fee, and Diversification Changes

New Economy Fund DEF 14A Filing Summary
FieldDetail
CompanyNew Economy Fund
Form TypeDEF 14A
Filed DateSep 9, 2025
Risk Levelmedium
Pages15
Reading Time18 min
Key Dollar Amounts$1.70
Sentimentmixed

Sentiment: mixed

Topics: Shareholder Meeting, Proxy Vote, Fund Governance, Advisory Fees, Diversification Change, Investment Company Act, Capital Group

TL;DR

**Vote FOR these proposals; they're streamlining fees and giving managers more flexibility to chase returns, which is bullish for long-term holders.**

AI Summary

NEW ECONOMY FUND, alongside other American Funds and Capital Group ETFs, is holding a special shareholder meeting on November 25, 2025, to address three key proposals. Shareholders are being asked to elect Board members, a necessary step as it has been several years since the last election and changes in Board composition necessitate new elections to maintain the two-thirds elected member requirement under the 1940 Act. Additionally, ten specific bond funds, including American Funds Mortgage Fund and The Bond Fund of America, are proposing an amendment to their Investment Advisory and Service Agreement to modify the fee schedule from an asset and income component to an asset-only structure, aiming for greater fee stability for investors. Finally, American Funds Tax-Exempt Fund of New York (TEFNY) seeks approval to change its classification from a 'diversified' to a 'non-diversified' fund under the 1940 Act, which would grant its investment adviser, Capital Research and Management Company (CRMC), greater investment flexibility, albeit with additional risks. The Boards of all affected Funds unanimously recommend voting 'FOR' all proposals, believing them to be in the best interests of shareholders.

Why It Matters

These proposals have significant real-world implications for investors, employees, and the broader market. The shift to an asset-only advisory fee for ten bond funds could stabilize costs for investors, particularly in volatile interest rate environments, potentially enhancing net returns compared to competitors with more variable fee structures. For TEFNY, the reclassification to 'non-diversified' offers CRMC increased investment flexibility, which could lead to higher returns but also introduces greater risk concentration, impacting investor risk profiles. The election of Board members ensures proper governance and oversight, crucial for maintaining investor confidence and fund stability in a competitive asset management landscape dominated by firms like Capital Group.

Risk Assessment

Risk Level: medium — The risk level is medium due to the proposed change in American Funds Tax-Exempt Fund of New York's classification from 'diversified' to 'non-diversified.' This change, while offering greater investment flexibility to CRMC, introduces additional risks associated with higher asset concentration in fewer issuers, as non-diversified funds are not subject to the 1940 Act's 5% and 10% investment limits.

Analyst Insight

Investors should carefully review the specific implications of the fee schedule changes for the ten bond funds they hold, as this could impact their net returns. For shareholders of American Funds Tax-Exempt Fund of New York, it's crucial to understand the increased risk profile associated with a non-diversified classification before voting, and consider if this aligns with their personal risk tolerance.

Key Numbers

  • 2025-09-09 — Filing Date (Date the DEF 14A was filed)
  • 2025-11-25 — Meeting Date (Date of the Joint Special Meetings of Shareholders)
  • 2025-08-28 — Record Date (Date for determining shareholder voting eligibility)
  • 10 — Number of Funds (Number of bond funds proposing advisory fee schedule changes)
  • 3 — Number of Proposals (Total number of proposals to be voted upon by shareholders)
  • 67% — Majority Vote Threshold (Required vote for proposals 2 and 3 if more than 50% of outstanding voting securities are present)
  • 50% — Majority Vote Threshold (Required vote for proposals 2 and 3 if less than 50% of outstanding voting securities are present)
  • 2/3 — Board Member Ratio (Minimum proportion of Board members that must be elected by shareholders after filling vacancies)
  • $1.70 — Estimated Cost Per Shareholder Account (Average cost for obtaining shareholder approval of proposals)
  • 888-615-7476 — Computershare Contact Number (Shareholder assistance line for voting questions)

Key Players & Entities

  • NEW ECONOMY FUND (company) — Registrant in DEF 14A filing
  • Capital Group (company) — Parent company of American Funds and Capital Group ETFs, meeting host
  • Michael W. Stockton (person) — Executive Vice President of the Funds
  • Capital Research and Management Company (company) — Investment adviser for American Funds Tax-Exempt Fund of New York
  • American Funds Tax-Exempt Fund of New York (company) — Fund proposing diversification classification change
  • Computershare Fund Services (company) — Company hired to assist with shareholder meetings and proxy solicitation
  • November 25, 2025 (date) — Date of the special shareholder meeting
  • August 28, 2025 (date) — Record date for shareholder voting eligibility
  • $1.70 (dollar_amount) — Estimated average cost per shareholder account for proxy solicitation
  • Investment Company Act of 1940 (regulator) — Governing act for fund classifications and board elections

FAQ

What are the key proposals for NEW ECONOMY FUND shareholders to vote on?

NEW ECONOMY FUND shareholders are asked to vote on three key proposals: the election of Board members, an amendment to the Investment Advisory and Service Agreement to modify the fee schedule for ten specific bond funds, and a change in American Funds Tax-Exempt Fund of New York's classification from 'diversified' to 'non-diversified.'

Why is NEW ECONOMY FUND electing Board members now?

NEW ECONOMY FUND is electing Board members because it has been several years since the last shareholder meeting for elections, and subsequent changes in Board composition necessitate new elections. This ensures that at least two-thirds of the Board members are elected by shareholders, as required by the Investment Company Act of 1940.

How will the proposed fee schedule change affect investors in American Funds Mortgage Fund?

The proposed fee schedule change for American Funds Mortgage Fund, and nine other bond funds, will modify the Investment Advisory and Service Agreement to an asset-only advisory fee structure. This aims to create stability and consistency in fees for investors, eliminating potential for higher advisory fees during periods of rising or higher interest rates.

What does changing American Funds Tax-Exempt Fund of New York to 'non-diversified' mean for investors?

Changing American Funds Tax-Exempt Fund of New York (TEFNY) to 'non-diversified' means it will no longer be subject to the 1940 Act's limits on investing more than 5% of its total assets in one issuer or holding more than 10% of an issuer's voting securities. This gives its adviser, CRMC, greater investment flexibility but introduces additional risks associated with higher asset concentration.

When and where is the special shareholder meeting for NEW ECONOMY FUND?

The Joint Special Meetings of Shareholders, including for NEW ECONOMY FUND, will be held on November 25, 2025, at the office of Capital Group, located at 333 South Hope Street, Los Angeles, California 90071, starting at 9:00 a.m. Pacific Time.

Who is recommending the proposals and what is their stance?

The Board of Directors or Trustees of each Fund, including NEW ECONOMY FUND, has unanimously approved proposals 1-3 and recommends that shareholders vote 'FOR' each of these proposals, believing them to be in the best interests of shareholders.

What happens if the proposals are not approved by NEW ECONOMY FUND shareholders?

If there are not enough votes to approve a proposal, the Fund's meeting may be adjourned to solicit further proxy votes. If a proposal is ultimately not approved, the Fund will continue to operate as it currently does, with current trustees continuing to serve if Board elections are not approved for EMEF or EUPAC.

How much will it cost the Funds to obtain shareholder approval for these proposals?

The Funds will bear the expenses associated with obtaining shareholder approval, including printing, mailing, and proxy solicitation. These costs are estimated to average approximately $1.70 per shareholder account across all Funds.

What is the role of Computershare Fund Services in this shareholder meeting?

Computershare Fund Services is a company hired by the Funds to help with the shareholder meetings and collect votes. They are not affiliated with the Funds, CRMC, or Capital International, Inc., and may contact shareholders who have not yet voted to encourage participation.

What is the voting standard for electing Board members for NEW ECONOMY FUND?

For NEW ECONOMY FUND (excluding EUPAC and EMEF), approval for electing Board members requires the affirmative vote of a plurality of votes cast by shareholders at a meeting where a quorum is present. Since nominees are running unopposed, election is likely if a quorum is met.

Risk Factors

  • Classification Change for Tax-Exempt Fund of New York [medium — regulatory]: American Funds Tax-Exempt Fund of New York (TEFNY) is seeking to change its classification from 'diversified' to 'non-diversified' under the 1940 Act. This change grants the investment adviser, CRMC, greater investment flexibility but also introduces additional risks for investors. A diversified fund has limitations on investments in a single issuer (no more than 5% of assets or 10% of voting securities), while non-diversified funds do not have these specific constraints.
  • Board Member Election Requirements [low — regulatory]: The 1940 Act requires that at least two-thirds of a fund's Board members must be elected by shareholders. To maintain compliance, the Funds are holding elections as it has been several years since the last one and board composition has changed. This ensures ongoing compliance with regulatory requirements for shareholder representation on the board.
  • Investment Advisory Fee Schedule Changes [low — financial]: Ten bond funds are proposing to amend their Investment Advisory and Service Agreement to shift from an asset and income component fee schedule to an asset-only structure. This aims to provide greater fee stability for investors by eliminating variability caused by fluctuating interest rates, which can impact the income component of the current fee structure.

Industry Context

The mutual fund industry, particularly within the American Funds and Capital Group families, is highly competitive and subject to evolving regulatory landscapes. Funds are continuously adapting their structures and fee arrangements to remain competitive and meet investor demands for stability and performance. Changes in investment advisory agreements and fund classifications are common strategies to enhance flexibility and potentially improve investment outcomes in response to market conditions.

Regulatory Implications

The proposals directly address requirements and classifications under the Investment Company Act of 1940. The election of board members ensures ongoing compliance with shareholder representation rules. The proposed change in classification for TEFNY from diversified to non-diversified will alter its regulatory investment limitations, while the fee schedule amendment for bond funds aims to standardize costs, potentially impacting how fees are perceived and managed under regulatory frameworks.

What Investors Should Do

  1. Review the Joint Proxy Statement carefully to understand the implications of each proposal on your specific fund holdings.
  2. Vote your shares by the deadline to ensure your voice is heard on matters of fund governance, fees, and investment strategy.
  3. Contact Computershare at 888-615-7476 if you have any questions or require assistance with the voting process.

Key Dates

  • 2025-09-09: Filing Date — This is the date the definitive proxy statement (DEF 14A) was officially filed with the SEC, making the information public and initiating the formal proxy solicitation period.
  • 2025-08-28: Record Date — Shareholders as of this date are eligible to vote at the special meetings. This date is crucial for determining the voting rights of shareholders.
  • 2025-11-25: Joint Special Meetings of Shareholders — This is the date when shareholders will vote on the three key proposals. The outcome of these votes will impact the governance, fee structure, and investment strategy of several funds.

Glossary

DEF 14A
A filing with the U.S. Securities and Exchange Commission (SEC) that provides shareholders with information about matters to be voted on at a shareholder meeting, including proposals, board recommendations, and other relevant details. (This document is the primary source of information for shareholders regarding the upcoming meeting and the proposals being voted on.)
Investment Company Act of 1940 (1940 Act)
A U.S. federal law that regulates the organization and operation of mutual funds and other investment companies. It provides for shareholder rights, board responsibilities, and investment company classifications. (Key provisions of the 1940 Act are central to two of the proposals: the requirement for shareholder election of at least two-thirds of board members, and the classification of funds as 'diversified' or 'non-diversified'.)
Diversified Fund
Under the 1940 Act, a diversified investment company is one that meets specific requirements regarding the concentration of its investments. For 75% of its assets, it cannot invest more than 5% of its total assets in the securities of any one issuer, nor can it hold more than 10% of the outstanding voting securities of any one issuer. (American Funds Tax-Exempt Fund of New York is proposing to change its classification from diversified to non-diversified, which will alter its investment flexibility and associated risks.)
Non-diversified Fund
Under the 1940 Act, a non-diversified investment company is not subject to the strict percentage limitations on investments in a single issuer that apply to diversified funds. (This classification allows for greater investment flexibility, as proposed for the American Funds Tax-Exempt Fund of New York, but may also entail higher concentration risk.)
Proxy Statement
A document that is required by the SEC when a company is soliciting proxies from shareholders. It contains detailed information about the matters to be voted on at a shareholder meeting. (This filing is a joint proxy statement, meaning it covers multiple funds and consolidates information for shareholders of those funds.)
Plurality
In an election, a plurality means that a candidate receives more votes than any other single candidate, but not necessarily more than 50% of the total votes cast. This is often used when there are multiple candidates or when a majority is not required. (Proposal 1 (election of Board members) uses a plurality voting standard, meaning nominees are elected if they receive the most votes among those cast, assuming a quorum is present.)

Year-Over-Year Comparison

This filing is a proxy statement for a special meeting and does not contain comparative financial data like revenue or net income from a previous year's annual report. The key 'vs. last filing' aspect relates to the necessity of these proposals: Proposal 1 addresses outdated board elections, and Proposals 2 and 3 are adaptations to market conditions and regulatory classifications, indicating a proactive rather than reactive change from previous operational states.

Filing Stats: 4,405 words · 18 min read · ~15 pages · Grade level 13.7 · Accepted 2025-09-09 16:17:58

Key Financial Figures

  • $1.70 — average across all Funds approximately $1.70 per shareholder account. How many vote

Filing Documents

– The Proposals

Part I – The Proposals     Proposal 1 – To elect Board members of the Funds   3 Proposal 2 – To approve the proposed amendment of the Investment Advisory and Service Agreement to modify the investment advisory and service fee schedule for each of American Funds Mortgage Fund, American High -Income Trust, The Bond Fund of America, U.S. Government Securities Fund, Intermediate Bond Fund of America, American High -Income Municipal Bond Fund, Limited Term Tax -Exempt Bond Fund of America, The Tax -Exempt Bond Fund of America, The Tax -Exempt Fund of California, and American Funds Tax -Exempt Fund of New York   8 Proposal 3 – To approve the proposed change to the diversification classification for American Funds Tax -Exempt Fund of New York from a diversified to a non -diversified registered investment company   13 Part II     Additional Information about the Funds   15 Audit Committee   16 Further Information About Voting and the Shareholder Meetings   17 EXHIBITS     Exhibit A – Series and Included Fund(s )     Exhibit B – Form of Nominating and Governance Committee Charte r     APPENDICES     Appendix 1 – Board Member and Nominee Informatio n     Appendix 2 – Board and Committee Meetings; Committee Compositio n     Appendix 3 – Board Member Compensation and Fund Ownershi p     Appendix 4 – Executive Officer s     Appendix 5 – Total Shares Outstandin g     Appendix 6 – Principal Beneficial Holder s     Appendix 7 – Independent Auditors and Related Fee s     Appendix 8 – Comparison of Current and Proposed A

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