Capital Group Funds Seek Board Elections, Fee Structure Overhaul

Capital World Growth & Income Fund DEF 14A Filing Summary
FieldDetail
CompanyCapital World Growth & Income Fund
Form TypeDEF 14A
Filed DateSep 9, 2025
Risk Levelmedium
Pages15
Reading Time18 min
Key Dollar Amounts$1.70
Sentimentmixed

Sentiment: mixed

Topics: Proxy Statement, Shareholder Meeting, Board Elections, Advisory Fees, Fund Reclassification, Investment Company Act of 1940, Capital Group

TL;DR

**Vote FOR these proposals; they're streamlining fees and giving managers more flexibility to chase returns, even if it means a bit more risk for TEFNY.**

AI Summary

CAPITAL WORLD GROWTH & INCOME FUND is holding a complex-wide shareholder meeting on November 25, 2025, at 9:00 a.m. Pacific Time to address three key proposals. Shareholders are being asked to elect Board members, a necessity due to several years passing since the last election and subsequent changes in Board composition, which will allow the Boards to add new members for a longer period without incurring additional shareholder meeting expenses. The second proposal seeks to amend the Investment Advisory and Service Agreement for ten specific bond funds, including American Funds Mortgage Fund and The Bond Fund of America, to transition from an asset and income-based fee schedule to an asset-only advisory fee schedule, aiming for greater stability and consistency in fees, especially during dynamic interest rate environments. The third proposal involves reclassifying American Funds Tax-Exempt Fund of New York (TEFNY) from a 'diversified' to a 'non-diversified' fund under the 1940 Act, granting its investment adviser, Capital Research and Management Company (CRMC), greater investment flexibility, though this change introduces additional risks. The estimated cost for obtaining shareholder approval across all Funds is approximately $1.70 per shareholder account. The Boards unanimously recommend voting 'FOR' all proposals.

Why It Matters

This DEF 14A filing is crucial for investors as it outlines significant governance and fee structure changes across a broad range of American Funds and Capital Group ETFs. The proposed shift to an asset-only advisory fee for several bond funds could stabilize investor costs, particularly in volatile interest rate environments, impacting long-term returns. The reclassification of American Funds Tax-Exempt Fund of New York to 'non-diversified' offers greater investment flexibility for CRMC, potentially leading to higher returns but also increased risk, directly affecting risk-averse investors. These changes reflect Capital Group's strategic adaptation to market conditions, aiming to enhance long-term investment results and maintain competitiveness against other large fund families.

Risk Assessment

Risk Level: medium — The reclassification of American Funds Tax-Exempt Fund of New York (TEFNY) from 'diversified' to 'non-diversified' introduces additional risks, as non-diversified funds are not subject to the 1940 Act's limits on investing more than 5% of total assets in one issuer or holding more than 10% of an issuer's voting securities. While this offers greater investment flexibility for CRMC, it concentrates risk for TEFNY shareholders.

Analyst Insight

Investors should carefully review the specific implications of the fee schedule changes for their bond fund holdings and understand the increased risk profile for American Funds Tax-Exempt Fund of New York. Vote 'FOR' the proposals if you trust the Board's assessment that these changes will lead to superior long-term investment results and are comfortable with the increased flexibility and associated risks for TEFNY.

Key Numbers

  • 2025-09-09 — Filing Date (Date the DEF 14A was filed)
  • 2025-11-25 — Shareholder Meeting Date (Date of the Joint Special Meetings of Shareholders)
  • 9:00 a.m. Pacific Time — Meeting Time (Scheduled time for the shareholder meetings)
  • 3 — Number of Proposals (Total proposals to be voted upon by shareholders)
  • $1.70 — Estimated Cost Per Shareholder Account (Average cost for obtaining shareholder approval across all Funds)
  • 2025-08-28 — Record Date (Date for determining shareholders entitled to vote)
  • 10 — Number of Funds (Funds affected by the proposed amendment to the Investment Advisory and Service Agreement)
  • 888-615-7476 — Computershare Contact Number (Phone number for shareholder assistance with voting)

Key Players & Entities

  • CAPITAL WORLD GROWTH & INCOME FUND (company) — Registrant for the DEF 14A filing
  • Michael W. Stockton (person) — Executive Vice President of the Funds
  • Capital Group (company) — Host of the special shareholder meeting
  • Capital Research and Management Company (company) — Investment adviser for American Funds Tax-Exempt Fund of New York
  • Computershare Fund Services (company) — Company hired to assist with shareholder meetings and collect votes
  • American Funds Mortgage Fund (company) — Fund affected by proposed fee schedule amendment
  • American High-Income Trust (company) — Fund affected by proposed fee schedule amendment
  • The Bond Fund of America (company) — Fund affected by proposed fee schedule amendment
  • American Funds Tax-Exempt Fund of New York (company) — Fund proposed for reclassification from diversified to non-diversified
  • SEC (regulator) — Regulates the filing of DEF 14A statements

FAQ

What are the key proposals for the CAPITAL WORLD GROWTH & INCOME FUND shareholder meeting on November 25, 2025?

Shareholders of CAPITAL WORLD GROWTH & INCOME FUND are asked to vote on three key proposals: electing Board members, approving an amendment to the Investment Advisory and Service Agreement for ten specific bond funds to modify their fee schedules, and approving a change in American Funds Tax-Exempt Fund of New York's classification from 'diversified' to 'non-diversified'.

Why is CAPITAL WORLD GROWTH & INCOME FUND proposing to elect Board members now?

The election of Board members is necessitated by several years passing since the last shareholder meeting for this purpose and subsequent changes in Board composition. This election will allow the Funds' Boards to add new members for a longer period without incurring the expense of conducting additional shareholder meetings.

Which funds are affected by the proposed amendment to the Investment Advisory and Service Agreement?

Ten funds are affected by the proposed amendment: 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.

What is the purpose of changing the fee structure for certain bond funds?

The purpose is to modify the investment advisory and service fee schedule from an asset and income component to an asset-only advisory fee schedule. This change aims to create stability and consistency in fees for investors, eliminating the potential for higher advisory fees during times of rising or higher interest rates.

What does it mean for American Funds Tax-Exempt Fund of New York to change from 'diversified' to 'non-diversified'?

Changing to 'non-diversified' means American Funds Tax-Exempt Fund of New York will no longer be subject to certain regulatory limits under the 1940 Act, such as investing no more than 5% of total assets in one issuer or holding no more than 10% of an issuer's voting securities. This gives the investment adviser, Capital Research and Management Company, greater investment flexibility but also introduces additional risks due to potential asset concentration.

What are the risks associated with American Funds Tax-Exempt Fund of New York becoming a 'non-diversified' fund?

The primary risk is increased concentration risk. As a non-diversified fund, it can invest a larger percentage of its assets in a smaller number of issuers, making it more susceptible to the risks associated with those specific investments and potentially leading to greater volatility than a diversified fund.

What is the estimated cost to shareholders for these proposals?

The estimated cost associated with obtaining shareholder approval of the proposals, including printing, mailing, and proxy solicitation, will average approximately $1.70 per shareholder account across all Funds.

How do the Boards of the Funds recommend shareholders vote on these proposals?

The Board of each Fund has unanimously approved proposals 1, 2, and 3, as applicable, and recommends that shareholders vote 'FOR' each of these proposals.

What happens if the proposals are not approved by shareholders?

If there are not enough votes to approve a proposal, the Fund's meeting may be adjourned to permit further solicitation of proxy votes. If a proposal is ultimately not approved (excluding EMEF or EUPAC for Proposal 1), the Fund will continue to operate as it currently does.

Who is responsible for soliciting proxy votes for the CAPITAL WORLD GROWTH & INCOME FUND meeting?

Computershare Fund Services, a company not affiliated with the Funds or their advisers, has been hired to help with the shareholder meetings and collect votes. They may contact shareholders who have not voted before the meeting.

Risk Factors

  • 1940 Act Classification Change [medium — regulatory]: American Funds Tax-Exempt Fund of New York (TEFNY) is proposed to be reclassified from a 'diversified' to a 'non-diversified' fund under the 1940 Act. This change grants the investment adviser, CRMC, greater investment flexibility but introduces additional risks associated with non-diversified funds.
  • Dynamic Interest Rate Environments [medium — market]: The proposed amendment to the Investment Advisory and Service Agreement for ten bond funds aims to transition from an asset and income-based fee schedule to an asset-only schedule. This is intended to create greater stability and consistency in fees, particularly during dynamic interest rate environments where the current structure can lead to variability.
  • Shareholder Meeting Costs [low — operational]: The estimated cost for obtaining shareholder approval across all affected Funds for the proposals is approximately $1.70 per shareholder account. This cost is incurred to facilitate necessary governance and operational changes.

Industry Context

The mutual fund industry, particularly the segment managed by large firms like Capital Group, is subject to ongoing regulatory scrutiny and market dynamics. Firms continuously adapt their structures and fee arrangements to optimize investment strategies and investor outcomes. Changes in interest rates and evolving regulatory landscapes necessitate periodic adjustments to fund operations and governance.

Regulatory Implications

The proposed reclassification of American Funds Tax-Exempt Fund of New York under the 1940 Act highlights the impact of regulatory definitions on fund flexibility. Amendments to investment advisory agreements also fall under regulatory oversight, requiring shareholder approval to ensure alignment with investor interests.

What Investors Should Do

  1. Vote on the three proposals presented in the Joint Proxy Statement by the November 25, 2025, shareholder meeting. Your vote is crucial for board elections and changes to fund management and classification.
  2. Review the details of each proposal, particularly the shift to an asset-only fee structure for ten bond funds and the reclassification of TEFNY to a non-diversified status, to understand potential impacts on fees and investment strategy.
  3. Contact Computershare at 888-615-7476 if you have questions or require assistance with voting your proxy.

Key Dates

  • 2025-09-09: Filing Date — Indicates when the definitive proxy statement was filed with the SEC, providing shareholders with the official information for the upcoming meeting.
  • 2025-08-28: Record Date — Determines which shareholders are entitled to vote at the special shareholder meetings.
  • 2025-11-25: Shareholder Meeting Date — The date when shareholders will vote on the three key proposals, including board elections and changes to advisory agreements.

Glossary

DEF 14A
A definitive proxy statement filed with the U.S. Securities and Exchange Commission (SEC) by companies, providing shareholders with information about matters to be voted on at a shareholder meeting. (This document contains the details of the proposals shareholders are being asked to vote on.)
1940 Act
The Investment Company Act of 1940, a U.S. federal law that regulates the organization of companies, including mutual funds, investment trusts, and similar organizations, in the issuance of securities and other aspects of their operations. (Key provisions of the 1940 Act are relevant to the election of board members and the classification of funds (diversified vs. non-diversified).)
Diversified Fund
Under the 1940 Act, a diversified investment company generally limits its investments in any single issuer to no more than 5% of its total assets and holds no more than 10% of the voting securities of any single issuer. (The proposed change for American Funds Tax-Exempt Fund of New York from diversified to non-diversified is a central proposal.)
Non-diversified Fund
Under the 1940 Act, a non-diversified investment company is not subject to the strict percentage limitations on investments in single issuers that apply to diversified funds. (This classification offers greater investment flexibility but may entail higher risks for shareholders.)
Investment Advisory and Service Agreement
A contract between an investment company (like a mutual fund) and its investment adviser, outlining the services to be provided and the fees to be paid. (Shareholders are being asked to approve amendments to this agreement for ten bond funds, specifically concerning the fee structure.)

Year-Over-Year Comparison

This filing is a proxy statement for a shareholder meeting and does not contain comparative financial data from a previous year's annual report. The key focus is on upcoming governance and operational changes rather than a review of past financial performance.

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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