American Funds, Capital Group Seek Shareholder Approval for Board, Fee, and Fund Classification Changes

Limited Term Tax Exempt Bond Fund Of America DEF 14A Filing Summary
FieldDetail
CompanyLimited Term Tax Exempt Bond Fund Of America
Form TypeDEF 14A
Filed DateSep 9, 2025
Risk Levelmedium
Pages15
Reading Time18 min
Key Dollar Amounts$1.70
Sentimentneutral

Sentiment: neutral

Topics: Proxy Statement, Shareholder Meeting, Board Elections, Advisory Fees, Fund Classification, Investment Company Act, Municipal Bonds

TL;DR

**Vote FOR these proposals; they're streamlining governance and fee structures, which should bring more stability and flexibility to your bond funds.**

AI Summary

LIMITED TERM TAX EXEMPT BOND FUND OF AMERICA, alongside other American Funds and Capital Group ETFs, is holding a special shareholder meeting on November 25, 2025, to address three key proposals. The first proposal seeks to elect Board members, a necessary step due to prior vacancies filled by appointment and to enable future appointments without additional shareholder meetings. The second proposal involves amending the Investment Advisory and Service Agreement for ten specific bond funds, including Limited Term Tax-Exempt Bond Fund of America, to transition from a fee schedule with both asset and income components to an asset-only advisory fee. This change aims to stabilize fees, particularly in dynamic interest rate environments, by eliminating potential increases during periods of rising rates. The third proposal, specific to American Funds Tax-Exempt Fund of New York (TEFNY), requests approval to reclassify it 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. The Boards of all affected Funds unanimously recommend voting 'FOR' all applicable proposals, emphasizing their belief that these changes are in the best interests of shareholders.

Why It Matters

This DEF 14A filing is crucial for investors in Limited Term Tax-Exempt Bond Fund of America and other American Funds/Capital Group ETFs as it outlines significant governance and fee structure changes. The proposed shift to an asset-only advisory fee for several bond funds could provide more predictable costs for investors, especially in volatile interest rate markets, potentially impacting net returns. For American Funds Tax-Exempt Fund of New York, the reclassification to 'non-diversified' offers its adviser, CRMC, enhanced investment flexibility, which could lead to different risk/reward profiles compared to its diversified peers. These changes reflect a proactive adaptation to market conditions and regulatory requirements, potentially influencing the competitive landscape within the municipal bond and broader fund sectors.

Risk Assessment

Risk Level: medium — The risk level is medium due to the proposed reclassification of American Funds Tax-Exempt Fund of New York from 'diversified' to 'non-diversified,' which, as stated in the filing, carries 'additional risks associated with investing in a non-diversified fund.' While the fee schedule change aims for stability, any modification to advisory fees or fund diversification can introduce unforeseen impacts on performance or investor perception, even if intended to be beneficial.

Analyst Insight

Investors should carefully review the specific implications of the proposed asset-only advisory fee schedule on their individual bond fund holdings, particularly for Limited Term Tax-Exempt Bond Fund of America, to understand potential cost savings or changes. Shareholders of American Funds Tax-Exempt Fund of New York must consider the increased investment flexibility and associated risks of a 'non-diversified' classification before casting their vote.

Key Numbers

  • $1.70 — Estimated cost per shareholder account (Average expense for obtaining shareholder approval across all Funds)
  • 2/3 — Board member election threshold (Minimum proportion of Board members required to be elected by shareholders after filling vacancies by appointment)
  • 5% — Diversified fund investment limit (Maximum percentage of total assets a diversified fund can invest in one issuer for 75% of its portfolio)
  • 10% — Diversified fund voting securities limit (Maximum percentage of outstanding voting securities of one issuer a diversified fund can hold)
  • 67% — Majority vote threshold (1940 Act) (Percentage of voting securities present or represented by proxy required for approval if holders of more than 50% of outstanding securities are present)
  • 50% — Majority vote threshold (1940 Act) (Percentage of outstanding voting securities required for approval)
  • 10 — Number of bond funds affected by fee change (Funds proposing to modify their investment advisory and service fee schedule)
  • August 28, 2025 — Record Date (Date for determining shareholders entitled to vote)
  • 9:00 a.m. Pacific Time — Meeting Time (Scheduled start time for the Joint Special Meetings of Shareholders)
  • 888-615-7476 — Computershare contact number (Shareholder assistance line for voting questions)

Key Players & Entities

  • LIMITED TERM TAX EXEMPT BOND FUND OF AMERICA (company) — Registrant for DEF 14A filing
  • American Funds (company) — Group of funds involved in the joint proxy statement
  • Capital Group (company) — Group of funds involved in the joint proxy statement and 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
  • Computershare Fund Services (company) — Company hired to assist with shareholder meetings and collect votes
  • American Funds Tax-Exempt Fund of New York (company) — Fund proposing a change in diversification classification
  • Investment Company Act of 1940 (regulator) — Governing act for fund classifications and board elections
  • $1.70 (dollar_amount) — Estimated average cost per shareholder account for obtaining approval
  • November 25, 2025 (date) — Date of the special shareholder meeting

FAQ

What are the key proposals for Limited Term Tax-Exempt Bond Fund of America shareholders?

Shareholders of Limited Term Tax-Exempt Bond Fund of America are being asked to vote on three key proposals: the election of Board members, the approval of an amendment to the Investment Advisory and Service Agreement to modify the investment advisory and service fee schedule, and for American Funds Tax-Exempt Fund of New York, a change in diversification classification.

Why is Limited Term Tax-Exempt Bond Fund of America changing its advisory fee structure?

Limited Term Tax-Exempt Bond Fund of America, along with nine other bond funds, is proposing to change its advisory fee structure from one with both asset and income components to an asset-only schedule. This aims to create stability and consistency in fees, eliminating potential increases during dynamic interest rate environments.

What is the impact of American Funds Tax-Exempt Fund of New York's proposed reclassification?

The proposed reclassification of American Funds Tax-Exempt Fund of New York from 'diversified' to 'non-diversified' will grant its investment adviser, Capital Research and Management Company, greater investment flexibility. However, the filing notes that there are 'additional risks associated with investing in a non-diversified fund' due to less stringent regulatory limits on asset concentration.

When and where is the special shareholder meeting for Limited Term Tax-Exempt Bond Fund of America?

The Joint Special Meetings of Shareholders, including for Limited Term Tax-Exempt Bond Fund of America, 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 these proposals for Limited Term Tax-Exempt Bond Fund of America?

The Board of Directors or Trustees of each Fund, including Limited Term Tax-Exempt Bond Fund of America, has unanimously approved proposals 1-3, as applicable, and recommends that shareholders vote 'FOR' these proposals, believing them to be in the best interests of shareholders.

What happens if the proposals for Limited Term Tax-Exempt Bond Fund of America are not approved?

If there are not enough votes to approve a proposal for a Fund, that Fund's meeting may be adjourned to permit further solicitation of proxy votes. If a Fund's shareholders do not ultimately approve a proposal (other than for EMEF or EUPAC), the Fund will continue to operate as it currently does.

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

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

What is the voting standard for electing Board members for Limited Term Tax-Exempt Bond Fund of America?

For Limited Term Tax-Exempt Bond Fund of America (and most other Funds), approval for Board member election 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.

What is the role of Computershare Fund Services in this process?

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 or their advisers, Capital Research and Management Company or Capital International, Inc., and may contact shareholders to solicit votes.

How can shareholders of Limited Term Tax-Exempt Bond Fund of America vote?

Shareholders can vote their shares online, by phone, by mail, or in person at the shareholder meeting. Instructions and identifying numbers for online or phone voting are on the proxy card or meeting notice, and mail voting involves completing and returning the signed proxy card.

Risk Factors

  • 1940 Act Classification Change [medium — regulatory]: The proposal to reclassify American Funds Tax-Exempt Fund of New York (TEFNY) from a 'diversified' to a 'non-diversified' fund under the 1940 Act grants its investment adviser, CRMC, greater investment flexibility. While this offers potential benefits, non-diversified funds are not subject to the same regulatory limits on investments in single issuers as diversified funds (e.g., 5% of assets or 10% of voting securities in one issuer for 75% of the portfolio). This change introduces additional risks for shareholders.
  • Interest Rate Environment Impact on Fees [medium — market]: The proposed amendment to the Investment Advisory and Service Agreement for ten bond funds, including Limited Term Tax-Exempt Bond Fund of America, aims to transition from a fee schedule with both asset and income components to an asset-only advisory fee. This change is intended to stabilize fees, particularly in dynamic interest rate environments, by eliminating potential increases during periods of rising rates, which could otherwise impact fund performance and shareholder costs.
  • Board Member Election Necessity [low — operational]: The proposal to elect Board members is necessary due to prior vacancies filled by appointment. Under the 1940 Act, at least two-thirds of the Board members must have been elected by shareholders. This election ensures compliance and allows for future appointments without additional shareholder meetings, which would incur costs estimated at $1.70 per shareholder account.

Industry Context

The mutual fund industry, particularly the fixed-income sector, is highly competitive and sensitive to macroeconomic factors like interest rates. Funds are constantly seeking ways to optimize their fee structures and investment strategies to attract and retain assets. Regulatory changes and market dynamics often drive proposals for fund classification changes and fee adjustments to enhance flexibility and investor value.

Regulatory Implications

The proposed reclassification of American Funds Tax-Exempt Fund of New York to a non-diversified status under the 1940 Act is a significant regulatory shift that will alter its investment parameters. Changes to investment advisory fee schedules also require shareholder approval, highlighting the regulatory oversight of fund operations and shareholder interests.

What Investors Should Do

  1. Vote on the proposals by November 25, 2025.
  2. Review the Joint Proxy Statement thoroughly.
  3. Contact Computershare at 888-615-7476 for voting assistance.

Key Dates

  • 2025-11-25: Joint Special Shareholder Meetings — Shareholders will vote on key proposals including board member elections and changes to investment advisory agreements.
  • 2025-08-28: Record Date — Determines which shareholders are entitled to vote at the special meetings.
  • 2025-09-09: Mailing of Joint Proxy Statement — Informs shareholders about the upcoming meeting and the proposals to be voted on.

Glossary

1940 Act
The Investment Company Act of 1940, a U.S. federal law that regulates the organization of companies, including mutual funds, that engage in investing, reinvesting, and trading in securities, and whose primary purpose is to invest and trade in securities. (Governs the classification of funds as diversified or non-diversified and sets requirements for shareholder approval of changes in classification and board composition.)
Diversified Fund
A type of investment company under the 1940 Act that is limited in how much it can invest in any single issuer. Specifically, for 75% of its assets, it cannot invest more than 5% of its total assets in securities of one issuer, nor 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 from this classification, which will alter its investment flexibility and associated risks.)
Non-Diversified Fund
A type of investment company under the 1940 Act that does not have the same strict limitations on investments in single issuers as a diversified fund. (American Funds Tax-Exempt Fund of New York is proposing to change to this classification, which will provide its investment adviser with greater flexibility.)
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. (The proposal seeks to amend this agreement for several bond funds to change the fee structure from asset and income components to an asset-only component.)
Proxy Statement
A document required by the SEC that provides shareholders with information about a meeting and the matters on which they are expected to vote. (This document is the proxy statement for the joint special meetings of shareholders, detailing the proposals and the board's recommendations.)

Year-Over-Year Comparison

This filing is a proxy statement for a special shareholder meeting, not an annual report. Therefore, direct year-over-year comparisons of financial metrics like revenue or net income are not applicable. The focus is on proposed operational and structural changes, such as fee adjustments and fund classification, rather than historical 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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