New World Fund Seeks Board Elections, Fee Structure Changes, and Diversification Shift

New World Fund Inc DEF 14A Filing Summary
FieldDetail
CompanyNew World Fund Inc
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, Mutual Funds

TL;DR

**Vote FOR these proposals; they're streamlining fees and giving managers more flexibility to chase returns, which is a net positive for shareholders.**

AI Summary

NEW WORLD FUND INC, alongside other American Funds and Capital Group ETFs, is holding a special shareholder meeting on November 25, 2025, to address three key proposals. Shareholders will vote to elect Board members, a necessary step as it has been several years since the last election and board composition has changed. The Investment Company Act of 1940 mandates that at least two-thirds of Board members be shareholder-elected. Additionally, shareholders of ten specific bond funds, including American Funds Mortgage Fund and The Bond Fund of America, are asked to approve an amendment to the Investment Advisory and Service Agreement. This amendment proposes a shift from a variable asset and income-based advisory fee schedule to a stable asset-only fee structure, aiming to eliminate fee volatility during dynamic interest rate environments. Finally, shareholders of American Funds Tax-Exempt Fund of New York (TEFNY) will vote on reclassifying the fund from 'diversified' to 'non-diversified' under the 1940 Act, which would grant its investment adviser, Capital Research and Management Company (CRMC), greater investment flexibility by removing the 5% single-issuer and 10% voting securities limits on 75% of its assets. The Boards of all affected Funds unanimously recommend voting 'FOR' all proposals, believing they are in the best interests of shareholders.

Why It Matters

This DEF 14A filing is crucial for investors as it outlines significant governance and operational changes across a broad spectrum of American Funds and Capital Group ETFs. The proposed shift to an asset-only advisory fee for ten bond funds could stabilize costs for investors, particularly in volatile interest rate markets, impacting their net returns. For American Funds Tax-Exempt Fund of New York, the reclassification to 'non-diversified' offers its adviser, CRMC, enhanced investment flexibility, potentially leading to higher returns but also increased risk concentration. These changes could influence competitive positioning within the mutual fund and ETF landscape, as fee structures and investment mandates are key differentiators.

Risk Assessment

Risk Level: medium — The reclassification of American Funds Tax-Exempt Fund of New York to 'non-diversified' introduces additional risk. While it grants greater investment flexibility, it removes regulatory limits, allowing more than 5% of total assets to be invested in a single issuer and holding more than 10% of an issuer's voting securities, increasing concentration risk for investors.

Analyst Insight

Investors should vote 'FOR' the proposals as recommended by the Boards, particularly the fee structure change for bond funds which aims to stabilize costs. For TEFNY shareholders, understand the increased flexibility and potential for higher risk/reward from the non-diversified classification.

Key Numbers

  • November 25, 2025 — Date of Special Shareholder Meeting (Meeting will be held at 9:00 a.m. Pacific Time)
  • August 28, 2025 — Record Date for Shareholder Voting (Shareholders as of this date are entitled to vote)
  • 10 — Number of bond funds affected by fee schedule change (Includes American Funds Mortgage Fund and The Bond Fund of America)
  • 5% — Diversified fund single-issuer investment limit (Non-diversified funds are not subject to this limit for 75% of assets)
  • 10% — Diversified fund voting securities limit (Non-diversified funds are not subject to this limit for 75% of assets)
  • $1.70 — Estimated average cost per shareholder account (Cost for obtaining shareholder approval of proposals)
  • 888-615-7476 — Computershare contact number (For questions or voting assistance)

Key Players & Entities

  • NEW WORLD FUND INC (company) — Registrant filing the DEF 14A
  • Michael W. Stockton (person) — Executive Vice President of the Funds
  • Capital Group (company) — Host of the special shareholder meeting and parent company of Capital Research and Management Company
  • 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 reclassification from diversified to non-diversified
  • Investment Company Act of 1940 (regulator) — Governing act for fund classifications and board elections
  • Jennifer L. Butler (person) — Secretary of the Funds
  • Courtney R. Taylor (person) — Secretary of the Funds
  • Julie E. Lawton (person) — Secretary of the Funds

FAQ

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

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

Why is NEW WORLD FUND INC proposing a change to the investment advisory fee schedule?

NEW WORLD FUND INC is proposing to change the investment advisory fee schedule for ten bond funds to an asset-only structure. This aims to create stability and consistency in fees for investors by eliminating the potential for higher advisory fees during dynamic interest rate environments, which occurred with the previous asset and income component fee structure.

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

Changing American Funds Tax-Exempt Fund of New York's classification to 'non-diversified' means it will no longer be subject to certain regulatory limits under the 1940 Act. Specifically, it can invest more than 5% of its total assets in one issuer and hold more than 10% of an issuer's voting securities for 75% of its portfolio, granting its adviser, CRMC, greater investment flexibility.

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

The primary risk associated with American Funds Tax-Exempt Fund of New York becoming 'non-diversified' is increased concentration risk. By removing the 5% single-issuer and 10% voting securities limits on 75% of its assets, the fund can take larger positions in fewer securities, potentially leading to greater volatility and impact from adverse events affecting those specific holdings.

When and where is the special shareholder meeting for NEW WORLD FUND INC and other funds?

The special shareholder meeting for NEW WORLD FUND INC and other American Funds and Capital Group exchange-traded funds will be held on November 25, 2025, at 9:00 a.m. Pacific Time, at the office of Capital Group, located at 333 South Hope Street, Los Angeles, California 90071.

Who is Michael W. Stockton and what is his role in this DEF 14A filing?

Michael W. Stockton is the Executive Vice President of the Funds. He signed the letter to shareholders dated September 9, 2025, encouraging them to vote at the upcoming complex-wide shareholder meeting and stating the Board's unanimous recommendation to vote 'FOR' the proposals.

How much will it cost the Funds 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 affected Funds.

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

If there are not enough votes to approve a proposal for a Fund, the meeting may be adjourned to solicit further proxy votes. If a proposal is ultimately not approved (other than for EMEF or EUPAC), the Fund will continue to operate as it currently does. For EMEF or EUPAC, if Proposal 1 is not approved, current trustees will continue to serve.

How can NEW WORLD FUND INC shareholders vote their shares?

NEW WORLD FUND INC 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. For mail, shareholders complete, sign, and return the proxy card in the postage-paid envelope.

Which specific bond funds are affected by the proposed advisory fee schedule amendment?

The proposed advisory fee schedule amendment affects 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.

Risk Factors

  • Investment Company Act of 1940 Compliance [medium — regulatory]: The Investment Company Act of 1940 mandates that at least two-thirds of a fund's Board members must be shareholder-elected. This filing addresses the need to elect new board members, as it has been several years since the last election and board composition has changed. Failure to comply with these election requirements could lead to regulatory scrutiny.
  • Diversified vs. Non-Diversified Fund Classification [medium — regulatory]: American Funds Tax-Exempt Fund of New York (TEFNY) is proposing to reclassify from 'diversified' to 'non-diversified' under the 1940 Act. Diversified funds have limits on investing in single issuers (5% of assets) and voting securities (10% of outstanding). Non-diversified funds are not subject to these limits for 75% of their assets, offering greater flexibility but also potentially increasing concentration risk.
  • Interest Rate Environment and Fee Volatility [low — market]: Ten bond funds are seeking to amend their Investment Advisory and Service Agreement to shift from a variable asset and income-based fee schedule to a stable asset-only structure. This change aims to eliminate fee volatility, particularly during dynamic interest rate environments where income-based fees can fluctuate significantly.

Industry Context

The mutual fund industry, particularly within the American Funds and Capital Group families, is subject to significant regulatory oversight under the Investment Company Act of 1940. Key trends include adapting fee structures to market conditions, such as interest rate volatility, and providing investment flexibility through fund classifications. Shareholder engagement through proxy voting is a critical mechanism for governance and approving material changes.

Regulatory Implications

The proposals address compliance with the Investment Company Act of 1940, specifically regarding board elections and fund classification. The reclassification of TEFNY from diversified to non-diversified could lead to increased investment concentration, which requires careful monitoring by investors and regulators. Changes to advisory fee structures also fall under regulatory scrutiny to ensure they are fair to shareholders.

What Investors Should Do

  1. Review the Joint Proxy Statement carefully to understand the implications of each proposal.
  2. Vote 'FOR' all three proposals as recommended by the Boards of Directors/Trustees, as they are believed to be in the best interests of shareholders.
  3. Ensure your vote is cast by the deadline for the special shareholder meeting on November 25, 2025, by using the provided phone, internet, or mail options.
  4. Contact Computershare at 888-615-7476 if you have any questions or require assistance with voting.

Key Dates

  • 2025-11-25: Special Shareholder Meeting — Shareholders will vote on key proposals including board member elections, advisory fee structure amendments for bond funds, and a classification change for TEFNY. The meeting is scheduled for 9:00 a.m. Pacific Time.
  • 2025-08-28: Record Date for Shareholder Voting — Shareholders as of this date are entitled to vote on the proposals presented at the special shareholder meeting.

Glossary

DEF 14A
A filing with the U.S. Securities and Exchange Commission (SEC) that provides detailed information to shareholders when a company is soliciting their proxy votes. (This document is the DEF 14A filing for NEW WORLD FUND INC and other affiliated funds, outlining the proposals for the upcoming shareholder meeting.)
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. (This Act dictates requirements for board composition, fund classification (diversified vs. non-diversified), and shareholder voting on certain matters, all of which are relevant to the proposals in this filing.)
Diversified Fund
Under the 1940 Act, a diversified fund has restrictions on its investments, typically limiting it to investing no more than 5% of its assets in any single issuer and holding no more than 10% of the voting securities of any single issuer for 75% of its assets. (American Funds Tax-Exempt Fund of New York is proposing to change its classification from diversified to non-diversified, which would remove these investment restrictions.)
Non-Diversified Fund
Under the 1940 Act, a non-diversified fund is not subject to the strict investment limitations imposed on diversified funds regarding concentration in single issuers or voting securities. (Changing to a non-diversified status for TEFNY will provide greater investment flexibility to its adviser, Capital Research and Management Company.)
Proxy Statement
A document that a company must provide to shareholders before a shareholder meeting, containing information about the matters to be voted on. (This filing is a Joint Proxy Statement detailing the proposals and soliciting shareholder votes for the special meetings of various American Funds and Capital Group ETFs.)
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. (Ten bond funds are seeking shareholder approval to amend this agreement to change their fee structure from a variable asset/income basis to a stable asset-only basis.)

Year-Over-Year Comparison

This filing is a joint proxy statement for a special shareholder meeting, distinct from routine annual filings. It focuses on specific proposals requiring shareholder approval rather than a broad overview of financial performance compared to the previous year. Therefore, direct year-over-year comparisons of financial metrics like revenue growth or net income are not applicable to this specific document.

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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