American Funds, Capital Group Seek Shareholder Nod on Board, Fee, Diversification Changes

American Funds Developing World Growth & Income Fund DEF 14A Filing Summary
FieldDetail
CompanyAmerican Funds Developing World Growth & Income Fund
Form TypeDEF 14A
Filed DateSep 9, 2025
Risk Levelmedium
Pages15
Reading Time18 min
Key Dollar Amounts$1.70
Sentimentneutral

Sentiment: neutral

Topics: Fund Governance, Shareholder Meeting, Advisory Fees, Diversification Change, Investment Company Act, Mutual Funds, ETF

TL;DR

**Vote FOR these proposals; they're streamlining fees and giving managers more flexibility, which should benefit long-term performance.**

AI Summary

AMERICAN FUNDS DEVELOPING WORLD GROWTH & INCOME FUND, 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 as it has been several years since the last election and changes in Board composition necessitate shareholder approval to maintain the two-thirds elected member requirement under the 1940 Act. The second proposal involves amending 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. This change aims to stabilize fees for investors, particularly in dynamic interest rate environments, by eliminating potential fee increases during periods of rising rates. The third proposal, specific to American Funds Tax-Exempt Fund of New York (TEFNY), requests shareholder approval to reclassify the fund from 'diversified' to 'non-diversified' 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 proposals, believing they are in the best interests of shareholders and will position the Funds for superior long-term investment results.

Why It Matters

This DEF 14A filing is crucial for investors in AMERICAN FUNDS DEVELOPING WORLD GROWTH & INCOME FUND and other American Funds/Capital Group ETFs as it outlines significant governance and operational changes. The proposed shift to an asset-only advisory fee for ten bond funds could directly impact investor returns by stabilizing costs, especially in volatile interest rate markets, offering a competitive edge against funds with more variable fee structures. For American Funds Tax-Exempt Fund of New York, the reclassification to 'non-diversified' offers greater investment flexibility, potentially leading to higher returns but also increased risk, directly affecting its competitive positioning in the municipal bond market. Employees of Capital Group and its affiliates will see their oversight structure updated through the Board elections, while customers will experience changes in fee transparency and investment strategy.

Risk Assessment

Risk Level: medium — The risk level is medium due to the proposed reclassification of American Funds Tax-Exempt Fund of New York (TEFNY) from 'diversified' to 'non-diversified.' While this grants greater investment flexibility, it also introduces 'additional risks associated with investing in a non-diversified fund' as explicitly stated in Proposal 3, potentially increasing portfolio concentration risk. However, the fee schedule change for ten bond funds aims to create 'stability and consistency in fees,' which could mitigate some financial risk for those specific funds.

Analyst Insight

Investors should carefully review the specific implications of the fee structure change for the ten bond funds they hold, as it aims to stabilize costs. For American Funds Tax-Exempt Fund of New York shareholders, understand that approving the 'non-diversified' classification means accepting potentially higher risk for greater investment flexibility, and consider if this aligns with your risk tolerance.

Key Numbers

  • November 25, 2025 — Date of Joint Special Meetings of Shareholders (Key date for voting on proposals)
  • August 28, 2025 — Record Date for Shareholder Eligibility (Date by which shareholders must own shares to vote)
  • 9:00 a.m. Pacific Time — Meeting Start Time (Time of the special shareholder meetings)
  • 3 — Number of main proposals (Shareholders are asked to vote on three distinct proposals)
  • 10 — Number of bond funds affected by fee schedule change (Specific funds transitioning to an asset-only advisory fee)
  • 2/3 — Minimum proportion of Board members to be elected by shareholders (Requirement under the Investment Company Act of 1940)
  • $1.70 — Estimated average cost per shareholder account for proxy solicitation (Funds will bear these costs for obtaining shareholder approval)
  • 888-615-7476 — Computershare contact number (Shareholder assistance for voting)
  • 5% — Diversified fund investment limit in one issuer (Under 1940 Act, for 75% of total assets)
  • 10% — Diversified fund voting securities limit in one issuer (Under 1940 Act, for 75% of total assets)

Key Players & Entities

  • AMERICAN FUNDS DEVELOPING WORLD GROWTH & INCOME FUND (company) — Registrant for DEF 14A filing
  • Capital Group (company) — Parent company and meeting host
  • Michael W. Stockton (person) — Executive Vice President of the Funds
  • Capital Research and Management Company (company) — Investment adviser for TEFNY
  • Computershare Fund Services (company) — Company hired to assist with shareholder meetings and collect votes
  • American Funds Tax-Exempt Fund of New York (company) — Fund undergoing diversification classification change
  • Investment Company Act of 1940 (regulator) — Governing act for fund classifications and board elections
  • Jennifer L. Butler (person) — Secretary of the Boards of the Funds
  • Courtney R. Taylor (person) — Secretary of the Boards of the Funds
  • Julie E. Lawton (person) — Secretary of the Boards of the Funds

FAQ

What are the key proposals for the AMERICAN FUNDS DEVELOPING WORLD GROWTH & INCOME FUND shareholder meeting?

The key proposals for the AMERICAN FUNDS DEVELOPING WORLD GROWTH & INCOME FUND shareholder meeting on November 25, 2025, include electing Board members, approving an amendment to the Investment Advisory and Service Agreement for ten 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 AMERICAN FUNDS DEVELOPING WORLD GROWTH & INCOME FUND electing new Board members?

AMERICAN FUNDS DEVELOPING WORLD GROWTH & INCOME FUND is electing new Board members because it has been several years since the last shareholder meeting for elections, and subsequent changes in Board composition necessitate this action to ensure 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 will modify the Investment Advisory and Service Agreement to an asset-only advisory fee schedule. This 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, which was a characteristic of the previous asset and income component fee structure.

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 the fund will no longer be subject to certain regulatory limits under the 1940 Act, such as investing no more than 5% of its total assets in any one issuer for 75% of its portfolio. This change grants the investment adviser, Capital Research and Management Company, greater investment flexibility but also introduces additional risks associated with a less diversified portfolio.

When is the special shareholder meeting for AMERICAN FUNDS DEVELOPING WORLD GROWTH & INCOME FUND?

The special shareholder meeting for AMERICAN FUNDS DEVELOPING WORLD GROWTH & INCOME FUND, along with other American Funds and Capital Group exchange-traded funds, is scheduled for November 25, 2025, at 9:00 a.m. Pacific Time at the office of Capital Group, 333 South Hope Street, Los Angeles, California 90071.

Who is recommending the proposals for AMERICAN FUNDS DEVELOPING WORLD GROWTH & INCOME FUND?

The Board of Directors or Trustees of each Fund, including AMERICAN FUNDS DEVELOPING WORLD GROWTH & INCOME FUND, has approved proposals 1 through 3, as applicable, and unanimously recommends that shareholders vote 'FOR' these proposals, believing they are in the best interests of shareholders.

What is the voting requirement for the fee schedule and diversification proposals?

For proposals 2 and 3, approval for a Fund requires the affirmative vote of a majority of the outstanding voting securities of such Fund at a shareholder meeting where a quorum is present. This means the lesser of 67% or more of votes present or represented by proxy if over 50% of outstanding securities are present, or more than 50% of the outstanding voting securities of the Fund.

What happens if the proposals for AMERICAN FUNDS DEVELOPING WORLD GROWTH & INCOME FUND are not approved?

If there are not enough votes to approve a proposal for AMERICAN FUNDS DEVELOPING WORLD GROWTH & INCOME FUND, the 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 existing structures and classifications remaining in place.

Who is Capital Research and Management Company (CRMC) in relation to these funds?

Capital Research and Management Company (CRMC) is the investment adviser for American Funds Tax-Exempt Fund of New York (TEFNY) and, along with Capital International, Inc. (CIInc), is referred to as the 'Advisers' for the Funds. CRMC believes that changing TEFNY's classification to a non-diversified fund will benefit TEFNY by giving it greater investment flexibility.

How much will it cost shareholders for this proxy solicitation?

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

Risk Factors

  • Board Election Requirements [medium — regulatory]: The Investment Company Act of 1940 requires that at least two-thirds of a fund's Board members be elected by shareholders. The current Boards need shareholder approval to elect new members to maintain this requirement, especially after several years without prior elections.
  • Fee Structure Volatility [medium — market]: Ten bond funds are proposing to move from an asset and income-based fee schedule to an asset-only schedule. This aims to stabilize fees, as the current structure can lead to increased advisory fees during periods of rising interest rates, impacting investor costs.
  • Diversified vs. Non-Diversified Classification [medium — regulatory]: American Funds Tax-Exempt Fund of New York (TEFNY) seeks to reclassify from 'diversified' to 'non-diversified' under the 1940 Act. This grants greater investment flexibility to the adviser but removes the 5% investment limit in one issuer and 10% voting securities limit for 75% of assets.
  • Proxy Solicitation Costs [low — operational]: The funds will incur costs for proxy solicitation to obtain shareholder approval for the proposals. The estimated average cost per shareholder account is $1.70, which will be borne by the funds.

Industry Context

The mutual fund industry, particularly within the American Funds and Capital Group families, is subject to ongoing regulatory oversight and market dynamics. Funds must adapt to evolving interest rate environments and investor needs. Changes in fund classification and fee structures are common strategies to enhance investment flexibility and manage costs effectively.

Regulatory Implications

The proposals directly involve compliance with the Investment Company Act of 1940, specifically concerning board elections and fund diversification rules. Changes in classification from diversified to non-diversified require shareholder approval and may alter investment strategies and associated risks.

What Investors Should Do

  1. Vote 'FOR' Proposal 1 to elect Board members, ensuring continued governance and compliance with the 1940 Act's two-thirds elected member requirement.
  2. Vote 'FOR' Proposal 2 to approve the amendment of the Investment Advisory and Service Agreement for ten bond funds, which aims to stabilize fees by moving to an asset-only schedule.
  3. Vote 'FOR' Proposal 3 to approve the reclassification of American Funds Tax-Exempt Fund of New York from 'diversified' to 'non-diversified', granting greater investment flexibility.
  4. Review the Joint Proxy Statement thoroughly to understand the details of each proposal and the potential implications for your investment.
  5. Contact Computershare at 888-615-7476 if you have any questions or require assistance with voting.

Key Dates

  • 2025-11-25: Joint Special Meetings of Shareholders — Shareholders will vote on key proposals including board member elections and changes to investment advisory agreements.
  • 2025-08-28: Record Date for Shareholder Eligibility — Determines which shareholders are eligible to vote at the special meetings.

Glossary

DEF 14A
A filing with the SEC that provides detailed information to shareholders about matters to be voted on at a shareholder meeting. (This document contains the specific proposals and information shareholders need to make informed voting decisions.)
Investment Company Act of 1940
A U.S. federal law that regulates the organization and operation of mutual funds and other investment companies. (Governs key aspects of the proposals, including board composition requirements and fund classifications (diversified vs. non-diversified).)
Diversified Fund
Under the 1940 Act, a fund that limits its investments in any single issuer to no more than 5% of its total assets and no more than 10% of the voting securities of that issuer. (American Funds Tax-Exempt Fund of New York is seeking to change its classification from diversified to non-diversified.)
Non-Diversified Fund
Under the 1940 Act, a fund that is not subject to the strict diversification requirements of a diversified fund, allowing for greater investment flexibility. (The proposed change for American Funds Tax-Exempt Fund of New York will grant its adviser more flexibility.)
Proxy Statement
A document provided to shareholders that contains information about a meeting and the matters on which shareholders will vote. (This is the primary document informing shareholders about 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 growth or net income are not applicable. The focus is on specific proposals requiring shareholder approval, such as board elections and changes to investment advisory agreements and fund classifications.

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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