SCHEDULE 14A INFORMATION
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AMCAP Fund, Inc.
American Balanced Fund, Inc.
The American Funds Income Series
American Funds Money Market Fund
American Funds Short-Term Tax-Exempt Bond Fund
American Funds Target Date Retirement Series, Inc.
The American Funds Tax-Exempt Series I
The American Funds Tax-Exempt Series II
American High-Income Municipal Bond Fund, Inc.
American High-Income Trust
American Mutual Fund, Inc.
The Bond Fund of America, Inc.
Capital Income Builder, Inc.
Capital World Bond Fund, Inc.
Capital World Growth and Income Fund, Inc.
EuroPacific Growth Fund
Fundamental Investors, Inc.
The Growth Fund of America, Inc.
The Income Fund of America, Inc.
Intermediate Bond Fund of America
International Growth and Income Fund, Inc.
The Investment Company of America
Limited Term Tax-Exempt Bond Fund of America
The New Economy Fund
New Perspective Fund, Inc.
New World Fund, Inc.
Short-Term Bond Fund of America, Inc.
SMALLCAP World Fund, Inc.
The Tax-Exempt Bond Fund of America, Inc.
Washington Mutual Investors Fund, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, other than the Registrant)
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Article in the September Flyer
Material fromImportant proxy vote for all shareholders
In late August, all American Funds shareholders will begin receiving proxy materials asking them to vote on measures designed to reduce expenses for fund shareholders and provide the funds with more investment flexibility.
Some of the eight proposals will affect all of the American Funds, retail and retirement websitessome apply only to certain funds. The proposals fall into categories that include:
• fund business, such as electing members to the funds’ boards
| • agreements between the funds and Capital Research and Management Company,SM the investment adviser to the funds |
• definition of the funds’ investment policies
Thoughts fromPlease alert your clients who are invested in the American Funds on this historicthat they will receive proxy materials for each account by mail. Encourage them to vote promptly in order to avoid receiving follow-up phone calls and mailings about these important proxy measures. You can also direct them to our shareholder website, americanfunds.com/vote, for more information and access to electronic voting.
Article in the October Flyer
Important reminder about proxy votes
All American Funds shareholders were recently mailed proxy materials asking them to vote on measures designed to increase investment flexibility and streamline fund administration, which may reduce some fund expenses.
Tim Armour, presidentIn all, shareholders have been asked to consider eight measures including proposals regarding definitions of fund investment policies; agreements between the funds and their investment adviser, Capital Research and Management CompanySM,; and fund board elections. Some of the investment adviser tomeasures would affect all of the American Funds, discusses the reasons behind the current vote and the importance of casting your ballot.some apply only to certain funds. American Funds Insurance Series® has scheduled a similar proxy vote.
[Video Transcript]Shareholders may receive more than one set of proxy materials in the mail — one for each separate account. To vote all shares, they must vote all ballots. Encourage your clients to vote promptly in order to avoid receiving follow-up phone calls and mailings about these important proxy measures. You can suggest that they cast their votes by signing and returning the ballot, or direct them to americanfunds.com/vote for more information and access to electronic voting.
Article in the Fall Investor
Hello, I’m Tim Armour, president of Capital ResearchVote on American Funds’ proposals to increase efficiency and Management Company,investment flexibility
As an American Funds shareholder, you were sent proxy statements and ballots to vote on several important proposals. We encourage you to read the materials you received in the mail because they contain key information regarding these proposals. The measures seek primarily to provide the funds with greater investment adviserflexibility and streamline fund administration.
Some proposals apply to all the American Funds. I’d likeFunds while others apply only to takecertain funds. They include a momentproposal calling for a uniform set of investment policies across all funds as well as a measure that would allow the portfolio managers and talk with you about analysts of The New Economy Fund to invest in growing, innovative companies beyond those in
the proxy materials that American Funds recently sent its shareholders.
Let me start by saying a little about why we’re holding this vote. I’ll also discussservice and information industries. Two other proposals seek the issues and why they’re important and I’ll close by explaining how you can vote.
We’re holding this vote in large part because shareholders need to elect memberselection of the funds’ boards. And since we’re asking you to electfund board members we thought it made sense to ask you to approve some other proposals as well.and a reorganization of certain funds into Delaware statutory trusts. We think the proposalsbelieve these proposed changes will make the funds more flexible and efficient and may reduce some fund expenses in the future.
First, we’re asking shareholders to approve organizing all of the American Funds as Delaware statutory trusts. The funds currently are organized under various state laws. We think that having them all organized in one state will be more efficient and could reduce fund expenses over time.
We’re also askingYou have received either a complete kit containing the full proxy proposal and ballot or a shareholder meeting notice outlining the proposals and instructing you to vote by phone or online. Shareholders with multiple fund accounts have been sent multiple mailings. You should vote all the ballots you receive. The board of each fund recommends that you vote in favor of all management-initiated proposals.
Shareholders in 16 funds submitted a proposal requesting the boards adopt policies to prohibit investments in certain companies based on human rights considerations. Capital Research and Management Company and the fund boards recommend a “no” vote on this proposal. They believe that Capital’s existing policy of considering these issues on a company-by-company basis as part of the investment management process is preferable to the shareholder proposal.
If you have questions about the voting process, want to access electronic voting or would like to download the proxy statement, go to americanfunds.com/vote. If you need replacement materials, order a complimentary copy by calling 877/816-5331 or visiting proxy-direct.com/afs. Please note that shareholders who don’t complete all ballots will receive follow-up phone calls and/or mailings.
Article in the Fall Newsline
Vote on American Funds proposals to approve changesincrease efficiency and investment flexibility
By now, you’ve received proxy materials and ballots that will modernize our funds’ fundamentalallow you to cast your vote on several important proposals for the upcoming American Funds shareholder meetings. The measures are designed primarily to streamline fund administration and to provide the funds with more investment policies. Mostflexibility.
What are these proposals? Some of the proposals apply to all of the American Funds were organized back when individual states had rules about mutual funds’ investment policies. But now that the U.S. Securities and Exchange Commission regulates these policies, these state rules no longer apply. We can’t change our funds’ outdated state policies without shareholder approval, so we’re asking youwhile others apply only to approve streamlining and modernizing thecertain funds. They range from a uniform set of fundamental investment policies across all funds to an expansion of the funds.
There are severalinvestment universe for The New Economy Fund. Currently, The New Economy Fund is restricted to investing in companies in service and information industries — the change would allow the fund’s managers to invest in growing, innovative companies regardless of industry classification. Two other issues onproposals seek the ballot as well, including approvalelection of the legal agreements betweenfund board members and a reorganization of certain funds into Delaware statutory trusts. Why? We believe these proposed changes will make the funds more flexible and Capital Researchefficient and Management Company.
I urge you to learn more about all the proposals using the resources on this website.
Your vote is very important and we’ve tried to make voting easy. You can vote via the Web, by phone or by mailing a paper ballot.
The most important thing, though, is simply to vote. And please be sure to vote for eachmay reduce some fund you own. Remember, technically speaking, each fund is holding its own election. So, if you own more than one fund, you may have received more than one ballot.
And, if you have more than one account — say, a taxable retail account and an IRA — you’ll receive a ballot for each account. We realize this could mean you’ll be casting a lot of votes. To simplify the process, you do have the option of checking a single box on each ballot to vote consistent with the recommendation of the fund board on every issue.
Finally, I want to ask you to vote early. In fact, if you haven’t voted, you may get a call urging you to cast your ballot. I apologize for any inconvenience, but we’re trying to be as efficient as possible. The longer the voting takes, the more it costs the funds — and the shareholders.
So, please remember to vote — and vote early. And if you have any questions, refer to the frequently asked questions on this website. Thank you for your time.
[End Video Transcript]
[Tab 1]: How can I vote?expenses.
Vote online now [links to www.proxy-direct.com/afs] (be sure to have your proxy mailing in hand).
Misplaced your proxy materials? Call 877/816-5331 to get a replacement ballot.
You can also vote your proxies in a number of other ways:
§ | by calling 800/337-3503 (available 24 hours a day)
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§ | by completing and mailing the proxy ballots you received (please send in all the ballots included in the mailing)
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§ | by attending a shareholder meeting on either October 27, 2009 (for The Investment Company of America®), or November 24, 2009 (for all other funds, including funds in the American Funds Insurance Series®), at 333 S. Hope St., Los Angeles, CA 90071
|
Have questions about your proxy materials? Get more information about how to vote.
[Tab 2]: What does the vote cover?
The proposals include:
§ | the reorganization of the funds into Delaware statutory trusts |
§ | the election of directors for the funds |
§ | exemptive relief from the Securities and Exchange Commission (SEC) and related matters |
§ | the creation of a uniform set of fundamental investment policies |
§ | the expansion of investment opportunities for The New Economy Fund® and the American Funds Insurance Series Global Discovery Fund |
§ | shareholder proposals regarding divestiture for 16 of our funds |
Download the complete proxy statement. Please note that the PDF is large, so you may experience delays in downloading it.
[Tab 3]: Why should I vote?
The proposals we’re asking you to review and approve will help increase investment flexibility, streamline the administration of the funds and, consequently, may reduce expenses associated with managing the funds.
It is very important that all shareholders cast their votes in order to have a sufficient number of votes at the shareholder meetings. If there are not enough votes for a quorum, the meetings will be adjourned and the solicitation of votes will continue. This will increase expenses to the fund.
[Tab 4]: When should I vote?
You will receive proxy materials between late August and mid-September.
Some mailings will include significant background on the proposals along with proxy ballots, while others will provide summaries. The number of shares you own will help determine the materials you receive.
We encourage you to vote as soon as you receive the materials. By voting early, you can help us avoid the expense of resending proxy materials.
In mid-September, if you have not yet voted, you may receive follow-up phone calls encouraging you to vote your proxies. You will be able to vote over the phone at that time.
Please note that these calls will come from a company helping to manage our proxy vote.
If there is not a quorum at the shareholder meetings on October 27, 2009 (for The Investment Company of America®), or November 24, 2009 (for all other funds, including the funds in the American Funds Insurance Series®), the meeting(s) will be adjourned while the solicitation of votes continues.
[Tab 5]: FAQ
Voting procedures
Ways to vote
Q: How do I vote?
A: Make sure you have your proxy materials in hand before voting. The way you vote depends on the type of account and funds you have.
If you have investments in the American Funds (with account information held by American Funds), you can vote:
· | online [links to: www.proxy-direct.com/afs]
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· | by calling 800/337-3503 (available 24 hours)
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· | by completing and mailing the proxy ballots you Shareholders received (please send in all the ballots included in the mailing)
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· | by attending a shareholder meeting on either October 27, 2009 (for The Investment Company of America®), or November 24, 2009 (for all other funds), at 333 S. Hope St., Los Angeles, CA 90071
|
If you have investments in American Funds through a brokerage account, you can vote:
· | online [links to: www.proxyvote.com]
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· | by calling 800/454-8683 (available 24 hours)
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· | by completing and mailing the proxy ballots or voting instruction forms you received (please send in all the ballots included in the mailing)
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· | by attending a shareholder meeting on either October 27, 2009 (for The Investment Company of America), or November 24, 2009 (for all other funds), at 333 S. Hope St., Los Angeles, CA 90071
|
If you have investments in the American Funds Insurance Series (AFIS), you can vote:
· | online [links to: www.proxyweb.com]
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· | by calling 888/221-0697 (available 24 hours)
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· | by completing and mailing the proxy ballots or voting instruction forms you received (please send in all the ballots included in the mailing)
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· | by attending a shareholder meeting on November 24, 2009, at 333 S. Hope St., Los Angeles, CA 90071
|
Q: If I have a joint tenant account, do both tenants need to vote?
A: Only one joint tenant needs to vote.
Q: Can I cast a vote for a family member who is not able to vote?
A: We cannot advise you to vote for a family member.
Q: Why is it important that I vote?
A: It is very important that all shareholders cast their votes in order to have a sufficient number of votes at the shareholder meetings. If there are not enough votes for a quorum, the meetings will be adjourned and the solicitation of votes will continue. This will increase expenses to the fund.
Proxy materials
Q: Why am I getting multiple envelopes in the mail?
A: You will receive a mailing for each separate account you have with American Funds. If you have an IRA and a retail account, for example, you will receive two mailings. If you have a variable annuity that offers an American Funds Insurance Series (AFIS) fund, you will receive a mailing for that contract as well.
Q: Why did I get a proxy statement and card from American Funds and another from my adviser’s firm?
A: Some shareholders have accounts held directly with American Funds, in addition to accounts that may be held with your adviser’s firm. If American Funds has your account information, such as your name and address, we’ll send you proxy materials directly. If your adviser’s firm has the records, it will send you the materials. If you have more than one account, you may receive proxy materials from both American Funds and your adviser’s firm. Additionally, if you own a variable annuity that offers AFIS, you’ll receive a ballot from your insurance company. Please be sure to vote all of the ballots you receive. The way you vote may vary based on the type of account and funds you have.
Q: Why are there multiple ballots in the envelopes?
A: We can only fit four funds on a ballot. If you own more than four funds, you’ll receive more than one ballot.
Q: If I receive multiple ballots can I vote on just one?
A: Each ballot is for different funds, so you need to vote each ballot.
Q: Can I just vote to accept the Board of Trustees’ recommendation?
A: Yes. If you wish to accept the boards’ recommendations, you can check the box in the middle of the ballot, or indicate your preference when voting online. That one check is sufficient, so you do not need to check any other boxes. However, if you received multiple ballots, you must indicate your vote on each ballot. If you check the box in the middle of the page and another box, your vote will not be counted and will be returned to you.
Q: What happens if I lose my ballot?
A: You can call 800/421-0180 to obtain another ballot. You will have to provide your name, address and account number. If your accounts are held through a brokerage account or you are an AFIS contractholder, call 888/456-7152.
Q: How much will this vote cost?
A: We estimate the cost will be between $2.50 and $3.00 per account. The AFIS proxy vote will cost less.
Q: Why is the proxy statement so many pages?
A: To fully explain the proposals requires many pages. In addition, Securities and Exchange Commission (SEC) rules require that we include much of the information in the back of the proxy statement.
Q: Why did some shareholders get a full proxy statement and proxy ballot and others only got a notice?
A: In an effort to contain costs, we’re sendingcomplete kit containing the full proxy statement and proxy cards to some shareholders and a proxy notice to others. Download the full proxy statement. All investors in AFIS funds, held in variable annuity contracts, received a full proxy statement.
Q: If I get one proxy statementproposal and ballot from both American Fundsor a shareholder meeting notice outlining the proposals and my adviser’s firm, do I haveasking shareholders to vote both ballots?
A: Yes. Each proxy card is for a different account. If you received separate proxy cards from American Funds and your adviser’s firm, you have more than one account. You need toby phone or online. Shareholders with multiple accounts will receive multiple mailings. The bottom line? Shareholders should vote for each account.
Follow-up phone calls
Q: Why are you calling me at home?
A: We are calling to facilitate your voting. To achieve a quorum, at least half of the outstanding shares in a fund must vote. Thus, it is critical that as many shareholders as possible vote. Currently, we do not expect investors in AFIS funds, held in variable annuity contracts, to receive calls.
Q: Why did you give my information to a third party?
A: We hired two firms that specialize in helping shareholders vote proxies. We provided them with only enough information to complete their work as efficiently as possible. We limited the information we shared to protect your privacy. Our confidentiality agreement with them provides that your information may not be shared with any other third party.
Q: Who are Computershare Fund Services and D.F. King & Co.?
A: They are independent companies that specialize in assisting financial firms with shareholder meetings. American Funds hired these firms to contact shareholders and record their votes. Our confidentiality agreement with them provides that your information may not be shared with any other third party.
Q: Why have I received multiple phone calls?
A: We are calling shareholders who have not yet submitted all their votes. If, for example, you received two proxy cards and only voted one, you may get a call about the second card. Currently, we do not expect investors in AFIS funds to receive calls.
Voting deadlines and results
Q: When is the deadline for voting?
A: It is important that you cast your votes as early as possible. The sooner shareholders vote, the sooner we can discontinue calling shareholders to cast their votes and the greater the cost savings to the funds. The shareholder meetings will be October 27, 2009 (for The Investment Company of America), and November 24, 2009 (for all other funds, including funds in the American Funds Insurance Series). Conducting the proxy vote is an expense of the fund and the longer the voting takes, the more expensive it is.
Q: When will voting results be available?
A: The Investment Company of America’s annual meeting is scheduled for October 27, 2009. All the other meetings (including the meeting for the AFIS funds) are scheduled for November 24, 2009. If there is not a quorum, the meetings may be adjourned while we continue soliciting votes. We will make the results available as soon as possible after the outcomes are known.
Q: How will I be notified?
A: We will post the results of the votes on this website.
The proposals
Board recommendations
Q: Do the boards of the funds have a recommendation?
A:ballots they receive. The board of each fund recommends that shareholders vote in favor of all management-initiated proposals. However, certain
In addition, shareholders of 16 funds havesubmitted a proposal submitted by some shareholders regarding investingrequesting the boards adopt policies to prohibit investments in certain companies with ties to certain countries (such as Sudan). Each board recommends that shareholders of applicable funds vote “against” this proposal. The proxy statement contains more information about all of the proposals. Shareholders have not added any proposals to the AFIS ballot.
Q: Why is American Funds asking shareholders of all funds to votebased on all of the proposals at the same time?
A: We believe that presenting all of the proposals to all shareholders at one time is the most cost-effective and least intrusive manner of addressing these issues because many of the funds have similar matters that require shareholder approval.
Q: Will investors in the American Funds Insurance Series (AFIS) also have a proxy vote?
A: Yes. Investors in AFIS funds, held in variable annuity contracts, will receive a proxy statement and voting instruction forms by mid-September from their insurance company asking for their vote.
Election of directors (proposal 1)
Shareholders are being asked to elect directors for the funds.
Q: What is the benefit of shareholders electing directors for the funds?
A: Electing members of the fund boards will result in more of the funds having common board members. This will allow more funds to hold board meetings at the same time, potentially reducing fund expenses.
Q: Why do shareholders have to vote for directors?
A: The law requires that two-thirds of a fund’s board be elected by shareholders. Over the years, as shareholder-elected board members have retired, some boards have declined to the two-thirds minimum. By electing all board members at this time, we expect that the funds will avoid having to go through the expense of holding shareholder elections for many years.
Delaware statutory trust (proposal 2)
Currently the funds are incorporated in three different states — Delaware, Massachusetts and Maryland — as either business trusts or corporations. This change to reorganize all the funds as Delaware statutory trusts means that all the funds will operate under a single, uniform set of organizational rules.
Q: How do shareholders benefit from the funds becoming Delaware statutory trusts?
A: We believe that this change will make the administration of the funds more efficient, thereby reducing expenses. In some cases, the change will directly save shareholders money. For example:
· | If The Investment Company of America becomes a Delaware statutory trust it will no longer be required to hold an annual shareholder meeting. Over the past two decades, fewer than 20 shareholders have ever attended any shareholder meeting, yet notifying investors of the meeting costs the fund more than $1 million annually. |
· | Some funds must now seek shareholder approval for even minor changes to the funds’ charters. Changes that are in the shareholders’ best interest and could make a fund more efficient would no longer require a shareholder vote, which is very expensive. |
Q: Does the change to a Delaware statutory trust reduce investors’ protection or increase their liabilities in any way?
A: No. Changing to a Delaware statutory trust does not lessen shareholder protections or increase their liabilities.
Fundamental investment policies (proposal 3)
Our goal is to have a uniform set of fundamental investment policies across all funds and eliminate overly restrictive policies that are no longer applicable. The SEC requires that a fund states in writing what its “fundamental investment policies” are on issues such as borrowing or purchasing real estate.
· | In 1996, a federal law gave the SEC exclusive authority to regulate mutual funds, preempting state laws. |
· | Some of the funds’ fundamental investment policies that were adopted when the funds were established with the goal of meeting state laws are now outdated and overly restrictive. |
· | A fund’s fundamental investment policies can’t be changed without a shareholder vote. |
Q: How will shareholders benefit from changing the fundamental investment policies?
A: Eliminating some unnecessary and overly restrictive fundamental policies will increase the flexibility ofhuman rights considerations. Capital Research and Management Company,SM (CRMC), the funds’ investment adviser, to respond to market, industry, regulatory or technical changes. Shareholders will also benefit from a simplified system of compliance monitoring. It is more efficient and less time consuming, and thus less costly, to ensure compliance with a single set of investment policies.
Q: The proxy statement mentions borrowing money, purchasing real estate and making loans, among other fundamental policies. Will CRMC change its practices on any of these or the other issues mentioned?
A: No. We are proposing a standardized set of policies across all funds and the elimination of some policies that were required when the fund was launched but are now more restrictive than required by current regulations. CRMC does not currently intend to change the way the funds are managed. Any material change in the way a fund is managed would still need to be approved by the board of that fund.
For additional detail regarding the funds’ investment policies, please refer to the funds’ statement of additional information (i.e., Part B) available on the Prospectuses and Reports page.
For more information on the AFIS funds’ investment policies, please refer to the prospectuses and reports for Class 1 and Class 2 shares.
Q: Why is it important to standardize the fundamental investment policies?
A: We believe that adopting this slate of fundamental policies will give the funds more flexibility to quickly adapt to changing circumstances and market conditions and simplify compliance monitoring.
Exemptive relief from the Securities and Exchange Commission (SEC) and incorporating Capital World Investors (CWI) and Capital Research Global Investors (CRGI) (proposals 4, 5 and 6)
CRMC and the funds are seeking exemptive relief (i.e., special permission) from the SEC that will allow CRMC to incorporate its two investment divisions — CWI and CRGI. CRMC will remain the investment adviser to the funds. CWI and/or CRGI will be subsidiary advisers and handle the day-to-day investment management responsibilities for the funds, just as they do today.
Q: How do shareholders benefit if CWI and CRGI are incorporated?
A: Today, some regulators outside the United States do not recognize CWI and CRGI as independent entities. If they are legal corporations and subsidiaries of CRMC, regulators in certain countries may treat them as separate investment entities, giving the funds more investment flexibility.
Q: How do shareholders benefit if the exemptive relief from the SEC is granted?
A: While the fund’s board would have to approve CRMC changing a fund’s subsidiary adviser, shareholders would avoid the cost of an expensive shareholder vote to approve such an action.
Q: Why are shareholders being asked to approve a new advisory agreement?
A: The new advisory agreement allows CRMC to engage CWI and CRGI as subsidiary advisers to manage the funds. This approval will be necessary once CWI and CRGI are incorporated. In addition, the current advisory agreements vary somewhat from fund to fund. Adopting the new advisory agreement will create greater standardization of agreements across the funds.
Q: Can CRMC appoint any firm as a subsidiary adviser?
A: If the exemptive order is granted, CRMC will only be able to appoint affiliates that are wholly-owned or majority-owned by CRMC or its parent, The Capital Group Companies.
The New Economy Fund and American Funds Insurance Series Global Discovery Fund (proposal 7)
The New Economy Fund (NEF) was formed in 1983 to take advantage of opportunities presented by the “new economy,” defined primarily as service and information industries. (AFIS Global Discovery Fund was formed in 2001 and has substantially similar investment policies as NEF.) The proposed change allows the funds’ managers to invest in any company that participates in the “new economy” — companies that can benefit from innovation, exploit new technologies or provide products and services that meet the demands of an evolving global economy — regardless of industry classification.
Q: How do shareholders of the funds benefit from expanding the funds’ investment universe?
A: With a broader investment universe, the funds’ investment professionals will be able to pursue investment opportunities in a wider range of industries.
Q: Will expanding the funds’ investment universe change the way they are managed?
A: No, this will not change the way NEF or AFIS Global Discovery Fund is managed. It will give the funds’ investment professionals more flexibility by allowing investments in a larger universe of companies.
Q: Will the funds invest more outside the United States after this change?
A: No. NEF may continue to invest up to 45% of its assets outside the United States. AFIS Global Discovery Fund may continue to invest a majority of its assets in the U.S.
Q: What types of companies will be eligible to be in included in the funds’ portfolios?
A: Companies that introduce cutting-edge technology or embrace innovation now will be eligible regardless of their industry classification. In the past, unless a company was classified as being in the service or information industry, they probably would not be eligible.
Q: Are you seeking approval for this change to help improve the results of NEF or Global Discovery Fund?
A: No. The proposed change simply reflects changes in the global economy.
Shareholder proposal regarding divestiture (proposal 8)
Shareholders have submitted a proposal requesting certain funds’ boards to consider instituting a policy to prevent the fund from holding investments in companies that “contribute to genocide or crimes against humanity.” This issue is not on the AFIS ballots.
Q: Why am I being asked to vote on a proposal submitted by a shareholder?
A: We are required to include requests from shareholders for a nonbinding vote.
Q: What is a “nonbinding” resolution?
A: If the shareholder resolution passes, the board of the fund must consider, but is not required to adopt, the proposal.
Q: Do the Boards of Directors recommend shareholders support the proposal?
A: No. CRMC and the fund boards recommend a “no” vote on this proposal. They believe that CRMC'sthe adviser’s existing policy is preferable to that recommended by the shareholder proposal. Anyof considering human rights issues that may affect companies are considered by our investment professionals as part of the investment management process. This approach is consistent with the stated investment objectives and policies of the funds. We believe considering these issues on a company-by-company basis and as a part of the investment management process is preferable to havingthe shareholder proposal.
We want to hear from you. As an American Funds shareholder, your participation in this proxy vote is key. We encourage you to read the materials you received in the mail because they contain important information regarding the proposals. Questions about the voting process? Go to americanfunds.com/vote for more information, access to electronic voting or to download a copy of the proxy statement. You can also order a complimentary copy by calling 877/816-5331 or visiting proxy-direct.com/afs. Please note that shareholders who don’t complete all ballots will receive follow-up phone calls and/or mailings.
Article on the Capital Group Intranet
American Funds urges shareholders to vote on several key proposals
This month, American Funds shareholders are being asked to vote by proxy on a number of significant proposals, which, if adopted, will streamline fund administration activities and promote greater investment flexibility.
All CGC associates who own American Funds (outside of the Master Retirement Plan, 401(k) Tax Advantage Plan or a 529 CollegeAmerica account) are strongly encouraged to promptly vote their shares, which can be done online. (You will receive specific voting instructions based on the fund shares you own.)
The proxy vote will impact all American Funds shareholders, and it’s the broadest vote the funds have ever undertaken. It covers eight proposals, some of which will affect all the funds, and others that apply only to certain funds.
Reducing fund board clusters
One proposal will reduce the number of fund board clusters. “There are currently nine clusters, but we’d like to move toward six,” says Mike Downer, senior vice president and coordinator of Legal and Compliance for Capital Research and Management Company.
“This will bring several benefits over time. We’ll be able to focus on fewer independent fund directors and decrease the number of board-related meetings. This will not only maximize our ability to be effective, but also will result in cost savings for the funds and our organization.”
Because law requires a certain number of fund directors to be elected by shareholders, it made sense to go out to all shareholders for a vote. In that way, the fund boards can add new members for a longer period without incurring the expense of conducting additional shareholder meetings.
Making the most of the proxy
“When we decided to implement the vote for board members, we thought about other issues we could address at the same time,” Mike says. “A lot of thought went into what should be on the proxy. We concluded it would be most cost effective to get everything we need done at once.”
Several issues had been lingering for a long time. One related to the different jurisdictions in which the funds had been registered. “The funds are organized under four different forms of corporate organization,” Mike notes. “At one point, this structure offered certain advantages. But those distinctions have disappeared, and now it only adds unnecessary complexity.”
As a result, a proposal was added to organize all funds into a Delaware statutory trust. This will reduce the number of shareholder meetings required, and help make operations more efficient, which will reduce expenses. Mike adds, “Working within one set of rules is simpler, and there’s less opportunity for something to fall through the cracks.”
Other proposals in the proxy include:
| · | Updating fundamental investment policies |
The funds are still subject to restrictions from many investment policies imposed by states before 1996, when the U.S. government pre-empted the states’ ability to do that. The proxy contains a proposal to streamline the fundamental investment policies to make them as consistent as possible across all funds and provide maximum flexibility.
| · | Allowing for incorporation of CRMC investment divisions |
Another proposal calls for the reorganization as corporate entities of the investment divisions of CRMC (Capital Research Global Investors and Capital World Investors, which were created through the disaggregation efforts at CRMC several years ago). Incorporation will help these decisions.divisions be recognized as separate investment entities for purposes of ownership reporting and takeover limits in countries such as Japan and Germany.
“The U.S. recognizes these divisions without requiring incorporation,” Mike says. “But outside the U.S., there are major countries that only recognize incorporated entities as disaggregated. At the same time, we’ve applied to the Securities and Exchange Commission for an order to allow us to have one shareholder vote that enables us to assign management of assets to whatever Capital-affiliated investment group is best suited to the needs of the funds, without triggering additional shareholder votes.”
The remaining proposals pertain to individual funds, such as an expansion of the investment universe for The New Economy Fund® and its variable annuity counterpart, American Funds Insurance Series Global Discovery Fund®. They also address some unique issues, including an “anti-genocide” proposal submitted by shareholders of certain funds.
“This was submitted by a group that’s making a similar request of other large fund complexes,” says Mike. “It’s an advisory vote only, not binding, requesting fund boards to prevent holdings in companies that contribute to genocide and crimes against humanity. We believe a better approach is to consider these matters as part of the investment process, which our organization already does.”
Prompt voting encouraged
Because of the nature and scope of the proposals in the proxy, every effort is being made to get shareholders to vote promptly so the required threshold is met quickly.
Proxy materials are being carefully planned to obtain the desired outcome at the lowest cost. Shareholders with larger holdings will receive a hard-copy packet (printed on low-cost paper) fully detailing all the proposals, while shareholders with smaller holdings will receive a letter directing them to a website where they can read the proxy statement and vote.
The sooner the required threshold of shareholder votes is met, the better. Capital has hired two proxy solicitation firms to contact shareholders directly if they haven’t voted by a certain date—so earlier voting would reduce this expense. The firms also analyzed all shareholder data to determine which funds require the greater effort to obtain a vote. “Our goal is to be as cost sensitive as possible,” Mike says.
AFIS has scheduled a similar proxy vote.
Shareholders may vote online, by phone, or by signing, dating and returning the proxy ballot they receive. Proxy materials will provide instructions detailing how to vote using these methods. For The Investment Company of America®, voting will end on 27 October, the date of its shareholder meeting. For the other funds, voting will end on 24 November, the date of their shareholder meeting. If approved, the proposals are anticipated to take effect in 2010.
Emails to Retirement Plan Sponsors
Subject: Upcoming American Funds proxy mailing [PlanPremier® or PlanPremier TPA®]
Dear plan sponsor:
You will soon be receiving by mail proxy materials related to the American Funds mutual funds offered in your retirement plan. The proxy statement asks shareholders to consider a number of proposals that are designed to provide the funds with more investment flexibility and streamline fund administration, which may reduce expenses for fund shareholders. We encourage you to vote in a timely manner to help the funds avoid the cost of additional mailings.
You may vote online at www.proxy-direct.com/afs, by calling 800/337-3503 or by signing, dating and returning the proxy ballot you receive. Voting will end October 27, 2009 (for The Investment Company of America®), or November 24, 2009 (for all other funds), the dates of the shareholder meetings.
You can find more information about the proposals, including a video, by clicking here.
Thank you for your attention to this important matter.
Subject: Upcoming American Funds proxy mailing
Dear third-party administrator:
American Funds plan sponsors will soon be receiving proxy materials that ask them to consider a number of proposals that are designed to provide the funds with more investment flexibility and streamline fund administration, which may reduce expenses for fund shareholders.
The proposals include the following:
| · | The election of fund board members |
| · | The approval of an Agreement and Plan of Reorganization that provides for the reorganization of each fund from a Delaware corporation, Maryland corporation or Massachusetts business trust into a Delaware statutory trust |
| · | The update of the funds’ fundamental investment policies |
| · | The approval of a policy allowing Capital Research and Management Company (CRMC) to appoint subsidiary advisers to manage the day-to-day investment activities of the funds without additional shareholder approval |
| · | The approval of amendments to the funds’ Investment Advisory and Service Agreements with CRMC |
| · | The approval of changes to the investment objectives of The New Economy Fund® |
| · | The consideration of a proposal submitted by shareholders of certain funds that requests the Boards of these funds to “institute procedures to prevent holding investments in companies that, in the judgment of the Board, substantially contribute to genocide or crimes against humanity, the most egregious violations of human rights.” |
The Board of each fund recommends that shareholders vote in favor of all management-initiated proposals and against the shareholder-submitted proposal. Voting will end October 27, 2009 (for The Investment Company of America®), or November 24, 2009 (for all other funds), the dates of the shareholder meetings.
Thank you for your continued support of American Funds.
Email responses to requests for more proxy information
Subject Line: Regarding American Funds - As Requested
As discussed, we have attached the joint proxy statement and information about the upcoming American Funds shareholder meeting.
The Board of your Fund(s) has reviewed the proposals as detailed in the proxy statement and for the proposals that apply to your fund(s), urges a vote in favor of Proposals 1 through 7 and against Proposal 8 as explained in the joint proxy statement.
Please take a moment to review the statement and if you have any questions, or are ready to cast your vote by telephone, please call toll-free 1-###-###-####. We are available to answer your questions from 9:00am until 11:00pm Eastern Time weekdays and from Noon to 6:00pm Eastern Time on Saturday.
If you would prefer, and have your proxy card(s), you may vote via the internet (www.proxy-direct.com/afs) or by touchtone telephone (1-xxx-xxx-xxxx), which are available 24 hours a day.
Thank you for your time and your attention to this matter.
Subject Line: Regarding American Funds - As Requested
As discussed, we have attached the joint proxy statement and information about the American Funds shareholder meeting.
We are trying to avoid any further adjournment of the shareholder meeting for the Fund(s) which was originally scheduled for <Original Meeting Date>.
The Board of your Fund(s) has reviewed the proposals as detailed in the proxy statement and, for the proposals that apply to your Fund(s), urges a vote in favor of Proposals 1 through 7 and against Proposal 8 as explained in the joint proxy statement.
Please take a moment to review the statement and if you have any questions, or are ready to cast a vote by telephone, please call toll-free 1-###-###-####.
We are available to answer your questions from 9:00am until 11:00pm Eastern Time weekdays and from Noon to 6:00pm Eastern Time on Saturday
If you would prefer, and have your proxy card(s), you may vote via the internet (www.proxy-direct.com) or by touchtone telephone (1-xxx-xxx-xxxx), available 24 hours a day.
Thank you for your time and your attention to this matter.