cmtapre14a.htm
SCHEDULE 14A
INFORMATION
Proxy Statement
Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.
)
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Material Pursuant to Section 240.14a-12
THE CASH MANAGEMENT
TRUST OF AMERICA
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as Specified In Its Charter)
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Frequently
asked questions regarding current market conditions
FAQ about recent
turmoil in the markets and how it affects our funds.
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1.
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Do you think the
markets have hit bottom?
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2.
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What are your
investment professionals doing differently
today?
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3.
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Will American Funds
continue participating in the government’s temporary guarantee program for
money market funds?
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4.
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Where can I find
information about the stocks and bonds held by the American
Funds?
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5.
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Can the assets of the
American Funds that are held by independent custodians J.P. Morgan and
State Street Bank be attached by the banks’ creditors or
regulators?
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With developments
moving quickly in the nation’s financial markets, we thought the following might
be helpful.
A: We never predict the
short-term direction of financial markets, but we are seeing some signs that the
stage is being set for a recovery in the economy and the markets. We know that
we are far from out of the woods and that not all of our difficulties are behind
us. Still, credit markets have improved, the slide in home prices is showing
signs of slowing and the effects of the economic stimulus package are just
starting to be felt.
One result of the
long decline in the markets is that the share prices of many good companies have
become attractive. Corporate profits have also fallen as the recession has
progressed. Historically, we’ve seen that as corporate profits pick up, stock
prices also rise. We know, too, that markets anticipate good news rather than
wait until it has made the headlines. While this does not mean that the markets
have hit bottom — and they may not have — it reminds us that the number of
attractive long-term investment opportunities is growing.
We
are confident that markets will recover over time and reward patient,
conservative investors as markets always have in the past.
Read additional
perspectives on current market conditions.
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A: We are living through the
worst bear market in 70 years but in one respect we’ve not changed our approach.
We’re still conducting fundamental, global research with a long-term view. We
realize, however, that the world has changed. It is far more interconnected than
anyone understood. A real estate downturn in California, for example, can affect
the assets of a small regional bank in Europe. Our fixed-income and equity
analysts are working more closely than ever to thoroughly understand companies.
When we assess a company’s long-term prospects, we try to understand the impact
that seemingly unrelated events halfway around the world could have on the
company or its industry.
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A: Yes, The Cash Management Trust of
America®,
The U.S. Treasury
Money Fund of AmericaSM
and The Tax-Exempt
Money Fund of AmericaSM
are participating in the program.
Under the program,
investments in a money market fund as of September 19, 2008, will be temporarily
guaranteed to enable shareholders to receive a net asset value of $1.00 per
share if the fund is liquidated. Investments in money market funds made after
September 19, 2008, are ineligible for the program and will not be guaranteed.
The guarantee program has been extended through September 18, 2009. For more
information, you can read FAQ about the guarantee
program on the Treasury Department’s website.
Although we are
participating in the program, we believe it is highly unlikely that the
guarantee will be needed for any of our money market funds. Investments in money
market funds managed by Capital Research and Management CompanySM
continue to adhere to strict credit quality, liquidity and diversification
guidelines. The Cash Management Fund in the American Funds Insurance Series® is not
managed to maintain a stable asset value and thus is not eligible to participate
in the program.
The Boards of
Trustees of the three funds participating in the program have recently decided
to ask shareholders to approve the following changes:
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Shareholders
of The Cash Management Trust of America and The U.S. Treasury Money Fund
of America are being asked to approve merging the two funds into American
Funds Money Market FundSM.
If the merger is approved, assets in the two funds that are currently
guaranteed under the program will continue to be
covered.
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Shareholders
of The Tax-Exempt Money Fund of America are being asked to approve
converting the fund into a short-term, tax-exempt bond fund. If the
conversion is approved, assets currently guaranteed under the program will
be covered until the conversion is effective, tentatively anticipated for
late July. After the conversion, the assets will no longer be covered
because the fund will no longer be a money market
fund.
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A: To view holdings
information, visit our
detailed fund information page and choose a fund name and share class.
Then click on the Holdings link near the top of the page. To view a complete
list of fund holdings, click on “portfolio holdings” from the “Holdings”
section. This information is updated about 45 days after the end of each
calendar quarter.
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A: No. Under federal
bankruptcy law, fund assets are not property of the bank and could not be
attached by the banks’ creditors or regulators. In addition, federal securities
laws and each fund’s custody agreement both require the custodian banks to hold
fund assets in segregated accounts for the benefit of the fund. Moreover, our
custody agreements specifically provide that the custodian may take actions
pertaining to these segregated accounts only as authorized by the fund. The
funds also regularly reconcile assets held by the custodian banks and receive
reports from independent auditors regarding the custodian’s internal
controls.
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Shareholders
of each fund are encouraged to read the applicable proxy statement when it
becomes available as it contains important information regarding the proposed
transactions. Shareholders will be mailed a proxy statement and proxy
ballot and may obtain the proxy statement, and other relevant documents, for
free on the SEC’s website at sec.gov. For The Cash Management Trust
of America and The U.S. Treasury Money Fund of America, the proxy statement and
other information may be found under the filings for American Funds Money Market
Fund. You may also request a complimentary copy of the proxy
statement by calling American Funds Service Company at 800/421-0180 or writing
to the secretary of the funds at 333 South Hope Street, Los Angeles, California,
90071.
Although money market funds seek to
preserve the value of your investment at $1.00 a share, it is possible to lose
money by investing in a money market fund. Investments are not FDIC-insured, nor
are they deposits of or guaranteed by a bank or any other
entity.
Most investments
carry some degree of risk. For example, equity investments are subject to market
fluctuations.
Investors
should carefully consider the investment objectives, risks, charges and expenses
of the American Funds. This and other important information is contained in the
prospectuses,
which can be obtained from your financial professional and should be read
carefully before investing.
Retirement Plan Sponsors:
FAQs about money market fund changes
American Funds is
introducing a new money market fund on May 1, 2009, and, pending shareholder
approval, will merge its existing money market funds into the new fund this
summer. Here are answers to some frequently asked questions about these
changes.
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Q:
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Why
did American Funds create a new money market fund?
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A:
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We know that
money market funds play an important role in our shareholders’ portfolios,
and we remain committed to providing a cash-equivalent fund option that
seeks to preserve a net asset value of $1.00 a share. We believe that the
new fund, American Funds Money Market FundSM,
combines the investment strategies of our two taxable cash-equivalent
funds.
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Q:
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How
is American Funds Money Market Fund different from The Cash Management
Trust of America®
(CMTA) and The U.S. Treasury Money Fund of AmericaSM
(CTRS)?
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A:
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CMTA may
invest substantially in commercial paper, bank obligations and U.S.
government securities, while CTRS invests mainly in U.S. Treasury
securities. American Funds Money Market Fund will invest significantly in
U.S. Treasury securities and other securities backed by the full faith and
credit of the U.S. government, as well as in securities issued by U.S.
federal agencies. The fund may also invest in other high-quality money
market instruments.
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Q:
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How
will plans offering CMTA and CTRS be affected?
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A:
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CMTA and CTRS
will be closed to new plans effective May 1, 2009. We may, however, allow
use of these funds in certain circumstances. Also, the boards of CMTA and
CTRS have decided to seek shareholder approval to merge the funds into
American Funds Money Market Fund.
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Plans that already
offer CMTA or CTRS will not be affected by the May 1 closure. All participants
in these plans will be able to invest in these funds until the merger, which is
expected to take place this summer.
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Q:
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What
impact will the merger, if approved by shareholders, have on retirement
plans?
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A:
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Plan assets
in CMTA or CTRS will automatically be moved into American Funds Money
Market Fund on the date of the merger. This includes the use of CMTA and
CTRS:
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as an
investment option available to plan
participants,
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as the plan’s
default investment, and/or
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as the plan’s
forfeiture account investment.
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Q:
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What
do I, as a plan sponsor, need to do?
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A:
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Assuming
approval of the merger, plan investments in CMTA or CTRS will
automatically be moved into American Funds Money Market Fund on the date
of the merger. Plan sponsors must notify participants about the merger at
least 30 days in advance to qualify for the fiduciary liability protection
provided in ERISA section 404(c). We have created a sample participant
notice that you can use. [link to new notification
article]
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Q:
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Can
a plan replace CMTA or CTRS prior to the anticipated merger with American
Funds Money Market Fund?
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A:
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Yes. You
should contact your financial professional as soon as possible to discuss
your options.
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If
your plan currently uses CMTA or CTRS for the forfeiture account or as a default
option, remember that you’ll have to choose an investment to replace
it.
For
more information
If
your plan offers CMTA or CTRS, consider using our sample participant notice
to inform participants about the upcoming changes. Contact your financial
professional to find out more about our cash-equivalent funds.
Investments are not FDIC-insured, nor
are they deposits of or guaranteed by a bank or any other entity. Although
cash-equivalent funds seek to preserve the value of your investment at $1.00 a
share, it is possible to lose money by investing in them. Fund shares are
not guaranteed by the U.S. government.
Shareholders of each fund are
encouraged to read the applicable proxy statement when it becomes available as
it contains important information regarding the proposed transactions.
Shareholders will be mailed a proxy statement and proxy ballot and may obtain
the proxy statement, and other relevant documents, for free on the SEC’s website
at sec.gov. For The Cash Management Trust of
America and The U.S. Treasury Money Fund of America, the proxy statement and other
information may be found under the filings for American Funds Money Market Fund.
You may also request a complimentary copy of the proxy statement by calling
American Funds Service Company at 800/421-0180 or writing to the secretary of
the funds at 333 South
Hope Street,
Los Angeles, California 90071.
Investors should
carefully consider the investment objectives, risks, charges and expenses of
each fund. This and other important information is contained in the prospectus,
which can be obtained from your financial professional or downloaded. Please
read the prospectus carefully before you invest or send money.