As filed with the Securities and Exchange Commission on March 3, 1999
SEC File No. 811-9105
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. 1 (X)
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 1 (X)
NEW WORLD FUND, INC.
(Exact name of registrant as specified in charter)
333 South Hope Street, Los Angeles, California 90071
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (213) 486-9200
Michael J. Downer, Esq.
Senior Vice President - Fund Business Management Group
Capital Research and Management Company
333 South Hope Street
Los Angeles, California 90071
Approximate date of proposed public offering:
April 19, 1999
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
<TABLE>
<CAPTION>
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
Being Being Price Offering Registration
Registered Registered Per Unit Price Fee
<S> <C> <C> <C> <C>
Shares of Indefinite N/A Indefinite* $500**
Common
Stock $0.01
par value per
share)
</TABLE>
* An indefinite number of shares of common stock of the Registrant is being
registered by this Registration Statement pursuant to Rule 24f-2 under the
Investment Company Act of 1940.
** The $500 fee was paid upon the initial filing of the registration statement
on November 17, 1998.
The Registrant hereby amends this Registration Statement under the Securities
Act of 1933 on such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which specifically
states that this Registration Statement shall thereafter be effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the
Registration Statement shall become effective on such date as the Commission,
acting pursuant to Section 8(a), may determine.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
A registration statement relating to these securities has been filed with the
Securities and Exchange Commission but has not yet become effective. Informa-
tion contained herein is subject to completion or amendment. These securities
may not be sold nor may offers to buy be accepted prior to the time the regis-
tration statement becomes effective. This prospectus shall not constitute an
offer to sell or the solicitation of an offer to buy nor shall there be any
sale of these securities in any State in which such offer, solicitation or
sale would be unlawful prior to registration under the securities laws of any
such State.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Preliminary Prospectus
Issued March 3, 1999
PROSPECTUS
20,000,000 Shares
New World Fund, Inc.
333 South Hope Street
Los Angeles, California 90071
(213) 486-9200
New World Fund, Inc. is an open-end diversified management investment company
with the objective of seeking long-term capital appreciation. The fund will
invest primarily in stocks of companies with significant exposure to countries
which have developing economies and/or markets.
American Funds Distributors, Inc., as principal underwriter, has entered into
agreements with a selected group of securities dealers to solicit subscriptions
for shares of the fund during an offering period that will terminate on the
settlement date, June 17, 1999. Purchases may not be made by exchanging shares
of other funds in The American Funds Group.
This Prospectus, which should be read and then retained for future reference,
sets forth concisely the information an investor should know before investing.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED OF THESE
SECURITIES. FURTHER, IT HAS NOT DETERMINED THAT THIS PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Price to Underwriting Proceeds to
Public/1/ Discount/1/ Fund/2/
- -------------------------------------------------------------------------------
Maximum Offering/3/
(20,000,000 Shares) $500,000,000 $28,750,000 $471,250,000
- -------------------------------------------------------------------------------
/1/ Assumes that the shares offered hereby are sold in transactions of less
than $50,000 each. In larger transactions, the underwriting discount of
5.75% per share (6.10% of the net amount invested) and the offering price
will be reduced, but the proceeds per share to the fund will be the same.
See "Purchase and Exchange of Shares."
Per Share $25.00 $1.44 $23.56
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
/2/ Does not give effect to organizational and other expenses payable by the
fund, estimated at $ .
/3/ The maximum offering refers to shares to be sold during the offering period
that will be terminate on the settlement date, June 17, 1999. After that
date additional shares may be sold pursuant to an indefinite share
registration in limited circumstances as described herein.
April , 1999
New World Fund, Inc.
333 South Hope Street
Los Angeles, California 90071
TICKER SYMBOL: NEWSPAPER ABBREV.: FUND NO.: 36
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Risk/Return Summary 2
................................................................................
Fees and Expenses of the Fund 3
................................................................................
Investment Objectives, Strategies and Risks 4
................................................................................
Year 2000 6
................................................................................
Management and Organization 6
................................................................................
Shareholder Information 8
................................................................................
Purchase and Exchange of Shares 9
................................................................................
How to Sell Shares 13
................................................................................
Distribution Arrangements 14
- --------------------------------------------------------------------------------
New World Fund / Prospectus 1
- --------------------------------------------------------------------------------
RISK/RETURN SUMMARY
The fund seeks to make your investment grow over time by investing primarily in
stocks of companies with significant exposure to countries which have
developing economies and/or markets. The fund may also invest in debt
securities of issuers, including issuers of high-yield, high-risk bonds, in
these countries.
The fund is designed for investors seeking capital appreciation through stocks.
Investors in the fund should have a long-term perspective and be able to
tolerate potentially wide price fluctuations. An investment in the fund is
subject to risks, including the possibility that the fund may decline in value
in response to economic, political and social events in the U.S. or abroad. In
addition, the prices of equity securities will be affected by events
specifically involving the companies whose securities are owned in the fund.
The value of debt securities held by the fund may be affected by changing
interest rates and credit ratings. High-yield, high-risk and longer maturity
bonds will be subject to greater credit risk and price fluctuations than higher
quality and shorter maturity bonds.
Although all securities in the fund's portfolio, including U.S. securities, may
be adversely affected by currency fluctuations or world political, social and
economic instability, investments outside the U.S., particularly in countries
with developing economies or markets, may be affected to a greater extent.
Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.
You may lose money by investing in the fund. The likelihood of loss is greater
if you invest for a shorter period of time.
2 New World Fund / Prospectus
- --------------------------------------------------------------------------------
FEES AND EXPENSES OF THE FUND
The following describes the fees and expenses that you may pay if you buy and
hold shares of the fund.
Shareholders Fees
(fees paid directly from your investment)
- --------------------------------------------------------------------------------
Maximum sales charge imposed on purchases
(as a percentage of offering price) 5.75%/1/
................................................................................
Maximum sales charge imposed on reinvested dividends 0%
................................................................................
Maximum deferred sales charge 0%/2/
................................................................................
Redemption or exchange fees 0%
/1/ Sales charges are reduced or eliminated for larger purchases.
/2/ A contingent deferred sales charge of 1% applies on certain redemptions
made within 12 months following any purchases you made without a sales
charge.
Annual Fund Operating Expenses
(expenses that are deducted from the fund assets)
- --------------------------------------------------------------------------------
Management Fees %
................................................................................
Service (12b-1) Fees %/1/
................................................................................
Other Expenses %/2/
................................................................................
Total Annual Fund Operating Expenses %
/1/ 12b-1 expenses may not exceed 0.30% of the fund's average net assets
annually.
/2/ Based on estimated amounts for the current fiscal year.
Example
This Example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that
the fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
One year $
................................................................................
Three years $
................................................................................
New World Fund / Prospectus 3
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS
The fund's investment objective is long-term capital appreciation. The fund may
invest in equity securities of any company, regardless of where it is based, if
the fund's investment adviser determines that a significant portion of a
company's assets or revenues (generally 20% or more) are attributable to
developing countries. Under normal market conditions, the fund will invest at
least 35% of its assets in equity and debt securities of issuers primarily based
in "qualified" countries which have developing economies and/or markets. In
addition, the fund may invest up to 25% of its assets in debt securities of
issuers, including issuers of high-yield, high-risk and government bonds,
primarily based in qualified countries or that have a significant portion of
their assets or revenues attributable to developing countries.
In determining whether a country is qualified, the fund will consider such
factors as the country's per capita gross domestic product, the percentage of
the country's economy that is industrialized, market capital as a percentage of
gross domestic product, the overall regulatory environment, the presence of
government regulation limiting or banning foreign ownership, and restrictions on
repatriation of initial capital, dividends, interest, and/or capital gains. The
fund's investment adviser, Capital Research and Management Company, will
maintain an eligible list of qualified countries and securities in which the
fund may invest.
The prices of equity securities will decline in response to certain events,
including those directly involving the companies whose securities are owned in
the fund, adverse conditions affecting the general economy, overall market
declines, world political, social and economic instability, and currency
fluctuations. Investments outside the U.S. may be affected by these events to a
greater extent and may also be affected by differing securities regulations, and
administrative difficulties such as delays in clearing and settling portfolio
transactions.
Investing in countries with developing economies and/or markets generally
involves risks in addition to and greater than those generally associated with
investing in developed countries. For instance, these countries may have less
developed legal and accounting systems. The governments of these countries may
be more unstable and likely to impose capital controls, nationalize a company
or industry, place restrictions on foreign ownership and on withdrawing sale
proceeds of securities from the country, and/or impose punitive taxes that
could adversely affect security prices. In addition, the economies of these
countries may be dependent on relatively few industries that are more
susceptible to local and global changes. Securities markets in these countries
are also relatively small and have substantially lower trading volumes. As a
result, securities issued in
4 New World Fund / Prospectus
these countries may be more volatile and potentially less liquid than
securities issued in countries with more developed economies or markets.
The value of debt securities held by the fund may be affected by factors such
as changing interest rates, credit ratings, and effective maturities. For
example, the value of bonds in the fund's portfolio generally will decline when
interest rates rise and vice versa. In addition, the values of high-yield, high-
risk and longer maturity bonds will be subject to greater credit risk and price
fluctuations than higher quality and shorter maturity bonds.
The fund may also hold cash or money market instruments of any issuer to any
extent deemed appropriate. The size of the fund's cash position will vary and
will depend on various factors, including market conditions and purchases and
redemptions of fund shares. A larger cash position could detract from the
achievement of the fund's objective, but it also provides greater liquidity to
meet redemptions or to make additional investments, and it would reduce the
fund's exposure in the event of a market downturn.
The fund relies on the professional judgment of Capital Research and Management
Company to make decisions about the fund's portfolio securities. The basic
investment philosophy of Capital Research and Management Company is to seek
undervalued securities that represent good long-term investment opportunities.
Securities may be sold when they are judged to no longer represent good long-
term value.
New World Fund / Prospectus 5
- --------------------------------------------------------------------------------
YEAR 2000
The date-related computer issue known as the "Year 2000 problem" could have an
adverse impact on the quality of services provided to the fund and its
shareholders. However, the fund understands that its key service providers --
including the investment adviser and its affiliates -- are taking steps to
address the issue. In addition, the Year 2000 problem may adversely affect the
issuers in which the fund invests. For example, issuers may incur substantial
costs to address the problem. They may also suffer losses caused by corporate
and governmental data processing errors. The fund and its investment adviser
will continue to monitor developments relating to this issue.
- --------------------------------------------------------------------------------
MANAGEMENT AND ORGANIZATION
Investment Adviser
Capital Research and Management Company, an experienced investment management
organization founded in 1931, serves as investment adviser to the fund and
other funds, including those in The American Funds Group. Capital Research and
Management Company, a wholly owned subsidiary of The Capital Group Companies,
Inc., is headquartered at 333 South Hope Street, Los Angeles, CA 90071. Capital
Research and Management Company manages the investment portfolio and business
affairs of the fund. The estimated total management fee to be paid by the fund,
as a percentage of average net assets, is discussed earlier under "Fees and
Expenses of the Fund."
Capital Research and Management Company and its affiliated companies have
adopted a personal investing policy that is consistent with the recommendations
contained in the May 9, 1994 report issued by the Investment Company
Institute's Advisory Group on Personal Investing. This policy has also been
incorporated into the fund's code of ethics.
6 New World Fund / Prospectus
Multiple Portfolio Counselor System
Capital Research and Management Company uses a system of multiple portfolio
counselors in managing mutual fund assets. Under this approach the portfolio of
a fund is divided into segments which are managed by individual counselors.
Counselors decide how their respective segments will be invested, within the
limits provided by a fund's objective(s) and policies and by Capital Research
and Management Company's investment committee. In addition, Capital Research
and Management Company's research professionals may make investment decisions
with respect to a portion of a fund's portfolio. The primary individual
portfolio counselors for New World Fund are listed below.
<TABLE>
Approximate
Years of Experience as an
Investment Professional
(including the last five years)
...............................
With Capital
Portfolio Years of Experience Research and
Counselors as Portfolio Counselor Management
for New World for New World Fund Company or
Fund Primary Title(s) (approximate) affiliates Total Years
---------------------------------------------------------------------------------------------------
<S> <S> <S> <S> <S>
David C. Barclay of the fund. Less than one year 11 years 17 years
Vice President, (since the fund began
Capital Research operations)
and Management
Company.
---------------------------------------------------------------------------------------------------
Mark E. Denning of the fund. Less than one year 16 years 16 years
Director, Capital (since the fund began
Research and operations)
Management Company
---------------------------------------------------------------------------------------------------
Alwyn Heong of the fund. Less than one year 7 years 11 years
Vice President, (since the fund began
Capital Research operations)
Company*
---------------------------------------------------------------------------------------------------
Carl M. Kawaja of the fund. Less than one year 8 years 12 years
Vice President, (since the fund began
Capital Research operations)
Company*
---------------------------------------------------------------------------------------------------
Robert W. Lovelace of the fund. Less than one year 13 years 13 years
Executive Vice (since the fund began
President and operations)
Director, Capital
Research Company*
---------------------------------------------------------------------------------------------------
</TABLE>
The fund began operations June 17, 1999.
* Company affiliated with Capital Research and Management Company.
New World Fund / Prospectus 7
- --------------------------------------------------------------------------------
SHAREHOLDER INFORMATION
Shareholder Services
American Funds Service Company, the fund's transfer agent, offers you a wide
range of services you can use to alter your investment program should your
needs and circumstances change. These services are available only in states
where they may be legally offered and may be terminated or modified at any time
upon 60 days written notice. For your convenience, American Funds Service
Company has four service centers across the country.
[MAPS APPEARS HERE]
- --------------------------------------------------------------------------------
Call toll-free from anywhere in the U.S.
(8 a.m. to 8 p.m. ET):
800/421-0180
Western Western Central Eastern Central Eastern
Service Center Service Center Service Center Service Center
American Funds American Funds American Funds American Funds
Service Company Service Company Service Company Service Company
P.O. Box 2205 P.O. Box 659522 P.O. Box 6007 P.O. Box 2280
Brea, California San Antonio, Texas Indianapolis, Indiana Norfolk, Virginia
92822-2205 78265-9522 46206-6007 23501-2280
Fax: 714/671-7080 Fax: 210/474-4050 Fax: 317/735-6620 Fax: 757/670-4773
- --------------------------------------------------------------------------------
A complete description of the services we offer is described in the fund's
statement of additional information. In addition, an easy-to-read guide to
owning a fund in The American Funds Group titled "Welcome to the Family" is
sent to new shareholders and is available by writing or calling American Funds
Service Company.
You may invest in the fund through various retirement plans. However, some re-
tirement plans or accounts held by investment dealers may not offer certain
services. If you have any questions, please contact your plan
administration/trustee or dealer.
8 New World Fund / Prospectus
- --------------------------------------------------------------------------------
PURCHASE AND EXCHANGE OF SHARES
Initial Offering
American Funds Distributors will serve as the principal underwriter for the
fund's shares and will enter into agreements with a selected group of securi-
ties dealers who will use their best efforts to solicit orders to purchase
shares of the fund. Dealers may obtain non-binding indications of interest
prior to actually confirming any orders. The termination date of the offering
is June 17, 1999, the settlement date for subscriptions accepted during the of-
fering. Any payments received by a dealer or by American Funds Distributors
prior to the settlement date will be held in a non-interest bearing bank ac-
count. Shares of the fund may be purchased only through those dealers that are
registered, if required, in the state where the purchase is made.
A minimum purchase of 200 shares ($5,000 at the maximum offering price) is re-
quired to invest in the fund during the offering, except that for retirement
plans, such as IRAs, this minimum is reduced to 60 shares ($1,500 at the maxi-
mum offering price). For Education IRAs the minimum is further reduced to 25
shares ($500 at the maximum offering price). The shares are offered at a maxi-
mum offering price of $25.00 per share, which is equal to the net asset value
per share plus a sales charge. The sales charge will be reduced for large pur-
chases in the amount indicated below, but in all cases, the fund will receive
the net asset value of $23.56 per share.
The table below shows the offering price, total per share sales charges (under-
writing discounts) and dealer concessions connected with sales of various quan-
tities of the fund's shares during the initial offering. Dealer concessions
represent the amounts allowed to securities dealers.
<TABLE>
Underwriting Discount Dealer Concession
--------------------------------- ---------------------
Approx. % Approx. % Approx. %
Amount of Purchase Offering Dollar of Offering of Net Dollar of Offering
at the Offering Price Price Amount Price Asset Value Amount Price
- ------------------------ --------- --------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Less than $50,000....... $25.00 $1.44 5.75% 6.10% $1.44 5.75%
$50,000 but less than
$100,000............... $24.61 $1.11 4.50% 4.71% $1.11 4.50%
$100,000 but less than
$250,000............... $24.35 $0.85 3.50% 3.63% $0.85 3.50%
$250,000 but less than
$500,000............... $24.10 $0.60 2.50% 2.56% $0.60 2.50%
$500,000 but less than
$1 million............. $23.98 $0.48 2.00% 2.04% $0.48 2.00%
$1 million or more...... see below see below see below see below see below see below
</TABLE>
New World Fund / Prospectus 9
Investments of $1 million or more and investments made by employer-sponsored
defined contribution-type plans with 100 or more eligible employees are sold
with no initial sales charge. A 1% contingent deferred sales charge may be im-
posed on certain redemptions by accounts that invest with no initial sales
charge (other than employer-sponsored plans), if redemptions are made within
one year of purchase. Up to 1% may be paid by the fund under its Plan of Dis-
tribution and/or by American Funds Distributors to dealers on investments made
with no initial sales charge.
The fund currently intends to pay a continuing service fee (not to exceed 0.25%
annually) to dealers in order to promote selling efforts and to compensate them
for providing certain services for their clients. Participating dealers may re-
ceive up to the entire underwriting discount.
You may be entitled to a reduced sales charge and offering price on purchases
in the offering as described below under "Reducing Your Sales Charge."
Additional Sales and Possible Future Offerings
Following the completion of the offering, the fund does not intend to make ad-
ditional sales of its shares (except as described below) until after Septem-
ber 15, 1999. The fund reserves the right after that date to make additional
sales of its shares, either on a continuous basis or by periodic offerings of
limited amounts of shares, although it is not obligated to do so. During the
period prior to September 15, 1999, and for such time thereafter that it is not
making a continuous offering of its shares, the fund intends to sell additional
shares (in excess of the maximum initial offering of 20,000,000 shares), pursu-
ant to its registration statement (including this prospectus) or amendments
thereto, as follows: (i) of additional purchases ($50 minimum) by shareholders
that purchased fund shares in the initial offering; (ii) for reinvestment of
dividends and capital gain distributions paid by the fund (including reinvest-
ment within 30 days of dividends or capital gain distributions that were paid
in cash); (iii) in connection with the exercise of the reinstatement privilege
by shareholders who redeemed fund shares; and (iv) in connection with retire-
ment plans offered to employees of the investment adviser and its affiliates.
Investments in such retirement plans, as well as reinvestment and reinstate-
ment, will be at the next determined net asset value. The other sales will be
at the net asset value next determined after receipt of the order plus a sales
charge in accordance with the schedule set forth above.
Exchange
Shareholders of other funds in The American Funds Group may not exchange their
shares for shares of the fund during the initial offering or in connection with
the additional sales described above. Should the fund decide to make a continu-
ous offering of shares in the future, you may exchange your shares into the
fund or other funds in The American Funds Group, subject to the terms of the
prospectuses of the funds involved, without a sales charge. Exchanges of shares
from the money market funds initially purchased without a sales charge
10 New World Fund / Prospectus
generally will be subject to the appropriate sales charge. Exchanges have the
same tax consequences as ordinary sales and purchases. See "Transactions by
Telephone . . ." for information regarding electronic exchanges.
The fund and American Funds Distributors, the fund's principal underwriter, re-
serve the right to reject any purchase order for any reason. Although there is
currently no specific limit on the number of exchanges you can make in a period
of time, the fund and American Funds Distributors reserve the right to reject
any purchase order and may terminate the exchange privilege of any investor
whose pattern of exchange activity they have determined involves actual or po-
tential harm to the fund.
Share Price
The fund calculates its share price, also called net asset value, as of 4:00
p.m. New York time, which is the normal close of trading on the New York Stock
Exchange, every day the Exchange is open. In calculating net asset value, mar-
ket prices are used when available. If a market price for a particular security
is not available, the fund will determine the appropriate price for the securi-
ty.
Your shares will be purchased at the offering price, or sold at the net asset
value, next determined after American Funds Service Company receives and ac-
cepts your request. The offering price is the net asset value plus a sales
charge, if applicable.
Sales Charge
Should limited amounts of shares be offered in the future, the fund intends to
offer such shares first to its shareholders, prior to offering any shares to
other prospective investors. In the event the fund should determine to make a
continuous offering of shares in the future, it likely would adopt the sales
charge schedule applicable to the other equity funds in The American Funds
Group as set forth below.
<TABLE>
Sales Charge as a Percentage of
...............................
Net Dealer Concession
Offering Amount as % of
Investment Price Invested Offering Price
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
................................................................................
$50,000 but less than $100,000 4.50% 4.71% 3.75%
................................................................................
$100,000 but less than $250,000 3.50% 3.63% 2.75%
................................................................................
$250,000 but less than $500,000 2.50% 2.56% 2.00%
................................................................................
$500,000 but less $1 million 2.00% 2.04% 1.60%
................................................................................
$1 million or more and certain
other investments described below see below see below see below
</TABLE>
New World Fund / Prospectus 11
Purchases Not Subject to Sales Charge
Investments of $1 million or more and investments made by employer-sponsored
defined contribution-type plans with 100 or more eligible employees are sold
with no initial sales charge. A 1% contingent deferred sales charge may be im-
posed on certain redemptions by accounts that invest with no initial sales
charge (other than employer-sponsored plans), if redemptions are made within
one year of purchase. Up to 1% may be paid by the fund under its Plan of Dis-
tribution and/or by American Funds Distributors to dealers on investments made
with no initial sales charge.
Reducing Your Sales Charge
You and your immediate family may combine investments to reduce your sales
charge. You must let your investment dealer or American Funds Service Company
know if you qualify for a reduction in your sales charge using one or any com-
bination of the methods described in the statement of additional information
and "Welcome to the Family."
Plan of Distribution
The fund has a Plan of Distribution or "12b-1 Plan" under which it may finance
activities primarily intended to sell shares, provided the categories of ex-
penses are approved in advance by the fund's board of directors. Up to 0.25% of
average net assets is paid annually to qualified dealers for providing certain
services pursuant to the fund's Plan of Distribution. The estimated 12b-1 fee,
as a percentage of average net assets, to be paid by the fund is indicated ear-
lier under "Fees and Expenses of the Fund." Since these fees are paid out of
the fund's assets on an ongoing basis, over time they will increase the cost of
an investment and may cost you more than paying higher initial sales charges.
Other Compensation to Dealers
American Funds Distributors may provide additional compensation to, or sponsor
informational meetings for, dealers as described in the statement of additional
information.
12 New World Fund / Prospectus
- --------------------------------------------------------------------------------
HOW TO SELL SHARES
Once a sufficient period of time has passed to reasonably assure that checks or
drafts (including certified or cashiers' checks) for shares purchased have
cleared (normally 15 calendar days), you may sell (redeem) those shares in any
of the following ways:
Through Your Dealer (certain charges may apply)
. Shares held for you in your dealer's name must be sold through the
dealer.
Writing to American Funds Service Company
. Requests must be signed by the registered shareholder(s)
. A signature guarantee is required if the redemption is:
-- Over $50,000;
-- Made payable to someone other than the registered shareholder(s);
or
-- Sent to an address other than the address of record, or an
address of record which has been changed within the last 10 days.
. Additional documentation may be required for sales of shares held in
corporate, partnership or fiduciary accounts.
Telephoning or Faxing American Funds Service Company, or by using American
FundsLine(R) or American FundsLine OnLine(R):
. Redemptions by telephone or fax (including American FundsLine and
American FundsLine OnLine) are limited to $50,000 per shareholder each
day
. Checks must be made payable to the registered shareholder
. Checks must be mailed to an address of record that has been used with
the account for at least 10 days
Transactions by Telephone, Fax, American FundsLine, or American FundsLine
OnLine
Generally, you are automatically eligible to use these services for redemptions
and exchanges unless you notify us in writing that you do not want any or all
of these services. You may reinstate these services at any time.
Unless you decide not to have telephone, fax, or computer services on your ac-
count(s), you agree to hold the fund, American Funds Service Company, any
New World Fund / Prospectus 13
of its affiliates or mutual funds managed by such affiliates, and each of their
respective directors, trustees, officers, employees and agents harmless from
any
losses, expenses, costs or liabilities (including attorney fees) which may be
incurred in connection with the exercise of these privileges, provided American
Funds Service Company employs reasonable procedures to confirm that the in-
structions received from any person with appropriate account information are
genuine. If reasonable procedures are not employed, the fund may be liable for
losses due to unauthorized or fraudulent instructions.
- --------------------------------------------------------------------------------
DISTRIBUTION ARRANGEMENTS
Dividends and Distributions
The fund intends to distribute dividends to you once each year, usually in
December. Capital gains, if any, are usually distributed in December.
You may elect to reinvest dividends and/or capital gain distributions to
purchase additional shares of this fund or any other fund in The American Funds
Group or you may elect to receive them in cash.
Tax Consequences
Dividends and capital gains are generally taxable whether they are reinvested
or received in cash -- unless you are exempt from taxation or entitled to tax
deferral. Capital gains may be taxed at different rates depending on the length
of time the fund holds its assets.
The tax treatment of redemptions from a retirement plan account may differ from
redemptions from an ordinary shareholder account.
You must provide the fund with a certified correct taxpayer identification
number (generally your Social Security Number) and certify that you are not
subject to backup withholding. If you fail to do so, the IRS can require the
fund to withhold 31% of your taxable distributions and redemptions. Federal law
also requires the fund to withhold 30% of the applicable tax treaty rate from
dividends paid to certain non-resident alien, non-U.S. partnership and non-U.S.
corporation shareholder accounts.
Please see the statement of additional information, "Welcome to the Family,"
and your tax adviser for further information.
14 New World Fund / Prospectus
- --------------------------------------------------------------------------------
NOTES
New World Fund / Prospectus 15
- --------------------------------------------------------------------------------
NOTES
16 New World Fund / Prospectus
- --------------------------------------------------------------------------------
NOTES
New World Fund / Prospectus 17
For Shareholder For Retirement Plan For Dealer
Services Services Services
American Funds Call your employer or American Funds
Service Company plan administrator Distributors
800/421-0180 800/421-9900 ext. 11
For 24-hour Information
American American
FundsLine(R) FundsLine OnLine(R)
800/325-3590 http://www.americanfunds.com
Telephone conversations may be recorded or monitored for verification,
recordkeeping and quality assurance purposes.
-------------------------------------------------------------------------------
Multiple Translations
This prospectus may be translated into other languages. In the event of any
inconsistency or ambiguity as to the meaning of any word or phrase contained
in a translation, the English text shall prevail.
-------------------------------------------------------------------------------
OTHER FUND INFORMATION
Annual/Semi-Annual Report to Shareholders
Contains additional information about the fund including financial statements,
investment results, portfolio holdings, a statement from portfolio management
discussing market conditions and the fund's investment strategies, and the
independent accountants' report (in the annual report).
Statement of Additional Information (SAI)
Contains more detailed information on all aspects of the fund, including the
fund's financial statements.
A current SAI has been filed with the Securities and Exchange Commission and
is incorporated by reference into this prospectus. The SAI and other related
materials about the fund are available for review or to be copied at the
Securities and Exchange Commission's Public Reference Room (1-800-SEC-0330) in
Washington, D.C. or on its Internet Web site at http://www.sec.gov.
Code of Ethics
Includes a description of the fund's personal investing policy.
To request a free copy of any of the documents above:
Call American Funds or Write to the Secretary of the fund
Service Company 333 South Hope Street
800/421-0180 ext. 1 Los Angeles, CA 90071
Investment Company File No. 811-9105 [LOGO] Printed on recycled paper
>
<PAGE>
A registration statement relating to these securities has been filed with
the Securities and Exchange Commission but has not yet become effective.
Information contained herein is subject to completion or amendment. These
securities may not be sold nor may offers to buy be accepted prior to the time
the registration statement becomes effective. This prospectus shall not
constitute an offer to sell or the solicitation of an offer to buy nor shall
there be any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration under the
securities laws of any such State.
NEW WORLD FUND, INC.
Part B
Statement of Additional Information
APRIL __, 1999
This document is not a prospectus but should be read in conjunction with the
current prospectus of New World Fund, Inc. (the fund or NWF) dated April __,
1999. The prospectus may be obtained from your investment dealer or financial
planner or by writing to the fund at the following address:
New World Fund, Inc.
Attention: Secretary
333 South Hope Street
Los Angeles, CA 90071
(213) 486-9200
Shareholders who purchase shares at net asset value through eligible retirement
plans should note that not all of the services or features described below may
be available to them, and they should contact their employer for details.
TABLE OF CONTENTS
Item Page No.
CERTAIN INVESTMENT LIMITATIONS AND GUIDELINES 2
DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT TECHNIQUES 2
INVESTMENT RESTRICTIONS 7
FUND ORGANIZATION 8
FUND DIRECTORS AND OFFICERS 9
MANAGEMENT 10
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES 12
PURCHASE OF SHARES 16
SELLING SHARES 22
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES 24
EXECUTION OF PORTFOLIO TRANSACTIONS 26
GENERAL INFORMATION 26
DESCRIPTION OF BOND RATINGS 28
FINANCIAL STATEMENTS ATTACHED
CERTAIN INVESTMENT LIMITATIONS AND GUIDELINES
The following limitations and guidelines are considered at the time of
purchase, under normal market conditions, and are based on a percentage of the
fund's net assets unless otherwise noted. This summary is not intended to
reflect all of the fund's investment limitations.
EQUITY SECURITIES
- - The fund will invest at least 35% of its assets in equity securities of
companies primarily based in qualified countries which have developing
economies and/or markets.
- - The fund may invest the balance of its assets in equity securities of any
company, regardless of where it is based, if the fund's investment adviser
determines that a significant portion of its assets or revenues (generally 20%
or more) are attributable to qualified countries.
DEBT SECURITIES
- - The fund may invest up to 25% of its assets in debt securities of issuers,
including government issuers, primarily based in qualified countries which have
developing economies and/or markets, or issuers that the fund's investment
adviser determines has a significant portion of its assets or revenues
(generally 20% or more) attributable to qualified countries. The fund will
generally purchase debt securities consistent with its objective of long-term
capital appreciation.
- - The fund may invest up to 25% of its assets in debt securities rated Ba and
BB or below by Moody's Investors Services, Inc. or Standard & Poor's
Corporation or unrated but determined to be of equivalent quality
DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT TECHNIQUES
The descriptions below are intended to supplement the material in the
prospectus under the "Risk/Return Summary" and "Investment Objective,
Strategies and Risks."
EQUITY SECURITIES -- Equity securities represent an ownership position in a
company. The prices of equity securities fluctuate based on changes in the
financial condition of their issuers and on market and economic conditions. The
fund's results will be related to the overall market for these securities. The
growth-oriented, equity-type securities generally purchased by the fund may
involve large price swings and potential for loss, particularly in the case of
smaller capitalization stocks.
DEBT SECURITIES -- Bonds and other debt securities are used by issuers to
borrow money. Issuers pay investors interest and generally must repay the
amount borrowed at maturity. Some debt securities, such as zero coupon bonds,
do not pay current interest, but are purchased at a discount from their face
values. The prices of debt securities fluctuate depending on such factors as
interest rates, credit quality and maturity. In general their prices decline
when interest rates rise and vice versa.
INVESTMENTS IN LOWER RATED BONDS -- The fund may invest up to 25% of it's
assets in lower rated straight debt securities (securities rated Ba or below by
Moody's and BB or below by S&P and commonly referred to as "high-yield,
high-risk bonds" or "junk bonds") or in unrated securities that are determined
to be of equivalent quality. High-yield, high-risk bonds carry a higher degree
of investment risk and are considered speculative.
CERTAIN RISK FACTORS RELATING TO HIGH-YIELD, HIGH-RISK BONDS
SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES -- High-yield, high-risk
bonds can be sensitive to adverse economic changes and political and corporate
developments and may be less sensitive to interest rate changes. During an
economic downturn or substantial period of rising interest rates, highly
leveraged issuers may experience financial stress that would adversely affect
their ability to service their principal and interest payment obligations, to
meet projected business goals, and to obtain additional financing. In addition,
periods of economic uncertainty and changes can be expected to result in
increased volatility of market prices and yields of high-yield, high-risk
bonds.
PAYMENT EXPECTATIONS -- High-yield, high-risk bonds may contain redemption or
call provisions. If an issuer exercised these provisions in a declining
interest rate market, the fund would have to replace the security with a lower
yielding security, resulting in a decreased return for investors. In addition,
if the issuer of a bond defaulted on its obligations to pay interest or
principal or entered into bankruptcy proceedings, the fund may incur losses or
expenses in seeking recovery of amounts owed to it.
LIQUIDITY AND VALUATION -- There may be little trading in the secondary market
for particular bonds, which may affect adversely the fund's ability to value
accurately or dispose of such bonds. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of high-yield, high-risk bonds, especially in a thin
market.
Capital Research and Management Company attempts to reduce the risks described
above through diversification of the portfolio and by credit analysis of each
issuer as well as by monitoring broad economic trends and corporate and
legislative developments.
OTHER SECURITIES -- The fund may also invest in securities that have equity
and debt characteristics. These securities may at times resemble equity more
than debt and vice versa. Non-convertible preferred stocks are similar to debt
in that they have a stated dividend rate akin to the coupon of a bond or note
even though they are often classified as equity securities. The prices and
yields of non- convertible preferred stocks generally move with changes in
interest rates and the issuer's credit quality, similar to the factors
affecting debt securities.
Bonds, preferred stocks, and other securities may sometimes be converted into
common stock or other securities at a stated exchange ratio. These securities
prior to conversion pay a fixed rate of interest or a dividend. Because
convertible securities have both debt and equity characteristics, their value
varies in response to many factors, including the value of the underlying
equity, general market and economic conditions, convertible market valuations,
as well as changes in interest rates, credit spreads, and the issuer's credit
quality.
INVESTING IN VARIOUS COUNTRIES - Investing outside the U.S. involves special
risks, caused by, among other things: currency controls, fluctuating currency
values; different accounting, auditing, and financial reporting regulations and
practices in some countries; changing local and regional economic, political,
and social conditions; greater market volatility; differing securities market
structures; and various administrative difficulties such as delays in clearing
and settling portfolio transactions or in receiving payment of dividends.
The risks described above are potentially heightened in connection with
investments in developing countries. Although there is no universally accepted
definition, a developing country is generally considered to be a country which
is in the initial stages of its industrialization cycle with a low per capita
gross national product. For example, political and/or economic structures in
these countries may be in their infancy and developing rapidly. Historically,
the markets of developing countries have been more volatile than the markets of
developed countries.
Additional costs could be incurred in connection with the fund's investment
activities outside the U.S. The fund may purchase and sell currencies to
facilitate transactions in securities denominated in currencies other than the
US. dollar. Brokerage commissions may be higher outside the U.S., and the fund
will bear certain expenses in connection with its currency transactions.
Furthermore, increased custodian costs may be associated with the maintenance
of assets in certain jurisdictions.
CERTAIN RISK FACTORS RELATED TO DEVELOPING COUNTRIES
CURRENCY FLUCTUATIONS - the fund's investments may be valued in currencies
other than the U.S. dollar. Certain developing countries' currencies have and
may in the future experience significant declines against the U.S. dollar. For
example, should the U.S. dollar appreciate against foreign currencies, the
value of the fund's securities holdings would generally depreciate and vice
versa. Consistent with its investment objective, the fund can engage in
certain currency transactions to hedge against currency fluctuations. SEE
"Currency Transactions" below.
GOVERNMENT REGULATION - the political, economic, and social structures of
certain developing countries may be more volatile and less developed than those
in the U.S. Certain developing countries lack uniform accounting, auditing,
and financial reporting standards, have less governmental supervision of
financial markets than in the U.S., do not honor legal rights enjoyed in the
U.S. Certain governments may be more unstable and present greater risks of
nationalization or restrictions on foreign ownership of local companies.
Repatriation of investment income, capital, and the proceeds of sales by
foreign investors may require governmental registration and/or approval in some
developing market countries. While the fund will only invest in markets where
these restrictions are considered acceptable, new or additional repatriation
restrictions might be imposed subsequent to the fund's investment. If such
restrictions were imposed subsequent to the fund's investment in the securities
of a particular country, the fund's response might include, among other things,
applying to the appropriate authorities for a waiver of the restrictions or
engaging in transactions in other markets designed to offset the risks of
decline in that country. Such restrictions will be considered in relation to
the fund's liquidity needs and all other acceptable positive and negative
factors. Further, some attractive equity securities may not be available to
the fund because foreign shareholders hold the maximum amount permissible under
current laws.
While government involvement in the private sector varies in degree among
developing countries, such involvement may in some cases, include government
ownership of companies in certain sectors, wage and price controls or
imposition of trade barriers and other protectionist measures. With respect to
any developing country, there is no guarantee that some future economic or
political crisis will not lead to price controls, forced mergers of companies,
expropriation, or creation of government monopolies to the possible detriment
of the fund's investments.
LESS DEVELOPED SECURITIES MARKETS - developing countries may have less
well-developed securities markets and exchanges. They have lower trading
volumes than the securities markets of more developed countries. These markets
may be unable to respond effectively to increases in trading volume.
Consequently, these markets may be substantially less liquid than those of more
developed countries and the securities of issuers located in these markets may
have limited marketability. This may make prompt liquidation of substantial
portfolio holdings may be difficult or impossible at times.
SETTLEMENT RISKS - Settlement systems in developing countries are generally
less well organized in developed markets. Supervisory authorities may also be
unable to apply standards which are comparable with those in developed markets.
Thus, there may be risks that settlement may be delayed and that cash or
securities belonging to the fund may be in jeopardy because of failures of or
defects in the systems. In particular, market practice may require that
payment shall be made prior to receipt of the security which is being purchased
or that delivery of a security must be made before payment is received. In
such cases, default by a broker or bank (the "counterparty") through whom the
transaction is effected might result in a loss being suffered by the fund. The
fund will seek where possible, to use counterparties whose financial status is
such that this risk is reduced. However, there can be no certainty that the
fund will be successful in eliminating this risk, particularly as
counterparties operating in developing countries frequently lack the substance
or financial resources of those in developed countries. There may also be a
danger that, because of uncertainties in the operation of settlement systems in
individual markets, competing claims may arise with respect to securities held
by or to be transferred to the fund.
INVESTOR INFORMATION - the fund may encounter problems assessing investment
opportunities in certain developing securities markets in light of limitations
on available information and different accounting, auditing and financial
reporting standards. In such circumstances, the fund's investment adviser will
seek alternative sources of information, and to the extent the investment
adviser may not be satisfied with the sufficiency of the information obtained
with respect to a particular market or security, the fund will not invest in
such market or security.
TAXATION - taxation of dividends and capital gains received by non-residents
varies among developing countries and, in some cases, is comparatively high.
In addition, developing countries typically have less well-defined tax laws and
procedures and such laws may permit retroactive taxation so that the fund could
in the future become subject to local tax liability that it had not reasonably
anticipated in conducting its investment activities or valuing its assets.
LITIGATION - the fund and its shareholders may encounter substantial
difficulties in obtaining and enforcing judgments against non-U.S. resident
individuals and companies.
FRAUDULENT SECURITIES - securities purchased by the fund may subsequently be
found to be fraudulent or counterfeit and as a consequence the fund could
suffer a loss.
LOAN PARTICIPATIONS - the fund may invest, subject to its overall limitation
on debt securities, in loan participations, typically made by a syndicate of
banks to governmental or corporate borrowers for a variety of purposes. The
underlying loans to developing market governmental borrowers may be in default
and may be subject to restructuring under the Brady Plan. The underlying loans
may be secured or unsecured, and will vary in term and legal structure. When
purchasing such instruments the fund may assume the credit risks associated
with the original bank lender as well as the credit risks associated with the
borrower. Investment in loan participations present the possibility that in
the U.S., the fund could be held liable as a co-lender under emerging legal
theories of lender liability. In addition, if the loan is foreclosed, the fund
could be part owner of any collateral, and could bear the costs and liabilities
of owning and disposing of the collateral. Loan participations are generally
not rated by major rating agencies, may not be protected by securities laws,
and are often considered to be illiquid.
CASH AND CASH EQUIVALENTS -- These securities include (1) commercial paper
(short-term notes up to 9 months in maturity issued by corporations or
governmental bodies), (2) commercial bank obligations (E.G., certificates of
deposit, bankers' acceptances (time drafts on a commercial bank where the bank
accepts an irrevocable obligation to pay at maturity), (3) savings association
and saving bank obligations (E.G., certificates of deposit issued by savings
banks or savings associations), (4) securities of the U.S. Government, its
agencies or instrumentalities that mature, or may be redeemed, in one year or
less, and (5) corporate bonds and notes that mature, or that may be redeemed,
in one year or less.
CURRENCY TRANSACTIONS -- The fund has the ability to enter into forward
currency contracts to protect against changes in currency exchange rates. A
forward currency contract is an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days from the date
of the contract agreed upon by the parties, at a price set at the time of the
contract. Forward currency contracts entered into by the fund will involve the
purchase or sale of a currency against the U.S. dollar. The fund will
segregate liquid assets, which will be marked to market daily, to meet its
forward contract commitments to the extent required by the Securities and
Exchange Commission.
Certain provisions of the Internal Revenue Code may affect the extent to which
the fund may enter into forward contracts. Such transactions may also affect,
for U.S. federal income tax purposes, the character and timing of income, gain
or loss recognized by the fund.
RESTRICTED SECURITIES AND LIQUIDITY -- The fund may purchase securities subject
to restrictions on resale. All such securities not actively traded outside the
U.S. will be considered illiquid unless they have been specifically determined
to be liquid under procedures which may be adopted by the fund's board of
directors, taking into account factors such as the frequency and volume of
trading, the commitment of dealers to make markets and the availability of
qualified investors, all of which can change from time to time. The fund may
incur certain additional costs in disposing of illiquid securities
INVESTMENT RESTRICTIONS
The fund has adopted the following fundamental policies and investment
restrictions which may not be changed without a majority vote of its
outstanding shares. Such majority is defined by the Investment Company Act of
1940 (the 1940 Act) as the vote of the lesser of (i) 67% or more of the
outstanding voting securities present at a meeting, if the holders of more than
50% of the outstanding voting securities are present in person or by proxy or
(ii) more than 50% of the outstanding voting securities. Investment
limitations expressed in the following restrictions are considered at the time
securities are purchased and are based on the fund's net assets unless
otherwise indicated. These restrictions provide that:
1. The fund may not borrow money or securities, except for temporary or
emergency purposes in an amount not exceeding 33$% of its total assets.
2. The fund may not make loans, if, as a result, more than 33$% of its total
assets would be lent to other parties (this limitation does not apply to
purchases of debt securities, repurchase agreements or loans of portfolio
securities).
3. The fund may not invest 25% or more of its assets in securities of issuers
in any one industry (other than securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities).
4. The fund may not purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business, such as real
estate investment trusts).
5. The fund may not purchase or sell physical commodities unless acquired as a
result of ownership of securities or other instruments (this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical commodities).
6. The fund may not engage in the business of underwriting securities of other
issuers, except to the extent that the purchase or disposal of an investment
position may technically constitute the fund as an underwriter as that term is
defined under the Securities Act of 1933.
7. The fund may not issue senior securities, except as permitted under the
Investment Company Act of 1940.
The fund has also adopted the following investment restrictions which may be
changed without shareholder approval:
1. The fund may not with respect to 75% of its total assets, invest more than
5% of its assets in securities of any one issuer or acquire more than 10% of
the voting securities of any one issuer. These limitations do not apply to
securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities.
2. The fund may not invest more than 15% of its total assets in securities
which are not readily marketable.
3. The fund may not purchase securities on margin, except for such short-term
credits as are necessary for the clearance of transactions, and provided that
the fund may make margin payments in connection with purchases or sales of
futures contracts or of options on futures contracts.
4. The fund may not engage in short sales except to the extent it owns or has
the right to obtain securities equivalent in kind and amount to those sold
short.
5. The fund will not invest in other companies for the purpose of exercising
control or management.
FUND ORGANIZATION
The fund is an open-end, diversified management investment company. It was
organized as a Maryland Corporation on November 16, 1998.
All fund operations are supervised by the fund's board of directors. The board
meets periodically and performs duties required by applicable state and federal
laws. Members of the board who are not employed by Capital Research and
Management Company or its affiliates are paid certain fees for services
rendered to the fund as described in "Directors and Director Compensation"
below. They may elect to defer all or a portion of these fees through a
deferred compensation plan in effect for the fund.
FUND DIRECTORS AND OFFICERS
DIRECTORS AND DIRECTOR COMPENSATION
<TABLE>
<CAPTION>
NAME, ADDRESS POSITION PRINCIPAL AGGREGATE TOTAL TOTAL
AND AGE WITH OCCUPATION(S) COMPENSATION COMPENSATION NUMBER
REGISTRANT DURING PAST 5 (INCLUDING (INCLUDING OF
YEARS VOLUNTARILY VOLUNTARILY FUND
DEFERRED DEFERRED BOARDS
COMPENSATION/1/) COMPENSATION/1/) ON
FROM THE FUND FROM ALL FUNDS WHICH
DURING FISCAL MANAGED BY DIRECTOR
YEAR ENDED CAPITAL RESEARCH SERVES
10/31/__ AND MANAGEMENT /3/
COMPANY OR ITS
AFFILIATES/2/
FOR THE YEAR
ENDED __/__/__
<S> <C> <C> <C> <C> <C>
XXX Director $_____ $_____
Age: __
</TABLE>
+ Directors who are considered "interested persons" of the fund as defined in
the 1940 Act on the basis of their affiliation with the fund's Investment
Adviser, Capital Research and Management Company.
++ Directors who may be deemed "interested persons" of the fund as defined in
the 1940 Act due to membership on the board of directors of the parent company
of a registered broker-dealer.
1 Amounts may be deferred by eligible directors under a non-qualified deferred
compensation plan adopted by the fund in 19__. Deferred amounts accumulate at
an earnings rate determined by the total return of one or more of the funds in
The American Funds Group as designated by the director.
2 Capital Research and Management Company manages The American Funds Group
consisting of 29 funds: AMCAP Fund, American Balanced Fund, Inc., American
High-Income Municipal Bond Fund, Inc., American High-Income Trust, American
Mutual Fund, Inc., The Bond Fund of America, Inc., The Cash Management Trust of
America, Capital Income Builder, Inc., Capital World Growth and Income Fund,
Inc., Capital World Bond 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, 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., SMALLCAP World Fund, Inc., The
Tax-Exempt Bond Fund of America, Inc., The Tax-Exempt Fund of California, The
Tax-Exempt Fund of Maryland, The Tax-Exempt Fund of Virginia, The Tax-Exempt
Money Fund of America, The U.S. Treasury Money Fund of America, U.S. Government
Securities Fund and Washington Mutual Investors Fund, Inc. Capital Research
and Management Company also manages American Variable Insurance Series and
Anchor Pathway Fund which serve as the underlying investment vehicles for
certain variable insurance contracts; and Endowments, whose shareholders are
limited to (i) any entity exempt from taxation under Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended ("501(c)(3) organization"); (ii) any
trust, the present or future beneficiary of which is a 501(c)(3) organization,
and (iii) any other entity formed for the primary purpose of benefiting a
501(c)(3) organization.
3 Includes funds managed by Capital Research and Management Company and
affiliates.
4 _____, _____ and _____ are affiliated with the Investment Adviser and,
accordingly, receive no compensation from the fund.
OFFICERS
<TABLE>
<CAPTION>
NAME AND ADDRESS AGE POSITION(S) PRINCIPAL OCCUPATION(S)
HELD WITH DURING PAST 5 YEARS
REGISTRANT (POSITIONS WITHIN THE
ORGANIZATIONS MAY HAVE
CHANGED DURING THIS
PERIOD)
<S> <C> <C> <C>
</TABLE>
All of the officers listed are officers or employees of the Investment Adviser
or affiliated companies. No compensation is paid by the fund to any director
or officer who is a director, officer or employee of the Investment Adviser or
affiliated companies. The fund pays fees of $_____ per annum to directors who
are not affiliated with the Investment Adviser, plus $_____ for each Board of
Directors meeting attended ($_____ for each meeting attended in conjunction
with meetings with the Advisory Board), plus $_____ for each meeting attended
as a member of a committee of the Board of Directors. No pension or retirement
benefits are accrued as part of fund expenses. The Directors may elect, on a
voluntary basis, to defer all or a portion of these fees through a deferred
compensation plan in effect for the fund.
MANAGEMENT
INVESTMENT ADVISER -- The Investment Adviser, founded in 1931, maintains
research facilities in the U.S. and abroad (Los Angeles, San Francisco, New
York, Washington D.C., London, Geneva, Hong Kong, Singapore and Tokyo), with a
staff of professionals, many of whom have a number of years of investment
experience. The Investment Adviser is located at 333 South Hope Street, Los
Angeles, CA 90071, and at 135 South State College Boulevard, Brea, CA 92821.
The Investment Adviser's professionals travel several million miles a year,
making more than 5,000 research visits in more than 50 countries around the
world. The Investment Adviser believes that it is able to attract and retain
quality personnel. The Investment Adviser is a wholly owned subsidiary of The
Capital Group Companies, Inc.
An affiliate of the Investment Adviser compiles indices for major stock markets
around the world and compiles and edits the Morgan Stanley Capital
International Perspective, providing financial and market information about
more than 2,400 companies around the world.
The Investment Adviser is responsible for managing more than $200 billion of
stocks, bonds and money market instruments and serves over eight million
investors of all types. These investors include privately owned businesses and
large corporations as well as schools, colleges, foundations and other
non-profit and tax-exempt organizations.
INVESTMENT ADVISORY AND SERVICE AGREEMENT -- The Investment Advisory and
Service Agreement (the Agreement) between the fund and the Investment Adviser
is dated _____. The Agreement will continue in effect until ____, unless
sooner terminated, and may be renewed from year to year thereafter, provided
that any such renewal has been specifically approved at least annually by (i)
the Board of Directors of the fund, or by the vote of a majority (as defined in
the 1940 Act) of the outstanding voting securities of the fund, and (ii) the
vote of a majority of Directors who are not parties to the Agreement or
interested persons (as defined in the 1940 Act) of any such party, cast in
person, at a meeting called for the purpose of voting on such approval. The
Agreement provides that the Investment Adviser has no liability to the fund for
its acts or omissions in the performance of its obligations to the fund not
involving willful misconduct, bad faith, gross negligence or reckless disregard
of its obligations under the Agreement. The Agreement also provides that
either party has the right to terminate it, without penalty, upon 60 days'
written notice to the other party, and that the Agreement automatically
terminates in the event of its assignment (as defined in the 1940 Act).
The Investment Adviser, in addition to providing investment advisory services,
furnishes the services and pays the compensation and travel expenses of persons
to perform the executive, administrative, clerical and bookkeeping functions of
the fund, provides suitable office space and utilities, necessary office
equipment and general purpose forms and supplies used at the office of the
fund, and will pay the travel expenses of directors incurred in connection with
attendance at meetings of those Boards. The fund will pay all expenses not
expressly assumed by the Investment Adviser, including, but not limited to,
fees and expenses of the transfer agent, dividend disbursing agent, legal
counsel and independent public accountants and custodian, including charges of
such custodian for the preparation and maintenance of the books of account and
records of the fund, cost of designing, printing and mailing reports,
prospectuses, proxy statements and notices to shareholders; fees and expenses
of registration, qualification and issuance of fund shares; expenses pursuant
to the fund's Plan of Distribution (described below); association dues;
interest; taxes; and compensation of Directors who are not affiliated persons
of the Investment Adviser.
The Investment Adviser has agreed that in the event the expenses of the fund
(with the exclusion of interest, taxes, brokerage costs, distribution expenses
pursuant to a plan under Rule 12b-1 and extraordinary expenses such as
litigation and acquisitions) for any fiscal year ending on a date on which the
Agreement is in effect, exceed the expense limitations, if any, applicable to
the fund pursuant to state securities laws or any regulations thereunder, it
will reduce its fee by the extent of such excess and, if required pursuant to
any such laws or regulations, will reimburse the fund in the amount of such
excess.
As compensation for its services, the Investment Adviser receives a monthly fee
which is accrued daily, calculated at the annual rate of
_________________________.
PRINCIPAL UNDERWRITER -- American Funds Distributors, Inc. (the Principal
Underwriter) is the principal underwriter of the fund's shares. The Principal
Underwriter is located at 333 South Hope Street, Los Angeles, CA 90071, 135
South State College Boulevard, Brea, CA 92821, 3500 Wiseman Boulevard, San
Antonio, TX 78251, 8332 Woodfield Crossing Boulevard, Indianapolis, IN 46240,
and 5300 Robin Hood Road, Norfolk, VA 23513. The fund has adopted a Plan of
Distribution (the Plan), pursuant to rule 12b-1 under the 1940 Act. The
Principal Underwriter receives amounts payable pursuant to the Plan (see below)
and commissions consisting of that portion of the sales charge remaining after
the discounts which it allows to investment dealers.
As required by rule 12b-1 and the 1940 Act, the Plan (together with the
Principal Underwriting Agreement) has been approved by the full Board of
Directors, and separately by a majority of the Directors who are not interested
persons of the fund and who have no direct or indirect financial interest in
the operation of the Plan or the Principal Underwriting Agreement, and the Plan
has been approved by the vote of a majority of the outstanding voting
securities of the fund. The Officers and Directors who are interested persons
of the fund may be considered to have a direct or indirect financial interest
in the operation of the Plan due to present or past affiliations with the
Investment Adviser and related companies. Potential benefits of the Plan to
the fund include improved shareholder services, savings to the fund in transfer
agency costs, savings to the fund in advisory fees and other expenses, benefits
to the investment process from growth or stability of assets and maintenance of
a financially healthy management organization. The selection and nomination of
Directors who are not interested persons of the fund are committed to the
discretion of the Directors who are not interested persons during the existence
of the Plan. The Plan is reviewed quarterly and must be renewed annually by
the Board of Directors.
Under the Plan the fund may expend up to 0.30% of its net assets annually to
finance any activity which is primarily intended to result in the sale of fund
shares, provided the fund's Board of Directors has approved the category of
expenses for which payment is being made. These include service fees for
qualified dealers and dealer commissions and wholesaler compensation on sales
of shares exceeding $1 million (including purchases by any employer-sponsored
403(b) plan, any defined contribution plan qualified under Section 401(a) of
the Internal Revenue Code including a "401(k)" plan with 100 or more eligible
employees or a community foundation).
Commissions on sales of shares exceeding $1 million (including purchases by any
employer-sponsored 403(b) plan or purchases by any defined contribution plan
qualified under Section 401(a) of the Internal Revenue Code, including any
"401(k)" plan with 100 or more eligible employees) in excess of the Plan
limitation not reimbursed during the most recent fiscal quarter are recoverable
for five quarters, provided that such commissions do not exceed the annual
expense limit. After five quarters, commissions are not recoverable.
The Glass-Steagall Act and other applicable laws, among other things, generally
prohibit commercial banks from engaging in the business of underwriting,
selling or distributing securities, but permit banks to make shares of mutual
funds available to their customers and to perform administrative and
shareholder servicing functions. However, judicial or administrative decisions
or interpretations of such laws, as well as changes in either federal or state
statutes or regulations relating to the permissible activities of banks or
their subsidiaries of affiliates, could prevent a bank from continuing to
perform all or a part of its servicing activities. If a bank were prohibited
from so acting, shareholder clients of such bank would be permitted to remain
shareholders of the fund and alternate means for continuing the servicing of
such shareholders would be sought. In such event, changes in the operation of
the fund might occur and shareholders serviced by such bank might no longer be
able to avail themselves of any automatic investment or other services then
being provided by such bank. It is not expected that shareholders would suffer
adverse financial consequences as a result of any of these occurrences.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and certain banks and financial
institutions may be required to be registered as dealers pursuant to state law.
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES
The fund intends to meet all the requirements, and has elected the tax status
of a "regulated investment company," under the provisions of Subchapter M of
the Internal Revenue Code of 1986 (the Code). Under Subchapter M, if the fund
distributes within specified times at least 90% of the sum of its investment
company taxable income (net investment income and the excess of net short-term
capital gains over net long-term capital losses) and its tax-exempt interest,
if any, it will be taxed only on that portion of such investment company
taxable income that it retains.
To qualify, the fund must (a) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, and
gains from the sale or other disposition of stock, securities, currencies or
other income derived with respect to its business of investing in such stock,
securities or currencies; (b) derive less than 30% of its gross income from the
gains or sale or other disposition of stock or securities held less than three
months; and (c) diversify its holdings so that, at the end of each fiscal
quarter, (i) at least 50% of the market value of the fund's assets is
represented by cash, cash items, U.S. Government securities, securities of
other regulated investment companies, and other securities (but such other
securities must be limited, in respect of any one issuer, to an amount not
greater than 5% of the fund's assets and 10% of the outstanding voting
securities of such issuer), and (ii) not more than 25% of the value of its
assets is invested in the securities of any one issuer (other than U.S.
Government securities or the securities of other regulated investment
companies), or in two or more issuers which the fund controls and which are
engaged in the same or similar trades or businesses or related trades or
businesses.
Under the Code, a nondeductible excise tax of 4% is imposed on the excess of a
regulated investment company's "required distribution" for the calendar year
ending within the regulated investment company's taxable year over the
"distributed amount" for such calendar year. The term "required distribution"
means the sum of (i) 98% of ordinary income (generally net investment income)
for the calendar year, (ii) 98% of capital gains (both long-term and
short-term) for the one-year period ending on October 31 (as though the
one-year period ending on October 31 were the regulated investment company's
taxable year), and (iii) the sum of any untaxed, undistributed net investment
income and net capital gains of the regulated investment company for prior
periods. The term "distributed amount" generally means the sum of (i) amounts
actually distributed by the fund from its current year's ordinary income and
capital gain net income and (ii) any amount on which the fund pays income tax
for the year. The fund intends to distribute net investment income and net
capital gains so as to minimize or avoid the excise tax liability.
The amount of any realized gain or loss on closing out a futures contract such
as a forward commitment for the purchase or sale of foreign currency will
generally result in a realized capital gain or loss for tax purposes. Futures
contracts held by the fund at the end of each fiscal year will be required to
be "marked to market" for federal income tax purposes, that is, deemed to have
been sold at market value. Sixty percent (60%) of any net gain or loss
recognized on these deemed sales and sixty percent (60%) of any net realized
gain or loss from any actual sales will be treated as long-term capital gain or
loss, and the remainder will be treated as short-term capital gain or loss.
Currency transactions that are not subject to Section 1256 of the Code may be
subject to Section 988 of the Code, in which case the 60%/40%
long-term/short-term capital gain or loss rule of Section 1256 would not apply.
Rather, each Section 988 foreign currency gain or loss would generally be
computed separately and treated as ordinary income or loss. The fund will
attempt to monitor Section 988 transactions to avoid an adverse tax impact.
The fund also intends to continue distributing to shareholders all of the
excess of net long-term capital gain over net short-term capital loss on sales
of securities. If the net asset value of shares of the fund should, by reason
of a distribution of realized capital gains, be reduced below a shareholder's
cost, such distribution would to that extent be a return of capital to that
shareholder even though taxable to the shareholder, and a sale of shares by a
shareholder at net asset value at that time would establish a capital loss for
federal tax purposes.
Dividends generally are taxable to shareholders at the time they are paid.
If a shareholder exchanges or otherwise disposes of shares of the fund within
90 days of having acquired such shares, and if, as a result of having acquired
those shares, the shareholder subsequently pays a reduced sales charge for
shares of the fund, or of a different fund, the sales charge previously
incurred in acquiring the fund's shares shall not be taken into account (to the
extent such previous sales charges do not exceed the reduction in sales
charges) for the purpose of determining the amount of gain or loss on the
exchange, but will be treated as having been incurred in the acquisition of
such other shares. Also, any loss realized on a redemption or exchange of
shares of a fund will be disallowed to the extent substantially identical
shares are reacquired within the 61-day period beginning 30 days before and
ending 30 days after the shares are disposed of.
The fund may be required to pay withholding and other taxes imposed by foreign
countries generally at rates from 10% to 40% which would reduce the fund's
investment income. Tax conventions between certain countries and the U.S. may
reduce or eliminate such taxes. If more than 50% in value of the fund's total
assets at the close of its taxable year consists of securities of foreign
issuers, the fund will be eligible to file elections with the Internal Revenue
Service pursuant to which shareholders of the fund will be required to include
their respective pro rata portions of such withholding taxes in their federal
income tax returns as gross income, treat such amounts as foreign taxes paid by
them, and deduct such amounts in computing their taxable incomes or,
alternatively, use them as foreign tax credits against their federal income
taxes. In any year the fund makes such an election, shareholders will be
notified as to the amount of foreign withholding and other taxes paid by the
fund.
Under the Code, distributions of net investment income by the fund to a
shareholder who, as to the U.S., is a nonresident alien individual, nonresident
alien fiduciary of a trust or estate, non-U.S. corporation, or non-U.S.
partnership (a non-U.S. shareholder) will be subject to U.S. withholding tax
(at a rate of 30% or lower treaty rate). Withholding will not apply if a
dividend paid by the fund to a non-U.S. shareholder is "effectively connected"
with a U.S. trade or business, in which case the reporting and withholding
requirements applicable to U.S. citizens, U.S. residents, or domestic
corporations will apply. However, if the distribution is effectively connected
with the conduct of the non-U.S. shareholder's trade or business within the
U.S., the distribution would be included in the net income of the shareholder
and subject to U.S. income tax at the applicable marginal rate. Distributions
of net long-term capital gains are not subject to tax withholding, but in the
case of a non-U.S. shareholder who is a nonresident alien individual, such
distributions ordinarily will be subject to U.S. income tax at a rate of 30% if
the individual is physically present in the U.S. for more than 182 days during
the taxable year.
As of the date of this statement of additional information, the maximum federal
individual stated tax rate applicable to ordinary income is 39.6% (effective
tax rates may be higher for some individuals due to phase out of exemptions and
elimination of deductions); the maximum individual tax rate applicable to net
capital gains on assets held more than one year is 20%; and the maximum
corporate tax applicable to ordinary income and net capital gains is 35%.
However, to eliminate the benefit of lower marginal corporate income tax rates,
corporations which have taxable income in excess of $100,000 for a taxable
year will be required to pay an additional amount of tax liability of up to
$11,750 and corporations which have taxable income in excess of $15,000,000 for
a taxable year will be required to pay an additional amount of tax of up to
$100,000. Naturally, the amount of tax payable by a shareholder with respect
to either distributions from the fund or disposition of fund shares will be
affected by a combination of tax law rules covering, e.g., deductions, credits,
deferrals, exemptions, sources of income and other matters. Under the Code, an
individual is entitled to establish an IRA each year (prior to the tax return
filing deadline for that year) whereby earnings on investments are
tax-deferred. In addition, in some cases, the IRA contribution itself may be
deductible.
The foregoing is limited to a summary of federal taxation and should not be
viewed as a comprehensive discussion of all provisions of the Code relevant to
investors. Dividends and capital gain distributions may also be subject to
state or local taxes. Investors should consult their own tax advisers with
specific reference to their own tax situations.
PURCHASE OF SHARES
<TABLE>
<CAPTION>
METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS
<S> <C> <C>
See "Investment $50 minimum (except where a
Minimums and Fund lower minimum is noted under
Numbers" for initial "Investment Minimums and Fund
investment minimums. Numbers").
By Visit any investment Mail directly to your
contacting dealer who is investment dealer's address
your registered in the printed on your account
investment state where the statement.
dealer purchase is made and
who has a sales
agreement with
American Funds
Distributors.
By mail Make your check Fill out the account
payable to the fund additions form at the bottom
and mail to the of a recent account
address indicated on statement, make your check
the account payable to the fund, write
application. Please your account number on your
indicate an check, and mail the check and
investment dealer on form in the envelope provided
the account with your account statement.
application.
By Please contact your Complete the "Investments by
telephone investment dealer to Phone" section on the account
open account, then application or American
follow the procedures FundsLink Authorization Form.
for additional Once you establish the
investments. privilege, you, your
financial advisor or any
person with your account
information can call American
FundsLine(r) and make
investments by telephone
(subject to conditions noted
in "Telephone Purchases,
Redemptions and Exchanges"
below).
By Please contact your Complete the American
computer investment dealer to FundsLink Authorization Form.
open account, then Once you establish the
follow the procedures privilege, you, your
for additional financial advisor or any
investments. person with your account
information may access
American FundsLine OnLine(r)
on the Internet and make
investments by computer
(subject to conditions noted
in "Telephone and Computer
Purchases, Redemptions and
Exchanges" below).
By wire Call 800/421-0180 to Your bank should wire your
obtain your account additional investments in the
number(s), if same manner as described
necessary. Please under "Initial Investment."
indicate an
investment dealer on
the account.
Instruct your bank to
wire funds to:
Wells Fargo Bank
155 Fifth Street
Sixth Floor
San Francisco, CA
94106
(ABA #121000248)
For credit to the
account of:
American Funds
Service Company a/c
#4600-076178
(fund name)
(your fund acct. no.)
THE FUNDS AND AMERICAN FUNDS DISTRIBUTORS RESERVE THE RIGHT TO
REJECT ANY PURCHASE ORDER.
</TABLE>
INVESTMENT MINIMUMS AND FUND NUMBERS -- Here are the minimum initial
investments required by the funds in The American Funds Group along with fund
numbers for use with our automated phone line, American FundsLine(r) (see
description below):
<TABLE>
<CAPTION>
MINIMUM FUND
FUND INITIAL NUMBER
INVESTMENT
<S> <C> <C>
STOCK AND STOCK/BOND FUNDS
AMCAP Fund(r) $1,000 02
American Balanced Fund(r) 500 11
American Mutual Fund(r) 250 03
Capital Income Builder(r) 1,000 12
Capital World Growth and Income 1,000 33
Fund(sm)
New World Fund(sm) 1,000 36
EuroPacific Growth Fund(r) 250 16
Fundamental Investors(sm) 250 10
The Growth Fund of America(r) 1,000 05
The Income Fund of America(r) 1,000 06
The Investment Company of America(r) 250 04
The New Economy Fund(r) 1,000 14
New Perspective Fund(r) 250 07
New World Fund(sm) 1,000 36
SMALLCAP World Fund(r) 1,000 35
Washington Mutual Investors Fund(sm) 250 01
BOND FUNDS
American High-Income Municipal Bond 1,000 40
Fund(r)
American High-Income Trust(sm) 1,000 21
The Bond Fund of America(sm) 1,000 08
Capital World Bond Fund(r) 1,000 31
Intermediate Bond Fund of 1,000 23
America(sm)
Limited Term Tax-Exempt Bond Fund of 1,000 43
America(sm)
The Tax-Exempt Bond Fund of 1,000 19
America(r)
The Tax-Exempt Fund of 1,000 20
California(r)*
The Tax-Exempt Fund of Maryland(r)* 1,000 24
The Tax-Exempt Fund of Virginia(r)* 1,000 25
U.S. Government Securities Fund(sm) 1,000 22
MONEY MARKET FUNDS
The Cash Management Trust of 2,500 09
America(r)
The Tax-Exempt Money Fund of 2,500 39
America(sm)
The U.S. Treasury Money Fund of 2,500 49
America(sm)
___________
*Available only in certain states.
</TABLE>
For retirement plan investments, the minimum is $250, except that the money
market funds have a minimum of $1,000 for individual retirement accounts
(IRAs). Minimums are reduced to $50 for purchases through "Automatic
Investment Plans" (except for the money market funds) or to $25 for purchases
by retirement plans through payroll deductions and may be reduced or waived for
shareholders of other funds in The American Funds Group. TAX-EXEMPT FUNDS
SHOULD NOT SERVE AS RETIREMENT PLAN INVESTMENTS. The minimum is $50 for
additional investments (except as noted above).
SALES CHARGES -- The sales charges you pay when purchasing the stock,
stock/bond, and bond funds of The American Funds Group are set forth below.
The money market funds of The American Funds Group are offered at net asset
value. (See "Investment Minimums and Fund Numbers" for a listing of the
funds.)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AMOUNT OF PURCHASE SALES CHARGE AS DEALER
AT THE OFFERING PRICE PERCENTAGE OF THE: CONCESSION
AS PERCENTAGE
OF THE
OFFERING
PRICE
NET AMOUNT OFFERING
INVESTED PRICE
STOCK AND STOCK/BOND
FUNDS
Less than $50,000 6.10% 5.75% 5.00%
$50,000 but less than$100,000 4.71 4.50 3.75
BOND FUNDS
Less than $25,000 4.99 4.75 4.00
$25,000 but less than 4.71 4.50 3.75
$50,000
$50,000 but less than 4.17 4.00 3.25
$100,000
STOCK, STOCK/BOND, AND
BOND FUNDS
$100,000 but less than 3.63 3.50 2.75
$250,000
$250,000 but less than 2.56 2.50 2.00
$500,000
$500,000 but less than 2.04 2.00 1.60
$1,000,000
$1,000,000 or more none none (see below)
</TABLE>
PURCHASES NOT SUBJECT TO SALES CHARGES - Investment of $1 million or more and
investments made by employer-sponsored defined contribution-type plans with 100
or more eligible employees are sold with no initial sales charge. A contingent
deferred sales charge may be imposed on certain redemptions by these accounts
made within one year of purchases. Investments by retirement plans,
foundations or endowments with $50 million or more in assets, and
employer-sponsored defined contribution-type plans with 100 or more eligible
employees made with no sales charge and are not subject to a contingent
deferred sales charge.
In addition, the stock, stock/bond and bond funds may sell shares at net asset
value to:
(1) current or retired directors, trustees, officers and advisory board members
of the funds managed by Capital Research and Management Company, employees of
Washington Management Corporation, employees and partners of The Capital Group
Companies, Inc. and its affiliated companies, certain family members of the
above persons, and trusts or plans primarily for such persons;
(2) current registered representatives, retired registered representatives with
respect to accounts established while active, or full-time employees (and their
spouses, parents, and children) of dealers who have sales agreements with
American Funds Distributors (or who clear transactions through such dealers)
and plans for such persons or the dealers;
(3) companies exchanging securities with the fund through a merger, acquisition
or exchange offer;
(4) trustees or other fiduciaries purchasing shares for certain retirement
plans of organizations with retirement plan assets of $50 million or more;
(5) insurance company separate accounts;
(6) accounts managed by subsidiaries of The Capital Group Companies, Inc.; and
(7) The Capital Group Companies, Inc., its affiliated companies and Washington
Management Corporation. Shares are offered at net asset value to these persons
and organizations due to anticipated economies in sales effort and expense.
DEALER COMMISSIONS - Commissions of up to 1% will be paid to dealers who
initiate and are responsible for purchases of $1 million or more, for purchases
by any employer-sponsored 403(b) plan or purchases by any defined contribution
plan qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 100 or more eligible employees, and for purchases made at
net asset value by certain retirement plans of organizations with collective
retirement plan assets of $50 million or more: _______________________.
OTHER COMPENSATION TO DEALERS - American Funds Distributors, at its expense
(from a designated percentage of its income), currently provides additional
compensation to dealers. Currently these payments are limited to the top 100
dealers who have sold shares of the fund or other funds in The American Funds
Group. These payments will be based principally on a pro rata share of a
qualifying dealer's sales. American Funds Distributors will, on an annual
basis, determine the advisability of continuing these payments.
Qualified dealers currently are paid a continuing service fee not to exceed
0.25% of average net assets (0.15% in the case of the money market funds)
annually in order to promote selling efforts and to compensate them for
providing certain services. These services include processing purchase and
redemption transactions, establishing shareholder accounts and providing
certain information and assistance with respect to the fund.
REDUCING YOUR SALES CHARGE - You and your immediate family may combine
investments to reduce your costs. You must let your investment dealer or
American Funds Service Company know if you qualify for a reduction in your
sales charge using one or any combination of the methods described below.
STATEMENT OF INTENTION -- You may enter into a non-binding commitment to
purchase shares of a fund(s) over a 13-month period and receive the same sales
charge as if all shares had been purchased at once. This includes purchases
made during the previous 90 days, but does not include appreciation of your
investment or reinvested distributions. The reduced sales charges and offering
prices set forth in the Prospectus apply to purchases of $50,000 or more made
within a 13-month period subject to the following statement of intention (the
"Statement"). The Statement is not a binding obligation to purchase the
indicated amount. When a shareholder elects to utilize a Statement in order to
qualify for a reduced sales charge, shares equal to 5% of the dollar amount
specified in the Statement will be held in escrow in the shareholder's account
out of the initial purchase (or subsequent purchases, if necessary) by the
Transfer Agent. All dividends and any capital gain distributions on shares
held in escrow will be credited to the shareholder's account in shares (or paid
in cash, if requested). If the intended investment is not completed within the
specified 13-month period, the purchaser will remit to the Principal
Underwriter the difference between the sales charge actually paid and the sales
charge which would have been paid if the total of such purchases had been made
at a single time. If the difference is not paid within 45 days after written
request by the Principal Underwriter or the securities dealer, the appropriate
number of shares held in escrow will be redeemed to pay such difference. If
the proceeds from this redemption are inadequate, the purchaser will be liable
to the Principal Underwriter for the balance still outstanding. The Statement
may be revised upward at any time during the 13-month period, and such a
revision will be treated as a new Statement, except that the 13-month period
during which the purchase must be made will remain unchanged and there will be
no retroactive reduction of the sales charges paid on prior purchases.
Existing holdings eligible for rights of accumulation (see the account
application) may be credited toward satisfying the Statement. During the
Statement period, reinvested dividends and capital gain distributions,
investments in money market funds, and investments made under a right of
reinstatement will not be credited toward satisfying the Statement.
When the trustees of certain retirement plans purchase shares by payroll
deduction, the sales charge for the investments made during the 13-month period
will be handled as follows: The regular monthly payroll deduction investment
will be multiplied by 13 and then multiplied by 1.5. The current value of
existing American Funds investments (other than money market fund investments)
and any rollovers or transfers reasonably anticipated to be invested in
non-money market American Funds during the 13-month period are added to the
figure determined above. The sum is the Statement amount and applicable
breakpoint level. On the first investment and all other investments made
pursuant to the Statement, a sales charge will be assessed according to the
sales charge breakpoint thus determined. There will be no retroactive
adjustments in sales charges on investments previously made during the 13-month
period.
Shareholders purchasing shares at a reduced sales charge under a Statement
indicate their acceptance of these terms with their first purchase.
AGGREGATION -- Sales charge discounts are available for certain aggregated
investments. Qualifying investments include those by you, your spouse and your
children under the age of 21, if all parties are purchasing shares for their
own account(s), which may include purchases through employee benefit plan(s)
such as an IRA, individual-type 403(b) plan or single-participant Keogh-type
plan or by a business solely controlled by these individuals (for example, the
individuals own the entire business) or by a trust (or other fiduciary
arrangement) solely for the benefit of these individuals. Individual purchases
by a trustee(s) or other fiduciary(ies) may also be aggregated if the
investments are (1) for a single trust estate or fiduciary account, including
an employee benefit plan other than those described above or (2) made for two
or more employee benefit plans of a single employer or of affiliated employers
as defined in the Investment Company Act of 1940, again excluding employee
benefit plans described above, or (3) for a diversified common trust fund or
other diversified pooled account not specifically formed for the purpose of
accumulating fund shares. Purchases made for nominee or street name accounts
(securities held in the name of an investment dealer or another nominee such as
a bank trust department instead of the customer) may not be aggregated with
those made for other accounts and may not be aggregated with other nominee or
street name accounts unless otherwise qualified as described above.
CONCURRENT PURCHASES -- You may combine purchases of two or more funds in The
American Funds Group, except direct purchases of the money market funds.
Shares of money market funds purchased through an exchange, reinvestment or
cross-reinvestment from a fund having a sales charge do qualify.
RIGHT OF ACCUMULATION -- You may take into account the current value of your
existing holdings in The American Funds Group, as well as your holdings in
Endowments (shares of which may be owned only by tax-exempt organizations), to
determine your sales charge on investments in accounts eligible to be
aggregated, or when making a gift to an individual or charity. Direct
purchases of the money market funds are excluded.
PRICE OF SHARES -- Shares are purchased at the offering price next determined
after the purchase order is received and accepted by the fund or American Funds
Service Company; this offering price is effective for orders received prior to
the time of determination of the net asset value and, in the case of orders
placed with dealers, accepted by the Principal Underwriter prior to its close
of business. In the case of orders sent directly to the fund or American Funds
Service Company, an investment dealer must be indicated. The dealer is
responsible for promptly transmitting purchase orders to the Principal
Underwriter. Orders received by the investment dealer, the Transfer Agent, or
the fund after the time of the determination of the net asset value will be
entered at the next calculated offering price. Prices which appear in the
newspaper do not always indicated prices at which you will be purchasing and
redeeming shares of the fund, since such prices generally reflect the previous
day's closing price whereas purchases and redemptions are made at the next
calculated price.
The price you pay for shares, the offering price, is based on the net asset
value per share which is calculated once daily at the normal close of trading
(currently 4:00 p.m., New York time) each day the New York Stock Exchange is
open. For example, if the Exchange closes at 1:00 p.m. on one day and at 4:00
p.m. on the next, the fund's share price would be determined as of 4:00 p.m.
New York time on both days. The New York Stock Exchange is currently closed on
weekends and on the following holidays: New Year's Day, Martin Luther King Jr.
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas Day.
All portfolio securities of funds managed by Capital Research and Management
Company (other than money market funds) are valued, and the net asset value per
share is determined, as follows:
1. Equity securities, including depositary receipts, are valued at the last
reported sale price on the exchange or market on which such securities are
traded, as of the close of business on the day the securities are being valued
or, lacking any sales, at the last available bid price. In cases where equity
securities are traded on more than one exchange, the securities are valued on
the exchange or market determined by the Investment Adviser to be the broadest
and most representative market, which may be either a securities exchange or
the over-the-counter market. Debt securities are valued at prices obtained
from a pricing service, when such prices are available; however, in
circumstances where the Investment Adviser deems it appropriate to do so, such
securities will be valued at the mean quoted bid and asked prices or at prices
for securities of comparable maturity, quality and type.
Securities with original maturities of one year or less having 60 days or less
to maturity are amortized to maturity based on their cost if acquired within 60
days of maturity or, if already held on the 60th day, based on the value
determined on the 61st day. Forward currency contracts are valued at the mean
of representative quoted bid and asked prices.
Assets or liabilities initially expressed in terms of non-U.S. currencies are
translated prior to the next determination of the net asset value of the fund's
shares into U.S. dollars at the prevailing market rates.
Securities and assets for which representative market quotations are not
readily available are valued at fair value as determined in good faith under
policies approved by the fund's Board. The fair value of all other assets is
added to the value of securities to arrive at the total assets;
2. Liabilities, including accruals of taxes and other expense items, are
deducted from total assets; and
3. Net assets so obtained are then divided by the total number of shares
outstanding, and the result, rounded to the nearer cent, is the net asset value
per share.
Any purchase order may be rejected by the Principal Underwriter or the fund.
The Principal Underwriter will not knowingly sell shares of the fund directly
or indirectly to any person or entity, where, after the sale, such person or
entity would own beneficially directly or indirectly more than 4.5% of the
outstanding shares of the fund without the consent of a majority of the fund's
Directors.
SELLING SHARES
Shares are sold at the net asset value next determined after your request is
received in good order by American Funds Service Company. You may sell
(redeem) shares in your account in any of the following ways:
THROUGH YOUR DEALER (certain charges may apply)
- - Shares held for you in your dealer's street name must be sold through the
dealer.
WRITING TO AMERICAN FUNDS SERVICE COMPANY
- - Requests must be signed by the registered shareholder(s)
- - A signature guarantee is required if the redemption is:
- -- Over $50,000;
- -- Made payable to someone other than the registered shareholder(s); or
- -- Sent to an address other than the address of record, or an address of record
which has been changed within the last 10 days.
Your signature may be guaranteed by a domestic stock exchange or the National
Association of Securities Dealers, Inc., bank, savings association or credit
union that is an eligible guarantor institution.
- - Additional documentation may be required for sales of shares held in
corporate, partnership or fiduciary accounts.
- - You must include any shares you wish to sell that are in certificate form.
TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY, OR BY USING AMERICAN
FUNDSLINE(R) OR AMERICAN FUNDSLINE ONLINE(R)
- - Redemptions by telephone or fax (including American FundsLine(r) and American
FundsLine OnLine(R)) are limited to $50,000 per shareholder each day.
- - Checks must be made payable to the registered shareholder(s).
- - Checks must be mailed to an address of record that has been used with the
account for at least 10 days.
MONEY MARKET FUNDS
- - You may have redemptions of $1,000 or more wired to your bank by writing
American Funds Service Company.
- - You may establish check writing privileges (use the money market funds
application).
- -- If you request check writing privileges, you will be provided with checks
that you may use to draw against your account. These checks may be made
payable to anyone you designate and must be signed by the authorized number or
registered shareholders exactly as indicated on your checking account signature
card.
Redemption proceeds will not be mailed until sufficient time has passed to
provide reasonable assurance that checks or drafts (including certified or
cashier's checks) for shares purchased have cleared (which may take up to 15
calendar days from the purchase date). Except for delays relating to clearance
of checks for share purchases or in extraordinary circumstances (and as
permissible under the Investment Company Act of 1940), sale proceeds will be
paid on or before the seventh day following receipt and acceptance of an order.
Interest will not accrue or be paid on amounts that represent uncashed
distribution or redemption checks.
You may reinvest proceeds from a redemption or a dividend or capital gain
distribution without a sales charge (any contingent deferred sales charge paid
will be credited to your account) in any fund in The American Funds Group
within 90 days after the date of the redemption or distribution. Redemption
proceeds of shares representing direct purchases in the money market funds are
excluded. Proceeds will be reinvested at the next calculated net asset value
after your request is received and accepted by American Funds Service Company.
CONTINGENT DEFERRED SALES CHARGE -- A contingent deferred sales charge of 1%
applies to certain redemptions from funds other than the money market funds
made within twelve months of purchase on investments of $1 million or more
(other than redemptions by employer-sponsored retirement plans). The charge is
1% of the lesser of the value of the shares redeemed (exclusive of reinvested
dividends and capital gain distributions) or the total cost of such shares.
Shares held for the longest period are assumed to be redeemed first for
purposes of calculating this charge. The charge is waived for exchanges
(except if shares acquired by exchange were then redeemed within 12 months of
the initial purchase); for distributions from 403(b) plans or IRAs due to
death, disability or attainment of age 591/2; for tax-free returns of excess
contributions to IRAs; and for redemptions through certain automatic
withdrawals not exceeding 10% of the amount that would otherwise be subject to
the charge.
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES
AUTOMATIC INVESTMENT PLAN -- The automatic investment plan enables
shareholders to make regular monthly or quarterly investments in shares through
automatic charges to their bank accounts. With shareholder authorization and
bank approval, the Transfer Agent will automatically charge the bank account
for the amount specified ($50 minimum), which will be automatically invested in
shares at the offering price on or about the dates you select. Bank accounts
will be charged on the day or a few days before investments are credited,
depending on the bank's capabilities, and shareholders will receive a
confirmation statement at least quarterly. Participation in the plan will
begin within 30 days after receipt of the account application. If the
shareholder's bank account cannot be charged due to insufficient funds, a
stop-payment order or the closing of the account, the plan may be terminated
and the related investment reversed. The shareholder may change the amount of
the investment or discontinue the plan at any time by writing to the Transfer
Agent.
AUTOMATIC REINVESTMENT -- Dividends and capital gain distributions are
reinvested in additional shares at no sales charge unless you indicate
otherwise on the account application. You also may elect to have dividends
and/or capital gain distributions paid in cash by informing the fund, American
Funds Service Company or your investment dealer.
CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS -- A shareholder in one fund
may elect to cross-reinvest dividends or dividends and capital gain
distributions paid by that fund (the paying fund) into any other fund in The
American Funds Group (the receiving fund) subject to the following conditions:
(i) the aggregate value of the shareholder's account(s) in the paying fund(s)
must equal or exceed $5,000 (this condition is waived if the value of the
account in the receiving fund equals or exceeds that fund's minimum initial
investment requirement), (ii) as long as the value of the account in the
receiving fund is below that fund's minimum initial investment requirement,
dividends and capital gain distributions paid by the receiving fund must be
automatically reinvested in the receiving fund, and (iii) if this privilege is
discontinued with respect to a particular receiving fund, the value of the
account in that fund must equal or exceed the fund's minimum initial investment
requirement or the fund shall have the right, if the shareholder fails to
increase the value of the account to such minimum within 90 days after being
notified of the deficiency, to automatically redeem the account and send the
proceeds to the shareholder. These cross-reinvestments of dividends and
capital gain distributions will be at net asset value (without sales charge).
EXCHANGE PRIVILEGE -- You may exchange shares into other funds in The American
Funds Group. Exchange purchases are subject to the minimum investment
requirements of the fund purchased and no sales charge generally applies.
However, exchanges of shares from the money market funds are subject to
applicable sales charges on the fund being purchased, unless the money market
fund shares were acquired by an exchange from a fund having a sales charge, or
by reinvestment or cross-reinvestment of dividends or capital gain
distributions.
You may exchange shares by writing to American Funds Service Company (see
"Redeeming Shares"), by contacting your investment dealer, by using American
FundsLine(r) or American FundsLine OnLine(r) (see "American FundsLine(r) and
American FundsLine OnLine(r)" below), or by telephoning 800/421-0180
toll-free, faxing (see "Principal Underwriter and Transfer Agent" in the
prospectus for the appropriate fax numbers) or telegraphing American Funds
Service Company. (See "Telephone and Computer Purchases, Redemptions and
Exchanges" below.) Shares held in corporate-type retirement plans for which
Capital Guardian Trust Company serves as trustee may not be exchanged by
telephone, computer, fax or telegraph. Exchange redemptions and purchases are
processed simultaneously at the share prices next determined after the exchange
order is received. (See "Purchase of Shares--Price of Shares.") THESE
TRANSACTIONS HAVE THE SAME TAX CONSEQUENCES AS ORDINARY SALES AND PURCHASES.
AUTOMATIC EXCHANGES -- You may automatically exchange shares (in amounts of
$50 or more) among any of the funds in The American Funds Group on any day (or
preceding business day if the day falls on a non-business day) of each month
you designate. You must either meet the minimum initial investment requirement
for the receiving fund OR the originating fund's balance must be at least
$5,000 and the receiving fund's minimum must be met within one year.
AUTOMATIC WITHDRAWALS -- Withdrawal payments are not to be considered as
dividends, yield or income. Automatic investments may not be made into a
shareholder account from which there are automatic withdrawals. Withdrawals of
amounts exceeding reinvested dividends and distributions and increases in share
value would reduce the aggregate value of the shareholder's account. The
Transfer Agent arranges for the redemption by the fund of sufficient shares,
deposited by the shareholder with the Transfer Agent, to provide the withdrawal
payment specified.
ACCOUNT STATEMENTS -- Your account is opened in accordance with your
registration instructions. Transactions in the account, such as additional
investments and dividend reinvestments, will be reflected on regular
confirmation statements from American Funds Service Company. Purchases through
automatic investment plans and certain retirement plans will be confirmed at
least quarterly.
AMERICAN FUNDSLINE(R) AND AMERICAN FUNDSLINE ONLINE(r) -- You may check your
share balance, the price of your shares, or your most recent account
transaction, redeem shares (up to $50,000 per shareholder each day), or
exchange shares around the clock with American FundsLine(r) or American
FundsLine OnLine(r). To use this service, call 800/325-3590 from a
TouchTone(TM) telephone or access the American Funds Web site on the Internet
at www.americanfunds.com. Redemptions and exchanges through American
FundsLine(r) and American FundsLine OnLine(r) are subject to the conditions
noted above and in "Shareholder Account Services and Privileges -- Telephone
and Computer Purchases, Redemptions and Exchanges" below. You will need your
fund number (see the list of funds in The American Funds Group under "Purchase
of Shares -- Investment Minimums and Fund Numbers"), personal identification
number (the last four digits of your Social Security number or other tax
identification number associated with your account) and account number.
TELEPHONE AND COMPUTER REDEMPTIONS AND EXCHANGES -- By using the telephone or
computer (including American FundsLine(r) or American FundsLine OnLine(r)),
fax or telegraph redemption and/or exchange options, you agree to hold the
fund, American Funds Service Company, any of its affiliates or mutual funds
managed by such affiliates, and each of their respective directors, trustees,
officers, employees and agents harmless from any losses, expenses, costs or
liability (including attorney fees) which may be incurred in connection with
the exercise of these privileges. Generally, all shareholders are
automatically eligible to use these options. However, you may elect to opt out
of these options by writing American Funds Service Company (you may also
reinstate them at any time by writing American Funds Service Company). If
American Funds Service Company does not employ reasonable procedures to confirm
that the instructions received from any person with appropriate account
information are genuine, the fund may be liable for losses due to unauthorized
or fraudulent instructions. In the event that shareholders are unable to reach
the fund by telephone because of technical difficulties, market conditions, or
a natural disaster, redemption and exchange requests may be made in writing
only.
SHARE CERTIFICATES - Shares are credited to your account and certificates are
not issued unless you request them by writing to American Funds Service
Company.
REDEMPTION OF SHARES - The fund's Articles of Incorporation permits the fund to
direct the Transfer Agent to redeem your shares for their then current net
asset value per share if at such time you own of record, shares having an
aggregate net asset value of less than the minimum initial investment amount
required of new shareholders as set forth in the fund's current registration
statement under the 1940 Act, and subject to such further terms and conditions
as the Board of Directors of the fund may from time to time adopt. Prior
notice of at least 60 days will be given to a shareholder before the
involuntary redemption provision is made effective with respect to the
shareholder's account. The shareholder will have not less than 30 days from
the date of such notice within which to bring the account up to the minimum
determined as set forth above.
EXECUTION OF PORTFOLIO TRANSACTIONS
The Investment Adviser places orders for the fund's portfolio securities
transactions. The Investment Adviser strives to obtain the best available
prices in its portfolio transactions taking into account the costs and
promptness of executions. When circumstances relating to a proposed
transaction indicate that a particular broker (either directly or through their
correspondent clearing agents) is in a position to obtain the best price and
execution, the order is placed with that broker. This may or may not be a
broker who has provided investment research, statistical, or other related
services to the Investment Adviser or has sold shares of the fund or other
funds served by the Investment Adviser. The fund does not have an obligation
to obtain the lowest available commission rate to the exclusion of price,
service and qualitative considerations.
Portfolio transactions for the fund may be executed as part of concurrent
authorizations to purchase or sell the same security for other funds served by
the Investment Adviser, or for trusts or other accounts served by affiliated
companies of the Investment Adviser. Although such concurrent authorizations
potentially could be either advantageous or disadvantageous to the fund, they
are effected only when the Investment Adviser believes that to do so is in the
interest of the fund. When such concurrent authorizations occur, the objective
is to allocate the executions in an equitable manner.
GENERAL INFORMATION
CUSTODIAN OF ASSETS -- Securities and cash owned by the fund, including
proceeds from the sale of shares of the fund and of securities in the fund's
portfolio, are held by The Chase Manhattan Bank, One Chase Manhattan Plaza,
New York, NY 10081, as Custodian. Non-U.S. securities may be held by the
Custodian pursuant to subcustodial arrangements in non-U.S. banks or foreign
branches of U.S. banks.
TRANSFER AGENT -- American Funds Service Company, a wholly owned subsidiary of
the Investment Adviser, maintains the records of each shareholder's account,
processes purchases and redemptions of the fund's shares, acts as dividend and
capital gain distribution disbursing agent, and performs other related
shareholder service functions.
INDEPENDENT ACCOUNTANTS -- __________, has served as the fund's independent
accountants since the fund's inception, providing audit services, preparation
of tax returns and review of certain documents to be filed with the Securities
and Exchange Commission. The financial statements included in this Statement
of Additional Information from the Annual Report have been so included in
reliance on the report of __________ given on the authority of said firm as
experts in auditing and accounting.
SHAREHOLDER VOTING RIGHTS -- The fund does not hold annual meetings of
shareholders. However, significant matters which require shareholder approval,
such as certain elections of board members or a change in a fundamental
investment policy, will be presented to shareholders at a meeting called for
such purpose. At any meeting of shareholders, duly called and at which a
quorum is present, the shareholders may, by the affirmative vote of the holders
of a majority of the votes entitled to be cast thereon, remove any director or
directors from office and may elect a successor or successors to fill any
resulting vacancies for the unexpired terms of removed directors. Accordingly,
the directors of the fund will promptly call a meeting of shareholders for the
purpose of voting upon the removal of any director when requested in writing
to do so by the record holders of at least 10% of the outstanding shares.
Shareholders have one vote per share owned.
REPORTS TO SHAREHOLDERS -- The fund's fiscal year ends on October 31.
Shareholders are provided at least semi-annually with reports showing the
investment portfolio, financial statements and other information. The fund's
annual financial statements are audited by the fund's independent accountants,
__________, whose selection is determined annually by the Board of Directors.
In an effort to reduce the volume of mail shareholders receive from the fund
when a household owns more than one account, the Transfer Agent has taken steps
to eliminate duplicate mailings of shareholder reports. To receive additional
copies of a report shareholders should contact the Transfer Agent.
YEAR 2000 -- The fund and its shareholders depend on the proper functioning of
computer systems maintained by the Investment Adviser and its affiliates and
other key service providers. Many computer systems in use today will require
reprogramming or replacement prior to the year 2000 because of the way they
store dates and make date-related calculations. The fund understands that
these service providers are taking steps to address the "Year 2000 problem".
However, there can be no assurance that these steps will be sufficient to avoid
any adverse impact on the fund. In addition, the fund's investments could be
adversely affected by the Year 2000 problem. For example, the markets for
securities in which the fund invests could experience settlement problems and
liquidity issues. Corporate and governmental data processing errors may cause
losses for individual companies and overall economic uncertainties. Earnings of
individual issuers are likely to be affected by the costs of addressing the
problem, which may be substantial and may be reported inconsistently.
PERSONAL INVESTING POLICY -- Capital Research and Management Company and its
affiliated companies have adopted a personal investing policy consistent with
Investment Company Institute guidelines. This policy includes: a ban on
acquisitions of securities pursuant to an initial public offering; restrictions
on acquisitions of private placement securities; pre-clearance and reporting
requirements; review of duplicate confirmation statements; annual
recertification of compliance with codes of ethics; disclosure of personal
holdings by certain investment personnel prior to recommendation for purchase
for the fund; blackout periods on personal investing for certain investment
personnel; ban on short-term trading profits for investment personnel;
limitations on service as a director of publicly traded companies; and
disclosure of personal securities transactions.
The financial statements including the investment portfolio and the report of
Independent Accountants contained in the Annual Report are included in this
Statement of Additional Information. The following information is not included
in the Annual Report:
The fund may refer to results and surveys compiled by organizations such as CDA
Investment Technologies, Ibbottson Associates, Lipper Analytical Services,
Morningstar, Inc. and Wiesenberger Investment Companies Services and by the
U.S. Department of Commerce. Additionally, the fund may refer to results
published in various newspapers or periodicals, including BARRONS, FORBES,
FORTUNE, INSTITUTIONAL INVESTOR, KIPLINGER'S PERSONAL FINANCE MAGAZINE, MONEY,
U.S. NEWS AND WORLD REPORT and THE WALL STREET JOURNAL.
EXPERIENCE OF INVESTMENT ADVISER - The Investment Adviser manages nine growth
and growth-income funds that are at least 10 years old. In the rolling 10-year
periods since January 1, 1969 (138 in all), those funds have had better total
returns than their comparable Lipper indexes in 128 of 138 periods.
Note that past results are not an indication of future investment results and
that the fund has different investment policies from other funds managed by
Capital Research and Management Company. Reference to the other common stock
funds is made solely for the purpose of informing investors about the
experience and history of Capital Research and Management Company.
DESCRIPTION OF BOND RATINGS
Corporate Debt Securities
MOODY'S INVESTORS SERVICE, INC. rates the long-term debt securities issued by
various entities in categories ranging from "Aaa" to "C" according to quality.
"AAA -- Best quality. These securities carry the smallest degree of investment
risk and are generally referred to as 'gilt edge.' Interest payments are
protected by a large or by an exceptionally stable margin, and principal is
secure. While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the fundamentally
strong position of such issues."
"AA -- High quality by all standards. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities,
fluctuation of protective elements may be of greater amplitude, or there may be
other elements present which make the long-term risks appear somewhat greater."
"A -- Upper medium grade obligations. These bonds possess many favorable
investment attributes. Factors giving security to principal and interest are
considered adequate, but elements may be present which suggest a susceptibility
to impairment sometime in the future."
"BAA -- Medium grade obligations. Interest payments and principal security
appear adequate for the present but certain protective elements may be lacking
or may be characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and , in fact, have
speculative characteristics as well."
"BA -- Have speculative elements; future cannot be considered as well assured.
The protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the future.
Bonds in this class are characterized by uncertainty of position."
"B -- Generally lack characteristics of the desirable investment; assurance of
interest and principal payments or of maintenance of other terms of the
contract over any long period of time may be small."
"CAA -- Of poor standing. Issues may be in default or there may be present
elements of danger with respect to principal or interest."
"CA -- Speculative in a high degree; often in default or have other marked
shortcomings."
"C -- Lowest rated class of bonds; can be regarded as having extremely poor
prospects of ever attaining any real investment standing."
STANDARD & POOR'S CORPORATION rates the long-term securities debt of various
entities in categories ranging from "AAA" to "D" according to quality.
"AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong."
"AA -- High grade. Very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree."
"A - Have a strong capacity to pay interest and repay principal, although they
are somewhat more susceptible to the adverse effects of change in circumstances
and economic conditions, than debt in higher rated categories."
"BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay interest and repay principal than for debt in
higher rated categories."
"BB, B, CCC, CC, C -- Regarded, on balance, as predominantly speculative with
respect to capacity to pay interest and repay principal in accordance with the
terms of the obligation. BB indicates the lowest degree of speculation and C
the highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions."
"C-1 -- Reserved for income bonds on which no interest is being paid."
"D -- In default and payment of interest and/or repayment of principal is in
arrears."
OTHER INFORMATION
Item 23. Exhibits.
a. Articles of Incorporation of Registrant
b. By-Laws of Registrant
c. Share Certificate -- to be provided by amendment
d. Form of Investment Advisory and Service Agreement between the Registrant
and Capital Research and Management Company -- to be provided by amendment
e. Form of Principal Underwriting Agreement -- to be provided by amendment
f. None
g. Form of Custodian Agreement -- to be provided by amendment
h. None
i. Legal Opinion -- to be provided by amendment
j. None
k. None
l. None
m. Form of Plan of Distribution adopted by the Registrant pursuant to rule
12b-1 under the 1940 Act -- to be provided by amendment
n. None
o. None
Item 24. Persons Controlled by or under Common Control with the Fund
None.
Item 25. Indemnification.
Registrant, upon the effective date of this Registration Statement, will
become a joint-insured under Investment Adviser/Mutual Fund Errors and
Omissions Policies written by American International Surplus Lines Insurance
Company, Chubb Custom Insurance Company, and ICI Mutual Insurance Company which
will insure its officers and directors against certain liabilities. However,
in no event will Registrant maintain insurance to indemnify any such person for
any act for which Registrant itself is not permitted to indemnify the
individual.
Subsection (b) of Section 2-418 of the General Corporation Law of Maryland
empowers a corporation to indemnify any person who was or is party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise,
against reasonable expenses (including attorneys' fees), judgments, penalties,
fines and amounts paid in settlement actually incurred by him in connection
with such action, suit or proceeding unless it is established that: (I) the
act or omission of the person was material to the matter giving rise to the
proceeding and was committed in bad faith or was the result of active and
deliberate dishonesty; (ii) the person actually received an improper personal
benefit of money, property or services; or (iii) with respect to any criminal
action or proceeding, the person had reasonable cause to believe his act or
omission was unlawful.
Indemnification under subsection (b) of Section 2-418 may not be made by a
corporation unless authorized for a specific proceeding after a determination
has been made that indemnification is permissible in the circumstances because
the party to be indemnified has met the standard of conduct set forth in
subsection (b). This determination shall be made (I) by the Board of Directors
by a majority vote of a quorum consisting of directors not, at the time,
parties to the proceeding, or, if such quorum cannot be obtained, then by a
majority vote of a committee of the Board consisting solely of two or more
directors not, at the time, parties to such proceeding and who were duly
designated to act in the matter by a majority vote of the full Board in which
the designated directors who are parties may participate; (ii) by special legal
counsel selected by the Board of Directors of a committee of the Board by vote
as set forth in subparagraph (I), or, if the requisite quorum of the full Board
cannot be obtained therefor and the committee cannot be established, by a
majority vote of the full Board in which any director who is a party may
participate; or (iii) by the stockholders (except that shares held by any party
to the specific proceeding may not be voted). A court of appropriate
jurisdiction may also order indemnification if the court determines that a
person seeking indemnification is entitled to reimbursement under subsection
(b).
Section 2-418 further provides that indemnification provided for by Section
2-418 shall not be deemed exclusive of any rights to which the indemnified
party may be entitled; that the scope of indemnification extends to directors,
officers, employees or agents of a constituent corporation absorbed in a
consolidation or merger and persons serving in that capacity at the request of
the constituent corporation for another; and empowers the corporation to
purchase and maintain insurance on behalf of a director, officer, employee or
agent of the corporation against any liability asserted against or incurred by
such person in any such capacity or arising out of such person's status as such
whether or not the corporation would have the power to indemnify such person
against such liabilities under Section 2-418.
Article VIII (h) of the Articles of Incorporation of New World Fund, Inc.
(the "Fund" or the "Corporation") provides that "The Corporation shall
indemnify (1) its directors and officers, whether serving the Corporation or at
its request any other entity, to the full extent required or permitted by the
General Laws of the State of Maryland now or hereafter in force, including the
advance of expenses under the procedures and to the full extent permitted by
law, and (2) its other employees and agents to such extent as shall be
authorized by the Board of Directors or the Corporation's By-Laws and be
permitted by law. The foregoing rights of indemnification shall not be
exclusive of any other rights to which those seeking indemnification may be
entitled. The Board of Directors may take such action as is necessary to carry
out these indemnification provisions and is expressly empowered to adopt,
approve and amend from time to time such by-laws, resolutions or contracts
implementing such provisions or such further indemnification arrangements as
may be permitted by law. No amendment of this Charter of the Corporation shall
limit or eliminate the right to indemnification provided hereunder with respect
to acts or omissions occurring prior to such amendment or repeal. Nothing
contained herein shall be construed to authorize the Corporation to indemnify
any director or officer of the Corporation against any liability to the
Corporation or to any holders of securities of the Corporation to which he is
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of his office. Any
indemnification by the Corporation shall be consistent with the requirements of
law, including the Investment Company Act of 1940."
The Fund will comply with the indemnification requirements contained in the
Investment Company Act of 1940 (the "1940 Act") Releases No. 7221 (June 9,
1972) and No. 11330 (September 4, 1980). In addition, indemnification by the
Corporation shall be consistent with the requirements of rule 484 under the
Securities Act of 1933. Furthermore, the Fund undertakes to the staff of the
Securities and Exchange Commission that the Fund's indemnification provisions
quoted above prohibit indemnification for liabilities arising under the
Securities Act of 1933 and the 1940 Act.
Item 26. Business and Other Connections of the Investment Adviser.
None.
Item 27. Principal Underwriters.
(a) American Funds Distributors, Inc. is also the Principal Underwriter of
shares of: AMCAP Fund, Inc., American Balanced Fund, Inc., American Funds
Income Series, 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, Capital World Bond Fund, Capital World Growth and
Income Fund, Inc., New World Fund, Inc., The Cash Management Trust of America,
EuroPacific Growth Fund, Fundamental Investors, Inc., The Growth Fund of
America, Inc., Intermediate Bond Fund of America, The Investment Company of
America, Limited Term Tax-Exempt Bond Fund of America, The New Economy Fund,
New Perspective Fund, Inc., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund
of America, Inc., The Tax-Exempt Money Fund of America, The U.S. Treasury Money
Fund of America and Washington Mutual Investors Fund, Inc.
<TABLE>
<CAPTION>
(B) (1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
<S> <C> <C> <C>
David L. Abzug Regional Vice President None
27304 Park Vista Road
Agoura Hills, CA 91301
John A. Agar Vice President None
1501 N. University Drive,
Suite 227A
Little Rock, AR 72207
Robert B. Aprison Regional Vice President None
2983 Bryn Wood Drive
Madison, WI 53711
L William W. Bagnard Vice President None
Steven L. Barnes Vice President None
5400 Mt. Meeker Road,
Suite 1
Minneapolis, MN 55438
B Carl R. Bauer Assistant Vice President None
Michelle A. Bergeron Senior Vice President None
4160 Gateswalk Drive
Smyrna, GA 30080
Joseph T. Blair Senior Vice President None
27 Drumlin Road
West Simsbury, CT 06092
John A. Blanchard Vice President None
6421 Aberdeen Road
Mission Hills, KS 66208
Ian B. Bodell Senior Vice President None
P.O. Box 1665
Brentwood, TN 37024-1665
Michael L. Brethower Senior Vice President None
2320 North Austin Avenue
Georgetown, TX 78626
C. Alan Brown Regional Vice President None
4129 Laclede Avenue
St. Louis, MO 63108
B J. Peter Burns Vice President None
Brian C. Casey Regional Vice President None
9508 Cable Drive
Bethesda, MD 20817
Victor C. Cassato Senior Vice President None
609 W. Littleton Blvd., Suite 310
Littleton, CO 80120
Christopher J. Cassin Senior Vice President None
111 W. Chicago Avenue,
Suite G3
Hinsdale, IL 60521
Denise M. Cassin Vice President None
1301 Stoney Creek Drive
San Ramon CA 94538
L Larry P. Clemmensen Director None
L Kevin G. Clifford Director, President and
Co-Chief Executive Officer None
Ruth M. Collier Senior Vice President None
145 West 67th St. Ste. 12K
New York, NY 10023
S David Coolbaugh Assistant Vice President None
Thomas E. Cournoyer Vice President None
2333 Granada Boulevard
Coral Gables, FL 33134
Douglas A. Critchell Senior Vice President None
4116 Woodbine St.
Chevy Chase, MD 20815
L Carl D. Cutting Vice President None
Daniel J. Delianedis Regional Vice President None
8689 Braxton Drive
Eden Prairie, MN 55347
Michael A. Dilella Vice President None
P.O. Box 661
Ramsey, NJ 07446
G. Michael Dill Senior Vice President None
505 E. Main Street
Jenks, OK 74037
Kirk D. Dodge Senior Vice President None
633 Menlo Avenue, Suite 210
Menlo Park, CA 94025
Peter J. Doran Senior Vice President None
1205 Franklin Avenue
Garden City, NY 11530
L Michael J. Downer Secretary None
Robert W. Durbin Vice President None
74 Sunny Lane
Tiffin, OH 44883
I Lloyd G. Edwards Senior Vice President None
L Paul H. Fieberg Senior Vice President None
John Fodor Vice President None
15 Latisquama Road
Southborough, MA 01772
Clyde E. Gardner Senior Vice President None
Route 2, Box 3162
Osage Beach, MO 65065
B Evelyn K. Glassford Vice President None
Jeffrey J. Greiner Vice President None
12210 Taylor Road
Plain City, OH 43064
L Paul G. Haaga, Jr. Director None
B Mariellen Hamann Assistant Vice President None
David E. Harper Senior Vice President None
R.D. 1, Box 210, Rte 519
Frenchtown, NJ 08825
Ronald R. Hulsey Vice President None
6744 Avalon
Dallas, TX 75214
Robert S. Irish Regional Vice President None
1225 Vista Del Mar Drive
Delray Beach, FL 33843
L Robert L. Johansen Vice President, Controller None
Michael J. Johnston Director None
630 Fifth Ave., 36th Floor
New York, NY 10111-0121
B Damien M. Jordan Vice President None
Arthur J. Levine Vice President None
12558 Highlands Place
Fishers, IN 46038
B Karl A. Lewis Assistant Vice President None
T. Blake Liberty Regional Vice President None
5506 East Mineral Lane
Littleton, CO 80122
Mark J. Lien Regional Vice President None
5570 Beechwood Terrace
West Des Moines, IA 50266
L Lorin E. Liesy Assistant Vice President None
L Susan G. Lindgren Vice President - Institutional None
Investment Services Division
LW Robert W. Lovelace Director None
Stephen A. Malbasa Vice President None
13405 Lake Shore Blvd.
Cleveland, OH 44110
Steven M. Markel Senior Vice President None
5241 South Race Street
Littleton, CO 90121
L John C. Massar Senior Vice President None
L E. Lee McClennahan Senior Vice President None
L Jamie R. McCrary Assistant Vice President None
S John V. McLaughlin Senior Vice President None
Terry W. McNabb Vice President None
2002 Barrett Station Road
St. Louis, MO 63131
L R. William Melinat Vice President - Institutional None
Investment Services Division
David R. Murray Regional Vice President None
60 Briant Drive
Sudbury, MA 01776
Stephen S. Nelson Vice President None
P.O. Box 470528
Charlotte, NC 28247-0528
William E. Noe Regional Vice President None
304 River Oaks Road
Brentwood, TN 37027
Peter A. Nyhus Vice President None
3084 Wilds Ridge Court
Prior Lake, MN 55372
Eric P. Olson Vice President None
62 Park Drive
Glenview, IL 60025
Fredric Phillips Senior Vice President None
175 Highland Avenue,
4th Floor
Needham, MA 02194
B Candance Pilgram Assistant Vice President None
Carl S. Platou Vice President None
4021 96th Avenue, SE
Mercer Island, WA 98040
L John O. Post, Jr. Vice President None
S Richard P. Prior Assistant Vice President None
Steven J. Reitman Senior Vice President None
212 The Lane
Hinsdale, IL 60521
Brian A. Roberts Vice President None
11404 Foxhaven Drive
Charlotte, NC 28277
George S. Ross Senior Vice President None
55 Madison Avenue
Morristown, NJ 07962
L Julie D. Roth Vice President None
L James F. Rothenberg Director None
Douglas F. Rowe Vice President None
30008 Oakland Hills Drive
Georgetown, TX 78628
Christopher Rowey Regional Vice President None
9417 Beverlywood Street
Los Angeles, CA 90034
Dean B. Rydquist Senior Vice President None
1080 Bay Pointe Crossing
Alpharetta, GA 30005
Richard R. Samson Senior Vice President None
4604 Glencoe Avenue, No. 4
Marina del Rey, CA 90292
Joe D. Scarpitti Vice President None
31465 St. Andrews
Westlake, OH 44145
L R. Michael Shanahan Director None
David W. Short Director, Chairman of the None
1000 RIDC Plaza, Ste 212 Board
Pittsburgh, PA 15238 and Co-Chief Executive Officer
William P. Simon, Jr. Senior Vice President None
912 Castlehill Lane
Devon, PA 91333
L John C. Smith Vice President - Institutional None
Investment Services Division
L Mary E. Smith Vice President - Institutional None
Investment Services Division
Rodney G. Smith Vice President None
100 N. Central Expressway,
Suite 1214
Richardson, TX 75080
Anthony L. Soave Regional Vice President None
8831 Morning Mist Drive
Clarkston, MI 48348
Nicholas D. Spadaccini Regional Vice President None
855 Markley Woods Way
Cincinnati, OH 45230
L Kristen J. Spazafumo Assistant Vice President None
Daniel S. Spradling Senior Vice President None
1400 Southdown Road
Hillsborough, CA 94010
B Max D. Stites Vice President None
Thomas A. Stout Regional Vice President None
3919 Whooping Crane Circle
Virginia Beach, VA 23455
Craig R. Strauser Vice President None
3 Dover Way
Lake Oswego, OR 97034
Francis N. Strazzeri Senior Vice President None
31641 Saddletree Drive
Westlake Village, CA 91361
L Drey W. Taylor Assistant Vice President None
S James P. Toomey Vice President None
I Christopher E. Trede Vice President None
George F. Truesdail Vice President None
400 Abbotsford Court
Charlotte, NC 28270
Scott W. Ursin-Smith Vice President None
60 Reedland Woods Way
Tiburon, CA 94920
John David Viale Regional Vice President None
Thomas E. Warren Regional Vice President None
119 Faubel Street
Sarasota, FL 34242
L J. Kelly Webb Sr. Vice President, Treasurer None
Gregory J. Weimer Regional Vice President None
206 Hardwood Drive
Venetia, PA 15367
B Timothy W. Weiss Director None
George J. Wenzel Regional Vice President None
3406 Shakespeare Drive
Troy, MI 48084
B Laura L. Wimberly Vice President None
H Marshall D. Wingo Senior Vice President None
L Robert L. Winston Director, Senior Vice None
President
William Yost Vice President None
9320 Overlook Trail
Eden Prairie, MN 55347
Janet M. Young Regional Vice President None
1616 Vermont
Houston, TX 77006
Scott D. Zambon Regional Vice President None
2887 Player Lane
Tustin Ranch, CA 92782
</TABLE>
_______________________
L Business Address, 333 South Hope Street, Los Angeles, CA 90071
LW Business Address, 11100 Santa Monica Boulevard, 15th Floor, Los Angeles, CA
90025
B Business Address, 135 South State College Boulevard, Brea, CA 928621
S Business Address, 3500 Wiseman Boulevard, San Antonio, TX 78230
H Business Address, 5300 Robin Hood Road, Norfolk, VA 23513
I Business Address, 8332 Woodfield Crossing Blvd., Indianapolis, IN 46240
(c) None.
Item 28. Location of Accounts and Records.
Accounts, books and other records required by Rules 31a-1 and 31a-2 under the
Investment Company Act of 1940, are maintained and held in the offices of its
investment adviser, Capital Research and Management Company, 333 South Hope
Street, Los Angeles, California 90071, and/or 135 South State College
Boulevard, Brea, California 92821, and/or the offices of the Registrant, One
Market, Steuart Tower, Suite 1800, San Francisco, CA 94105.
Registrant's records covering shareholder accounts are maintained and kept by
the fund's transfer agent, American Funds Service Company, 135 South State
College Boulevard, Brea, California 92821, 8332 Woodfield Crossing Boulevard,
Indianapolis, IN 46240, 3500 Wiseman Boulevard, San Antonio, Texas 78251 and
5300 Robin Hood Road, Norfolk, VA 23513.
Registrant's records covering portfolio transactions are maintained and kept
by the fund's custodian, The Chase Manhattan Bank, One Chase Manhattan Plaza,
New York, New York 10081.
Item 29. Management Services.
None.
Item 30. Undertakings.
None.
SIGNATURE OF REGISTRANT
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City and County of Los Angeles, and State of California on the 3rd day of
March, 1999.
NEW WORLD FUND, INC.
ATTEST:
/s/ Michael J. Downer /s/ Michele Y. Yang
Michael J. Downer, Director Michele Y. Yang, Director
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below on March 3, 1999 by the following persons in
the capacities indicated.
<TABLE>
<CAPTION>
Signature Title
<S> <C>
/s/ Michael J. Downer
Michael J. Downer Director
/s/ Kristine M. Nishiyama
/s/ Patrick F. Quan
Patrick F. Quan Director
/s/ Michele Y. Yang
Michele Y. Yang Director
</TABLE>
CAPITAL WORLD OPPORTUNITIES FUND, INC.
ARTICLES OF AMENDMENT
Capital World Opportunities Fund, Inc. a Maryland corporation, having its
principal office in Baltimore, Maryland (which is hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The Charter of the Corporation is hereby amended as follows:
(a) Article II of the Charter is amended in its entirety to read as follows:
The name of the Corporation is:
New World Fund, Inc.
SECOND: The amendment does not increase the authorized stock of the
Corporation.
THIRD: The foregoing amendment to the Charter of the Corporation has been
approved by a majority of the entire Board of Directors and no stock entitled
to be voted on the matter was outstanding at the time of approval.
IN WITNESS WHEREOF, New World Fund, Inc. has caused those present to be signed
in its name and on its behalf on February 1, 1999.
WITNESS: New World Fund, Inc.
/s/ Kristine M. Nishiyama /s/ Michael J. Downer
Kristine M. Nishiyama Michael J. Downer
President
THE UNDERSIGNED, Incorporator of New World Fund, Inc., who executed on behalf
of the Corporation the foregoing Articles of Amendment of which this
certificate is made a part, hereby acknowledges in the name and on behalf of
said corporation the foregoing Articles of Amendment to be the corporate act of
said Corporation and hereby certifies that to the best of his knowledge,
information, and belief the matters and facts set forth therein with respect to
the authorization and approval thereof are true in all material respects under
the penalties of perjury.
/s/ Michael J. Downer
Michael J. Downer
CAPITAL WORLD OPPORTUNITIES FUND, INC.
ARTICLES OF INCORPORATION
I.
The undersigned, Kristine M. Nishiyama, whose mailing address is 333 South
Hope Street, Los Angeles, California 90071, being at least 18 years of age,
does hereby form a corporation under and by virtue of the General Laws of the
State of Maryland.
II.
NAME
The name of the corporation (hereinafter called the "Corporation") is:
Capital World Opportunities Fund, Inc.
III.
PURPOSES AND POWERS
The purpose or purposes for which the Corporation is formed and the business
or objects to be transacted, carried on and promoted by it are:
(a) To conduct and carry on the business of an open-end investment company
under the Investment Company Act of 1940.
(b) To do any and all such acts or things and to exercise any and all such
further powers or rights as may be necessary, incidental, relative, conducive,
appropriate or desirable for the accomplishment, carrying out or attainment of
the purposes stated in this Article.
The foregoing enumerated purposes and objects shall be in no way limited or
restricted by reference to, or inference from, the terms of any other clause of
this or any other Article of the charter, and shall each be regarded as
independent; and they are intended to be and shall be construed as powers as
well as purposes and objects of the Corporation and shall be in addition to and
not in limitation of the general powers of corporations under the laws of the
State of Maryland.
IV.
PRINCIPAL OFFICE AND PLACE OF BUSINESS
The present address of the principal office of the Corporation in the State of
Maryland is c/o The Corporation Trust Company Incorporated, 32 South Street,
Baltimore, Maryland 21202.
V.
RESIDENT AGENT
The name and address of the Corporation's resident agent is The Corporation
Trust Company Incorporated, 32 South Street, Baltimore, Maryland 21202. Said
resident agent is a Maryland corporation.
VI.
CAPITAL STOCK
(a) The total number of shares of capital stock which the Corporation shall
have the authority to issue is Two Hundred Million (200,000,000) shares of the
par value of $.01 per share and of the aggregate par value of Two Million
Dollars ($2,000,000). The Board of Directors of the Corporation is hereby
empowered to increase or decrease, from time to time, the total number of
shares of capital stock or the number of shares of capital stock of any class
or series that the Corporation shall have authority to issue without any action
by the shareholders.
(b) Any fractional share shall carry proportionately all the rights of a whole
share, excepting any right to receive a certificate evidencing such fractional
share, but including the right to vote and the right to receive dividends.
(c) All persons who shall acquire stock in the Corporation shall acquire the
same subject to the provisions of the charter and the By-Laws of the
Corporation.
(d) As used in the charter, a "series" of shares represent interests in the
same assets, liabilities, income, earnings and profits of the Corporation; each
"class" of shares of a series represents interests in the same underlying
assets, liabilities, income, earnings and profits, but may differ from other
classes of such series with respect to fees and expenses or such other matters
as shall be established by the Board of Directors in accordance with Maryland
law and the charter of the corporation. Initially, the shares of capital stock
of the Corporation shall be all of one class and series designated as "common
stock." The Board of Directors shall have authority to classify and reclassify
any authorized but unissued shares of capital stock from time to time by
setting or changing in any one or more respects the preferences, conversion or
other rights, voting powers, restrictions, limitations as to dividends,
qualifications or terms or conditions of redemption of the capital stock.
Subject to the provisions of Section (e) of this Article VI and applicable law,
the power of the Board of Directors to classify or reclassify any of the shares
of capital stock shall include, without limitation, authority to classify or
reclassify any such stock into one or more series of capital stock and to
divide and classify shares of any series into one or more classes of such
series, by determining, fixing or altering one or more of the following:
1. The distinctive designation of such class or series and the number of
shares to constitute such class or series; provided that, unless otherwise
prohibited by the terms of such class or series, the number of shares of any
class or series may be decreased by the Board of Directors in connection with
any classification or reclassification of unissued shares and the number of
shares of such class or series may be increased by the Board of Directors in
connection with any such classification or reclassification, and any shares of
any class or series which have been redeemed, purchased or otherwise acquired
by the Corporation shall remain part of the authorized capital stock and be
subject to classification and reclassification as provided herein.
2. Whether or not and, if so, the rates, amounts and times at which, and the
conditions under which, dividends shall be payable on shares of such class or
series;
3. Whether or not shares of such class or series shall have voting rights in
addition to any general voting rights provided by law and the charter of the
Corporation and, if so, the terms of such additional voting rights;
4. The rights of the holders of shares of such class or series upon the
liquidation, dissolution or winding up of the affairs of, or upon any
distribution of the assets of, the Corporation.
(e) Shares of capital stock of the Corporation shall have the following
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption:
1. Assets Belonging to a Series. All consideration received by the
Corporation for the issue or sale of stock of any series of capital stock,
together with all assets in which such consideration is invested and
reinvested, income, earnings, profits and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation thereof, and any funds
or payments derived from any reinvestment of such proceeds in whatever form the
same may be, shall irrevocably belong to the series of shares of capital stock
with respect to which such assets, payments or funds were received by the
Corporation for all purposes, subject only to the rights of creditors, and
shall be so handled upon the books of account of the Corporation. Such
consideration, assets, income, earnings, profits and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation thereof,
and any assets derived from any reinvestment of such proceeds in whatever form,
are herein referred to as "assets belonging to" such series. Any assets,
income, earnings, profits, and proceeds thereof, funds or payments which are
not readily attributable to any particular series shall be allocable among any
one or more of the series in such manner and on such basis as the Board of
Directors, in its sole discretion, shall deem fair and equitable.
2. Liabilities Belonging to a Series. The assets belonging to any series of
capital stock shall be charged with the liabilities in respect of such series
and shall also be charged with such series' share of the general liabilities of
the Corporation determined as hereinafter provided. The determination of the
Board of Directors shall be conclusive as to the amount of such liabilities,
including the amount of accrued expenses and reserves; as to any allocation of
the same to a given series; and as to whether the same are allocable to one or
more series. The liabilities so allocated to a series are herein referred to
as "liabilities belonging to" such series. Any liabilities which are not
readily attributable to any particular series shall be allocable among any one
or more of the series in such manner and on such basis as the Board of
Directors, in its sole discretion, shall deem fair and equitable.
3. Dividends and Distributions. Shares of each series of capital stock shall
be entitled to such dividends and distributions, in stock or in cash or both,
as may be declared from time to time by the Board of Directors, acting in its
sole discretion, with respect to such series, provided, however, that dividends
and distributions on shares of a series of capital stock shall be paid only out
of the lawfully available "assets belonging to" such series as such phrase is
defined in Section (e)(1) of this Article VI.
4. Liquidating Dividends and Distributions. In the event of the liquidation
or dissolution of the Corporation, shareholders of each series of capital stock
shall be entitled to receive, as a series, out of the assets of the Corporation
available for distribution to shareholders, but other than general assets not
belonging to any particular series of capital stock, the assets belonging to
such series; and the assets so distributable to the shareholders of any series
of capital stock shall be distributed among such shareholders in proportion to
the number of shares of such series held by them and recorded on the books of
the Corporation. In the event that there are any general assets not belonging
to any particular series of capital stock and available for distribution, such
distribution shall be made to the holders of stock of all series of capital
stock in proportion to the asset value of the respective series of capital
stock determined as hereinafter provided. The liquidation of any particular
series in which there are shares then outstanding may be authorized by vote of
a majority of the Board of Directors then in office, subject to the approval of
a majority of the outstanding voting securities of that series, as defined in
the Investment Company Act, and without the vote of the holders of shares of
any other series. The liquidation of a particular series may be accomplished,
in whole or in part, by the transfer of assets of such series to another series
or by the exchange of shares of such series for the shares of another series.
By action of the Board of Directors of the Corporation but without
shareholder approval, the assets belonging to a series may be transferred in
accordance with the applicable requirements of the Investment Company Act to
another series of the Corporation or to another registered or unregistered
investment company or portfolio thereof, in exchange for shares of the
transferee series, investment company, or portfolio or in exchange for cash, as
determined in accordance with the Investment Company Act and any applicable
agreement or plan of reorganization adopted by the Board of Directors of the
Corporation. This paragraph shall not limit the authority of the Corporation
to effect a transaction described by this paragraph under authority of
applicable law or any other independent provision of the Charter.
5. Voting. On each matter submitted to a vote of the shareholders, each
holder of shares shall be entitled to one vote for each share standing in his
name on the books of the Corporation, irrespective of the series thereof, and
all shares of all series shall vote as a single class ("Single Class Voting");
provided, however, that (i) as to any matter with respect to which a separate
vote of any series is required by the Investment Company Act or by the Maryland
General Corporation Law, such requirement as to a separate vote by that series
shall apply in lieu of Single Class Voting; (ii) in the event that the separate
vote requirement referred to in (i) above applies with respect to one or more
series, then, subject to (iii) below, the shares of all other series shall vote
as a single class; and (iii) as to any matter which does not affect the
interest of a particular series, including liquidation of another series as
described in subsection (4) hereof, only the holders of shares of the one or
more affected series shall be entitled to vote.
6. Redemption. To the extent the Corporation has funds or other property
legally available therefor, each holder of shares of capital stock of the
Corporation shall be entitled to require the Corporation to redeem all or any
part of the shares standing in the name of such holder on the books of the
Corporation, at the redemption price of such shares as in effect from time to
time as may be determined by the Board of Directors of the Corporation in
accordance with the provisions hereof, subject to the right of the Board of
Directors of the Corporation to suspend the right of redemption of shares of
capital stock of the Corporation or postpone the date of payment of such
redemption price in accordance with provisions of applicable law. Without
limiting the generality of the foregoing, the Corporation shall, to the extent
permitted by applicable law, have the right at any time to redeem the shares
owned by any holder of capital stock of the Corporation on terms and conditions
determined by the Board of Directors, including, without limitation, if the
value of such shares in the account of such holder is less than the minimum
initial investment amount applicable to that account as set forth in the
Corporation's current registration statement under the Investment Company Act
of 1940, and in all cases subject to such further terms and conditions as the
Board of Directors of the Corporation may from time to time adopt. The
redemption price of shares of capital stock of the Corporation shall, except as
otherwise provided in this Section (e)(6), be the net asset value thereof as
determined by, or pursuant to methods approved by, the Board of Directors of
the Corporation from time to time in accordance with the provisions of
applicable law, less such redemption fee or other charge, if any, as may be
specified in the Corporation's current registration statement under the
Investment Company Act of 1940 for that class or series. Payment of the
redemption price shall be made in cash by the Corporation at such time and in
such manner as may be determined from time to time by the Board of Directors of
the Corporation unless, in the opinion of the Board of Directors, which shall
be conclusive, conditions exist which make payment wholly in cash unwise or
undesirable; in such event the Corporation may make payment wholly or partly by
securities or other property included in the assets belonging or allocable to
the series of the shares redemption of which is being sought, the value of
which shall be determined as provided herein.
7. Equality. All shares of each particular series shall represent an equal
proportionate interest in the assets belonging to that series (subject to the
liabilities of that series), and each share of any particular series shall be
equal to each other share of that series. The Board of Directors may from time
to time divide or combine the shares of any particular series into a greater or
lesser number of shares of that series without thereby changing the
proportionate interest in the assets belonging to that series or in any way
affecting the rights of holders of shares of any other series.
8. Conversion or Exchange Rights. Subject to compliance with the
requirements of the Investment Company Act, the Board of Directors shall have
the authority to provide that holders of shares of any series shall have the
right to convert or exchange said shares into shares of one or more other
classes or series of shares in accordance with such requirements and procedures
as may be established by the Board of Directors.
(f) The shares of Common Stock of the Corporation, or of any series of Common
Stock of the Corporation to the extent such Common Stock is divided into
series, may be further subdivided into classes (which may, for convenience of
reference be referred to a term other than "class"). Unless otherwise provided
in the Articles Supplementary establishing such classes, all such shares, or
all shares of a series of Common Stock in a series, shall have identical
voting, dividend, and liquidation rights. Shares of the classes shall also be
subject to such front-end sales loads, contingent deferred sales charges,
expenses (including, without limitation, distribution expenses under a Rule
12b-1 plan and administrative expenses under an administration or service
agreement, plan or other arrangement, however designated), conversion rights,
and class voting rights as shall be consistent with Maryland law, the
Investment Company Act of 1940, and the rules and regulations of the National
Association of Securities Dealers and shall be contained in Articles
Supplementary establishing such classes.
VII.
DIRECTORS
The number of directors of the Corporation shall be four (4), which number may
be, from time to time, increased or decreased pursuant to the By-Laws of the
Corporation, but shall never be less than the minimum number permitted by the
General Laws of the State
of Maryland now or hereafter in force. The names of the directors who will
serve until the first shareholders meeting or until their successors are
elected and qualify are as follows:
Michael J. Downer
Kristine M. Nishiyama
Patrick F. Quan
Michele Y. Yang
VIII.
PROVISIONS FOR DEFINING, LIMITING AND REGULATING CERTAIN POWERS
OF THE CORPORATION AND OF THE DIRECTORS AND SHAREHOLDERS
The following provisions are hereby adopted for the purpose of defining,
limiting and regulating the powers of the Corporation and of the directors and
shareholders:
(a) No holder of any stock or any other securities of the Corporation, whether
now or hereafter authorized, shall have any preemptive right to subscribe for
or purchase any stock or any other securities of the Corporation other than
such, if any, as the Board of Directors, in its sole discretion, may determine
and at such price or prices and upon such other terms as the Board of
Directors, in its sole discretion, may fix; and any stock or other securities
which the Board of Directors may determine to offer for subscription may, as
the Board of Directors in its sole discretion shall determine, be offered to
the holders of any class, series or type of stock or other securities at the
time outstanding to the exclusion of the holders of any or all other classes,
series or types of stock or other securities at the time outstanding.
(b) The Board of Directors of the Corporation shall have power from time to
time and in its sole discretion to determine, in accordance with sound
accounting practice, what constitutes annual or other net income, profits,
earnings, surplus, or net assets; to fix and vary from time to time the amount
to be reserved as working capital, or determine that retained earnings or
surplus shall remain in the hands of the Corporation; to set apart out of any
funds of the Corporation such reserve or reserves in such amount or amounts and
for such proper purpose or purposes as it shall determine and to abolish any
such reserve or any part thereof; to distribute and pay distributions or
dividends in stock, cash or other securities or property, out of surplus or any
other funds or amounts legally available therefor, at such times and to the
shareholders of record on such dates as it may from time to time determine; and
to determine whether and to what extent and at what times and places and under
what conditions and regulations the books, accounts and documents of the
Corporation, or any of them, shall be open to the inspection of shareholders,
except as otherwise provided by statute or by the By-Laws, and, except as so
provided, no shareholder shall have any right to inspect any book, account or
document of the Corporation unless authorized to do by resolution of the Board
of Directors.
(c) The Board of Directors of the Corporation may establish in its absolute
discretion the basis or method for determining the value of the assets
belonging to any series, and the net asset value of each share of capital stock
of each series and class for purposes of sales, redemptions, repurchases of
shares or otherwise.
(d) Any director or officer, individually, or any firm of which any director
or officer may be a member, or any corporation, trust or association of which
any director or officer may be an officer or director or in which any director
or officer may be directly or indirectly interested as the holder of any amount
of its capital stock or otherwise, may be a party to, or may be financially or
otherwise interested in, any contract or transaction of the Corporation; and
any such director or officer of the Corporation may be counted in determining
the existence of a quorum at the meeting of the Board of Directors of the
Corporation or a committee thereof which shall authorize any such contract or
transaction, and may vote thereat to authorize any such contract or
transaction, and such transaction or contract shall not as a result be void or
voidable provided either
(i) the fact of the common directorship or interest is disclosed or known to:
(a) the Board of Directors or the committee and the Board or committee
authorizes, approves, or ratifies the contract or transaction by the
affirmative vote of a majority of disinterested directors, even if the
disinterested directors constitute less than a quorum; or (b) the shareholders
entitled to vote, and the contract or transaction is authorized, approved, or
ratified by a majority of the votes cast by the shareholders entitled to vote
other than the votes of shares owned of record or beneficially by the
interested director or corporation, firm, or other entity; or
(ii) the contract or transaction is fair and reasonable to the Corporation.
In furtherance and not in limitation of the foregoing, the Board of Directors
of the Corporation is expressly authorized to contract for management services
of any nature, with respect to the conduct of the business of the Corporation
with any entity, person or company, incorporated or unincorporated, on such
terms as the Board of Directors may deem desirable. Any such contract may
provide for the rendition of management services of any nature with respect to
the conduct of the business of the Corporation, and for the management or
direction of the business and activities of the Corporation to such extent as
the Board of Directors may determine, whether or not the contract involves
delegation of functions usually or customarily performed by the Board of
Directors or officers of the Corporation or of a corporation organized under
the laws of Maryland. The Board of Directors is further expressly authorized
to contract with any person or company on such terms as the Board of Directors
may deem desirable for the distribution of shares of the Corporation and to
contract for other services, including, without limitation, services as
custodian of the Corporation's assets and as transfer agent for the
Corporation's shares, with any entity(ies), person(s) or company(ies),
incorporated or unincorporated, on such terms as the directors may deem
desirable. Any entity, person or company which enters into one or more of such
contracts may also perform similar or identical services for other investment
companies and other persons and entities without restriction by reason of the
relationship with the Corporation unless the contract expressly provides
otherwise.
(e) Any contract, transaction, or act of the Corporation or of the Board of
Directors which shall be ratified by a majority of a quorum of the shareholders
having voting powers at any annual meeting, or at any special meeting called
for such purpose, shall so far as permitted by law be as valid and as binding
as though ratified by every shareholder of the Corporation.
(f) Notwithstanding any provision of law requiring the authorization of any
action by a greater proportion than a majority of the total number of shares of
any series or class, or of all classes or series of capital stock, or by the
total number of such shares, such action shall be valid and effective if
authorized by the affirmative vote of the holders of a majority of the total
number of shares outstanding and entitled to vote thereon.
(g) The Corporation shall indemnify (1) its directors and officers, whether
serving the Corporation or at its request any other entity, to the full extent
required or permitted by the General Laws of the State of Maryland now or
hereafter in force, including the advancement of expenses under the procedures
and to the full extent permitted by law, and (2) its other employees and agents
to such extent as shall be authorized by the Board of Directors or the
Corporation's By-Laws and be permitted by law. The foregoing rights of
indemnification shall not be exclusive of any other rights to which those
seeking indemnification may be entitled. The Board of Directors may take such
action as is necessary to carry out these indemnification provisions and is
expressly empowered to adopt, approve and amend from time to time such By-Laws,
resolutions or contracts implementing such provisions or such further
indemnification arrangements as may be permitted by law. No amendment of this
Charter of the Corporation shall limit or eliminate the right to
indemnification provided hereunder with respect to acts or omissions occurring
prior to such amendment or repeal. Nothing contained herein shall be construed
to authorize the corporation to indemnify any director or officer of the
Corporation against any liability to the Corporation or to any holders of
securities of the Corporation to which he is subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office. Any indemnification by the Corporation
shall be consistent with the requirements of law, including the Investment
Company Act of 1940.
(h) To the fullest extent permitted by Maryland statutory and decisional law
and the 1940 Act, as amended or interpreted, no director or officer of the
Corporation shall be personally liable to the Corporation or its stockholders
for money damages; provided, however, that nothing herein shall be construed to
protect any director or officer of the Corporation against any liability to
which such director or officer would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office. No amendment, modification or repeal of
this Article VIII shall adversely affect any right or protection of a director
or officer that exists at the time of such amendment, modification or repeal.
(i) In addition to the powers and authority hereinbefore, hereinafter or by
statute expressly conferred upon them, the Board of Directors may exercise all
such powers and do all such acts and things as may be exercised or done by the
Corporation, subject, nevertheless, to the express provisions of the laws of
Maryland, of the charter and of the By-Laws of the Corporation.
(j) The Corporation reserves the right from time to time to make any
amendments of its charter which may now or hereafter be authorized by law,
including any amendments changing the terms or contract rights, as expressly
set forth in its charter, of any of its outstanding stock by classification,
reclassification or otherwise.
(k) The Corporation shall not be required to hold an annual meeting of
shareholders in any year in which the laws of Maryland do not require that such
a meeting be held.
(l) Unless otherwise prohibited by law, so long as the Corporation is
registered as an open-end management investment company under the Investment
Company Act, the Board of Directors shall have the power and authority, without
the approval of the holders of any outstanding shares, to increase or decrease
the number of shares of capital stock or the number of shares of capital stock
of any class or series that the Corporation has authority to issue.
(m) The Corporation may issue and sell fractions of shares of capital stock
having pro rata all the rights of full shares, including, without limitation,
the right to vote and to receive dividends, and wherever the words "share" or
"shares" are used in the charter or By-Laws of the Corporation, they shall be
deemed to include fractions of shares, where the context does not clearly
indicate that only full shares are intended.
(n) The Corporation shall not be obligated to issue certificates representing
shares of any class or series of capital stock. At the time of issue or
transfer of shares without certificates, the Corporation shall provide the
shareholder with such information as may be required under the Maryland General
Corporation Law.
The enumeration and definition of particular powers of the Board of Directors
included in the foregoing shall in no way be limited or restricted by reference
to or inference from the terms of any other clause of this or any other Article
of the charter of the Corporation, or construed as or deemed by inference or
otherwise in any manner to exclude or limit any powers conferred upon the Board
of Directors under the General Laws of the State of Maryland now or hereafter
in force.
IX.
DURATION OF THE CORPORATION
The duration of the Corporation shall be perpetual.
IN WITNESS WHEREOF, I have signed these Articles of Incorporation,
acknowledging the same to be my act, on November 13, 1998.
/s/ Kristine M. Nishiyama
Kristine M. Nishiyama
WITNESS:
/s/ Vincent P. Corti
Vincent P. Corti
NEW WORLD FUND, INC.
BY-LAWS
NEW WORLD FUND, INC.
BY-LAWS
I N D E X
<TABLE>
<CAPTION>
Section and Title Page
<S> <C> <C> <C>
Article I. SHAREHOLDERS
1.01 Annual Meetings 1
1.02 Special Meetings 1
1.03 Place of Meetings 1
1.04 Notice of Meetings 1
1.05 Quorum 2
1.06 Votes Required 2
1.07 Proxies 2
1.08 List of Shareholders 2
1.09 Voting 2
1.10 Action by Shareholders Other than 3
at a Meeting
Article BOARD OF DIRECTORS
II.
2.01 Powers 3
2.02 Number of Directors 3
2.03 Election of Directors 3
2.04 Regular Meetings 4
2.05 Special Meetings 4
2.06 Notice of Meetings 4
2.07 Quorum 4
2.08 Vacancies 4
2.09 Compensation and Expenses 5
2.10 Action by Directors Other than at 5
a Meeting
2.11 Committees 5
2.12 Holding of Meetings by Conference 5
Telephone Call
Article OFFICERS
III.
3.01 Executive Officers 6
3.02 Chairman and Vice Chairman of the 6
Board
3.03 President 6
3.04 Vice Presidents 6
3.05 Secretary and Assistant 7
Secretaries
3.06 Treasurer and Assistant 7
Treasurers
3.07 Subordinate Officers 7
3.08 Removal 7
Article STOCK
IV.
4.01 Certificates 8
4.02 Transfers 8
4.03 Stock Ledgers 8
4.04 Record Dates 8
4.05 Replacement Certificates 8
Article GENERAL PROVISIONS
V.
5.01 Dividends 9
5.02 Checks 9
5.03 Fiscal Year 9
5.04 Custodian 9
5.05 Seal 10
5.06 Representation of Shares 10
5.07 Prohibited Transactions 10
5.08 Bonds 10
5.09 Annual Statement of Affairs 10
Article AMENDMENT OF BY-LAWS 11
VI.
</TABLE>
BY-LAWS
OF
New World Fund, Inc.
ARTICLE I
SHAREHOLDERS
Section 1.01. Annual Meetings. The Corporation is not required to hold an
annual meeting in any year in which the election of directors is not required
to be acted upon under the Investment Company Act of 1940, as amended (the
"1940 Act"). If the election of directors is required to be acted upon under
the 1940 Act then such meeting (or the first such meeting in any year) shall be
designated as the annual meeting of stockholders for that year. If the 1940
Act requires the Corporation to hold a meeting of stockholders to elect
directors, the meeting shall, unless otherwise required by the 1940 Act, be
held no later than 120 days after the occurrence of the event requiring the
meeting. Except as the Charter or statute provides otherwise, any business may
be considered at an annual meeting without the purpose of the meeting having
been specified in the notice. Failure to hold an annual meeting does not
invalidate the Corporation's existence or affect any otherwise valid corporate
acts.
Section 1.02. Special Meetings. At any time in the interval between annual
meetings, special meetings of the shareholders may be called by the Chairman of
the Board or the President or by a majority of the Board or by shareholders
entitled to cast 10% in number of votes by vote at a meeting or in writing with
or without a meeting.
Section 1.03. Place of Meetings. Meetings of the shareholders for the
election of Directors shall be held at such place either within or without the
State of Maryland or elsewhere in the United States as shall be designated from
time to time by the Board of Directors and stated in the notice of the meeting.
Meetings of shareholders for any other purpose may be held at such time and
place, within the State of Maryland or elsewhere in the United States, as shall
be stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
Section 1.04. Notice of Meetings. Not less than ten days nor more than
ninety days before the date of every shareholders' meeting, the Secretary shall
give to each shareholder entitled to vote at such meeting, written or printed
notice stating the time and place of the meeting and, if the meeting is a
special meeting or notice of the purpose is required by statute, the purpose or
purposes for which the meeting is called, either by mail or by presenting it to
the shareholder personally or by leaving it at the shareholder's residence or
usual place of business. If mailed, such notice shall be deemed to be given
when deposited in the United States mail addressed to the shareholder at his
post office address as it appears on the records of the Corporation, with
postage thereon prepaid. Notwithstanding the foregoing provision, a waiver of
notice in writing, signed by the person or persons entitled to such notice and
filed with the records of the meeting, whether before or after the holding
thereof, or actual attendance at the meeting in person or by proxy, shall be
deemed equivalent to the giving of such notice to such persons. Any meeting of
shareholders, annual or special, may adjourn from time to time to reconvene at
the same or some other place, and no notice need be given of any such adjourned
meeting other than by announcement at the meeting.
Section 1.05. Quorum. At any meeting of shareholders the presence in person
or by proxy of shareholders entitled to cast one third of the votes thereat
shall constitute a quorum; but this Section shall not affect any requirement
under statute or under the Articles for the vote necessary for the adoption of
any measure. In the absence of a quorum the shareholders present in person or
by proxy, by majority vote and without notice, may adjourn the meeting from
time to time until a quorum shall attend. At any such adjourned meeting at
which a quorum shall be present, any business may be transacted which might
have been transacted at the meeting as originally called.
Section 1.06. Votes Required. A majority of the votes cast at a meeting of
shareholders, duly called and at which a quorum is present, shall be sufficient
to take or authorize action upon any matter which may properly come before the
meeting, unless more than a majority of votes cast is required by statute or by
the Articles. Each outstanding share of stock shall be entitled to one vote on
each matter submitted to a vote at a meeting of shareholders and fractional
shares shall be entitled to corresponding fractions of one vote on such
matters, except that a plurality of all the votes cast at a meeting at which a
quorum is present is sufficient to elect a director.
Section 1.07. Proxies. A shareholder may vote the shares owned of record by
him either in person or by proxy executed in writing by the shareholder or by
the shareholder's duly authorized attorney-in-fact. No proxy shall be valid
after eleven months from its date, unless otherwise provided in the proxy.
Every proxy shall be in writing, subscribed by the shareholder or the
shareholder's duly authorized attorney, and dated, but need not be sealed,
witnessed or acknowledged.
Section 1.08. List of Shareholders. At each meeting of shareholders, a full,
true and complete list in alphabetical order of all shareholders entitled to
vote at such meeting, certifying the number and class or series of shares held
by each, shall be made available by the Secretary.
Section 1.09. Voting. In all elections for Directors every shareholder shall
have the right to vote, in person or by proxy, the shares owned of record by
the shareholder, for as many persons as there are Directors to be elected and
for whose election the shareholder has a right to vote. At all meetings of
shareholders, unless the voting is conducted by inspectors, the proxies and
ballots shall be received, and all questions regarding the qualification of
voters and the validity of proxies and the acceptance or rejection of votes
shall be decided by the chairman of the meeting. If demanded by shareholders,
present in person or by proxy, entitled to cast 10% in number of votes, or if
ordered by the chairman, the vote upon any election or question shall be taken
by ballot. Upon like demand or order, the voting shall be conducted by two
inspectors in which event the proxies and ballots shall be received, and all
questions regarding the qualification of voters and the validity of proxies and
the acceptance or rejection of votes shall be decided, by such inspectors.
Unless so demanded or ordered, no vote need be by ballot, and voting need not
be conducted by inspectors. Inspectors may be elected by the shareholders at
their annual meeting, to serve until the close of the next annual meeting and
their election may be held at the same time as the election of Directors. In
case of a failure to elect inspectors, or in case an inspector shall fail to
attend, or refuse or be unable to serve, the shareholders at any meeting may
choose an inspector or inspectors to act at such meeting, and in default of
such election the chairman of the meeting may appoint an inspector or
inspectors.
Section 1.10. Action by Shareholders Other than at a Meeting. Any action
required or permitted to be taken at any meeting of shareholders may be taken
without a meeting, if a consent in writing, setting forth such action, is
signed by all the shareholders entitled to vote on the subject matter thereof
and any other shareholders entitled to notice of a meeting of shareholders (but
not to vote thereat) have waived in writing any rights which they may have to
dissent from such action, and such consent and waiver are filed with the
records of the Corporation.
ARTICLE II
BOARD OF DIRECTORS
Section 2.01. Powers. The Board may exercise all the powers of the
Corporation, except such as are by statute or the charter or these By-Laws
conferred upon or reserved to the shareholders. The Board shall keep full and
fair accounts of its transactions.
Section 2.02. Number of Directors. The number of Directors shall be such
number as shall be fixed from time to time by vote of a majority of the
Directors; provided, however, that the number of Directors shall in no event
exceed fifteen nor be reduced to fewer than three. The tenure of office of a
Director shall not be affected by any decrease in the number of Directors made
by the Board.
Section 2.03. Election of Directors. Until the first annual meeting of
shareholders and until successors or additional Directors are duly elected and
qualify, the Board shall consist of the persons named as such in the charter.
At the first annual meeting of shareholders and at each annual meeting
thereafter, the shareholders shall elect Directors to hold office until the
next succeeding annual meeting and until their successors are elected and
qualify. At any meeting of shareholders, duly called and at which a quorum is
present, the shareholders may, by the affirmative vote of the holders of a
majority of the votes entitled to be cast thereon, remove any Director or
Directors from office and may elect a successor or successors to fill any
resulting vacancies for the unexpired terms of removed Directors.
Section 2.04. Regular Meetings. After each meeting of shareholders at which
a Board of Directors shall have been elected, the Board so elected shall meet
for the purpose of organization and the transaction of other business. No
notice of such first meeting shall be necessary if held immediately after the
adjournment, and at the site, of such meeting of shareholders. Other regular
meetings of the Board shall be held without notice on such dates and at such
places within or without the State of Maryland as may be designated from time
to time by the Board.
Section 2.05. Special Meetings. Special meetings of the Board may be called
at any time by the Chairman of the Board, the President or the Secretary of the
Corporation, or by a majority of the Board by vote at a meeting, or in writing
with or without a meeting. Such special meetings shall be held at such place
or places within or without the State of Maryland as may be designated from
time to time by the Board. In the absence of such designation such meetings
shall be held at such places as may be designated in the calls.
Section 2.06. Notice of Meetings. Except as provided in Section 2.04, notice
of the place, day and hour of all meetings shall be given to each Director two
days (or more) before the meeting, by delivering the same personally, or by
sending the same by telegraph, or by leaving the same at the Director's
residence or usual place of business, or, in the alternative, by mailing such
notice three days (or more) before the meeting, postage prepaid, and addressed
to the Director at the Director's last known business or residence post office
address, according to the records of the Corporation. Unless required by these
By-Laws or by resolution of the Board, no notice of any meeting of the Board
need state the business to be transacted thereat. No notice of any meeting of
the Board need be given to any Director who attends, or to any Director who in
writing executed and filed with the records of the meeting either before or
after the holding thereof, waives such notice. Any meeting of the Board,
regular or special, may adjourn from time to time to reconvene at the same or
some other place, and no notice need be given of any such adjourned meeting
other than by announcement at the adjourned meeting.
Section 2.07. Quorum. At all meetings of the Board, a majority of the entire
Board (but in no event fewer than two Directors) shall constitute a quorum for
the transaction of business. Except in cases in which it is by statute, by the
charter or by these By-Laws otherwise provided, the vote of a majority of such
quorum at a duly constituted meeting shall be sufficient to elect and pass any
measure. In the absence of a quorum, the Directors present by majority vote
and without notice other than by announcement at the meeting may adjourn the
meeting from time to time until a quorum shall attend. At any such adjourned
meeting at which a quorum shall be present, any business may be transacted
which might have been transacted at the meeting as originally noticed.
Section 2.08. Vacancies. Any vacancy occurring in the Board of Directors for
any cause other than by reason of an increase in the number of Directors may be
filled by a majority of the remaining members of the Board of Directors,
although such majority is less than a quorum. Any vacancy occurring by reason
of an increase in the number of Directors may be filled by action of a majority
of the entire Board of Directors; provided, in either case, that immediately
after filling such vacancy at least two-thirds of the Directors then holding
office shall have been elected to such office by the shareholders at an annual
or special meeting thereof. If at any time after the first annual meeting of
shareholders of the Corporation a majority of the Directors in office shall
consist of Directors elected by the Board of Directors, a meeting of the
shareholders shall be called forthwith for the purpose of electing the entire
Board of Directors, and the terms of office of the Directors then in office
shall terminate upon the election and qualification of such Board of Directors.
A Director elected by the Board of Directors or the shareholders to fill a
vacancy shall be elected to hold office until the next annual meeting of
shareholders and until his successor is elected and qualifies.
Section 2.09. Compensation and Expenses. Directors may, pursuant to
resolution of the Board, be paid fees for their services, which fees may
consist of an annual fee or retainer and/or a fixed fee for attendance at
meetings. In addition, Directors may in the same manner be reimbursed for
expenses incurred in connection with their attendance at meetings or otherwise
in performing their duties as Directors. Members of committees may be allowed
like compensation and reimbursement. Nothing herein contained shall preclude
any Director from serving the Corporation in any other capacity and receiving
compensation therefor.
Section 2.10. Action by Directors Other than at a Meeting. Any action
required or permitted to be taken at any meeting of the Board, or of any
committee thereof, may be taken without a meeting, if a written consent to such
action is signed by all members of the Board or of such committee, as the case
may be, and such written consent is filed with the minutes of proceedings of
the Board or committee.
Section 2.11. Committees. The Board may, by resolution passed by a majority
of the entire Board, designate one or more committees, each committee to
consist of two or more of the Directors. The Board may designate one or more
Directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. Any such committee, to
the extent provided in the resolution and by law, shall have and may exercise
the powers of the Board in the management of the business and affairs of the
Corporation, provided, however, that in the absence or disqualification of any
member of such committee or committees, the member or members thereof present
at any meeting and not disqualified from voting, whether or not he or they
constitute a quorum, may appoint another member of the Board to act at the
meeting in the place of any such absent or disqualified member. Such committee
or committees shall have such name or names as may be determined from time to
time by resolution adopted by the Board. Each committee shall keep regular
minutes of its meetings and report the same to the Board when required.
Section 2.12. Holding of Meetings by Conference Telephone Call. At any
regular or special meeting of the Board or any committee thereof, members
thereof may participate in such meeting by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other. Participation in a meeting pursuant to this
section shall constitute presence in person at such meeting.
ARTICLE III
OFFICERS
Section 3.01. Executive Officers. The Board of Directors shall
choose a President and may choose a Chairman of the Board and a Vice Chairman
of the Board from among the Directors, and shall choose a Secretary and a
Treasurer who need not be Directors. The Board of Directors shall designate as
principal executive officer of the Corporation either the Chairman of the
Board, the Vice Chairman of the Board, or the President. The Board of
Directors may choose an Executive Vice President, one or more Senior Vice
Presidents, one or more Vice Presidents, one or more Assistant Secretaries and
one or more Assistant Treasurers, none of whom need be a Director. Any two or
more of the above-mentioned offices, except those of President and a Vice
President, may be held by the same person, but no officer shall execute,
acknowledge or verify any instrument in more than one capacity if such
instrument be required by law, by the charter, by the By-Laws or by resolution
of the Board of Directors to be executed by any two or more officers. Each
such officer shall hold office until his successor shall have been duly chosen
and qualified, or until he shall have resigned or shall have been removed. Any
vacancy in any of the above offices may be filled for the unexpired portion of
the term of the Board of Directors at any regular or special meeting.
Section 3.02. Chairman and Vice Chairman of the Board. The Chairman of the
Board, if one be elected, shall preside at all meetings of the Board of
Directors and of the shareholders at which he is present. He shall have and
may exercise such powers as are, from time to time, assigned to him by the
Board of Directors. The Vice Chairman of the Board, if one be elected, shall,
when present and in the absence of the Chairman of the Board, preside at all
meetings of the shareholders and Directors, and he shall perform such other
duties as may from time to time be assigned to him by the Board of Directors or
as may be required by law.
Section 3.03. President. In the absence of the Chairman or Vice Chairman of
the Board, the President shall preside at all meetings of the shareholders and
of the Board at which the President is present; and in general, shall perform
all duties incident to the office of a president of a Maryland Corporation, and
such other duties, as from time to time, may be assigned to him by the Board.
Section 3.04. Vice Presidents. The Vice President or Vice Presidents,
including any Executive or Senior Vice President(s), at the request of the
President or in the President's absence or during the President's inability or
refusal to act, shall perform the duties and exercise the functions of the
President, and when so acting shall have the powers of the President. If there
be more than one Vice President, the Board may determine which one or more of
the Vice Presidents shall perform any of such duties or exercise any of such
functions, or if such determination is not made by the Board, the President may
make such determination. The Vice President or Vice Presidents shall have such
other powers and perform such other duties as may be assigned by the Board, the
Chairman of the Board, or the President.
Section 3.05. Secretary and Assistant Secretaries. The Secretary shall keep
the minutes of the meetings of the shareholders, of the Board and of any
committees, in books provided for the purpose; shall see that all notices are
duly given in accordance with the provisions of these By-Laws or as required by
law; be custodian of the records of the Corporation; see that the corporate
seal is affixed to all documents the execution of which, on behalf of the
Corporation, under its seal, is duly authorized, and when so affixed may attest
the same; and in general perform all duties incident to the office of a
secretary of a Maryland Corporation, and such other duties as, from time to
time, may be assigned to him by the Board, the Chairman of the Board, or the
President.
The Assistant Secretary, or if there be more than one, the Assistant
Secretaries in the order determined by the Board, the President or the Chairman
of the Board, shall, in the absence of the Secretary or in the event of the
Secretary's inability or refusal to
act, perform the duties and exercise the powers of the Secretary and shall
perform such other duties and have such other powers as the Board may from time
to time prescribe.
Section 3.06. Treasurer and Assistant Treasurers. The Treasurer shall have
charge of and be responsible for all funds, securities, receipts and
disbursements of the Corporation, and shall deposit, or cause to be deposited
in the name of the Corporation, all moneys or other valuable effects in such
banks, trust companies or other depositories as shall, from time to time, be
selected by the Board in accordance with Section 5.04 of these By-Laws; render
to the President, the Chairman of the Board and to the Board, whenever
requested, an account of the financial condition of the Corporation; and in
general, perform all the duties incident to the office of a treasurer of a
corporation, such other duties as may be assigned to him by the Board, the
President or the Chairman of the Board.
The Assistant Treasurer, or if there shall be more than one, the
Assistant Treasurers in the order determined by the Board, the President or the
Chairman of the Board shall, in the absence of the Treasurer or in the event of
the Treasurer's inability or refusal to act, perform the duties and exercise
the powers of the Treasurer and shall perform other duties and have such other
powers as the Board may from time to time prescribe.
Section 3.07. Subordinate Officers. The Board may from time to time appoint
such subordinate officers as it may deem desirable. Each such officer shall
hold office for such period and perform such duties as the Board, the President
or the Chairman of the Board may prescribe. The Board may, from time to time,
authorize any committee or officer to appoint and remove subordinate officers
and prescribe the duties thereof.
Section 3.08. Removal. Any officer or agent of the Corporation may be
removed by the Board whenever, in its judgment, the best interests of the
Corporation will be served thereby, but such removal shall be without prejudice
to the contractual rights, if any, of the person so removed.
ARTICLE IV
STOCK
Section 4.01. Certificates. Each shareholder shall be entitled to a
certificate or certificates which shall represent and certify the number of
shares of stock owned by him in the Corporation. Such certificate shall be
signed by the President, the Chairman of the Board or a Vice President and
countersigned by the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer, and sealed with the seal of the Corporation. The
signatures may be either manual or facsimile signatures and the seal may be
either facsimile or any other form of seal. No certificates shall be issued
for fractional shares. Such certificates shall be in such form, not
inconsistent with law or with the charter, as shall be approved by the Board.
In case any officer of the Corporation who has signed any certificate ceases to
be an officer of the Corporation, whether because of death, resignation or
otherwise, before such certificate is issued, the certificate may nevertheless
be issued and delivered by the Corporation as if the officer had not ceased to
be such officer as of the date of its issue. Certificates need not be issued
except to shareholders who request such issuance in writing. A certificate is
valid and may be issued whether or not an officer who signed it is still an
officer when it is issued.
Section 4.02. Transfers. The Board of Directors shall have power and
authority to make such rules and regulations as it may deem necessary or
expedient concerning the issue, transfer and registration of certificates of
stock; and may appoint transfer agents and registrars thereof. The duties of
transfer agent and registrar, if any, may be combined.
Section 4.03. Stock Ledgers. A stock ledger, containing the names and
addresses of the shareholders of the Corporation and the number of shares of
each class held by them, respectively, shall be kept by the Transfer Agent of
the Corporation. The stock ledger may be in written form or in any other form
which can be converted within a reasonable time into written form for visual
inspection.
Section 4.04. Record Dates. The Board is hereby empowered to fix, in
advance, a date as the record date for the purpose of determining shareholders
entitled to notice of, or to vote at, any meeting of shareholders, or
shareholders entitled to receive payment of any dividend, capital gains
distribution or the allotment of any rights, or in order to make a
determination of shareholders for any other proper purpose. Such date in any
case shall be not more than ninety days, and in case of a meeting of
shareholders, not less than ten days, prior to the date on which the particular
action, requiring such determination of shareholders, is to be taken.
Section 4.05. Replacement Certificates. The Board of Directors may direct a
new stock certificate or certificates to be issued in place of any certificate
or certificates theretofore issued by the Corporation alleged to have been
lost, stolen or destroyed, upon such conditions as the Board shall determine.
When authorizing such issue of a new certificate or certificates, the Board of
Directors may, in it discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative to advertise the same in such manner
as it shall require and/or to give the Corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the Corporation
with respect to the Certificate alleged to have been lost, stolen or destroyed.
ARTICLE V
GENERAL PROVISIONS
Section 5.01. Dividends. Dividends or distributions upon the capital stock
of the Corporation, subject to provisions of the charter, if any, may be
declared by the Board of Directors at any regular or special meeting, pursuant
to law. Dividends or distributions may be paid only in cash or in shares of
the capital stock, subject to the provisions of the Articles of Incorporation.
Before payment of any dividend or distribution there may be set aside out of
any funds of the Corporation available for dividends or distributions such sum
or sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends or distributions or for maintaining any property of the Corporation,
or for such other purpose as the Directors shall think conducive to the
interest of the Corporation, and the Directors may modify or abolish any such
reserve in the manner in which it was created.
Section 5.02. Checks. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board may from time to time designate.
Section 5.03. Fiscal Year. The fiscal year of the Corporation shall be fixed
by resolution of the Board of Directors.
Section 5.04. Custodian. All securities and cash of the Corporation shall be
placed in the custody of a bank or trust company ("Custodian") having
(according to its last published report) not less than $2,000,000 aggregate
capital, surplus and undivided profits, provided such a Custodian can be found
ready and willing to act (or maintained in such other manner as is consistent
with Section 17(f) of the Investment Company Act of 1940 and the rules and
regulations promulgated thereunder.) The Corporation shall enter into a
written contract with the Custodian regarding the powers, duties and
compensation of the Custodian with respect to the cash and securities of the
Corporation held by the Board of Directors of the Corporation. The Corporation
shall upon the resignation or inability to serve of the Custodian use its best
efforts to obtain a successor custodian; require that the cash and securities
owned by the Corporation be delivered directly to the successor custodian; and
in the event that no successor custodian can be found, submit to the
shareholders, before permitting delivery of the cash and securities owned by
the Corporation to other than a successor custodian, the question whether or
not the Corporation shall be liquidated or shall function without a custodian.
Section 5.05. Seal. The Board of Directors shall provide a suitable seal,
bearing the name of the Corporation, which shall be in the custody of the
Secretary. The Board of Directors may authorize one or more duplicate seals
and provide for the custody thereof.
Section 5.06. Representation of Shares. Any officer of the Corporation is
authorized to vote, represent and exercise of the Corporation any and all
rights incident to any shares of any corporation or other business enterprise
owned by the Corporation.
Section 5.07. Prohibited Transactions. No officer or director of the
Corporation or of its investment adviser shall deal for or on behalf of the
Corporation with himself, as principal or agent, or with any corporation or
partnership in which he has a financial interest. This prohibition shall not
prevent: (a) officers or directors of the Corporation from having a financial
interest in the Corporation, its principal underwriter or its investment
adviser; (b) the purchase of securities for the portfolio of the Corporation or
the sale of securities owned by the Corporation through a securities dealer,
one or more of whose partners, officers or directors is an officer or director
of the Corporation, provided such transactions are handled in the capacity of
broker only and provided commissions charged do not exceed customary brokerage
charges for such service; or (c) the employment of legal counsel, registrar,
transfer agent, dividend disbursing agent, or custodian having a partner,
officer or director who is an officer or director of the Corporation, provided
only customary fees are charged for services rendered to or for the benefit of
the Corporation.
Section 5.08. Bonds. The Board of Directors may require any officer, agent
or employee of the Corporation to give a bond to the Corporation, conditioned
upon the faithful discharge of his duties, with one or more sureties and in
such amount as may be satisfactory to the Board of Directors. The Board of
Directors shall, in any event, require the Corporation to provide and maintain
a bond issued by a reputable fidelity insurance company, against larceny and
embezzlement, covering each officer and employee of the Corporation who may
singly, or jointly with others, have access to securities or funds of the
Corporation, either directly or through authority to draw upon such funds, or
to direct generally the disposition of such securities, such bond or bonds to
be in such reasonable amount as a majority of the Board of Directors who are
not such officers or employees of the Corporation shall determine with due
consideration to the value of the aggregate assets of the Corporation to which
any such officer or employee may have access, or in any amount or upon such
terms as the Securities and Exchange Commission may prescribe by order, Rule or
Regulations.
Section 5.09. Annual Statement of Affairs. The President or the Controller
shall prepare annually a full and correct statement of the affairs of the
Corporation, to include a balance sheet and a financial statement of operations
for the preceding fiscal year. The statement of affairs shall be placed on
file at the Corporation's principal office within 120 days after the end of the
fiscal year.
ARTICLE VI
AMENDMENT OF BY-LAWS
These By-Laws of the Corporation may be altered, amended, added to or
repealed by majority vote of the shareholders or by majority vote of the entire
Board.
