As filed with the Securities and Exchange Commission on April 16, 1999
SEC File Nos.
811-9105
333-67455
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. 3 (X)
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 3 (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
Vincent P. Corti
Capital Research and Management Company
333 South Hope Street
Los Angeles, California 90071
(name and address of agent for service)
Copies to:
Eric A.S. Richards, Esq.
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, California 90071
(Counsel for the Registrant)
Approximate date of proposed public offering:
April 19, 1999
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
Title of Securities Being Registered
<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.
The
American
Funds
Group(R)
- --------------------------------------------------------------------------------
New World
Fund
Prospectus
New World Fund seeks to make your investment grow over time by investing
primarily in stocks of companies with significant exposure to countries with
developing economies and/or markets.
American Funds Distributors, as principal underwriter, has entered into
agreements with a selected group of securities dealers to solicit subscriptions
for shares of the fund during an initial offering period that will terminate on
the settlement date, June 17, 1999. Purchases may not be made by exchanging
shares from other funds in The American Funds Group.
The fund will reopen on September 15, 1999, and shares of the fund will be
continuously offered thereafter.
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.
APRIL 19, 1999
- --------------------------------------------------------------------------------
New World Fund, Inc.
333 South Hope Street
Los Angeles, California 90071
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Risk/Return Summary 2
.............................................................................
Fees and Expenses of the Fund 3
.............................................................................
Investment Objective, 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
36-010-0499/RRD
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- --------------------------------------------------------------------------------
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 with 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. 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 by 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
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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 to certain redemptions
made within 12 months following any purchases you made without a sales
charge.
Annual Fund Operating Expenses/1/
(expenses deducted from fund assets)
- --------------------------------------------------------------------------------
Management Fees .85%
................................................................................
Service (12b-1) Fees .10%/2/
................................................................................
Other Expenses .29%
................................................................................
Total Annual Fund Operating Expenses 1.24%
/1/ Based on estimated amounts for the current fiscal year.
/2/ 12b-1 expenses may not exceed 0.30% of the fund's average net assets
annually.
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 $694
................................................................................
Three years $946
................................................................................
New World Fund / Prospectus 3
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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 that 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. Qualified developing countries in which the fund may invest
currently include, but are not limited to Argentina, Brazil, Chile, Hungary,
India, Indonesia, Israel, Korea, Mexico, Philippines, Poland, Russia, South
Africa, and Turkey.
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,
higher transaction costs, 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, developing 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
4 New World Fund / Prospectus
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 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 the risks
described above, as well as for developing countries, 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
in terest 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
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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. These risks may be particularly acute
in certain developing countries in which the fund may invest and may adversely
affect the fund's net asset value and total return. 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 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> <C> <C> <C> <C>
Robert W. President of the Less than one year 14 years 14 years
Lovelace fund. Executive (since the fund began
Vice President operations)
and Director,
Capital Research
Company*
------------------------------------------------------------------------------------------------
Mark E. Denning Senior Vice Less than one year 17 years 17 years
President of the (since the fund began
fund. Director, operations)
Capital Research
and Management
Company
------------------------------------------------------------------------------------------------
David C. Barclay Vice President of Less than one year 11 years 18 years
the fund. Vice (since the fund began
President, Capital operations)
Research and
Management Company.
------------------------------------------------------------------------------------------------
Alwyn Heong Vice President of Less than one year 7 years 11 years
the fund. Vice (since the fund began
President, Capital operations)
Research Company*
------------------------------------------------------------------------------------------------
Carl M. Kawaja Vice President of Less than one year 8 years 12 years
the fund. Vice (since the fund began
President, Capital operations)
Research Company*
------------------------------------------------------------------------------------------------
</TABLE>
The fund will begin operations June 17, 1999.
* Company affiliated with Capital Research and Management Company.
New World Fund / Prospectus 7
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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 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
administrator/trustee or dealer.
8 New World Fund / Prospectus
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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
securities 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
offering. 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
account. 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
required 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
maximum offering price). For Education IRAs the minimum is further reduced to 20
shares ($500 at the maximum offering price). The shares are offered at a
maximum 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
purchases 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
(underwriting discounts) and dealer concessions connected with sales of various
quantities 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 see see see see see
next page next page next page next page next page next
page
</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 Future Offerings
Following the completion of the offering, the fund does not intend to make
additional sales of its shares (except as described below) until September 15,
1999. During the period prior to September 15, 1999, the fund intends to sell
additional shares pursuant to its registration statement (including this
prospectus) or amendments thereto, as follows: (i) 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 reinvestment 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 retirement plans offered to employees of the investment
adviser and its affiliates. Investments in such retirement plans, as well as
reinvestment and reinstatement, 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 on the
previous page.
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. Once the fund begins its continuous
offering on September 15, 1999, 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
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.
10 New World Fund / Prospectus
The fund and American Funds Distributors, the fund's principal underwriter,
reserve 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
potential 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,
market 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
security.
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
accepts your request. The offering price is the net asset value plus a sales
charge, if applicable.
Sales Charge
When the fund begins its continuous offering of shares on September 15, 1999,
it likely will 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 on the next page see next page see mext page see next page
</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
imposed 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
Distribution 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
combination 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
expenses 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 earlier 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
account(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) that 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
As with any investment, your investment in the fund could have tax consequences.
If you are not investing through a tax-advantaged retirement account you
should consider these tax consequences.
TAXES ON DISTRIBUTIONS
Distributions you receive from the fund are subject to income tax and may also
be subject to state or local taxes.For federal tax purposes, the fund's
dividends and distributions of short-term capital gains are taxable to you as
ordinary income. The fund's distributions of long-term capital gains are
taxable to you as capital gains. Any taxable distributions you receive from
the fund will normally be taxable to you when you receive them, regardless
of whether you reinvest dividends or receive them in cash.
TAXES ON TRANSACTIONS
Your redemptions, including exchanges, may result in a capital gain or loss
for federal tax purposes. A capital gain or loss on your investment in the
fund is the difference between the cost of your shares, including any sales
charges, and the price you receive when you sell them.
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 in a
translation, the English text will 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
[LOGO]
Investment Company File No. 811-9105 Printed on recycled paper
NEW WORLD FUND, INC.
Part B
Statement of Additional Information
APRIL 19, 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 19,
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 9
FUND DIRECTORS AND OFFICERS 10
MANAGEMENT 15
DIVIDENDS, DISTRIBUTIONS AND TAXES 17
PURCHASE OF SHARES 22
SELLING SHARES 28
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES 30
EXECUTION OF PORTFOLIO TRANSACTIONS 32
GENERAL INFORMATION 33
INVESTMENT RESULTS AND RELATED STATISTICS 34
DESCRIPTION OF BOND RATINGS 36
FINANCIAL STATEMENTS 38
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.
GENERAL
- - The fund will invest at least 35% of its assets in equity and debt securities
of companies based primarily in qualified countries with developing economies
and/or markets.
EQUITY SECURITIES
- - The fund may invest 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 developing 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 with
developing economies and/or markets, or issuers that the fund's investment
adviser determines have a significant portion of their assets or revenues
(generally 20% or more) attributable to developing countries. The fund will
generally purchase debt securities considered 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. (See "Certain Risk Factors Related to
Developing Countries" below.)
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 in the
initial stages of its industrialization cycle with a low per capita gross
national product. 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.
In determining where an issuer of a security is based, the Investment
Adviser may consider such factors as where the country is legally organized,
maintains its principal corporate offices, and/or conducts its principal
operations.
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
experienced and may in the future experience significant declines against the
U.S. dollar. For example, if the U.S. dollar appreciates 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., and 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, a country could impose new or
additional repatriation restrictions after the fund's investment. If this
happened, 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 positive and negative factors. Further, some
attractive equity securities may not be available to the fund because foreign
shareholders hold the maximum amount legally permissible.
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. These factors may make prompt liquidation of
substantial portfolio holdings difficult or impossible at times.
SETTLEMENT RISKS -- Settlement systems in developing countries are generally
less well organized than developed markets. Supervisory authorities may also
be unable to apply standards 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 be made
before receipt of the security being purchased or that delivery of a security
be made before payment is received. In such cases, default by a broker or bank
(the "counterparty") through whom the transaction is effected might cause the
fund to suffer a loss. 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 resulting in a loss to the fund.
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 presents 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.
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.
U.S. GOVERNMENT SECURITIES -- Securities guaranteed by the U.S. Government
include: (1) direct obligations of the U.S. Treasury (such as Treasury bills,
notes and bonds) and (2) federal agency obligations guaranteed as to principal
and interest by the U.S. Treasury. In these securities, the payment of
principal and interest is unconditionally guaranteed by the U.S. Government,
and thus they are of the highest possible credit quality. Such securities are
subject to variations in market value due to fluctuations in interest rates,
but, if held to maturity, will be paid in full.
Certain securities issued by U.S. Government instrumentalities and certain
federal agencies are neither direct obligations of, nor guaranteed by, the U.S.
Treasury. However, they generally involve federal sponsorship in one way or
another; some are backed by specific types of collateral; some are supported by
the issuer's right to borrow from the U.S. Treasury; some are supported by the
discretionary authority of the U.S. Treasury to purchase certain obligations of
the issuer; others are supported only by the credit of the issuing government
agency or instrumentality. These agencies and instrumentalities include, but
are not limited to, Federal Land Banks, Farmers Home Administration, Central
Bank Cooperatives, and Federal Intermediate Credit Banks.
CASH AND CASH EQUIVALENTS -- These securities include (i) commercial paper
(short-term notes up to 9 months in maturity issued by corporations or
governmental bodies), (ii) 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)), (iii) savings
association and saving bank obligations (E.G., certificates of deposit issued
by savings banks or savings associations), (iv) securities of the U.S.
Government, its agencies or instrumentalities that mature, or may be redeemed,
in one year or less, and (v) corporate bonds and notes that mature, or that may
be redeemed, in one year or less.
INVESTMENT COMPANIES -- The fund has the ability to invest up to 5% of its
total assets in shares of closed-end investment companies, but will not acquire
more than 3% of the outstanding voting securities of any one closed-end
investment company. (If the fund invests in another investment company, it
would pay an investment advisory fee in addition to the fee paid to the
Investment Adviser.)
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 on the date 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 that 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.
In addition, the fund will not change its subclassification from a diversified
to non-diversified company 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 net 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 may not invest in other companies for the purpose of exercising
control or management.
6. The fund may not invest more than 5% of its total assets in the securities
of other managed investment companies; such investments shall be limited to 3%
of the voting stock of any investment company, provided, however, that
investment in the open market of a closed-end investment company where no more
than customary brokers' commissions are involved and investment in connection
with a merger, consolidation, acquisition or reorganization shall not be
prohibited by this restriction.
Fund Organization
The fund is an open-end, diversified management investment company. It was
organized as a Maryland corporation on November 13, 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 TOTAL COMPENSATION TOTAL NUMBER OF
AND AGE WITH OCCUPATION(S) (INCLUDING FUND BOARDS
REGISTRANT DURING PAST 5 VOLUNTARILY ON WHICH
YEARS DEFERRED DIRECTOR
COMPENSATION/1/) SERVES/3/
FROM ALL FUNDS
MANAGED BY CAPITAL
RESEARCH AND
MANAGEMENT COMPANY
OR ITS
AFFILIATES/2/ FOR
THE YEAR ENDED
10/31/98
<S> <C> <C> <C> <C>
Elizabeth Director Administrative $42,600 3
Allison Director, ANZI,
ANZI, Ltd. Ltd. (financial
1770 publishing and
Massachusetts consulting);
Ave. Publishing
Cambridge, MA Consultant,
02140 Harvard Medical
Age: 52 School; former
Senior Vice
President,
Planning and
Development,
McGraw Hill, Inc.
Michael R. Director Chairman of the $39,800 3
Bonsignore Board and Chief
Honeywell Executive Officer,
Plaza Honeywell Inc.
P.O. Box 524
Minneapolis,
MN 55440
Age: 58
+Gina H. Vice Senior Vice None/4/ 2
Depres Chairman President, Capital
3000 K. and Research and
Street, N.W. Director Management Company
Suite 230
Washington,
D.C. 20007
Age: 57
Robert A. Fox Director President and $105,417 7
P.O. Box 457 Chief Executive
Livingston, Officer, Foster
CA 95334 Farms, Inc.
Age: 61
Alan Greenway Director President, $75,500 5
7413 Fairway Greenway
Road Associates, Inc.
La Jolla, CA (management
92037 consulting
services)
+William R. Chairman Senior Vice None/4/ 5
Grimsley of the President and
One Market Board Director, Capital
Steuart Research and
Tower, Suite Management Company
1800
San
Francisco, CA
94105
Age: 60
Koichi Itoh Director Group Vice $43,900 3
Autosplice President,
Inc. Autosplice, Inc.,
3-7-39 former President
Minami-cho and Chief
Higashi-Kurume City Executive Officer,
Tokyo, Japan IMPAC (management
203-0031 consulting
Age: 58 services); former
Managing Partner,
VENCA Management
(venture capital)
William H. Director President, $79,000 6
Kling Minnesota Public
45 East Radio; President,
Seventh Greenspring Co.;
Street former President,
St. Paul, MN American Public
55101 Radio (now Public
Age: 56 Radio
International)
John G. Director The IBJ Professor $189,100 8
McDonald of Finance,
Graduate Graduate School of
School of Business, Stanford
Business University
Stanford
University
Stanford, CA
94305
Age: 61
++William I. Director Chairman of the $43,900 3
Miller Board, Irwin
500 Financial
Washington Corporation
Street
Box 929
Columbus, IN
47202
Age: 42
Kirk P. Director Chairman/Chief $102,434 6
Pendleton Executive Officer,
Cairnwood, Cairnwood, Inc.
Inc. (venture capital
75 James Way investment)
Southhampton,
PA 18966
Age: 59
Donald E. Director Former Chairman of $75,000 5
Petersen the Board and
222 East Chief Executive
Brown, Suite Officer, Ford
460 Motor Company
Birmingham,
MI 48009
Age: 72
</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 1999. 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 Gina H. Despres and William R. Grimsley 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
<S> <C> <C> <C>
Robert W. Lovelace 36 President Executive Vice President
11100 Santa Monica and Director, Capital
Blvd. Research Company; Vice
Los Angeles, CA President, Capital
90025 Research and Management
Company
Mark E. Denning 41 Senior Vice Senior Vice President and
25 Bedford Street President Director, Capital
London, England Research Company;
Director, Capital
Research and Management
Company
David C. Barclay 42 Vice Senior Vice President,
11100 Santa Monica President Capital Research Company
Blvd.
Los Angeles, CA
90025
Alwyn Heong 39 Vice Vice President, Capital
630 Fifth Avenue President Research Company
New York, NY
10111
Joseph R. Higdon 57 Vice Director and Senior Vice
3000 K. Street, President President, Capital
N.W. Strategy Research, Inc.
Suite 230
Washington, D.C.
20007
Carl M. Kawaja 34 Vice Vice President, Capital
One Market President Research Company
Steuart Tower,
Suite 1800
San Francisco, CA
94105
Vincent P. Corti 42 Secretary Vice President - Fund
333 South Hope Business Management
Street Group, Capital Research
Los Angeles, CA and Management Company
90071
R. Marcia Gould 44 Treasurer Vice President - Fund
135 South State Business Management
College Blvd. Group, Capital Research
Brea, CA 92821 and Management Company
Dayna Yamabe 32 Assistant Assistant Vice President
135 South State Treasurer - Fund Business
College Blvd. Management Group, Capital
Brea, CA 92821 Research and Management Company
</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 expects to pay an annual fee to Directors who
are not affiliated with the Investment Adviser, plus a fee for each Board of
Directors meeting attended, plus a fee 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 individuals, various
retirement benefit plans, 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 April 16, 1999. The Agreement will continue in effect until December
31, 2000, 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
who 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 0.85% of average
net assets.
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 average net assets
annually to finance any activity 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 TAXES
DIVIDENDS -- The fund intends to follow the practice of distributing
substantially all of its investment company taxable income which includes any
excess of net realized short-term gains over net realized long-term capital
losses. The fund may follow the practice of distributing the entire excess of
net realized long-term capital gains over net realized short-term capital
losses. However, the fund may retain all or part of such gain for
reinvestment, after paying the related federal taxes for which shareholders may
then be able to claim a credit against their federal tax liability. If the
fund does not distribute the amount of capital gain and/or net investment
income required to be distributed by an excise tax provision of the Code, the
fund may be subject to that excise tax. In certain circumstances, the fund may
determine that it is in the interest of shareholders to distribute less than
the required amount. In this case, the fund will pay any income or excise
taxes due.
The fund intends to distribute annually in December its investment company
taxable income, including any net short-term capital gains in excess of net
long-term capital losses, and any net capital gains realized during each fiscal
year. Additional distributions may be made, if necessary.
Dividends will be reinvested in shares of the fund unless shareholders
indicate in writing that they wish to receive them in cash or in shares of
other American Funds, as provided in the prospectus.
TAXES -- The fund intends to elect to be treated as a regulated investment
company under Subchapter M of the Code. A regulated investment company
qualifying under Subchapter M of the Code is required to distribute to its
shareholders at least 90% of its investment company taxable income (including
net short-term capital gain over net long-term capital losses) and generally is
not subject to federal income tax to the extent that it distributes annually
its investment company taxable income and net realized capital gains in the
manner required under the Code. The fund intends to distribute annually all of
its investment company taxable income and net realized capital gains and
therefore does not expect to pay federal income tax, although in certain
circumstances the fund may determine that it is in the interest of shareholders
to distribute less than that amount.
The fund will be subject to a 4% nondeductible excise tax on amounts
required to be but not distributed under a prescribed formula. The formula
requires the fund to distribute to shareholders for a calendar year an amount
equal to at least 98% of the fund's ordinary income for that calendar year, at
least 98% of the excess of its capital gains over capital losses realized
during the one-year period ending October 31 during such year, and all ordinary
income and capital gains for prior years that were not previously
distributed.
Investment company taxable income generally includes dividends, interest,
net short-term capital gains in excess of net long-term capital losses, and
certain foreign currency gains, if any, less expenses and certain foreign
currency losses, if any. Net realized capital gains for a fiscal year are
computed by taking into account any capital loss carry-forward of the fund.
If any net realized long-term capital gains in excess of net realized
short-term capital losses are retained by a fund for reinvestment, requiring
federal income taxes to be paid thereon by the fund, the fund intends to elect
to treat such capital gains as having been distributed to shareholders. As a
result, each shareholder will report such capital gains as long-term capital
gains taxable to individual shareholders at a maximum 20% capital gains rate,
will be able to claim a pro rata share of federal income taxes paid by the fund
on such gains as a credit against personal federal income tax liability, and
will be entitled to increase the adjusted tax basis on fund shares by the
difference between a pro rata share of such gains owned and the individual tax
credit.
Distributions of investment company taxable income are taxable to
shareholders as ordinary income.
Dividends from domestic corporations are expected to comprise some portion
of the fund's gross income. To the extent that such dividends constitute any
of the fund's gross income, a portion of the income distributions of the fund
will be eligible for the deduction for dividends received by corporations.
Shareholders will be informed of the portion of dividends which so qualify.
The dividends-received deduction is reduced to the extent that either the fund
shares, or the underlying shares of stock held by the fund, with respect to
which dividends are received, are treated as debt-financed under federal income
tax law and is eliminated if the shares are deemed to have been held by the
shareholder or the fund, as the case may be, for less than 46 days.
Distributions of the excess of net long-term capital gains over net
short-term capital losses which the fund properly designates as "capital gain
dividends" generally will be taxable to individual shareholders at a maximum
20% capital gains rate, regardless of the length of time the shares of the fund
have been held by such shareholders. Such distributions are not eligible for
the dividends-received deduction. Any loss realized upon the redemption of
shares held at the time of redemption for six months or less from the date of
their purchase will be treated as a long-term capital loss to the extent of any
amounts treated as distributions of long-term capital gain during such
six-month period.
Distributions of investment company taxable income and net realized capital
gains will be taxable as described above, whether received in shares or in
cash. Shareholders electing to receive distributions in the form of additional
shares will have a cost basis for federal income tax purposes in each share so
received equal to the net asset value of a share on the reinvestment date.
All distributions of investment company taxable income and net realized
capital gain, whether received in shares or in cash, must be reported by each
shareholder subject to tax on his or her federal income tax return. Dividends
and capital gains distributions declared in October, November or December and
payable to shareholders of record in such a month will be deemed to have been
received by shareholders on December 31 if paid during January of the following
year. Redemptions of shares, including exchanges for shares of another
American Fund, may result in tax consequences (gain or loss) to the shareholder
and must also be reported on the shareholder's federal income tax return.
Distributions by the fund result in a reduction in the net asset value of
the fund's shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution would nevertheless be taxable to
the shareholder as ordinary income or capital gain as described above, even
though, from an investment standpoint, it may constitute a partial return of
capital. For this reason, investors should consider the tax implications of
buying shares just prior to a distribution. The price of shares purchased at
that time includes the amount of the forthcoming distribution. Those
purchasing just prior to a distribution will then receive a partial return of
capital upon the distribution, which will nevertheless be taxable to them.
Dividend and interest income received by the fund from sources outside the
U.S. may be subject to withholding and other taxes imposed by such foreign
jurisdictions. Tax conventions between certain countries and the U.S. may
reduce or eliminate these foreign taxes, however, and foreign countries
generally do not impose taxes on capital gains in respect of investments by
foreign investors.
The fund may make the election permitted under Section 853 of the Code so
that shareholders may (subject to limitations) be able to claim a credit or
deduction on their federal income tax returns for, and will be required to
treat as part of the amounts distributed to them, their pro rata portion of
qualified taxes paid by the Fund to foreign countries (which taxes relate
primarily to investment income). The fund may make an election under Section
853 of the Code, provided that more than 50% of the value of the total assets
of the fund at the close of the taxable year consists of securities in foreign
corporations. The foreign tax credit available to shareholders is subject to
certain limitations imposed by the Code.
Under the Code, gains or losses attributable to fluctuations in exchange
rates which occur between the time the fund accrues receivables or liabilities
denominated in a foreign currency and the time the fund actually collects such
receivables, or pays such liabilities, generally are treated as ordinary income
or ordinary loss. Similarly, on disposition of debt securities denominated in
a foreign currency and on disposition of certain futures contracts, forward
contracts and options, gains or losses attributable to fluctuations in the
value of foreign currency between the date of acquisition of the security or
contract and the date of disposition are also treated as ordinary gain or loss.
These gains or losses, referred to under the Code as "Section 988" gains or
losses, may increase or decrease the amount of the fund's investment company
taxable income to be distributed to its shareholders as ordinary income.
A portion of the difference between the issue price of zero coupon
securities and their face value ("original issue discount") is considered to be
income to the Fund each year, even though the fund will not receive cash
interest payments from these securities.
This original issue discount (imputed income) will comprise a part of the
investment company taxable income of the fund which must be distributed to
shareholders in order to maintain the qualification of the fund as a regulated
investment company and to avoid federal income tax at the level of the fund.
Shareholders will be subject to income tax on such original issue discount,
whether or not they elect to receive their distributions in cash.
If the fund invests in stock of certain passive foreign investment
companies, the fund may be subject to U.S. federal income taxation on a portion
of any "excess distribution" with respect to, or gain from the disposition of,
such stock. The tax would be determined by allocating such distribution or
gain ratably to each day of the fund's holding period for the stock. The
distribution or gain so allocated to any taxable year of the fund, other than
the taxable year of the excess distribution or disposition, would be taxed to
the fund at the highest ordinary income rate in effect for such year, and the
tax would be further increased by an interest charge to reflect the value of
the tax deferral deemed to have resulted from the ownership of the foreign
company's stock. Any amount of distribution or gain allocated to the taxable
year of the distribution or disposition would be included in the fund's
investment company taxable income and, accordingly, would not be taxable to the
fund to the extent distributed by the fund as a dividend to its
shareholders.
To avoid such tax and interest, the fund intends to elect to treat these
securities as sold on the last day of its fiscal year and recognize any gains
for tax purposes at that time. Deductions for losses are allowable only to the
extent of any prior recognized gains, and both gains and losses will be treated
as ordinary income or loss. The fund will be required to distribute any
resulting income even though it has not sold the security and received cash to
pay such distributions.
The fund will be required to report to the IRS all distributions of
investment company taxable income and capital gains as well as gross proceeds
from the redemption or exchange of fund shares, except in the case of certain
exempt shareholders. Under the backup withholding provisions of Section 3406
of the Code, distributions of investment company taxable income and capital
gains and proceeds from the redemption or exchange of the shares of a regulated
investment company may be subject to withholding of federal income tax at the
rate of 31% in the case of non-exempt shareholders who fail to furnish the
investment company with their taxpayer identification numbers and with required
certifications regarding their status under the federal income tax law.
Withholding may also be required if the fund is notified by the IRS or a broker
that the taxpayer identification number furnished by the shareholder is
incorrect or that the shareholder has previously failed to report interest or
dividend income. If the withholding provisions are applicable, any such
distributions and proceeds, whether taken in cash or reinvested in additional
shares, will be reduced by the amounts required to be withheld.
Shareholders of the fund may be subject to state and local taxes on
distributions received from the fund and on redemptions of the fund's
shares.
Each distribution is accompanied by a brief explanation of the form and
character of the distribution. In January of each year fund shareholders will
receive a statement of the federal income tax status of all distributions.
The foregoing discussion of U.S. federal income tax law relates solely to
the application of that law to U.S. persons, I.E., U.S. citizens and residents
and U.S. corporations, partnerships, trusts and estates. Each shareholder who
is not a U.S. person should consider the U.S. and foreign tax consequences of
ownership of shares of the fund, including the possibility that such a
shareholder may be subject to a U.S. withholding tax at a rate of 30% (or at a
lower rate under an applicable income tax treaty) on dividend income received
by him or her.
Shareholders should consult their tax advisers about the application of the
provisions of tax law described in this statement of additional information in
light of their particular 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>
FUND MINIMUM 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)
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 4.71 4.50 3.75
$100,000
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 -- 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
contingent deferred sales charge may be imposed on certain redemptions by these
accounts made within one year of purchase. 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: 1.00% on amounts of $1 million
to $4 million, 0.50% on amounts over $4 million to $10 million, and 0.25% on
amounts over $10 million.
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 American
Funds Service Company. 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 (i) for a single trust estate or fiduciary account, including
an employee benefit plan other than those described above or (ii) made for two
or more employee benefit plans of a single employer or of affiliated employers
as defined in the 1940 Act, again excluding employee benefit plans described
above, or (iii) 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, American Funds Service
Company, 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 1940 Act), 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, American Funds Service Company 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 American Funds
Service Company.
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. American
Funds Service Company arranges for the redemption by the fund of sufficient
shares, deposited by the shareholder with American Funds Service Company, 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 permit the fund to
direct American Funds Service Company 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
Orders for the fund's portfolio securities transactions are placed by the
Investment Adviser. The Investment Adviser strives to obtain the best
available prices in its portfolio transactions taking into account the costs
and promptness of executions. Fixed-income securities are generally traded on a
"net" basis with a dealer acting as principal for its own account without a
stated commission, although the price of the security usually includes a profit
to the dealer. In underwritten offerings, securities are usually purchased at a
fixed price which includes an amount of compensation to the dealer, generally
referred to as a concession or discount. On occasion, securities may be
purchased directly from an issuer, in which case no commissions or discounts
are paid. In the over-the-counter market, purchases and sales are transacted
directly with principal market-makers except in those circumstances where it
appears better prices and executions are available elsewhere.
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 funds or other funds served by the Investment
Adviser. The fund does not consider that they have an obligation to obtain the
lowest available commission rate to the exclusion of price, service and
qualitative considerations.
Subject to the above policy, when two or more brokers (either directly or
through their correspondent clearing agents) are in a position to offer
comparable prices and executions, preference may be given to brokers who have
sold shares of the funds or have provided investment research, statistical, and
other related services for the funds and or other funds served by the
Investment Adviser.
There are occasions on which 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. The fund will not pay a mark-up for
research in principal transactions.
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 -- Deloitte & Touche LLP, 1000 Wilshire Boulevard,
15th floor, Los Angeles, California 90017, has served as the fund's
independent accountants since the fund's inception, and will provide audit
services, prepare tax returns and review certain documents to be filed with the
Securities and Exchange Commission. The financial statements included in this
Statement of Additional Information have been so included in reliance on the
report of the independent auditors given on the authority of that firm as
experts in auditing and accounting.
SHAREHOLDER VOTING RIGHTS -- The fund does not hold annual meetings of
shareholders. However, significant matters that 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 will be provided at least semi-annually with reports showing the
investment portfolio, financial statements and other information. The fund's
annual financial statements will be audited by the fund's independent
accountants, Deloitte & Touche LLP, whose selection will be 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,
American Funds Service Company has taken steps to eliminate duplicate mailings
of shareholder reports. To receive additional copies of a report, shareholders
should contact American Funds Service Company.
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.
INVESTMENT RESULTS AND RELATED STATISTICS
The fund's yield will be computed by dividing the net investment income per
share earned during the period by the maximum offering price per share on the
last day of the period, according to the following formula:
YIELD = 2[(a-b/cd+1)/6/-1]
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period that
were entitled to receive dividends.
d = the maximum offering price per share on the last day of the period.
The average annual total return (T) will be computed by using the value at
the end of the period (ERV) of a hypothetical initial investment of $1,000 (P)
over a period of years (n) according to the following formula as required by
the Securities and Exchange Commission: P(1+T)/n/ = ERV.
In calculating average annual total return, the fund will assume: (1)
deduction of the maximum sales load of 5.75% from the $1,000 initial
investment; (2) reinvestment of dividends and distributions at net asset value
on the reinvestment date determined by the Board; and (3) a complete redemption
at the end of any period illustrated.
The fund may also, at times, calculate total return based on net asset value
per share (rather than the offering price), in which case the figure would not
reflect the effect of any sales charges which would have been paid if shares
were purchased during the period reflected in the computation. Total return
calculated in this manner will be higher. These total returns may be
calculated over periods in addition to those described above. Total return for
unmanaged indices will be calculated assuming reinvestment of dividends and
interest, but will not reflect any deductions for advisory fees, brokerage
costs or administrative expenses.
The fund may also calculate a distribution rate on a taxable and tax
equivalent basis. The distribution rate will be computed by dividing the
dividends paid by the fund over the last 12 months by the sum of the month-end
net asset value or maximum offering price and the capital gains paid over the
last 12 months. The distribution rate may differ from the yield.
The fund may include, in advertisements or in reports furnished to present
or prospective shareholders, information on its investment results and/or
comparisons of its investment results to various unmanaged indices (such as the
Morgan Stanley Capital International (MSCI) World Free Index, MSCI Emerging
Markets Free Index, and the Salomon Smith Barney New World Index) or results of
other mutual funds or investment or savings vehicles. The fund may also, from
time to time, combine its results with those of other funds in The American
Funds Group for purposes of illustrating investment strategies involving
multiple funds. For educational purposes, fund literature may contain
discussions and/or illustrations of volatility, risk tolerance, asset
allocation and investment strategies.
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.
The fund may illustrate the benefits of tax-deferral by comparing taxable
investments to investments made through tax-deferred retirement plans.
The fund may compare its investment results with the Consumer Price Index,
which is a measure of the average change in prices over time in a fixed market
basket of goods and services (E.G. food, clothing, fuels, transportation, and
other goods and services that people buy for day-to-day living).
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.
Also, the fund has different investment policies than the funds mentioned
above. These results are included solely for the purpose of informing
investors about the experience and history of the Investment Adviser.
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."
Financial Statements
New World Fund, Inc.
Statement of Assets and Liabilities
April 16, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Cash $175,000
Prepaid Offering Expenses 59,100
Total Assets 234,100
LIABILITIES:
Payable to CRMC (Note 4) 70,100
NET ASSETS: Equivalent to $22.08 per share on $164,000
7,427.8438 shares of $0.01 par value capital stock
issued and outstanding (authorized capital stock -
200,000,000 shares)(Note 1)
NET ASSETS CONSIST OF:
Paid-in-capital - Equivalent to $23.56 per share $175,000
Net Loss (11,000)
NET ASSETS $164,000
</TABLE>
New World Fund, Inc.
Statement of Operations
For the period from November 13, 1998 (inception) through April 16, 1999
<TABLE>
<CAPTION>
<S> <C>
Expenses (Note 4) $11,000
Net Loss ($11,000)
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. New World Fund, Inc. (the "fund") was organized on November 13, 1998 as a
Maryland corporation. To date, the fund has had no transactions other than
those relating to organization matters and the sale of 7,427.8438 shares of
capital stock for $175,000 to Capital Research and Management Company ("CRMC"),
the Investment Adviser. The fund's fiscal year ends on October 31. The fund
will upon declaration of effectiveness by the Securities and Exchange
Commission ("SEC"), be registered under the Investment Company Act of 1940, as
an open-end, diversified management investment company.
2. The fund has entered into an Investment Advisory and Service Agreement with
CRMC and a Principal Underwriting Agreement with American Funds Distributors,
Inc. ("AFD"). Pursuant to the Investment Advisory and Service Agreement with
CRMC, the fund will pay a monthly fee, accrued daily, at an annual rate of
0.85% of the average net assets.
3. It is the fund's policy to comply in its initial year and thereafter with
the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its net taxable income, including
any net realized gain on investments to its shareholders.
4. Organizational expenses are expensed as incurred. The fund has accrued a
payable to CRMC representing expenses paid on behalf of the fund. The fund
intends to repay CRMC upon commencement of operations. Organizational expenses
are primarily audit, legal, accounting and printing fees.
5. The fund recorded prepaid offering expenses relating to state and SEC
registration fees which will be amortized over the initial 60 day offering
period of the fund's shares.
Independent Auditors' Report
To the Board of Directors of New World Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of New
World Fund, Inc. (the "Fund"), as of April 16, 1999, and the related statement
of operations for the period from November 13, 1998 (inception) through April
16, 1999. These financial statements are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of New World Fund, Inc. at April
16, 1999, and the results of its operations for the period from November 13,
1998 (inception) through April 16, 1999, in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
Los Angeles, California
April 16, 1999
OTHER INFORMATION
Item 23. Exhibits.
a. On file (see SEC file nos. 811-9105 and 333-67455)
b. On file (see SEC file nos. 811-9105 and 333-67455)
c. Form of Share Certificate
d. Form of Investment Advisory and Service Agreement between the Registrant
and Capital Research and Management Company
e. Form of Principal Underwriting Agreement
f. None
g. Form of Custodian Agreement
h. Form of Shareholder Services Agreement between the Registrant and American
Funds Service Company
i. Legal Opinion
j. Consent of Independent Auditors
k. None
l. Investment letter from the Investment Adviser relating to initial shares
m. Form of Plan of Distribution adopted by the Registrant pursuant to rule
12b-1 under the 1940 Act
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."
Registrant 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
Registrant shall be consistent with the requirements of rule 484 under the
Securities Act of 1933. Furthermore, Registrant 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., 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., New World 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 None
Co-Chief Executive
Officer
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
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 - None
Institutional 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 - None
Institutional
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 - None
Institutional Investment
Services Division
L Mary E. Smith Vice President - None
Institutional 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, None
Treasurer
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
1940 Act, 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.
Registrant's records covering shareholder accounts are maintained and kept by
its 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 its 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 amended 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 16th day of April, 1999.
NEW WORLD FUND, INC.
/s/ William R. Grimsley
William R. Grimsley,
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this amendment to
Registration Statement has been signed below on April 16, 1999 by the following
persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C> <C>
(1) Principal Executive Officer:
/s/ William R. Grimsley Chairman of the Board
(William R. Grimsley)
(2) Principal Financial Officer and
Principal Accounting Officer:
/s/ R. Marcia Gould Treasurer
(R. Marcia Gould)
(3) Directors:
Elisabeth Allison* Director
Michael R. Bonsignore* Director
/s/ Gina H. Despres
Gina H. Despres Vice Chairman and Director
Robert A. Fox* Director
Alan Greenway* Director
Koichi Itoh* Director
William H. Kling* Director
John G. McDonald* Director
William I. Miller* Director
Kirk P. Pendleton* Director
Donald E. Petersen* Director
</TABLE>
*By /s/ Vincent P. Corti
(Vincent P. Corti, Attorney-in-Fact)
POWER OF ATTORNEY
I, Elisabeth Allison, the undersigned Director of New World Fund, Inc., a
Maryland corporation, do hereby constitute and appoint Vincent P. Corti, R.
Marcia Gould and Robert W. Lovelace, or any of them, to act as
attorneys-in-fact for and in my name, place and stead (1) to sign my name as a
Director of said Fund to any and all amendments to the Registration Statement
of New World Fund, Inc., File No. 333-67455 under the Securities Act of 1933 as
amended, said amendments to be filed with the Securities and Exchange
Commission, and to any and all reports, applications or renewal of applications
required by any State in the United States of America in which this Fund is
registered to sell shares, and (2) to deliver any and all such amendments to
such Registration Statement, so signed, for filing with the Securities and
Exchange Commission under the provisions of the Securities Act of 1933 as
amended, granting to said attorneys-in-fact, and each of them, full power and
authority to do and perform every act and thing whatsoever requisite and
necessary to be done in and about the premises as fully to all intents and
purposes as the undersigned might or could do if personally present, hereby
ratifying and approving the acts of said attorneys-in-fact.
EXECUTED at Sydney, Australia, this 16th day of April, 1999.
/s/ Elisabeth Allison
Elisabeth Allison
POWER OF ATTORNEY
I, Michael R. Bonsignore, the undersigned Director of New World Fund, Inc., a
Maryland corporation, do hereby constitute and appoint Vincent P. Corti, R.
Marcia Gould and Robert W. Lovelace, or any of them, to act as
attorneys-in-fact for and in my name, place and stead (1) to sign my name as a
Director of said Fund to any and all amendments to the Registration Statement
of New World Fund, Inc., File No. 333-67455 under the Securities Act of 1933 as
amended, said amendments to be filed with the Securities and Exchange
Commission, and to any and all reports, applications or renewal of applications
required by any State in the United States of America in which this Fund is
registered to sell shares, and (2) to deliver any and all such amendments to
such Registration Statement, so signed, for filing with the Securities and
Exchange Commission under the provisions of the Securities Act of 1933 as
amended, granting to said attorneys-in-fact, and each of them, full power and
authority to do and perform every act and thing whatsoever requisite and
necessary to be done in and about the premises as fully to all intents and
purposes as the undersigned might or could do if personally present, hereby
ratifying and approving the acts of said attorneys-in-fact.
EXECUTED at Sydney, Australia, this 16th day of April, 1999.
/s/ Michael R. Bonsignore
Michael R. Bonsignore
POWER OF ATTORNEY
I, Gina H. Despres, the undersigned Director of New World Fund, Inc., a
Maryland corporation, do hereby constitute and appoint Vincent P. Corti, R.
Marcia Gould and Robert W. Lovelace, or any of them, to act as
attorneys-in-fact for and in my name, place and stead (1) to sign my name as a
Director of said Fund to any and all amendments to the Registration Statement
of New World Fund, Inc., File No. 333-67455 under the Securities Act of 1933 as
amended, said amendments to be filed with the Securities and Exchange
Commission, and to any and all reports, applications or renewal of applications
required by any State in the United States of America in which this Fund is
registered to sell shares, and (2) to deliver any and all such amendments to
such Registration Statement, so signed, for filing with the Securities and
Exchange Commission under the provisions of the Securities Act of 1933 as
amended, granting to said attorneys-in-fact, and each of them, full power and
authority to do and perform every act and thing whatsoever requisite and
necessary to be done in and about the premises as fully to all intents and
purposes as the undersigned might or could do if personally present, hereby
ratifying and approving the acts of said attorneys-in-fact.
EXECUTED at Sydney, Australia, this 16th day of April, 1999.
/s/ Gina H. Despres
Gina H. Despres
POWER OF ATTORNEY
I, Robert A. Fox, the undersigned Director of New World Fund, Inc., a Maryland
corporation, do hereby constitute and appoint Vincent P. Corti, R. Marcia Gould
and Robert W. Lovelace, or any of them, to act as attorneys-in-fact for and in
my name, place and stead (1) to sign my name as a Director of said Fund to any
and all amendments to the Registration Statement of New World Fund, Inc., File
No. 333-67455 under the Securities Act of 1933 as amended, said amendments to
be filed with the Securities and Exchange Commission, and to any and all
reports, applications or renewal of applications required by any State in the
United States of America in which this Fund is registered to sell shares, and
(2) to deliver any and all such amendments to such Registration Statement, so
signed, for filing with the Securities and Exchange Commission under the
provisions of the Securities Act of 1933 as amended, granting to said
attorneys-in-fact, and each of them, full power and authority to do and perform
every act and thing whatsoever requisite and necessary to be done in and about
the premises as fully to all intents and purposes as the undersigned might or
could do if personally present, hereby ratifying and approving the acts of said
attorneys-in-fact.
EXECUTED at Sydney, Australia, this 16th day of April, 1999.
/s/ Robert A. Fox
Robert A. Fox
POWER OF ATTORNEY
I, William R. Grimsley, the undersigned Director of New World Fund, Inc., a
Maryland corporation, do hereby constitute and appoint Vincent P. Corti, R.
Marcia Gould and Robert W. Lovelace, or any of them, to act as
attorneys-in-fact for and in my name, place and stead (1) to sign my name as a
Director of said Fund to any and all amendments to the Registration Statement
of New World Fund, Inc., File No. 333-67455 under the Securities Act of 1933 as
amended, said amendments to be filed with the Securities and Exchange
Commission, and to any and all reports, applications or renewal of applications
required by any State in the United States of America in which this Fund is
registered to sell shares, and (2) to deliver any and all such amendments to
such Registration Statement, so signed, for filing with the Securities and
Exchange Commission under the provisions of the Securities Act of 1933 as
amended, granting to said attorneys-in-fact, and each of them, full power and
authority to do and perform every act and thing whatsoever requisite and
necessary to be done in and about the premises as fully to all intents and
purposes as the undersigned might or could do if personally present, hereby
ratifying and approving the acts of said attorneys-in-fact.
EXECUTED at Sydney, Australia, this 16th day of April, 1999.
/s/ William R. Grimsley
William R. Grimsley
POWER OF ATTORNEY
POWER OF ATTORNEY
I, Alan Greenway, the undersigned Director of New World Fund, Inc., a Maryland
corporation, do hereby constitute and appoint Vincent P. Corti, R. Marcia Gould
and Robert W. Lovelace, or any of them, to act as attorneys-in-fact for and in
my name, place and stead (1) to sign my name as a Director of said Fund to any
and all amendments to the Registration Statement of New World Fund, Inc., File
No. 333-67455 under the Securities Act of 1933 as amended, said amendments to
be filed with the Securities and Exchange Commission, and to any and all
reports, applications or renewal of applications required by any State in the
United States of America in which this Fund is registered to sell shares, and
(2) to deliver any and all such amendments to such Registration Statement, so
signed, for filing with the Securities and Exchange Commission under the
provisions of the Securities Act of 1933 as amended, granting to said
attorneys-in-fact, and each of them, full power and authority to do and perform
every act and thing whatsoever requisite and necessary to be done in and about
the premises as fully to all intents and purposes as the undersigned might or
could do if personally present, hereby ratifying and approving the acts of said
attorneys-in-fact.
EXECUTED at Sydney, Australia, this 16th day of April, 1999.
/s/ Alan Greenway
Alan Greenway
I, Koichi Itoh, the undersigned Director of New World Fund, Inc., a Maryland
corporation, do hereby constitute and appoint Vincent P. Corti, R. Marcia Gould
and Robert W. Lovelace, or any of them, to act as attorneys-in-fact for and in
my name, place and stead (1) to sign my name as a Director of said Fund to any
and all amendments to the Registration Statement of New World Fund, Inc., File
No. 333-67455 under the Securities Act of 1933 as amended, said amendments to
be filed with the Securities and Exchange Commission, and to any and all
reports, applications or renewal of applications required by any State in the
United States of America in which this Fund is registered to sell shares, and
(2) to deliver any and all such amendments to such Registration Statement, so
signed, for filing with the Securities and Exchange Commission under the
provisions of the Securities Act of 1933 as amended, granting to said
attorneys-in-fact, and each of them, full power and authority to do and perform
every act and thing whatsoever requisite and necessary to be done in and about
the premises as fully to all intents and purposes as the undersigned might or
could do if personally present, hereby ratifying and approving the acts of said
attorneys-in-fact.
EXECUTED at Sydney, Australia, this 16th day of April, 1999.
/s/ Koichi Itoh
Koichi Itoh
POWER OF ATTORNEY
I, William H. Kling, the undersigned Director of New World Fund, Inc., a
Maryland corporation, do hereby constitute and appoint Vincent P. Corti, R.
Marcia Gould and Robert W. Lovelace, or any of them, to act as
attorneys-in-fact for and in my name, place and stead (1) to sign my name as a
Director of said Fund to any and all amendments to the Registration Statement
of New World Fund, Inc., File No. 333-67455 under the Securities Act of 1933 as
amended, said amendments to be filed with the Securities and Exchange
Commission, and to any and all reports, applications or renewal of applications
required by any State in the United States of America in which this Fund is
registered to sell shares, and (2) to deliver any and all such amendments to
such Registration Statement, so signed, for filing with the Securities and
Exchange Commission under the provisions of the Securities Act of 1933 as
amended, granting to said attorneys-in-fact, and each of them, full power and
authority to do and perform every act and thing whatsoever requisite and
necessary to be done in and about the premises as fully to all intents and
purposes as the undersigned might or could do if personally present, hereby
ratifying and approving the acts of said attorneys-in-fact.
EXECUTED at Sydney, Australia, this 16th day of April, 1999.
/s/ William H. Kling
William H. Kling
POWER OF ATTORNEY
I, John G. McDonald, the undersigned Director of New World Fund, Inc., a
Maryland corporation, do hereby constitute and appoint Vincent P. Corti, R.
Marcia Gould and Robert W. Lovelace, or any of them, to act as
attorneys-in-fact for and in my name, place and stead (1) to sign my name as a
Director of said Fund to any and all amendments to the Registration Statement
of New World Fund, Inc., File No. 333-67455 under the Securities Act of 1933 as
amended, said amendments to be filed with the Securities and Exchange
Commission, and to any and all reports, applications or renewal of applications
required by any State in the United States of America in which this Fund is
registered to sell shares, and (2) to deliver any and all such amendments to
such Registration Statement, so signed, for filing with the Securities and
Exchange Commission under the provisions of the Securities Act of 1933 as
amended, granting to said attorneys-in-fact, and each of them, full power and
authority to do and perform every act and thing whatsoever requisite and
necessary to be done in and about the premises as fully to all intents and
purposes as the undersigned might or could do if personally present, hereby
ratifying and approving the acts of said attorneys-in-fact.
EXECUTED at Sydney, Australia, this 16th day of April, 1999.
/s/ John G. McDonald
John G. McDonald
POWER OF ATTORNEY
I, William I. Miller, the undersigned Director of New World Fund, Inc., a
Maryland corporation, do hereby constitute and appoint Vincent P. Corti, R.
Marcia Gould and Robert W. Lovelace, or any of them, to act as
attorneys-in-fact for and in my name, place and stead (1) to sign my name as a
Director of said Fund to any and all amendments to the Registration Statement
of New World Fund, Inc., File No. 333-67455 under the Securities Act of 1933 as
amended, said amendments to be filed with the Securities and Exchange
Commission, and to any and all reports, applications or renewal of applications
required by any State in the United States of America in which this Fund is
registered to sell shares, and (2) to deliver any and all such amendments to
such Registration Statement, so signed, for filing with the Securities and
Exchange Commission under the provisions of the Securities Act of 1933 as
amended, granting to said attorneys-in-fact, and each of them, full power and
authority to do and perform every act and thing whatsoever requisite and
necessary to be done in and about the premises as fully to all intents and
purposes as the undersigned might or could do if personally present, hereby
ratifying and approving the acts of said attorneys-in-fact.
EXECUTED at Sydney, Australia, this 16th day of April, 1999.
/s/ William I. Miller
William I. Miller
POWER OF ATTORNEY
I, Kirk P. Pendleton, the undersigned Director of New World Fund, Inc., a
Maryland corporation, do hereby constitute and appoint Vincent P. Corti, R.
Marcia Gould and Robert W. Lovelace, or any of them, to act as
attorneys-in-fact for and in my name, place and stead (1) to sign my name as a
Director of said Fund to any and all amendments to the Registration Statement
of New World Fund, Inc., File No. 333-67455 under the Securities Act of 1933 as
amended, said amendments to be filed with the Securities and Exchange
Commission, and to any and all reports, applications or renewal of applications
required by any State in the United States of America in which this Fund is
registered to sell shares, and (2) to deliver any and all such amendments to
such Registration Statement, so signed, for filing with the Securities and
Exchange Commission under the provisions of the Securities Act of 1933 as
amended, granting to said attorneys-in-fact, and each of them, full power and
authority to do and perform every act and thing whatsoever requisite and
necessary to be done in and about the premises as fully to all intents and
purposes as the undersigned might or could do if personally present, hereby
ratifying and approving the acts of said attorneys-in-fact.
EXECUTED at Sydney, Australia, this 16th day of April, 1999.
/s/ Kirk P. Pendleton
Kirk P. Pendleton
POWER OF ATTORNEY
I, Donald E. Petersen, the undersigned Director of New World Fund, Inc., a
Maryland corporation, do hereby constitute and appoint Vincent P. Corti, R.
Marcia Gould and Robert W. Lovelace, or any of them, to act as
attorneys-in-fact for and in my name, place and stead (1) to sign my name as a
Director of said Fund to any and all amendments to the Registration Statement
of New World Fund, Inc., File No. 333-67455 under the Securities Act of 1933 as
amended, said amendments to be filed with the Securities and Exchange
Commission, and to any and all reports, applications or renewal of applications
required by any State in the United States of America in which this Fund is
registered to sell shares, and (2) to deliver any and all such amendments to
such Registration Statement, so signed, for filing with the Securities and
Exchange Commission under the provisions of the Securities Act of 1933 as
amended, granting to said attorneys-in-fact, and each of them, full power and
authority to do and perform every act and thing whatsoever requisite and
necessary to be done in and about the premises as fully to all intents and
purposes as the undersigned might or could do if personally present, hereby
ratifying and approving the acts of said attorneys-in-fact.
EXECUTED at Sydney, Australia, this 16th day of April, 1999.
/s/ Donald E. Petersen
Donald E. Petersen
NUMBER SHARES
(Void)
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
NEW WORLD FUND, INC.
This Certifies that is the owner of
*SEE REVERSE FOR CERTAIN ABBREVIATIONS
CUSIP 649 280 10 4
fully paid and nonassessable Shares of the Capital Stock of New World Fund,
Inc., each of the par value of One Cent [$.01], transferable on the books of
the Corporation by the holder thereof in person or by duly authorized attorney
upon surrender of this certificate properly endorsed. This certificate is not
valid unless countersigned by the Transfer Agent.
Witness, the facsimile signatures of its duly authorized officers.
Dated:
/s/ Vincent P. Corti /s/ William R. Grimsley
Secretary Chairman of the Board
COUNTERSIGNED
AMERICAN FUNDS SERVICE COMPANY
TRANSFER AGENT
BY---------------------------
AUTHORIZED SIGNATURE
------------------------------------------------------------------------------
PLEASE DETACH AND DISCARD UNLESS CHANGES ARE REQUIRED
CERTIFICATE NEW WORLD FUND, INC.
NUMBER SHARES
ACCOUNT NO. ALPHA CODE DEALER NUMBER TRADE DATE
CHANGE NOTICE: IF THE ABOVE INFORMATION IS INCORRECT OR MISSING,
PLEASE PRINT THE CORRECT INFORMATION BELOW AND RETURN TO:
--------------------------------------------------------------
--------------------------------------------------------------
TAXPAYER I.D. NUMBER------------------------------------------
EXPLANATION OF ABBREVIATIONS
* The following abbreviations, when used in the registration on the face of
this certificate, shall have the meanings assigned below:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
ADM --Administratrix FBO --For the benefit of TTEE --Trustee
--Administrator
COM PROP --Community Property GDN --Guardian U/A --Under Agreement
CUST --Custodian JT TEN --Joint tenants UGMA/ --Gift to minors act in effect in the state
with right of (State) indicated
survivorship
DTD --Dated LIFE TEN --Life tenant UTMA/ --Transfers to minors act in effect in the state
(State) indicated
EST --Estate TR --Trust U/W --Last will and testament
--Of Estate of --Under last will and testament of
--Of will of
--Under the will of
--Of the will of
ET AL --(and) Others TEN COM --Tenants in common
EXEC --Executor TEN ENT --Tenants by the entireties
--Executrix
</TABLE>
Note: Abbreviations refer where appropriate to the singular or plural, male or
female. Other abbreviations may also be used, including U.S. Post Office
Department two-letter state abbreviations.
THE CORPORATION WILL FURNISH TO ANY SHAREHOLDER UPON REQUEST AND WITHOUT CHARGE
A FULL STATEMENT OF THE DESIGNATIONS, PREFERENCES, LIMITATIONS AND RELATIVE
RIGHTS OF THE SHARES OF EACH CLASS AUTHORIZED TO BE ISSUED, THE VARIATIONS IN
THE RELATIVE RIGHTS AND PREFERENCES BETWEEN THE SHARES OF EACH SERIES OF SHARES
OF THE CORPORATION SO FAR AS THE SAME HAVE BEEN FIXED AND DETERMINED, AND THE
AUTHORITY OF THE BOARD OF DIRECTORS TO FIX AND DETERMINE THE RELATIVE RIGHTS
AND PREFERENCES OF CLASSES AND SERIES OF THE SHARES OF THE CORPORATION. SUCH
REQUEST MAY BE MADE TO THE SECRETARY OF THE CORPORATION.
NOTE: AS STATED IN THE FUND'S ARTICLES OF INCORPORATION, THIS CERTIFICATE
REPRESENTING SHARES OF CAPITAL STOCK OF THE FUND MAY BE REDEEMED WITHOUT THE
CONSENT OR APPROVAL OF THE SHAREHOLDER FOR THE THEN CURRENT NET ASSET VALUE PER
SHARE IF AT SUCH TIME THE SHAREHOLDER OWNS OF RECORD SHARES HAVING AN AGGREGATE
NET ASSET VALUE OF LESS THAN THE MINIMUM INITIAL INVESTMENT AMOUNT.
REQUIREMENTS: The signature(s) on this assignment must correspond exactly with
the name(s) as written upon the face of the certificate in every particular.
Except as described below, in order to redeem shares, your signature must
be guaranteed by a bank, savings, association, credit union, or member firm of
a domestic stock exchange or the National Association of Securities Dealers,
Inc. that is an eligible guarantor prior toobtaining the signature guarantee.
A signature guarantee is not currently required for any redemption of
$50,000 or less provided the redemption check is made payable to the registered
shareholder(s) and is mailed to the address of record. However, the fund
reserves the right to require signature guarantee(s) on all redemptions.
For value received, the undersigned hereby sell, assign, and transfer
- --------- shares of capital stock represented by this certificate to:
- ------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
and do hereby irrevocably constitute and appoint -------- attorney to transfer
the said stock on the books of the corporation with full power
of substitution.
Dated: ----------------------
----------------------------------------
Owner
----------------------------------------
Signature of Co-Owner, if any
IMPORTANT: BEFORE SIGNING, PLEASE READ AND COMPLY WITH REQUIREMENTS PRINTED
ABOVE.
Signatures(s) guaranteed by:
FORM OF
INVESTMENT ADVISORY AND SERVICE AGREEMENT
THIS AGREEMENT, dated and effective as of the 16th day of April 1999, is made
and entered into by and between NEW WORLD FUND, INC., a Maryland corporation,
(hereinafter called the "Fund"), and CAPITAL RESEARCH AND MANAGEMENT COMPANY, a
Delaware corporation, (hereinafter called the "Investment Adviser").
W I T N E S S E T H
The Fund is an open-end diversified investment company of the management type,
registered under the Investment Company Act of 1940 (the "1940 Act"). The
Investment Adviser is registered under the Investment Advisers Act of 1940 and
is engaged in the business of providing investment advisory and related
services to the Fund and to other investment companies.
NOW, THEREFORE, in consideration of the premises and the mutual undertaking of
the parties, it is covenanted and agreed as follows:
1. The Investment Adviser shall determine what securities and other assets
shall be purchased or sold by the Fund.
2. The Investment Adviser shall furnish the services of persons to perform the
executive, administrative, clerical, and bookkeeping functions of the Fund,
including the daily determination of net asset value per share. The Investment
Adviser shall pay the compensation and travel expenses of all such persons, and
they shall serve without any additional compensation from the Fund. The
Investment Adviser shall also, at its expense, provide the Fund with necessary
office space (which may be in the offices of the Investment Adviser); all
necessary office equipment and utilities; and general purpose forms, supplies,
and postage used at the offices of the Fund.
3. The Fund shall pay all its expenses not assumed by the Investment Adviser as
provided herein. Such expenses shall include, but shall not be limited to,
expenses incurred in connection with the organization of the Fund, its
qualification to do business as a foreign corporation in the State of
California, and its registration as an investment company under the 1940 Act;
custodian, stock transfer and dividend disbursing fees and expenses;
distribution expenses pursuant to a plan under rule 12b-1 under the 1940 Act;
costs of designing and of printing and mailing to its shareholders reports,
prospectuses, proxy statements, and notices to its shareholders; taxes;
expenses of the issuance, sale, redemption, or repurchase of shares of the Fund
(including registration and qualification expenses); legal and auditing fees
and expenses; compensation, fees, and expenses paid to directors not affiliated
with the Investment Adviser; association dues; and costs of any share
certificates, stationery and forms prepared exclusively for the Fund.
4. The Fund shall pay to the Investment Adviser on or before the tenth (10th)
day of each month, as compensation for the services rendered by the Investment
Adviser during the preceding month a fee, which shall be accrued daily,
calculated at the annual rate of:
.85% of net assets.
For the purposes hereof, the net assets of the Fund shall be determined in the
manner set forth in the Articles of Incorporation and Prospectus of the Fund.
The advisory fee shall be payable for the period commencing on the date on
which operations of the Fund begin and ending on the date of termination hereof
and shall be prorated for any fraction of a month at the termination of such
period.
5. The Investment Adviser agrees that in the event the expenses of the Fund
(with the exclusion of interest, taxes, brokerage costs, extraordinary expenses
such as litigation and acquisitions or other expenses excludable under
applicable state securities laws or regulations) for any fiscal year ending on
a date on which this Investment Advisory and Service 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.
6. This Agreement may be terminated at any time, without payment of any
penalty, by the Directors of the Fund or by vote of a majority (within the
meaning of the 1940 Act) of the outstanding voting securities of the Fund, on
sixty (60) days' written notice to the Investment Adviser, or by the Investment
Adviser on like notice to the Fund. Unless sooner terminated in accordance
with this provision, this Agreement shall continue until December 31, 2000. It
may thereafter be renewed from year to year by mutual consent; provided that
such renewal shall be specifically approved at least annually by the Board of
Directors of the Fund, or by vote of a majority (within the meaning of the 1940
Act) of the outstanding voting securities of the Fund. In either event, it
must be approved by a majority of those Directors who are not parties to such
Agreement nor interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
7. This Agreement shall not be assignable by either party hereto, and in the
event of assignment (within the meaning of the 1940 Act) by the Investment
Adviser shall automatically be terminated forthwith.
8. Nothing contained in this Agreement shall be construed to prohibit the
Investment Adviser from performing investment advisory, management, or
distribution services for other investment companies and other persons or
companies, nor to prohibit affiliates of the Investment Adviser from engaging
in such businesses or in other related or unrelated businesses.
9. The Investment Adviser shall not be liable to the Fund or its stockholders
for any error of judgment, act, or omission not involving willful misfeasance,
bad faith, gross negligence, or reckless disregard of its obligations and
duties hereunder.
10. It is understood that the name, "American Funds" and "Capital" or any
derivatives thereof or logo associated with those names are the valuable
property of the Investment Adviser and its affiliates, and that the Fund shall
have the right to use such names (or derivatives or logos) only so long as this
Agreement shall continue in effect. Upon termination of this Agreement the
Fund shall forthwith cease to use such names (or derivatives or logos).
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in duplicate original by their duly authorized officers.
NEW WORLD FUND, INC.
By
Chairman of the Board
By
Secretary
CAPITAL RESEARCH AND MANAGEMENT
COMPANY
By
Chairman of the Board
By
Secretary
FORM OF
PRINCIPAL UNDERWRITING AGREEMENT
THIS PRINCIPAL UNDERWRITING AGREEMENT, between New World Fund, Inc., a Maryland
corporation (the "Fund"), and AMERICAN FUNDS DISTRIBUTORS, INC., a California
corporation ("AFD").
W I T N E S S E T H:
WHEREAS, the Fund is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end diversified investment company which
offers shares of common stock and it is a part of the business of the Fund, and
affirmatively in the interest of the Fund, to offer shares of the Fund in an
initial offering during a period that shall terminate on the settlement date,
June 17, 1999, and thereafter either from time to time or continuously as
determined by the Fund's officers subject to authorization by its Board of
Directors; and
WHEREAS, AFD is engaged in the business of promoting the distribution of shares
of investment companies through securities broker-dealers; and
WHEREAS, the Fund and AFD wish to enter into an agreement with each other to
promote the distribution of the shares of the Fund and of all series of the
Fund which may be established in the future;
NOW, THEREFORE, the parties agree as follows:
1. (a) AFD shall be the exclusive principal underwriter for the sale of the
shares of the Fund and of each series of the Fund which may be established in
the future, except as otherwise provided pursuant to the following subsection
(b). The terms "shares of Fund" or "shares" as used herein shall mean shares
of common stock of the Fund and each series which may be established in the
future and become covered by this Agreement in accordance with Section 21 of
this Agreement..
(b) The Fund may, upon 60 days' written notice to AFD, from time to time
designate other principal underwriters of its shares with respect to areas
other than the North American continent, Hawaii, Puerto Rico, and such
countries or other jurisdictions as to which the Fund may have expressly waived
in writing its right to make such designation. In the event of such
designation, the right of AFD under this Agreement to sell shares in the areas
so designated shall terminate, but this Agreement shall remain otherwise in
full force and effect until terminated in accordance with the other provisions
hereof.
2. In the sale of shares of the Fund, AFD shall act as agent of the Fund except
in any transaction in which AFD sells such shares as a dealer to the public, in
which event AFD shall act as principal for its own account.
3. The Fund shall sell shares only through AFD, except that the Fund may, to
the extent permitted by the 1940 Act and the rules and regulations promulgated
thereunder or pursuant thereto, at any time:
(a) issue shares to any corporation, association, trust, partnership or other
organization, or its, or their, security holders, beneficiaries or members, in
connection with a merger, consolidation or reorganization to which the Fund is
a party, or in connection with the acquisition of all or substantially all the
property and assets of such corporation, association, Fund, partnership or
other organization;
(b) issue shares at net asset value to the holders of shares of capital stock
or beneficial interest of other investment companies served as investment
adviser by any affiliated company or companies of The Capital Group Companies,
Inc., to the extent of all or any portion of amounts received by such
shareholders upon redemption or repurchase of their shares by the other
investment companies;
(c) issue shares at net asset value to its shareholders in connection with the
reinvestment of dividends paid and other distributions made by the Fund;
(d) issue shares at net asset value to persons entitled to purchase shares at
net asset value without sales charge or contingent deferred sales charge as
described in the current prospectus which is part of the Fund's Registration
Statement in effect under the Securities Act of 1933, as amended, for each
series issued by the Fund at the time of such offer or sale (the "Prospectus").
4. AFD shall devote its best efforts to the sale of shares of the Fund and
shares of any other mutual funds served as investment adviser by affiliated
companies of The Capital Group Companies, Inc., and insurance contracts funded
by shares of such mutual funds, for which AFD has been authorized to act as a
principal underwriter for the sale of shares. AFD shall maintain a sales
organization suited to the sale of shares of the Fund and shall use its best
efforts to effect such sales in jurisdictions as to which the Fund shall have
expressly waived in writing its right to designate another principal
underwriter pursuant to subsection 1(b) hereof, and shall effect and maintain
appropriate qualification to do so in all those jurisdictions in which it sells
or offers shares for sale and in which qualification is required.
5. Within the United States of America, all dealers to whom AFD shall offer and
sell shares must be duly licensed and qualified to sell shares of the Fund.
Shares sold to dealers shall be for resale by such dealers only at the public
offering price set forth in the current Prospectus. AFD shall not, without the
consent of the Fund, sell or offer for sale any shares of a series issued by
the Fund other than as principal underwriter pursuant to this Agreement.
6. In its sales to dealers, it shall be the responsibility of AFD to insure
that such dealers are appropriately qualified to transact business in the
shares under applicable laws, rules and regulations promulgated by such
national, state, local or other governmental or quasi-governmental authorities
as may in a particular instance have jurisdiction.
7. The applicable public offering price of shares shall be the price which is
equal to the net asset value per share as shall be determined by the Fund in
the manner and at the time or times set forth in and subject to the provisions
of the Prospectus of the Fund.
8. All orders for shares received by AFD shall, unless rejected by AFD or the
Fund, be accepted by AFD immediately upon receipt and confirmed at an offering
price determined in accordance with the provisions of the Prospectus and the
1940 Act, and applicable rules in effect thereunder. AFD shall not hold orders
subject to acceptance nor otherwise delay their execution. The provisions of
this Section shall not be construed to restrict the right of the Fund to
withhold shares from sale under Section 16 hereof.
9. The Fund or its transfer agent shall be promptly advised of all orders
received, and shall cause shares to be issued upon payment therefor in New York
or Los Angeles Clearing House Funds.
10. AFD shall adopt and follow procedures as approved by the officers of the
Fund for the confirmation of sales to dealers, the collection of amounts
payable by dealers on such sales, and the cancellation of unsettled
transactions, as may be necessary to comply with the requirements of the
Commission or the National Association of Securities Dealers, Inc. ("NASD"), as
such requirements may from time to time exist.
11. The compensation for the services of AFD as a principal underwriter under
this Agreement shall be (i) that part of the sales charge which is retained by
AFD after allowance of discounts to dealers as set forth in the effective
prospectus which is part of the Fund's Registration Statement in effect under
the Securities Act of 1933, as amended, and (ii) amounts payable to AFD as
reimbursement of distribution expenses pursuant to the Fund's Plan of
Distribution under Rule 12b-1 under the 1940 Act.
12. The Fund agrees to use its best efforts to maintain its registration as a
diversified open-end management investment company under the 1940 Act.
13. The Fund agrees to use its best efforts to maintain an effective Prospectus
under the Securities Act of 1933, as amended, and warrants that such Prospectus
will contain all statements required by and will conform with the requirements
of such Securities Act of 1933 and the rules and regulations thereunder, and
that no part of any such Prospectus, at the time the Registration Statement of
which it is a part becomes effective, will contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein,
or necessary to make the statements therein not misleading. AFD agrees and
warrants that it will not in the sale of shares use any Prospectus, advertising
or sales literature not approved by the Fund or its officers nor make any
untrue statement of a material fact nor omit the stating of a material fact
necessary in order to make the statements made, in the light of the
circumstances under which they are made, not misleading. AFD agrees to
indemnify and hold the Fund harmless from any and all loss, expense, damage and
liability resulting from a breach of the agreements and warranties in this
Section contained, or from the use of any sales literature, information,
statistics or other aid or device employed in connection with the sale of
shares.
14. The expense of each printing of each Prospectus and each revision thereof
or addition thereto deemed necessary by the Fund's officers to meet the
requirements of applicable laws shall be divided between the Fund, AFD and any
other principal underwriter of the shares of the Fund as follows:
(a) the Fund shall pay the typesetting and make-ready charges;
(b) the printing charges shall be prorated between the Fund, AFD, and any other
principal underwriter(s) in accordance with the number of copies each receives;
and
(c) expenses incurred in connection with the foregoing, other than to meet the
requirements of the Securities Act of 1933, as amended, or other applicable
laws, shall be borne by AFD, except in the event such incremental expenses are
incurred at the request of any other principal underwriter(s) in which case
such incremental expenses shall be borne by the principal underwriter(s) making
the request.
15. The Fund agrees to use its best efforts to qualify and maintain the
qualification of an appropriate number of the shares of each series it offers
for sale under the securities laws of such states as AFD and the Fund may
approve. Any such qualification for any series may be withheld, terminated or
withdrawn by the Fund at any time in its discretion. The expense of
qualification and maintenance of qualification shall be borne by the Fund, but
AFD shall furnish such information and other material relating to its affairs
and activities as may be required by the Fund or its counsel in connection with
such qualifications.
16. The Fund may withhold shares of any series from sale in any jurisdiction
temporarily or permanently if, in the opinion of its counsel, such offer or
sale would be contrary to law or if the Directors or the President or any Vice
President of the Fund determines that such offer or sale is not in the best
interest of the Fund. The Fund will give prompt notice to AFD of any
withholding and will indemnify it against any loss suffered by AFD as a result
of such withholding by reason of nondelivery of shares of any series after a
good faith confirmation by AFD of sales thereof prior to receipt of notice of
such withholding.
17. (a) This Agreement may be terminated at any time, without payment of any
penalty, as to the Fund or any series on sixty (60) days' written notice by AFD
to the Fund.
(b) This Agreement may be terminated as to the Fund or any series by either
party upon five (5) days' written notice to the other party in the event that
the Securities and Exchange Commission has issued an order or obtained an
injunction or other court order suspending effectiveness of the Registration
Statement covering the shares of the Fund or such series.
(c) This Agreement may be terminated as to any series upon five (5) days'
written notice to AFD provided either of the following events has occurred:
(i) The NASD has expelled AFD or suspended its membership in that
organization;
(ii) the qualification, registration, license or right of AFD to sell shares
of any series in a particular state has been suspended or canceled by the State
of California or any other state in which sales of the shares of the Fund or
such series during the most recent 12-month period exceeded 10% of all shares
of such series sold by AFD during such period.
(d) This Agreement may be terminated as to the Fund or any series at any time
on sixty (60) days' written notice to AFD without the payment of any penalty,
by vote of a majority of the members of the Board of Directors of the Fund who
are not interested persons of the Fund and have no direct or indirect financial
interest in the operation of the Plan of Distribution or this Agreement or any
other agreements related to the Plan of Distribution (the "Independent
Directors") or by vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of the Fund or such series.
18. This Agreement shall not be assignable by either party hereto and in the
event of assignment shall automatically terminate forthwith. The term
"assignment" shall have the meaning set forth in the 1940 Act.
19. No provision of this Agreement shall protect or purport to protect AFD
against any liability to the Fund or holders of its shares for which AFD would
otherwise be liable by reason of willful misfeasance, bad faith, or gross
negligence.
20. This Agreement shall become effective on April 16, 1999. Unless sooner
terminated in accordance with the other provisions hereof, this Agreement shall
continue in effect until December 31, 2000, and shall continue in effect from
year to year thereafter but only so long as such continuance is specifically
approved at least annually by (i) the vote of a majority of the Independent
Directors of the Fund cast in person at a meeting called for the purpose of
voting on such approval, and (ii) the vote of either a majority of the entire
Board of Directors of the Fund or a majority (within the meaning of the 1940
Act) of the outstanding voting securities of the Fund.
21. If the Fund shall at any time issue shares in more than one series, this
Agreement shall take effect with respect to such series of the Fund which may
be established in the future at such time as it has been approved as to such
series by vote of the Board of Directors and the Independent Directors in
accordance with Section 20. The Agreement as approved with respect to any
series shall specify the compensation payable to AFD pursuant to Section 11, as
well as any provisions which may differ from those herein with respect to such
series, subject to approval in writing by AFD.
This Agreement may be approved, amended, continued or renewed with respect to a
series as provided herein notwithstanding such approval, amendment, continuance
or renewal has not been effected with respect to any one or more other series
of the Fund.
This Agreement shall be construed under and shall be governed by the laws of
the State of California, and the parties hereto agree that proper venue of any
action with respect hereto shall be Los Angeles County, California.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in duplicate original by their officers thereunto duly authorized, as
of ______________.
AMERICAN FUNDS DISTRIBUTORS, INC. NEW WORLD FUND, INC.
By By
Chairman of the Board Chairman of the Board
By By
Secretary Secretary
FORM OF GLOBAL CUSTODY AGREEMENT
This AGREEMENT is effective __________ and is between THE CHASE MANHATTAN BANK
(the "Bank") and NEW WORLD FUND, INC. (the "Customer").
1. Customer Accounts.
The Bank agrees to establish and maintain the following accounts ("Accounts"):
(a) A custody account in the name of the Customer ("Custody Account") for any
and all stocks, shares, bonds, debentures, notes, mortgages or other
obligations for the payment of money, bullion, coin and any certificates,
receipts, warrants or other instruments representing rights to receive,
purchase or subscribe for the same or evidencing or representing any other
rights or interests therein and other similar property whether certificated or
uncertificated as may be received by the Bank or its Subcustodian (as defined
in Section 3) for the account of the Customer ("Securities"); and
(b) A deposit account in the name of the Customer ("Deposit Account") for any
and all cash in any currency received by the Bank or its Subcustodian for the
account of the Customer, which cash shall not be subject to withdrawal by draft
or check.
The Customer warrants its authority to: 1) deposit the cash and Securities
("Assets") received in the Accounts and 2) give Instructions (as defined in
Section 11) concerning the Accounts. The Bank may deliver securities of the
same class in place of those deposited in the Custody Account.
Upon written agreement between the Bank and the Customer, additional Accounts
may be established and separately accounted for as additional Accounts under
the terms of this Agreement.
The Bank shall be accountable under the terms of this agreement to the
Customer for all Assets held in the accounts and shall take prompt and
appropriate action to remedy any discrepancies with respect to such Assets.
2. Maintenance of Securities and Cash at Bank and Subcustodian Locations.
Unless Instructions specifically require another location acceptable to the
Bank:
(a) Securities will be held in the country or other jurisdiction in which the
principal trading market for such Securities is located, where such Securities
are to be presented for payment or where such Securities are acquired; and
(b) Cash will be credited to an account in a country or other jurisdiction in
which such cash may be legally deposited or is the legal currency for the
payment of public or private debts.
Cash may be held pursuant to Instructions in either interest or non-interest
bearing accounts as may be available for the particular currency. To the
extent Instructions are issued and the Bank can comply with such Instructions,
the Bank is authorized to maintain cash balances on deposit for the Customer
with itself or one of its affiliates at such reasonable rates of interest as
may from time to time be paid on such accounts, or in non-interest bearing
accounts as the Customer may direct, if acceptable to the Bank.
If the Customer wishes to have any of its Assets held in the custody of an
institution other than the established Subcustodians as defined in Section 3
(or their securities depositories), such arrangement must be authorized by a
written agreement, signed by the Bank and the Customer.
3. Subcustodians and Securities Depositories.
The Bank may act under this Agreement through the subcustodians listed in
Schedule A of this Agreement with which the Bank has entered into subcustodial
agreements ("Subcustodians"). The Customer authorizes the Bank to hold Assets
in the Accounts in accounts which the Bank has established with one or more of
its branches or Subcustodians. The Bank and Subcustodians are authorized to
hold any of the Securities in their account with any securities depository in
which they participate.
The Bank reserves the right to add new, replace or remove Subcustodians. The
Customer will be given reasonable notice by the Bank of any amendment to
Schedule A. Upon request by the Customer, the Bank will identify the name,
address and principal place of business of any Subcustodian of the Customer's
Assets and the name and address of the governmental agency or other regulatory
authority that supervises or regulates such Subcustodian.
The terms Subcustodian and securities depositories as used in this Agreement
shall mean a branch of a qualified U.S. bank, an eligible foreign custodian or
an eligible foreign securities depository, which are further defined as
follows:
(a) "qualified U.S. Bank" shall mean a qualified U.S. bank as defined in Rule
17f-5 under the Investment Company Act of 1940;
(b) "eligible foreign custodian" shall mean (i) a banking institution or trust
company incorporated or organized under the laws of a country other than the
United States that is regulated as such by that country's government or an
agency thereof and that has shareholders' equity in excess of $200 million in
U.S. currency (or a foreign currency equivalent thereof), (ii) a majority owned
direct or indirect subsidiary of a qualified U.S. bank or bank holding company
that is incorporated or organized under the laws of a country other than the
United States and that has shareholders' equity in excess of $100 million in
U.S. currency (or a foreign currency equivalent thereof) (iii) a banking
institution or trust company incorporated or organized under the laws of a
country other than the United States or a majority owned direct or indirect
subsidiary of a qualified U.S. bank or bank holding company that is
incorporated or organized under the laws of a country other than the United
States which has such other qualifications as shall be specified in
Instructions and approved by the Bank; or (iv) any other entity that shall have
been so qualified by exemptive order, rule or other appropriate action of the
SEC; and
(c) "eligible foreign securities depository" shall mean a securities
depository or clearing agency, incorporated or organized under the laws of a
country other than the United States, which operates (i) the central system for
handling securities or equivalent book-entries in that country, or (ii) a
transnational system for the central handling of securities or equivalent
book-entries.
The Customer represents that its Board of Directors will approve each of the
Subcustodians listed in Schedule A to this Agreement before Assets are held by
such Subcustodian and the form of the subcustody agreements between the Bank
and each Subcustodian, and further represents that its Board will determine
that the use of such Subcustodian and the terms of each subcustody agreement
are consistent with the best interests of the customer's fund(s) and its
(their) shareholders prior to placing Assets with any such Subcustodian. The
Bank will supply the Customer with any amendment to Schedule A for approval
within such reasonable period of time as agreed to by the Bank and the
Customer. Upon request, the Customer has supplied or will supply the Bank with
certified copies of its Board of Directors resolutions with respect to the
foregoing prior to placing Assets with any Subcustodian so approved.
The Bank shall furnish annually to the Customer information concerning
Subcustodians employed by the Bank. Such information shall be similar in kind
and scope to that furnished to the Customer in connection with the initial
approval of the subcustodian by the Customer's Board of Directors. In
addition, the Bank will promptly inform the Customer in the event that the Bank
learns of a material adverse change in the financial condition of a
Subcustodian or is notified by a foreign banking institution employed as a
Subcustodian that there appears to be a substantial likelihood that its
shareholders's equity as required by Rule 17f-5 or any order thereunder. With
regard to the foregoing paragraphs, the Bank shall not be deemed to have
assumed any fiduciary duties imposed upon Customer by law.
The Bank will supply periodically, as mutually agreed upon, a statement in
respect of any Securities and cash, including identification of the foreign
entities having custody of the Securities and cash and descriptions thereof.
4. Use of Subcustodian.
(a) The Bank will identify such Assets on its books as belonging to the
Customer.
(b) A Subcustodian will hold such Assets together with assets belonging to
other customers of the Bank in accounts identified on such Subcustodian's books
as special custody accounts for the exclusive benefit of customers of the Bank.
(c) Any Assets in the Accounts held by a Subcustodian will be subject only to
the instructions of the Bank or its agent. Any Securities held in a securities
depository for the account of a Subcustodian will be subject only to the
instructions of such Subcustodian.
(d) Any agreement the Bank enters into with a Subcustodian for holding its
customer's assets shall provide that such assets will not be subject to any
right, charge, security interest, lien or claim of any kind in favor of such
Subcustodian except for safe custody or administration, and that the beneficial
ownership of such assets will be freely transferable without the payment of
money or value other than for safe custody or administration. The foregoing
shall not apply to the extent of any special agreement or arrangement made by
the Customer with any particular Subcustodian.
5. Deposit Account Transactions.
(a) The Bank or its Subcustodians will make payments from the Deposit Account
upon receipt of Instructions which include all information required by the
Bank.
(b) In the event that any payment to be made under this Section 5 exceeds the
funds available in the Deposit Account, the Bank, in its discretion, may
advance the Customer such excess amount which shall be deemed a loan payable on
demand, bearing interest at the rate customarily charged by the Bank on similar
loans.
(c) If the Bank credits the Deposit Account on a payable date, or at any time
prior to actual collection and reconciliation to the Deposit Account, with
interest, dividends, redemptions or any other amount due, the Customer will
promptly return any such amount upon oral or written notification: (i) that
such amount has not been received in the ordinary course of business or (ii)
that such amount was incorrectly credited. If the Customer does not promptly
return any amount upon such notification, the Bank shall be entitled, upon oral
or written notification to the Customer, to reverse such credit by debiting the
Deposit Account for the amount previously credited. The Bank or its
Subcustodian shall have no duty or obligation to institute legal proceedings,
file a claim or a proof of claim in any insolvency proceeding or take any other
action with respect to the collection of such amount, but may act for the
Customer upon Instructions after consultation with the Customer.
6. Custody Account Transactions.
(a) Securities will be transferred, exchanged or delivered by the Bank or its
Subcustodian upon receipt by the Bank of Instructions which include all
information required by the Bank. Settlement and payment for Securities
received for, and delivery of Securities out of, the Custody Account may be
made in accordance with the customary or established securities trading or
securities processing practices and procedures in the jurisdiction or market in
which the transaction occurs, including, without limitation, delivery of
Securities to a purchaser, dealer or their agents against a receipt with the
expectation of receiving later payment and free delivery. Delivery of
Securities out of the Custody Account may also be made in any manner
specifically required by Instructions acceptable to the Bank.
(b) The Bank, in its discretion, may credit or debit the Accounts on a
contractual settlement date with cash or Securities with respect to any sale,
exchange or purchase of Securities. Otherwise, such transactions will be
credited or debited to the Accounts on the date cash or Securities are actually
received by the Bank and reconciled to the Account.
(i) The Bank may reverse credits or debits made to the Accounts in its
discretion if the related transaction fails to settle within a reasonable
period, determined by the Bank in its discretion, after the contractual
settlement date for the related transaction; provided however that prior to
taking action, the Bank will use every reasonable effort to give Customer
written notice of any such reversal which may include back valuation.
(ii) If any Securities delivered pursuant to this Section 6 are returned by
the recipient thereof, the Bank may reverse the credits and debits of the
particular transaction at any time.
7. Actions of the Bank.
The Bank shall follow Instructions received regarding assets held in the
Accounts. However, until it receives Instructions to the contrary, the Bank
will:
(a) Present for payment any Securities which are called, redeemed or retired
or otherwise become payable and all coupons and other income items which call
for payment upon presentation, to the extent that the Bank or Subcustodian is
actually aware of such opportunities.
(b) Execute in the name of the Customer such ownership and other certificates
as may be required to obtain payments in respect of Securities.
(c) Exchange interim receipts or temporary Securities for definitive
Securities.
(d) Appoint brokers and agents for any transaction involving the Securities,
including, without limitation, affiliates of the Bank or any Subcustodian.
(e) Issue statements to the Customer, at times mutually agreed upon,
identifying the Assets in the Accounts.
The Bank will send the Customer an advice or notification of any transfers of
Assets to or from the Accounts. Such statements, advices or notifications
shall indicate the identity of the entity having custody of the Assets. Unless
the Customer sends the Bank a written exception or objection to certain bank
statements as shall be mutually agreed upon in writing within 180 days of
receipt, the Customer shall be deemed to have approved such statement. In such
event, or where the Customer has otherwise approved any such statement, the
Bank shall, to the extent permitted by law, be released, relieved and
discharged with respect to all matters set forth in such statement or
reasonably implied therefrom as though it had been settled by the decree of a
court of competent jurisdiction in an action where the Customer and all persons
having or claiming an interest in the Customer or the Customer's Accounts were
parties.
All collections of funds or other property paid or distributed in respect of
Securities in the Custody Account shall be made at the risk of the Customer.
The Bank shall have no liability for any loss occasioned by delay in the actual
receipt of notice by the Bank or by its Subcustodians of any payment,
redemption or other transaction regarding Securities in the Custody Account in
respect of which the Bank has agreed to take any action under this Agreement.
8. Corporate Actions; Proxies.
Whenever the Bank receives information concerning the Securities which
requires discretionary action by the beneficial owner of the Securities (other
than a proxy), such as subscription rights, bonus issues, stock repurchase
plans and rights offerings, or legal notices or other material intended to be
transmitted to securities holders ("Corporate Actions"), the Bank will give the
Customer prompt notice of such Corporate Actions to the extent that the Bank's
central corporate actions department has actual knowledge of a Corporate Action
in time to notify its customers.
When a rights entitlement or a fractional interest resulting from a rights
issue, stock dividend, stock split or similar Corporate Action is received
which bears an expiration date, the Bank will endeavor to obtain Instructions
from the Customer or its Authorized Person, but if Instructions are not
received in time for the Bank to take timely action, or actual notice of such
Corporate Action was received too late to seek Instructions, the Bank is
authorized to sell such rights entitlement or fractional interest and to credit
the Deposit Account with the proceeds or take any other action it deems, in
good faith, to be appropriate in which case it shall be held harmless for any
such action.
The Bank will deliver proxies to the Customer or its designated agent pursuant
to special arrangements which may have been agreed to in writing. Such proxies
shall be executed in the appropriate nominee name relating to Securities in the
Custody Account registered in the name of such nominee but without indicating
the manner in which such proxies are to be voted; and where bearer Securities
are involved, proxies will be delivered in accordance with Instructions.
9. Nominees.
Securities which are ordinarily held in registered form may be registered in a
nominee name of the Bank, Subcustodian or securities depository, as the case
may be. The Bank may without notice to the Customer cause any such Securities
to cease to be registered in the name of any such nominee and to be registered
in the name of the Customer. In the event that any Securities registered in a
nominee name are called for partial redemption by the issuer, the Bank may
allot the called portion to the respective beneficial holders of such class of
security in any manner the Bank deems to be fair and equitable. The Customer
agrees to hold the Bank, Subcustodians, and their respective nominees harmless
from any liability arising directly or indirectly from their status as a mere
record holder of Securities in the Custody Account.
10. Authorized Persons.
As used in this Agreement, the term "Authorized Person" means employees or
agents including investment managers as have been designated by written notice
from the Customer or its designated agent to act on behalf of the Customer
under this Agreement. Such persons shall continue to be Authorized Persons
until such time as the Bank receives Instructions from the Customer or its
designated agent that any such employee or agent is no longer an Authorized
Person.
11. Instructions.
The term "Instructions" means instructions of any Authorized Person received
by the Bank, via telephone, telex, TWX, facsimile transmission, bank wire or
other teleprocess or electronic instruction or trade information system
acceptable to the Bank which the Bank believes in good faith to have been given
by Authorized Persons or which are transmitted with proper testing or
authentication pursuant to terms and conditions which the Bank may specify.
Unless otherwise expressly provided, all Instructions shall continue in full
force and effect until canceled or superseded.
Any Instructions delivered to the Bank by telephone shall promptly thereafter
be confirmed in writing by an Authorized Person (which confirmation may bear
the facsimile signature of such Person), but the Customer will hold the Bank
harmless for the failure of an Authorized Person to send such confirmation in
writing, the failure of such confirmation to conform to the telephone
instructions received or the Bank's failure to produce such confirmation at any
subsequent time. The Bank may electronically record any Instructions given by
telephone, and any other telephone discussions with respect to the Custody
Account. The Customer shall be responsible for safeguarding any testkeys,
identification codes or other security devices which the Bank shall make
available to the Customer or its Authorized Persons.
Deposit Account Payments and Custody Account Transactions made pursuant to
Section 5 and 6 of this Agreement may be made only for the purposes listed
below. Instructions must specify the purpose for which any transaction is to
be made and Customer shall be solely responsible to assure that Instructions
are in accord with any limitations or restrictions applicable to the Customer
by law or as may be set forth in its prospectus.
(a) In connection with the purchase or sale of Securities at prices as
confirmed by Instructions;
(b) When Securities are called, redeemed or retired, or otherwise become
payable;
(c) In exchange for or upon conversion into other securities alone or other
securities and cash pursuant to any plan or merger, consolidation,
reorganization, recapitalization or readjustment;
(d) Upon conversion of Securities pursuant to their terms into other
securities;
(e) Upon exercise of subscription, purchase or other similar rights
represented by Securities;
(f) For the payment of interest, taxes, management or supervisory fees,
distributions or operating expenses;
(g) In connection with any borrowings by the Customer requiring a pledge of
Securities, but only against receipt of amounts borrowed;
(h) In connection with any loans, but only against receipt of adequate
collateral as specified in Instructions which shall reflect any restrictions
applicable to the Customer;
(i) For the purpose of redeeming shares of the capital stock of the Customer
and the delivery to, or the crediting to the account of, the Bank, its
Subcustodian or the Customer's transfer agent, such shares to be purchased or
redeemed;
(j) For the purpose of redeeming in kind shares of the Customer against
delivery to the Bank, its Subcustodian or the Customer's transfer agent of such
shares to be so redeemed;
(k) For delivery in accordance with the provisions of any agreement among the
Customer, the Bank and a broker-dealer registered under the Securities Exchange
Act of 1934 (the "Exchange Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to compliance with the rules of The
Options Clearing Corporation and of any registered national securities
exchange, or of any similar organization or organizations, regarding escrow or
other arrangements in connection with transactions by the Customer;
(l) For release of Securities to designated brokers under covered call
options, provided, however, that such Securities shall be released only upon
payment to the Bank of monies for the premium due and a receipt for the
Securities which are to be held in escrow. Upon exercise of the option, or at
expiration, the Bank will receive from brokers the Securities previously
deposited. The Bank will act strictly in accordance with Instructions in the
delivery of Securities to be held in escrow and will have no responsibility or
liability for any such Securities which are not returned promptly when due
other than to make proper request for such return;
(m) For spot or forward foreign exchange transactions to facilitate security
trading, receipt of income from Securities or related transactions;
(n) For other proper purposes as may be specified in Instructions issued by an
officer of the Customer which shall include a statement of the purpose for
which the delivery or payment is to be made, the amount of the payment or
specific Securities to be delivered, the name of the person or persons to whom
delivery or payment is to be made, and a certification that the purpose is a
proper purpose under the instruments governing the Customer; and
(o) Upon the termination of this Agreement as set forth in Section 14(i).
12. Standard of Care; Liabilities.
(a) The Bank shall be responsible for the performance of only such duties as
are set forth in this Agreement or expressly contained in Instructions which
are consistent with the provisions of this Agreement as follows:
(i) The Bank will use reasonable care with respect to its obligations under
this Agreement and the safekeeping of Assets. The Bank shall be liable to the
Customer for any loss which shall occur as the result of the failure of a
Subcustodian to exercise reasonable care with respect to the safekeeping of
such Assets to the same extent that the Bank would be liable to the Customer if
the Bank were holding such Assets in New York. In the event of any loss to the
Customer by reason of the failure of the Bank or its Subcustodian to utilize
reasonable care, the Bank shall be liable to the Customer only to the extent of
the Customer's direct damages, to be determined based on the market value of
the property which is the subject of the loss at the date of discovery of such
loss and without reference to any special conditions or circumstances.
(ii) The Bank will not be responsible for any act, omission, default or for
the solvency of any broker or agent which it or a Subcustodian appoints unless
such appointment was made negligently or in bad faith.
(iii) The Bank shall be indemnified by, and without liability to the Customer
for any action taken or omitted by the Bank whether pursuant to Instructions or
otherwise within the scope of this Agreement if such act or omission was in
good faith, without negligence. In performing its obligations under this
Agreement, the Bank may rely on the genuineness of any document which it
believes in good faith to have been validly executed.
(iv) The Customer agrees to pay for and hold the Bank harmless from any
liability or loss resulting from the imposition or assessment of any taxes or
other governmental charges, and any related expenses with respect to income
from or Assets in the Accounts.
(v) The Bank shall be entitled to rely, and may act, upon the advice of
counsel (who may be counsel for the Customer) on all matters and shall be
without liability for any action reasonably taken or omitted pursuant to such
advice.
(vi) The Bank need not maintain any insurance for the benefit of the Customer.
(vii) Without limiting the foregoing, the Bank shall not be liable for any
loss which results from: 1) the general risk of investing, or 2) investing or
holding Assets in a particular country including, but not limited to, losses
resulting from nationalization, expropriation or other governmental actions;
regulation of the banking or securities industry; currency restrictions,
devaluations or fluctuations; and market conditions which prevent the orderly
execution of securities transactions or affect the value of Assets.
(viii) Neither party shall be liable to the other for any loss due to forces
beyond their control including, but not limited to strikes or work stoppages,
acts of war or terrorism, insurrection, revolution, nuclear fusion, fission or
radiation, or acts of God.
(b) Consistent with and without limiting the first paragraph of this Section
12, it is specifically acknowledged that the Bank shall have no duty or
responsibility to:
(i) question Instructions or make any suggestions to the Customer or an
Authorized Person regarding such Instructions;
(ii) supervise or make recommendations with respect to investments or the
retention of Securities;
(iii) advise the Customer or an Authorized Person regarding any default in the
payment of principal or income of any security other than as provided in
Section 5(c) of this Agreement;
(iv) evaluate or report to the Customer or an Authorized Person regarding the
financial condition of any broker, agent or other party to which Securities are
delivered or payments are made pursuant to this Agreement;
(v) review or reconcile trade confirmations received from brokers. The
Customer or its Authorized Persons (as defined in Section 10) issuing
Instructions shall bear any responsibility to review such confirmations against
Instructions issued to and statements issued by the Bank.
(c) The Bank hereby warrants to the Customer that in its opinion, after due
inquiry, the established procedures to be followed by each of its branches,
each branch of a qualified U.S. bank, each eligible foreign custodian and each
eligible foreign securities depository holding the Customer's Securities
pursuant to this Agreement afford protection for such Securities at least equal
to that afforded by the Bank's established procedures with respect to similar
securities held by the Bank and its securities depositories in New York.
(d) The Customer authorizes the Bank to act under this Agreement
notwithstanding that the Bank or any of its divisions or affiliates may have a
material interest in a transaction, or circumstances are such that the Bank may
have a potential conflict of duty or interest including the fact that the Bank
or any of its affiliates may provide brokerage services to other customers, act
as financial advisor to the issuer of Securities, act as a lender to the issuer
of Securities, act in the same transaction as agent for more than one customer,
have a material interest in the issue of Securities, or earn profits from any
of the activities listed herein.
13. Fees and Expenses.
The Customer agrees to pay the Bank for its services under this Agreement such
amount as may be agreed upon in writing, together with the Bank's reasonable
out-of-pocket or incidental expenses, including, but not limited to, legal fees
incurred on behalf of the Customer. The Bank shall have a lien on and is
authorized to charge any Accounts of the Customer for any amount owing to the
Bank under any provision of this Agreement.
14. Miscellaneous.
(a) Foreign Exchange Transactions. To facilitate the administration of the
Customer's trading and investment activity, the Bank is authorized to enter
into spot or forward foreign exchange contracts with the Customer or an
Authorized Person for the Customer and may also provide foreign exchange
through its subsidiaries, affiliates or Subcustodians. Instructions, including
standing instructions, may be issued with respect to such contracts but the
Bank may establish rules or limitations concerning any foreign exchange
facility made available. In all cases where the Bank, its subsidiaries,
affiliates or Subcustodians enter into a foreign exchange contract related to
Accounts, the terms and conditions of the then current foreign exchange
contract of the Bank, its subsidiary, affiliate or Subcustodian and, to the
extent not inconsistent, this Agreement shall apply to such transaction.
(b) Certification of Residency, etc. The Customer certifies that it is a
resident of the United States and agrees to notify the Bank of any changes in
residency. The Bank may rely upon this certification or the certification of
such other facts as may be required to administer the Bank's obligations under
this Agreement. The Customer will indemnify the Bank against all losses,
liability, claims or demands arising directly or indirectly from any such
certifications.
(c) Access to Records. The Bank shall allow the Customer's independent public
accountant reasonable access to the records of the Bank relating to the Assets
as is required in connection with their examination of books and records
pertaining to the Customer's affairs. Subject to restrictions under applicable
law, the Bank shall also obtain an undertaking to permit the Customer's
independent public accountants reasonable access to the records of any
Subcustodian which has physical possession of any Assets as may be required in
connection with the examination of the Customer's books and records. Upon
reasonable request from the Customer, the Bank shall furnish the Customer such
reports (or portions thereof) of the Bank's system of internal accounting
controls applicable to the Bank's duties under this Agreement. The Bank shall
endeavor to obtain and furnish the Customer with such similar reports as it may
reasonably request with respect to each Subcustodian and securities depository
holding the Customer's assets. The Bank shall not unreasonably refuse to
furnish to the Customer such reports (or portions thereof) of the Bank's
external auditors as they relate directly to the Bank's system of internal
accounting controls applicable to the Bank's duties under this Agreement. The
Bank shall endeavor to obtain and furnish the Customer with such similar
reports as the Customer may reasonably request with respect to each
Subcustodian holding Assets of the Customer. Expenses of the Bank and any
Subcustodians under this provision shall be paid by the Customer.
(d) Governing Law; Successors and Assigns. This Agreement shall be governed
by the laws of the State of New York and shall not be assignable by either
party, but shall bind the successors in interest of the Customer and the Bank.
(e) Entire Agreement; Applicable Riders. Customer represents that the Assets
deposited in the Accounts are (Check one):
____ Employee Benefit Plan or other assets subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA");
X Mutual Fund assets subject to certain Securities and Exchange Commission
("SEC") rules and regulations;
____ Neither of the above.
This Agreement consists exclusively of this document together with Schedule A,
and the following Rider(s) [Check applicable rider(s)]:
____ ERISA
X MUTUAL FUND
X SPECIAL TERMS AND CONDITIONS
There are no other provisions of this Agreement and this Agreement supersedes
any other agreements, whether written or oral, between the parties. Any
amendment to this Agreement must be in writing, executed by both parties.
(f) Severability. In the event that one or more provisions of this Agreement
are held invalid, illegal or enforceable in any respect on the basis of any
particular circumstances or in any jurisdiction, the validity, legality and
enforceability of such provision or provisions under other circumstances or in
other jurisdictions and of the remaining provisions will not in any way be
affected or impaired.
(g) Waiver. Except as otherwise provided in this Agreement, no failure or
delay on the part of either party in exercising any power or right under this
Agreement operates as a waiver, nor does any single or partial exercise of any
power or right preclude any other or further exercise, or the exercise of any
other power or right. No waiver by a party of any provision of this Agreement,
or waiver of any breach or default, is effective unless in writing and signed
by the party against whom the waiver is to be enforced.
(h) Notices. All notices under this Agreement shall be effective when
actually received. Any notices or other communications which may be required
under this Agreement are to be sent to the parties at the following addresses
or such other addresses as may subsequently be given to the other party in
writing:
Bank: The Chase Manhattan Bank
4 Chase MetroTech Center
Brooklyn, NY 11245
Attention: Global Custody Division
or telex:
Customer: Capital Research and Management Company
135 South State College Blvd.
Brea, CA 92821
or telex:
(i) Termination. This Agreement may be terminated by the Customer or the Bank
by giving sixty (60) days written notice to the other, provided that such
notice to the Bank shall specify the names of the persons to whom the Bank
shall deliver the Assets in the Accounts. If notice of termination is given by
the Bank, the Customer shall, within sixty (60) days following receipt of the
notice, deliver to the Bank Instructions specifying the names of the persons to
whom the Bank shall deliver the Assets. In either case the Bank will deliver
the Assets to the persons so specified, after deducting any amounts which the
Bank determines in good faith to be owed to it under Section 13. If within
sixty (60) days following receipt of a notice of termination by the Bank, the
Bank does not receive Instructions from the Customer specifying the names of
the persons to whom the Bank shall deliver the Assets, the Bank, at its
election, may deliver the Assets to a bank or trust company doing business in
the State of New York to be held and disposed of pursuant to the provisions of
this Agreement, or to Authorized Persons, or may continue to hold the Assets
until Instructions are provided to the Bank.
NEW WORLD FUND, INC.
By:
Title:
THE CHASE MANHATTAN BANK
By:
Title:
STATE OF )
: ss.
COUNTY OF )
On this day of , 19 , before me personally came
, to me known, who being by me duly sworn, did
depose and say that he/she resides in at
;
that he/she is of
, the entity described in and which executed the foregoing
instrument; that he/she knows the seal of said entity, that the seal affixed to
said instrument is such seal, that it was so affixed by order of said entity,
and that he/she signed his/her name thereto by like order.
Sworn to before me this
day of , 19 .
Notary
STATE OF NEW YORK )
: ss.
COUNTY OF NEW YORK )
On this day of ,19 , before me
personally came , to me known, who being by me duly
sworn, did depose and say that he/she resides in
at
; that he/she is a Vice
President of THE CHASE MANHATTAN BANK, the corporation described in and which
executed the foregoing instrument; that he/she knows the seal of said
corporation, that the seal affixed to said instrument is such corporate seal,
that it was so affixed by order of the Board of Directors of said corporation,
and that he/she signed his/her name thereto by like order.
Sworn to before me this
day of , 19 .
Notary
FORM OF
SHAREHOLDER SERVICES AGREEMENT
1. The parties to this Agreement, which is effective as of April, 16, 1999, are
New World Fund, Inc. (hereinafter called "the Fund") and American Funds Service
Company, a California corporation (hereinafter called "AFS"). AFS is a wholly
owned subsidiary of Capital Research and Management Company (hereinafter called
"CRMC"). This Agreement will continue in effect until amended or terminated in
accordance with its terms.
2. The Fund hereby employs AFS, and AFS hereby accepts such employment by the
Fund, as its transfer agent. In such capacity AFS will provide the services of
stock transfer agent, dividend disbursing agent, redemption agent, and such
additional related services as the Fund may from time to time require, all of
which services are sometimes referred to herein as "shareholder services."
3. AFS has entered into substantially identical agreements with other
investment companies for which CRMC serves as investment adviser. (For the
purposes of this Agreement, such investment companies, including the Fund, are
called "participating investment companies.")
4. AFS has entered into an agreement with DST Systems, Inc. (hereinafter called
"DST"), to provide AFS with electronic data processing services sufficient for
the performance of the shareholder services referred to in paragraph 2.
5. The Fund, together with the other participating companies, will maintain a
Review and Advisory Committee, which Committee will review and may make
recommendations to the boards of the participating investment companies
regarding all fees and charges provided for in this Agreement, as well as
review the level and quality of the shareholder services rendered to the
participating investment companies and their shareholders. Each participating
investment company may select one director who is not affiliated with CRMC, or
any of its affiliated companies, or with Washington Management Corporation or
any of its affiliated companies, to serve on the Review and Advisory Committee.
6. AFS will provide to the participating investment companies the shareholder
services referred to herein in return for the following fees:
ANNUAL ACCOUNT MAINTENANCE FEE (PAID MONTHLY):
$.45 per month for each open account on AFS books or in Level 2 or 4
Networking ($5.40 per year)
$.06 per month for each open account maintained in Street Name or Level 1 or 3
Networking ($0.72 per year)
No annual fee will be charged for a participant account underlying a 401(k) or
other defined contribution plan where the plan maintains a single account on
AFS books and responds to all participant inquiries
TRANSACTION FEES:
$2.70 per non-automated transaction
$0.20 per automated transaction
For this purpose, "transactions" shall include all types of transactions
included in an "activity index" as reported to the Review and Advisory
Committee at least annually. AFS will bill the Fund monthly, on or shortly
after the first of each calendar month, and the Fund will pay to AFS within
five business days of such billing.
Any revision of the schedule of charges set forth herein shall require the
affirmative vote of a majority of the members of the board of directors of the
Fund.
7. All fund-specific charges from third parties -- including DST charges,
payments described in the next sentence, postage, NSCC transaction charges and
similar out-of-pocket expenses -- will be passed through directly to the Fund
or other participating investment companies, as applicable. AFS, subject to
approval of its board of directors, is authorized in its discretion to
negotiate payments to third parties for account maintenance and/or transaction
processing services provided such payments do not exceed the anticipated
savings to the Fund, either in fees payable to AFS hereunder or in other direct
Fund expenses, that AFS reasonably anticipates would be realized by the Fund
from using the services of such third party rather than maintaining the
accounts directly on AFS' books and/or processing non-automated transactions.
8. It is understood that AFS may have income in excess of its expenses and may
accumulate capital and surplus. AFS is not, however, permitted to distribute
any net income or accumulated surplus to its parent, CRMC, in the form of a
dividend without the affirmative vote of a majority of the members of the
boards of directors of the Fund and all participating investment companies.
9. This Agreement may be amended at any time by mutual agreement of the
parties, with agreement of the Fund to be evidenced by affirmative vote of a
majority of the members of the board of directors of the Fund.
10. This Agreement may be terminated on 180 days' written notice by either
party. In the event of a termination of this Agreement, AFS and the Fund will
each extend full cooperation in effecting a conversion to whatever successor
shareholder service provider(s) the Fund may select, it being understood that
all records relating to the Fund and its shareholders are property of the Fund.
11. In the event of a termination of this Agreement by the Fund, the Fund will
pay to AFS as a termination fee the Fund's proportionate share of any costs of
conversion of the Fund's shareholder service from AFS to a successor. In the
event of termination of this Agreement and all corresponding agreements with
all the participating investment companies, all assets of AFS will be sold or
otherwise converted to cash, with a view to the liquidation of AFS when it
ceases to provide shareholder services for the participating investment
companies. To the extent any such assets are sold by AFS to CRMC and/or any of
its affiliates, such sales shall be at fair market value at the time of sale as
agreed upon by AFS, the purchasing company or companies, and the Review and
Advisory Committee. After all assets of AFS have been converted to cash and
all liabilities of AFS have been paid or discharged, an amount equal to any
capital or paid-in surplus of AFS that shall have been contributed by CRMC or
its affiliates shall be set aside in cash for distribution to CRMC upon
liquidation of AFS. Any other capital or surplus and any assets of AFS
remaining after the foregoing provisions for liabilities and return of capital
or paid-in surplus to CRMC shall be distributed to the participating investment
companies in such proportions as may be determined by the Review and Advisory
Committee.
12. In the event of disagreement between the Fund and AFS, or between the Fund
and other participating investment companies as to any matter arising under
this Agreement, which the parties to the disagreement are unable to resolve,
the question shall be referred to the Review and Advisory Committee for
resolution. If the Review and Advisory Committee is unable to resolve the
question to the satisfaction of both parties, either party may elect to submit
the question to arbitration; one arbitrator to be named by each party to the
disagreement and a third arbitrator to be selected by the two arbitrators named
by the original parties. The decision of a majority of the arbitrators shall
be final and binding on all parties to the arbitration. The expenses of such
arbitration shall be paid by the party electing to submit the question to
arbitration.
13. The obligations of the Fund under this Agreement are not binding upon any
of the directors, officers, employees, agents or shareholders of the Fund
individually, but bind only the Fund itself. AFS agrees to look solely to the
assets of the Fund for the satisfaction of any liability of the Fund in respect
to this Agreement and will not seek recourse against such directors, officers,
employees, agents or shareholders, or any of them or their personal assets for
such satisfaction.
AMERICAN FUNDS SERVICE COMPANY NEW WORLD FUND, INC.
By By
By By
CENTURY CITY O HONG KONG
NEWPORT BEACH O'Melveny & Myers LLP LONDON
NEW YORK 400 South Hope Street SHANGHAI
SAN FRANCISCO Los Angeles, California 90071-2899 TOKYO
WASHINGTON, D.C. TELEPHONE(213) 430-6000
FACSIMILE (213) 430-6407
INTERNET: www.omm.com
April 16, 1999
OUR FILE NUMBER 619,749-999
WRITER'S DIRECT DIAL (213) 430-6443
New World Fund, Inc.
333 South Hope Street
Los Angeles, CA 90071
WRITER'S E-MAIL ADDRESS [email protected]
Ladies and Gentlemen:
At your request we have examined the form of Registration Statement on Form
N-1A and the related Pre-Effective Amendment No. 1 filed by you with the
Securities and Exchange Commission in connection with the registration under
the Securities Act of 1933, as amended, of an indefinite number of shares of
your common stock, $.01 par value per share (the "Shares"). We are familiar
with the proceedings taken and proposed to be taken by you in connection with
the authorization, issuance and sale of the Shares.
Based upon our examination and upon our knowledge of your activities, it is
our opinion that, subject to the issuance of an appropriate order by the
Securities and Exchange Commission declaring the Registration Statement
effective and the completion of the proposed actions referred to above, and
subject to the qualification of the Shares under the California Corporate
Securities Law of 1968, and provided that an appropriate amendment to your
Articles of Incorporation is duly effected prior to the issuance of more than
200,000,000 Shares, the Shares upon issuance and sale in the manner described
in the Registration Statement will constitute validly issued, fully paid
and nonassessable Shares of you common stock.
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Respectfully submitted,
O'MELVENY & MYERS LLP
CONSENT OF INDEPENDENT AUDITORS
New World Fund, Inc.:
We consent to the use in this Pre-Effective Amendment No. 3 to Registration
Statement No. 333-67455 on Form N-1A of our report dated April 16, 1999
appearing in the Financial Statements, which are included in Part B, the
Statement of Additional Information of such Registration Statement.
We also consent to the references to us under the heading "General Information"
in such Statement of Additional Information.
DELOITTE & TOUCHE LLP
Los Angeles, California
April 16, 1999
April 16, 1999
Capital Research and Management Company
333 South Hope Street
Los Angeles, CA 90071
Re: Investment Letter
Gentlemen:
New World Fund, Inc., a Maryland corporation (the "Fund"), hereby offers to
sell to you 7,427.844 shares of its common stock, $0.01 par value, (the
"Shares") at a price of $23.56 per share upon the following terms and
conditions:
You agree to pay to the Fund the aggregate purchase price of $175,000 against
delivery of a statement confirming the registration of the 7,427.844 Shares in
your name.
You represent to the Fund that you are purchasing the Shares for your own
account for investment purposes and not with the present intention of redeeming
or reselling the Shares and that the purchase price of such Shares is in
payment for an equity interest and does not represent a loan or temporary
advance by you.
You understand that you are obligated to pay certain expenses incurred in
connection with the organization of the Fund, as shall be reflected in an
Investment Advisory and Service Agreement between you and the Fund. You agree
that you will not redeem any of the Shares while any portion of such
organizational expenses has not been paid by you.
Very truly yours,
NEW WORLD FUND, INC.
By /s/ Vincent P. Corti
Vincent P. Corti, Secretary
Confirmed and agreed to April 16, 1999
CAPITAL RESEARCH AND MANAGEMENT COMPANY
By /s/ Michael J. Downer
Michael J. Downer, Secretary
FORM OF
PLAN OF DISTRIBUTION
OF
NEW WORLD FUND, INC.
WHEREAS, New World Fund, Inc. (the "Fund") is a Maryland Corporation which
offers shares of common stock.
WHEREAS, American Funds Distributors, Inc. ("AFD") will serve as distributor of
the shares of common stock of the Fund, and the Fund and AFD are parties to a
principal underwriting agreement (the "Agreement");
WHEREAS, the purpose of this Plan of Distribution (the "Plan") is to authorize
the Fund to bear expenses of distribution of its shares, including
reimbursement of AFD for certain of its expenses incurred in connection with
the Fund;
WHEREAS, the Board of Directors of the Fund has determined that there is a
reasonable likelihood that this Plan will benefit the Fund and its
shareholders:
NOW, THEREFORE, the Fund adopts this Plan as follows:
1. The Fund may expend pursuant to this Plan amounts not to exceed .30 of 1% of
the average net assets of the Fund per annum.
2. Subject to the limit in paragraph 1, the Fund shall pay, or reimburse AFD
for, amounts to finance any activity which is primarily intended to result in
the sale of shares of the Fund provided that the Board of Directors of the Fund
shall have approved categories of expenses for which payment or reimbursement
shall be made pursuant to this paragraph 2.
3. This Plan shall not take effect until it has been approved by vote of a
majority of the outstanding voting securities of the Fund (as defined in the
Investment Company Act of 1940 (the "1940 Act")) and by the Board of Directors
as provided in paragraph 4.
4. This Plan shall not take effect until it has been approved, together with
any related agreement, by votes of the majority of both (i) the Board of
Directors of the Fund and (ii) those Directors of the Fund who are not
"interested persons" of the Fund (as defined in the 1940 Act) and have no
direct or indirect financial interest in the operation of this Plan or any
agreement related to it (the "Independent Directors"), cast in person at a
meeting called for the purpose of voting on this Plan and/or such agreement.
5. At least quarterly, the Board of Directors shall be provided by any person
authorized to direct the disposition of monies paid or payable by the Fund
pursuant to this Plan or any related agreement, and the Board shall review a
written report of the amounts expended pursuant to the Plan and the purposes
for which such expenditures were made.
6. This Plan may be terminated as to the Fund at any time by vote of a majority
of the Independent Directors, or by vote of a majority of the outstanding
voting securities (as defined in the 1940 Act) of the Fund. Unless sooner
terminated in accordance with this provision, this Plan shall continue in
effect until December 31, 2000. It may thereafter be renewed from year to year
in the manner provided for in paragraph 4 hereof.
7. Any agreement related to this Plan shall be in writing, and shall provide:
A. that such agreement may be terminated as to the Fund at any time, without
payment of any penalty, by vote of a majority of the Independent Directors or
by a vote of a majority of the outstanding voting securities (as defined in the
1940 Act) of the Fund, on not more than sixty (60) days' written notice to any
other party to the agreement; and
B. that such agreement shall terminate automatically in the event of its
assignment.
8. This Plan may not be amended to increase materially the maximum amount of
fee or other distribution expenses provided for in paragraph 1 hereof with
respect to the Fund unless such amendment is approved by the voting securities
of the Fund in the manner provided in paragraph 3 hereof, and no material
amendment to this Plan shall be made unless approved in the manner provided for
in paragraph 4 hereof.
9. While this Plan is in effect, the selection and nomination of Directors of
the Fund who are not "interested persons" of the Fund (as defined in the 1940
Act) shall be committed to the discretion of the Directors who are not
interested persons.
10. If the Fund shall at any time issue shares in more than one series, this
Plan may be adopted, amended, continued or renewed with respect to a series as
provided herein notwithstanding such adoption, amendment, continuance or
renewal has not been effected with respect to any one or more other series of
the Fund.
11. The Fund shall preserve copies of this Plan and any related agreement and
all reports made pursuant to paragraph 5 hereof for a period of not less than
six (6) years from the date of this Plan, or such agreement or reports, as the
case may be, the first two (2) years of which such records shall be stored in
an easily accessible place.
IN WITNESS WHEREOF, the Fund has caused this Plan to be executed by its
officers thereunto duly authorized, as of _______________.
NEW WORLD FUND, INC.
By
President
By
Secretary
