SEC File Nos. 333-67455
811-9105
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
Registration Statement
Under
the Securities Act of 1933
Post-Effective Amendment No. 4
and
Registration Statement
Under
The Investment Company Act of 1940
Amendment No. 7
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)
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:
MICHAEL J. FAIRCLOUGH, ESQ.
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, California 90071
(Counsel for the Registrant)
Approximate date of proposed public offering:
It is proposed that this filing become effective on January 1, 2001, pursuant
to paragraph (b) of rule 485.
<PAGE>
New World Fund
Prospectus
JANUARY 1, 2001
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED
OR DISAPPROVED OF THESE SECURITIES. FURTHER, IT HAS NOT DETERMINED THAT THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
---------------------------------------------------------
NEW WORLD FUND, INC.
333 South Hope Street
Los Angeles, California 90071
<TABLE>
<CAPTION>
TICKER NEWSPAPER FUND
SYMBOL ABBREVIATION NUMBER
------------------------------------------------------------
<S> <C> <C> <C>
Class A NEWFX NwWrld 36
Class B NEWBX NwWrldB 236
</TABLE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-------------------------------------------------------
<S> <C>
Risk/Return Summary 2
-------------------------------------------------------
Fees and Expenses of the Fund 3
-------------------------------------------------------
Investment Objective, Strategies and Risks 4
-------------------------------------------------------
Management and Organization 7
-------------------------------------------------------
Shareholder Information 9
-------------------------------------------------------
Choosing a Share Class 10
-------------------------------------------------------
Purchase and Exchange of Shares 11
-------------------------------------------------------
Sales Charges 12
-------------------------------------------------------
Sales Charge Reductions and Waivers 14
-------------------------------------------------------
Plans of Distribution 16
-------------------------------------------------------
How to Sell Shares 17
-------------------------------------------------------
Distributions and Taxes 19
-------------------------------------------------------
Financial Highlights 20
-------------------------------------------------------
</TABLE>
1
NEW WORLD FUND / PROSPECTUS
NWF-010-0101/M
<PAGE>
---------------------------------------------------------
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 lower rated bonds, with exposure to 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's income and the value of its
investments may fluctuate in response to economic, political or social events
in the U.S. or abroad. The prices of equity securities owned by the fund may be
affected by events specifically involving the companies issuing those
securities. The values of debt securities may be affected by changing interest
rates and credit risk assessments. Lower quality or longer maturity bonds may
be subject to greater price fluctuations than higher quality or shorter
maturity bonds.
Although all securities in the fund's portfolio 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
<PAGE>
---------------------------------------------------------
FEES AND EXPENSES OF THE FUND
<TABLE>
<CAPTION>
SHAREHOLDER FEES
(fees paid directly from your investment) CLASS A CLASS B
--------------------------------------------------------------------------
<S> <C> <C>
Maximum sales charge imposed on purchases 5.75%/1/ 0.00%
(as a percentage of offering price)
--------------------------------------------------------------------------
Maximum sales charge imposed on reinvested dividends 0.00% 0.00%
--------------------------------------------------------------------------
Maximum deferred sales charge 0.00%/2/ 5.00%/3/
--------------------------------------------------------------------------
Redemption or exchange fees 0.00% 0.00%
</TABLE>
1 Sales charges are reduced or eliminated for purchases of $25,000 or more.
2 A contingent deferred sales charge of 1% applies on certain redemptions made
within 12 months following purchases of $1 million or more made without a
sales charge.
3 Deferred sales charges are reduced after 12 months and eliminated after six
years.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from fund assets) CLASS A CLASS B/1/
-----------------------------------------------
<S> <C> <C>
Management Fees 0.80% 0.80%
Distribution and/or Service (12b-1) Fees 0.26%/2/ 1.00%
Other Expenses 0.29% 0.23%
Total Annual Fund Operating Expenses 1.35% 2.03%
</TABLE>
1 Annualized.
2 Class A 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, that your investment
has a 5% return each year and that the fund's operating expenses remain the
same as shown above. The "Class A" example reflects the maximum initial sales
charge in Year One. The "Class B - assuming redemption" example reflects
applicable contingent deferred sales charges through Year Six (after which time
they are eliminated). Both Class B examples reflect Class A expenses for Years
9 and 10 since Class B shares automatically convert to Class A after eight
years. Although your actual costs may be higher or lower, based on these
assumptions your cumulative expenses would be:
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
ONE THREE FIVE TEN
<S> <C> <C> <C> <C> <C> <C> <C>
Class A $705 $ 978 $1,272 $2,105
-------------------------------------------------------------------------------
Class B - assuming redemption $706 $1,037 $1,293 $2,184
Class B - assuming no redemption $206 $ 637 $1,093 $2,184
</TABLE>
3
NEW WORLD FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
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 lower rated bonds 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 will maintain a 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, China, Colombia, Croatia, Czech Republic, Egypt, Greece,
Hungary, India, Israel, Jordan, Malaysia, Mexico, Morocco, Panama, Peru,
Philippines, Poland, Russia, South Africa, South Korea, Thailand, Turkey, and
Venezuela.
The values of equity securities held by the fund may 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 and interest rate fluctuations. 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. Smaller capitalization stocks are often more difficult
to value or dispose of, more difficult to obtain information about, and more
volatile than stocks of larger, more established companies. 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
4
NEW WORLD FUND / PROSPECTUS
<PAGE>
less developed legal and accounting systems. The governments of these countries
may be more unstable and likely to impose capital controls, nationalize a
company or industry, place restrictions on foreign ownership and on withdrawing
sale proceeds of securities from the country, and/or impose punitive taxes that
could adversely affect security prices. In addition, the economies of these
countries may be dependent on relatively few industries that are more
susceptible to local and global changes. Securities markets in these countries
are also relatively small and have substantially lower trading volumes. As a
result, securities issued in these countries may be more volatile and
potentially less liquid than securities issued in countries with more developed
economies or markets.
The values of most debt securities held by the fund may be affected by changing
interest rates, and individual securities by changes in their effective
maturities and credit ratings. For example, the values of bonds in the fund's
portfolio generally will decline when interest rates rise and vice versa. Debt
securities are also subject to credit risk, which is the possibility that the
credit strength of an issuer will weaken and/or an issuer of a debt security
will fail to make timely payments of principal or interest and the security
will go into default. The values of lower quality or longer maturity bonds may
be subject to greater price fluctuations than higher quality or shorter
maturity bonds. The fund's investment adviser attempts to reduce these risks
through diversification of the portfolio and with ongoing credit analysis of
each issuer as well as by monitoring economic and legislative developments.
The fund may also hold cash or money market instruments. 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 would
reduce the fund's exposure in the event of a market downturn and provide
liquidity to make additional investments or to meet redemptions.
The fund relies on the professional judgment of its investment adviser, Capital
Research and Management Company, to make decisions about the fund's portfolio
investments. The basic investment philosophy of the investment adviser is to
seek undervalued securities that represent good long-term investment
opportunities. Securities may be sold when the investment adviser believes they
no longer represent good long-term value.
5
NEW WORLD FUND / PROSPECTUS
<PAGE>
The following chart illustrates the industry mix of the fund's investment
portfolio as of the end of the fund's fiscal year, October 31, 2000.
[pie chart]
Banks 9.89%
Wireless Telecommunication Services 6.20%
Electronic Equipment & Instruments 5.11%
Diversified Telecommunication Services 4.83%
Beverages 4.53%
Other Industries 45.60%
Bonds & Notes 10.54%
Cash & Equivalents 13.30%
[end pie]
<TABLE>
<CAPTION>
LARGEST INDIVIDUAL EQUITY HOLDINGS PERCENT OF
(AS OF OCTOBER 31, 2000) NET ASSETS
---------------------------------------------------------------------------------
<S> <C>
Shinhan Bank 1.99%
---------------------------------------------------------------------------------
Hon Hai Precision Industry 1.68
---------------------------------------------------------------------------------
Unibanco-Uniao de Bancos Brasileiros 1.63
---------------------------------------------------------------------------------
Samsung Electro-Mechanics 1.62
---------------------------------------------------------------------------------
Coca-Cola 1.47
---------------------------------------------------------------------------------
Telefonos de Mexico 1.45
---------------------------------------------------------------------------------
Avon Products 1.30
---------------------------------------------------------------------------------
PepsiCo 1.26
---------------------------------------------------------------------------------
Fomento Economico Mexicano 1.21
---------------------------------------------------------------------------------
Sony 1.19
</TABLE>
Because the fund is actively managed, its holdings will change from time to
time.
6
NEW WORLD FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
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 total management fee paid by the fund, as a percentage
of average net assets, for the previous fiscal year is discussed earlier under
"Fees and Expenses of the Fund."
MULTIPLE PORTFOLIO COUNSELOR SYSTEM
Capital Research and Management Company uses a system of multiple portfolio
counselors in managing mutual fund assets. Under this approach the portfolio of
a fund is divided into segments which are managed by individual counselors.
Counselors decide how their respective segments will be invested, within the
limits provided by a fund's objective(s) and policies and by Capital Research
and Management Company's investment committee. In addition, Capital Research
and Management Company's research professionals may make investment decisions
with respect to a portion of a fund's portfolio. The primary individual
portfolio counselors for New World Fund are listed on the following page.
7
NEW WORLD FUND / PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
APPROXIMATE YEARS OF EXPERIENCE
AS AN INVESTMENT PROFESSIONAL
(INCLUDING THE LAST FIVE YEARS)
YEARS OF EXPERIENCE
AS PORTFOLIO COUNSELOR -----------------------------------
(AND RESEARCH PROFESSIONAL, WITH CAPITAL
PORTFOLIO IF APPLICABLE) FOR RESEARCH AND
COUNSELORS FOR NEW WORLD FUND MANAGEMENT
NEW WORLD FUND PRIMARY TITLE(S) (APPROXIMATE) COMPANY
------------------------------------------------------------------------------ OR AFFILIATES TOTAL YEARS
-----------------------------------
<S> <C> <C> <C> <C>
ROBERT W. President and Director of 2 years (since the fund began 16 years 16 years
LOVELACE the fund. President and operations)
Director, Capital Research
Company*
-----------------------------------------------------------------------------------------------------------------
MARK E. Senior Vice President of the 2 years (since the fund began 18 years 18 years
DENNING fund. Director, Capital operations)
Research and Management
Company. Senior Vice
President, Capital Research
Company*
-----------------------------------------------------------------------------------------------------------------
DAVID C. Vice President of the fund. 2 years (since the fund began 13 years 20 years
BARCLAY Senior Vice President and operations)
Director, Capital Research
and Management Company
-------------------------------------------------------------------
----------------------------------------------
ALWYN Vice President of the fund. 2 years (since the fund began 8 years 12 years
HEONG Vice President, Capital operations)
Research Company*
-----------------------------------------------------------------------------------------------------------------
CARL M. Vice President of the fund. 2 years (since the fund began 10 years 13 years
KAWAJA Vice President, Capital operations)
Research Company*
The fund began investment operations on June 17, 1999.
* Company affiliated with Capital Research and Management Company
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
8
NEW WORLD FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
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 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.
AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS
Call toll-Free from anywhere in the U.S.
(8 a.m. to 8 p.m. ET):
800/421-0180
[map of the United States]
<TABLE>
<CAPTION>
<S> <C> <C> <C>
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
</TABLE>
A COMPLETE DESCRIPTION OF THE SERVICES WE OFFER IS INCLUDED 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, Class B
shares generally are not available to certain retirement plans (for example,
group retirement plans such as 401(k) plans, employer-sponsored 403(b) plans,
and money purchase pension and profit sharing plans). Some retirement plans or
accounts held by investment dealers may not offer certain services. If you
have any questions, please contact American Funds Service Company, your plan
administrator/trustee or dealer.
9
NEW WORLD FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
CHOOSING A SHARE CLASS
The fund offers both Class A and Class B shares. Each share class has its own
sales charge and expense structure, allowing you to choose the class that best
meets your situation.
Factors you should consider in choosing a class of shares include:
. How long you expect to own the shares
. How much you intend to invest
. The expenses associated with owning shares of each class
. Whether you qualify for any reduction or waiver of sales charges (for
example, Class A shares may be a less expensive option over time if you
qualify for a sales charge reduction or waiver)
EACH INVESTOR'S FINANCIAL CONSIDERATIONS ARE DIFFERENT. YOU SHOULD SPEAK WITH
YOUR FINANCIAL ADVISER TO HELP YOU DECIDE WHICH SHARE CLASS IS BEST FOR YOU.
Differences between Class A and Class B shares include:
<TABLE>
<CAPTION>
CLASS A CLASS B
------------------------------------------------------------------------------
<S> <S>
Initial sales charge of up to No initial sales charge.
5.75%. Sales charges are reduced or
eliminated for purchases of $25,000
or more (see "Sales Charges - Class
A").
------------------------------------------------------------------------------
Distribution and service (12b-1) Distribution and service (12b-1) fees
fees of up to 0.30% annually. of 1.00% annually.
------------------------------------------------------------------------------
Higher dividends, if any, than Lower dividends, if any, than Class A
Class B shares due to lower annual shares due to higher distribution fees
expenses. and other expenses.
------------------------------------------------------------------------------
No contingent deferred sales charge A contingent deferred sales charge if
(except on certain redemptions on you sell shares within six years of
purchases of $1 million or more buying them. The charge starts at 5%
bought without an initial sales and declines thereafter until it
charge). reaches 0% after six years. (See "Sales
Charges - Class B.")
------------------------------------------------------------------------------
No purchase maximum. Maximum purchase of $100,000.
------------------------------------------------------------------------------
Automatic conversion to Class A shares
after eight years, reducing future
annual expenses.
------------------------------------------------------------------------------
</TABLE>
10
NEW WORLD FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
PURCHASE AND EXCHANGE OF SHARES
PURCHASE
Generally, you may open an account by contacting any investment dealer (who may
impose transaction charges in addition to those described in this prospectus)
authorized to sell the fund's shares. You may purchase additional shares using
various options described in the statement of additional information and
"Welcome to the Family."
EXCHANGE
You may exchange your shares into shares of the same class of other funds in
The American Funds Group generally without a sales charge. For purposes of
computing the contingent deferred sales charge on Class B shares, the length of
time you have owned your shares will be measured from the date of original
purchase and will not be affected by any exchange.
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.
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.
<TABLE>
<CAPTION>
PURCHASE MINIMUMS FOR CLASS A AND B SHARES
<S> <C>
To establish an account (including retirement plan accounts) $ 250
For a retirement plan account through payroll deduction $ 25
To add to an account $ 50
For a retirement plan account through payroll deduction $ 25
PURCHASE MAXIMUM FOR CLASS B SHARES $100,000
</TABLE>
11
NEW WORLD FUND / PROSPECTUS
<PAGE>
SHARE PRICE
The fund calculates its share price, also called net asset value, as of
approximately 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. The fund has adopted
procedures to make "fair value" determinations when reliable market prices for
particular securities are not available.
Your shares will be purchased at the net asset value plus any applicable sales
charge in the case of Class A shares, or sold at the net asset value next
determined after American Funds Service Company receives and accepts your
request. Sales of certain Class A and B shares may be subject to contingent
deferred sales charges.
---------------------------------------------------------
SALES CHARGES
CLASS A
The initial sales charge you pay when you buy Class A shares differs depending
upon the amount you invest and may be reduced or eliminated for larger
purchases as indicated below.
<TABLE>
<CAPTION>
SALES CHARGE AS A PERCENTAGE OF
----------------------------------
DEALER
NET COMMISSION
OFFERING AMOUNT AS % OF
INVESTMENT PRICE INVESTED OFFERING PRICE
------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $25,000 5.75% 6.10% 5.00%
------------------------------------------------------------------------------
$25,000 but less than 5.00% 5.26% 4.25%
$50,000
------------------------------------------------------------------------------
$50,000 but less than 4.50% 4.71% 3.75%
$100,000
------------------------------------------------------------------------------
$100,000 but less than 3.50% 3.63% 2.75%
$250,000
------------------------------------------------------------------------------
$250,000 but less than 2.50% 2.56% 2.00%
$500,000
------------------------------------------------------------------------------
$500,000 but less than 2.00% 2.04% 1.60%
$750,000
------------------------------------------------------------------------------
$750,000 but less than $1
million 1.50% 1.52% 1.20%
$1 million or more and certain other
investments described below see below see below see below
</TABLE>
CLASS A PURCHASES NOT SUBJECT TO SALES CHARGE
Investments of $1 million or more are sold with no initial sales charge.
HOWEVER, A 1% CONTINGENT DEFERRED SALES CHARGE MAY BE IMPOSED IF REDEMPTIONS
ARE
12
NEW WORLD FUND / PROSPECTUS
<PAGE>
MADE WITHIN ONE YEAR OF PURCHASE. Employer-sponsored defined contribution-type
plans investing $1 million or more, or with 100 or more eligible employees, and
Individual Retirement Account rollovers involving retirement plan assets
invested in the American Funds, may invest with no sales charge and are not
subject to a contingent deferred sales charge. Investments made through
retirement plans, endowments or foundations with $50 million or more in assets,
or through certain qualified fee-based programs may also be made with no sales
charge and are not subject to a contingent deferred sales charge. The fund may
pay a dealer concession of up to 1% under its Plan of Distribution on
investments made with no initial sales charge.
CLASS B
Class B shares are sold without any initial sales charge. However, a contingent
deferred sales charge may be applied to the value of the shares you redeem
within six years of purchase, as shown in the table below.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Shares sold within year 1 2 3 4 5 6
----------------------------------------------------------------
Contingent deferred sales charge 5% 4% 4% 3% 2% 1%
</TABLE>
Shares acquired through reinvestment of dividends or capital gain distributions
are not subject to a contingent deferred sales charge. In addition, the
contingent deferred sales charge may be waived in certain circumstances. See
"Contingent Deferred Sales Charge Waivers for Class B Shares" below. The
contingent deferred sales charge is based on the original purchase cost or the
current market value of the shares being sold, whichever is less. For purposes
of determining the contingent deferred sales charge, if you sell only some of
your shares, shares that are not subject to any contingent deferred sales
charge will be sold first and then shares that you have owned the longest.
American Funds Distributors pays compensation equal to 4% of the amount
invested to dealers who sell Class B shares.
CLASS B CONVERSION TO A SHARES
Class B shares automatically convert to Class A shares in the month of the
eight-year anniversary of the purchase date. The Internal Revenue Service
currently takes the position that this automatic conversion is not taxable.
Should their position change, shareholders would still have the option of
converting but may face certain tax consequences. Please see the statement of
additional information for more information.
13
NEW WORLD FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
SALES CHARGE REDUCTIONS AND WAIVERS
You must let your investment dealer or American Funds Service Company know if
you qualify for a reduction in your Class A sales charge or waiver of your
Class B contingent deferred sales charge using one or any combination of the
methods described below, in the statement of additional information and
"Welcome to the Family."
REDUCING YOUR CLASS A SALES CHARGE
You and your "immediate family" (your spouse and your children under the age of
21) may combine investments to reduce your Class A sales charge.
AGGREGATING ACCOUNTS
To receive a reduced Class A sales charge, investments made by you and your
immediate family (see above) may be aggregated if made for their own account(s)
and/or:
. trust accounts established by the above individuals. However, if the
person(s) who established the trust is deceased, the trust account may be
aggregated with accounts of the person who is the primary beneficiary of
the trust.
. solely controlled business accounts.
. single-participant retirement plans.
Other types of accounts may also be aggregated. You should check with your
financial adviser or consult the statement of additional information or
"Welcome to the Family" for more information.
CONCURRENT PURCHASES
You may combine simultaneous purchases of Class A and/or B shares of two or
more American Funds, as well as individual holdings in various American Legacy
variable annuities or variable life insurance policies, to qualify for a
reduced Class A sales charge. Direct purchases of money market funds are
excluded.
RIGHTS OF ACCUMULATION
You may take into account the current value (or if greater, the amount you
invested less any withdrawals) of your existing Class A and B holdings in the
American Funds, as well as individual holdings in various American Legacy
variable annuities or variable life insurance policies, to determine your Class
A sales charge. Direct purchases of money market funds are excluded.
14
NEW WORLD FUND / PROSPECTUS
<PAGE>
STATEMENT OF INTENTION
You can reduce the sales charge you pay on your Class A share purchases by
establishing a Statement of Intention. A Statement of Intention allows you to
combine all Class A and B share non-money market fund purchases, as well as
individual American Legacy variable annuity and life insurance policies you
intend to make over a 13-month period, to determine the applicable sales
charge. At your request purchases made during the previous 90 days may be
included; however, capital appreciation and reinvested dividends and capital
gains do not apply toward these combined purchases. A portion of your account
may be held in escrow to cover additional Class A sales charges which may be
due if your total investments over the 13-month period do not qualify for the
applicable sales charge reduction.
CONTINGENT DEFERRED SALES CHARGE WAIVERS FOR CLASS B SHARES
The contingent deferred sales charge on Class B shares may be waived in the
following cases:
. when receiving payments through systematic withdrawal plans (up to 12% of
the value of your account);
. when receiving required minimum distributions from retirement accounts upon
reaching age 70 1/2; or
. for redemptions due to death or post-purchase disability of the
shareholder.
For more information, please consult your financial adviser, the statement of
additional information or "Welcome to the Family."
15
NEW WORLD FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
PLANS OF DISTRIBUTION
The fund has Plans of Distribution or "12b-1 Plans" 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. The plans
provide for annual expenses of up to 0.30% for Class A shares and 1.00% for
Class B shares. Up to 0.25% of these payments are used to pay service fees to
qualified dealers for providing certain shareholder services. The remaining
0.75% expense for Class B shares is used for financing commissions paid to your
dealer. The 12b-1 fees paid by the fund, as a percentage of average net assets,
for the previous fiscal year is indicated above under "Fees and Expenses of the
Fund." Since these fees are paid out of the fund's assets or income on an
ongoing basis, over time they will increase the cost and reduce the return of
an investment. The higher fees for Class B shares may cost you more over time
than paying the initial sales charge for Class A shares.
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.
16
NEW WORLD FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
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.
. American Funds Service Company reserves the right to require signature
guarantee(s) on all redemptions.
. 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, fax, or computer (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.
17
NEW WORLD FUND / PROSPECTUS
<PAGE>
TRANSACTIONS BY TELEPHONE, FAX, AMERICAN FUNDSLINE OR 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 of
its affiliates or mutual funds managed by such affiliates, and each of their
respective directors, trustees, officers, employees and agents harmless from
any losses, expenses, costs or liabilities (including attorney fees) which may
be incurred in connection with the exercise of these privileges, provided
American Funds Service Company employs reasonable procedures to confirm that
the instructions received from any person with appropriate account information
are genuine. If reasonable procedures are not employed, it and/or the fund may
be liable for losses due to unauthorized or fraudulent instructions.
18
NEW WORLD FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
The fund intends to distribute dividends to you, if any, usually in December.
Capital gains, if any, are usually distributed in December. When a dividend or
capital gain is distributed, the net asset value per share is reduced by the
amount of the payment.
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. Most shareholders do not elect
to take capital gain distributions in cash because these distributions reduce
principal value.
TAXES ON DISTRIBUTIONS
Distributions you receive from the fund may be subject to income tax and may
also be subject to state or local taxes - unless you are exempt from taxation.
For federal tax purposes, any taxable dividends and distributions of short-term
capital gains are treated as ordinary income. The fund's distributions of net
long-term capital gains are taxable to you as long-term capital gains. Any
taxable distributions you receive from the fund will normally be taxable to you
when made, regardless of whether you reinvest distributions 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, the "Welcome to the Family"
guide, and your tax adviser for further information.
19
NEW WORLD FUND / PROSPECTUS
<PAGE>
FINANCIAL HIGHLIGHTS/1/
The financial highlights table is intended to help you understand the fund's
results for the past five years. Certain information reflects financial results
for a single fund share. The total returns in the table represent the rate that
an investor would have earned or lost on an investment in the fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Deloitte & Touche LLP, whose report, along with the fund's financial
statements, is included in the statement of additional information, which is
available upon request.
<TABLE>
<CAPTION>
Net gains/(losses) on
Net asset securities Dividends
value, Net (both realized Total from (from net Net asset
Years ended beginning of investment and investment investment Total value, end of
October 31 period income unrealized) operations income) distributions year Total return
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A:
2000 $23.67 $.42/2/ $(1.08)/2/ $(.66) $(.20) $(.20) $22.81 (2.91)%
1999 23.56 .16 (.05) .11 - - 23.67 .47
CLASS B:
2000 29.09 .20/2/ (6.58)/2/ (6.38) - - 22.71 (21.93)/3/
<CAPTION>
Ratio of Ratio of net
Net assets, expenses to income to
Years ended end of year average net average net Portfolio
October 31 (in millions) assets assets turnover rate
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A:
2000 $1,279 1.35% 1.61% 30.07%/4/
1999 739 1.46/3/ 1.83/3/ .83/5/
CLASS B:
2000 16 2.03/3/ .93/3/ 30.07/4/
</TABLE>
1 The period ended 1999 represents the period June 17, commencement of
operations, to October 31. The period ended 2000 represents, for Class A
shares, fiscal year ended October 31, 2000. The period ended 2000 represents,
for Class B shares, the 230-day period ended October 31, 2000. Class B shares
were not offered before March 15, 2000. Total return for Class B is based on
activity during the period and thus is not representative of a full year.
2 Based on average shares outstanding.
3 Annualized
4 Represents portfolio turnover rate (equivalent for all share classes) for the
year ended October 31, 2000.
5 Based on operations for the period shown and, accordingly, not representative
of a full year.
20
NEW WORLD FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
NOTES
21
NEW WORLD FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
NOTES
22
NEW WORLD FUND / PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
FOR SHAREHOLDER SERVICES American Funds Service Company
800/421-0180
FOR RETIREMENT PLAN SERVICES Call your employer or plan administrator
FOR DEALER SERVICES American Funds Distributors
800/421-9900 Ext. 11
FOR 24-HOUR INFORMATION American FundsLine(R)
800/325-3590
American FundsLine OnLine(R)
http://www.americanfunds.com
</TABLE>
Telephone conversations may be recorded or monitored for
verification, recordkeeping and quality assurance purposes.
MULTIPLE TRANSLATIONS This prospectus may be translated into other languages.
If there is any inconsistency or ambiguity as to the meaning of any word or
phrase in a translation, the English text will prevail.
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) AND CODES OF ETHICS The SAI contains
more detailed information on all aspects of the fund, including the fund's
financial statements and is incorporated by reference into this prospectus.
The Codes of Ethics describe the personal investing policies adopted by the
fund and the fund's investment adviser and its affiliated companies.
The Codes of Ethics and current SAI have been filed with the Securities and
Exchange Commission ("SEC"). These and other related materials about the fund
are available for review or to be copied at the SEC's Public Reference Room in
Washington, D.C. (202/942-8090) or on the EDGAR database on the SEC's Internet
Web site at http://www.sec.gov, or, after payment of a duplicating fee, via
e-mail request to [email protected] or by writing the SEC's Public Reference
Section, Washington, D.C. 20549-0102.
HOUSEHOLD MAILINGS Each year you are automatically sent an updated
prospectus, annual and semi-annual report for the fund. In order to reduce the
volume of mail you receive, when possible, only one copy of these documents
will be sent to shareholders that are part of the same family and share the
same residential address.
* * * * *
If you would like to receive individual copies of these documents at no
charge, please call American Funds Service Company at 800/421-0180 or write to
the Secretary of the fund at 333 South Hope Street, Los Angeles, California
90071.
Investment Company File No. 811-9105
Printed on recycled paper
THE FUND PROVIDES SPANISH TRANSLATIONS IN CONNECTION WITH THE PUBLIC OFFERING
AND SALE OF ITS SHARES. THE FOLLOWING IS A FAIR AND ACCURATE ENGLISH
TRANSLATION OF A SPANISH LANGUAGE PROSPECTUS FOR THE FUND.
/s/ Vincent P. Corti
Vincent P. Corti
Secretary
<PAGE>
New World Fund
Prospectus
JANUARY 1, 2001
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED
OR DISAPPROVED OF THESE SECURITIES. FURTHER, IT HAS NOT DETERMINED THAT THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
---------------------------------------------------------
NEW WORLD FUND, INC.
333 South Hope Street
Los Angeles, California 90071
<TABLE>
<CAPTION>
TICKER NEWSPAPER FUND
SYMBOL ABBREVIATION NUMBER
------------------------------------------------------------
<S> <C> <C> <C>
Class A NEWFX NwWrld 36
Class B NEWBX NwWrldB 236
</TABLE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-------------------------------------------------------
<S> <C>
Risk/Return Summary 2
-------------------------------------------------------
Fees and Expenses of the Fund 3
-------------------------------------------------------
Investment Objective, Strategies and Risks 4
-------------------------------------------------------
Management and Organization 7
-------------------------------------------------------
Shareholder Information 9
-------------------------------------------------------
Choosing a Share Class 10
-------------------------------------------------------
Purchase and Exchange of Shares 11
-------------------------------------------------------
Sales Charges 12
-------------------------------------------------------
Sales Charge Reductions and Waivers 14
-------------------------------------------------------
Plans of Distribution 16
-------------------------------------------------------
How to Sell Shares 17
-------------------------------------------------------
Distributions and Taxes 19
-------------------------------------------------------
Financial Highlights 20
-------------------------------------------------------
</TABLE>
1
NEW WORLD FUND / PROSPECTUS
NWF-010-0101/M
<PAGE>
---------------------------------------------------------
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 lower rated bonds, with exposure to 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's income and the value of its
investments may fluctuate in response to economic, political or social events
in the U.S. or abroad. The prices of equity securities owned by the fund may be
affected by events specifically involving the companies issuing those
securities. The values of debt securities may be affected by changing interest
rates and credit risk assessments. Lower quality or longer maturity bonds may
be subject to greater price fluctuations than higher quality or shorter
maturity bonds.
Although all securities in the fund's portfolio 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
<PAGE>
---------------------------------------------------------
FEES AND EXPENSES OF THE FUND
<TABLE>
<CAPTION>
SHAREHOLDER FEES
(fees paid directly from your investment) CLASS A CLASS B
--------------------------------------------------------------------------
<S> <C> <C>
Maximum sales charge imposed on purchases 5.75%/1/ 0.00%
(as a percentage of offering price)
--------------------------------------------------------------------------
Maximum sales charge imposed on reinvested dividends 0.00% 0.00%
--------------------------------------------------------------------------
Maximum deferred sales charge 0.00%/2/ 5.00%/3/
--------------------------------------------------------------------------
Redemption or exchange fees 0.00% 0.00%
</TABLE>
1 Sales charges are reduced or eliminated for purchases of $25,000 or more.
2 A contingent deferred sales charge of 1% applies on certain redemptions made
within 12 months following purchases of $1 million or more made without a
sales charge.
3 Deferred sales charges are reduced after 12 months and eliminated after six
years.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from fund assets) CLASS A CLASS B/1/
-----------------------------------------------
<S> <C> <C>
Management Fees 0.80% 0.80%
Distribution and/or Service (12b-1) Fees 0.26%/2/ 1.00%
Other Expenses 0.29% 0.23%
Total Annual Fund Operating Expenses 1.35% 2.03%
</TABLE>
1 Annualized.
2 Class A 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, that your investment
has a 5% return each year and that the fund's operating expenses remain the
same as shown above. The "Class A" example reflects the maximum initial sales
charge in Year One. The "Class B - assuming redemption" example reflects
applicable contingent deferred sales charges through Year Six (after which time
they are eliminated). Both Class B examples reflect Class A expenses for Years
9 and 10 since Class B shares automatically convert to Class A after eight
years. Although your actual costs may be higher or lower, based on these
assumptions your cumulative expenses would be:
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
ONE THREE FIVE TEN
<S> <C> <C> <C> <C> <C> <C> <C>
Class A $705 $ 978 $1,272 $2,105
-------------------------------------------------------------------------------
Class B - assuming redemption $706 $1,037 $1,293 $2,184
Class B - assuming no redemption $206 $ 637 $1,093 $2,184
</TABLE>
3
NEW WORLD FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
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 lower rated bonds 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 will maintain a 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, China, Colombia, Croatia, Czech Republic, Egypt, Greece,
Hungary, India, Israel, Jordan, Malaysia, Mexico, Morocco, Panama, Peru,
Philippines, Poland, Russia, South Africa, South Korea, Thailand, Turkey, and
Venezuela.
The values of equity securities held by the fund may 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 and interest rate fluctuations. 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. Smaller capitalization stocks are often more difficult
to value or dispose of, more difficult to obtain information about, and more
volatile than stocks of larger, more established companies. 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
4
NEW WORLD FUND / PROSPECTUS
<PAGE>
less developed legal and accounting systems. The governments of these countries
may be more unstable and likely to impose capital controls, nationalize a
company or industry, place restrictions on foreign ownership and on withdrawing
sale proceeds of securities from the country, and/or impose punitive taxes that
could adversely affect security prices. In addition, the economies of these
countries may be dependent on relatively few industries that are more
susceptible to local and global changes. Securities markets in these countries
are also relatively small and have substantially lower trading volumes. As a
result, securities issued in these countries may be more volatile and
potentially less liquid than securities issued in countries with more developed
economies or markets.
The values of most debt securities held by the fund may be affected by changing
interest rates, and individual securities by changes in their effective
maturities and credit ratings. For example, the values of bonds in the fund's
portfolio generally will decline when interest rates rise and vice versa. Debt
securities are also subject to credit risk, which is the possibility that the
credit strength of an issuer will weaken and/or an issuer of a debt security
will fail to make timely payments of principal or interest and the security
will go into default. The values of lower quality or longer maturity bonds may
be subject to greater price fluctuations than higher quality or shorter
maturity bonds. The fund's investment adviser attempts to reduce these risks
through diversification of the portfolio and with ongoing credit analysis of
each issuer as well as by monitoring economic and legislative developments.
The fund may also hold cash or money market instruments. 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 would
reduce the fund's exposure in the event of a market downturn and provide
liquidity to make additional investments or to meet redemptions.
The fund relies on the professional judgment of its investment adviser, Capital
Research and Management Company, to make decisions about the fund's portfolio
investments. The basic investment philosophy of the investment adviser is to
seek undervalued securities that represent good long-term investment
opportunities. Securities may be sold when the investment adviser believes they
no longer represent good long-term value.
5
NEW WORLD FUND / PROSPECTUS
<PAGE>
The following chart illustrates the industry mix of the fund's investment
portfolio as of the end of the fund's fiscal year, October 31, 2000.
[pie chart]
Banks 9.89%
Wireless Telecommunication Services 6.20%
Electronic Equipment & Instruments 5.11%
Diversified Telecommunication Services 4.83%
Beverages 4.53%
Other Industries 45.60%
Bonds & Notes 10.54%
Cash & Equivalents 13.30%
[end pie]
<TABLE>
<CAPTION>
LARGEST INDIVIDUAL EQUITY HOLDINGS PERCENT OF
(AS OF OCTOBER 31, 2000) NET ASSETS
---------------------------------------------------------------------------------
<S> <C>
Shinhan Bank 1.99%
---------------------------------------------------------------------------------
Hon Hai Precision Industry 1.68
---------------------------------------------------------------------------------
Unibanco-Uniao de Bancos Brasileiros 1.63
---------------------------------------------------------------------------------
Samsung Electro-Mechanics 1.62
---------------------------------------------------------------------------------
Coca-Cola 1.47
---------------------------------------------------------------------------------
Telefonos de Mexico 1.45
---------------------------------------------------------------------------------
Avon Products 1.30
---------------------------------------------------------------------------------
PepsiCo 1.26
---------------------------------------------------------------------------------
Fomento Economico Mexicano 1.21
---------------------------------------------------------------------------------
Sony 1.19
</TABLE>
Because the fund is actively managed, its holdings will change from time to
time.
6
NEW WORLD FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
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 total management fee paid by the fund, as a percentage
of average net assets, for the previous fiscal year is discussed earlier under
"Fees and Expenses of the Fund."
MULTIPLE PORTFOLIO COUNSELOR SYSTEM
Capital Research and Management Company uses a system of multiple portfolio
counselors in managing mutual fund assets. Under this approach the portfolio of
a fund is divided into segments which are managed by individual counselors.
Counselors decide how their respective segments will be invested, within the
limits provided by a fund's objective(s) and policies and by Capital Research
and Management Company's investment committee. In addition, Capital Research
and Management Company's research professionals may make investment decisions
with respect to a portion of a fund's portfolio. The primary individual
portfolio counselors for New World Fund are listed on the following page.
7
NEW WORLD FUND / PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
APPROXIMATE YEARS OF EXPERIENCE
AS AN INVESTMENT PROFESSIONAL
(INCLUDING THE LAST FIVE YEARS)
YEARS OF EXPERIENCE
AS PORTFOLIO COUNSELOR -----------------------------------
(AND RESEARCH PROFESSIONAL, WITH CAPITAL
PORTFOLIO IF APPLICABLE) FOR RESEARCH AND
COUNSELORS FOR NEW WORLD FUND MANAGEMENT
NEW WORLD FUND PRIMARY TITLE(S) (APPROXIMATE) COMPANY
------------------------------------------------------------------------------ OR AFFILIATES TOTAL YEARS
-----------------------------------
<S> <C> <C> <C> <C>
ROBERT W. President and Director of 2 years (since the fund began 16 years 16 years
LOVELACE the fund. President and operations)
Director, Capital Research
Company*
-----------------------------------------------------------------------------------------------------------------
MARK E. Senior Vice President of the 2 years (since the fund began 18 years 18 years
DENNING fund. Director, Capital operations)
Research and Management
Company. Senior Vice
President, Capital Research
Company*
-----------------------------------------------------------------------------------------------------------------
DAVID C. Vice President of the fund. 2 years (since the fund began 13 years 20 years
BARCLAY Senior Vice President and operations)
Director, Capital Research
and Management Company
-------------------------------------------------------------------
----------------------------------------------
ALWYN Vice President of the fund. 2 years (since the fund began 8 years 12 years
HEONG Vice President, Capital operations)
Research Company*
-----------------------------------------------------------------------------------------------------------------
CARL M. Vice President of the fund. 2 years (since the fund began 10 years 13 years
KAWAJA Vice President, Capital operations)
Research Company*
The fund began investment operations on June 17, 1999.
* Company affiliated with Capital Research and Management Company
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
8
NEW WORLD FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
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 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.
AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS
Call toll-Free from anywhere in the U.S.
(8 a.m. to 8 p.m. ET):
800/421-0180
[map of the United States]
<TABLE>
<CAPTION>
<S> <C> <C> <C>
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
</TABLE>
A COMPLETE DESCRIPTION OF THE SERVICES WE OFFER IS INCLUDED 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, Class B
shares generally are not available to certain retirement plans (for example,
group retirement plans such as 401(k) plans, employer-sponsored 403(b) plans,
and money purchase pension and profit sharing plans). Some retirement plans or
accounts held by investment dealers may not offer certain services. If you
have any questions, please contact American Funds Service Company, your plan
administrator/trustee or dealer.
9
NEW WORLD FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
CHOOSING A SHARE CLASS
The fund offers both Class A and Class B shares. Each share class has its own
sales charge and expense structure, allowing you to choose the class that best
meets your situation.
Factors you should consider in choosing a class of shares include:
. How long you expect to own the shares
. How much you intend to invest
. The expenses associated with owning shares of each class
. Whether you qualify for any reduction or waiver of sales charges (for
example, Class A shares may be a less expensive option over time if you
qualify for a sales charge reduction or waiver)
EACH INVESTOR'S FINANCIAL CONSIDERATIONS ARE DIFFERENT. YOU SHOULD SPEAK WITH
YOUR FINANCIAL ADVISER TO HELP YOU DECIDE WHICH SHARE CLASS IS BEST FOR YOU.
Differences between Class A and Class B shares include:
<TABLE>
<CAPTION>
CLASS A CLASS B
------------------------------------------------------------------------------
<S> <S>
Initial sales charge of up to No initial sales charge.
5.75%. Sales charges are reduced or
eliminated for purchases of $25,000
or more (see "Sales Charges - Class
A").
------------------------------------------------------------------------------
Distribution and service (12b-1) Distribution and service (12b-1) fees
fees of up to 0.30% annually. of 1.00% annually.
------------------------------------------------------------------------------
Higher dividends, if any, than Lower dividends, if any, than Class A
Class B shares due to lower annual shares due to higher distribution fees
expenses. and other expenses.
------------------------------------------------------------------------------
No contingent deferred sales charge A contingent deferred sales charge if
(except on certain redemptions on you sell shares within six years of
purchases of $1 million or more buying them. The charge starts at 5%
bought without an initial sales and declines thereafter until it
charge). reaches 0% after six years. (See "Sales
Charges - Class B.")
------------------------------------------------------------------------------
No purchase maximum. Maximum purchase of $100,000.
------------------------------------------------------------------------------
Automatic conversion to Class A shares
after eight years, reducing future
annual expenses.
------------------------------------------------------------------------------
</TABLE>
10
NEW WORLD FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
PURCHASE AND EXCHANGE OF SHARES
PURCHASE
Generally, you may open an account by contacting any investment dealer (who may
impose transaction charges in addition to those described in this prospectus)
authorized to sell the fund's shares. You may purchase additional shares using
various options described in the statement of additional information and
"Welcome to the Family."
EXCHANGE
You may exchange your shares into shares of the same class of other funds in
The American Funds Group generally without a sales charge. For purposes of
computing the contingent deferred sales charge on Class B shares, the length of
time you have owned your shares will be measured from the date of original
purchase and will not be affected by any exchange.
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.
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.
<TABLE>
<CAPTION>
PURCHASE MINIMUMS FOR CLASS A AND B SHARES
<S> <C>
To establish an account (including retirement plan accounts) $ 250
For a retirement plan account through payroll deduction $ 25
To add to an account $ 50
For a retirement plan account through payroll deduction $ 25
PURCHASE MAXIMUM FOR CLASS B SHARES $100,000
</TABLE>
11
NEW WORLD FUND / PROSPECTUS
<PAGE>
SHARE PRICE
The fund calculates its share price, also called net asset value, as of
approximately 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. The fund has adopted
procedures to make "fair value" determinations when reliable market prices for
particular securities are not available.
Your shares will be purchased at the net asset value plus any applicable sales
charge in the case of Class A shares, or sold at the net asset value next
determined after American Funds Service Company receives and accepts your
request. Sales of certain Class A and B shares may be subject to contingent
deferred sales charges.
---------------------------------------------------------
SALES CHARGES
CLASS A
The initial sales charge you pay when you buy Class A shares differs depending
upon the amount you invest and may be reduced or eliminated for larger
purchases as indicated below.
<TABLE>
<CAPTION>
SALES CHARGE AS A PERCENTAGE OF
----------------------------------
DEALER
NET COMMISSION
OFFERING AMOUNT AS % OF
INVESTMENT PRICE INVESTED OFFERING PRICE
------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $25,000 5.75% 6.10% 5.00%
------------------------------------------------------------------------------
$25,000 but less than 5.00% 5.26% 4.25%
$50,000
------------------------------------------------------------------------------
$50,000 but less than 4.50% 4.71% 3.75%
$100,000
------------------------------------------------------------------------------
$100,000 but less than 3.50% 3.63% 2.75%
$250,000
------------------------------------------------------------------------------
$250,000 but less than 2.50% 2.56% 2.00%
$500,000
------------------------------------------------------------------------------
$500,000 but less than 2.00% 2.04% 1.60%
$750,000
------------------------------------------------------------------------------
$750,000 but less than $1
million 1.50% 1.52% 1.20%
$1 million or more and certain other
investments described below see below see below see below
</TABLE>
CLASS A PURCHASES NOT SUBJECT TO SALES CHARGE
Investments of $1 million or more are sold with no initial sales charge.
HOWEVER, A 1% CONTINGENT DEFERRED SALES CHARGE MAY BE IMPOSED IF REDEMPTIONS
ARE
12
NEW WORLD FUND / PROSPECTUS
<PAGE>
MADE WITHIN ONE YEAR OF PURCHASE. Employer-sponsored defined contribution-type
plans investing $1 million or more, or with 100 or more eligible employees, and
Individual Retirement Account rollovers involving retirement plan assets
invested in the American Funds, may invest with no sales charge and are not
subject to a contingent deferred sales charge. Investments made through
retirement plans, endowments or foundations with $50 million or more in assets,
or through certain qualified fee-based programs may also be made with no sales
charge and are not subject to a contingent deferred sales charge. The fund may
pay a dealer concession of up to 1% under its Plan of Distribution on
investments made with no initial sales charge.
CLASS B
Class B shares are sold without any initial sales charge. However, a contingent
deferred sales charge may be applied to the value of the shares you redeem
within six years of purchase, as shown in the table below.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Shares sold within year 1 2 3 4 5 6
----------------------------------------------------------------
Contingent deferred sales charge 5% 4% 4% 3% 2% 1%
</TABLE>
Shares acquired through reinvestment of dividends or capital gain distributions
are not subject to a contingent deferred sales charge. In addition, the
contingent deferred sales charge may be waived in certain circumstances. See
"Contingent Deferred Sales Charge Waivers for Class B Shares" below. The
contingent deferred sales charge is based on the original purchase cost or the
current market value of the shares being sold, whichever is less. For purposes
of determining the contingent deferred sales charge, if you sell only some of
your shares, shares that are not subject to any contingent deferred sales
charge will be sold first and then shares that you have owned the longest.
American Funds Distributors pays compensation equal to 4% of the amount
invested to dealers who sell Class B shares.
CLASS B CONVERSION TO A SHARES
Class B shares automatically convert to Class A shares in the month of the
eight-year anniversary of the purchase date. The Internal Revenue Service
currently takes the position that this automatic conversion is not taxable.
Should their position change, shareholders would still have the option of
converting but may face certain tax consequences. Please see the statement of
additional information for more information.
13
NEW WORLD FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
SALES CHARGE REDUCTIONS AND WAIVERS
You must let your investment dealer or American Funds Service Company know if
you qualify for a reduction in your Class A sales charge or waiver of your
Class B contingent deferred sales charge using one or any combination of the
methods described below, in the statement of additional information and
"Welcome to the Family."
REDUCING YOUR CLASS A SALES CHARGE
You and your "immediate family" (your spouse and your children under the age of
21) may combine investments to reduce your Class A sales charge.
AGGREGATING ACCOUNTS
To receive a reduced Class A sales charge, investments made by you and your
immediate family (see above) may be aggregated if made for their own account(s)
and/or:
. trust accounts established by the above individuals. However, if the
person(s) who established the trust is deceased, the trust account may be
aggregated with accounts of the person who is the primary beneficiary of
the trust.
. solely controlled business accounts.
. single-participant retirement plans.
Other types of accounts may also be aggregated. You should check with your
financial adviser or consult the statement of additional information or
"Welcome to the Family" for more information.
CONCURRENT PURCHASES
You may combine simultaneous purchases of Class A and/or B shares of two or
more American Funds, as well as individual holdings in various American Legacy
variable annuities or variable life insurance policies, to qualify for a
reduced Class A sales charge. Direct purchases of money market funds are
excluded.
RIGHTS OF ACCUMULATION
You may take into account the current value (or if greater, the amount you
invested less any withdrawals) of your existing Class A and B holdings in the
American Funds, as well as individual holdings in various American Legacy
variable annuities or variable life insurance policies, to determine your Class
A sales charge. Direct purchases of money market funds are excluded.
14
NEW WORLD FUND / PROSPECTUS
<PAGE>
STATEMENT OF INTENTION
You can reduce the sales charge you pay on your Class A share purchases by
establishing a Statement of Intention. A Statement of Intention allows you to
combine all Class A and B share non-money market fund purchases, as well as
individual American Legacy variable annuity and life insurance policies you
intend to make over a 13-month period, to determine the applicable sales
charge. At your request purchases made during the previous 90 days may be
included; however, capital appreciation and reinvested dividends and capital
gains do not apply toward these combined purchases. A portion of your account
may be held in escrow to cover additional Class A sales charges which may be
due if your total investments over the 13-month period do not qualify for the
applicable sales charge reduction.
CONTINGENT DEFERRED SALES CHARGE WAIVERS FOR CLASS B SHARES
The contingent deferred sales charge on Class B shares may be waived in the
following cases:
. when receiving payments through systematic withdrawal plans (up to 12% of
the value of your account);
. when receiving required minimum distributions from retirement accounts upon
reaching age 70 1/2; or
. for redemptions due to death or post-purchase disability of the
shareholder.
For more information, please consult your financial adviser, the statement of
additional information or "Welcome to the Family."
15
NEW WORLD FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
PLANS OF DISTRIBUTION
The fund has Plans of Distribution or "12b-1 Plans" 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. The plans
provide for annual expenses of up to 0.30% for Class A shares and 1.00% for
Class B shares. Up to 0.25% of these payments are used to pay service fees to
qualified dealers for providing certain shareholder services. The remaining
0.75% expense for Class B shares is used for financing commissions paid to your
dealer. The 12b-1 fees paid by the fund, as a percentage of average net assets,
for the previous fiscal year is indicated above under "Fees and Expenses of the
Fund." Since these fees are paid out of the fund's assets or income on an
ongoing basis, over time they will increase the cost and reduce the return of
an investment. The higher fees for Class B shares may cost you more over time
than paying the initial sales charge for Class A shares.
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.
16
NEW WORLD FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
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.
. American Funds Service Company reserves the right to require signature
guarantee(s) on all redemptions.
. 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, fax, or computer (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.
17
NEW WORLD FUND / PROSPECTUS
<PAGE>
TRANSACTIONS BY TELEPHONE, FAX, AMERICAN FUNDSLINE OR 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 of
its affiliates or mutual funds managed by such affiliates, and each of their
respective directors, trustees, officers, employees and agents harmless from
any losses, expenses, costs or liabilities (including attorney fees) which may
be incurred in connection with the exercise of these privileges, provided
American Funds Service Company employs reasonable procedures to confirm that
the instructions received from any person with appropriate account information
are genuine. If reasonable procedures are not employed, it and/or the fund may
be liable for losses due to unauthorized or fraudulent instructions.
18
NEW WORLD FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
The fund intends to distribute dividends to you, if any, usually in December.
Capital gains, if any, are usually distributed in December. When a dividend or
capital gain is distributed, the net asset value per share is reduced by the
amount of the payment.
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. Most shareholders do not elect
to take capital gain distributions in cash because these distributions reduce
principal value.
TAXES ON DISTRIBUTIONS
Distributions you receive from the fund may be subject to income tax and may
also be subject to state or local taxes - unless you are exempt from taxation.
For federal tax purposes, any taxable dividends and distributions of short-term
capital gains are treated as ordinary income. The fund's distributions of net
long-term capital gains are taxable to you as long-term capital gains. Any
taxable distributions you receive from the fund will normally be taxable to you
when made, regardless of whether you reinvest distributions 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, the "Welcome to the Family"
guide, and your tax adviser for further information.
19
NEW WORLD FUND / PROSPECTUS
<PAGE>
FINANCIAL HIGHLIGHTS/1/
The financial highlights table is intended to help you understand the fund's
results for the past five years. Certain information reflects financial results
for a single fund share. The total returns in the table represent the rate that
an investor would have earned or lost on an investment in the fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Deloitte & Touche LLP, whose report, along with the fund's financial
statements, is included in the statement of additional information, which is
available upon request.
<TABLE>
<CAPTION>
Net gains/(losses) on
Net asset securities Dividends
value, Net (both realized Total from (from net Net asset
Years ended beginning of investment and investment investment Total value, end of
October 31 period income unrealized) operations income) distributions year Total return
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A:
2000 $23.67 $.42/2/ $(1.08)/2/ $(.66) $(.20) $(.20) $22.81 (2.91)%
1999 23.56 .16 (.05) .11 - - 23.67 .47
CLASS B:
2000 29.09 .20/2/ (6.58)/2/ (6.38) - - 22.71 (21.93)/3/
<CAPTION>
Ratio of Ratio of net
Net assets, expenses to income to
Years ended end of year average net average net Portfolio
October 31 (in millions) assets assets turnover rate
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A:
2000 $1,279 1.35% 1.61% 30.07%/4/
1999 739 1.46/3/ 1.83/3/ .83/5/
CLASS B:
2000 16 2.03/3/ .93/3/ 30.07/4/
</TABLE>
1 The period ended 1999 represents the period June 17, commencement of
operations, to October 31. The period ended 2000 represents, for Class A
shares, fiscal year ended October 31, 2000. The period ended 2000 represents,
for Class B shares, the 230-day period ended October 31, 2000. Class B shares
were not offered before March 15, 2000. Total return for Class B is based on
activity during the period and thus is not representative of a full year.
2 Based on average shares outstanding.
3 Annualized
4 Represents portfolio turnover rate (equivalent for all share classes) for the
year ended October 31, 2000.
5 Based on operations for the period shown and, accordingly, not representative
of a full year.
20
NEW WORLD FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
NOTES
21
NEW WORLD FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
NOTES
22
NEW WORLD FUND / PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
FOR SHAREHOLDER SERVICES American Funds Service Company
800/421-0180
FOR RETIREMENT PLAN SERVICES Call your employer or plan administrator
FOR DEALER SERVICES American Funds Distributors
800/421-9900 Ext. 11
FOR 24-HOUR INFORMATION American FundsLine(R)
800/325-3590
American FundsLine OnLine(R)
http://www.americanfunds.com
</TABLE>
Telephone conversations may be recorded or monitored for
verification, recordkeeping and quality assurance purposes.
MULTIPLE TRANSLATIONS This prospectus may be translated into other languages.
If there is any inconsistency or ambiguity as to the meaning of any word or
phrase in a translation, the English text will prevail.
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) AND CODES OF ETHICS The SAI contains
more detailed information on all aspects of the fund, including the fund's
financial statements and is incorporated by reference into this prospectus.
The Codes of Ethics describe the personal investing policies adopted by the
fund and the fund's investment adviser and its affiliated companies.
The Codes of Ethics and current SAI have been filed with the Securities and
Exchange Commission ("SEC"). These and other related materials about the fund
are available for review or to be copied at the SEC's Public Reference Room in
Washington, D.C. (202/942-8090) or on the EDGAR database on the SEC's Internet
Web site at http://www.sec.gov, or, after payment of a duplicating fee, via
e-mail request to [email protected] or by writing the SEC's Public Reference
Section, Washington, D.C. 20549-0102.
HOUSEHOLD MAILINGS Each year you are automatically sent an updated
prospectus, annual and semi-annual report for the fund. In order to reduce the
volume of mail you receive, when possible, only one copy of these documents
will be sent to shareholders that are part of the same family and share the
same residential address.
* * * * *
If you would like to receive individual copies of these documents at no
charge, please call American Funds Service Company at 800/421-0180 or write to
the Secretary of the fund at 333 South Hope Street, Los Angeles, California
90071.
Investment Company File No. 811-9105
Printed on recycled paper
<PAGE>
NEW WORLD FUND, INC.
Part B
Statement of Additional Information
January 1, 2001
This document is not a prospectus but should be read in conjunction with the
current prospectus of New World Fund (the "fund" or "NWF") dated January 1,
2001. 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, California 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
<TABLE>
<CAPTION>
Item Page No.
---- --------
<S> <C>
Certain Investment Limitations and Guidelines . . . . . . . . . . . 2
Description of Certain Securities and Investment Techniques . . . . 2
Fundamental Policies and Investment Restrictions. . . . . . . . . . 8
Fund Organization and Voting Rights . . . . . . . . . . . . . . . . 9
Fund Directors and Other Officers . . . . . . . . . . . . . . . . . 11
Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Dividends, Distributions and Taxes. . . . . . . . . . . . . . . . . 17
Purchase of Shares. . . . . . . . . . . . . . . . . . . . . . . . . 22
Sales Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Sales Charge Reductions and Waivers . . . . . . . . . . . . . . . . 27
Individual Retirement Account (IRA) Rollovers . . . . . . . . . . . 30
Price of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Selling Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Shareholder Account Services and Privileges . . . . . . . . . . . . 34
Execution of Portfolio Transactions . . . . . . . . . . . . . . . . 36
General Information . . . . . . . . . . . . . . . . . . . . . . . . 36
Class A Share Investment Results and Related Statistics . . . . . . 38
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Financial Statements
</TABLE>
New World Fund - Page 1
<PAGE>
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% of 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 straight debt securities
(not including convertible 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.
The fund may experience difficulty liquidating certain portfolio securities
during significant market declines or periods of heavy redemptions.
DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT TECHNIQUES
The descriptions below are intended to supplement the material in the prospectus
under "Investment Objective, Strategies and Risks."
EQUITY SECURITIES - Equity securities represent an ownership position in a
company. These securities may include common stocks and securities with equity
conversion or purchase rights. 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 markets
for these securities.
INVESTING IN SMALLER CAPITALIZATION STOCKS - The fund may invest in the stocks
of smaller companies (typically companies with market capitalizations of less
than $1.5 billion at the time of purchase). The Investment Adviser believes that
the issuers of smaller capitalization stocks often provide attractive investment
opportunities. However, investing in smaller capitalization stocks can involve
greater risk than is customarily associated with investing in stocks of larger,
more established companies. For example, smaller companies often have limited
product lines, markets, or financial resources, may be dependent for management
on one or a few key persons, and can be more susceptible to losses. Also, their
securities may be thinly traded (and therefore have to be sold at a discount
from current prices or sold in small lots over an extended period of time), may
be followed by fewer investment research analysts, and may be subject to
New World Fund - Page 2
<PAGE>
wider price swings thus creating a greater chance of loss than securities of
larger capitalization companies.
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; expropriation or confiscatory taxation; 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. However, in the opinion of Capital Research
and Management Company, investing outside the U.S. also can reduce certain
portfolio risks due to greater diversification opportunities.
The risks described above are potentially heightened in connection with
investments in developing countries. Although there is no universally accepted
definition, a developing country is generally considered to be a country which
is in the initial stages of its industrialization cycle with a low per capita
gross national product. For example, political and/or economic structures in
these countries may be in their infancy and developing rapidly. Historically,
the markets of developing countries have been more volatile than the markets of
developed countries. The fund may only invest in securities of issuers in
developing countries to a limited extent.
In determining where an issuer of a security is based, the Investment Adviser
may consider such factors as where the company is legally organized, maintains
its principal corporate offices, and/ or conduct its principal operations.
Additional costs could be incurred in connection with the fund's investment
activities outside the U.S. 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 con-
New World Fund - Page 3
<PAGE>
sidered 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.
New World Fund - Page 4
<PAGE>
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 could not have 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.
CURRENCY TRANSACTIONS - The fund can purchase and sell currencies to facilitate
securities transactions and enter into forward currency contracts to protect
against changes in currency exchange rates. A forward currency contract is an
obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days from the date of the contract agreed upon by the
parties, at a price set at the time of the contract. Forward currency contracts
entered into by the fund will involve the purchase or sale of one currency
against the U.S. dollar. While entering into forward currency transactions could
minimize the risk of loss due to a decline in the value of the hedged currency,
it could also limit any potential gain which might result from an increase in
the value of the currency. The fund will not generally attempt to protect
against all potential changes in exchange rates. 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.
WARRANTS AND RIGHTS - The fund may purchase warrants, which may be issued
together with bonds or preferred stocks. Warrants generally entitle the holder
to buy a proportionate amount of common stock at a specified price, usually
higher than the current market price. Warrants may be issued with an expiration
date or in perpetuity. Rights are similar to warrants except that they normally
entitle the holder to purchase common stock at a lower price than the current
market price.
New World Fund - Page 5
<PAGE>
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.
Lower rated bonds, rated Ba or below by Standard & Poor's Corporation and BB or
below by Moody's Investors Services, Inc. or unrated but considered to be of
equivalent quality, are described by the rating agencies as speculative and
involve greater risk of default or price changes due to changes in the issuer's
creditworthiness than higher rated bonds, or they may already be in default. The
market prices of these securities may fluctuate more than higher quality
securities and may decline significantly in periods of general economic
difficulty. It may be more difficult to dispose of, or to determine the value
of, lower rated bonds.
Certain risk factors relating to "lower rated bonds" are discussed below.
SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES - Lower rated bonds may
be more sensitive to adverse economic changes and political and corporate
developments and may be more sensitive to interest rate changes than higher
rated bonds. 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 lower rated bonds.
PAYMENT EXPECTATIONS - Lower rated bonds, like other bonds, may contain
redemption or call provisions. If an issuer exercises 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. If the issuer of a bond defaults on its obligations to pay
interest or principal or enters 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 value and liquidity of lower rated bonds.
The Investment Adviser 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, but there can be no assurance that it will be successful in doing
so.
SECURITIES WITH EQUITY AND DEBT CHARACTERISTICS - The fund may invest in
securities that have a combination of equity and debt characteristics such as
non-convertible preferred stocks and convertible securities. These securities
may at times resemble equity more than debt and vice versa. The risks of
convertible preferred stock may be similar to those of equity securities. Some
types of convertible bonds or preferred stock automatically convert into common
stock. Non-convertible preferred stock with stated redemption rates are similar
to debt in that they have
New World Fund - Page 6
<PAGE>
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 stock generally move with changes in interest rates and the issuer's
credit quality, similar to the factors affecting debt securities.
Convertible bonds, convertible preferred stock, and other securities may
sometimes be converted into common stock or other securities at a stated
conversion 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 credit quality of the issuer.
U.S. GOVERNMENT SECURITIES - Securities guaranteed by the U.S. Government
include direct obligations of the U.S. Treasury (such as Treasury bills, notes
and bonds). For 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
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 Treasury; some are supported by the
discretionary authority of the Treasury to purchase certain obligations of the
issuer; and others are supported only by the credit of the issuing government
agency or instrumentality. These agencies and instrumentalities include, but are
not limited to, Farmers Home Administration, Federal Home Loan Bank, Federal
Home Loan Mortgage Corporation, Federal National Mortgage Association, Tennessee
Valley Authority, and Federal Farm Credit Bank System.
CASH AND CASH EQUIVALENTS - These securities include (i) commercial paper (e.g.,
short-term notes up to 9 months in maturity issued by corporations, governmental
bodies or bank/ corporation sponsored conduits (asset-backed commercial paper)),
(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
savings bank obligations (e.g., bank notes and 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.)
RESTRICTED SECURITIES AND LIQUIDITY - The fund may purchase securities subject
to restrictions on resale. All such securities not actively traded will be
considered illiquid unless they have been specifically determined to be liquid
under procedures which have been 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
New World Fund - Page 7
<PAGE>
can change from time to time. The fund may incur certain additional costs in
disposing of illiquid securities.
FUNDAMENTAL POLICIES AND INVESTMENT RESTRICTIONS
FUNDAMENTAL POLICIES - The fund has adopted the following fundamental policies
and investment restrictions which may not be changed without approval by holders
of a majority of its outstanding shares. Such majority is defined in the
Investment Company Act of 1940 ("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.
All percentage limitations are considered at the time securities are purchased
and are based on the fund's net assets unless otherwise indicated. None of the
following investment restrictions involving a maximum percentage of assets will
be considered violated unless the excess occurs immediately after, and is caused
by, an acquisition by the fund.
1. The fund may not borrow money or securities, except for temporary or
emergency purposes in an amount not exceeding 33(alpha)% of its total assets.
2. The fund may not make loans, if, as a result, more than 33(alpha)% 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 following investment restrictions 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
New World Fund - Page 8
<PAGE>
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 AND VOTING RIGHTS
The fund, an open-end, diversified management investment company, was organized
as a Maryland corporation on November 13, 1998.
All fund operations are supervised by the fund's Board of Directors which 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.
The fund has two classes of shares - Class A and Class B. The shares of each
class represent an interest in the same investment portfolio. Each class has
equal rights as to voting, redemption, dividends and liquidation, except that
each class bears different distribution expenses and may bear different transfer
agent fees and other expenses properly attributable to the particular class as
approved by the Board of Directors. Class A and Class B shareholders have
exclusive voting rights with respect to the rule 12b-1 Plans adopted in
connection with the distribution of shares and on other matters in which the
interests of one class are different from interests in another class. Shares of
all classes of the fund vote together on matters that affect all classes in
substantially the same manner. Each class votes as a class on matters that
affect that class alone.
The fund does not hold annual meetings of shareholders. However, significant
matters which require shareholder approval, such as certain elections of board
members or a change in a fundamental investment policy, will be presented to
shareholders at a meeting called for such
New World Fund - Page 9
<PAGE>
purpose. Shareholders have one vote per share owned. At the request of the
holders of at least 10% of the shares, the fund will hold a meeting at which any
member of the board could be removed by a majority vote.
New World Fund - Page 10
<PAGE>
FUND DIRECTORS AND OFFICERS
Directors and Director Compensation
<TABLE>
<CAPTION>
AGGREGATE TOTAL COMPENSATION
COMPENSATION (INCLUDING VOLUNTARILY
(INCLUDING VOLUNTARILY DEFERRED
DEFERRED COMPENSATION/1/) FROM
COMPENSATION/1/) ALL FUNDS MANAGED BY
PRINCIPAL FROM THE FUND CAPITAL RESEARCH AND
POSITION OCCUPATION(S) DURING FISCAL YEAR MANAGEMENT COMPANY
WITH DURING ENDED OR ITS AFFILIATES/2/ FOR THE
NAME, ADDRESS AND AGE REGISTRANT PAST 5 YEARS OCTOBER 31, 2000 YEAR ENDED OCTOBER 31, 2000
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Elizabeth Allison Director Administrative $16,000 $72,500
ANZI, Ltd. Director, ANZI, Ltd.
1770 Massachusetts (financial
Ave. publishing and
Cambridge, MA 02140 consulting);
Age: 54 Publishing
Consultant, Harvard
Medical School;
former Senior Vice
President, Planning
and Development,
McGraw Hill, Inc.
-------------------------------------------------------------------------------------------------------------------------
+ Gina H. Despres Chairman of the Senior Vice None/3/ None/3/
3000 K. Street, N.W. Board President, Capital
Suite 230 Research and
Washington, D.C. Management Company
20007
Age: 59
-------------------------------------------------------------------------------------------------------------------------
Robert A. Fox Director President and Chief $ 14,400/4/ $ 152,500/4/
P.O. Box 457 Executive Officer,
Livingston, CA 95334 Foster Farms, Inc.
Age: 63
-------------------------------------------------------------------------------------------------------------------------
Alan Greenway Director President, Greenway $15,600 $113,800
7413 Fairway Road Associates, Inc.
La Jolla, CA 92037 (management
Age: 73 consulting services)
-------------------------------------------------------------------------------------------------------------------------
Koichi Itoh Director Group Vice President $ 16,000/4/ $ 72,500/4/
Autosplice Inc. - Asia/Pacific,
3-7-39 Minami-cho Autosplice Inc.,
Higashi-Kurume City former President and
Tokyo, Japan Chief Executive
203-0031 Officer, IMPAC
Age: 60 (management
consulting
services); former
Managing Partner,
VENCA Management
(venture capital)
-------------------------------------------------------------------------------------------------------------------------
William H. Kling Director President, Minnesota $ 14,600/4/ $ 117,800/4/
45 East Seventh Public Radio;
Street President,
St. Paul, MN 55101 Greenspring Co.;
Age: 58 former President,
American Public
Radio (now Public
Radio International)
-------------------------------------------------------------------------------------------------------------------------
+Robert W. Lovelace President and President and None/3/ None/3/
11100 Santa Monica Director Director, Capital
Blvd. Research Company*
Los Angeles, CA
90025
Age: 38
-------------------------------------------------------------------------------------------------------------------------
John G. McDonald Director The IBJ Professor of $ 14,400/4/ $ 244,000/4/
Graduate School of Finance, Graduate
Business School of Business,
Stanford University Stanford University
Stanford, CA 94305
Age: 63
-------------------------------------------------------------------------------------------------------------------------
++ William I. Miller Director Chairman of the $ 14,000/4/ $65,500/4/
500 Washington Board, Irwin
Street Financial
Box 929 Corporation
Columbus, IN 47202
Age: 44
-------------------------------------------------------------------------------------------------------------------------
Kirk P. Pendleton Director Chairman/Chief $ 15,500/4/ $ 148,800/4/
Cairnwood, Inc. Executive Officer,
P.O. Box 546 Cairnwood, Inc.
Bryn Athyn, PA (venture capital
19009 investment)
Age: 61
-------------------------------------------------------------------------------------------------------------------------
Donald E. Petersen Director Former Chairman of $14,600 $105,000
222 East Brown, the Board and Chief
Suite 460 Executive Officer,
Birmingham, MI 48009 Ford Motor Company
Age: 74
-------------------------------------------------------------------------------------------------------------------------
<CAPTION>
TOTAL NUMBER
OF FUND
BOARDS
ON WHICH
DIRECTOR
NAME, ADDRESS AND AGE SERVES/2/
--------------------------------------
<S> <C>
Elizabeth Allison 3
ANZI, Ltd.
1770 Massachusetts
Ave.
Cambridge, MA 02140
Age: 54
--------------------------------------
+ Gina H. Despres 3
3000 K. Street, N.W.
Suite 230
Washington, D.C.
20007
Age: 59
--------------------------------------
Robert A. Fox 7
P.O. Box 457
Livingston, CA 95334
Age: 63
--------------------------------------
Alan Greenway 3
7413 Fairway Road
La Jolla, CA 92037
Age: 73
--------------------------------------
Koichi Itoh 3
Autosplice Inc.
3-7-39 Minami-cho
Higashi-Kurume City
Tokyo, Japan
203-0031
Age: 60
--------------------------------------
William H. Kling 6
45 East Seventh
Street
St. Paul, MN 55101
Age: 58
--------------------------------------
+Robert W. Lovelace 1
11100 Santa Monica
Blvd.
Los Angeles, CA
90025
Age: 38
--------------------------------------
John G. McDonald 8
Graduate School of
Business
Stanford University
Stanford, CA 94305
Age: 63
--------------------------------------
++ William I. Miller 3
500 Washington
Street
Box 929
Columbus, IN 47202
Age: 44
--------------------------------------
Kirk P. Pendleton 6
Cairnwood, Inc.
P.O. Box 546
Bryn Athyn, PA
19009
Age: 61
--------------------------------------
Donald E. Petersen 5
222 East Brown,
Suite 460
Birmingham, MI 48009
Age: 74
--------------------------------------
</TABLE>
<PAGE>
* Company affiliated with Capital Research and Management Company.
+ "Interested persons" within the meaning of the 1940 Act on the basis of their
affiliation with the fund's Investment Adviser, Capital Research and
Management Company, or the parent company of the Investment Adviser, The
Capital Group Companies, Inc.
++ May be deemed an "interested person" of the fund 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 funds in The
American Funds Group as designated by the Directors.
2 Capital Research and Management Company manages The American Funds Group
consisting of 29 funds: AMCAP Fund, Inc., 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 vehicle 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. An
affiliate of Capital Research and Management Company, Capital International,
Inc., manages Emerging Markets Growth Fund, Inc.
3 Gina H. Despres and Robert W. Lovelace are affiliated with the Investment
Adviser and, accordingly, receive no compensation from the fund.
4 Since the deferred compensation plan's adoption, the total amount of deferred
compensation accrued by the fund (plus earnings thereon) through the 2000
fiscal year for participating Directors is as follows: Robert A. Fox
($24,857), Koichi Itoh ($22,521), William H. Kling ($20,838), John G. McDonald
($24,884), William I. Miller ($20,749), and Kirk P. Pendleton ($22,130).
Amounts deferred and accumulated earnings thereon are not funded and are
general unsecured liabilities of the fund until paid to the Directors.
New World Fund - Page 13
<PAGE>
OTHER OFFICERS
<TABLE>
<CAPTION>
POSITION(S) PRINCIPAL OCCUPATION(S) DURING
NAME AND ADDRESS AGE WITH REGISTRANT PAST 5 YEARS
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Mark E. Denning 43 Senior Vice Director, Capital Research and
25 Bedford Street President Management Company. Senior Vice
London, England President, Capital Research
Company*
-------------------------------------------------------------------------------
David C. Barclay 44 Vice President Senior Vice President and
11100 Santa Monica Director, Capital Research and
Blvd. Management Company. Senior Vice
Los Angeles, CA 90025 President, Capital Research
Company*
-------------------------------------------------------------------------------
Alwyn Heong 40 Vice President Vice President, Capital Research
630 Fifth Avenue Company*
New York, NY 10111
-------------------------------------------------------------------------------
Joseph R. Higdon 59 Vice President Senior Vice President and
3000 K. Street, N.W. Director, Capital Strategy
Suite 230 Research, Inc.*
Washington, D.C. 20007
-------------------------------------------------------------------------------
Carl M. Kawaja 36 Vice President Vice President, Capital Research
One Market Company*
Steuart Tower, Suite
1800
San Francisco, CA 94105
-------------------------------------------------------------------------------
Vincent P. Corti 44 Secretary Vice President - Fund Business
333 South Hope Street Management Group, Capital
Los Angeles, CA 90071 Research and Management Company
-------------------------------------------------------------------------------
R. Marcia Gould 46 Treasurer Vice President - Fund Business
135 South State College Management Group, Capital
Blvd. Research and Management Company
Brea, CA 92821
-------------------------------------------------------------------------------
Dayna Yamabe 33 Assistant Vice President - Fund Business
135 South State College Treasurer Management Group, Capital
Blvd. Research and Management Company
Brea, CA 92821
-------------------------------------------------------------------------------
</TABLE>
* Company affiliated with Capital Research and Management Company.
All of the officers listed are officers and/or directors/trustees of one or more
of the other funds for which Capital Research and Management Company serves as
Investment Adviser.
No compensation is paid by the fund to any officer or Director who is a
director, officer or employee of the Investment Adviser or affiliated companies.
The fund pays annual fees of $9,000 to Directors who are not affiliated with the
Investment Adviser, plus $1,000 for each Board of Directors meeting attended,
plus $500 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 their fees through a deferred compensation plan in effect for the
fund. The fund also reimburses certain expenses of the Directors who are not
affiliated with the Investment Adviser. As of December 1, 2000 the
New World Fund - Page 14
<PAGE>
officers and Directors of the fund and their families, as a group, owned
beneficially or of record less than 1% of the outstanding shares of the fund.
MANAGEMENT
INVESTMENT ADVISER - The Investment Adviser, Capital Research and Management
Company, 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 research 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.
The Investment Adviser is responsible for managing more than $300 billion of
stocks, bonds and money market instruments and serves over 11 million
shareholder accounts of all types throughout the world. These investors include
privately owned businesses and large corporations as well as schools, colleges,
foundations and other non-profit and tax-exempt organizations.
INVESTMENT ADVISORY AND SERVICE AGREEMENT - The Investment Advisory and Service
Agreement (the "Agreement") between the Fund and the Investment Adviser will
continue in effect until December 31, 2001, 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, or by the
vote of a majority (as defined in the 1940 Act) of the outstanding voting
securities of the fund, and (ii) the vote of a majority of Directors who are not
parties to the Agreement or interested persons (as defined in the 1940 Act) of
any such party, cast in person at a meeting called for the purpose of voting on
such approval. The Agreement provides that the Investment Adviser has no
liability to the fund for its acts or omissions in the performance of its
obligations to the fund not involving willful misconduct, bad faith, gross
negligence or reckless disregard of its obligations under the Agreement. The
Agreement also provides that either party has the right to terminate it, without
penalty, upon 60 days' written notice to the other party, and that the Agreement
automatically terminates in the event of its assignment (as defined in the 1940
Act).
The Investment Adviser, in addition to providing investment advisory services,
furnishes the services and pays the compensation and travel expenses of persons
to perform the executive, administrative, clerical and bookkeeping functions of
the fund, and provides suitable office space, necessary small office equipment
and utilities, general purpose accounting forms, supplies, and postage used at
the offices of the fund. The Fund pays all expenses not assumed by the
Investment Adviser, including, but not limited to, custodian, stock transfer and
dividend disbursing fees and expenses; costs of the designing, printing and
mailing of reports, prospectuses, proxy statements, and notices to its
shareholders; taxes; expenses of the issuance and redemption of shares of the
fund (including stock certificates, registration and qualification fees and
expenses); expenses pursuant to the fund's Plans of Distribution (described
below); legal and auditing expenses; compensation, fees, and expenses paid to
directors unaffiliated with the Investment Adviser; association dues; costs of
stationery and forms prepared exclusively for the fund; and costs of assembling
and storing shareholder account data.
New World Fund - Page 15
<PAGE>
As compensation for its services, the Investment Adviser receives a monthly fee
which is accrued daily, calculated at the annual rate of 0.85% on the first $500
million of the Fund's net assets, 0.77% on net assets between $500 million and
$1 billion, 0.71% on net assets from $1 billion to $1.5 billion, 0.66% on net
assets from $1.5 billion to $2.5 billion, and 0.62% on net assets in excess of
$2.5 billion. For the fiscal period ended October 31, 2000, the Investment
Adviser received an advisory fee of $10,145,000.
The Investment Adviser has agreed that in the event the expenses of Class A
shares 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 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 any regulations thereunder, will
reimburse the fund in the amount of such excess. To the extent the fund's
management fee must be waived due to Class A share expense ratios exceeding the
above limit, management fees will be reduced similarly for all classes of shares
of the fund or other Class A fees will be waived in lieu of management fees.
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 Plans of Distribution (the "Plans"), pursuant to rule 12b-1
under the 1940 Act. The Principal Underwriter receives amounts payable pursuant
to the Plans (see below). In addition, the Principal Underwriter receives
revenues from sales of the fund's shares. For Class A shares, the Principal
Underwriter receives commission revenue consisting of that portion of the Class
A sales charge remaining after the allowances which it allows to investment
dealers. For Class B shares, the Principal Underwriter sells the rights to 12b-1
fees paid by the fund for distribution expenses to a third party and receives
the revenue remaining after compensating investment dealers for sales of Class B
shares. The fund also reimburses the Principal Underwriter for the immediate
service fees advanced and paid to dealers by the Principal Underwriter for sales
of Class B shares. Commissions retained by the Principal Underwriter on sales of
Class A shares during the 2000 fiscal year amounted to $2,137,000 after
allowance of $9,930,000 to dealers.
During the fiscal year ended 1999, the Principal Underwriter retained $1,117,000
on sales of Class A shares after an allowance of $18,946,000 to dealers. Revenue
retained and service fee reimbursements received by the Principal Underwriter on
sales of Class B shares during the 2000 fiscal year amounted to $118,000 after
compensation of $735,000 to dealers.
As required by rule 12b-1 and the 1940 Act, the Plans (together with the
Principal Underwriting Agreement) have 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 Plans or the Principal Underwriting Agreement. 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 Plans due to
present or past affiliations with the Investment Adviser and related companies.
Potential benefits of the Plans to the fund include shareholder services,
savings to the fund in transfer agency costs, savings to the fund in
New World Fund - Page 16
<PAGE>
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 Plans. The Plans may not be
amended to increase materially the amount spent for distribution without
shareholder approval. Plan expenses are reviewed quarterly and the Plans must be
renewed annually by the Board of Directors.
Under the Plans, the fund may expend up to 0.30% of its net assets annually for
Class A shares and 1.00% of its net assets annually for Class B shares to
finance any activity which is primarily intended to result in the sale of fund
shares, provided the fund's Board of Directors has approved the category of
expenses for which payment is being made. For Class A shares, these include up
to 0.25% in service fees for qualified dealers and dealer commissions and
wholesaler compensation on sales of shares exceeding $1 million purchased
without a sales charge (including purchases by employer-sponsored defined
contribution-type retirement plans investing $1 million or more or with 100 or
more eligible employees, rollover IRA accounts as described in "Individual
Retirement Account (IRA) Rollovers" below, and retirement plans, endowments or
foundations with $50 million or more in assets). For Class B shares, these
include 0.25% in service fees for qualified dealers and 0.75% in payments to the
Principal Underwriter for financing commissions paid to qualified dealers
selling Class B shares.
Commissions on sales of Class A 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 Class A 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, these commissions are not recoverable.
During the 2000 fiscal year, the fund paid or accrued $3,313,000 for
compensation to dealers or the Principal Underwriter under the Plan for Class A
shares and $70,000 under the Plan for Class B shares. As of October 31, 2000,
accrued and unpaid distribution expenses for Class A and Class B shares were
$338,000 and $13,000, respectively.
OTHER COMPENSATION TO DEALERS - The Principal Underwriter, 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. The Principal Underwriter will, on an annual basis,
determine the advisability of continuing these payments.
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. Additional distributions may be made, if necessary. The fund also
intends to 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
New World Fund - Page 17
<PAGE>
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.
Dividends on Class A and Class B shares will be reinvested in shares of the fund
of the same class unless shareholders indicate in writing that they wish to
receive them in cash or in shares of the same class of other American Funds, as
provided in the prospectus.
TAXES - The fund has elected 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 the excess of 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 100% of
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.
To be treated as a regulated investment company under Subchapter M of the Code,
the fund must also (a) derive at least 90% of its gross income from dividends,
interest, payments with respect to securities loans and gains from the sale or
other disposition of securities or foreign currencies, or other income
(including, but no limited to, gains from options, futures or forward contracts)
derived with respect to the business of investing in such securities or
currencies, and (b) diversify its holdings so that, at the end of each fiscal
quarter, (i) at least 50% of the market value of the fund's assets is
represented by cash, U.S. Government securities and securities of other
regulated investment companies, and other securities (for purposes of this
calculation generally limited, in respect of any one issuer, to an amount not
greater than 5% of the market value of the fund's assets and 10% of the
outstanding voting securities of such issuer), and (ii) not more than 25% of the
value of its assets is invested in the securities of any one issuer (other than
U.S. Government securities or the securities of other regulated investment
companies), or two or more issuers which the fund controls and which are
determined to be engaged in the same or similar trades or businesses.
Under the Code, a nondeductible excise tax of 4% is imposed on the excess of a
regulated investment company's "required distribution" for the calendar year
ending within the regulated investment company's taxable year over the
"distributed amount" for such calendar year. The term "required distribution"
means the sum of (i) 98% of ordinary income (generally net investment income)
for the calendar year, (ii) 98% of capital gain (both long-term and short-term)
for the one-year period ending on October 31 (as though the one-year period
ending on October 31 were the regulated investment company's taxable year), and
(iii) the sum of any untaxed, undistributed net investment income and net
capital gains of the regulated investment company for prior periods. The term
"distributed amount" generally means the sum of (i) amounts actually distributed
by the fund from its current year's ordinary income and capital gain net income
and (ii) any amount on which the fund pays income tax during the periods
described above. The fund intends to distribute net investment income and net
capital gains so as to minimize or avoid the excise tax liability.
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
New World Fund - Page 18
<PAGE>
expenses and certain foreign currency losses, if any. Net capital gains for a
fiscal year are computed by taking into account any capital loss carry-forward
of the fund.
If any net long-term capital gains in excess of net short-term capital losses
are retained by the 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 the retained gains and their related tax credit.
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 has 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 to individual shareholders will be taxable 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.
Redemptions of shares, including exchanges for shares of another American Fund,
may result in tax consequences (gain or loss) to the shareholder.
If a shareholder exchanges or otherwise disposes of shares of the fund within 90
days of having acquired such shares, and if, as a result of having acquired
those shares, the shareholder subsequently pays a reduced sales charge for
shares of the fund, or of a different fund, the sales charge previously incurred
in acquiring the fund's shares will not be taken into account (to the extent
such previous sales charges do not exceed the reduction in sales charges) for
the purposes of determining the amount of gain or loss on the exchange, but will
be treated as having been incurred in the acquisition of such other funds. Also,
any loss realized on a redemption or exchange of shares of the fund will be
disallowed to the extent substantially identical shares are reacquired within
the 61-day period beginning 30 days before and ending 30 days after the shares
are disposed of.
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
New World Fund - Page 19
<PAGE>
during the 90-day period beginning on the date which is 45 days before the date
on which the shares become ex-dividend.
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 investment
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 investment
capital upon the distribution, which will nevertheless be taxable to them.
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 U.S. 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.
In January of each year fund shareholders will receive a statement of the
federal income tax status of all distributions.
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. Most foreign countries do not impose
taxes on capital gains in respect of investments by foreign investors.
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.
New World Fund - Page 20
<PAGE>
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. Under this election, 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 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.
New World Fund - Page 21
<PAGE>
PURCHASE OF SHARES
<TABLE>
<CAPTION>
METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS
-------------------------------------------------------------------------------
<S> <C> <C>
See "Purchase $50 minimum (except where a
Minimums" for initial lower minimum is noted under
investment minimums. "Purchase Minimums").
-------------------------------------------------------------------------------
By contacting Visit any investment Mail directly to your
your investment dealer dealer who is investment dealer's address
registered in the printed on your account
state where the statement.
purchase is made and
who has a sales
agreement with
American Funds
Distributors.
-------------------------------------------------------------------------------
By mail Make your check Fill out the account additions
payable to the fund form at the bottom of a recent
and mail to the account statement, make your
address indicated on check payable to the fund,
the account write your account number on
application. Please your check, and mail the check
indicate an investment and form in the envelope
dealer on the account provided with your account
application. statement.
-------------------------------------------------------------------------------
By telephone Please contact your Complete the "Investments by
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
"Shareholder Account Services
and Privileges - Telephone and
Computer Purchases, Redemptions
and Exchanges" below).
-------------------------------------------------------------------------------
By computer Please contact your Complete the American FundsLink
investment dealer to Authorization Form. Once you
open account, then established the privilege, you,
follow the procedures your financial advisor or any
for additional person with your account
investments. information may access American
FundsLine OnLine(R) on the
Internet and make investments
by computer (subject to
conditions noted in
"Shareholder Account Services
and Privileges - 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 under
necessary. Please "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>
PURCHASE MINIMUMS - The minimum initial investment for all funds in The American
Funds Group, except the money market funds and the state tax-exempt funds, is
$250. The minimum initial investment for the money market funds (The Cash
Management Trust of America, The Tax--
New World Fund - Page 22
<PAGE>
Exempt Money Fund of America, and The U.S. Treasury Money Fund of America) and
the state tax-exempt funds (The Tax-Exempt Fund of California, The Tax-Exempt
Fund of Maryland, and The Tax-Exempt Fund of Virginia) is $1,000. Purchase
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).
PURCHASE MAXIMUM FOR CLASS B SHARES - The maximum purchase order for Class B
shares for all American Funds is $100,000. For investments above $100,000 Class
A shares are generally a less expensive option over time due to sales charge
reductions or waivers.
FUND NUMBERS - Here are the fund numbers for use with our automated phone line,
American FundsLine/(R)/ (see description below):
<TABLE>
<CAPTION>
FUND FUND
NUMBER NUMBER
FUND CLASS A CLASS B
---- ------- -------
<S> <C> <C>
STOCK AND STOCK/BOND FUNDS
AMCAP Fund/(R)/ . . . . . . . . . . . . . . . . . . . . 02 202
American Balanced Fund/(R)/ . . . . . . . . . . . . . . 11 211
American Mutual Fund/(R)/ . . . . . . . . . . . . . . . 03 203
Capital Income Builder/(R)/ . . . . . . . . . . . . . . 12 212
Capital World Growth and Income Fund/SM/ . . . . . . . 33 233
EuroPacific Growth Fund/(R)/ . . . . . . . . . . . . . 16 216
Fundamental Investors/SM/ . . . . . . . . . . . . . . . 10 210
The Growth Fund of America/(R)/ . . . . . . . . . . . . 05 205
The Income Fund of America/(R)/ . . . . . . . . . . . . 06 206
The Investment Company of America/(R)/ . . . . . . . . 04 204
The New Economy Fund/(R)/ . . . . . . . . . . . . . . . 14 214
New Perspective Fund/(R)/ . . . . . . . . . . . . . . . 07 207
New World Fund/SM/ . . . . . . . . . . . . . . . . . . 36 236
SMALLCAP World Fund/(R)/ . . . . . . . . . . . . . . . 35 235
Washington Mutual Investors Fund/SM/ . . . . . . . . . 01 201
BOND FUNDS
American High-Income Municipal Bond Fund/(R)/ . . . . . 40 240
American High-Income Trust/SM/ . . . . . . . . . . . . 21 221
The Bond Fund of America/SM/ . . . . . . . . . . . . . 08 208
Capital World Bond Fund/(R)/ . . . . . . . . . . . . . 31 231
Intermediate Bond Fund of America/SM/ . . . . . . . . . 23 223
Limited Term Tax-Exempt Bond Fund of America/SM/ . . . 43 243
The Tax-Exempt Bond Fund of America/(R)/ . . . . . . . 19 219
The Tax-Exempt Fund of California/(R)/* . . . . . . . . 20 220
The Tax-Exempt Fund of Maryland/(R)/* . . . . . . . . . 24 224
The Tax-Exempt Fund of Virginia/(R)/* . . . . . . . . . 25 225
U.S. Government Securities Fund/SM/ . . . . . . . . . . 22 222
MONEY MARKET FUNDS
The Cash Management Trust of America/(R)/ . . . . . . . 09 209
The Tax-Exempt Money Fund of America/SM/ . . . . . . . 39 N/A
The U.S. Treasury Money Fund of America/SM/ . . . . . . 49 N/A
___________
*Available only in certain states.
</TABLE>
New World Fund - Page 23
<PAGE>
SALES CHARGES
CLASS A SALES CHARGES - The sales charges you pay when purchasing Class A shares
of 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 "Fund Numbers" for a listing of the funds.)
<TABLE>
<CAPTION>
DEALER
SALES CHARGE AS CONCESSION
PERCENTAGE OF THE: AS PERCENTAGE
------------------ OF THE
AMOUNT OF PURCHASE
AT THE OFFERING PRICE NET AMOUNT OFFERING OFFERING
-INVESTED- PRICE PRICE
------------------------------------------ -------- ----- -----
<S> <C> <C> <C>
STOCK AND STOCK/BOND FUNDS
Less than $25,000 . . . . . . . . . 6.10% 5.75% 5.00%
$25,000 but less than $50,000 . . . 5.26 5.00 4.25
$50,000 but less than $100,000. . 4.71 4.50 3.75
BOND FUNDS
Less than $100,000 . . . . . . . . 3.90 3.75 3.00
STOCK, STOCK/BOND, AND BOND FUNDS
$100,000 but less than $250,000 . 3.63 3.50 2.75
$250,000 but less than $500,000 . 2.56 2.50 2.00
$500,000 but less than $750,000 . 2.04 2.00 1.60
$750,000 but less than $1 million 1.52 1.50 1.20
$1 million or more . . . . . . . . . . none none (see below)
-----------------------------------------------------------------------------
</TABLE>
CLASS A PURCHASES NOT SUBJECT TO SALES CHARGES - Investments of $1 million or
more are sold with no initial sales charge. HOWEVER, A 1% CONTINGENT DEFERRED
SALES CHARGE (CDSC) MAY BE IMPOSED IF REDEMPTIONS ARE MADE WITHIN ONE YEAR OF
PURCHASE. Employer-sponsored defined contribution-type plans investing $1
million or more, or with 100 or more eligible employees, and Individual
Retirement Account rollovers from retirement plans with assets invested in the
American Funds (see "Individual Retirement Account (IRA) Rollovers" below) may
invest with no sales charge and are not subject to a contingent deferred sales
charge. 403(b) plans may be
New World Fund - Page 24
<PAGE>
treated as employer-sponsored plans for sales charge purposes if; (i) the
American Funds are principal investment options; (ii) the employer facilitates
the enrollment process by, for example, allowing for onsite group enrollment
meetings held during working hours; and (iii) there is only one dealer firm
assigned to all employee accounts invested in the American Funds. 403(b) plans
meeting the above criteria may invest with no sales charge and are not subject
to a contingent deferred sales charge if investing $1 million or more or have
100 or more eligible employees. Investments made by investors in certain
qualified fee-based programs, and retirement plans, endowments or foundations
with $50 million or more in assets may also be made with no sales charge and are
not subject to a CDSC. A dealer concession of up to 1% may be paid by the fund
under its Plan of Distribution on investments made with no initial sales charge.
In addition, Class A shares of the stock, stock/bond and bond funds may be sold
at net asset value to:
(1) current or retired directors, trustees, officers and advisory board members
of, and certain lawyers who provide services to, the funds managed by Capital
Research and Management Company, current or retired employees of Washington
Management Corporation, current or retired employees and partners of The Capital
Group Companies, Inc. and its affiliated companies, certain family members and
employees 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 the
Principal Underwriter (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.
CONTINGENT DEFERRED SALES CHARGE ON CLASS A SHARES - A contingent deferred
sales charge of 1% applies to redemptions made from funds, other than the money
market funds, within 12 months following Class A share purchases of $1 million
or more made without an initial sales charge. 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 the longest
are assumed to be redeemed first for purposes of calculating this CDSC. The CDSC
may be waived in certain circumstances. See "CDSC Waivers for Class A Shares"
below.
New World Fund - Page 25
<PAGE>
DEALER COMMISSIONS ON CLASS A SHARES - The following commissions (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 defined contribution plan
investing $1 million or more, or with 100 or more eligible employees, IRA
rollover accounts (as described in "Individual Retirement Account (IRA)
Rollovers" below), and for purchases made at net asset value by certain
retirement plans, endowments and foundations with collective 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.
CLASS B SALES CHARGES - Class B shares are sold without any initial sales
charge. However, a CDSC may be applied to shares you sell within six years of
purchase, as shown in the table below:
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES CHARGE ON
SHARES SOLD WITHIN YEAR AS A % OF SHARES BEING SOLD
------------------------------------------------------------------------------
<S> <C>
1 5.00%
2 4.00%
3 4.00%
4 3.00%
5 2.00%
6 1.00%
</TABLE>
There is no CDSC on appreciation in share value above the initial purchase price
or on shares acquired through reinvestment of dividends or capital gain
distributions. In addition, the CDSC may be waived in certain circumstances. See
"CDSC Waivers for Class B shares" below. The CDSC is based on the original
purchase cost or the current market value of the shares being sold, whichever is
less. In processing redemptions of Class B shares, shares that are not subject
to any CDSC will be redeemed first and then shares that you have owned the
longest during the six-year period. CLASS B SHARES ARE NOT AVAILABLE TO CERTAIN
RETIREMENT PLANS, INCLUDING GROUP RETIREMENT PLANS SUCH AS 401(K) PLANS,
EMPLOYER-SPONSORED 403(B) PLANS, AND MONEY PURCHASE PENSION AND PROFIT SHARING
PLANS.
Compensation equal to 4% of the amount invested is paid by the Principal
Underwriter to dealers who sell Class B shares.
CONVERSION OF CLASS B SHARES TO CLASS A SHARES - Class B shares automatically
convert to Class A shares in the month of the eight-year anniversary of the
purchase date. The conversion of Class B shares to Class A shares after eight
years is subject to the Internal Revenue Service's continued position that the
conversion of Class B shares is not subject to federal income tax. In the event
the Internal Revenue Service no longer takes this position, the automatic
conversion feature may be suspended, in which event no further conversions of
Class B shares would occur while such suspension remained in effect. At your
option, Class B shares may still be exchanged for Class A shares on the basis of
relative net asset value of the two classes, without the imposition of a sales
charge or fee; however, such an exchange could constitute a taxable event for
you and, absent such an exchange, Class B shares would continue to be subject to
higher expenses for longer than eight years.
New World Fund - Page 26
<PAGE>
SALES CHARGE REDUCTIONS AND WAIVERS
REDUCING YOUR CLASS A SALES CHARGE - You and your "immediate family" (your
spouse and your children under age 21) may combine investments to reduce your
costs. You must let your investment dealer or American Funds Service Company
(the "Transfer Agent") 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 $25,000 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 use a Statement in order to qualify for a reduced sales charge,
shares equal to 5% of the dollar amount specified in the Statement will be
held in escrow in the shareholder's account out of the initial purchase (or
subsequent purchases, if necessary) by the Transfer Agent. All dividends
and any capital gain distributions on shares held in escrow will be
credited to the shareholder's account in shares (or paid in cash, if
requested). If the intended investment is not completed within the
specified 13-month period, the purchaser will remit to the Principal
Underwriter the difference between the sales charge actually paid and the
sales charge which would have been paid if the total of such purchases had
been made at a single time. If the difference is not paid by the close of
the period, 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. Existing holdings eligible for rights
of accumulation (see below), including Class A shares held in a fee-based
arrangement, as well as purchases of Class B shares, and any individual
investments in American Legacy variable annuities and variable life
insurance policies (American Legacy, American Legacy II and American Legacy
III variable annuities, American Legacy Life, American Legacy Variable
Life, and American Legacy Estate Builder) 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. The Statement will be considered completed if the shareholder
dies within the 13-month Statement period. Commissions will not be adjusted
or paid on the difference between the Statement amount and the amount
actually invested before the shareholder's death.
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, and
any individual investments in American Legacy variable annuities and
variable life
New World Fund - Page 27
<PAGE>
insurance policies 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
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 made by you, and your
immediate family (your spouse and your children under the age of 21), if
all parties are purchasing shares for their own accounts and/or:
. individual-type employee benefit plan(s), such as an IRA, 403(b) plan
(see exception below), or single-participant Keogh-type plan;
. business accounts solely controlled by you or your immediate family
(for example, you own the entire business);
. trust accounts established by you or your immediate family. However,
if the person(s) who established the trust is deceased, the trust
account may be aggregated with accounts of the person who is the
primary beneficiary of the trust; or
. endowments or foundations established and controlled by you or your
immediate family.
Individual purchases by a trustee(s) or other fiduciary(ies) may also be
aggregated if the investments are:
. for a single trust estate or fiduciary account, excluding
individual-type employee benefit plans described above;
. 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;
. for a diversified common trust fund or other diversified pooled
account not specifically formed for the purpose of accumulating fund
shares;
. for non-profit, charitable or educational organizations, such as an
employer-sponsored retirement plan, endowment or foundation
established and controlled by the organization; or
. for participant accounts of a 403(b) plan that is treated as an
employer-sponsored plan (see "Class A Purchases Not Subject to Sales
Charges" above), or made for two or more 403(b) plans that are treated
as employer-sponsored plans of a single employer or affiliated
employers as defined in the 1940 Act.
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
New World Fund - Page 28
<PAGE>
aggregated with other nominee or street name accounts unless otherwise
qualified as described above.
CONCURRENT PURCHASES - You may combine purchases of Class A and/or B shares
of two or more funds in The American Funds Group, as well as individual
holdings in American Legacy variable annuities and variable life insurance
policies. Direct purchases of the money market funds are excluded. Shares
of money market funds purchased through an exchange, reinvestment or
cross-reinvestment from a fund having a sales charge do qualify.
RIGHTS OF ACCUMULATION - You may take into account the current value (or if
greater, the amount you invested less any withdrawals) of your existing
Class A and B 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. When determining your sales charge, you may also take into account
the value of your individual holdings, as of the end of the week prior to
your investment, in various American Legacy variable annuities and variable
life insurance policies. Direct purchases of the money market funds are
excluded.
CDSC WAIVERS FOR CLASS A SHARES - Any CDSC on Class A shares may be waived in
the following cases:
(1) Exchanges (except if shares acquired by exchange are then redeemed within
12 months of the initial purchase).
(2) Distributions from 403(b) plans or IRAs due to death, post-purchase
disability or attainment of age 59-1/2.
(3) Tax-free returns of excess contributions to IRAs.
(4) Redemptions through systematic withdrawal plans (see "Automatic
Withdrawals" below), not exceeding 12% each year of the lesser of the original
purchase cost or the current market value of the shares being sold that would
otherwise be subject to a CDSC.
CDSC WAIVERS FOR CLASS B SHARES - Any CDSC on Class B shares may be waived in
the following cases:
(1) Redemptions through systematic withdrawal plans (see "Automatic
Withdrawals" below) not exceeding 12% each year of the lesser of the original
purchase cost or the current market value of the shares being sold that would
otherwise be subject to a CDSC. Shares not subject to a CDSC (such as shares
representing reinvestment of distributions) will be redeemed first and will
count toward the 12% limitation. If there are insufficient shares not subject to
a CDSC, shares subject to the lowest CDSC will be redeemed next until the 12%
limit is reached.
The 12% fee from CDSC limit is calculated on a pro rata basis at the time the
first payment is made and is recalculated thereafter on a pro rata basis at the
time of each SWP payment. Shareholders who establish a SWP should be aware that
the amount of that payment not subject to a CDSC may vary over time depending on
fluctuations in net asset value of their account. This privilege may be revised
or terminated at any time.
New World Fund - Page 29
<PAGE>
(2) Required minimum distributions taken from retirement accounts upon the
attainment of age 70-1/2.
(3) Distributions due to death or post-purchase disability of a shareholder. In
the case of joint tenant accounts, if one joint tenant dies, the surviving joint
tenant(s), at the time they notify the Transfer Agent of the decedent's death
and remove his/her name from the account, may redeem shares from the account
without incurring a CDSC. Redemptions subsequent to the notification to the
Transfer Agent of the death of one of the joint owners will be subject to a
CDSC.
INDIVIDUAL RETIREMENT ACCOUNT (IRA) ROLLOVERS
Assets from an employer-sponsored retirement plan (plan assets) may be invested
in any class of shares of the American Funds (except as described below) through
an IRA rollover plan. All such rollover investments will be subject to the terms
and conditions for Class A and B shares contained in the fund's current
prospectus and statement of additional information. In the case of an IRA
rollover involving plan assets that offered an investment option managed by any
affiliate of The Capital Group Companies, Inc., including any American Funds,
the assets may only be invested in Class A shares of the American Funds. Such
investments will be at net asset value and will not be subject to a contingent
deferred sales charge. Dealers who initiate and are responsible for such
investments will be compensated pursuant to the schedule applicable to
investments of $1 million or more (see "Dealer Commissions on Class A Shares"
above).
PRICE OF SHARES
Shares are purchased at the offering price next determined after the purchase
order is received and accepted by the fund or the Transfer Agent; 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 the Transfer Agent, an investment dealer MUST be
indicated. The dealer is responsible for promptly transmitting purchase orders
to the Principal Underwriter.
Orders received by the investment dealer, the Transfer Agent, or the fund after
the time of the determination of the net asset value will be entered at the next
calculated offering price. Prices which appear in the newspaper do not always
indicate 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 as of approximately 4:00 p.m. New York
time, which is the normal close of trading on the New York Stock Exchange each
day the Exchange is open. If, for example, the Exchange closes at 1:00 p.m., the
fund's share price would still be determined as of 4:00 p.m. New York time. 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
New World Fund - Page 30
<PAGE>
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. Fixed-income
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.
Short-term securities maturing within 60 days are valued at amortized cost which
approximates market value.
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 by 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 Board of
Directors.
SELLING SHARES
Shares are sold at the net asset value next determined after your request is
received in good order by the Transfer Agent. Sales of certain Class A and B
shares may be subject to deferred sales charges. 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;
New World Fund - Page 31
<PAGE>
- 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. The Transfer Agent reserves the
right to require a signature guarantee on all redemptions.
- 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.
- Check writing is not available for Class B shares of The Cash
Management Trust.
If you sell Class B shares and request a specific dollar amount to be sold, we
will sell sufficient shares so that the sale proceeds, after deducting any
contingent deferred sales charge, equals the dollar amount requested.
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
New World Fund - Page 32
<PAGE>
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 of Class A or Class B shares without a sales charge in the Class A
shares of any fund in The American Funds Group within 90 days after the date of
the redemption or distribution (any contingent deferred sales charge on Class A
shares will be credited to your account). 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 the Transfer Agent.
New World Fund - Page 33
<PAGE>
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES
AUTOMATIC INVESTMENT PLAN - An automatic investment plan enables you to make
monthly or quarterly investments in The American Funds through automatic debits
from your bank account. To set up a plan you must fill out an account
application and specify the amount you would like to invest ($50 minimum) and
the date on which you would like your investments to occur. The plan will begin
within 30 days after your account application is received. Your bank account
will be debited on the day or a few days before your investment is made,
depending on the bank's capabilities. The Transfer Agent will then invest your
money into the fund you specified on or around the date you specified. For
example, if the date you specified falls on a weekend or holiday, your money
will be invested on the next business day. If your bank account cannot be
debited due to insufficient funds, a stop-payment or the closing of the account,
the plan may be terminated and the related investment reversed. You may change
the amount of the investment or discontinue the plan at any time by writing to
the Transfer Agent.
AUTOMATIC REINVESTMENT - Dividends and capital gain distributions are reinvested
in additional shares of the same class 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, the
Transfer Agent or your investment dealer.
If you have elected to receive dividends and/or capital gain distributions in
cash, and the postal or other delivery service is unable to deliver checks to
your address of record, or you do not respond to mailings from American Funds
Service Company with regard to uncashed distribution checks, your distribution
option will automatically be converted to having all dividends and other
distributions reinvested in additional shares.
CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS - You may cross-reinvest
dividends and capital gains ("distributions") of the same share class into any
other fund in The American Funds Group at net asset value, subject to the
following conditions:
(a) The aggregate value of your account(s) in the fund(s) paying distributions
equals or exceeds $5,000 (this is waived if the value of the account in the fund
receiving the distributions equals or exceeds that fund's minimum initial
investment requirement),
(b) If the value of the account of the fund receiving distributions is below
the minimum initial investment requirement, distributions must be automatically
reinvested,
(c) If you discontinue the cross-reinvestment of distributions, the value of
the account of the fund receiving distributions must equal or exceed the minimum
initial investment requirement. If you do not meet this requirement within 90
days of notification, the fund has the right to automatically redeem the
account.
EXCHANGE PRIVILEGE - You may only exchange shares into other funds in The
American Funds Group within the same class. However, exchanges from Class A
shares of The Cash Management Trust of America may be made to Class B shares of
any other American Fund for dollar cost averaging purposes. 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
New World Fund - Page 34
<PAGE>
having a sales charge, or by reinvestment or cross-reinvestment of dividends or
capital gain distributions.
You may exchange shares by writing to the Transfer Agent (see "Selling Shares"),
by contacting your investment dealer, by using American FundsLine and American
FundsLine OnLine (see "American FundsLine and American FundsLine OnLine" below),
or by telephoning 800/421-0180 toll-free, faxing (see "American Funds Service
Company Service Areas" -- "Principal Underwriter and Transfer Agent" in the
prospectus for the appropriate fax numbers) or telegraphing the Transfer Agent.
(See "Telephone and Computer Purchases, Redemptions and Exchanges" below.)
Shares held in corporate-type retirement plans for which Capital Bank and 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 of the same class 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.
AUTOMATIC WITHDRAWALS - Withdrawal payments are not to be considered as
dividends, yield or income. Automatic investments may not be made into a
shareholder account from which there are automatic withdrawals. Withdrawals of
amounts exceeding reinvested dividends and distributions and increases in share
value would reduce the aggregate value of the shareholder's account. The
Transfer Agent arranges for the redemption by the fund of sufficient shares,
deposited by the shareholder with the Transfer Agent, to provide the withdrawal
payment specified.
ACCOUNT STATEMENTS - Your account is opened in accordance with your registration
instructions. Transactions in the account, such as additional investments will
be reflected on regular confirmation statements from the Transfer Agent.
Dividend and capital gain reinvestments and purchases through automatic
investment plans and certain retirement plans will be confirmed at least
quarterly.
AMERICAN FUNDSLINE AND AMERICAN FUNDSLINE ONLINE - 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 and American FundsLine OnLine. To use
these services, 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 and American FundsLine OnLine are
subject to the conditions noted above and in "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 - Purchase
Minimums" and "Purchase of Shares - Fund Numbers"), personal identification
number (generally the last four digits of your Social Security number or other
tax identification number associated with your account) and account number.
TELEPHONE AND COMPUTER PURCHASES, REDEMPTIONS AND EXCHANGES - By using the
telephone (including American FundsLine) or computer (including American
FundsLine OnLine), fax or telegraph purchase, redemption and/or exchange
options, you agree to hold the fund, the Transfer Agent, any of its affiliates
or mutual funds managed by such affiliates, and each of their
New World Fund - Page 35
<PAGE>
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 the Transfer Agent (you may also
reinstate them at any time by writing the Transfer Agent). If the Transfer Agent
does not employ reasonable procedures to confirm that the instructions received
from any person with appropriate account information are genuine, it and/or 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.
REDEMPTION OF SHARES - The fund's Articles of Incorporation permits the fund to
direct the Transfer Agent to redeem the shares of any shareholder for their then
current net asset value per share if at such time the shareholder of record owns
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.
SHARE CERTIFICATES - Shares are credited to your account and certificates are
not issued unless you request them by writing to the Transfer Agent.
EXECUTION OF PORTFOLIO TRANSACTIONS
The Investment Adviser places orders for the fund's portfolio securities
transactions. The Investment Adviser strives to obtain the best available prices
in its portfolio transactions taking into account the costs and quality of
executions. When, in the opinion of the Investment Adviser, two or more brokers
(either directly or through their correspondent clearing agents) are in a
position to obtain the best price and execution, preference may be given to
brokers who have sold shares of the fund or who have provided investment
research, statistical, or other related services to the Investment Adviser. The
fund does not consider that it has an obligation to obtain the lowest available
commission rate to the exclusion of price, service and qualitative
considerations.
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.
Brokerage commissions paid on portfolio transactions for the fiscal period ended
October 31, 2000 amounted to $4,430,000.
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. If the fund holds non--
New World Fund - Page 36
<PAGE>
U.S. securities, the Custodian may hold these securities pursuant to
sub-custodial arrangements in non-U.S. banks or non-U.S. 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. American Funds Service Company was paid a fee of
$1,850,000 for Class A shares and $11,000 for Class B shares for the 2000 fiscal
year.
INDEPENDENT ACCOUNTANTS - Deloitte & Touche LLP, 350 South Grand Avenue, Los
Angeles, CA 90071, serves as the fund's independent accountants providing audit
services, preparation of tax returns and review of certain documents to be filed
with the Securities and Exchange Commission. The financial statements included
in this Statement of Additional Information from the Annual Report have been so
included in reliance on the report of Deloitte & Touche LLP, independent
accountants, given on the authority of said firm as experts in accounting and
auditing. The selection of the fund's independent accountants is reviewed and
determined annually by the Board of Directors.
PROSPECTUSES AND REPORTS TO SHAREHOLDERS - The fund's fiscal year ends on
October 31. Shareholders are provided updated prospectuses annually. In
addition, shareholders are provided at least semiannually with reports showing
the investment portfolio, financial statements and other information. The fund's
annual financial statements are audited by the fund's independent accountants,
Deloitte & Touche LLP. In an effort to reduce the volume of mail shareholders
receive from the fund when a household owns more than one account, the Transfer
Agent has taken steps to eliminate duplicate mailings of prospectuses and
shareholder reports. To receive additional copies of a prospectus or report,
shareholders should contact the Transfer Agent.
PERSONAL INVESTING POLICY - The fund, Capital Research and Management Company
and its affiliated companies, including the fund's principal underwriter, have
adopted codes of ethics which allow for personal investments, including
securities in which the fund may invest from time to time. 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; 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.
OTHER INFORMATION - The financial statements including the investment portfolio
and the report of Independent Accountants contained in the Annual Report are
included in this Statement of Additional Information. The following information
is not included in the Annual Report:
New World Fund - Page 37
<PAGE>
DETERMINATION OF NET ASSET VALUE, REDEMPTION PRICE AND
MAXIMUM OFFERING PRICE PER SHARE FOR CLASS A SHARES -- OCTOBER 31, 2000
<TABLE>
<CAPTION>
<S> <C>
Net asset value and redemption price per share
(Net assets divided by shares outstanding) . . . . . . . . . $22.81
Maximum offering price per share
(100/94.25 of net asset value per share,
which takes into account the fund's current maximum
sales charge). . . . . . . . . . . . . . . . . . . . . . . . $24.20
</TABLE>
CLASS A SHARE INVESTMENT RESULTS AND RELATED STATISTICS
The fund's yield was 1.85% based on a 30-day (or one month) period ended October
31, 2000, 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 fund's one-year total return and lifetime average annual total return at the
maximum offering price ended October 31, 2000, were -8.48% and -5.95%,
respectively. The fund's one-year total return and lifetime average annual
total return at net asset value for the periods ended October 31, 2000 were
-2.91% and -5.95%, respectively.
The average total return ("T") is computed by equating the value at the end of
the period ("ERV") with 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 at the maximum offering price, the
fund assumes: (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. In addition, the fund will
provide lifetime average total return figures. From time to time, the fund may
calculate investment results for Class B shares.
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. Consequently,
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 the
New World Fund - Page 38
<PAGE>
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 include information on its investment results and/or comparisons of
its investment results to various unmanaged indices (such as the Dow Jones
Average of 30 Industrial Stocks and the Standard and Poor's 500 Composite Stock
Index) or results of other mutual funds or investment or savings vehicles in
advertisements or in reports furnished to present or prospective shareholders.
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.
The fund may refer to results and surveys compiled by organizations such as CDA/
Wiesenberger, Ibbotson Associates, Lipper Analytical Services, Morningstar,
Inc., and by the U.S. Department of Commerce. Additionally, the fund may refer
to results published in various newspapers and periodicals, including Barron's,
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, and fuels, transportation, and other
goods and services that people buy for day-to-day living).
The fund may also calculate a distribution rate on a taxable and tax equivalent
basis. The distribution rate is 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.
New World Fund - Page 39
<PAGE>
APPENDIX
Description of Bond Ratings
BOND RATINGS - The ratings of Moody's Investors Service, Inc. (Moody's) and
Standard & Poor's Corporation (S&P) represent their opinions as to the quality
of the municipal bonds which they undertake to rate. It should be emphasized,
however, that ratings are general and are not absolute standards of quality.
Consequently, municipal bonds with the same maturity, coupon and rating may
have different yields, while municipal bonds of the same maturity and coupon
with different ratings may have the same yield.
Moody's rates the long-term debt securities issued by various entities from
-------
"Aaa" to "C." Moody's applies the numerical modifiers 1, 2, and 3 in each
generic rating classification from Aa through B in its corporate bond rating
system. The modifier 1 indicates that the security ranks in the higher end of
its generic rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its generic
rating category. Ratings are described as follows:
"Bonds which are rated Aaa are judged to be of the best quality. They 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."
"Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, or fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present which make the long-term risks appear somewhat larger than the Aaa
securities."
"Bonds which are rated A possess many favorable investment attributes and are to
be considered as upper medium grade obligations. 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."
"Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. 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."
"Bonds which are rated Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often 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. Uncertainty of position characterizes
bonds in this class."
"Bonds which are rated 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."
New World Fund - Page 40
<PAGE>
"Bonds which are rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest."
"Bonds which are rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings."
"Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing."
S & P rates the long-term securities debt of various entities in categories
-----
ranging from "AAA" to "D" according to quality. The ratings from "AA" to "CCC"
may be modified by the addition of a plus (+) or minus (-) sign to show relative
standing within the major rating categories. Ratings are described as follows:
"Debt rated 'AAA' has the highest rating assigned by S & P. Capacity to pay
interest and repay principal is extremely strong."
"Debt rated 'AA' has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree."
"Debt rated 'A' has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories."
"Debt rated 'BBB' is regarded as having an adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories."
"Debt rated 'BB' has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The 'BB'
rating category is also used for debt subordinated to senior debt that is
assigned an actual or impled 'BBB-' rating.
"Debt rated 'B' has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The 'B' rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied 'BB' or 'BB-'
rating."
"The rating 'CC' is typically applied to debt subordinated to senior debt that
is assigned an actual or implied 'CCC' rating."
"The rating 'C' is typically applied to debt subordinated to senior debt which
is assigned an actual or implied 'CCC-' debt rating. The 'C' rating may be used
to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued."
"The rating 'C1' is reserved for income bonds on which no interest is being
paid."
New World Fund - Page 41
<PAGE>
"Debt rated 'D' is in payment default. The 'D' rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The 'D' rating also will be used upon
the filing of a bankruptcy petition if debt service payments are jeopardized."
New World Fund - Page 42
<TABLE>
<S> <C> <C> <C>
New World Fund, Inc.
Investment Portfolio, October 31, 2000
LARGEST INDUSTRY HOLDINGS
Banks 9.89%
Wireless Telecommunication Services 6.20%
Electronic Equipment & Instruments 5.11%
Diversified Telecommunication Services 4.83%
Beverages 4.53%
Other Industries 45.60%
Bonds & Notes 10.54%
Cash and Equivalents 13.30%
LARGEST INDIVIDUAL HOLDINGS
Shinhan Bank 1.99%
Hon Hai Precision Industry 1.68
Unibanco-Uniao de Bancos Brasileiros 1.63
Samsung Electro-Mechanics 1.62
Coca-Cola 1.47
Telefonos de Mexico 1.45
Avon Products 1.30
PepsiCo 1.26
Fomento Economico Mexicano 1.21
Sony 1.19
Shares or Market Percent
Principal Value of Net
Equity Securitites (common and preferred Amount (Millions) Assets
stocks and convertible debentures)
--------------------------------------- -------- -------- --------
BANKS - 9.89%
Shinhan Bank (South Korea) 2,566,930 $25.760 1.99%
Unibanco-Uniao de Bancos Brasileiros SA, 836,000 21.109 1.63
units (GDR) (Brazil)
Yapi ve Kredi Bankasi AS (Turkey) 1,536,385,000 13.289 1.03
ABN AMRO Holding NV (Netherlands) 514,090 11.908 .92
Bank of the Philippine Islands (Philippines) 8,892,750 9.163 .71
Wielkopolski Bank Kredytowy SA (Poland) 1,749,886 7.951 .61
Grupo Financiero Banamex-Accival, 4,380,000 6.810 .53
SA de CV (Mexico) (1)
DBS Group Holdings Ltd. (Singapore) 552,824 6.521 .50
Kookmin Bank (South Korea) 542,048 6.203 .48
Bangkok Bank PCL (Thailand) (1) 6,400,000 5.461 .42
ICICI Bank Ltd. (India) 2,217,200 5.236
ICICI Bank Ltd. (ADR) (1) 27,000 .128 .41
KorAm Bank (South Korea) (1) 1,000,000 5.326 .41
HSBC Holdings PLC (United Kingdom) 140,000 1.948 .15
Hanvit Bank (South Korea) (1) 1,050,000 1.257 .10
WIRELESS TELECOMMUNICATION SERVICES - 6.20%
GLOBE TELECOM, Inc., 1,057,896 12.252 .95
Class A (Philippines) (1) (2)
China Unicom Ltd. (China - Incorporated 5,841,300 11.722 .91
in Hong Kong) (1)
Tele Nordeste Celular Participacoes SA, 265,000 10.931 .84
preferred nominative (ADR) (Brazil)
Nuevo Grupo Iusacell SA de CV 709,000 9.217 .71
(ADR) (Mexico) (1)
Telesp Celular Participacoes, preferred 696,093,028 8.259 .64
nominative (Brazil)
Telemig Celular Participacoes SA, 101,700 5.339 .41
preferred nominative (ADR) (Brazil)
China Mobile (Hong Kong) Ltd. (formerly 812,000 5.232 .40
China Telecom (Hong Kong) Ltd.)
(Hong Kong) (1)
Tele Celular Sul Participacoes SA, 185,000 4.660 .36
preferred nominative (ADR) (Brazil)
Vimpel-Communications (Russia) (1) 198,400 3.869 .30
Orascom Telecom Holding (GDR) (Egypt) (1) 580,000 3.538 .27
Celular CRT SA, Class A (Brazil) (1) 10,500,000 3.454 .27
Turkcell Iletisim Hizmetleri AS (Turkey)(1) 41,400,000 1.821 .14
ELECTRONIC EQUIPMENT & INSTRUMENTS - 5.11%
Hon Hai Precision Industry Co. Ltd. (Taiwan) 4,158,500 21.792 1.68
Samsung Electro-Mechanics Co. 655,700 21.010 1.62
(South Korea) (1)
Orbotech Ltd. (Israel) (1) 191,250 10.124 .78
Omni Industries Ltd. (Singapore) 3,850,000 6.494 .50
Venture Manufacturing (Singapore) 571,800 5.539 .43
Ltd. (Singapore)
Varitronix International Ltd. (Hong Kong - 1,161,000 1.332 .10
Incorporated in Bermuda)
DIVERSIFIED TELECOMMUNICATION
SERVICES - 4.83%
Telefonos de Mexico, SA de CV, 345,000 18.608
Class L (ADR) (Mexico)
Telefonos de Mexico, SA de CV, $180,000 .223 1.45
4.25% convertible debentures 2004
United Pan-Europe Communications 359,100 6.292 .49
NV (Netherlands) (1)
Global Light Telecommunications 737,500 5.531 .43
Inc. (Canada) (1)
Magyar Tavkozlesi Rt. (ADR) (Hungary) 234,800 5.518 .43
Cia. Anonima Nacional Telefonos de 250,000 4.750 .37
Venezuela (CANTV), Class D (ADR)
(Venezuela)
Nortel Inversora SA, preferred, 257,200 3.086 .24
Class B (ADR) (Argentina)
Telefonica, SA (ADR) (Spain) (1) 47,222 2.736 .21
Cia. de Telecomunicaciones de 170,000 2.593 .20
Chile SA (ADR) (Chile)
Korea Telecom Corp. (ADR) (South Korea) 60,000 2.213 .17
Mahanagar Telephone Nigam Ltd. (GDR)(India) 350,000 2.065 .16
Bell Canada International Inc. (Canada) (1) 102,000 2.010 .16
Philippine Long Distance Telephone 120,000 1.860 .14
Co. (ADR) (Philippines)
Videsh Sanchar Nigam Ltd. (ADR) (India) 212,800 1.569 .12
AT&T Latin America Corp., Class A (USA) (1) 168,200 1.198 .09
Telecom Argentina STET-France Telecom SA, 65,000 1.117 .09
Class B (ADR) (Argentina)
FLAG Telecom Holdings Ltd. (USA) (1) 72,900 .847 .07
Global TeleSystems Group, Inc. (USA) (1) 39,500 .106 .01
BEVERAGES - 4.53%
Coca-Cola Co. (USA) 314,900 19.012 1.47
PepsiCo, Inc. (USA) 336,000 16.275 1.26
Fomento Economico Mexicano, 410,000 15.657 1.21
SA de CV (ADR) (Mexico)
Coca-Cola Amatil Ltd. (Australia) 2,011,236 4.097 .32
South African Breweries PLC (United Kingdom) 574,000 3.445 .27
MEDIA - 3.56%
Independent News & Media PLC (Ireland) 3,060,000 9.477 .73
MIH Ltd., Class A (South Africa) (1) 327,000 8.298 .64
Grupo Televisa, SA, ordinary participation 100,000 5.413 .42
certificates (ADR) (Mexico) (1)
Antenna TV SA (ADR) (Greece) (1) 236,000 4.661 .36
ABS-CBN Holdings Corp. (Philippines) 6,000,000 4.652 .36
Nasionale Pers Beperk (South Africa) 522,000 3.887 .30
Globo Cabo SA (ADR) (Brazil) (1) 330,000 3.568 .28
Promotora de Informaciaones, SA (Spain) (1) 162,500 3.130 .24
Benpres Holdings Corp. (Philippines) (1) 60,400,000 3.023 .23
OIL & GAS - 3.34%
Petroleo Brasileiro SA - PETROBRAS, 386,000 11.218 .87
ordinary nominative (ADR) (Brazil) (1)
Sasol Ltd. (South Africa) 1,433,700 10.999 .85
LUKOIL (ADR) (Russia) 167,000 8.918 .69
MOL Magyar Olaj- es Gazipari Rt., 200,000 3.093 .24
Class A (Hungary)
Gulf Indonesia Resources Ltd. 275,000 2.991 .23
(Indonesia) (1)
"Shell" Transport and Trading Co., 60,000 2.951 .23
PLC (New York registered) (United Kingdom)
China Petroleum & Chemical 150,000 2.944 .23
Corp. (ADR) (China) (1)
PHARMACEUTICALS - 3.28%
Teva Pharmaceutical Industries 114,000 6.740
Ltd. (ADR) (Israel)
Teva Pharmaceutical Industries Ltd. $3,750,000 3.769 .81
1.50% convertible debentures 2005
AstraZeneca PLC (United Kingdom) 193,500 9.143 .71
Pharmacia Corp. (formed by the merger of 154,700 8.509 .66
Pharmacia & Upjohn, Inc. and
Monsanto Co.) (USA)
PLIVA d.d. (GDR) (Croatia) 700,000 7.385 .57
Pfizer Inc (USA) 160,000 6.910 .53
FOOD PRODUCTS - 3.03%
Orkla AS, Class A (Norway) 662,857 11.968 .92
Nestle SA (Switzerland) 4,550 9.426 .73
Sara Lee Corp. (USA) 380,400 8.202 .63
Groupe Danone (France) 36,000 5.034 .39
Uni-President Enterprises Co. (Taiwan) 3,240,000 2.170 .17
PT Indofood Sukses Makmur 16,515,000 1.370 .11
Tbk (Indonesia) (1)
Dole Food Co., Inc. (USA) 81,200 .979 .08
COMMUNICATIONS EQUIPMENT - 2.49%
Telefonaktiebolaget LM Ericsson, 706,000 9.400
Class B (Sweden)
Telefonaktiebolaget LM Ericsson, 170,000 2.359 .91
Class B (ADR)
ECI Telecom Ltd. (Israel) 345,000 8.151 .63
Locus Co., Ltd. (South Korea) (1) 223,220 5.030 .39
Nokia Corp., Class A (Finland) 88,000 3.621 .28
Motorola, Inc. (USA) 120,000 2.993 .23
Datacraft Asia Ltd. (Singapore) 87,000 .596 .05
METALS & MINING - 2.15%
KGHM Polska Miedz SA (GDR) (Poland) 842,000 8.925 .69
BHP Ltd. (formerly Broken Hill 634,786 6.157 .48
Proprietary Co. Ltd.) (Australia)
De Beers Consolidated Mines 153,900 4.241 .33
Ltd. (South Africa)
Freeport-McMoRan Copper & Gold Inc., 368,000 2.921 .22
Class B (USA) (1)
Alcoa Inc. (USA) 100,000 2.869 .22
Billiton PLC (United Kingdom) 721,100 2.748 .21
HOUSEHOLD DURABLES - 2.11%
Sony Corp. (Japan) 193,400 15.455 1.19
Hankuk Electric Glass Co., 187,500 11.884 .92
Ltd. (South Korea) (1)
DIVERSIFIED FINANCIALS - 2.08%
Housing Development Finance Corp. 1,250,159 12.534 .97
Ltd (India)
First Pacific Co. Ltd. (Hong Kong) 54,806,035 12.439 .96
ICICI Ltd. (ADR) (India) 210,000 1.982 .15
PAPER & FOREST PRODUCTS - 1.89%
Votorantim Celulose e Papel SA 700,000 12.075 .93
(ADR) (Brazil)
Kimberly-Clark de Mexico, SA de CV (Mexico) 3,550,000 9.081 .70
Sappi Ltd. (South Africa) (1) 490,000 3.363 .26
AUTOMOBILES - 1.88%
Suzuki Motor Corp. (Japan) 1,147,000 12.298 .95
Honda Motor Co., Ltd. (Japan) 309,000 10.676 .82
Bajaj Auto Ltd. (India) 260,000 1.450 .11
MACHINERY - 1.72%
Mitsubishi Heavy Industries, Ltd. (Japan) 2,360,000 9.170 .71
Tubos de Acero de Mexico, SA (ADR) (Mexico) 590,000 8.974 .69
Metso Oyj (Finland) 550,000 4.200 .32
REAL ESTATE - 1.61%
SM Prime Holdings, Inc. (Philippines) 130,800,000 10.269 .79
New World China Land Ltd. (China - 11,999,800 3.847 .30
Incorporated in the Cayman Islands) (1)
Ayala Land, Inc. (Philippines) 48,025,200 3.770 .29
IRSA Inversiones y Representaciones 84,040 1.749
SA (GDR) (Argentina)
IRSA Inversiones y Representaciones SA 592,157 1.244 .23
SEMICONDUCTOR EQUIPMENT & PRODUCTS - 1.50%
Samsung Electronics Co., Ltd. (South Korea) 109,080 13.683 1.06
Hyundai Electronics Industries Co., 812,000 4.996 .39
SA (GDR) (Argentina)
ChipPAC, Inc., Class A (USA) (1) 73,800 .637 .05
PERSONAL PRODUCTS - 1.30%
Avon Products, Inc. (USA) 346,400 16.800 1.30
LEISURE EQUIPMENT & PRODUCTS - 1.19%
Fuji Photo Film Co., Ltd. (Japan) 270,000 10.021 .77
Shimano Inc. (Japan) 269,000 5.411 .42
AEROSPACE & DEFENSE - 1.12%
EMBRAER - Empresa Brasileira de 500,000 14.469 1.12
Aeronautica SA (ADR) (Brazil)
TEXTILES & APPAREL - 1.11%
Li & Fung Ltd. (Hong Kong - Incorporated 7,700,000 14.317 1.11
in Bermuda)
TRANSPORTATION INFRASTRUCTURE - 0.93%
New World Infrastructure Ltd. 7,250,000 6.601 .51
(Hong Kong) (1)
Zhejiang Expressway Co. Ltd., 27,700,000 4.476 .35
Class H (China)
International Container Terminal Services, 72,683,000 .956 .07
Inc. (Philippines) (1)
TRADING COMPANIES & DISTRIBUTORS - 0.93%
Marubeni Corp. (Japan) (1) 5,144,600 12.022 .93
ELECTRIC UTILITIES - 0.89%
Huaneng Power International, Inc. (China) 20,240,000 7.851 .61
Eletropaulo Metropolitana - Electricidade 63,900,000 3.593 .28
de Sao Paulo SA, preferred
nominative (Brazil)
IT CONSULTING & SERVICES - 0.88%
Check Point Software 37,000 5.860 .45
Technologies Ltd. (Israel) (1)
Dimension Data Holdings PLC (South Africa - 650,000 5.606 .43
Incorporated in the United Kingdom) (1)
HOTELS RESTAURANTS & LEISURE - 0.85%
Millennium & Copthorne Hotels 1,980,000 11.046 .85
PLC (United Kingdom)
HOUSEHOLD PRODUCTS - 0.67%
Kimberly-Clark Corp. (USA) 130,400 8.606 .66
Reckitt Benckiser PLC (United Kingdom) 9,400 .123 .01
FOOD & DRUG RETAILING - 0.65%
Migros Turk TAS (Turkey) 45,150,000 6.222 .48
Santa Isabel SA (ADR) (Chile) (1) 430,000 2.204 .17
COMPUTERS & PERIPHERALS - 0.52%
NatSteel Electronics Ltd. $5,600,000 5.502 .42
1.50% convertible debentures 2004
(Singapore)
Trigem Computer Inc. (South Korea) 130,000 .847 .07
Primax Electronics Ltd. (Taiwan) (1) 638,000 .342 .03
OTHER INDUSTRIES - 2.79%
Cheung Kong Infrastructure 3,800,000 5.896 .45
Holdings Ltd. (Hong Kong)
Industriforvaltnings AB Kinnevik, 263,753 5.730 .44
Class B (Sweden)
Sabre Group Holdings, Inc., 105,098 3.514 .27
Class A (USA) (1)
Giordano International Ltd. (Hong Kong) 5,600,000 3.285 .25
VIA NET.WORKS, Inc. (USA) (1) 410,000 2.996 .23
Old Mutual PLC (South Africa) 1,200,000 2.630 .20
AMR Corp. (USA) (1) 75,000 2.456 .19
TTI Team Telecom International, 118,500 2.074 .16
Ltd. (Israel) (1)
Philip Morris Companies Inc. (USA) 50,200 1.839 .14
China Merchants Holdings Co. (Hong Kong) 2,500,000 1.747 .13
Organizacion Soriana, SA de CV, 462,000 1.450 .11
Class B (Mexico)
Elektrim SA 3.75% convertible euro 2,100,000 1.443 .11
debentures 2004 (Poland)
Tecnomatix Technologies Ltd. (Israel) (1) 220,000 1.348 .10
Rentokil Initial PLC (United Kingdom) 65,000 .150 .01
MISCELLANEOUS - 1.13%
Other equity securities in initial 14.595 1.13
period of acquisition
---------- ----------
TOTAL EQUITY SECURITIES 986.106 76.16
(cost: $1,142.956 million)
---------- ----------
Principal Market Percent
Amount Value of Net
Bonds & Notes (Millions) (Millions) Assets
------------------------------------ -------- -------- --------
NON-U.S. GOVERNMENT OBLIGATIONS - 9.73%
Brazil (Federal Republic of):
Global 14.50% 2009 $11.750 12.531
Bearer 8.00% 2014 (3) 30.305 22.615
Global 10.125% 2027 15.000 11.288 3.59
United Mexican States Government
Eurobonds, Global:
9.875% 2007 5.000 5.195
10.375% 2009 1.000 1.065
11.375% 2016 6.300 7.151
11.50% 2026 5.400 6.377 1.53
Russian Federation:
8.25% 2010 3.848 2.479 1.04
2.50% 2030 (4) 29.313 10.992
Argentina (Republic of):
11.75% 2009 12.000 10.500
12.00% 2020 2.000 1.725 .95
Panama (Republic of), Past Due 12.952 10.102 .78
Interest Eurobond 7.75% 2016 (4)
Turkey (Republic of) 11.875% 2030 8.900 8.722 .67
Croatian Government:
Series B, 7.75% 2006 (4) .960 .909 .51
Series A, 7.75% 2010 (4) 6.227 5.717
Poland (Republic of), Past Due Interest 5.225 4.848 .37
Bond, Bearer 6.00% 2014 (4)
Philippines (Republic of) 9.875% 2019 5.000 3.738 .29
WIRELESS TELECOMMUNICATION SERVICES - 0.65%
GLOBE TELECOM, Inc. 13.00% 2009 3.000 3.015 .23
Cellco Finance NV 12.75% 2005 2.725 2.691 .21
PTC International Finance 4.000 2.690 .21
BV 0%/10.75% 2007 (5)
CHEMICALS - 0.16%
Reliance Industries Ltd. 10.25% 2097 2.500 2.089 .16
---------- ----------
TOTAL BONDS & NOTES 136.439 10.54
(cost: $138.180 million)
---------- ----------
Short-Term Securities
Principal Market Percent
Amount Value of Net
CORPORATE SHORT-TERM NOTES - 11.43% (Millions) (Millions) Assets
-------------------------------------- -------- -------- --------
Internationale Nederlanden (U.S.) 25.000 24.924 1.93
Funding Corp. 6.475%-6.49%
due 11/3-11/27/2000
Diageo Capital PLC 6.45%-6.46% 25.000 24.804 1.92
due 12/14/2000
Den Danske Corp. Inc. 6.53% 20.000 19.691 1.52
due 1/22-1/26/2001
Sony Capital Corp. 6.50%-6.52% 16.000 15.954 1.23
due 11/7-11/21/2000
Asset Securitization Corp. 6.49%-6.53% 14.300 14.924 1.15
due 11/1/2000-1/25/2001
Toyota Motor Corp. 6.45% due 12/18/2000 11.000 10.905 .84
DaimlerChrysler North America Holdings 10.000 9.973 .77
6.49% due 11/15/2000
Canadian Wheat Board 6.45%-6.46% 10.000 9.944 .77
due 11/27-12/5/2000
Bayer Corp. 6.46% due 12/7/200 10.000 9.934 .77
ABN AMRO Bank NV 6.51% due 1/4/2001 7.000 6.917 .53
---------- ----------
147.970 11.43
---------- ----------
FEDERAL AGENCY DISCOUNT NOTES - 1.61%
Federal Home Loan Banks 6.38%-6.49% 21.000 20.789 1.61
due 11/17-12/27/2000
---------- ----------
NON-U.S. CURRENCY - 0.03%
New Taiwanese Dollar NT$14.033 .435 .03
---------- ----------
TOTAL SHORT-TERM SECURITIES 169.194 13.07
(cost: $169.206 million)
---------- ----------
TOTAL INVESTMENT SECURITIES 1,291.739 99.77
(cost: $1,450.342 million)
Excess of cash and receivables 3.045 .23
over payables
---------- ----------
NET ASSETS $1,294.784 100.00%
---------- ----------
(1) Non-income-producing securities.
(2) Valued under procedures established
by the Board of Directors.
(3) Payment in kind; the issuer has the
option of paying additional securities
in lieu of cash.
(4) Coupon rate may change periodically.
(5) Step bond; coupon rate will increase
at a later date.
ADR = American Depositary Receipts
GDR = Global Depositary Receipts
The description of the companies shown in
the portfolio, which were obtained from
published reports and other sources
believed to be reliable, are supplemental
and are not covered by the Independent
Auditors' Report.
See Notes to Financial Statements
</TABLE>
Equity securities appearing in the portfolio since
April 30, 2000
ABS-CBN Holdings
AT&T Latin America
Bank of the Philippine Islands
Celular CRT
China Petroleum & Chemical
China Unicom
ChipPAC
Datacraft Asia
EMBRAER - Empresia Brasileira de Aeronautica
FLAG Telecom Holdings
GLOBE TELECOM
Globo Cabo
Grupo Financiero Banamex-Accival
Hankuk Electric Glass
HSBC Holdings
Hyundai Electronics Industries
LUKOIL
Motorola
Orascom Telecom Holdings
Petroleo Brasileiro
Philippine Long Distance Telephone
Promotora de Informaciones
Sappi
"Shell" Transport and Trading
Tecnomatix Technologies
Telefonica
Tubos de Acero de Mexico
Turkcell Iletisim Hizmetleri
United Pan-Europe Commuinications
Vimpel-Communications
Equity securities eliminated from the portfolio since
April 30, 2000
China Resources Enterprise
Coca-Cola Beverages
FirstCom
Great Wall Technology
Korea Trunet
Koninklijke PTT Nederland
LG Electornics
Lucent Technologies
Matav-Cable Systems
Nissan Motor
Samsung
Seminis
Standard Chartered Bank
Tele Sudeste Celular Participacoes
Terra Networks
<TABLE>
<S> <C> <C>
New World Fund, Inc.
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
at October 31, 2000 (dollars in millions)
Assets:
Investment securities at market
(cost: $1,450.342) $1,291.739
Cash .004
Receivables for--
Sales of investments $2.181
Sales of fund's shares 3.505
Dividends and accrued interest 3.401 9.087
1,300.830
Liabilities:
Payables for--
Purchases of investments 2.538
Repurchases of fund's shares 1.780
Management services .873
Other expenses .855 6.046
Net Assets at October 31, 2000-- $1,294.784
Total authorized capital stock--200,000,000 shares
Class A shares, $.01 par value
Net assets $1,279.222
Shares outstanding 56,071,307
Net asset value per share $22.81
Class B shares, $.01 par value
Net assets $15.562
Shares outstanding 685,351
Net asset value per share $22.71
STATEMENT OF OPERATIONS
for the year ended October 31, 2000 (dollars in millions)
Investment Income:
Income:
Dividends $12.079
Interest 25.252 $ 37.331
Expenses:
Management services fee 10.145
Distribution expenses - Class A 3.313
Distribution expenses - Class B .070
Transfer agent fee - Class A 1.850
Transfer agent fee - Class B .011
Reports to shareholders .117
Registration statement and prospectus .523
Postage, stationery and supplies .251
Directors' fees .144
Auditing and legal fees .042
Custodian fee .601
Taxes other than federal income tax .029
Other expenses .031 17.127
Net investment income 20.204
Realized Loss and Change From Unrealized
Appreciation to Unrealized
Depreciation on Investments:
Net realized loss (4.368)
Change from unrealized appreciation to
unrealized depreciation on investments (159.425)
Net realized loss and change from unrealized
appreciation to unrealized depreciation on investments (163.793)
Net Decrease in Net Assets Resulting
From Operations (143.589)
STATEMENT OF CHANGES IN NET ASSETS (dollars in millions)
Year Ended June 17, 1999 /*/
October 31, to October 31,
2000 1999
Operations:
Net investment income 20.204 4.876
Net realized loss on investments (4.368) (0.513)
Unrealized (depreciation) appreciation
on investments (159.425) 0.813
Net (decrease) increase in net assets
resulting from operations (143.589) 5.176
Dividends and Distributions Paid to
Shareholders:
Dividends from net investment income:
Class A (6.958) 0.000
Total Dividends and Distributions (6.958) 0.000
Capital Share Transactions:
Proceeds from shares sold 914.463 745.141
Proceeds from shares issued in reinvestment
of net investment income dividends 6.472 0.000
Cost of shares repurchased (214.241) (11.844)
Net increase in net assets resulting from
capital share transactions 706.694 733.297
Total Increase in Net Assets 556.147 738.473
Net Assets:
Beginning of year 738.637 .164
End of year (including
undistributed net investment
income: $17.775 and $4.933,
respectively) $1,294.784 $738.637
/*/ Commencement of operations
See Notes to Financial Statements
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - New World Fund, Inc. (the "fund") is registered under the
Investment Company Act of 1940 as an open-end, diversified management
investment company. The fund seeks long-term capital appreciation by investing
in companies with significant exposure to countries which have developing
economies and/or markets. The fund offers Class A and Class B shares. Class A
shares are sold with an initial sales charge of up to 5.75%. Class B shares
are sold without an initial sales charge but subject to a contingent deferred
sales charge paid upon redemption. This charge declines from 5% to zero over a
period of six years. Class B shares have higher distribution expenses and
transfer agent fees than Class A shares. Class B shares are automatically
converted to Class A shares eight years after the date of purchase. Holders of
both classes of shares have equal pro rata rights to assets and identical
voting, dividend, liquidation and other rights, except that each class bears
different distribution and transfer agent expenses, and each class shall have
exclusive rights to vote on matters affecting only that class.
SIGNIFICANT ACCOUNTING POLICIES - The financial statements have been prepared
in conformity with accounting principles generally accepted in the United
States which require management to make estimates and assumptions that affect
the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates. The following is a summary of the
significant accounting policies consistently followed by the fund in the
preparation of its financial statements:
SECURITY VALUATION - 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. Fixed-income 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. Short-term securities maturing within 60 days are valued at amortized
cost, which approximates market value. Securities and assets for which
representative market quotations are not readily available are valued at fair
value as determined in good faith by a committee appointed by the Board of
Directors. The ability of the issuers of the fixed-income securities held by
the fund to meet their obligations may be affected by economic developments in
a specific industry, state or region.
NON-U.S. CURRENCY TRANSLATION - Assets and liabilities initially expressed in
terms of non-U.S. currencies are translated into U.S. dollars at the prevailing
market rates at the end of the reporting period. Purchases and sales of
securities and income and expenses are translated into U.S. dollars at the
prevailing market rates on the dates of such transactions. The effects of
changes in non-U.S. currency exchange rates on investment securities and other
assets and liabilities are included with the net realized and unrealized gain
or loss on investment securities.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions are
accounted for as of the trade date. Realized gains and losses from securities
transactions are determined based on specific identified cost. In the event
securities are purchased on a delayed delivery or "when-issued" basis, the fund
will instruct the custodian to segregate liquid assets sufficient to meet its
payment obligations in these transactions. Dividend income is recognized on
the ex-dividend date, and interest income is recognized on an accrual basis.
Market discounts, premiums, and original issue discounts on fixed-income
securities are amortized daily over the expected life of the security.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends and distributions paid
to shareholders are recorded on the ex-dividend date.
Allocations - Income, expenses (other than class-specific expenses) and
realized and unrealized gains and losses are allocated daily between Class A
and Class B based on their relative net asset values. Distribution expenses,
transfer agent fees and any other class-specific expenses are accrued daily and
charged to the applicable share class.
2. NON-U.S. INVESTMENTS
INVESTMENT RISK - Investments in securities of non-U.S. issuers in certain
countries involve special investment risks. These risks may include, but are
not limited to, investment and repatriation restrictions, revaluation of
currencies, adverse political, social, and economic developments, government
involvement in the private sector, limited and less reliable investor
information, lack of liquidity, certain local tax law considerations, and
limited regulation of the securities markets.
TAXATION - Dividend and interest income is recorded net of non-U.S. taxes paid.
For the year ended October 31, 2000 such non-U.S. taxes were $1,037,000.
CURRENCY GAINS AND LOSSES - Net realized currency losses on dividends,
interest, sales of non-U.S. bonds and notes, forward contracts, and other
receivables and payables, on a book basis, were $356,000 for the year ended
October 31, 2000.
3. FEDERAL INCOME TAXATION
The fund complies with the requirements of the Internal Revenue Code applicable
to regulated investment companies and intends to distribute all of its net
taxable income and net capital gains for the fiscal year. As a regulated
investment company, the fund is not subject to income taxes if such
distributions are made. Required distributions are determined on a tax basis
and may differ from net investment income and net realized gains for financial
reporting purposes. In addition, the fiscal year in which amounts are
distributed may differ from the year in which the net investment income and net
realized gains are recorded by the fund.
As of October 31, 2000, net unrealized depreciation on investments for federal
income tax purposes aggregated $158,872,000; $98,974,000 related to appreciated
securities and $257,846,000 related to depreciated securities. During the year
ended October 31, 2000, the fund realized, on a tax basis, a net capital loss
of $4,012,000 on securities transactions. The fund had available at October 31,
2000 a net capital loss carryforward totaling $4,324,000, which may be used to
offset capital gains realized during subsequent years through 2008 and thereby
relieve the fund and its shareholders of any federal income tax liability with
respect to the capital gains that are so offset. Net losses related to
non-U.S. currency and other transactions of $356,000 are treated as ordinary
income for federal income tax purposes. The cost of portfolio securities for
federal income tax purposes was $1,450,611,000 at October 31, 2000.
4. FEES AND TRANSACTIONS WITH RELATED PARTIES
INVESTMENT ADVISORY FEE - The fee of $10,145,000 for management services was
incurred pursuant to an agreement with Capital Research and Management Company
(CRMC), with which certain officers and Directors of the fund are affiliated.
The Investment Advisory and Service Agreement provides for monthly fees accrued
daily, based on the following rates and net asset levels:
<TABLE>
<CAPTION>
<S> <C> <C>
Average Net Asset Level
Rate In Excess of Up to
0.85% $0 $500 million
0.77 500 million 1.0 billion
0.71 1.0 billion 1.5 billion
0.66 1.5 billion 2.5 billion
0.62 2.5 billion
</TABLE>
DISTRIBUTION EXPENSES - American Funds Distributors, Inc. ("AFD"), the
principal underwriter of the fund's shares, received $2,137,000 (after
allowances to dealers) as its portion of the sales charges paid by purchasers
of the fund's Class A shares during the year ended October 31, 2000. Such
sales charges are not an expense of the fund and, hence, are not reflected in
the accompanying Statement of Operations.
The fund has adopted plans of distribution under which it may finance
activities primarily intended to sell fund shares, provided the categories of
expense are approved in advance by the fund's Board of Directors. The plans
provide for aggregate annual expenses limits of 0.30% of net assets for Class A
shares, and 1.00% of net assets for Class B shares.
For Class A shares, approved categories of expense include dealer service fees
of up to 0.30% of net assets. Also included are monthly reimbursements to AFD
for commissions paid during the prior 15-month period to dealers and
wholesalers in respect of certain shares sold without a sales charge. These
reimbursements are permitted only to the extent that the fund's overall 0.30%
annual expense limit is not exceeded. For the year ended October 31, 2000,
aggregate distribution expenses were $3,313,000, or 0.26% of net assets
attributable to Class A shares.
For Class B shares, approved categories of expense include fees of 0.75% per
annum payable to AFD. AFD sells the rights to receive such payments (as well as
any contingent deferred sales charges payable in respect of shares sold during
the period) in order to finance the payment of dealer commissions. Also
included are service fees of 0.25% per annum. These fees are paid to AFD to
compensate AFD for paying service fees to qualified dealers. For the year ended
October 31, 2000, aggregate distribution expenses were $70,000, or 1.00% of net
assets attributable to Class B shares.
As of October 31, 2000, accrued and unpaid distribution expenses payable to AFD
for Class A and Class B shares were $338,000 and $13,000, respectively.
TRANSFER AGENT FEE - A fee of $1,861,000 was incurred during the year ended
October 31, 2000 pursuant to an agreement with American Funds Service Company
(AFS), the transfer agent for the fund.
DEFERRED DIRECTORS' FEES - Directors who are unaffiliated with CRMC may elect
to defer part or all of the fees earned for services as members of the Board.
Amounts deferred are not funded and are general unsecured liabilities of the
fund. As of October 31, 2000, aggregate deferred amounts and earnings thereon
since the deferred compensation plan's adoption (1999), net of any payments to
Directors, were $150,000.
AFFILIATED DIRECTORS' AND OFFICERS - CRMC is owned by The Capital Group
Companies, Inc. AFS and AFD are both wholly owned subsidiaries of CRMC.
Officers of the fund and certain Directors are or may be considered to be
affiliated with CRMC, AFS and AFD. No such persons received any remuneration
directly from the fund.
5. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
The fund made purchases and sales of investment securities, excluding
short-term securities, of $1,009,942,000 and $324,763,000, respectively, during
the year ended October 31, 2000.
Pursuant to the custodian agreement, the fund receives credits against its
custodian fee for imputed interest on certain balances with the custodian bank.
During the year ended October 31, 2000, the custodian fee of $601,000 includes
$33,000 that was paid by these credits rather than in cash. The fund
reclassified $356,000 from undistributed net investment income to undistributed
net realized gains; and reclassified $47,000 from undistributed net investment
income to additional paid-in capital for the year ended October 31, 2000, as a
result of permanent differences between book and tax.
Net assets consisted of the following:
<TABLE>
<S> <C>
Capital paid in on shares of capital stock $1,440,213,000
Undistributed net investment income 17,775,000
Accumulated net realized loss (4,592,000)
Net unrealized depreciation (158,612,000)
Net assets $1,294,784,000
</TABLE>
Capital share transactions in the fund were as follows:
<TABLE>
<S> <C> <C> <C> <C>
Year ended October 31, 2000 June 17, 1999/*/ to October 31, 1999
Amount (000) Shares Amount (000) Shares
Class A Shares:
Sold $ 895.743 32,829,731 $ 745.141 31,700,839
Reinvested dividends 6.472 241,688 - -
and distributions
Repurchased (213.848) (8,199,648) (11.844) (508,731)
Net increase in Class A 688.367 24,871,771 733.297 31,192,108
Class B Shares:/+/
Sold 18.720 701,108 - -
Reinvested dividends - - - -
and distributions
Repurchased (.393) (15,757) - -
Net increase in Class B 18.327 685,351 - -
Total Net Increase in Fund $ 706.694 25,557,122 $ 733.297 31,192,108
/*/ Commencement of
Operations.
/+/ Class B shares were
not offered before
March 15, 2000.
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
PER-SHARE DATA AND RATIOS (1)
Net asset Net losses
value, Net on securities
beginning investment (both realized
of year income and unrealized)
Class A:
2000 $23.67 0.42 /2/ (1.08)/2/
1999 23.56 .16 (.05)
Class B:
2000 29.09 0.2 /2/ (6.58)/2/
Dividends
Total from (from net
investment investment Total
operations income) distributions
Class A:
2000 $(.66) $(.20) $(.20)
1999 .11 - -
Class B:
2000 (6.38) - -
Net asset Net assets,
value, end Total end of year
of year return (in millions)
Class A:
2000 $22.81 (2.91)% $1,279
1999 23.67 .47 739
Class B:
2000 22.71 (21.93) 16
Ratio of Ratio of
expenses net income Portfolio
to average to average turnover
net assets net assets rate
Class A:
2000 1.35% 1.61% 30.07% /3/
1999 1.46 /4/ 1.83 /4/ 0.83 /5/
Class B:
2000 2.03 /4/ 0.93 /4/ 30.07 /3/
</TABLE>
/1/ The period ended 1999 represents the period June 17,
commencement of operations, to October 31. The period
ended 2000 represents, for Class A shares, fiscal year
ended October 31, 2000 and, or Class B shares, the
230-day period ended October 31, 2000. Class B shares
were not offered before March 15, 2000. Total return
for 1999 and for Class B are based on activity during
the period and thus are not representative of a
full year.
/2/ Based on average shares outstanding.
/3/ Represents portfolio turnover rate (equivalent for
all share classes) for the year ended October 31, 2000.
/4/ Annualized.
/5/ Based on operations for the period shown and, accordingly,
not representative of a full year.
Independent Auditors' Report
To the Board of Directors and Shareholders
of New World Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of New
World Fund, Inc. (the "fund"), including the investment portfolio, as of
October 31, 2000, and the related statement of operations for the year then
ended, the statement of changes in net assets for the year then ended and the
period June 17, 1999, commencement of operations, to October 31, 1999, and the
per-share data and ratios for the yeare then ended and the period June 17,
1999, commencement of operation, to October 31, 1999, for Class A shares and
the period March 15, 2000, through October 31, 2000, for Class B shares. These
financial statements and per-share data and ratios are the responsibility of
the fund's management. Our responsibility is to express an opinion on these
financial statements and per-share data and ratios based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements and per-share data and ratios are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned at October 31, 2000, by
correspondence with the custodian and brokers; where replies were not received
from brokers, we performed other auditing procedures. 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and per-share data and ratios referred
to above present fairly, in all material respects, the financial position of
New World Fund Inc. at October 31, 2000, the results of its operations for the
year then ended, the changes in its net assets for the year then ended and the
period June 17, 1999, commencement of operations, to October 31, 1999, and the
per-share data and ratios for the year then ended and the period June 17, 1999,
commencement of operations, to October 31, 1999, for Class A shares and the
period March 15, 2000 through October 31, 2000, for Class B shares, in
conformity with generally accepted accounting principles in the United States
of America.
PRICEWATERHOUSECOOPERS
Los Angeles, California
December 1, 2000
Tax Information (unaudited)
We are required to advise you within 60 days of the fund's fiscal year-end
regarding the federal tax status of distributions received by shareholders
during such fiscal year.
The fund also designates as a net investment income distribution a portion of
earnings and profits paid to shareholders in redemption of their shares.
The fund makes an election under the Internal Revenue Code Section 853 to pass
through non-U.S. taxes paid by the fund to its shareholders. The amount of
non-U.S. taxes for the fiscal year ended October 31, 2000 was $1,037,000.
Foreign source income earned by the fund was $28,245,000. Shareholders are
entitled to a foreign tax credit or an itemized deduction, at their discretion.
Generally, it is more advantageous to claim a credit rather than to take a
deduction.
Corporate shareholders may exclude up to 70% of qualifying dividends received
during the year. For purposes of computing this exclusion, 9% of the dividends
paid by the fund from net investment income represent qualifying dividends.
Dividends and distributions received by retirement plans such as IRAs,
Keogh-type plans and 403(b) plans need not be reported as taxable income.
However, many retirement plan trusts may need this information for their annual
information reporting.
SINCE THE AMOUNTS ABOVE ARE REPORTED FOR THE FUND'S FISCAL YEAR AND NOT THE
CALENDAR YEAR, SHAREHOLDERS SHOULD REFER TO THEIR FORM 1099-DIV OR OTHER TAX
INFORMATION WHICH WILL BE MAILED IN JANUARY 2001 TO DETERMINE THE CALENDAR YEAR
AMOUNTS TO BE INCLUDED ON THEIR TAX RETURNS. SHAREHOLDERS SHOULD CONSULT THEIR
TAX ADVISERS.
PART C
OTHER INFORMATION
NEW WORLD FUND, INC.
ITEM 23. EXHIBITS
(a) Previously filed (see Pre-Effective Amendment No. 3 filed 3/10/00)
(b) Previously filed (see Pre-Effective Amendment No. 1 filed 3/3/99)
(c) Previously filed (see Pre-Effective Amendment No. 3 filed 3/10/00)
(d) Previously filed (see Post-Effective Amendment No. 2 filed 1/6/00)
(e) Previously filed (see Pre-Effective Amendment No. 3 filed 3/10/00)
(f) None
(g) Previously filed (see Post-Effective Amendment No. 2 filed 1/6/00)
(h) Previously filed (see Pre-Effective Amendment No. 3 filed 4/16/99)
(i) Previously filed (see Pre-Effective Amendment No. 3 filed 3/10/00)
(j) Consent of Independent Auditors
(k) None
(l) Previously filed (see Post-Effective Amendment No. 3 filed 4/16/99)
(m) Previously filed (see Pre-Effective Amendment No. 3 filed 3/10/00)
(n) Previously filed (see Pre-Effective Amendment No. 3 filed 3/10/00)
(o) None
(p) Previously filed (see Pre-Effective Amendment No. 3 filed 3/10/00)
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.
ITEM 25. INDEMNIFICATION (CONTINUED)
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
ITEM 25. INDEMNIFICATION (CONTINUED)
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., The 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, Inc., Capital World Bond Fund, Inc., 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., The
Income Fund of America, Inc., The Investment Company of America, Intermediate
Bond Fund of America, Limited Term Tax-Exempt Bond Fund of America, The New
Economy Fund, New Perspective Fund, Inc., SMALLCAP World Fund, Inc., The
Tax-Exempt Bond Fund of America, Inc., The Tax-Exempt Money Fund of America,
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 Vice President None
27304 Park Vista Road
Agoura Hills, CA 91301
John A. Agar Vice President None
1501 N. University, Suite 227A
Little Rock, AR 72207
Robert B. Aprison Vice President None
2983 Bryn Wood Drive
Madison, WI 53711
L William W. Bagnard Vice President None
Steven L. Barnes Senior Vice President None
5400 Mount Meeker Road
Suite 1
Boulder, CO 80301-3508
B Carl R. Bauer Vice President None
Michelle A. Bergeron Senior Vice President None
4160 Gateswalk Drive
Smyrna, GA 30080
J. Walter Best, Jr. Regional Vice President None
9013 Brentmeade Blvd.
Brentwood, TN 37027
Joseph T. Blair Senior Vice President None
148 E. Shore Ave.
Groton Long Point, CT 06340
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
Mick L. Brethower Senior Vice President None
2320 North Austin Avenue
Georgetown, TX 78626
Alan Brown Vice President None
4129 Laclede Avenue
St. Louis, MO 63108
B J. Peter Burns Vice President None
Brian C. Casey Vice President None
8002 Greentree Road
Bethesda, MD 20817
Victor C. Cassato Senior Vice President None
609 W. Littleton Blvd., Suite 310
Greenwood Village, CO 80120
Christopher J. Cassin Senior Vice President None
19 North Grant Street
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
29 Landsdowne Drive
Larchmont, NY 10538
S David Coolbaugh Assistant Vice President None
H Carlo O. Cordasco Assistant Vice President None
Thomas E. Cournoyer Vice President None
2333 Granada Boulevard
Coral Gables, FL 33134
Douglas A. Critchell Senior Vice President None
3521 Rittenhouse Street, N.W.
Washington, D.C. 20015
L Carl D. Cutting Vice President None
William F. Daugherty Regional Vice President None
1216 Highlander Way
Mechanicsburg, PA 17055
Daniel J. Delianedis Vice President None
8689 Braxton Drive
Eden Prairie, MN 55347
James A. DePerno, Jr. Regional Vice President None
91 Church Street
East Aurora, NY 14052
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
2627 Mission Street
San Marino, CA 91108
Peter J. Doran Director, Executive Vice None
President
100 Merrick Road, Suite 216W
Rockville Centre, NY 11570
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
John Fodor Senior Vice President None
15 Latisquama Road
Southborough, MA 01772
Daniel B. Frick Regional Vice President None
845 Western Avenue
Glen Ellyn, IL 60137
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
150 Old Franklin School Road
Pittstown, NJ 08867
H Mary Pat Harris Assistant Vice President None
Ronald R. Hulsey Senior Vice President None
6744 Avalon
Dallas, TX 75214
Robert S. Irish Vice President None
1225 Vista Del Mar Drive
Delray Beach, FL 33483
Michael J. Johnston Director None
630 Fifth Avenue, 36th Floor
New York, NY 10111
B Damien M. Jordan Senior Vice President None
John P. Keating Regional Vice President None
2285 Eagle Harbor Parkway
Orange Park, FL 32073
Dorothy Klock Vice President None
515 East 89th Street, Apt. 4G
New York, NY 10128
H Diane Koske Assistant Vice President
Andrew R. LeBlanc Regional Vice President None
78 Eton Road
Garden City, NY 11530
Arthur J. Levine Senior Vice President None
12558 Highlands Place
Fishers, IN 46038
B Karl A. Lewis Assistant Vice President None
T. Blake Liberty 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 Vice President None
Louis Linquata Regional Vice President None
170 South Battin
Wichita, KS 67218
LW Robert W. Lovelace Director None
Stephen A. Malbasa Senior Vice President None
13405 Lake Shore Blvd.
Cleveland, OH 44110
Steven M. Markel Senior Vice President None
5241 South Race Street
Littleton, CO 80121
L J. Clifton Massar Director, Senior Vice President None
L E. Lee McClennahan Senior Vice President None
James R. McCrary Regional Vice President None
963 1st Street, #1
Hermosa Beach, CA 90254
S John V. McLaughlin Senior Vice President None
Terry W. McNabb Vice President None
2002 Barrett Station Road
St. Louis, MO 63131
William E. Noe 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
Jeffrey Olson Regional Vice President None
930 S. Cowley Street, #305
Spokane, WA 99202
Gary A. Peace Regional Vice President None
291 Kaanapali Drive
Napa, CA 94558
Samuel W. Perry Regional Vice President None
4730 East Indian School Road
Suite 120
Phoenix, AZ 85018
David Petzke Regional Vice President None
4016 Saint Lucia Street
Boulder, CO 80301
Fredric Phillips Senior Vice President None
175 Highland Avenue, 4th Floor
Needham, MA 02494
B Candance D. Pilgrim Assistant Vice President None
Carl S. Platou Vice President None
7455 80th Place, S.E.
Mercer Island, WA 98040
L John O. Post Senior Vice President None
S Richard P. Prior Vice President None
Steven J. Reitman Senior Vice President None
212 The Lane
Hinsdale, IL 60521
Brian A. Roberts Vice President None
P.O. Box 388
Glenville, NC 28736
George S. Ross Senior Vice President None
P.O. Box 376
Southport, ME 04576
L Julie D. Roth Vice President None
L James F. Rothenberg Director None
Douglas F. Rowe Vice President None
414 Logan Ranch Road
Georgetown, TX 78628
Christopher S. Rowey Vice President None
10538 Cheviot Drive
Los Angeles, CA 90064
Dean B. Rydquist Senior Vice President None
1080 Bay Pointe Crossing
Alpharetta, GA 30005
Richard R. Samson Senior Vice President None
4604 Glencoe Avenue, #4
Marina del Rey, CA 90292
Joseph D. Scarpitti Vice President None
31465 St. Andrews
Westlake, OH 44145
L R. Michael Shanahan Director None
Brad W. Short Regional Vice President None
1601 Seal Way
Seal Beach, CA 90740
David W. Short Chairman of the Board and None
1000 RIDC Plaza, Suite 212 Co-Chief Executive
Officer
Pittsburgh, PA 15238
William P. Simon Senior Vice President None
912 Castlehill Lane
Devon, PA 19333
Rodney G. Smith Senior Vice President None
100 N. Central Expressway
Suite 1214
Richardson, TX 75080
S Sherrie L. Snyder-Senft Assistant Vice President None
Anthony L. Soave Regional Vice President None
8831 Morning Mist Drive
Clarkston, MI 48348
L Therese L. Souiller Assistant Vice President None
Nicholas D. Spadaccini 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
181 Second Avenue
Suite 228
San Mateo, CA 94401
LW Eric H. Stern Director None
B Max D. Stites Vice President None
Thomas A. Stout Vice President None
1004 Ditchley Road
Virginia Beach, VA 23451
Craig R. Strauser Vice President None
3 Dover Way
Lake Oswego, OR 97034
Francis N. Strazzeri Senior Vice President None
3021 Kensington Trace
Tarpon Springs, FL 34689
L Drew W. Taylor Vice President None
Gary J. Thoma Regional Vice President None
604 Thelosen Drive
Kimberly, WI 54136
L James P. Toomey Vice President None
I Christopher E. Trede Vice President None
George F. Truesdail Senior Vice President None
400 Abbotsford Court
Charlotte, NC 28270
Scott W. Ursin-Smith Vice President None
60 Reedland Woods Way
Tiburon, CA 94920
J. David Viale Regional Vice President None
204 Fernleaf Drive
Corona del Mar, CA 92625
Thomas E. Warren Vice President None
119 Faubel Street
Sarasota, FL 34242
L J. Kelly Webb Senior Vice President, None
Treasurer and Controller
Gregory J. Weimer Vice President None
206 Hardwood Drive
Venetia, PA 15367
B Timothy W. Weiss Director None
George J. Wenzel Regional Vice President None
251 Barden Road
Bloomfield, MI 48304
H J. D. Wiedmaier Assistant Vice President None
SF N. Dexter Williams Senior Vice President None
Timothy J. Wilson Vice President None
113 Farmview Place
Venetia, PA 15367
B Laura L. Wimberly Vice President None
H Marshall D. Wingo Director, Senior Vice None
President
L Robert L. Winston Director, Senior Vice None
President
William R. Yost Senior Vice President None
9320 Overlook Trail
Eden Prairie, MN 55347
Janet M. Young Regional Vice President None
1616 Vermont
Houston, TX 77006
Jonathan A. Young Regional Vice President None
329 Downing Drive
Chesapeake, VA 23322
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 92821
S Business Address, 3500 Wiseman Boulevard, San Antonio, TX 78251
SF Business Address, One Market, Steuart Tower, Suite 1800, San Francisco, CA
94105-1016
H Business Address, 5300 Robin Hood Road, Norfolk, VA 23513
I Business Address, 8332 Woodfield Crossing Blvd., Indianapolis, IN 46240
(c) None
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
Accounts, books and other records required by Rules 31a-1 and 31a-2 under the
Investment Company Act of 1940, as amended, 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 certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this amended
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Los Angeles, and State of California, on the
26th day of December, 2000.
NEW WORLD FUND, INC.
By /s/ Gina H. Despres
(Gina H. Despres, Chairman of the Board)
Pursuant to the requirements of the Securities Act of 1933, this amendment to
Registration Statement has been signed below on December 26, 2000, by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C> <C>
(1) Principal Executive Officer:
/s/ Robert W. Lovelace President and Director
(Robert W. Lovelace)
(2) Principal Financial Officer
& Principal Accounting Officer:
/s/ R. Marcia Gould Treasurer
(R. Marcia Gould)
(3) Directors:
Elisabeth Allison* Director
/s/ Gina H. Despres
(Gina H. Despres) Chairman of the Board
Robert A. Fox* Director
Alan Greenway* Director
Koichi Itoh* Director
William H. Kling* Director
/s/ Robert W. Lovelace
(Robert W. Lovelace) President, PEO and 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)
Counsel represents that this amendment does not contain disclosures that would
make the amendment ineligible for effectiveness under the provisions of rule
485(b).
/s/ Michael J. Downer
(Michael J. Downer)