[The American Funds Group (R)]
NEW PERSPECTIVE FUND
[sketch: flat depiction of globe]
1997 ANNUAL REPORT
for the year ended September 30
NEW PERSPECTIVE FUND (R) seeks long-term growth of capital through investments
all over the world, including the United States.
New Perspective is one of the 28 mutual funds in The American Funds Group,(R)
managed by Capital Research and Management Company. Since 1931, Capital has
invested with a long-term focus based on thorough research and attention to
risk.
RESULTS AT A GLANCE
FISCAL 1997
for the year ended
September 30, 1997 Total return*
New Perspective Fund +30.0%
Morgan Stanley Capital
International Indexes:
World Index +24.6%
USA Index +40.2%
LIFETIME OF THE FUND
from March 13, 1973 Average annual
through September 30, 1997 Total return* compound return*
New Perspective Fund +3,091.4% +15.1%
Morgan Stanley Capital
International Indexes:
World Index +1,538.2% +12.1%
USA Index +1,896.1% +13.0%
*With dividends and capital gain distributions reinvested
[sketches of globe changing from flat to round shape]
About our cover: In the 1930s, Buckminster Fuller, the educator, engineer,
architect and futurist, began developing a new perception of the Earth with his
creation of the Fuller Projection Dymaxion (TM) (Dynamic + Maximum + Tension)
map. As the first two-dimensional world map accurate in terms of the relative
sizes of land masses, it provided an unprecedented look at the whole Earth at
once. New Perspective Fund's investment professionals take a similar approach,
looking at companies from every angle to get a comprehensive picture before
they invest.
The word "Dymaxion" and the Fuller Projection Dymaxion (TM) Map design are
trademarks of the Buckminster Fuller Institute, Santa Barbara, California,
(c)1938, 1967 & 1992. All rights reserved.
FUND RESULTS IN THIS REPORT WERE COMPUTED WITHOUT A SALES CHARGE UNLESS
OTHERWISE INDICATED. THE FIGURES IN THIS REPORT REFLECT PAST RESULTS. SHARE
PRICE AND RETURN WILL VARY, SO YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE
SHORTER THE TIME PERIOD OF YOUR INVESTMENT, THE GREATER THE POSSIBILITY OF
LOSS. FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR INSURED OR GUARANTEED
BY, THE U.S. GOVERNMENT, ANY FINANCIAL INSTITUTION, THE FEDERAL DEPOSIT
INSURANCE CORPORATION, OR ANY OTHER AGENCY, ENTITY OR PERSON. INVESTING OUTSIDE
THE UNITED STATES IS SUBJECT TO ADDITIONAL RISKS, SUCH AS CURRENCY FLUCTUATIONS
AND POLITICAL INSTABILITY, WHICH ARE DETAILED IN THE FUND'S PROSPECTUS.
FELLOW SHAREHOLDERS:
Fiscal 1997 was another profitable year for New Perspective Fund, its best for
total return in a decade. For the 12 months ended September 30, the value of
your investment rose 30.0% if you reinvested income dividends totaling 33 cents
a share and the capital gain distribution of 68 cents paid during the fiscal
period.
By comparison, the unmanaged Morgan Stanley Capital International (MSCI)
World Index, which measures the world's major stock markets including the
United States, rose 24.6%. That also was the average gain of 170 global equity
funds tracked by Lipper Analytical Services.
As NPF approaches its quarter-century anniversary as one of the oldest
global mutual funds, fiscal 1997 results lifted the fund's total return since
its inception in March 1973 to 3,091.4%. This translates into an average annual
compound return of 15.1%. The MSCI World Index gained an average of 12.1% a
year during that period, while the average for global funds was 14.4% a year.
A STRONG ENVIRONMENT FOR INVESTING
During fiscal 1997, most of the world's major markets enjoyed exceptional
growth. Propelled by moderate inflation, low interest rates and sustained
capital inflows from optimistic investors, most markets posted double-digit
gains both in local currency and in U.S. dollars, despite the dollar's relative
strength. In the United States, the fund's largest area of concentration, the
market overall rose 40.2% as measured by the MSCI USA Index. The United
Kingdom, NPF's next largest area of holdings, also did well, roughly matching
the U.S. gain in dollar terms. (The table on page 2 shows returns for major
markets.)
At the other end of the spectrum, a number of Asian markets fared poorly
during the fiscal year. Despite a brief uptick in the first quarter of 1997,
Japan's sluggish economy led to a 15.7% decline in stock prices in dollar
terms. Good stock selection, however, meant that a number of our Japanese
holdings rose in price during the year, including Sony (+50.1%), Fuji Photo
Film (+36.0%) and Toyota (+20.2%). The market downturn also provided an
opportunity to increase our investments in Japanese equities. Japan now
accounts for 5.6% of net assets, up from 3.1% a year ago. Elsewhere in the
region, currency turmoil in midsummer roiled markets across Southeast Asia,
sending currency values and stock prices spiraling downward. With virtually no
investments in the affected countries, the crisis had little impact on the
fund. (The fund does have investments in Hong Kong stocks, which tumbled
several weeks after the close of the reporting period; however, at 1.6% of net
assets our position in that market is relatively small.)
A FOCUSED RESEARCH EFFORT
As we have frequently mentioned, New Perspective Fund invests in
companies, not countries. That individual focus is supported by in-depth
research into every security we consider for the fund. In the feature beginning
on page 6, we take you on a tour of how that research effort is conducted among
companies in our largest industry concentrations.
Our analytical approach leads to broad diversification. On September 30,
the fund held 238 companies in 27 countries and 34 industries. The portfolio
showed broad strength: Of stocks held over the entire period, 143 rose in price
and 31 declined.
During the past fiscal year, our 10 largest holdings made solid
contributions to NPF's growth. They include two longtime holdings, Finnish
cellular phone manufacturer Nokia (+111.9%) and Caterpillar (+43.1%); the
Spanish telecommunications company Telefonica de Espana, a relatively new
holding, rose 69.9%.
[photos: globe cutouts]
[Begin sidebar]
WHERE NPF'S ASSETS
WERE INVESTED
(percent invested by country)
9/30/97 9/30/96
ASIA/PACIFIC RIM 12.0% 9.8%
Japan 5.6 3.1
Australia 3.4 3.6
Hong Kong 1.6 1.6
New Zealand .8 1.5
Taiwan .5 -
South Korea .1 -
EUROPE 31.9% 37.9%
United Kingdom 6.5 7.2
France 5.6 7.3
Sweden 4.2 5.9
Netherlands 3.6 4.2
Switzerland 3.1 3.5
Germany 2.4 4.8
Spain 2.0 2.0
Italy 1.8 .7
Finland 1.6 1.3
Norway .6 .4
Denmark .4 .4
Luxembourg .1 .1
Belgium - .1
NORTH AMERICA 41.1% 35.2%
United States 33.8 28.3
Canada 5.8 5.4
Mexico 1.5 1.5
OTHER 3.6% 2.9%
CASH & EQUIVALENTS 11.4% 14.2%
100.0% 100.0%
[End sidebar]
The smallest increases among our 10 largest holdings were recorded by
Astra, the Swedish pharmaceutical company (+15.6%), and the U.S. memory-chip
maker Micron Technology (+13.7%). Astra suffered from investor concern over a
patent expiration on its major ulcer drug, Losec, but we continue to believe
that the strength of the balance sheet and flow of new products bode well for
the company. Micron's lackluster return was caused by a slowdown in personal
computer demand earlier in the year, not unusual in such a cyclical business.
In a period in which investor concentration on a relatively small number
of very large U.S. companies was driving the U.S. stock market higher, NPF
maintained a significantly broader base. At the close of the fiscal year, the
fund held nearly 34% in U.S. stocks, up from 28% last year; Europe accounted
for 32% of net assets; Asia and the Pacific Rim for 12%, and other countries
for about 11%. The balance was held in cash and equivalents as a buying
reserve.
LOW TURNOVER AS WELL AS LOW EXPENSES
An important part of New Perspective Fund's investment strategy is a
long-term perspective. The fund's portfolio turnover rate (the rate at which
holdings are bought and sold), averaging 21% of net assets over the last five
years, is among the lowest of all global equity funds, according to Lipper.
Turnover rates take on added significance for investors because of recent
changes in U.S. tax law. The new provisions grant a reduction in long-term
capital gains tax (to 20% from 28% for assets held longer than 18 months).
We are also pleased to report that NPF's 0.79% annual expense ratio -
already well under half the 1.92% average in its fund universe as measured by
CDA/Wiesenberger - continued to trend downward (see table on page 34).
NPF'S 401(K) ACCOUNTS GROW TO $1 BILLION
New Perspective Fund has continued to grow. Assets at year-end stood at
nearly $17 billion, up 45% from a year earlier. While some of that growth
reflects appreciation in the portfolio, we also welcomed many new shareholder
accounts, including a significant number of 401(k) retirement accounts. NPF now
has nearly 30,000 such accounts, totaling just over $1 billion.
NPF's method of portfolio management, the multiple portfolio counselor
system, is helping it accommodate growth. Because the fund's assets are divided
among a number of portfolio counselors, managers can be added as assets
increase. The fund currently has five primary portfolio counselors, with an
aggregate of 151 years of experience among them, and a research portfolio
managed by 41 analysts.
World markets have been remarkably robust in recent years. A number of
factors have contributed. Inflation worldwide has been relatively benign, which
has kept interest rates low. Technology has been helping businesses grow
without putting pressure on wages. European governments have been taking
disciplined fiscal measures to prepare for the introduction of the Euro in
January 1999. Globalization has made many companies more competitive as they
find new markets in which to do business.
At the same time, the rapid rise in many international markets, along with
the continued strength in the U.S., suggest caution as we move forward. Stock
prices have become more volatile and less tolerant of profit disappointments
and other shocks. Indeed, world markets dipped sharply shortly after the close
of the fund's reporting period. This is why we have always maintained a
long-term perspective on our investments and encourage shareholders to do the
same.
Cordially,
[/s/ Walter P. Stern]
Walter P. Stern
Chairman of the Board
[/s/ Gina H. Despres]
Gina H. Despres
President
November 17, 1997
[Begin sidebar]
NEW PERSPECTIVE VERSUS THE MAJOR WORLD MARKET INDEXES
(with dividends reinvested)
<TABLE>
<CAPTION>
World's Major Stock Latest Fiscal Year Lifetime of the Fund
Markets/1/ (10/1/96-9/30/97) (3/13/73-9/30/97)
(listed in order of size Local Adjusted to Local Adjusted to
of market capitalization currency U.S.$/2/ currency U.S.$/2/
as of 9/30/97)
<S> <C> <C> <C> <C>
United States
MSCI USA Index 40.2% 1,896.1%
Japan -8.6% -15.7 461.4% 1,128.9
United Kingdom 35.5 40.0 3,994.0 2,632.8
Germany 52.1 31.4 1,115.5 1,861.5
France 42.3 23.8 2,255.0 1,574.0
Canada 35.7 33.6 1,184.3 816.8
Switzerland 52.8 31.9 1,106.0 2,518.2
Netherlands 66.1 42.8 3,864.7 5,350.8
Hong Kong 20.9 20.9 2,082.1 1,350.6
Australia 22.3 12.0 2,085.3 993.5
Italy 52.9 34.9 2,082.7 601.4
Sweden 64.0 43.3 9,256.6 5,277.6
Spain 83.9 58.3 1,801.8 630.8
Belgium 35.9 17.1 2,254.8 2,383.8
Singapore -5.1 -12.7 353.6 515.5
MSCI World Index/3/ 24.6 1,538.2
NEW PERSPECTIVE FUND 30.0% 3,091.4%
</TABLE>
/1/ United States market represented by the U.S. component of MSCI World Index;
all other markets computed by Capital International Perspective S.A. and
included in MSCI World Index. All indexes are unmanaged.
/2/ Figures adjusted to reflect foreign exchange fluctuations relative to the
U.S. dollar.
/3/ Includes the major stock markets throughout the world, weighted by size and
adjusted to reflect foreign exchange fluctuation relative to the U.S. dollar.
U.S. companies currently represent approximately 47% of the total index.
All figures include the reinvestment of dividends. Returns for international
indexes are with gross dividends reinvested (i.e., without local withholding
taxes removed).
NEW PERSPECTIVE'S 10 LARGEST STOCK HOLDINGS AT FISCAL YEAR-END
<TABLE>
<CAPTION>
PERCENT OF FOR 12 MONTHS
COMPANY NPF'S NET ASSETS COUNTRY ENDED 9/30/97
<S> <C> <C> <C>
Astra 2.23% Sweden +15.6%
Novartis 2.10 Switzerland +57.2*
Time Warner 2.05 U.S. +40.3
Philip Morris 1.83 U.S. +38.9
Pfizer 1.73 U.S. +51.8
Telefonica de Espana 1.51 Spain +69.9
Caterpillar 1.46 U.S. +43.1
Mannesmann 1.43 Germany +27.5
Micron Technology 1.40 U.S. +13.7
Nokia 1.33 Finland +111.9
</TABLE>
*Company formed by merger in December 1996. Figure contains certain
hypothetical data.
HERE'S HOW A $10,000 INVESTMENT IN THE FUND GREW between March 13, 1973 - when
the fund was introduced - and September 30, 1997, the end of the fund's latest
fiscal year. Unlike figures presented earlier in the report, the fund's results
in this chart reflect payment of the maximum sales charge of 5.75%, so the net
amount invested was $9,425 versus $10,000 in the indexes shown. The indexes are
unmanaged and do not have sales charges, commissions or expenses. As you can
see, the investment in New Perspective would have grown to $300,835 versus
$163,819 in the Morgan Stanley Capital International (MSCI) World Index, which
reflects results in 22 major markets, and $199,607 in the MSCI USA Index.
New Perspective's year-by-year results appear in the table under the chart. The
table shows that NPF recorded positive results in 21 of these 25 periods, and
the boxed figure at the bottom right of the table shows that over the entire
241/2 years the investment grew at an average compound rate of 14.9% a year.
You can use this table to estimate how much the value of your own holdings has
grown. Let's say, for example, that you have been reinvesting all your
dividends and capital gain distributions and want to know how your investment
has done since September 30, 1987. At that time, according to the table, the
value of the investment illustrated here was $94,727. Since then, it has more
than tripled to $300,835. Thus, in that same period, the value of your
investment - regardless of size - also has more than tripled.
NPF'S RETURN VERSUS OTHER GLOBAL EQUITY FUNDS
(with distributions reinvested for periods ended 9/30/97)
New Perspective Fund has done significantly better than most other similar
mutual funds. Over its lifetime, the fund ranked second among the five global
equity funds in existence over this 24 1/2-year span, according to Lipper
Analytical Services. Here is how the fund ranks over other time periods:
* 10 years: 4th out of 18 global equity funds
* 5 years: 9th out of 44 global equity funds
* 1 year: 41st out of 170 global equity funds
Lipper rankings are based on total return and do not reflect the effect of
sales charges.
[begin chart]
HOW A $10,000 INVESTMENT HAS GROWN
$300,835/1,2/
New Perspective Fund with dividends reinvested
$199,607
MSCI USA Index with dividends reinvested
$163,819
MSCI World Index with dividends reinvested
$10,000/1/
original investment
<TABLE>
<CAPTION>
New
Perspective
Year Fund MSCI USA MSCI World
ended TOTAL VALUE Index with Index with
September Dividends Value at Total dividends dividends
30 Reinvested year-end/1/ Return reinvested reinvested
<S> <C> <C> <C> <C> <C>
1973# - $9,938 (0.6)% 9,644 9,496
1974 $325 7,402 (25.5) 5,796 5,886
1975 401 10,769 45.5 7,954 7,647
1976 337 12,720 18.1 10,379 9,328
1977 280 13,050 2.6 9,925 9,685
1978 318 17,342 32.9 10,953 11,895
1979 444 20,100 15.9 12,042 13,362
1980 501 24,866 23.7 14,200 15,945
1981 931 25,315 1.8 13,948 14,919
1982 1,667 27,151 7.3 15,458 15,314
1983 1,830 39,093 44.0 22,064 21,629
1984 1,205 39,494 1.0 23,019 22,861
1985 1,196 45,578 15.4 26,527 28,617
1986 1,178 63,273 38.8 34,776 45,581
1987 1,393 94,727 49.7 49,353 65,809
1988 1,820 81,233 (14.2) 42,818 61,905
1989 2,605 103,968 28.0 56,868 77,872
1990 2,617 98,896 (4.9) 52,008 61,430
1991 2,979 122,493 23.9 68,580 76,958
1992 2,524 132,337 8.0 76,198 76,629
1993 2,172 156,604 18.3 86,165 92,637
1994 2,231 176,345 12.6 89,637 100,116
1995 2,813 209,200 18.6 117,232 115,102
1996 4,129 231,461 10.6 142,355 131,445
1997 4,365 300,835 30.0 199,607 163,819
</TABLE>
Average annual compound return for 24-1/2 years 14.9% /1/
# For the period March 13, 1973 (commencement of operations) through September
30, 1973.
/1/These figures, unlike those shown elsewhere in this report, reflect payment
of the maximum sales charge of 5.75% on the $10,000 investment. Thus, the net
amount invested was $9,425. As outlined in the prospectus, the sales charge is
reduced for larger investments. The maximum intitial sales charge was 8.5%
prior to July 1, 1988. There is no sales charge on dividends or capital gain
distributions that are reinvested in additional shares. No adjustment has been
made for income or capital gain taxes.
/2/Includes reinvested dividends of $40,261 and reinvested capital gain
distributions of $80,243.
Past results are not predictive of future results.
AVERAGE ANNUAL COMPOUND RETURNS*
(for periods ended September 30, 1997)
10 Years +11.59%
5 Years +16.46%
1 Year +22.52%
*Assumes reinvestment of all distributions and payment of 5.75% sales charge at
the beginning of the stated periods.
[end chart]
CAPITALIZING ON CHANGE
A NEW PERSPECTIVE ON THE GLOBAL ECONOMY
New Perspective Fund was created nearly 25 years ago with an unusual mandate:
to seek out investment opportunities presented by changes in international
trade and in economic and political relationships. The strategy was a prescient
one. The last few decades have seen borders open, free trade and free
enterprise flourish, economies expand and the concept of investing globally
gain wide acceptance to a degree we could not have anticipated back in 1973.
Several trends have converged to ease the way. A wave of economic freedom
and a reduction in government control have allowed private investment to
finance growth. Trade pacts and worldwide deregulation have helped erase
borders. Bolstering these forces is a quickening of innovation, particularly in
technology, that is creating entire industries that did not exist when New
Perspective Fund began.
Many companies have been alert to the potential rewards of globalization
and benefited tremendously from it. With economic prosperity raising living
standards for more people around the world than at any time in history,
businesses that serve world markets have both fueled this growth and been among
its biggest beneficiaries.
New Perspective's investment professionals also use a global approach when
they look for investments for the fund. The fund's investment adviser, Capital
Research and Management Company, has had an international presence for more
than 35 years. What began as a single office in Geneva has grown today into one
of the industry's most comprehensive global research networks, supported by
more than 100 analysts and portfolio counselors.
Of course, other investment firms have offices around the world. What
makes New Perspective unique is an integrated research process that allows
investment professionals to develop a broad base of knowledge and expertise.
It's a process that demands constant dialogue and a continuous exchange of
information and ideas. We believe those insights help us make better long-term
investment decisions on your behalf.
On the next few pages, we'll examine three industries that have adapted
particularly well to globalization and explain how our analysts have gone about
identifying them and their potential value as long-term investments. The
telecommunications, information technology and pharmaceuticals industries are
well-represented in New Perspective Fund. (Companies shown in BOLDFACE on first
reference are current holdings in the fund. Of course, the fund's portfolio is
actively managed and holdings may change.) These businesses are offering new
services, developing new products and tapping into new markets.
[photo: telephone conversation via computer monitor]
[Begin photo caption]
TELECOMMUNICATIONS
[End photo caption]
[photo: pharmaceutical lab technician]
[Begin photo caption]
PHARMACEUTICALS
[End photo caption]
[photo: microchip]
[Begin photo caption]
INFORMATION TECHNOLOGY
[End photo caption]
[photo: conical shape of globe]
[Begin sidebar]
With a new customer added about every 20 seconds, wireless service is one of
the fastest growing areas in telecommunications and another way telephone
companies add value. New Perspective's research analysts can add value, too, by
uncovering attractive investment opportunities at just the right time. When
AIRTOUCH COMMUNICATIONS entered into a joint venture with the German
conglomerate MANNESMANN, Brad Vogt, a research analyst based in Washington,
D.C., was intrigued. "I had been covering AirTouch for some time," he says,
"and it was clear that this was a good opportunity for the company to make use
of its expertise in overseas markets."
[photo: telephone conversation via computer monitor]
Because Brad focuses mostly on U.S. companies, however, he felt he needed
a broader perspective before he could be certain about whether the investment
made sense. After carefully studying the details of the partnership, he talked
to David Riley, who covers European telecommunications companies, and Ursula
Van Almsick, a London-based analyst who covers Mannesmann, to see what they
thought. They compared notes and, based on their input on European companies
and industry trends, Brad felt confident that AirTouch stock was undervalued
and recommended it for New Perspective Fund. Since then, the venture, called
Mannesmann Mobilfunk, has attracted more than 2 million subscribers and has
helped make AirTouch and Mannesmann two very good investments for the fund.
[End sidebar]
TELECOMMUNICATIONS
NEW SERVICES FOR GLOBAL COMPANIES
With the technology to reach every corner of the world in the blink of an
eye, perhaps no industry is more emblematic of the potential of globalization
than telecommunications services.
Although the telephone has been helping people stay in touch for more than
a century, its potential has only begun to be realized. Not long ago, AT&T'S
decades-long monopoly on U.S. services and equipment seemed unassailable, and
the majority of overseas phone companies were bureaucratic, state-run
operations. Without competition, phone service around the world tended to be
slow, expensive or simply nonexistent.
Today, the telecommunications landscape could not be more different. Ma
Bell's dominance in the U.S. crumbled in 1984. The Telecommunications Act of
1996 brought added competition to the market by allowing regional phone
companies to broaden the range of services they could provide to customers. The
U.S. government has been auctioning off billions of dollars in licenses for
parts of the frequency spectrum for wireless services.
In Europe, barriers to competition that had protected the continent's
telecommunications groups for more than a century will be demolished as early
as January 1, 1998. Developing markets that had virtually no phone service two
decades ago are now hastily building infrastructures that will accommodate
wireless technology and Internet access. Innovation and industrywide
deregulation have allowed competition to take its course, forcing companies to
become more efficient and customer-oriented.
These changes have made telecommunications companies attractive
investments as well. New Perspective Fund had no telecommunications holdings
until 1983. Today, thanks in no small part to the potential offered by global
growth and worldwide deregulation, telecommunications is our second largest
industry concentration, with 16 companies based in 12 countries.
David Riley, an NPF research analyst based in Geneva, is impressed by how
effectively some telecommunications companies are taking advantage of the new
open environment. "To borrow a biblical term, globalization begets
globalization," he says. "As businesses have expanded their borders of
operations, they have demanded increasingly sophisticated, reliable services.
Phone companies have responded by becoming more global themselves."
David cites as examples a number of global partnerships formed by regional
and long distance service providers. A joint venture called Concert, involving
BRITISH TELECOM and MCI, has recently linked up with TELEFONICA DE ESPANA to
facilitate access to Spain and Latin America. Likewise, DEUTSCHE TELEKOM has
joined France Telecom and SPRINT in a venture called Global One, while AT&T has
partnered with the Netherlands' KPN, Swiss PTT and Telia of Sweden to enhance
services for its multinational customers. These companies are offering their
clients faster, cheaper connections, new data services and simplified billing.
Research is critical in a complex industry such as this one. The fund's
analysts make it their business to get to know every telecommunications company
very well, whether we invest in it or not. Their research typically crosses
geographic borders, which can help an analyst determine what companies are
worth on a relative basis. David, for example, follows European companies and
has recently added Latin America to his area of coverage. Keeping Mexican or
Brazilian valuations in mind when evaluating British or Italian businesses has
helped him make better investment recommendations.
Although David spends a lot of time studying companies on his own, his
work isn't done until he's talked with other Capital associates with relevant
areas of expertise (see story above). Working in "cluster groups" helps
analysts leverage their many hours of research and close the circle of
information. That knowledge makes a difference with the companies we invest in,
too. As David says, "When Capital's analysts call on them, companies will take
the time to talk to us. In fact, because we've done our homework so thoroughly,
management will frequently call us with information they feel is important for
their shareholders."
[photo: cables]
[sketch of globe cutouts]
[photo: Telefonica de Espana, Spain]
[Begin photo caption]
Telefonica de Espana, Spain
[End photo caption]
[photo: Telefonos de Mexico]
[Begin photo caption]
Telefonos de Mexico
[End photo caption]
INFORMATION TECHNOLOGY
NEW MARKETS FOR GLOBAL INNOVATION
If telecommunications has ridden the wave of the global explosion, then
information technology has been its catalyst, the element that has made it all
possible. Technological innovation has helped create new industries, change the
way every business is run and transform developing economies into pacesetters.
The market for information technology is expanding rapidly. Companies are
spending large sums to upgrade their computer systems, while more people than
ever are buying personal computers for home use. The fastest growth is
occurring outside the U.S., particularly in the Asia/Pacific region, where
improving economic conditions helped propel PC sales 30% higher last year.
China, South Korea and India have presented significant opportunities for
global companies that can meet the demands of their international customers.
Today, U.S.-based technology companies, which dominate the industry,
derive up to half of their revenues from markets outside the United States, by
some estimates. Many global technology firms operate manufacturing facilities
in the countries they service. Trade pacts have helped globalize the industry
as well; several countries have recently agreed to end all tariffs on
information technology products by the year 2000.
The industry is complex and interdependent. Where manufacturers like IBM
once made all the parts they needed to assemble a complete computer, companies
now typically produce only one or a few components. Scott Bonham, a research
analyst based in San Francisco, notes that "outsourcing, which has become
popular across many industries, has completely changed the dynamics of the
information technology sector. That applies across the board. Whether it's
giant mainframes, tiny silicon wafers or ancillary consulting services, people
want to benefit from technology, not manage it." He points out that today
computer makers rely on other firms to supply the "guts" of the machine -
companies such as INTEL and ADVANCED MICRO DEVICES for microprocessors, which
coordinate the flows of information within the computer; MICRON TECHNOLOGY for
powerful memory chips that store huge amounts of data; SEAGATE for disk drives;
and CISCO SYSTEMS and ASCEND for high-speed data networking systems that allow
computers to communicate with each other.
Of course, information technology has other applications. Chips and
circuits are used to make and operate automobiles, machinery, movies and
countless electronic devices. What's more, much of the best innovation comes
not from the technology industry but from forward-looking businesses hoping to
increase their market share. They include firms such as NOKIA and ERICSSON,
which pioneered cellular phone technology.
Technology companies fit together like pieces of a global jigsaw puzzle.
That makes understanding them - and investing in them - a complicated
enterprise. Integrated research helps the fund's analysts develop a
comprehensive understanding of this highly specialized industry.
New Perspective Fund's technology cluster comprises six analysts. Working
as a team, they travel together, share information at weekly teleconferences
and write frequent reports on the companies they cover. "The constant
interplay of perspectives is essential to the research process," stresses
Scott. "Without it, it's like using an encyclopedia with $A' through $M'
missing."
[photo: Nokia, Finland]
[Begin photo caption]
Nokia, Finland
[End photo caption]
[photo: Advanced Micro Devices, U.S.
K6 microprocessor]
[Begin photo caption]
Advanced Micro Devices, U.S.
K6 microprocessor
[End photo caption]
[photo: close-up of microchip]
[photo: electronic component]
[Begin sidebar]
Fundamental research can be a time-consuming, laborious process, but we think
it's worth the effort: After all, keeping a long-term focus is one of New
Perspective Fund's guiding principles. Sung Lee, a technology analyst based in
Tokyo, was inspired by an article he read about the impending deregulation of
Japan's financial industry. Realizing that these companies would have to make
tremendous investments in information technology to stay competitive, he
compiled a list of several technology companies that might benefit. Sung
crunched some numbers and came up with Fujitsu, the world's second-largest
computer manufacturer, as a likely candidate.
At that point, however, Sung's work had just begun. He began to hit the
streets, meeting with every division head at Fujitsu, visiting the company's
U.S. subsidiaries and calling on dozens of customers and competitors. All the
while, he consulted with the fund's technology cluster at the group's weekly
teleconference to gain additional insights and put his information in a broader
context. Finally, after several weeks of painstaking research, Sung was
convinced that Fujitsu would be a good long-term holding for the fund and made
his recommendation. "Spending time on research can sometimes cost you
short-term gains," he concedes, "but I think it helps you reap the real
benefits down the line."
[End sidebar]
NEW PRODUCTS FOR GLOBAL HEALTH
PHARMACEUTICALS
[sketch of globe cutouts]
[photo: phamaceutical lab technician]
Unlike telephones and computers, which are relatively recent innovations,
the use of plants or minerals for medicinal purposes goes back to ancient
times. In many ways, however, the drug industry is just as "new" as the other
two industries, reinvented by the remarkable advances the global economy has
wrought.
Many factors have contributed to the growth of the pharmaceutical
industry. Baby boomers will increasingly require drugs for ailments of age such
as cancer, Alzheimer's, cardiovascular disease and depression. Health care
providers, under pressure to trim budgets, have turned to cost-effective drugs
to prevent disease and hasten their cure. Breakthrough treatments like
com-bination therapy for HIV/AIDS are gaining wider acceptance. Regulatory
agencies have made enormous strides in shortening approval times, which allows
new drugs to be brought to market faster. But perhaps the greatest stimulus is
the most obvious one. "Everyone wants to live," states Jonathan Knowles, a
pharmaceutical analyst based in London. "Drugs help you stay alive."
"The largest drug concerns," says Jonathan, "NOVARTIS, MERCK and JOHNSON &
JOHNSON, to name just a few, are truly multinational. Technically, they may be
based in one country, but in reality they serve a world market." He mentions
GLAXO WELLCOME, which recently performed clinical trials on its new hepatitis
drug in China, where incidence of the disease is quite high. Another example is
PFIZER, which partnered with a Croatian firm to develop one of the world's
best-selling antibiotics. In addition to opening doors to potential profits,
globalization also helps companies leverage the resources they need to bring
new medicines to market, which can run to $500 million and perhaps a decade of
research and development for a single product. That investment is imperative.
In the highly competitive world of pharmaceuticals, companies that do not
continuously develop innovative products simply cannot thrive.
Research, the lifeblood of the pharmaceutical industry, is also the
cornerstone of New Perspective Fund's investment strategy. Like the fund's
other health care analysts, Jonathan pays close attention to drug "pipelines"
to monitor their progress. "Because so many things can change along the way,"
he says, "you have to make constant assessments of how a product is moving
through the system." Not long ago, he was following the development of an
environmentally safe fungicide that ZENECA was planning to launch. "We started
tracking it a while back. On successive visits, we could see that their R&D
people were getting more and more excited about the possibilities. This
chemical has recently been launched and is doing extremely well."
Analysts who follow pharmaceutical companies are part of a health care
cluster that includes a bond specialist who provides yet another perspective to
the group. In all, the cluster has seven analysts covering biotechnology,
hospitals, managed care facilities and medical supplies, in addition to
pharmaceuticals. Such collaboration is particularly helpful in an industry that
crosses so many borders.
The analysts also benefit from the vast experience of New Perspective
Fund's investment adviser. "Capital's pedigree is remarkable in the investment
world," notes Jonathan. "Our organization has been visiting many of these
pharmaceutical companies for 15 or 20 years." That history, combined with the
continuous, intensive research of the fund's investment professionals, provides
a depth of knowledge that is virtually unmatched in the industry.
[photo: Novartis, Switzerland]
[Begin photo caption]
Novartis, Switzerland
[End photo caption]
[photos: Astra Research Center]
[Begin photo caption]
Astra, Sweden
Astra Research Center, Boston, Massachusetts
(above and right)
[End photo caption]
[Begin sidebar]
Drug companies frequently find success by looking for unorthodox solutions to
difficult problems. When it comes to researching pharmaceutical firms, New
Perspective Fund's analysts often have to be creative as well.
Sankyo was developing a novel treatment for type 2 diabetes in Japan,
where the condition is prevalent. Lacking sufficient distribution channels for
overseas markets, the company had licensed the drug jointly to Glaxo Wellcome
and Warner-Lambert. Unfortunately, information about the drug was extremely
hard to come by. Richard Beleson, an analyst based in San Francisco, had a long
relationship with Warner-Lambert. During his visits to the company, he paid
close attention to the drug's pipeline on the U.S. side. He was encouraged by
what he saw. "It was apparent from clinical trials that were being performed
here that this was going to be an extremely important product for all three
companies involved," he says. Richard shared his insights with Jonathan
Knowles, who follows European pharmaceuticals, and other Capital analysts. The
drug is off to a great start. Launched earlier this year, it has already
generated more than $250 million in sales worldwide.
[End sidebar]
<TABLE>
<S> <C> <C> <C>
New Perspective Fund
Investment Portfolio, September 30, 1997
Largest Industry Holdings
10.26% Health & Personal Care
7.63% Telecommunications
6.71% Banking
5.58% Electronic Components
5.30% Broadcasting & Publishing
52.93% Other Industries
11.59% Bonds, Cash and Equivalents
Shares or Market Percent
Principal Value of Net
Equity-Type Securities Amount (Millions) Assets
- ----------------------------------------- ------------ ------------ ------------
Health & Personal Care - 10.26%
AB Astra, Class A (Sweden) 11,826,833 $218.798
AB Astra, Class A (American Depositary Receipts) 413,333 7.595
AB Astra, Class B 8,590,533 152.115 2.23
Novartis AG (Switzerland) 231,231 355.470 2.10
Pfizer Inc (USA) 4,870,000 292.505 1.73
Teva Pharmaceutical Industries Ltd. (American Depositary
Receipts) (Israel) 2,400,000 133.800 .79
SmithKline Beecham PLC (American Depositary Receipts)
(United Kingdom) 2,200,000 107.525 .63
Merck & Co., Inc. (USA) 880,000 87.945 .52
Glaxo Wellcome PLC (United Kingdom) 563,264 12.678
Glaxo Wellcome PLC (American Depositary Receipts) 854,000 38.377 .30
Zeneca Group PLC (United Kingdom) 1,000,000 32.627
Zeneca Group PLC (American Depositary Receipts) 185,000 18.095 .30
Shiseido Co., Ltd. (Japan) 2,924,000 47.075 .28
Johnson & Johnson (USA) 800,000 46.100 .27
Genentech, Inc., callable putable common stock (USA) (1) 600,000 34.875 .21
Sankyo Co., Ltd. (Japan) 1,000,000 34.689 .20
Alza Corp. (USA) (1) 1,000,000 29.000 .17
Abbott Laboratories (USA) 400,000 25.575 .15
Pharmacia & Upjohn, Inc. (USA) 500,000 18.250 .11
Gillette Co. (USA) 203,400 17.556 .10
Guidant Corp. (USA) 300,000 16.800 .10
Medtronic, Inc. (USA) 255,000 11.985 .07
Telecommunications - 7.63%
Telefonica de Espana, SA (Spain) 7,906,000 249.523
Telefonica de Espana, SA (American Depositary Receipts) 76,000 7.153 1.51
Telecom Italia SPA, ordinary shares (formerly STET-Societa
Finanziaria Telefonica p.a.) (Italy) 20,190,000 135.280
Telecom Italia SPA, nonconvertible
savings shares 16,500,000 64.457 1.18
Telefonos de Mexico, SA de CV, Class L (American
Depositary Receipts) (Mexico) 3,134,530 162.212 .96
AirTouch Communications (USA) (1) 3,500,000 124.031 .73
Telecom Corp. of New Zealand Ltd. (New Zealand) 13,678,100 69.386
Telecom Corp. of New Zealand Ltd. (2) 5,135,400 26.051 .56
Vodafone Group PLC (American Depositary Receipts) (United
Kingdom) 1,428,500 76.782 .45
Tele Danmark AS, Class B (Denmark) 672,000 35.463
Tele Danmark AS, Class B (American Depositary Receipts) 1,233,700 32.924 .40
MCI Communications Corp. (USA) 2,325,000 68.297 .40
AT&T Corp. (USA) 1,535,000 68.020 .40
Koninklijke PTT Nederland NV (Netherlands) 1,629,500 64.208 .38
Sprint Corp. (USA) 883,400 44.170 .26
Hong Kong Telecommunications Ltd. (Hong Kong) 8,260,529 18.684
Hong Kong Telecommunications Ltd. (American Depositary
Receipts) 440,759 9.862 .17
British Telecommunications PLC (United Kingdom) 3,000,000 19.828 .12
Telecomunicacoes Brasileiras SA, preferred
nominative (American Depositary Receipts) (Brazil) 76,439 9.841 .06
Deutsche Telekom AG (Germany) 265,900 5.160 .03
DDI Corp. (Japan) 500 2.515 .02
Banking - 6.71%
Royal Bank of Canada (Canada) 3,717,000 182.689 1.08
Bank of Nova Scotia (Canada) 3,129,500 149.962 .88
Westpac Banking Corp. (Australia) 17,567,630 110.731
Westpac Banking Corp., warrants, expire 2000 (1) 3,000,000 15.867 .75
BankAmerica Corp. (USA) 1,250,000 91.641 .54
Citicorp (USA) 600,000 80.362 .47
Banco de Santander, SA (Spain) 1,800,000 59.233
Banco de Santander, SA (American Depositary Receipts) 540,000 17.617 .45
Australia and New Zealand Banking Group Ltd. (Australia) 7,371,411 60.242 .36
Cie. Financiere de Paribas, Class A (France) 750,000 55.781 .33
Banque Nationale de Paris (France) 1,021,549 51.613 .30
Chase Manhattan Corp. (USA) 375,000 44.250 .26
Fuji Bank, Ltd. (Japan) 3,710,000 40.948 .24
Sumitomo Bank, Ltd. (Japan) 2,300,000 34.739 .21
ABN AMRO Holding NV (Netherlands) 1,672,960 33.972 .20
Sakura Bank, Ltd. (Japan) 6,675,000 31.962 .19
The Toronto-Dominion Bank (Canada) 750,000 25.489 .15
Bank of Tokyo-Mitsubishi, Ltd. (Japan) 1,250,000 23.859 .14
Istituto Mobiliare Italiano SpA (Italy) 1,500,000 16.064 .09
HSBC Holdings PLC (United Kingdom) 320,000 11.365 .07
Electronic Components - 5.58%
Micron Technology, Inc. (USA) (1) 6,855,000 237.783 1.40
Advanced Micro Devices, Inc. (USA) (1) 6,050,000 197.003 1.16
Intel Corp. (USA) 1,400,000 129.237 .76
Bay Networks, Inc. (USA) (1) 3,000,000 115.875 .68
Analog Devices, Inc. (USA) (1) 1,710,000 57.285 .34
Arrow Electronics, Inc. (USA) (1) 880,000 51.040 .30
Seagate Technology (USA) (1) 1,400,000 50.575 .30
Altera Corp. (USA) (1) 950,000 48.687 .29
Murata Manufacturing Co., Ltd. (Japan) 590,000 25.559 .15
Electrocomponents PLC (United Kingdom) 3,000,000 22.273 .13
Kyocera Corp. (Japan) 176,000 11.524 .07
Broadcasting & Publishing - 5.30%
Time Warner Inc. (USA) 6,406,225 347.137 2.05
Viacom Inc., Class B (USA) (1) 4,640,000 146.740 .87
News Corp. Ltd. (Australia) 3,948,625 20.246
News Corp. Ltd. (American Depositary Receipts) 3,991,600 81.578
News Corp. Ltd., preferred shares 2,021,244 8.947
News Corp. Ltd., preferred shares (American Depositary
Receipts) 1,995,800 35.800 .86
CANAL + (France) 267,145 47.595 .27
Carlton Communications PLC (United Kingdom) 4,890,000 40.607 .24
Grupo Televisa, SA, ordinary participation certificates
(American Depositary Receipts) (Mexico) (1) 825,000 29.545 .17
Westinghouse Electric Corp. (USA) 1,045,000 28.280 .17
Elsevier NV (Netherlands) 1,700,000 24.756 .15
Wolters Kluwer NV (Netherlands) 162,516 21.979 .13
Pearson PLC (United Kingdom) 1,700,000 21.498 .13
Dow Jones & Co., Inc. (USA) 434,900 20.331 .12
AUDIOFINA (Luxembourg) 415,300 16.707 .10
U S WEST Media Group (USA) (1) 313,300 6.990 .04
.
Energy Sources - 4.76%
TOTAL, Class B (France) 131,077 15.044
TOTAL, Class B (American Depositary Receipts) 3,109,814 178.231 1.14
Royal Dutch Petroleum Co. (New York Registered
Shares) (Netherlands) 1,852,000 102.786
'Shell' Transport and Trading Co., PLC (United Kingdom) 3,000,000 21.958 .74
Broken Hill Proprietary Co. Ltd. (Australia) 6,502,053 75.749 .45
ENI SpA (Italy) 11,000,000 69.448 .41
Elf Aquitaine (France) 400,000 53.550
Elf Aquitaine (American Depositary
Receipts) 100,000 6.669 .35
Phillips Petroleum Co. (USA) 1,100,000 56.788 .33
Anadarko Petroleum Corp. (USA) 700,000 50.269 .30
Talisman Energy Inc. (Canada) (1) 1,400,000 48.237 .28
YPF SA, Class D (American Depositary Receipts (Argentina) 1,200,000 44.250 .26
Mobil Corp. (USA) 500,000 37.000 .22
RAO Gazprom (American Depositary Receipts) (Russia) 1,341,000 33.659 .20
Enterprise Oil PLC (United Kingdom) 1,221,300 13.355 .08
.
Electrical & Electronics - 4.58%
Nokia Corp., Class A (Finland) 480,000 45.693
Nokia Corp., Class A (American Depositary Receipts) 1,450,000 136.028
Nokia Corp., Class K 460,000 43.615 1.33
Telefonaktiebolaget LM Ericsson, Class B (Sweden) 2,376,000 114.444
Telefonaktiebolaget LM Ericsson, Class B (American
Depositary Receipts) 800,000 38.350 .90
ABB AB, Class A (Sweden) 150,000 2.131
ABB AB, Class B 6,000,000 84.836
ABB AB, Class B (American Depositary Receipts) 250,000 35.375
ABB AG, Class A (Switzerland) 11,750 17.350 .82
Northern Telecom Ltd. (Canada) 457,300 47.530 .28
Schneider SA (France) 750,000 47.477 .28
Siemens AG (Germany) 600,000 40.637 .24
Alcatel Alsthom (France) 260,000 34.675 .21
York International Corp. (USA) 680,000 30.430 .18
General Electric Co. (USA) 394,000 26.817 .16
NextLevel Systems, Inc. (USA) (1) 1,055,200 17.675 .10
Lucent Technologies Inc. (USA) 168,523 13.713 .08
.
Multi-Industry - 4.17%
Siebe PLC (United Kingdom) 6,570,000 132.391 .78
Hutchison Whampoa Ltd. (Hong Kong) 13,281,000 130.884 .77
Lend Lease Corp. Ltd. (Australia) 4,058,860 96.427 .57
FMC Corp. (USA) (1) 991,300 87.978 .52
Williams Holdings PLC (United Kingdom) 10,000,000 59.557 .35
LTV Corp. (USA) 4,225,000 53.605 .32
Suez Lyonnaise des Eaux (France) 390,243 43.668 .26
Canadian Pacific Ltd. (Canada) 1,000,000 29.563 .17
Lagardere Groupe SCA (France) 700,000 22.280 .13
AlliedSignal Inc. (USA) 400,000 17.000 .10
B.A.T Industries PLC (United Kingdom) 1,895,559 16.613 .10
Swire Pacific Ltd., Class A (Hong Kong) 2,150,000 16.464 .10
.
Automobiles - 3.63%
Honda Motor Co., Ltd. (Japan) 4,640,000 162.111 .96
Regie Nationale des Usines Renault, SA (France) 3,800,000 112.985 .67
Bayerische Motoren Werke AG (Germany) 69,500 59.336
Bayerische Motoren Werke AG, preferred shares 20,318 11.830 .42
Ford Motor Co., Class A (USA) 1,229,500 55.635 .33
Chrysler Corp. (USA) 1,500,000 55.219 .33
Toyota Motor Corp. (Japan) 1,405,000 43.141 .25
Suzuki Motor Corp. (Japan) 3,600,000 34.656 .20
Volvo AB, Class B (Sweden) 1,000,000 28.741 .17
General Motors Corp. (USA) 400,000 26.775 .16
Daimler-Benz AG, 4.125% convertible debentures 2003
(Germany) (2) DM28,000,000 24.311 .14
Beverages & Tobacco - 3.42%
Philip Morris Companies Inc. (USA) 7,455,000 309.848 1.83
Asahi Breweries, Ltd. (Japan) 4,060,000 65.364
Asahi Breweries, Ltd., 1.00% convertible debentures 2003 Y924,000,000 12.844
Asahi Breweries, Ltd., .95% convertible debentures 2002 Y410,000,000 5.682
Asahi Breweries, Ltd., .90% convertible debentures 2001 Y520,000,000 7.168 .54
Seagram Co. Ltd. (Canada) 2,200,000 77.550 .46
PepsiCo, Inc. (USA) 1,000,000 40.563 .24
Cia. Cervejaria Brahma (Brazil) 47,000,000 36.108 .21
LVMH Moet Hennessy Louis Vuitton (France) 55,000 11.723 .07
Lion Nathan Ltd. (New Zealand) 3,218,800 7.875 .04
Gallaher Group PLC (American Depositary Receipts)
(United Kingdom) 300,000 5.756 .03
Machinery & Engineering - 3.40%
Caterpillar Inc. (USA) 4,600,000 248.113 1.46
Mannesmann AG (Germany) 507,500 242.490 1.43
Deere & Co. (USA) 725,000 38.969 .23
Kvaerner AS, Class A (Norway) 535,340 31.663 .19
Kawasaki Heavy Industries, Ltd. (Japan) 4,200,000 14.534 .09
Chemicals - 3.20%
Praxair, Inc. (USA) 2,639,300 135.099 .80
Georgia Gulf Corp. (USA) (3) 1,975,000 60.484 .36
Sherwin-Williams Co. (USA) 1,962,000 57.756 .34
Methanex Corp. (Canada) 6,250,000 52.479 .31
Nan Ya Plastics Corp. (Taiwan) 19,980,000 47.921 .28
E.I. du Pont de Nemours and Co. (USA) 600,000 36.938 .22
Valspar Corp. (USA) 1,160,000 36.395 .21
AGA AB, Class A (Sweden) 1,460,000 24.020
AGA AB, Class B 550,000 8.867 .19
Bayer AG (Germany) 750,000 29.941 .18
L'Air Liquide (France) 110,097 18.163 .11
BOC Group PLC (United Kingdom) 1,000,000 17.827 .10
Engelhard Corp. (USA) 813,100 17.533 .10
Food & Household Products - 3.13%
Nestle SA (Switzerland) 89,782 125.395 .74
Cadbury Schweppes PLC (United Kingdom) 10,865,090 104.604 .62
Reckitt & Colman PLC (United Kingdom) 6,056,250 93.007 .55
Unilever NV (Netherlands) 335,000 71.706
Unilever PLC (United Kingdom) 660,000 19.318 .54
Groupe Danone (France) 443,586 70.107 .41
Archer Daniels Midland Co. (USA) 1,050,000 25.134 .15
Colgate-Palmolive Co. (USA) 300,000 20.906 .12
Data Processing & Reproduction - 2.54%
Fujitsu Ltd. (Japan) 7,172,000 89.873 .53
Ascend Communications, Inc. (USA) (1) 1,850,000 59.894 .35
Silicon Graphics, Inc. (USA) (1) 2,100,000 55.125 .32
Oracle Corp. (USA) (1) 1,425,000 51.923 .31
Acer Inc. (Taiwan) (1) 20,000,000 39.216 .23
Sybase, Inc. (USA) (1) 1,850,000 33.300 .20
International Business Machines Corp. (USA) 300,000 31.781 .19
Computer Associates International, Inc. (USA) 261,500 18.779 .11
Microsoft Corp. (USA) (1) 140,000 18.524 .11
Digital Equipment Corp. (USA) (1) 400,000 17.325 .10
Cisco Systems, Inc. (USA) (1) 200,000 14.613 .09
Insurance - 2.46%
ING Groep NV (formerly Internationale Nederlanden Groep)
(Netherlands) 4,376,336 201.550 1.19
Fairfax Financial Holdings Ltd. (Canada) 234,700 65.067
Fairfax Financial Holdings Ltd. (USA) (2) 93,000 25.783 .54
American International Group, Inc. (USA) 774,843 79.954 .47
Societe Centrale des Assurances Generales de France (Franc 735,000 29.196 .17
Assicurazioni Generali SpA (Italy) 670,000 15.098 .09
Forest Products & Paper - 2.01%
Champion International Corp. (USA) 2,200,000 134.063 .79
Louisiana-Pacific Corp. (USA) 2,550,000 63.750 .38
UPM-Kymmene Corp. (Finland) 1,953,000 54.332 .32
International Paper Co. (USA) 600,000 33.038 .19
Rayonier Inc. (USA) 600,000 29.025 .17
Jefferson Smurfit Corp. (USA) (1) 1,255,700 25.114 .15
Carter Holt Harvey Ltd. (New Zealand) 1,058,500 2.298 .01
Gold Mines - 1.88%
Newmont Mining Corp. (USA) 2,750,000 123.578 .73
Placer Dome Inc. (Canada) 5,500,000 105.188 .62
Barrick Gold Corp. (Canada) 2,500,000 61.875 .36
Gold Fields of South Africa Ltd. (South Africa) 1,400,000 28.195 .17
Metals: Nonferrous - 1.78%
Aluminum Co. of America (USA) 950,000 77.900 .46
WMC Ltd. (Australia) 15,389,336 72.249 .43
Alumax Inc. (USA) (1) 1,500,000 61.313 .36
Alcan Aluminium Ltd. (Canada) 1,700,000 59.075 .35
Pechiney, Class A (France) 366,527 17.657 .10
Teck Corp., Class B (Canada) 700,000 14.441 .08
Leisure & Tourism - 1.35%
Carnival Corp., Class A (USA) 3,400,000 157.250 .93
Walt Disney Co. (USA) 600,000 48.375 .29
Accor SA (France) 120,000 22.231 .13
Euro Disney SCA (France) (1) 171,307 .236 .00
Merchandising - 1.29%
Wal-Mart Stores, Inc. (USA) 4,150,000 151.994 .90
Cifra, SA de CV, Class A (Mexico) 4,970,139 11.136
Cifra, SA de CV, Class B 4,500,000 10.650
Cifra, SA de CV, Class C 3,624,400 7.981 .17
Home Depot, Inc. (USA) 472,500 24.629 .14
Ito-Yokado Co., Ltd. (Japan) 185,000 10.041 .06
WHSmith Group PLC, Class A (United Kingdom) 500,000 2.970 .02
Energy Equipment - 1.27%
Schlumberger Ltd. (Netherlands Antilles) 998,300 84.044 .50
Halliburton Co. (USA) 1,270,000 66.040 .39
Western Atlas Inc. (USA) (1) 740,000 65.120 .38
Recreation & Other Consumer Products - 1.17%
Mattel, Inc. (USA) 1,900,000 62.938 .37
Fuji Photo Film Co., Ltd. (Japan) 900,000 37.195 .22
Nintendo Co., Ltd. (Japan) 350,000 32.822 .19
Eastman Kodak Co. (USA) 400,000 25.975 .15
EMI Group PLC (United Kingdom) 1,375,569 13.532
EMI Group PLC, Class B preferred shares 764,205 1.412 .09
PolyGram NV (New York Registered Shares) (Netherlands) 259,900 14.928 .09
Fortune Brands Inc. (formerly American Brands, Inc.)
(USA) 300,000 10.106 .06
Appliances & Household Durables - 0.98%
Sony Corp. (Japan) 927,000 87.700 .52
Philips Electronics NV (Netherlands) 582,500 49.427
Philips Electronics NV, warrants, expire 1998 (1) 250,000 16.943 .39
Samsung Electronics Co., Ltd. (South Korea) 125,727 12.180 .07
Business & Public Services - 0.98%
Quintiles Transnational Corp. (USA) (1) 500,000 42.125 .25
United Utilities PLC (United Kingdom) 3,000,000 37.114 .22
Cie. Generale des Eaux (France) 203,808 24.046
Cie. Generale des Eaux, warrants, expire 2001 (1) 203,808 .110 .14
Rentokil Group PLC (United Kingdom) 4,200,000 17.455 .11
Reuters Holdings PLC (American Depositary Receipts)
(United Kingdom) 240,000 17.100 .10
Waste Management, Inc. (formerly WMX Technologies, Inc.)
(USA) 395,737 13.826 .08
Electronic Data Systems Corp. (USA) 300,000 10.650 .06
Thorn PLC (United Kingdom) 1,301,948 2.942 .02
Metals: Steel - 0.85%
Allegheny Teledyne Inc. (USA) 2,040,000 58.395 .34
Usinor Sacilor (France) 2,800,000 56.748 .34
Cia. Vale do Rio Doce, ordinary nominative (Brazil) 38,400 .893
Cia. Vale do Rio Doce, preferred nominative 38,400 .000
Cia. Vale do Rio Doce, preferred nominative (American
Depositary Receipts) 11,184,000 28.712 .17
Utilities: Electric & Gas - 0.71%
National Power PLC (United Kingdom) 9,300,000 85.483 .50
Hongkong Electric Holdings Ltd. (Hong Kong) 5,213,500 19.406 .12
Enersis SA (American Depositary Receipts) (Chile) 420,000 15.566 .09
Transportation: Shipping - 0.57%
Bergesen d.y. AS, Class A (Norway) 1,500,000 46.158
Bergesen d.y. AS, Class B 795,000 24.576 .42
Nippon Yusen KK (Japan) 7,658,000 25.739 .15
Miscellaneous Materials & Commodities - 0.53%
Potash Corp. of Saskatchewan Inc. (Canada) 400,000 31.400 .19
Cie. de Saint-Gobain (France) 189,841 29.362 .17
De Beers/Centenary linked units (South Africa) 1,000,000 29.216 .17
Real Estate - 0.45%
Cheung Kong (Holdings) Ltd. (Hong Kong) 6,720,000 75.562 .45
Transportation: Rail & Road - 0.33%
CSX Corp. (USA) 950,000 55.575 .33
Building Materials & Components - 0.33%
CEMEX, SA de CV, Class A (Mexico) 2,362,225 12.289
CEMEX, SA de CV CPO 4,040,000 21.225 .20
Holderbank Financiere Glaris Ltd. (Switzerland) 23,000 21.880 .13
Electronic Instruments - 0.29%
Tokyo Electron Ltd. (Japan) 500,000 30.581 .18
Applied Materials, Inc. (USA) (1) 200,000 19.050 .11
Aerospace & Military Technology - 0.23%
Boeing Co. (USA) 720,000 39.195 .23
Industrial Components - 0.22%
Bridgestone Corp. (Japan) 1,571,000 37.808 .22
Textiles & Apparel - 0.18%
NIKE, Inc., Class B (USA) 290,000 15.370 .09
Gucci Group NV (New York Registered Shares) (Netherlands) 310,000 14.531 .09
Miscellaneous - 0.24%
Other equity-type securities in initial period of
acquisition 39.936 .24
------------ ------------
TOTAL EQUITY-TYPE SECURITIES
(cost: $9,917.226 million) 14,990.005 88.41
------------ ------------
Principal
Amount
Bonds (Millions)
- --------------------------------------- ------------
New Zealand Government - 0.18%
New Zealand 8.00% November 2006 NZ$44.500 31.076 .18
----------- -----------
TOTAL BONDS (cost: $29.793 million) 31.076 .18
----------- -----------
TOTAL INVESTMENT SECURITIES (cost: $9,947.019 million) 15,021.081 88.59
----------- -----------
Short-Term Securities
- ------------------------------------------
Corporate Short-Term Notes - 9.05%
Svenska Handelsbanken Group 5.47%-5.50% due 11/4-12/23/97 100.000 99.107 .59
Toyota Motor Credit Corp. 5.49%-5.50% due 10/16-11/13/97 91.500 91.084 .54
Ameritech Corp. 5.46%-5.47% due 10/2-10/3/97 90.000 89.965 .53
Lucent Technologies Inc. 5.48%-5.50% due 10/8-12/17/97 90.000 89.390 .53
Daimler-Benz North America Corp. 5.49%-5.50% due 10/14-
12/19/97 89.500 89.169 .53
Halifax PLC 5.49% due 11/18-12/3/97 89.300 88.553 .52
General Electric Capital Corp. 5.50%-6.50% due 10/1-
11/12/97 89.240 88.881 .52
National Australia Funding (Delaware) Inc. 5.47%-5.48%
due 10/1-12/9/97 85.000 84.790 .50
E.I. du pont de Nemours and Co. 5.47% due 10/24-12/5/97 73.595 73.184 .43
Caisse d'amortissement de la dette sociale 5.48%-5.50%
due 10/20-12/2/97 70.000 69.579 .41
ANZ (Delaware) Inc. 5.49%-5.50% due 10/20-10/28/97 67.300 66.832 .40
Ford Credit Europe PLC 5.50%-5.52% due 10/7-12/11/97 63.800 63.570 .38
Canada Bills 5.46%-5.47% due 10/21-11/3/97 62.800 62.536 .37
International Lease Finance Corp. 5.47%-5.50% due 10/6-
12/1/97 62.000 61.654 .36
Toronto-Dominion Holdings USA Inc. 5.47%-5.53% due 10/22-
10/31/97 60.000 59.779 .35
A.I. Credit Corp. 5.49%-5.50% due 10/20-11/3/97 55.000 54.767 .33
IBM Credit Corp. 5.48%-5.51% due 10/16-11/14/97 53.600 53.299 .31
Commonwealth Bank of Australia 5.50% due 10/8-12/9/97 52.600 52.336 .31
Rank Xerox Capital (Europe) PLC 5.47%-5.50%
due 10/10-10/17/97 50.000 49.913 .29
Abbey National North America 5.47%-5.50% due 10/17-
10/20/97 47.000 46.871 .28
American Express Credit Corp. 5.49%-5.52% due 10/29-
11/20/97 39.500 39.278 .23
British Columbia (Province of) 5.45%-5.48% due 10/21-
10/31/97 31.834 31.711 .19
Societe Generale NA Inc. 5.51%-5.52% due 12/9-12/10/97 25.600 25.322 .15
Certificates of Deposit - 1.23%
Canadian Imperial Bank of Commerce 5.54%-5.57%
due 10/23-11/19/97 70.000 69.999 .41
Westdeutsche Landesbank Girozentrale 5.56%-5.66%
due 10/9-10/22/97 65.000 65.001 .38
Abbey National PLC 5.57% due 11/5/97 50.000 49.999 .29
Societe Generale 5.55% due 10/1/97 25.000 25.000 .15
Federal Agency Discount Notes - 0.84%
Freddie Mac (formerly Federal Home Loan Mortgage Corp.)
5.40%-5.48% due 10/7-11/25/97 89.100 88.692 .52
Fannie Mae (formerly Federal National Mortgage Assn.)
5.40%-5.45% due 11/6-11/24/97 55.100 54.718 .32
----------- -----------
Non-U.S. Currency - 0.06%
New Taiwanese Dollar NT$292.202 10.231 .06
TOTAL SHORT-TERM SECURITIES (cost: $1,895.484 million) 1,895.210 11.18
Excess of cash and receivables over payables 39.793 .23
------------ ------------
TOTAL SHORT-TERM SECURITIES AND NET CASH 1,935.003 11.41
------------ ------------
NET ASSETS $16,956.084 100.00%
=========== ===========
(1) Non-income-producing securities
(2) Purchased in a private placement
transaction; resale to the public may
require registration or sale only
to qualified institutional buyers.
(3) The fund owns 5.72% of the outstanding voting
securities of Georgia Gulf Corp., which represent an
investment in an affiliate as defined in the Investment
Company Act of 1940.
The descriptions 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 Report of Independent Accountants.
See Notes to Financial Statements
</TABLE>
<TABLE>
<S> <C>
New Perspective Fund
Equity-Type Securities Appearing in the Equity-Type Securities Eliminated from the
Portfolio Since March 31, 1997 Portfolio Since March 31, 1997
Accor Baker Hughes
Acer Barclays
Allegheny Teledyne Bombardier
Altera British Airways
Applied Materials Ciba Specialty Chemicals Holdings
Archer Daniels Midland Cie. Generale des Etablissements Michelin
Asahi Breweries Electrolux
Ascend Communications Eurotunnel
Assicurazioni Generali Hasbro
Bank of Tokyo-Mitsubishi Hitachi
Bay Networks Hoechst
BOC Group Incentive
Chase Manhattan Inco
Cheung Kong (Holdings) Kimberly-Clark
Chrysler Litton Industries
Cia. Cervejaria Brahma NCR
Computer Associates International Overseas Shipholding Group
Deutsche Telekom Repsol
Digital Equipment Republic New York
Dow Jones SANYO Electric
ENI VEBA
Enterprise Oil Weyerhaeuser
Fairfax Financial
Fuji Bank
Fujitsu
General Electric
Gucci Group
Guidant
HSBC
International Business Machines
Istituto Mobiliare Italiano
Kvaerner
Medtronic
Microsoft
Mobil
Nan Ya Plastics
NIKE
Pharmacia & Upjohn
Quintiles Transnational
RAO Gazprom
Rentokil Group
Sakura Bank
Samsung Electronics
Shiseido
Sumitomo Bank
Swire Pacific
Talisman Energy
Tokyo Electron
Toronto-Dominion Bank
Westinghouse Electric
</TABLE>
<TABLE>
<S> <C> <C>
New Perspective Fund
Financial Statements
- ---------------------------------------------- ---------------- ----------------
Statement of Assets and Liabilities (dollars in
at September 30, 1997 millions)
- ---------------------------------------------- ---------------- ----------------
Assets:
Investment securities at market
(cost: $9,947.019) $15,021.081
Short-term securities
(cost: $1,895.484) 1,895.210
Cash .663
Receivables for-
Sales of investments $38.023
Sales of fund's shares 23.147
Dividends and accrued interest 36.879 98.049
---------------- ----------------
17,015.003
Liabilities:
Payables for-
Purchases of investments 39.837
Repurchases of fund's shares 9.426
Management services 5.769
Accrued expenses 3.887 58.919
---------------- ----------------
Net Assets at September 30, 1997-
Equivalent to $21.86 per share on
775,640,437 shares of $1 par value
capital stock outstanding (authorized
capital stock--1,000,000,000 shares) $16,956.084
================
Statement of Operations
for the year ended September 30, 1997 (dollars in
millions)
- ---------------------------------------------- ---------------- ----------------
Investment Income:
Income:
Dividends $ 232.693
Interest 101.880 $ 334.573
----------------
Expenses:
Management services fee 59.337
Distribution expenses 32.358
Transfer agent fee 12.198
Reports to shareholders 1.060
Registration statement and prospectus 1.301
Postage, stationery and supplies 1.694
Directors' and Advisory Board fees .243
Auditing and legal fees .078
Custodian fee 4.117
Taxes other than federal
income tax .170
Other expenses .091 112.647
---------------- ----------------
Net investment income 221.926
----------------
Realized Gain and Increase in Unrealized
Appreciation on Investments:
Net realized gain 922.766
Net increase in unrealized appreciation on
investments:
Beginning of year 2,505.461
End of year 5,073.194 2,567.733
---------------- ----------------
Net realized gain and unrealized appreciation
on investments 3,490.499
----------------
Net Increase in Net Assets Resulting
from Operations $3,712.425
================
- ---------------------------------------------- ---------------- ----------------
Statement of Changes in Net Assets (dollars in
millions)
Year ended
September 30,
1997 1996
- ---------------------------------------------- ---------------- ----------------
Operations:
Net investment income $ 221.926 $ 204.748
Net realized gain on investments 922.766 439.315
Net increase in unrealized appreciation
on investments 2,567.733 389.111
---------------- ----------------
Net increase in net assets
resulting from operations 3,712.425 1,033.174
---------------- ----------------
Dividends and Distributions Paid to
Shareholders:
Dividends from net investment income (224.557) (181.254)
Distributions from net realized gain on
investments (462.037) (326.785)
---------------- ----------------
Total dividends and distributions (686.594) (508.039)
---------------- ----------------
Capital Share Transactions:
Proceeds from shares sold: 160,556,117
and 168,317,771 shares, respectively 3,126.904 2,872.559
Proceeds from shares issued in reinvestment
of net investment income dividends and
distributions of net realized gain on
investments: 36,204,990 and 29,221,609 shares,
respectively 650.157 477.859
Cost of shares repurchased: 78,902,097
and 58,868,182 shares, respectively (1,534.468) (1,004.893)
---------------- ----------------
Increase in net assets resulting from
capital share transactions 2,242.593 2,345.525
---------------- ----------------
Total Increase in Net Assets 5,268.424 2,870.660
Net Assets:
Beginning of year 11,687.660 8,817.000
---------------- ----------------
End of year (including undistributed
net investment income: $115.664
and $119.565, respectively) $16,956.084 $11,687.660
================ ================
See Notes to Financial Statements
</TABLE>
Notes to Financial Statements
1. New Perspective 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 growth of capital through investments all over the
world, including the United States. The following paragraphs summarize the
significant accounting policies consistently followed by the fund in the
preparation of its financial statements:
Equity-type securities traded on a national securities exchange (or reported
on the Nasdaq national market) and securities traded in the over-the-counter
market are stated at the last reported sales price on the day of valuation;
other securities, and securities for which no sale was reported on that date,
are stated at the last quoted bid price. Long-term and short-term securities
with original or remaining maturities in excess of 60 days are valued at the
mean of their quoted bid and asked prices. Short-term securities with 60 days
or less to maturity are valued at amortized cost, which approximates market
value. Securities for which market quotations are not readily available are
valued at fair value by the Board of Directors or a committee thereof.
As is customary in the mutual fund industry, securities transactions are
accounted for on the date the securities are purchased or sold. Realized gains
and losses from securities transactions are reported on an identified cost
basis. Dividend and interest income is reported on the accrual basis. Discounts
and premiums on securities purchased are amortized over the life of the
respective securities. Dividends and distributions paid to shareholders are
recorded on the ex-dividend date.
Investment securities, cash balances and other assets and liabilities
denominated in non-U.S. currencies are recorded in the financial statements
after translation into U.S. dollars utilizing rates of exchange on the last
business day of the year. Purchases and sales of investment securities, income
and expenses are calculated using the prevailing exchange rate as accrued. The
effects of changes in foreign currency exchange rates on investment securities
are included with the net realized and unrealized gain or loss on investment
securities.
2. It is the fund's policy to continue to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its net taxable income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision is
required.
As of September 30, 1997, net unrealized appreciation on investments for
federal income tax purposes aggregated $5,074,776,000, of which $5,318,292,000
related to appreciated securities and $243,516,000 related to depreciated
securities. During the year ended September 30, 1997, the fund realized, on a
tax basis, a net capital gain of $922,872,000 on securities transactions. Net
losses related to non-U.S. currency and other transactions of $106,000 were
treated as an adjustment to ordinary income for federal income tax purposes.
The capital gain distribution paid in December 1996 includes $4,708,000 of
realized non-U.S. currency gains. The cost of portfolio securities for federal
income tax purposes was $11,841,515,000 at September 30, 1997.
3. The fee of $59,337,000 for management services was paid 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 an annual rate of 0.60% of the first $500 million of average net assets;
0.50% of such assets in excess of $500 million but not exceeding $1 billion;
0.46% of such assets in excess of $1 billion but not exceeding $1.5 billion;
0.43% of such assets in excess of $1.5 billion but not exceeding $2.5 billion;
0.41% of such assets in excess of $2.5 billion but not exceeding $4 billion;
0.40% of such assets in excess of $4 billion but not exceeding $6.5 billion;
0.395% of such assets in excess of $6.5 billion but not exceeding $10.5
billion; 0.39% of such assets in excess of $10.5 billion but not exceeding $17
billion; and 0.385% of such assets in excess of $17 billion.
Pursuant to a Plan of Distribution, the fund may expend up to 0.25% of its
average net assets annually for any activities primarily intended to result in
sales of fund shares, provided the categories of expenses for which
reimbursement is made are approved by the fund's Board of Directors. Fund
expenses under the Plan include payments to dealers to compensate them for
their selling and servicing efforts. During the year ended September 30, 1997,
distribution expenses under the Plan were $32,358,000. As of September 30,
1997, accrued and unpaid distribution expenses were $2,763,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $12,198,000. American Funds Distributors, Inc. (AFD), the
principal underwriter of the fund's shares, received $12,090,000 (after
allowances to dealers) as its portion of the sales charges paid by purchasers
of the fund's shares. Such sales charges are not an expense of the fund and,
hence, are not reflected in the accompanying statement of operations.
Directors and Advisory Board members who are unaffiliated with CRMC may elect
to defer part or all of the fees earned for services as members of the Boards.
Amounts deferred are not funded and are general unsecured liabilities of the
fund. As of September 30, 1997, aggregate amounts deferred and earnings thereon
were $436,000.
CRMC is owned by The Capital Group Companies, Inc. AFS and AFD are both
wholly owned subsidiaries of CRMC. Certain Directors and officers of the fund
are or may be considered to be affiliated with CRMC, AFS and AFD. No such
persons received any remuneration directly from the fund.
4. As of September 30, 1997, accumulated undistributed net realized gain on
investments was $848,291,000 and additional paid-in capital was
$10,143,295,000. The fund reclassified $1,270,000 and $1,157,000 from
undistributed net investment income and undistributed net realized gains,
respectively, to additional paid-in-capital for the year ended September 30,
1997.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $4,697,161,000 and $3,199,572,000, respectively,
during the year ended September 30, 1997.
Pursuant to the custodian agreement, the fund receives credits against its
custodian fee for imputed interest on certain balances with the custodian bank.
The custodian fee of $4,117,000 includes $61,000 that was paid by these credits
rather than in cash.
Dividend and interest income is recorded net of non-U.S. taxes paid. For the
year ended September 30, 1997, such non-U.S. taxes were $21,248,000. Net
realized currency losses on dividends, interest, withholding taxes reclaimable
and sales of non-U.S. bonds and notes were $4,038,000 for the year ended
September 30, 1997.
<TABLE>
<S> <C> <C> <C> <C> <C>
Year ended
September 30
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
Net Asset Value, Beginning of Year $17.77 $16.98 $15.40 $14.21 $12.25
----------- ----------- ----------- ----------- -----------
Income from Investment Operations:
Net investment income .29 .32 .31 .22 .17
Net realized gain and increase in
unrealized appreciation on investment 4.81 1.40 2.35 1.54 2.04
----------- ----------- ----------- ----------- -----------
Total income from
investment operations 5.10 1.72 2.66 1.76 2.21
----------- ----------- ----------- ----------- -----------
Less Distributions:
Dividends from net
investment income (.323) (.321) (.237) (.173) (.178)
Dividends from net realized
non-U.S. currency gains(1) (.007) (.009) (.003) (.027) (.022)
Distributions from net
realized gains (.680) (.600) (.840) (.370) (.050)
----------- ----------- ----------- ----------- -----------
Total distributions (1.01) (.93) (1.08) (.57) (.25)
----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Year $21.86 $17.77 $16.98 $15.40 $14.21
========= ========= ========= ========= =========
Total Return(2) 29.97% 10.64% 18.63% 12.61% 18.34%
Ratios/Supplemental Data:
Net assets, end of
year (in millions) $16,956 $11,688 $8,817 $6,279 $4,417
Ratio of expenses to average
net assets .79% .82% .83% .84% .87%
Ratio of net income to
average net assets 1.56% 2.00% 2.12% 1.48% 1.40%
Average commissions paid(3) .50c 4.30c .72c 1.05c 1.74c
Portfolio turnover rate 25.68% 18.12% 22.40% 25.33% 15.02%
(1) Realized non-U.S. currency gains
are treated as ordinary income for
federal income tax purposes.
(2)Calculated without deducting a sales
charge. The maximum sales charge is
5.75% of the fund's offering price.
(3) Brokerage commissions paid on
portfolio transactions increase
the cost of securities purchased or
reduce the proceeds of securities
sold, and are not separately reflected
in the fund's statement of operations.
Shares traded on a principal basis
(without commissions), such as most
over-the-counter and fixed-income
transactions, are excluded. Generally,
non-U.S. commissions are lower than
U.S. commissions when expressed as
cents per share but higher when
expressed as a percentage of
transactions because of the lower
per-share prices of many non-U.S.
securities.
</TABLE>
To the Board of Directors and Shareholders of New Perspective Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the per-share data and ratios present fairly, in all
material respects, the financial position of New Perspective Fund, Inc. (the
"Fund") at September 30, 1997, the results of its operations, the changes in
its net assets and the per-share data and ratios for the years indicated in
conformity with generally accepted accounting principles. These financial
statements and per-share data and ratios (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation of
securities at September 30, 1997 by correspondence with the custodian and
brokers and the application of alternative auditing procedures where
confirmations from brokers were not received, provide a reasonable basis for
the opinion expressed above.
/s/Price Waterhouse LLP
Los Angeles, California
October 31, 1997
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 distributions made during the fiscal year by the
fund were earned from the following sources:
<TABLE>
<CAPTION>
Dividends and Distributions per Share
To Shareholders Payment Date From Net From Net From Net
of Record Investment Realized Short- Realized Long-
Income term Gains term Gains
<S> <C> <C> <C> <C>
December 13, 1996 December 16, 1996 $.23 $.056 $.624
May 30, 1997 June 2, 1997 .10 - -
</TABLE>
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 September 30, 1997 is $0.03744 on a
per-share basis. Shareholders are entitled to a foreign tax credit or an
itemized deduction, at their option. 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, 17% of the dividends
paid by the fund from net investment income represents 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 plan retirement 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 WHICH WILL BE
MAILED IN JANUARY 1998 TO DETERMINE THE CALENDAR YEAR AMOUNTS TO BE INCLUDED ON
THEIR 1997 TAX RETURNS. SHAREHOLDERS SHOULD CONSULT THEIR TAX ADVISERS.
NEW PERSPECTIVE FUND
BOARD OF DIRECTORS
ELISABETH ALLISON, Cambridge, Massachusetts
Administrative Director, ANZI, Ltd.;
Publishing Consultant, Harvard Medical School
MICHAEL R. BONSIGNORE, Minneapolis, Minnesota
Chairman and Chief Executive Officer,
Honeywell Inc.
GINA H. DESPRES, Washington, D.C.
President of the fund
Senior Vice President,
Capital Research and Management Company
DAVID I. FISHER, Los Angeles, California
Chairman of the Board,
The Capital Group Companies, Inc.
ROBERT A. FOX, Livingston, California
President and Chief Executive Officer,
Foster Farms Inc.
ALAN GREENWAY, La Jolla, California
Private investor; President,
Greenway Associates, Inc.
(management consulting services)
KOICHI ITOH, Tokyo, Japan
President and Chief Executive Officer, IMPAC
(management consulting services);
former managing partner, VENCA Management (venture capital)
WILLIAM H. KLING, St. Paul, Minnesota
President, Minnesota Public Radio;
President, Greenspring Co.;
former President, American Public Radio
(now Public Radio International)
JON B. LOVELACE, Los Angeles, California
Vice Chairman of the Board of the fund
Vice Chairman of the Board,
Capital Research and Management Company
JOHN G. MCDONALD, Stanford, California
The IBJ Professor of Finance,
Graduate School of Business,
Stanford University
WILLIAM I. MILLER, Columbus, Indiana
Chairman of the Board,
Irwin Financial Corporation
KIRK P. PENDLETON, Southampton, Pennsylvania
Chairman of the Board and
Chief Executive Officer, Cairnwood, Inc.
(venture capital investment)
DONALD E. PETERSEN, Birmingham, Michigan
Retired; former Chairman of the Board and
Chief Executive Officer, Ford Motor Company
JAMES W. RATZLAFF, San Francisco, California
Senior Partner, The Capital Group Partners L.P.
WALTER P. STERN, New York, New York
Chairman of the Board of the fund
Chairman of the Board,
Capital Group International, Inc.
OTHER OFFICERS
WILLIAM R. GRIMSLEY, San Francisco, California
Senior Vice President of the fund
Senior Vice President and Director,
Capital Research and Management Company
GREGG E. IRELAND, Washington, D.C.
Senior Vice President of the fund
Senior Vice President,
Capital Research and Management Company
THIERRY VANDEVENTER, Geneva, Switzerland
Senior Vice President of the fund
Director,
Capital Research and Management Company
DARCY B. KOPCHO, Los Angeles, California
Vice President of the fund
Vice President and Director,
Capital Research Company
CATHERINE M. WARD, Los Angeles, California
Vice President of the fund
Senior Vice President and Director,
Capital Research and Management Company
VINCENT P. CORTI, Los Angeles, California
Secretary of the fund
Vice President - Fund Business
Management Group,
Capital Research and Management Company
R. MARCIA GOULD, Brea, California
Treasurer of the fund
Vice President - Fund Business
Management Group,
Capital Research and Management Company
MEMBERS OF THE ADVISORY BOARD
YOICHI FUNABASHI, Ph.D., Tokyo, Japan
Chief Diplomatic Correspondent and columnist for the Asahi Shimbun
JEAN GANDOIS, Paris, France
President, Conseil National du Patronat Fran<UNDEF>ais;
Chairman of the Board of Cockerill-Sambre;
former Chairman and Chief Executive Officer,
Pechiney, and former Chairman, Pechiney
International
CLAUDIO X. GONZALEZ LAPORTE,
Mexico, DF, Mexico
Chairman of the Board and Chief Executive
Officer, Kimberly-Clark de M<UNDEF>xico, SA de CV
SIR PETER HOLMES, London, England
Director and former Chairman of the Board and
Managing Director, The Royal Dutch/Shell Group
of Companies
JAE-HYUN HYUN, New York, New York
Chairman, Tong Yang Group
BARON GUALTHERUS KRAIJENHOFF,
Nijmegen, Netherlands
Chairman of the Supervisory Council, Akzo NV
PIERRE LESCURE, Paris, France*
Chairman and Chief Executive Officer, Canal+
ALLEN E. PUCKETT, Pacific Palisades, California
Chairman Emeritus, Hughes Aircraft Company
ROZANNE L. RIDGWAY, Washington, D.C.
Chair, Baltic American Enterprises Fund,
former Co-Chair, Atlantic Council of the
United States
ORVILLE H. SCHELL, Berkeley, California
Dean, Graduate School of Journalism,
University of California at Berkeley
*Effective October 1, 1997
The following members retired from the Advisory Board effective September 30,
1997:
JUNICHI HATTORI had been on the Advisory Board since 1988. PETER C. HOBBINS had
been on the Advisory Board since 1987. The Honourable JOHN L. NICHOL and BRIAN
NICHOLSON had been on the Advisory Board since 1984. HAROLD M. WILLIAMS had
been on the Advisory Board since 1981.
STEVEN N. KEARSLEY retired as Treasurer of the fund effective May 20, 1997. He
had been an officer since 1973.
The Directors thank these six individuals for their many contributions to the
fund.
OFFICES OF THE FUND AND OF THE
INVESTMENT ADVISER,
CAPITAL RESEARCH AND MANAGEMENT COMPANY
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92821-5804
TRANSFER AGENT FOR SHAREHOLDER ACCOUNTS
American Funds Service Company
(Please write to the address nearest you.)
P.O. Box 2205
Brea, California 92822-2205
P.O. Box 659522
San Antonio, Texas 78265-9522
P.O. Box 6007
Indianapolis, Indiana 46206-6007
P.O. Box 2280
Norfolk, Virginia 23501-2280
CUSTODIAN OF ASSETS
The Chase Manhattan Bank
One Chase Manhattan Plaza
New York, New York 10081-0001
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
400 South Hope Street
Los Angeles, California 90071-2889
COUNSEL
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, California 90071-2899
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
For information about your account or any of the fund's services, please
contact your financial adviser. You may also call American Funds Service
Company, toll-free, at 800/421-0180 or visit www.americanfunds.com on the World
Wide Web.
THIS REPORT IS FOR THE INFORMATION OF SHAREHOLDERS OF NEW PERSPECTIVE FUND, BUT
IT MAY ALSO BE USED AS SALES LITERATURE WHEN PRECEDED OR ACCOMPANIED BY THE
CURRENT PROSPECTUS, WHICH GIVES DETAILS ABOUT CHARGES, EXPENSES, INVESTMENT
OBJECTIVES AND OPERATING POLICIES OF THE FUND. IF USED AS SALES MATERIAL AFTER
DECEMBER 31, 1997, THIS REPORT MUST BE ACCOMPANIED BY AN AMERICAN FUNDS GROUP
STATISTICAL UPDATE FOR THE MOST RECENTLY COMPLETED CALENDAR QUARTER.
Printed on recycled paper
Litho in USA AGD/GRS/3215
Lit. No. NPF-011-1197
[The American Funds Group (R)]
