<PAGE>
[LOGO OF THE AMERICAN FUNDS GROUP(R)]
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New Perspective
Fund(R)
Prospectus
FEBRUARY 1, 1997
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NEW PERSPECTIVE FUND, INC.
333 South Hope Street
Los Angeles, CA 90071
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TABLE OF CONTENTS
Expenses 3
Financial Highlights 4
Investment Policies and Risks 5
Securities and Investment Techniques 6
Multiple Portfolio Counselor System 8
Investment Results 9
Dividends Distributions and Taxes 10
Fund Organization and Management 11
Shareholder Services 14
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The primary investment objective of the fund is long-term growth of capital.
Future income is a secondary objective. In seeking to meet these investment
objectives, the fund normally invests on a global basis in a diversified
portfolio consisting primarily of common stocks.
This prospectus presents information you should know before investing in the
fund. You should keep it on file for future reference.
YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. YOUR INVESTMENT IN THE FUND IS NOT
A DEPOSIT OR OBLIGATION OF, OR INSURED OR GUARANTEED BY, ANY ENTITY OR PERSON
INCLUDING THE U.S. GOVERNMENT AND THE FEDERAL DEPOSIT INSURANCE CORPORATION.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
07-010-0297
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NEW PERSPECTIVE FUND / PROSPECTUS
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EXPENSES
The effect of the expenses described below is reflected in the fund's share
price or return.
You may pay certain shareholder transaction expenses when you buy or sell
shares of the fund. Fund operating expenses are paid out of the fund's earned
income.
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge on purchases
(as a percentage of offering price) 5.75%
................................................................................
SALES CHARGES ARE REDUCED OR ELIMINATED FOR LARGER PURCHASES. There is no sales
charge on reinvested dividends, and no deferred sales charge or redemption or
exchange fees. A contingent deferred sales charge of 1% applies on certain
redemptions made within 12 months following purchases without a sales charge.
FUND OPERATING EXPENSES
(as a percentage of average net assets for the fiscal year ended September 30,
1996)
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Management fees 0.42%
12b-1 expenses 0.22%/1/
Other expenses 0.18%
Total fund operating expenses 0.82%
/1/ 12b-1 expenses may not exceed 0.25% of the fund's average net assets
annually. Due to these distribution expenses, long-term shareholders may pay
more than the economic equivalent of the maximum front-end sales charge
permitted by the National Association of Securities Dealers, Inc.
EXAMPLES
Assuming a hypothetical annual return of 5% and shareholder transaction and
operating expenses as described above, for every $1,000 you invested, you would
pay the following total expenses over the following periods:
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One year $ 65
Three years $ 82
Five years $100
Ten years $153
THESE EXAMPLES ARE NOT MEANT TO REPRESENT YOUR ACTUAL INVESTMENT RESULTS OR
EXPENSES, WHICH MAY VARY. YOUR EXPENSES WILL BE LESS IF YOU QUALIFY TO PURCHASE
SHARES AT A REDUCED OR NO SALES CHARGE.
3
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NEW PERSPECTIVE FUND / PROSPECTUS
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FINANCIAL HIGHLIGHTS
The following information has been audited by Price Waterhouse llp, independent
accountants. This table should be read together with the financial statements
which are included in the statement of additional information and annual
report.
SELECTED PER-SHARE DATA
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30
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1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $16.98 $15.40 $14.21 $12.25 $11.77 $10.16 $11.96 $10.25 $13.73 $10.58
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INCOME FROM
INVESTMENT
OPERATIONS:
Net investment
income .32 .31 .22 .17 .21 .29 .27 .29 .26 .24
Net realized and
unrealized gain (loss)
on investments 1.40 2.35 1.54 2.04 .71 2.05 (.77) 2.37 (2.35) 4.38
Total income (loss)
from investment
operations 1.72 2.66 1.76 2.21 .92 2.34 (.50) 2.66 (2.09) 4.62
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LESS DISTRIBUTIONS:
Dividends from
net investment
income (.321) (.237) (.173) (.178) (.24) (.30) (.29) (.32) (.25) (.22)
Dividends from
net realized non-U.S.
currency gains/1/ (.009) (.003) (.027) (.022) -- -- -- -- -- --
Distributions from
net realized gains (.600) (.840) (.370) (.050) (.20) (.43) (1.01) (.63) (1.14) (1.25)
Total distributions (.93) (1.08) (.57) (.25) (.44) (.73) (1.30) (.95) (1.39) (1.47)
Net asset value,
end of year $17.77 $16.98 $15.40 $14.21 $12.25 $11.77 $10.16 $11.96 $10.25 $13.73
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Total return/2/ 10.64% 18.63% 12.61% 18.34% 8.04% 23.86% (4.88%) 27.99% (14.25%) 49.71%
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RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
year (in millions) $11,688 $8,817 $6,279 $4,417 $3,082 $2,213 $1,421 $1,230 $ 972 $1,242
Ratio of expenses to
average net assets .82% .83% .84% .87% .85% .86% .82% .76% .69% .64%
Ratio of net income
to average net assets 2.00% 2.12% 1.48% 1.40% 1.82% 2.80% 2.55% 2.69% 2.47% 2.06%
Average
commissions paid/3/ 4.30c .72c 1.05c 1.74c 3.02c 4.04c 3.92c 3.11c 3.29c 6.24c
Portfolio turnover
rate 18.12% 22.40% 25.33% 15.02% 6.43% 8.16% 14.04% 29.21% 20.58% 17.29%
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</TABLE>
/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
reflected in the fund's statement of operations. Shares traded on a
principal basis (without commissions) 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.
4
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NEW PERSPECTIVE FUND / PROSPECTUS
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INVESTMENT POLICIES AND RISKS
The fund's primary investment objective is long-term growth of capital. Future
income is a secondary objective.
The fund's assets are invested on a global basis to take advantage of
investment opportunities generated by changes in international trade patterns
and economic and political relationships. International investing presents
risks and opportunities which you should consider. (See "Investing in Various
Countries.") The fund's success depends largely upon the ability of its
investment adviser, Capital Research and Management Company, to foresee and
respond to rapid, complex, and often subtle changes in these patterns and
relationships. Capital Research and Management Company closely follows
companies, industries, governments, and securities and currency exchange
markets worldwide.
The fund normally invests in a diversified portfolio consisting primarily of
common stocks. Assets may also be invested in securities convertible into
common stocks and straight debt securities (generally rated in the top three
quality categories by Standard & Poor's Corporation or Moody's Investors
Service, Inc. or determined to be of equivalent quality by Capital Research and
Management Company). The fund may also hold cash or cash equivalents,
government securities, or nonconvertible preferred stocks. These securities may
be issued by U.S. or non-U.S. entities and may be denominated in U.S. dollars
or other currencies. MORE INFORMATION ON THE FUND'S INVESTMENT POLICIES IS
CONTAINED IN ITS STATEMENT OF ADDITIONAL INFORMATION.
The fund's fundamental investment restrictions (described in the statement of
additional information) and objectives may not be changed without shareholder
approval. All other investment practices may be changed by the fund's board of
directors.
ACHIEVEMENT OF THE FUND'S INVESTMENT OBJECTIVES CANNOT, OF COURSE, BE ASSURED
DUE TO THE RISK OF CAPITAL LOSS FROM FLUCTUATING PRICES INHERENT IN ANY
INVESTMENT IN SECURITIES.
5
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NEW PERSPECTIVE FUND / PROSPECTUS
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SECURITIES AND INVESTMENT TECHNIQUES
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 market for these securities.
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. The fund may invest in debt securities rated BBB by Standard &
Poor's Corporation or Baa by Moody's Investors Service, Inc. or unrated but
determined to be of equivalent quality. These securities are considered to have
speculative characteristics.
The fund may invest up to 10% of its total assets in debt securities rated Baa
or BBB or below by Moody's Investors Service, Inc. or Standard & Poor's
Corporation or in unrated securities that are determined to be of equivalent
quality by Capital Research and Management Company; however, the fund does not
currently intend to invest more than 5% of its net assets in bonds rated Ba and
BB or below or in unrated securities that are determined to be of equivalent
quality. These securities are commonly known as "high-yield, high-risk" or
"junk" bonds. The market prices of these securities may fluctuate more than
higher quality securities and may decline significantly in periods of general
economic difficulty.
Capital Research and Management Company attempts to reduce the risks described
above through diversification of the portfolio and by credit analysis of each
issuer as well as by monitoring broad economic trends and corporate and
legislative developments.
INVESTING IN VARIOUS COUNTRIES
The fund has the ability to invest outside the U.S. Investing outside the U.S.
involves special risks, particularly in certain developing countries, caused
by,
6
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NEW PERSPECTIVE FUND / PROSPECTUS
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among other things, fluctuating currency values; different accounting,
auditing, and financial reporting regulations and practices in some countries;
changing local and regional economic, political, and social conditions; greater
market volatility; differing securities market structures; and various
administrative difficulties such as delays in clearing and settling portfolio
transactions or in receiving payment of dividends. 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.
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.
CURRENCY TRANSACTIONS
The fund can purchase and sell currencies to facilitate securities transactions
and enter into forward currency contracts to hedge against changes in currency
exchange rates. 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.
U.S. PRIVATE PLACEMENTS
Private placements may be either purchased from another institutional investor
that originally acquired the securities in a private placement or directly from
the issuers of the securities. Generally, securities acquired in such private
placements are subject to contractual restrictions on resale and may not be
resold except pursuant to a registration statement under the Securities Act of
1933 or in reliance upon an exemption from the registration requirements under
the Act (for example, private placements sold pursuant to Rule 144A).
Accordingly, all such private placements will be considered illiquid unless
they have been specifically determined to be liquid taking into account factors
such as the frequency and volume of trading and the commitment of dealers to
make markets under procedures which may be adopted by the fund's board of
directors. Additionally, investing in private placement securities could have
the effect of increasing the level of illiquidity of the fund's portfolio to
the extent that "qualified" institutional investors become, for a period of
time, uninterested in purchasing these securities. The fund will not invest
more than 5% of its total assets in illiquid securities.
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MULTIPLE PORTFOLIO COUNSELOR SYSTEM
The basic investment philosophy of Capital Research and Management Company is
to seek fundamental values at reasonable prices, using a system of multiple
portfolio counselors in managing mutual fund assets. Under this system the
portfolio of the 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 the fund's objective and policies and by Capital
Research and Management Company's investment committee). In addition, Capital
Research and Management Company's research professionals make investment
decisions with respect to a portion of the fund's portfolio. The primary
individual portfolio counselors for the fund are listed on the following page.
7
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NEW PERSPECTIVE FUND / PROSPECTUS
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<TABLE>
<CAPTION>
YEARS OF EXPERIENCE
AS
INVESTMENT
PROFESSIONAL
(APPROXIMATE)
-------------------
YEARS OF EXPERIENCE AS WITH CAPITAL
PORTFOLIO COUNSELORS PORTFOLIO COUNSELOR (AS RESEARCH AND
FOR RESEARCH PROFESSIONAL, MANAGEMENT
NEW PERSPECTIVE IF APPLICABLE) FOR COMPANY OR TOTAL
FUND, INC. PRIMARY TITLE(S) NEW PERSPECTIVE FUND, INC. ITS AFFILIATES YEARS
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<S> <C> <C> <C> <C>
WILLIAM R. Senior Vice 27 years (since 27 years 34 years
GRIMSLEY President the fund began
of the fund. operations)
Senior Vice
President and
Director,
Capital
Research and
Management
Company
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GREGG E. Senior Vice 4 years (in 24 years 24 years
IRELAND President addition to
of the fund. 7 years as a
Vice President, research
Capital professional
Research and prior to
Management becoming a
Company portfolio
counselor for
the fund)
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THIERRY Senior Vice 18 years (in 34 years 34 years
VANDEVENTER President addition to
of the fund. 5 years as a
Chairman of the research
Board, Capital professional
Research prior to
Company* becoming a
portfolio
counselor for
the fund)
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MARK E. Senior Vice 4 years (in 15 years 15 years
DENNING President and addition to
Director, 4 years as a
Capital research
Research professional
Company* prior to
becoming a
portfolio
counselor for
the fund)
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WILLIAM C. Senior Partner, 27 years (since 38 years 44 years
NEWTON The Capital the fund began
Group operations)
Partners L.P.*
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</TABLE>
The fund began operations on March 13, 1973.
* Company affiliated with Capital Research and Management Company.
8
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NEW PERSPECTIVE FUND / PROSPECTUS
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INVESTMENT RESULTS
The fund may from time to time compare investment results to various indices or
other mutual funds. Fund results may be calculated on a total return, yield
and/or distribution rate basis. Currently the fund calculates investment
results only on a total return basis. Results calculated without a sales charge
will be higher.
- - TOTAL RETURN is the change in value of an investment in the fund over a
given period, assuming reinvestment of any dividends and capital gain
distributions.
- - YIELD is computed by dividing the net investment income per share earned by
the fund over a given period of time by the maximum offering price per share
on the last day of the period, according to a formula mandated by the
Securities and Exchange Commission. A yield calculated using this formula
may be different than the income actually paid to shareholders.
- - DISTRIBUTION RATE reflects dividends that were paid by the fund. The
distribution rate is calculated by dividing the dividends paid over the last
12 months by the sum of the month-end price and the capital gain
distributions paid over the last 12 months.
INVESTMENT RESULTS
(FOR PERIODS ENDED DECEMBER 31, 1996)
<TABLE>
<CAPTION>
AVERAGE
ANNUAL THE FUND THE FUND AT
TOTAL AT NET MAXIMUM MSCI MSCI
RETURNS: ASSET VALUE/1/ SALES CHARGE/1/,/2/ WORLD/3/ U.S./4/
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<S> <C> <C> <C> <C>
One year 17.28% 10.53% 14.00% 24.05%
................................................................................
Five years 13.94% 12.59% 11.38% 15.62%
................................................................................
Ten years 13.78% 13.11% 11.19% 15.44%
................................................................................
Lifetime/5/ 14.74% 14.46% 11.64% 12.18%
</TABLE>
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/1/ These fund results were calculated according to a standard that is required
for all stock and bond funds.
/2/ The maximum sales charge has been deducted.
/3/ Morgan Stanley Capital International World Index measures 22 major stock
markets throughout the world, including the U.S. This index is unmanaged and
does not reflect sales charges, commissions or expenses.
/4/ Morgan Stanley Capital International U.S. Index measures the U.S. portion of
the world market. This index is unmanaged and does not reflect sales
charges, commissions or expenses.
/5/ The fund began operations March 13, 1973.
9
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NEW PERSPECTIVE FUND / PROSPECTUS
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[PASTE UP GRAPH]
Past results are not an indication of future results.
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DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
The fund usually pays dividends, which may fluctuate, in June and December.
Capital gains, if any, are also 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.
FEDERAL TAXES
In any fiscal year in which the fund qualifies as a regulated investment
company and distributes to shareholders all of its net investment income and
net capital gains, the fund itself is relieved of federal income tax.
Generally, all dividends and capital gains are taxable whether they are
reinvested or received in cash -- unless you are exempt from taxation or
entitled to tax deferral. Early each year, you will be notified as to the
amount and federal tax status of all income distributions paid during the prior
year. Such distributions may also be subject to state or local taxes. The tax
treatment of redemptions from a retirement plan account may differ from
redemptions from an ordinary shareholder account.
10
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NEW PERSPECTIVE FUND / PROSPECTUS
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YOU MUST PROVIDE THE FUND WITH A CERTIFIED CORRECT TAXPAYER IDENTIFICATION
NUMBER (GENERALLY YOUR SOCIAL SECURITY NUMBER) AND CERTIFY THAT YOU ARE NOT
SUBJECT TO BACKUP WITHHOLDING. IF YOU FAIL TO DO SO THE IRS CAN REQUIRE THE
FUND TO WITHHOLD 31% OF YOUR TAXABLE DISTRIBUTIONS AND REDEMPTIONS. Federal law
also requires the fund to withhold 30% or the applicable tax treaty rate from
dividends paid to certain nonresident alien, non-U.S. partnership and non-U.S.
corporation shareholder accounts.
This is a brief summary of some of the tax laws that affect your investment in
the fund. Please see the statement of additional information and your tax
adviser for further information.
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FUND ORGANIZATION AND MANAGEMENT
FUND ORGANIZATION AND VOTING RIGHTS
The fund, an open-end, diversified management investment company, was organized
as a Maryland corporation in 1972. All fund operations are supervised by the
fund's board of directors who meet periodically and perform 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 the statement of additional
information. They may elect to defer all or a portion of these fees through a
deferred compensation plan in effect for the fund. The fund does not hold
annual meetings of shareholders. However, significant corporate matters which
require shareholder approval, such as certain elections of board members or a
change in a fundamental investment policy, will be presented to shareholders at
a meeting called for such purpose. 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.
THE INVESTMENT ADVISER
Capital Research and Management Company, a large and experienced investment
management organization founded in 1931, is the 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
11
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NEW PERSPECTIVE FUND / PROSPECTUS
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Company manages the investment portfolio and business affairs of the fund. The
management fee paid by the fund to Capital Research and Management Company may
not exceed 0.60% of the fund's average net assets annually and declines at
certain asset levels. The total management fee paid by the fund, as a
percentage of average net assets, for the previous fiscal year is discussed
earlier under "Expenses."
Capital Research and Management Company and its affiliated companies have
adopted a personal investing policy that is consistent with the recommendations
contained in the May 9, 1994 report issued by the Investment Company
Institute's Advisory Group on Personal Investing. This policy has also been
incorporated into the fund's "code of ethics."
PLAN OF DISTRIBUTION
The fund has a Plan of Distribution or "12b-1 Plan" under which it may finance
activities primarily intended to sell shares, provided the categories of
expenses are approved in advance by the board and the expenses paid under the
plan were incurred within the preceding 12 months and accrued while the plan is
in effect. The 12b-1 fee paid by the fund, as a percentage of average net
assets, for the previous fiscal year is discussed earlier under "Expenses."
PORTFOLIO TRANSACTIONS
Orders for the fund's portfolio securities transactions are placed by Capital
Research and Management Company, which strives to obtain the best available
prices, taking into account the costs and quality of executions. Fixed-income
securities are generally traded on a "net" basis with a dealer acting as
principal for its own account without a stated commission, although the price
of the security usually includes a profit to the dealer. In underwritten
offerings, securities are usually purchased at a fixed price which includes an
amount of compensation to the dealer, generally referred to as a concession or
discount. On occasion, securities may be purchased directly from an issuer, in
which case no commissions or discounts are paid. In the over-the-counter
market, purchases and sales are transacted directly with principal market-
makers except in those circumstances where it appears better prices and
executions are available elsewhere.
Subject to the above policy, when two or more brokers are in a position to
offer comparable prices and executions, preference may be given to brokers who
have sold shares of the fund or have provided investment research, statistical,
and other related services for the benefit of the fund and/or other funds
served by Capital Research and Management Company.
12
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NEW PERSPECTIVE FUND / PROSPECTUS
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PRINCIPAL UNDERWRITER AND TRANSFER AGENT
American Funds Distributors, Inc. and American Funds Service Company serve as
the principal underwriter and transfer agent for the fund, respectively. They
are headquartered at 333 South Hope Street, Los Angeles, CA 90071 and 135 South
State College Boulevard, Brea, CA 92821, respectively.
AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS
[MAP APPEARS HERE]
CALL TOLL-FREE FROM ANYWHERE IN THE U.S.
(8 A.M. TO 8 P.M. ET):
800/421-0180
WESTERN SERVICE CENTER
American Funds Service Company
P.O. Box 2205
Brea, California
92822-2205
Fax: 714/671-7080
WESTERN CENTRAL SERVICE CENTER
American Funds Service Company
P.O. Box 659522
San Antonio, Texas
78265-9522
Fax: 210/530-4050
EASTERN CENTRAL SERVICE CENTER
American Funds Service Company
P.O. Box 6007
Indianapolis, Indiana
46206-6007
Fax: 317/735-6620
EASTERN SERVICE CENTER
American Funds Service Company
P.O. Box 2280
Norfolk, Virginia
23501-2280
Fax: 804/670-4773
13
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NEW PERSPECTIVE FUND / PROSPECTUS
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SHAREHOLDER SERVICES
The fund offers you a valuable array of services you can use to alter your
investment program as your needs and circumstances change. These services,
which are summarized below, are available only in states where they may be
legally offered and may be terminated or modified at any time upon 60 days'
written notice. A COMPLETE DESCRIPTION OF SHAREHOLDER SERVICES AND ACCOUNT
POLICIES IS CONTAINED 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.
THE SERVICES DESCRIBED MAY NOT BE AVAILABLE THROUGH SOME RETIREMENT PLANS. IF
YOU ARE INVESTING THROUGH A RETIREMENT PLAN, YOU SHOULD CONTACT YOUR PLAN
ADMINISTRATOR/TRUSTEE ABOUT WHAT SERVICES ARE AVAILABLE AND WITH QUESTIONS
ABOUT YOUR ACCOUNT.
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PURCHASING SHARES
HOW TO PURCHASE SHARES
Generally, you may open an account by contacting any investment dealer
authorized to sell the fund's shares. You may add to your account through your
dealer or directly through American Funds Service Company by mail, wire, or
bank debit. You may also establish or add to your account by exchanging shares
from any of your other accounts in The American Funds Group. The fund and
American Funds Distributors reserve the right to reject any purchase order.
Various purchase options are available as described below subject to certain
investment minimums and limitations described in the statement of additional
information and "Welcome to the Family."
- - Automatic Investment Plan
You may invest monthly or quarterly through automatic withdrawals from your
bank account.
- - Automatic Reinvestment
You may reinvest your dividends and capital gain distributions into the
fund (with no sales charge). This will be done automatically unless you
elect to have the dividends and/or capital gain distributions paid to you
in cash.
14
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NEW PERSPECTIVE FUND / PROSPECTUS
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- - Cross-Reinvestment
You may invest your dividend and capital gain distributions into any other
fund in The American Funds Group.
- - Exchange Privilege
You may exchange your shares into other funds in The American Funds Group
generally with no sales charge. Exchanges of shares from the money market
funds that were initially purchased with no sales charge will generally be
subject to the appropriate sales charge. You may also elect to
automatically exchange shares among any of the funds in The American Funds
Group. Exchange requests may be made in writing, by telephone including
American FundsLine(R) (see below) or by fax. EXCHANGES HAVE THE SAME TAX
CONSEQUENCES AS ORDINARY SALES AND PURCHASES.
- - Retirement Plans
You may invest in the fund through various retirement plans. For further
information contact your investment dealer or American Funds Distributors.
SHARE PRICE
The fund's share price, also called net asset value, is determined as of the
close of trading (normally 4:00 p.m., Eastern time) every day the New York
Stock Exchange is open. The fund calculates its net asset value per share,
generally using market prices, by dividing the total value of its assets after
subtracting liabilities by the number of its shares outstanding. Shares are
purchased at the offering price next determined after your investment is
received and accepted by American Funds Service Company. The offering price is
the net asset value plus a sales charge, if applicable.
SHARE CERTIFICATES
Shares are credited to your account and certificates are not issued unless you
request them by writing to American Funds Service Company.
INVESTMENT MINIMUMS
<TABLE>
- --------------------------------------------------------------
<S> <C>
To establish an account $250
For a retirement plan account $250
For a retirement plan account through payroll deduction $ 25
To add to an account $ 50
For a retirement plan account $ 25
</TABLE>
15
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SALES CHARGES
A sales charge may apply, as described below, when purchasing shares. Sales
charges may be reduced for larger purchases as indicated below.
<TABLE>
<CAPTION>
SALES CHARGE AS A
PERCENTAGE OF
-----------------
DEALER
NET CONCESSION AS
OFFERING AMOUNT % OF OFFERING
INVESTMENT PRICE INVESTED PRICE
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than $100,000 4.50% 4.71% 3.75%
$100,000 but less than $250,000 3.50% 3.63% 2.75%
$250,000 but less than $500,000 2.50% 2.56% 2.00%
$500,000 but less than $1 million 2.00% 2.04% 1.60%
$1 million or more and certain
other investments described below see below see below see below
</TABLE>
PURCHASES NOT SUBJECT TO SALES CHARGES
Investments of $1 million or more and investments made by employer-sponsored
defined contribution-type plans with 200 or more eligible employees are sold
with no initial sales charge. A 1% CONTINGENT DEFERRED SALES CHARGE MAY BE
IMPOSED ON CERTAIN REDEMPTIONS MADE WITHIN ONE YEAR OF PURCHASE BY THESE
ACCOUNTS. A dealer concession of up to 1% may be paid by the fund from its Plan
of Distribution on these investments. Investments by retirement plans with $100
million or more in assets may be made with no sales charge and are not subject
to a contingent deferred sales charge. A dealer concession of up to 1% may be
paid by American Funds Distributors on these investments. Investments by
certain individuals and entities including employees and other associated
persons of dealers authorized to sell shares of the fund and Capital Research
and Management Company and its affiliated companies are not subject to a sales
charge.
16
<PAGE>
- --------------------------------------------------------------------------------
NEW PERSPECTIVE FUND / PROSPECTUS
- --------------------------------------------------------------------------------
ADDITIONAL DEALER COMPENSATION
In addition to the concessions listed, up to 0.25% of average net assets is
paid annually to qualified dealers for providing certain services pursuant to
the fund's Plan of Distribution. During 1997, American Funds Distributors will
also provide additional compensation to the top one hundred dealers who have
sold shares of funds in The American Funds Group based on the pro rata share of
a qualifying dealer's sales.
REDUCING YOUR SALES CHARGE
You and your immediate family may combine investments to reduce your costs. You
must let your investment dealer or American Funds Service Company know if you
qualify for a reduction in your sales charge using one or any combination of
the methods described below.
- - Aggregation
Investments that may be aggregated include those made by you, your spouse
and your children under the age of 21, if all parties are purchasing shares
for their own account(s), including any business account solely "controlled
by," as well as any retirement plan or trust account solely for the benefit
of, these individuals. Investments made for multiple employee benefit plans
of a single employer or "affiliated" employers may be aggregated provided
they are not also aggregated with individual accounts. Finally, investments
made by a common trust fund or other diversified pooled account not
specifically formed for the purpose of accumulating fund shares may be
aggregated.
Purchases made for nominee or street name accounts will generally not be
aggregated with those made for other accounts unless qualified as described
above.
- - Concurrent Purchases
You may combine concurrent purchases of two or more funds in The American
Funds Group, except direct purchases of the money market funds. Shares of
the money market funds purchased through an exchange, reinvestment or
cross-reinvestment from a fund having a sales charge do qualify.
- - Right of Accumulation
You may take into account the current value of your existing holdings in
The American Funds Group to determine your sales charge. Direct purchases
of the money market funds are excluded.
17
<PAGE>
- --------------------------------------------------------------------------------
NEW PERSPECTIVE FUND / PROSPECTUS
- --------------------------------------------------------------------------------
- - Statement of Intention
You may enter into a non-binding commitment to invest a certain amount
(which, at your request, may include purchases made during the previous
90 days) in non-money market fund shares over a 13-month period. A portion
of your account may be held in escrow to cover additional sales charges
which may be due if your total investments over the statement period are
insufficient to qualify for the applicable sales charge reduction.
- --------------------------------------------------------------------------------
SELLING SHARES
HOW TO SELL SHARES
You may sell (redeem) shares in your account by contacting your investment
dealer or American Funds Service Company. You may also use American
FundsLine(R) (see below). In addition, you may sell shares in amounts of $50 or
more automatically. If you sell shares through your investment dealer you may
be charged for this service. Shares held for you in your dealer's street name
must be sold through the dealer.
Shares are sold at the net asset value next determined after your request is
received in good order by American Funds Service Company. Sale requests may be
made in writing, by telephone, including American FundsLine(R) (see below), or
by fax. Sales by telephone or fax are limited to $10,000 in accounts registered
to individual(s) (including non-retirement trust accounts). In addition, checks
must be made payable to the registered shareholder(s) and mailed to an address
of record that has been used with the account for at least 10 days. Proceeds
will not be mailed until sufficient time has passed to provide reasonable
assurance that checks or drafts (including certified or cashier's checks) for
shares purchased have cleared (which may take up to 15 calendar days from the
purchase date). Except for delays relating to clearance of checks for share
purchases or in extraordinary circumstances (and as permissible under the
Investment Company Act of 1940), sale proceeds will be paid on or before the
seventh day following receipt and acceptance of an order. The fund may, with 60
days' written notice, close your account if due to a sale of shares the account
has a value of less than the minimum required initial investment.
Generally, written requests to sell shares must be signed by you and must
include any shares you wish to sell that are in certificate form. Your
signature must be guaranteed by a bank, savings association, credit union, or
member firm of a domestic stock exchange or the National Association of
Securities Dealers, Inc., that is an eligible guarantor institution. A
signature guarantee is not currently required for any sale of $50,000 or less
provided the check is made
18
<PAGE>
- --------------------------------------------------------------------------------
NEW PERSPECTIVE FUND / PROSPECTUS
- --------------------------------------------------------------------------------
payable to the registered shareholder(s) and is mailed to the address of record
on the account, and provided the address has been used with the account for at
least 10 days. Additional documentation may be required for sales of shares
held in corporate, partnership or fiduciary accounts.
You may reinvest proceeds from a redemption or a dividend or capital gain
distribution without a sales charge in any fund in The American Fund Group
within 90 days after the date of the redemption or distribution. Reinvestment
will be at the next calculated net asset value after receipt and acceptance by
American Funds Service Company.
- --------------------------------------------------------------------------------
OTHER IMPORTANT THINGS TO REMEMBER
AMERICAN FUNDSLINE(R)
You may check your share balance, the price of your shares, or your most recent
account transactions, sell shares (up to $10,000 per fund, per account each
day), or exchange shares around the clock with American FundsLine(R). To use
this service, call 800/325-3590 from a TouchTone(TM) telephone.
TELEPHONE PURCHASES, SALES AND EXCHANGES
Unless you opt out of the telephone (including American FundsLine(R)) or fax
purchase, sale and/or exchange options (see below), you agree to hold the fund,
American Funds Service Company, any of its affiliates or mutual funds managed
by such affiliates, and each of their respective directors, trustees, officers,
employees and agents harmless from any losses, expenses, costs or liability
(including attorney fees) which may be incurred in connection with the exercise
of these privileges 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, the fund may be liable for losses due to unauthorized or fraudulent
instructions.
Generally, all shareholders are automatically eligible to use these options.
However, you may elect to opt out of these options by writing American Funds
Service Company. (You may also reinstate them at any time by writing to
American Funds Service Company.)
ACCOUNT STATEMENTS
You will receive regular confirmation statements reflecting transactions in
your account. Purchases through automatic investment plans and certain
retirement plans will be confirmed at least quarterly.
19
<PAGE>
- --------------------------------------------------------------------------------
NEW PERSPECTIVE FUND / PROSPECTUS
- --------------------------------------------------------------------------------
NOTES
20
<PAGE>
- --------------------------------------------------------------------------------
NEW PERSPECTIVE FUND / PROSPECTUS
- --------------------------------------------------------------------------------
NOTES
21
<PAGE>
- --------------------------------------------------------------------------------
NEW PERSPECTIVE FUND / PROSPECTUS
- --------------------------------------------------------------------------------
NOTES
22
<PAGE>
- --------------------------------------------------------------------------------
NEW PERSPECTIVE FUND / PROSPECTUS
- --------------------------------------------------------------------------------
NOTES
23
<PAGE>
- --------------------------------------------------------------------------------
NEW PERSPECTIVE FUND / PROSPECTUS
- --------------------------------------------------------------------------------
FOR SHAREHOLDER FOR DEALER FOR 24-HOUR
SERVICES SERVICES INFORMATION
American Funds American Funds American
Service Company Distributors FundsLine(R)
800/421-0180 ext. 1 800/421-9900 ext. 11 800/325-3590
Telephone conversations may be recorded or monitored for
verification, recordkeeping and quality assurance purposes.
--------------------------------------------------------------
OTHER FUND INFORMATION
ANNUAL/SEMI-ANNUAL STATEMENT OF ADDITIONAL
REPORT TO SHAREHOLDERS INFORMATION (SAI)
Includes financial Contains more detailed
statements, detailed information on all aspects of
performance information, the fund, including the
portfolio holdings, a fund's financial statements.
statement from portfolio
management and the
independent accountants'
report.
A current SAI has been filed
with the Securities and
Exchange Commission and is
incorporated by reference (is
legally part of the
prospectus).
CODE OF ETHICS
Includes a description of the
fund's personal investing
policy.
To request a free copy of any of the documents above:
Call American Funds or Write to the Secretary of the
Service Company fund 333 South Hope Street
800/421-0180 ext. 1 os Angeles, CA 90071
[RECYCLE LOGO]
This prospectus has been printed on recycled paper.
24
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
Prospectus
for Eligible Retirement Plans
NEW
PERSPECTIVE
FUND(R)
AN OPPORTUNITY FOR LONG-TEM GROWTH OF
CAPITAL PRIMARILY THROUGH INVESTMENTS IN
STOCKS OF COMPANIES BASED AROUND THE WORLD
February 1, 1997
[LOGO OF THE AMERICAN FUNDS GROUP(R)]
NEW PERSPECTIVE FUND, INC.
333 South Hope Street
Los Angeles, California 90071
The primary investment objective of the fund is long-term growth of capital.
Future income is a secondary objective. In seeking to meet these investment
objectives, the fund normally invests on a global basis in a diversified
portfolio consisting primarily of common stocks.
This prospectus relates only to shares of the fund offered without a sales
charge to eligible retirement plans. For a prospectus regarding shares of the
fund to be acquired otherwise, contact the Secretary of the fund at the
address indicated above.
This prospectus presents information you should know before investing in the
fund. It should be retained for future reference.
More detailed information about the fund including the fund's financial
statements, is contained in the statement of additional information
dated February 1, 1997, which has been filed with the Securities and
Exchange Commission and is available to you without charge, by
writing to the Secretary of the fund at the above address or calling
American Funds Service Company.
SHARES OF THE FUND 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. THE
PURCHASE OF FUND SHARES INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS
OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
RP 07-010-0297
<PAGE>
- -------------------------------------------------------------------------------
SUMMARY OF
EXPENSES
Average annual expenses
paid over a 10-year
period would be
approximately $10 per
year, assuming a $1,000
investment and a 5%
annual return with no
sales charge.
TABLE OF CONTENTS
<TABLE>
<S> <C>
Summary of Expenses......... 2
Financial Highlights........ 3
Investment Objectives and
Policies................... 3
Investing Around the World.. 4
Multiple Portfolio
Counselor System........... 5
Investment Results.......... 6
Dividends, Distributions
and Taxes.................. 6
Fund Organization and
Management................. 7
Purchasing Shares........... 9
Shareholder Services........ 10
Redeeming Shares............ 10
</TABLE>
This table is designed to help you understand the costs of investing in the
fund. These are historical expenses; your actual expenses may vary.
SHAREHOLDER TRANSACTION EXPENSES
Certain retirement plans may purchase shares of the fund with no sales
charge./1/ The fund also has no sales charge on reinvested dividends, deferred
sales charge, redemption fees or exchange fees.
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<S> <C>
Management fees........................................................ 0.42%
12b-1 expenses......................................................... 0.22%/2/
Other expenses (including audit, legal, shareholder services,
transfer agent and custodian expenses)................................ 0.18%
Total fund operating expenses.......................................... 0.82%
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following cumulative
expenses on a $1,000 investment,
assuming a 5% annual return./3/ $8 $26 $46 $101
</TABLE>
/1/ Retirement plans of organizations with $100 million or more in collective
retirement plan assets may purchase shares of the fund with no sales charge.
In addition, any employer-sponsored 403(b) plan or defined contribution plan
qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees or any other plan that
invests at least $1 million in shares of the fund (or in combination with
shares of other funds in The American Funds Group other than the money
market funds) may purchase shares at net asset value; however, a contingent
deferred sales charge of 1% applies on certain redemptions made within 12
months following such purchases. (See "Redeeming Shares--Contingent Deferred
Sales Charge.")
/2/ These expenses may not exceed 0.25% of the fund's average net assets
annually. (See "Fund Organization and Management--Plan of Distribution.")
Due to these distribution expenses, long-term shareholders may pay more than
the economic equivalent of the maximum front-end sales charge permitted by
the National Association of Securities Dealers.
/3/ Use of this assumed 5% return is required by the Securities and Exchange
Commission; it is not an illustration of past or future investment results.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES; ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.
2
<PAGE>
- -------------------------------------------------------------------------------
FINANCIAL The following information has been audited by Price
HIGHLIGHTS Waterhouse LLP, independent accountants, whose
unqualified report covering each of the most recent
(For a share five years is included in the statement of additional
outstanding information. This information should be read in
throughout the conjunction with the financial statements and
fiscal year) accompanying notes which are also included in the
statement of additional information.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30
--------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, begin-
ning of year........... $16.98 $15.40 $14.21 $12.25 $11.77 $10.16 $11.96 $10.25 $13.73 $10.58
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income.. .32 .31 .22 .17 .21 .29 .27 .29 .26 .24
Net realized and
unrealized gain (loss)
on investments........ 1.40 2.35 1.54 2.04 .71 2.05 (.77) 2.37 (2.35) 4.38
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total income (loss)
from Investment Oper-
ations............... 1.72 2.66 1.76 2.21 .92 2.34 (.50) 2.66 (2.09) 4.62
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net in-
vestment income....... (.321) (.237) (.173) (.178) (.24) (.30) (.29) (.32) (.25) (.22)
Dividends from net
realized non-U.S.
currency gains/1/..... (.009) (.003) (.027) (.022) -- -- -- -- -- --
Distributions from net
realized gains........ (.600) (.840) (.370) (.050) (.20) (.43) (1.01) (.63) (1.14) (1.25)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions... (.93) ($1.08) ($.57) ($.25) ($.44) ($.73) ($1.30) ($.95) ($1.39) ($1.47)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, end of
year................... $17.77 $16.98 $15.40 $14.21 $12.25 $11.77 $10.16 $11.96 $10.25 $13.73
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return/2/......... 10.64% 18.63% 12.61% 18.34% 8.04% 23.86% (4.88)% 27.99% (14.25)% 49.71%
RATIOS/SUPPLEMENTAL DATA
Net Assets, end of year
(in millions)......... $11,688 $8,817 $6,279 $4,417 $3,082 $2,213 $1,421 $1,230 $ 972 $1,242
Ratios of expenses to
average net assets.... .82% .83% .84% .87% .85% .86% .82% .76% .69% .64%
Ratio of net income to
average net assets.... 2.00% 2.12% 1.48% 1.40% 1.82% 2.80% 2.55% 2.69% 2.47% 2.06%
Average
commissions paid/3/.... 4.30c .72c 1.05c 1.74c 3.02c 4.04c 3.92c 3.11c 3.29c 6.24c
Portfolio turnover
rate.................. 18.12% 22.40% 25.33% 15.02% 6.43% 8.16% 14.04% 29.21% 20.58% 17.29%
</TABLE>
-----------------
/1/ Realized non-U.S. currency gains are treated as ordinary income for
federal income tax purposes.
/2/ This was 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 reflected in the fund's statement of operations. Shares traded
on a principal basis (without commissions) 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.
INVESTMENT The fund's primary investment objective is long-term
OBJECTIVES growth of capital. Future income is a secondary objec-
AND POLICIES tive.
The fund invests The fund's assets are invested on a global basis to
globally and aims take advantage of investment opportunities generated by
primarily to make changes in international trade patterns and economic
your capital grow and political relationships. International investing
over time. presents risks and opportunities which you should con-
sider. (See "Investing Around the World.") The fund's
success depends largely upon the ability of its invest-
ment adviser, Capital Research and Management Company,
to foresee and respond to rapid, complex, and often
subtle changes in these patterns and relationships.
Capital Research and Management Company closely follows
companies, industries, governments, and securities and
currency exchange markets worldwide.
The fund normally invests in a diversified portfolio
consisting primarily of common stocks. Assets may also
be invested in securities convertible into common
stocks and straight debt securities (generally rated in
the top three quality categories by Standard & Poor's
Corporation or
3
<PAGE>
- -------------------------------------------------------------------------------
Moody's Investors Service, Inc. or determined to be of
equivalent quality by Capital Research and Management
Company). The fund may also hold cash or cash equiva-
lents, government securities, or nonconvertible pre-
ferred stocks. These securities may be issued by U.S.
or non-U.S. entities and may be denominated in U.S.
dollars or other currencies. (See the statement of ad-
ditional information for a description of cash equiva-
lents.)
The fund's investment restrictions (which are described
in the statement of additional information) and objec-
tives cannot be changed without shareholder approval.
All other investment practices may be changed by the
board of directors.
ACHIEVEMENT OF THE FUND'S INVESTMENT OBJECTIVES CANNOT,
OF COURSE, BE ASSURED DUE TO THE RISK OF CAPITAL LOSS
FROM FLUCTUATING PRICES INHERENT IN ANY INVESTMENT IN
SECURITIES AND THE SPECIAL RISKS ASSOCIATED WITH GLOBAL
INVESTING DESCRIBED HEREIN.
INVESTING OPPORTUNITIES, RISKS AND COSTS The fund's assets are
AROUND invested globally which, in the opinion of Capital
THE WORLD Research and Management Company, enhances the fund's
ability to meet its primary objective--long-term growth
Global investing of capital.
involves expanded
opportunities, Of course, investing globally involves special risks,
special risks and particularly in certain developing countries, caused
increased costs. by, among other things: fluctuating currency values;
less stringent accounting, auditing, and financial
reporting regulations and practices in some countries;
changing local and regional economic, political, and
social conditions; 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 Manage-
ment Company, global investing also can reduce certain
portfolio market risks due to greater diversification
opportunities.
Additional costs could be incurred in connection with
the fund's investment activities outside the U.S.
Brokerage commissions are generally 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.
CURRENCY TRANSACTIONS In connection with its non-U.S.
investments, the fund has the ability to hold
currencies other than the U.S. dollar and to enter into
forward currency contracts to facilitate settlements
and to protect against changes in exchange rates.
However, there is no assurance that such strategies
will be successful. Moreover, due to the expenses
involved, the fund will not generally attempt to
protect against all potential changes in exchange
rates.
4
<PAGE>
- -------------------------------------------------------------------------------
MULTIPLE The basic investment philosophy of Capital Research and
PORTFOLIO Management Company is to seek fundamental values at
COUNSELOR reasonable prices, using a system of multiple portfolio
SYSTEM counselors in managing mutual fund assets. Under this
system the portfolio of the fund is divided into seg-
Capital Research ments which are managed by individual counselors. Each
and Management counselor decides how his segment will be invested
Company, the (within the limits provided by the fund's objectives
fund's investment and policies and by Capital Research and Management
adviser, uses a Company's investment committee). In addition, Capital
system of multiple Research and Management Company's research profession-
portfolio als make investment decisions with respect to a portion
counselors to of the fund's portfolio. The primary individual portfo-
manage fund lio counselors for the fund are listed below.
assets.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
YEARS OF EXPERIENCE
AS INVESTMENT PROFESSIONAL
YEARS OF EXPERIENCE AS (APPROXIMATE)
PORTFOLIO COUNSELORS PORTFOLIO COUNSELOR
FOR (AND RESEARCH WITH CAPITAL
NEW PERSPECTIVE PRIMARY TITLE(S) PROFESSIONAL, IF RESEARCH AND
FUND, INC. APPLICABLE) FOR MANAGEMENT
NEW PERSPECTIVE COMPANY OR TOTAL
FUND, INC. ITS AFFILIATES YEARS
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mark E. Denning Senior Vice President, 3 years (in addition 15 years 15 years
Capital Research to 4 years as a
Company* research professional
prior to becoming a
portfolio counselor
for the fund)
- --------------------------------------------------------------------------------------------------------
William R. Grimsley Senior Vice President Since the fund began 27 years 34 years
of the fund. Senior operations
Vice President and
Director, Capital
Research and Management
Company
- --------------------------------------------------------------------------------------------------------
Gregg E. Ireland Vice President of the 3 years (in addition 24 years 24 years
fund. Vice President, to 7 years as a
Capital Research research professional
and Management Company prior to becoming a
portfolio counselor
for the fund)
- --------------------------------------------------------------------------------------------------------
William C. Newton Senior Partner, The Since the fund began 38 years 44 years
Capital Group Partners operations
L.P.*
- --------------------------------------------------------------------------------------------------------
Thierry Vandeventer Senior Vice President 17 years (in addition 34 years 34 years
of the fund. to 5 years as a
Chairman of the Board research professional
and Chief Executive prior to becoming a
Officer, Capital portfolio counselor
Research Company* for the fund)
- --------------------------------------------------------------------------------------------------------
The fund began operations on March 13, 1973.
* Company affiliated with Capital Research and Management Company.
- --------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
- -------------------------------------------------------------------------------
INVESTMENT The fund may from time to time compare its investment
RESULTS results to various unmanaged indices or other mutual
funds in reports to shareholders, sales literature and
The fund has advertisements. The results may be calculated on a to-
averaged a total tal return, yield and/or distribution rate basis for
return (at no various periods, with or without sales charges. Results
sales charge) of calculated without a sales charge will be higher. Total
14.74% a year over returns assume the reinvestment of all dividends and
its lifetime capital gain distributions. The fund's distribution
rate is calculated by dividing the dividends paid by
(March 13, 1973 the fund over the last 12 months by the sum of the
through month-end price and the capital gains paid over the
December 31, last 12 months. The SEC yield reflects income earned by
1996). the fund, while the distribution rate reflects divi-
dends paid by the fund. Yield is computed by dividing
the net investment income per share earned by the
fund over a given period of time by the maximum
offering price per share on the last day of the
period, according to a formula mandated by the
Securities and Exchange Commission. A yield
calculated using this formula may be different than
income actually paid to shareholders.
The fund's total return over the past 12 months and av-
erage annual total returns over the past five-year and
ten-year periods, as of December 31, 1996, were
17.28%, 13.94% and 13.78%, respectively. These results
were calculated with no sales charge in accordance with
Securities and Exchange Commission requirements. Of
course, past results are not an indication of future
results. Further information regarding the fund's in-
vestment results is contained in the fund's annual re-
port which may be obtained without charge by writing to
the Secretary of the fund at the address indicated on
the cover of this prospectus.
DIVIDENDS AND DISTRIBUTIONS Dividends are usually paid
DIVIDENDS, in June and December. Capital gains, if any, are
DISTRIBUTIONS usually distributed in December. When a dividend or
AND TAXES capital gain is distributed, the net asset value per
share is reduced by the amount of the payment.
Income
distributions are The terms of your plan will govern how your plan may
usually made in receive distributions from the fund. Generally, peri-
June and December. odic distributions from the fund to your plan are rein-
vested in additional fund shares, although your plan
may permit fund distributions from net investment in-
come to be received by you in cash while reinvesting
capital gain distributions in additional shares or may
permit all fund distributions to be received in cash.
Unless you select another option, all distributions
will be reinvested in additional fund shares.
FEDERAL TAXES The fund intends to operate as a
"regulated investment company" under the Internal
Revenue Code. In any fiscal year in which the fund so
qualifies and distributes to shareholders all of its
net investment income and net capital gains, the fund
itself is relieved of federal income tax. The tax
treatment of redemptions from a retirement plan may
differ from redemptions from an ordinary shareholder
account.
The fund may be required to pay withholding and other
taxes imposed by various countries in connection with
its investments outside the U.S. generally at rates
from 10% to 40%, which would reduce the fund's invest-
ment income.
6
<PAGE>
- -------------------------------------------------------------------------------
PLEASE SEE THE STATEMENT OF ADDITIONAL INFORMATION AND
YOUR TAX ADVISER FOR FURTHER INFORMATION.
FUND FUND ORGANIZATION AND VOTING RIGHTS The fund, an open-
ORGANIZATION end, diversified management investment company, was
AND organized as a Maryland corporation in 1972. The fund's
MANAGEMENT board supervises fund operations and performs duties
required by applicable state and federal law. Members
The fund is a of the board who are not employed by Capital Research
member of The and Management Company or its affiliates are paid
American Funds certain fees for services rendered to the fund as
Group, which is described in the statement of additional information.
managed by one of They may elect to defer all or a portion of these fees
the largest and through a deferred compensation plan in effect for the
most experienced fund. Shareholders have one vote per share owned and,
investment at the request of the holders of at least 10% of the
advisers. shares, the fund will hold a meeting at which any
member of the board could be removed by a majority
vote. There will not usually be a shareholder meeting
in any year except, for example, when the election of
the board is required to be acted upon by shareholders
under the Investment Company Act of 1940.
THE INVESTMENT ADVISER Capital Research and Management
Company, a large and experienced investment management
organization founded in 1931, is the investment adviser
to the fund and other funds, including those in The
American Funds Group. Capital Research and Management
Company is located at 333 South Hope Street, Los
Angeles, CA 90071 and at 135 South State College
Boulevard, Brea, CA 92821. Capital Research and
Management Company manages the investment portfolio and
business affairs of the fund and receives a fee at the
annual rates of 0.60% on the first $500 million of the
fund's net assets, 0.50% on net assets between
$500 million and $1 billion, 0.46% on net assets
between $1 billion and $1.5 billion, 0.43% on net
assets between $1.5 billion and $2.5 billion, 0.41%
on net assets between $2.5 billion and $4 billion,
0.40% on net assets between $4 billion and
$6.5 billion, 0.395% on net assets between $6.5
billion and $10.5 billion, and 0.392% on net assets
in excess of $10.5 billion.
Capital Research and Management Company is a wholly
owned subsidiary of The Capital Group Companies, Inc.
(formerly "The Capital Group, Inc."), which is located
at 333 South Hope Street, Los Angeles, CA 90071. The
research activities of Capital Research and Management
Company are conducted by affiliated companies which
have offices in Los Angeles, San Francisco, New York,
Washington, D.C., London, Geneva, Singapore, Hong Kong
and Tokyo.
Capital Research and Management Company and its
affiliated companies have adopted a personal investing
policy that is consistent with the recommendations
contained in the report dated May 9, 1994 issued by the
Investment Company Institute's Advisory Group on
Personal Investing. (See the statement of additional
information.)
7
<PAGE>
- -------------------------------------------------------------------------------
PORTFOLIO TRANSACTIONS Orders for the fund's portfolio
securities transactions are placed by Capital Research
and Management Company, which strives to obtain the
best available prices, taking into account the costs
and quality of executions. In the over-the-counter
market, purchases and sales are transacted directly
with principal market-makers except in those
circumstances where it appears better prices and
executions are available elsewhere.
Subject to the above policy, when two or more brokers
are in a position to offer comparable prices and
executions, preference may be given to brokers that
have sold shares of the fund or have provided
investment research, statistical, and other related
services for the benefit of the fund and/or other funds
served by Capital Research and Management Company.
PRINCIPAL UNDERWRITER American Funds Distributors,
Inc., a wholly owned subsidiary of Capital Research and
Management Company, is the principal underwriter of the
fund's shares. American Funds Distributors is located
at 333 South Hope Street, Los Angeles, CA 90071, 135
South State College Boulevard, Brea, CA 92821, 8000 IH-
10 West, San Antonio, TX 78230, 8332 Woodfield Crossing
Boulevard, Indianapolis, IN 46240, and 5300 Robin Hood
Road, Norfolk, VA 23513. Telephone conversations with
American Funds Distributors may be recorded or
monitored for verification, recordkeeping and quality
assurance purposes.
PLAN OF DISTRIBUTION The fund has a plan of
distribution or "12b-1 Plan" under which it may finance
activities primarily intended to sell shares, provided
the categories of expenses are approved in advance by
the board and the expenses paid under the plan were
incurred within the last 12 months and accrued while
the plan is in effect. Expenditures by the fund under
the plan may not exceed 0.25% of its average net assets
annually (all of which may be for service fees).
TRANSFER AGENT American Funds Service Company, 800/421-
0180, a wholly owned subsidiary of Capital Research and
Management Company, is the transfer agent and performs
shareholder service functions. American Funds Service
Company is located at 333 South Hope Street, Los
Angeles, CA 90071, 135 South State College Boulevard,
Brea, CA 92821, 8000 1H-10 West, San Antonio, TX 78230,
8332 Woodfield Crossing Boulevard, Indianapolis, IN
46240, and 5300 Robin Hood Road, Norfolk, VA 23513. It
was paid a fee of $10,919,000 for the fiscal year ended
September 30, 1996. Telephone conversations with
American Funds Service Company may be recorded or
monitored for verification, recordkeeping and quality
assurance purposes.
8
<PAGE>
- -------------------------------------------------------------------------------
PURCHASING SHARES ALL ORDERS TO PURCHASE SHARES MUST BE MADE THROUGH YOUR
RETIREMENT PLAN. FOR MORE INFORMATION ABOUT HOW TO
PURCHASE SHARES OF THE FUND THROUGH YOUR PLAN OR
LIMITATIONS ON THE AMOUNT THAT MAY BE PURCHASED, PLEASE
CONSULT WITH YOUR EMPLOYER. Shares are sold to eligible
retirement plans at the net asset value per share next
determined after receipt of an order by the fund or
American Funds Service Company. Orders must be received
before the close of regular trading on the New York
Stock Exchange in order to receive that day's net asset
value.
Plans of organizations with collective retirement plan
assets of $100 million or more may purchase shares at
net asset value. In addition, any employer-sponsored
403(b) plan or defined contribution plan qualified un-
der Section 401(a) of the Internal Revenue Code includ-
ing a "401(k)" plan with 200 or more eligible employees
or any other plan that invests at least $1 million in
shares of the fund (or in combination with shares of
other funds in The American Funds Group other than the
money market funds) may purchase shares at net asset
value; however, a contingent deferred sales charge of
1% is imposed on certain redemptions made within one
year of such purchase. (See "Redeeming Shares--Contin-
gent Deferred Sales Charge.") Plans may also qualify to
purchase shares at net asset value by completing a
statement of intention to purchase $1 million in fund
shares subject to a commission over a maximum of 13
consecutive months. Certain redemptions of such shares
may also be subject to a contingent deferred sales
charge as described above. (See the statement of addi-
tional information.)
The minimum initial investment is $250, except that the
money market funds have a minimum of $1,000 for
individual retirement accounts (IRAs). Minimums are
reduced to $50 for purchases through "Automatic
Investment Plans" (except for the money market funds)
or to $25 for purchases by retirement plans through
payroll deductions and may be reduced or waived for
shareholders of other funds in The American Funds
Group.
During 1997, American Funds Distributors, will
provide additional compensation to the top one hundred
dealers who have sold shares of the fund or other
funds in The American Funds Group, based on a pro
rata share of a qualifying dealer's sales. American
Funds Distributors will, on an annual basis, determine
the advisability of continuing these promotional
incentives.
Qualified dealers currently are paid a continuing
service fee not to exceed 0.25% of average net assets
(0.15% in the case of the money market funds) annually
in order to promote selling efforts and to compensate
them for providing certain services. (See "Fund
Organization and Management--Plan of Distribution.")
These services include processing purchase and
redemption transactions, establishing shareholder
accounts and providing certain information and
assistance with respect to the fund.
9
<PAGE>
- --------------------------------------------------------------------------------
Shares of the fund are offered to other shareholders
pursuant to another prospectus at public offering prices
that may include an initial sales charge.
SHARE PRICE Shares are offered to eligible retirement
plans at the net asset value next determined after the
order is received by the fund or American Funds Service
Company. In the case of orders sent directly to the fund
or American Funds Service Company, an investment dealer
must be indicated. Dealers are responsible for promptly
transmitting orders. (See the statement of additional
information under "Purchase of Shares--Price of
Shares.")
The fund's net asset value per share is determined as of
the close of trading (currently 4:00 p.m., New York
time) on each day the New York Stock Exchange is open.
The current value of the fund's total assets, less all
liabilities, is divided by the total number of shares
outstanding and the result, rounded to the nearer cent,
is the net asset value per share.
SHAREHOLDER Subject to any restrictions contained in your plan, you
SERVICES can exchange your shares for shares of other funds in
The American Funds Group which are offered through the
plan at net asset value. In addition, again depending on
your plan, you may be able to exchange shares
automatically or cross-reinvest dividends in shares of
other funds. Contact your plan administrator/trustee
regarding how to use these services. Also, see the
fund's statement of additional information for a
description of these and other services that may be
available through your plan. These services are
available only in states where the fund to be purchased
may be legally offered and may be terminated or modified
at any time upon 60 days' written notice.
REDEEMING Subject to any restrictions imposed by your plan, you
SHARES can sell your shares through the plan any day the New
York Stock Exchange is open. For more information about
how to sell shares of the fund through your retirement
plan, including any charges that may be imposed by the
plan, please consult with your employer.
---------------------------------------------------------
By contacting Your plan administrator/trustee must
your plan send a letter of instruction
administrator/ specifying the name of the fund, the
trustee number of shares or dollar amount to
be sold, and, if applicable, your
name and account number. For your
protection, if you redeem more than
$50,000, the signatures of the
registered owners or their legal
representatives must be guaranteed
by a bank, savings association,
credit union, or member firm of a
domestic stock exchange or the
National Association of Securities
Dealers, Inc. that is an eligible
guarantor institution. Your plan
administrator/trustee should verify
with the institution that it is an
eligible guarantor prior to signing.
Additional documentation may be
required to redeem shares from
certain accounts. Notarization by a
Notary Public is not an acceptable
signature guarantee.
----------------------------------------------------------
By contacting Shares may also be redeemed through
an investment an investment dealer; however, you
dealer or your plan may be charged for this
service. SHARES HELD FOR YOU IN AN
INVESTMENT DEALER'S STREET NAME MUST
BE REDEEMED THROUGH THE DEALER.
10
<PAGE>
- -------------------------------------------------------------------------------
THE PRICE YOU RECEIVE FOR THE SHARES YOU REDEEM IS THE
NET ASSET VALUE NEXT DETERMINED AFTER YOUR ORDER AND
ALL REQUIRED DOCUMENTATION ARE RECEIVED BY THE FUND OR
AMERICAN FUNDS SERVICE COMPANY. (SEE "PURCHASING
SHARES--SHARE PRICE.")
CONTINGENT DEFERRED SALES CHARGE A contingent deferred
sales charge of 1% applies to certain redemptions
within the first year on investments of $1 million or
more and, on any investment made with no initial sales
charge by any employer-sponsored 403(b) plan or defined
contribution plan qualified under Section 401(a) of the
Internal Revenue Code including a "401(k)" plan with
200 or more eligible employees. The charge is 1% of the
lesser of the value of the shares redeemed (exclusive
of reinvested dividends and capital gain distributions)
or the total cost of such shares. Shares held for the
longest period are assumed to be redeemed first for
purposes of calculating this charge. The charge is
waived for exchanges (except if shares acquired by
exchange were then redeemed within 12 months of the
initial purchase); for distributions from qualified
retirement plans and other employee benefit plans; for
redemptions resulting from participant-directed
switches among investment options within a participant-
directed employer-sponsored retirement plan; and for
redemptions in connection with loans made by qualified
retirement plans.
OTHER IMPORTANT THINGS TO REMEMBER The net asset value
for redemptions is determined as indicated under
"Purchasing Shares--Share Price." Because the fund's
net asset value fluctuates, reflecting the market value
of the portfolio, the amount you receive for shares
redeemed may be more or less than the amount paid for
them.
Redemption proceeds will not be mailed until sufficient
time has passed to provide reasonable assurance that
checks or drafts (including certified or cashier's
checks) for shares purchased have cleared (which may
take up to 15 calendar days from the purchase date).
Except for delays relating to clearance of checks for
share purchases or in extraordinary circumstances (and
as permissible under the Investment Company Act of
1940), redemption proceeds will be paid on or before
the seventh day following receipt of a proper
redemption request.
[RECYCLE LOGO] This prospectus has been printed on
recycled paper that meets the
guidelines of the United States
Environmental Protection Agency
11
<PAGE>
THIS PROSPECTUS RELATES ONLY TO SHARES OF THE FUND
OFFERED WITHOUT A SALES CHARGE TO ELIGIBLE RETIREMENT
PLANS. FOR A PROSPECTUS REGARDING SHARES OF THE FUND
TO BE ACQUIRED OTHERWISE, CONTACT THE SECRETARY OF
THE FUND AT THE ADDRESS INDICATED ON THE FRONT.
NEW PERSPECTIVE FUND, INC.
PART B
STATEMENT OF ADDITIONAL INFORMATION
FEBRUARY 1, 1997
This document is not a prospectus but should be read in conjunction with the
current Prospectus of New Perspective Fund, Inc. (the fund or NPF) dated
February 1, 1997. The Prospectus may be obtained from your investment dealer
or financial planner or by writing to the fund at the following address:
NEW PERSPECTIVE FUND, INC.
Attention: Secretary
333 South Hope Street
Los Angeles, CA 90071
(213) 486-9200
Shareholders who purchase shares at net asset value through eligible retirement
plans should note that not all of the services or features described below may
be available to them, and they should contact their employer for details.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Item Page No.
<S> <C>
Description of Certain Securities and Investment Techniques 1
Investment Restrictions 2
Fund Directors and Officers 5
Advisory Board Members 10
Management 15
Dividends, Distributions and Federal Taxes 17
Purchase of Shares 21
Redeeming Shares 27
Shareholder Account Services and Privileges 29
Execution of Portfolio Transactions 31
General Information 31
Investment Results 32
Appendix - Description of Bond Ratings 37
Financial Statements Attached
</TABLE>
DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT TECHNIQUES
The descriptions below are intended to supplement the material in the
prospectus under "Investment Policies and Risks."
CASH EQUIVALENTS - These securities include (1) commercial paper (short-term
notes up to 9 months in maturity issued by corporations or governmental
bodies), (2) commercial bank obligations (E.G., certificates of deposit,
bankers' acceptances (time drafts on a commercial bank where the bank accepts
an irrevocable obligation to pay at maturity), (3) savings association and
saving bank obligations (E.G., certificates of deposit issued by savings banks
or savings associations), (4) securities of the U.S. Government, its agencies
or instrumentalities that mature, or may be redeemed, in one year or less, and
(5) corporate bonds and notes that mature, or that may be redeemed, in one year
or less.
CURRENCY TRANSACTIONS -- The fund has the ability to enter into forward
currency contracts to protect against changes in currency exchange rates. A
forward currency contract is an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days from the date
of the contract agreed upon by the parties, at a price set at the time of the
contract. Forward currency contracts entered into by the fund will involve the
purchase or sale of a currency against the U.S. dollar. The fund will
segregate liquid assets which will be marked to market daily to meet its
forward contract commitments to the extent required by the Securities and
Exchange Commission.
Certain provisions of the Internal Revenue Code may affect the extent to which
the fund may enter into forward contracts. Such transactions may also affect,
for U.S. federal income tax purposes, the character and timing of income, gain
or loss recognized by the fund.
INVESTMENTS IN LOWER RATED BONDS - Up to 10% of the fund's assets may be
invested in lower rated straight debt securities (securities rated Baa or below
by Moody's Investors Service, Inc. or BBB or below by Standard & Poor's
Corporation), including up to 5% in securities rated Ba and BB or below
(commonly referred to as "junk bonds" or "high-yield, high-risk bonds") or in
unrated securities that are determined to be of equivalent quality. High-yield,
high-risk bonds carry a higher degree of investment risk and are considered
speculative. This quality restriction does not apply to securities convertible
into common stocks.
High-yield, high-risk bonds are very sensitive to adverse economic changes and
corporate developments. 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. If the issuer of a bond defaulted on its obligations to
pay interest or principal or entered into bankruptcy proceedings, the fund may
incur losses or expenses in seeking recovery of amounts owed to it. In
addition, periods of economic uncertainty and changes can be expected to result
in increased volatility of market prices of high-yield, high-risk bonds.
High-yield, high-risk bonds, like other bonds, may contain redemption or call
provisions. If an issuer exercised these provisions in a declining interest
rate market, the fund would have to replace the security with a lower yielding
security, resulting in a decreased return for investors. Conversely, a
high-yield, high-risk bond's value is likely to decrease in a rising interest
rate market, as is generally true with all bonds.
There may be little trading in the secondary market for particular bonds, which
may affect adversely the fund's ability to value accurately or dispose of such
bonds. Adverse publicity and investor perceptions, whether or not based on
fundamental analysis, may decrease the values and liquidity of high-yield,
high-risk bonds, especially in a thin market.
INVESTMENT RESTRICTIONS
The fund has adopted the following fundamental policies and investment
restrictions which may not be changed without a majority vote of its
outstanding shares. Such majority is defined by the Investment Company Act of
1940 (the 1940 Act) as the vote of the lesser of (i) 67% or more of the
outstanding voting securities present at a meeting, if the holders of more than
50% of the outstanding voting securities are present in person or by proxy or
(ii) more than 50% of the outstanding voting securities. All percentage
limitations expressed in the following investment restrictions are measured
immediately after and giving effect to the relevant transactions. These
restrictions provide that the fund may not:
1. Invest in securities of another issuer (other than the U.S. or its agencies
or instrumentalities), if immediately after and as a result of such investment
more than 5% of the value of the total assets of the fund would be invested in
the securities of such other issuer, or more than 10% of the outstanding voting
securities of such issuer would be owned by the fund;
2. Invest in companies for the purpose of exercising control or management;
3. Invest more than 25% of the value of its total assets in the securities of
companies primarily engaged in any one industry;
4. Purchase securities of other investment companies, except in connection with
a merger, consolidation, acquisition or reorganization, or by purchase in the
open market of securities of closed-end investment companies where no
underwriter or dealer's commission or profit, other than customary broker's
commissions, is involved, and only if immediately thereafter no more than 10%
of the value of the fund's total assets would be invested in such securities;
5. Buy or sell real estate in the ordinary course of its business; however, the
fund may invest in securities secured by real estate or interests therein or
issued by companies, including real estate investment trusts, which invest in
real estate or interests therein;
6. Buy or sell commodities or commodity contracts in the ordinary course of its
business provided, however, that this restriction shall not prohibit the fund
from purchasing, selling or holding foreign currencies or entering into forward
foreign currency contracts;
7. Make any investment under circumstances requiring direct payment by the fund
of the Federal Interest Equalization Tax if, immediately thereafter and as a
result of such investment, the total of the Federal Interest Equalization Tax
directly paid or owing by the fund during the fiscal year in which such
investment is made would amount to more than 1-1/2% of the fund's average
month-end net assets during such fiscal year to the date of such investment;
8. Acquire securities subject to restrictions on disposition imposed by the
Securities Act of 1933, if, immediately after and as a result of such
acquisition, the value of all such restricted securities held by the fund would
exceed 2% of the value of its total assets; in any event, the fund will not
invest more than 5% of the value of its total assets in securities which are
not readily marketable;
9. Engage in the business of underwriting of securities of other issuers,
except to the extent that the disposal of an investment position may
technically constitute the fund an underwriter as that term is defined under
the Securities Act of 1933;
10. Lend any of its assets; provided, however, that investment in government
obligations, short-term commercial paper, certificates of deposit and banker's
acceptances and publicly traded bonds, debentures, or other debt securities
shall not be deemed to be the making of a loan;
11. Sell securities short, except to the extent that the fund contemporaneously
owns or has the right to acquire at no additional cost securities identical to
those sold short;
12. Purchase securities on margin;
13. Borrow amounts in excess of 5% of the value of its total assets; in any
event, the fund may borrow only as a temporary measure for extraordinary or
emergency purposes and not for investment in securities; nor
14. Mortgage, pledge or hypothecate its assets to any extent.
For purposes of Investment Restriction #3, the fund will not invest 25% or more
of the value of its total assets in the securities of companies primarily
engaged in any one industry.
Notwithstanding Investment Restriction #4, the fund may invest in securities of
other investment companies if deemed advisable by its officers in connection
with the administration of a deferred compensation plan adopted by Directors
pursuant to an exemptive order granted by the Securities and Exchange
Commission.
For purposes of Investment Restriction #11, although the fund may sell
securities short, to the extent that the fund contemporaneously owns or has the
right to acquire at no additional cost securities identical to those sold
short, the fund does not anticipate doing so during the next twelve months.
Additional investment restrictions adopted by the fund and which may be changed
by the Board of Directors, provide that the fund may not;
1. Purchase or retain the securities of any issuer, if those individual
officers and directors of the fund, its investment adviser or principal
underwriter, each owning beneficially more than 1/2 of 1% of the securities of
such issuer, together own more than 5% of the securities of such issuer;
2. Invest more than 5% of the value of its total assets in securities of
companies having, together with their predecessors, a record of less than three
years of continuous operation;
3. Invest in puts, calls, straddles or spreads, or combinations thereof; or
4. Purchase partnership interests in oil, gas, or mineral exploration, drilling
or mining ventures.
FUND DIRECTORS AND OFFICERS
DIRECTORS AND DIRECTOR COMPENSATION
<TABLE>
<CAPTION>
NAME, ADDRESS POSITION PRINCIPAL AGGREGATE TOTAL COMPENSATION TOTAL
AND AGE WITH OCCUPATION(S) DURING COMPENSATION (INCLUDING NUMBER OF
REGISTRANT PAST 5 YEARS (INCLUDING VOLUNTARILY FUND
(POSITIONS WITHIN THE VOLUNTARILY DEFERRED BOARDS ON
ORGANIZATIONS LISTED DEFERRED COMPENSATION/1/) WHICH
MAY HAVE CHANGED COMPENSATION/1/) FROM ALL FUNDS DIRECTOR
DURING THIS PERIOD) FROM THE FUND MANAGED BY CAPITAL SERVES/3/
DURING FISCAL RESEARCH AND
YEAR ENDED MANAGEMENT
9/30/96 COMPANY/2/
<S> <C> <C> <C> <C> <C>
Elisabeth Director Administrative $18,900 $38,800 2.00
Allison Director, ANZI, Ltd.
ANZI, Ltd. (financial publishing
1770 and consulting);
Massachusetts Publishing
Ave. Consultant, Harvard
Cambridge, MA Medical School;
02410 former Senior Vice
Age: 50 President, Planning
and Development,
McGraw Hill, Inc.
+David I. Fisher Director Chairman of the None/5/ None/5/ 3
333 South Hope Board,
Street The Capital Group
Los Angeles, CA Companies, Inc.
90072
Age: 57
Robert A. Fox Director President and Chief $18,100/4/ $81,750 5.00
P.O Box 457 Executive Officer,
Livingston, CA Foster Farms, Inc.;
95334 former President,
Age: 59 Revlon International;
former Chairman and
Chief Executive
Officer, Clarke
Hooper America
(advertising)
Alan Greenway Director President, Greenway $18,900/4/ $67,450 4.00
7413 Fairway Associates, Inc.
Road (management
La Jolla, CA consulting services)
92037
Age: 69
Koichi Itoh Director President and Chief $19,400/4/ $38,600 2.00
7-14-11-104 Executive Officer,
Minami IMPAC (management
Aoyama consulting services);
Minato-ku, former Managing
Tokyo, Japan Partner, VENCA
Age: 56 Management (venture
capital)
++William H. Director President, Minnesota $18,100/4/ $70,050 5
Kling Public Radio;
45 East Seventh President,
Street Greenspring Co.;
St. Paul, MN former
55101 President, American
Age: 54 Public Radio
(now Public Radio
International)
+Jon B. Lovelace Vice Vice Chairman of the None/5/ None/5/ 4
333 South Hope Chairman of Board , Capital
Street the Board Research and
Los Angeles, CA Management Company
90071
Age: 69
John G. McDonald Director The IBJ Professor of $18,100/4/ $151,000 7.00
Graduate School Finance,
of Business Graduate School of
Stanford Business,
University Stanford University
Stanford, CA
94305
Age: 59
++William I. Director Chairman of the $18,900/4/ $37,600 2.00
Miller Board,
500 Washington Irwin Financial
Street Corporation
Box 929
Columbus, IN
47202
Age: 40
Kirk P. Director President, Cairnwood, None* $36,944 5
Pendleton Inc. (venture capital
Cairnwood, Inc. investment)
75 James Way
Southhampton, PA
18966
Age: 57
Donald E. Director Former Chairman of $16,900/4/ $60,050 4.00
Petersen the Board and
255 East Brown, Chief Executive
Suite 460 Officer, Ford Motor
Birmingham, MI Company
48009
Age: 70
+James W. Director Senior Partner, The None/5/ None/5/ 6
Ratzlaff Capital Group
One Market Plaza Partners, L.P.
Steuart Tower,
Suite 1800
San Francisco,
CA 94105
Age: 60
+Walter P. Stern Chairman of Chairman, Capital None/5/ None/5/ 8
630 Fifth Avenue the Board Group
New York, NY International, Inc.;
10111 Vice Chairman,
Age: 68 Capital Research
International;
Chairman,
Capital
International, Inc.;
Director,
Temple-Inland Inc.
(forest products)
</TABLE>
+ Directors who are considered "interested persons" as defined in the
Investment Company Act of 1940, as amended (the "1940 Act"), on the basis of
their affiliation with the fund's Investment Adviser, Capital Research and
Management Company.
++ Directors who may be deemed "interested persons" as defined in the 1940 Act
due to membership on the board of directors of the parent company of a
registered broker-dealer.
/1/ Amounts may be deferred by eligible directors under a non-qualified
deferred compensation plan adopted by the fund in 1993. Deferred amounts
accumulate at an earnings rate determined by the total return of one or more of
the funds in The American Funds Group as designated by the director.
/2/ Capital Research and Management Company manages The American Funds Group
consisting of 28 funds: AMCAP Fund, American Balanced Fund, Inc., American
High-Income Municipal Bond Fund, Inc., American High-Income Trust, American
Mutual Fund, Inc., The Bond Fund of America, Inc., The Cash Management Trust of
America, Capital Income Builder, Inc., Capital World Growth and Income Fund,
Inc., Capital World Bond Fund, Inc., EuroPacific Growth Fund, Fundamental
Investors, Inc., The Growth Fund of America, Inc., The Income Fund of America.
Inc., Intermediate Bond Fund of America, The Investment Company of America,
Limited Term Tax-Exempt Bond Fund of America, The New Economy Fund, New
Perspective Fund, Inc., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of
America, Inc., The Tax-Exempt Fund of California, The Tax-Exempt Fund of
Maryland, The Tax-Exempt Fund of Virginia, The Tax-Exempt Money Fund of
America, The U.S. Treasury Money Fund of America, U.S. Government Securities
Fund and Washington Mutual Investors Fund, Inc. Capital Research and
Management Company also manages American Variable Insurance Series and Anchor
Pathway Fund which serve as the underlying investment vehicles for certain
variable insurance contracts, and Endowments, Inc. and Bond Portfolio for
Endowments, Inc.
/3/ Includes funds managed by Capital Research and Management Company and
affiliates.
/4/ Since the deferred compensation plan's adoption, the total amount of
deferred compensation accrued by the fund (plus earnings thereon) as of the
fiscal year ended September 30, 1996 for participating Directors is as follows:
Robert A. Fox ($132,968), William H. Kling ($59,070), John G. McDonald
($52,559) and Donald E. Petersen ($11,921). Amounts deferred and accumulated
earnings thereon are not funded and are general unsecured liabilities of the
fund until paid to the Directors.
/5/ David I. Fisher, Jon B. Lovelace, James W. Ratzlaff and Walter P. Stern are
affiliated with the Investment Adviser and, accordingly, receive no
compensation from the fund.
* Mr. Pendleton was elected to the Board of Directors on September 24, 1996.
He received no compensation from the fund in fiscal year 1996.
OFFICERS/#/
WALTER P. STERN, Chairman of the Board (see above).
JON B. LOVELACE, Vice Chairman of the Board (see above).
GINA H. DESPRES, President and Principal Executive Officer.
3000 K. Street, N.W., Washington, DC 20007-5124.
Vice President, Capital Research and Management Company.
WILLIAM R. GRIMSLEY, Senior Vice President.
One Market Plaza, Steuart Tower, Suite 1800, San Francisco, CA 94105.
Senior Vice President and Director, Capital Research and Management Company.
GREGG E. IRELAND, Senior Vice President.
3000 K. Street, N.W., Washington, DC 20007-5124.
Vice President, Capital Research and Management Company.
THIERRY VANDEVENTER, Senior Vice President.
3 Place des Bergues, 1201 Geneva, Switzerland.
Chairman of the Board and Chief Executive Officer, Capital Research
Company.
DARCY B. KOPCHO, Vice President.
3 Place des Bergues, 1201 Geneva, Switzerland.
Vice President, Capital Research Company
* CATHERINE M. WARD, Vice President.
Vice President and Director, Capital Research and Management Company.
* VINCENT P. CORTI, Secretary.
Vice President - Fund Business Management Group, Capital Research and
Management Company.
** STEVEN N. KEARSLEY, Treasurer.
Vice President and Treasurer, Capital Research and Management Company.
** R. MARCIA GOULD, Assistant Treasurer.
Vice President - Fund Business Management Group, Capital Research and
Management Company.
** MARY C. HALL, Assistant Treasurer.
Senior Vice President - Fund Business Management Group, Capital Research and
Management Company.
_________________________
# Positions within the organizations listed may have changed during this
period.
* Address is 333 South Hope Street, Los Angeles, CA 90071.
** Address is 135 South State College Boulevard, Brea, CA 92821.
ADVISORY BOARD MEMBERS
Advisory Board Member Compensation
The Board of Directors has established an Advisory Board whose members are, in
the judgment of the Directors, highly knowledgeable about world political and
economic matters. In addition to holding meetings with the Board of Directors,
members of the Advisory Board, while not participating in specific investment
decisions, will consult from time to time with the Investment Adviser,
primarily with respect to world trade and business conditions abroad. The
members of the Advisory Board :
<TABLE>
<CAPTION>
NAME, ADDRESS POSITION PRINCIPAL AGGREGATE TOTAL TOTAL
AND AGE WITH OCCUPATION(S) COMPENSATION COMPENSATION NUMBER OF
REGISTRANT DURING PAST 5 (INCLUDING (INCLUDING FUND
YEARS (POSITIONS VOLUNTARILY VOLUNTARILY BOARDS ON
WITHIN THE DEFERRED DEFERRED WHICH
ORGANIZATIONS COMPENSATION/1/) COMPENSATION/1/) ADVISORY
LISTED MAY HAVE FROM THE FUND FROM ALL FUNDS BOARD
CHANGED DURING DURING FISCAL MANAGED BY MEMBER
THIS PERIOD) YEAR ENDED CAPITAL RESEARCH SERVES/3/
9/30/96 AND MANAGEMENT
COMPANY/2/
<S> <C> <C> <C> <C> <C>
Yoichi Advisory Washington, DC $3,000 $3,000 1
Funabashi Board Bureau Chief and
Asahi Shimbun Member Diplomatic
National Press Correspondent of
Building the Asahi Shimbun
529 14th
Street, N.W.
Washington, DC
20045
Age: 52
Jean Gandois Advisory President, Conseil $7,000 $7,000 1
Conseil Board National du
national du Member Patronat Francais;
Patronat former Chairman of
Francais the Board,
31 Ave. Pierre Cockerill-Sambre;
Premier de former Chairman
Serbie and Chief
75784 Paris, Executive Officer,
France Pechiney
Age: 66
Claudio X. Advisory Chairman of the $3,000 $3,000 1
Gonzalez Board Board and Chief
Laporte Member Executive Officer,
Kimberly Clark Kimberly Clark de
de Mexico, SA Mexico, SA
103-3 Colonia
Polanco Morales
Mexico, DF,
Mexico
Age: 62
Junichi Hattori Advisory Senior Managing $7,000 $7,000 1
Seiko Board Director, Seiko
Instruments, Member Instruments, Inc.
Inc.
8 Nakase, 1-Chome,
Mihama-ku
Chiba-shi,
Chiba 261
Japan
Age: 45
Peter C. Adviosry Counsellor; former $7,000 $7,000 1
Hobbins Board Member Executive
Weidstrasse 5 Member Group, Corange
Zug, Ltd.
Switzerland
Age: 67
Sir Peter Advisory Director and $7,000 $7,000 1
Holmes Board former Chairman of
Shell Centre Member the Board and
London, England Managing Director,
Age: 64 The Royal
Dutch/Shell Group
of Companies
Jae-Hyun Hyun Advisory Chairman, Tong None/4/ None 1
Tong Yang Group Board Yang Group
14F, TYIF Member
Building
Seoul, Korea
Age: 47
Baron Advisory Chairman of the $7,000 $7,000 1
Gualtherus Board Supervisory
Kraijenhoff Member Council, AKZO N.V.
Stoeplaan 9,
Flat 58
The Netherlands
Age: 74
John L. Nichol Advisory President, $3,000 $3,000 1
210-1095 West Board Springfield
Pender Street Member Investment
Vancouver, Company, Ltd.;
B.C., Canada former President
Age: 72 of Canada's
National Liberal
Party
Brian Nicholson Advisory Chairman, The $7,000 $7,000 1
Bloomsbury Board Advertising
House Member Standards Board of
74-77 Great Finance Ltd.;
Russell Street former Executive
London, England Chairman, Marlar
Age: 66 International
Ltd.; former Joint
Managing Director,
The Observer
Allen E. Advisory Chairman Emeritus, $7,000 $7,000 1
Puckett Board Hughes Aircraft
935 Corsica Member Company
Drive
Pacific
Palisades, CA
90272
Age: 77
Rozanne L. Advisory Co-Chair, Atlantic $7,000 $7,000 1
Ridgway Board Council of the
Baltic-American Member United States;
Enterprise Fund Chair, Baltic
1625 K Street, American
N.W. Enterprises Fund
Washington, DC
20006
Age: 61
Orville H. Advisory Dean, Graduate None/4/ None 1
Schell Board School of
Graduate School Member Journalism,
of Journalism University of
121 North Gate California,
Hall Berkeley
University of
California
Berkeley, CA
94720
Age: 56
Harold M. Advisory President and $3,000 $3,000 1
Williams Board Chief Executive
The J. Paul Member Officer, The J.
Getty Trust Paul Getty Trust;
1200 Getty former Chairman,
Center Drive U.S. Securities
Los Angeles, CA and Exchange
90049 Commission
Age: 69
</TABLE>
/1/ Amounts may be deferred by eligible directors under a non-qualified
deferred compensation plan adopted by the fund in 1993. Deferred amounts
accumulate at an earnings rate determined by the total return of one or more of
the funds in The American Funds Group as designated by the Advisory Board
member.
/2/ Capital Research and Management Company manages The American Funds Group
consisting of 28 funds: AMCAP Fund, American Balanced Fund, Inc., American
High-Income Municipal Bond Fund, Inc., American High-Income Trust, American
Mutual Fund, Inc., The Bond Fund of America, Inc., The Cash Management Trust of
America, Capital Income Builder, Inc., Capital World Growth and Income Fund,
Inc., Capital World Bond Fund, Inc., EuroPacific Growth Fund, Fundamental
Investors, Inc., The Growth Fund of America, Inc., The Income Fund of America.
Inc., Intermediate Bond Fund of America, The Investment Company of America,
Limited Term Tax-Exempt Bond Fund of America, The New Economy Fund, New
Perspective Fund, Inc., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of
America, Inc., The Tax-Exempt Fund of California, The Tax-Exempt Fund of
Maryland, The Tax-Exempt Fund of Virginia, The Tax-Exempt Money Fund of
America, The U.S. Treasury Money Fund of America, U.S. Government Securities
Fund and Washington Mutual Investors Fund, Inc. Capital Research and
Management Company also manages American Variable Insurance Series and Anchor
Pathway Fund which serve as the underlying investment vehicles for certain
variable insurance contracts, and Endowments, Inc. and Bond Portfolio for
Endowments, Inc.
/3/ Includes funds managed by Capital Research and Management Company and
affiliates.
/4/ Jae-Hyun Hyun and Orvill H. Schell were appointed to the Advisory Board
effective January 1, 1997 and October 1, 1996, respectively. Neither received
compensation from the fund in fiscal year 1996.
All of the officers listed are officers or employees of the Investment Adviser
or affiliated companies. No compensation is paid by the fund to any director
or officer who is a director, officer or employee of the Investment Adviser or
affiliated companies. The fund pays fees of $12,000 per annum to directors who
are not affiliated with the Investment Adviser, plus $1,000 for each Board of
Directors meeting attended ($2,500 for each meeting attended in conjunction
with meetings with the Advisory Board), plus $400 for each meeting attended as
a member of a committee of the Board of Directors. The directors may elect, on
a voluntary basis, to defer all or a portion of these fees through a deferred
compensation plan in effect for the fund. Each Advisory Board member is paid a
fee of $3,000 per annum, plus $4,000 for each meeting attended in conjunction
with meetings with the Board of Directors. As of January 1, 1997 the officers,
directors and Advisory Board members 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, founded in 1931, maintains
research facilities in the U.S. and abroad (Los Angeles, San Francisco, New
York, Washington D.C., London, Geneva, Hong Kong, Singapore and Tokyo), with a
staff of professionals, many of whom have a number of years of investment
experience. The Investment Adviser is located at 333 South Hope Street, Los
Angeles, CA 90071, and at 135 South State College Boulevard, Brea, CA 92821.
The Investment Adviser's professionals travel several million miles a year,
making more than 5,000 research visits in more than 50 countries around the
world. The Investment Adviser believes that it is able to attract and retain
quality personnel. The Investment Adviser is a wholly owned subsidiary of The
Capital Group Companies, Inc.
An affiliate of the Investment Adviser compiles indices for major stock markets
around the world and compiles and edits the Morgan Stanley Capital
International Perspective, providing financial and market information about
more than 2,400 companies around the world.
The Investment Adviser is responsible for managing more than $100 billion of
stocks, bonds and money market instruments and serves over five million
investors of all types. These investors include privately owned businesses and
large corporations as well as schools, colleges, foundations and other
non-profit and tax-exempt organizations.
INVESTMENT ADVISORY AND SERVICE AGREEMENT - The Investment Advisory and
Service Agreement (the Agreement) between the fund and the Investment Adviser,
was approved by shareholders and is dated May 18, 1993. The Agreement will
continue in effect until March 31, 1997 unless sooner terminated and may be
renewed from year to year thereafter, provided that any such renewal has been
specifically approved at least annually by (i) the Board of Directors of the
fund, or by the vote of a majority (as defined in the 1940 Act) of the
outstanding voting securities of the fund, and (ii) the vote of a majority of
Directors who are not parties to the Agreement or interested persons (as
defined in the 1940 Act) of any such party, cast in person, at a meeting called
for the purpose of voting on such approval. The Agreement provides that the
Investment Adviser has no liability to the fund for its acts or omissions in
the performance of its obligations to the fund not involving willful
misconduct, bad faith, gross negligence or reckless disregard of its
obligations under the Agreement. The Agreement also provides that either party
has the right to terminate it, without penalty, upon 60 days' written notice to
the other party, and that the Agreement automatically terminates in the event
of its assignment (as defined in the 1940 Act).
The Investment Adviser, in addition to providing investment advisory services,
furnishes the services and pays the compensation and travel expenses of persons
to perform the executive, administrative, clerical and bookkeeping functions of
the fund, provides suitable office space and utilities, necessary office
equipment and general purpose forms and supplies used at the office of the
fund, and will pay the travel expenses of directors and members of the Advisory
Board incurred in connection with attendance at meetings of those Boards. The
fund will pay all expenses not expressly assumed by the Investment Adviser,
including, but not limited to, fees and expenses of the transfer agent,
dividend disbursing agent, legal counsel and independent public accountants and
custodian, including charges of such custodian for the preparation and
maintenance of the books of account and records of the fund, cost of designing,
printing and mailing reports, prospectuses, proxy statements and notices to
shareholders; fees and expenses of registration, qualification and issuance of
fund shares; expenses pursuant to the fund's Plan of Distribution (described
below); association dues; interest; taxes; and compensation of Advisory Board
members and of Directors who are not affiliated persons of the Investment
Adviser.
The Investment Adviser has agreed that in the event the expenses of the fund
(with the exclusion of interest, taxes, brokerage costs, distribution expenses
pursuant to a plan under Rule 12b-1 and extraordinary expenses such as
litigation and acquisitions) for any fiscal year ending on a date on which the
Agreement is in effect, exceed the expense limitations, if any, applicable to
the fund pursuant to state securities laws or any regulations thereunder, it
will reduce its fee by the extent of such excess and, if required pursuant to
any such laws or regulations, will reimburse the fund in the amount of such
excess.
As compensation for its services, the Investment Adviser receives a monthly fee
which is accrued daily, calculated at the annual rate of 0.60% on the first
$500 million of the fund's net assets, 0.50% on net assets between $500 million
and $1 billion, 0.46% on net assets between $1 billion and $1.5 billion, 0.43%
on net assets between $1.5 billion and $2.5 billion, 0.41% on net assets
between $2.5 billion and $4 billion, 0.40% on net assets between $4 billion and
$6.5 billion, 0.395% on net assets between $6.5 billion and $10.5 billion, and
0.392% on net assets in excess of $10.5 billion. For the fiscal years ended
September 30, 1996, 1995 and 1994, the Investment Adviser received advisory
fees of $43,463,000, $32,015,000 and $24,390,000, respectively.
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, 8000 IH-10 West, San Antonio, TX
78230, 8332 Woodfield Crossing Boulevard, Indianapolis, IN 46240, and 5300
Robin Hood Road, Norfolk, VA 23513. The fund has adopted a Plan of
Distribution (the Plan), pursuant to rule 12b-1 under the 1940 Act. The
Principal Underwriter receives amounts payable pursuant to the Plan (see below)
and commissions consisting of that portion of the sales charge remaining after
the discounts which it allows to investment dealers. Commissions retained by
the Principal Underwriter on sales of fund shares for the fiscal year ended
September 30, 1996 amounted to $12,923,000 after allowance of $67,852,000 to
dealers. During the fiscal years ended September 30, 1995 and 1994 the
Principal Underwriter received $8,330,000 and $6,903,000, after allowance of
$44,248,000 and $36,636,000, respectively.
As required by rule 12b-1, the Plan (together with the Principal Underwriting
Agreement) has been approved by the full Board of Directors, and separately by
a majority of the Directors who are not interested persons of the fund and who
have no direct or indirect financial interest in the operation of the Plan or
the Principal Underwriting Agreement, and the Plan has been approved by the
vote of a majority of the outstanding voting securities of the fund. The
Officers and Directors who are interested persons of the fund may be considered
to have a direct or indirect financial interest in the operation of the Plan
due to present or past affiliations with the Investment Adviser and related
companies. Potential benefits of the Plan to the fund include improved
shareholder services, savings to the fund in transfer agency costs, savings to
the fund in advisory fees and other expenses, benefits to the investment
process from growth or stability of assets and maintenance of a financially
healthy management organization. The selection and nomination of Directors who
are not interested persons of the fund are committed to the discretion of the
Directors who are not interested persons during the existence of the Plan. The
Plan is reviewed quarterly and must be renewed annually by the Board of
Directors.
>Under the Plan, the fund may expend up to 0.25% of its net assets annually to
finance any activity which is primarily intended to result in the sale of fund
shares, provided the fund's Board of Directors has approved the category of
expenses for which payment is made. These include service fees for qualified
dealers and dealer commissions and wholesaler compensation on sales of shares
exceeding $1 million (including purchases by any employer-sponsored 403(b) plan
or purchases by any defined contribution plan qualified under Section 401(a) of
the Internal Revenue Code including a "401(k)" plan with 200 or more eligible
employees). Only expenses incurred during the preceding 12 months and accrued
while the Plan is in effect may be paid by the fund. During the fiscal year
ended September 30, 1996, the fund paid or accrued $22,300,000 in compensation
to dealers under the Plan.
The Glass-Steagall Act and other applicable laws, among other things, generally
prohibit commercial banks from engaging in the business of underwriting,
selling or distributing securities, but permit banks to make shares of mutual
funds available to their customers and to perform administrative and
shareholder servicing functions. However, judicial or administrative decisions
or interpretations of such laws, as well as changes in either federal or state
statutes or regulations relating to the permissible activities of banks or
their subsidiaries of affiliates, could prevent a bank from continuing to
perform all or a part of its servicing activities. If a bank were prohibited
from so acting, shareholder clients of such bank would be permitted to remain
shareholders of the fund and alternate means for continuing the servicing of
such shareholders would be sought. In such event, changes in the operation of
the fund might occur and shareholders serviced by such bank might no longer be
able to avail themselves of any automatic investment or other services then
being provided by such bank. It is not expected that shareholders would suffer
adverse financial consequences as a result of any of these occurrences.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and certain banks and financial
institutions may be required to be registered as dealers pursuant to state law.
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES
The fund intends to meet all the requirements, and has elected the tax status
of a "regulated investment company," under the provisions of Subchapter M of
the Internal Revenue Code of 1986 (the Code). Under Subchapter M, if the fund
distributes within specified times at least 90% of the sum of its investment
company taxable income (net investment income and the excess of net short-term
capital gains over net long-term capital losses) and its tax-exempt interest,
if any, it will be taxed only on that portion of such investment company
taxable income that it retains.
To qualify, the fund must (a) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, and
gains from the sale or other disposition of stock, securities, currencies or
other income derived with respect to its business of investing in such stock,
securities or currencies; (b) derive less than 30% of its gross income from the
gains or sale or other disposition of stock or securities held less than three
months; and (c) diversify its holdings so that, at the end of each fiscal
quarter, (i) at least 50% of the market value of the fund's assets is
represented by cash, cash items, U.S. Government securities, securities of
other regulated investment companies, and other securities (but such other
securities must be limited, in respect of any one issuer, to an amount not
greater than 5% of the fund's assets and 10% of the outstanding voting
securities of such issuer), and (ii) not more than 25% of the value of its
assets is invested in the securities of any one issuer (other than U.S.
Government securities or the securities of other regulated investment
companies), or in two or more issuers which the fund controls and which are
engaged in the same or similar trades or businesses or related trades or
businesses.
Under the Code, a nondeductible excise tax of 4% is imposed on the excess of a
regulated investment company's "required distribution" for the calendar year
ending within the regulated investment company's taxable year over the
"distributed amount" for such calendar year. The term "required distribution"
means the sum of (i) 98% of ordinary income (generally net investment income)
for the calendar year, (ii) 98% of capital gains (both long-term and
short-term) for the one-year period ending on October 31 (as though the
one-year period ending on October 31 were the regulated investment company's
taxable year), and (iii) the sum of any untaxed, undistributed net investment
income and net capital gains of the regulated investment company for prior
periods. The term "distributed amount" generally means the sum of (i) amounts
actually distributed by the fund from its current year's ordinary income and
capital gain net income and (ii) any amount on which the fund pays income tax
for the year. The fund intends to distribute net investment income and net
capital gains so as to minimize or avoid the excise tax liability.
The amount of any realized gain or loss on closing out a futures contract such
as a forward commitment for the purchase or sale of foreign currency will
generally result in a realized capital gain or loss for tax purposes. Futures
contracts held by the fund at the end of each fiscal year will be required to
be "marked to market" for federal income tax purposes, that is, deemed to have
been sold at market value. Sixty percent (60%) of any net gain or loss
recognized on these deemed sales and sixty percent (60%) of any net realized
gain or loss from any actual sales will be treated as long-term capital gain or
loss, and the remainder will be treated as short-term capital gain or loss.
Currency transactions that are not subject to Section 1256 of the Code may be
subject to Section 988 of the Code, in which case the 60%/40%
long-term/short-term capital gain or loss rule of Section 1256 would not apply.
Rather, each Section 988 foreign currency gain or loss would generally be
computed separately and treated as ordinary income or loss. The fund will
attempt to monitor Section 988 transactions to avoid an adverse tax impact.
The fund also intends to continue distributing to shareholders all of the
excess of net long-term capital gain over net short-term capital loss on sales
of securities. If the net asset value of shares of the fund should, by reason
of a distribution of realized capital gains, be reduced below a shareholder's
cost, such distribution would to that extent be a return of capital to that
shareholder even though taxable to the shareholder, and a sale of shares by a
shareholder at net asset value at that time would establish a capital loss for
federal tax purposes.
Dividends generally are taxable to shareholders at the time they are paid.
However, dividends declared in October, November and December and made payable
to shareholders of record in such a month are treated as paid and are thereby
taxable as of December 31, provided that the fund pays the dividend no later
than the end of January of the following year.
If a shareholder exchanges or otherwise disposes of shares of the fund within
90 days of having acquired such shares, and if, as a result of having acquired
those shares, the shareholder subsequently pays a reduced sales charge for
shares of the fund, or of a different fund, the sales charge previously
incurred in acquiring the fund's shares shall not be taken into account (to the
extent such previous sales charges do not exceed the reduction in sales
charges) for the purpose of determining the amount of gain or loss on the
exchange, but will be treated as having been incurred in the acquisition of
such other shares. Also, any loss realized on a redemption or exchange of
shares of a fund will be disallowed to the extent substantially identical
shares are reacquired within the 61-day period beginning 30 days before and
ending 30 days after the shares are disposed of.
The fund may be required to pay withholding and other taxes imposed by foreign
countries generally at rates from 10% to 40% which would reduce the fund's
investment income. Tax conventions between certain countries and the U.S. may
reduce or eliminate such taxes. If more than 50% in value of the fund's total
assets at the close of its taxable year consists of securities of foreign
issuers, the fund will be eligible to file elections with the Internal Revenue
Service pursuant to which shareholders of the fund will be required to include
their respective pro rata portions of such withholding taxes in their federal
income tax returns as gross income, treat such amounts as foreign taxes paid by
them, and deduct such amounts in computing their taxable incomes or,
alternatively, use them as foreign tax credits against their federal income
taxes. In any year the fund makes such an election, shareholders will be
notified as to the amount of foreign withholding and other taxes paid by the
fund.
Under the Code, distributions of net investment income by the fund to a
shareholder who, as to the U.S., is a nonresident alien individual, nonresident
alien fiduciary of a trust or estate, non-U.S. corporation, or non-U.S.
partnership (a non-U.S. shareholder) will be subject to U.S. withholding tax
(at a rate of 30% or lower treaty rate). Withholding will not apply if a
dividend paid by the fund to a non-U.S. shareholder is "effectively connected"
with a U.S. trade or business, in which case the reporting and withholding
requirements applicable to U.S. citizens, U.S. residents, or domestic
corporations will apply. However, if the distribution is effectively connected
with the conduct of the non-U.S. shareholder's trade or business within the
U.S., the distribution would be included in the net income of the shareholder
and subject to U.S. income tax at the applicable marginal rate. Distributions
of net long-term capital gains are not subject to tax withholding, but in the
case of a non-U.S. shareholder who is a nonresident alien individual, such
distributions ordinarily will be subject to U.S. income tax at a rate of 30% if
the individual is physically present in the U.S. for more than 182 days during
the taxable year.
As of the date of this statement of additional information, the maximum federal
individual stated tax rate applicable to ordinary income is 39.6% (effective
tax rates may be higher for some individuals due to phase out of exemptions and
elimination of deductions); the maximum individual tax rate applicable to net
capital gains is 28%; and the maximum corporate tax applicable to ordinary
income and net capital gains is 35%. However, to eliminate the benefit of
lower marginal corporate income tax rates, corporations which have taxable
income in excess of $100,000 for a taxable year will be required to pay an
additional amount of tax liability of up to $11,750 and corporations which have
taxable income in excess of $15,000,000 for a taxable year will be required to
pay an additional amount of tax of up to $100,000. Naturally, the amount of
tax payable by a shareholder with respect to either distributions from the fund
or disposition of fund shares will be affected by a combination of tax law
rules covering, e.g., deductions, credits, deferrals, exemptions, sources of
income and other matters. Under the Code, an individual is entitled to
establish an IRA each year (prior to the tax return filing deadline for that
year) whereby earnings on investments are tax-deferred. In addition, in some
cases, the IRA contribution itself may be deductible.
The foregoing is limited to a summary of federal taxation and should not be
viewed as a comprehensive discussion of all provisions of the Code relevant to
investors. Dividends and capital gain distributions may also be subject to
state or local taxes. Investors should consult their own tax advisers with
specific reference to their own tax situations.
PURCHASE OF SHARES
<TABLE>
<CAPTION>
METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS
<S> <C> <C>
See "Investment Minimums $50 minimum (except where a lower
and Fund Numbers" for minimum is noted under "Investment
initial investment Minimums and Fund Numbers").
minimums.
By contacting your Visit any investment dealer Mail directly to your investment
investment dealer who is registered in the dealer's address printed on your
state where the purchase is account statement.
made and who has a sales
agreement with American
Funds Distributors.
By mail Make your check payable to Fill out the account additions form
the fund and mail to the at the bottom of a recent account
address indicated on the statement, make your check payable
account application. to the fund, write your account
Please indicate an number on your check, and mail the
investment dealer on the check and form in the envelope
account application. provided with your account
statement.
By telephone Please contact your Complete the "Investments by Phone"
investment dealer to open section on the account application
account, then follow the or American FundsLink Authorization
procedures for additional Form.
investments. Once you establish the privilege,
you, your financial advisor or any
person with your account
information can call American
FundsLine(r) and make investments by
telephone (subject to conditions
noted in "Telephone Purchases,
Redemptions and
Exchanges" below).
By wire Call 800/421-0180 to obtain Your bank should wire your
your account number(s), if additional investments in the same
necessary. Please indicate manner as described under "Initial
an investment dealer on the Investment."
account. Instruct your
bank to wire funds to:
Wells Fargo Bank
155 Fifth Street
Sixth Floor
San Francisco, CA 94106
(ABA #121000248)
For credit to the account
of:
American Funds Service
Company a/c #4600-076178
(fund name)
(your fund acct. no.)
THE FUNDS AND AMERICAN FUNDS DISTRIBUTORS RESERVE THE RIGHT TO REJECT ANY PURCHASE ORDER.
</TABLE>
INVESTMENT MINIMUMS AND FUND NUMBERS - Here are the minimum initial investments
required by the funds in The American Funds Group along with fund numbers for
use with our automated phone line, American FundsLine(r) (see description
below):
<TABLE>
<CAPTION>
<S> <C> <C>
MINIMUM FUND
FUND INITIAL NUMBER
INVESTMENT
STOCK AND STOCK/BOND FUNDS
AMCAP Fund(r) 02
$1,000
American Balanced Fund(r) 11
500
American Mutual Fund(r) 03
250
Capital Income Builder(r) 12
1,000
Capital World Growth and Income Fund(sm) 33
1,000
EuroPacific Growth Fund(r) 16
250
Fundamental Investors(sm) 10
250
The Growth Fund of America(r) 05
1,000
The Income Fund of America(r) 06
1,000
The Investment Company of America(r) 04
250
The New Economy Fund(r) 14
1,000
New Perspective Fund(r) 07
250
SMALLCAP World Fund(r) 35
1,000
Washington Mutual Investors Fund(sm) 01
250
BOND FUNDS
American High-Income Municipal Bond Fund(r) 40
1,000
American High-Income Trust(sm) 21
1,000
The Bond Fund of America(sm) 08
1,000
Capital World Bond Fund(r) 31
1,000
Intermediate Bond Fund of America(sm) 23
1,000
Limited Term Tax-Exempt Bond Fund of America(sm) 43
1,000
The Tax-Exempt Bond Fund of America(r) 19
1,000
The Tax-Exempt Fund of California(r)* 20
1,000
The Tax-Exempt Fund of Maryland(r)* 24
1,000
The Tax-Exempt Fund of Virginia(r)* 25
1,000
U.S. Government Securities Fund(sm) 22
1,000
MONEY MARKET FUNDS
The Cash Management Trust of America(r) 09
2,500
The Tax-Exempt Money Fund of America(sm) 39
2,500
The U.S. Treasury Money Fund of America(sm) 49
2,500
___________
*Available only in certain states.
</TABLE>
For retirement plan investments, the minimum is $250, except that the money
market funds have a minimum of $1,000 for individual retirement accounts
(IRAs). Minimums are reduced to $50 for purchases through "Automatic
Investment Plans" (except for the money market funds) or to $25 for purchases
by retirement plans through payroll deductions and may be reduced or waived for
shareholders of other funds in The American Funds Group. TAX-EXEMPT FUNDS
SHOULD NOT SERVE AS RETIREMENT PLAN INVESTMENTS. The minimum is $50 for
additional investments (except as noted above).
DEALER COMMISSIONS - The sales charges you pay when purchasing the stock,
stock/bond, and bond funds of The American Funds Group are set forth below.
The money market funds of The American Funds Group are offered at net asset
value. (See "Investment Minimums and Fund Numbers" for a listing of the
funds.)
<TABLE>
<CAPTION>
<C> <C> <C>
<S> SALES CHARGE AS DEALER
AMOUNT OF PURCHASE PERCENTAGE OF THE: CONCESSION
AT THE OFFERING PRICE AS PERCENTAGE
OF THE
OFFERING
PRICE
NET AMOUNT OFFERING
INVESTED PRICE
STOCK AND STOCK/BOND FUNDS
Less than $50,000
6.10% 5.75% 5.00%
$50,000 but less than $100,000
4.71 4.50 3.75
BOND FUNDS
Less than $25,000
4.99 4.75 4.00
$25,000 but less than $50,000
4.71 4.50 3.75
$50,000 but less than $100,000
4.17 4.00 3.25
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 $1,000,000
2.04 2.00 1.60
$1,000,000 or more (see below)
none none
</TABLE>
Commissions of up to 1% will be paid to dealers who initiate and are
responsible for purchases of $1 million or more, for purchases by any
employer-sponsored 403(b) plan or purchases by any defined contribution plan
qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees, and for purchases made at
net asset value by certain retirement plans of organizations with collective
retirement plan assets of $100 million or more: 1.00% on amounts of $1 million
to $2 million, 0.80% on amounts over $2 million to $3 million, 0.50% on amounts
over $3 million to $50 million, 0.25% on amounts over $50 million to $100
million, and 0.15% on amounts over $100 million. The level of dealer
commissions will be determined based on sales made over a 12-month period
commencing from the date of the first sale at net asset value.
American Funds Distributors, at its expense (from a designated percentage of
its income), will, during calendar year 1997, provide additional compensation
to dealers. Currently these payments are limited to the top one hundred dealers
who have sold shares of the fund or other funds in The American Funds Group.
These payments will be based on a pro rata share of a qualifying dealer's
sales. American Funds Distributors will, on an annual basis, determine the
advisability of continuing these payments.
Any employer-sponsored 403(b) plan or defined contribution plan qualified under
Section 401(a) of the Internal Revenue Code including a "401(k)" plan with 200
or more eligible employees or any other purchaser investing at least $1 million
in shares of the fund (or in combination with shares of other funds in The
American Funds Group other than the money market funds) may purchase shares at
net asset value; however, a contingent deferred sales charge of 1% is imposed
on certain redemptions made within twelve months of the purchase. (See
"Redeeming Shares--Contingent Deferred Sales Charge.")
Qualified dealers currently are paid a continuing service fee not to exceed
0.25% of average net assets (0.15% in the case of the money market funds)
annually in order to promote selling efforts and to compensate them for
providing certain services. These services include processing purchase and
redemption transactions, establishing shareholder accounts and providing
certain information and assistance with respect to the fund.
NET ASSET VALUE PURCHASES - The stock, stock/bond and bond funds may sell
shares at net asset value to: (1) current or retired directors, trustees,
officers and advisory board members of the funds managed by Capital Research
and Management Company, employees of Washington Management Corporation,
employees and partners of The Capital Group Companies, Inc. and its affiliated
companies, certain family members of the above persons, and trusts or plans
primarily for such persons; (2) current registered representatives, retired
registered representatives with respect to accounts established while active,
or full-time employees (and their spouses, parents, and children) of dealers
who have sales agreements with American Funds Distributors (or who clear
transactions through such dealers) and plans for such persons or the dealers;
(3) companies exchanging securities with the fund through a merger, acquisition
or exchange offer; (4) trustees or other fiduciaries purchasing shares for
certain retirement plans of organizations with retirement plan assets of $100
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.
STATEMENT OF INTENTION - The reduced sales charges and offering prices set
forth in the Prospectus apply to purchases of $50,000 or more made within a
13-month period subject to a statement of intention (the "Statement"). The
Statement is not a binding obligation to purchase the indicated amount. When a
shareholder elects to utilize a Statement in order to qualify for a reduced
sales charge, shares equal to 5% of the dollar amount specified in the
Statement will be held in escrow in the shareholder's account out of the
initial purchase (or subsequent purchases, if necessary) by the Transfer Agent.
All dividends and any capital gain distributions on shares held in escrow will
be credited to the shareholder's account in shares (or paid in cash, if
requested). If the intended investment is not completed within the specified
13-month period, the purchaser will remit to the Principal Underwriter the
difference between the sales charge actually paid and the sales charge which
would have been paid if the total of such purchases had been made at a single
time. If the difference is not paid within 45 days after written request by
the Principal Underwriter or the securities dealer, the appropriate number of
shares held in escrow will be redeemed to pay such difference. If the proceeds
from this redemption are inadequate, the purchaser will be liable to the
Principal Underwriter for the balance still outstanding. The Statement may be
revised upward at any time during the 13-month period, and such a revision will
be treated as a new Statement, except that the 13-month period during which the
purchase must be made will remain unchanged and there will be no retroactive
reduction of the sales charges paid on prior purchases. Existing holdings
eligible for rights of accumulation (see the prospectus and account
application) may be credited toward satisfying the Statement. During the
Statement period reinvested dividends and capital gain distributions,
investments in money market funds, and investments made under a right of
reinstatement will not be credited toward satisfying the Statement.
In the case of purchase orders by the trustees of certain retirement plans by
payroll deduction, the sales charge for the investments made during the
13-month period will be handled as follows: The regular monthly payroll
deduction investment will be multiplied by 13 and then multiplied by 1.5. The
current value of existing American Funds investments (other than money market
fund investments) and any rollovers or transfers reasonably anticipated to be
invested in non-money market American Funds during the 13-month period are
added to the figure determined above. The sum is the Statement amount and
applicable breakpoint level. On the first investment and all other investments
made pursuant to the Statement, a sales charge will be assessed according to
the sales charge breakpoint thus determined. There will be no retroactive
adjustments in sales charges on investments previously made during the 13-month
period.
Shareholders purchasing shares at a reduced sales charge under a Statement
indicate their acceptance of these terms with their first purchase.
AGGREGATION - Sales charge discounts are available for certain aggregated
investments. Qualifying investments include those by you, your spouse and your
children under the age of 21, if all parties are purchasing shares for their
own account(s), which may include purchases through employee benefit plan(s)
such as an IRA, individual-type 403(b) plan or single-participant Keogh-type
plan or by a business solely controlled by these individuals (for example, the
individuals own the entire business) or by a trust (or other fiduciary
arrangement) solely for the benefit of these individuals. Individual purchases
by a trustee(s) or other fiduciary(ies) may also be aggregated if the
investments are (1) for a single trust estate or fiduciary account, including
an employee benefit plan other than those described above or (2) made for two
or more employee benefit plans of a single employer or of affiliated employers
as defined in the Investment Company Act of 1940, again excluding employee
benefit plans described above, or (3) for a diversified common trust fund or
other diversified pooled account not specifically formed for the purpose of
accumulating fund shares. Purchases made for nominee or street name accounts
(securities held in the name of an investment dealer or another nominee such as
a bank trust department instead of the customer) may not be aggregated with
those made for other accounts and may not be aggregated with other nominee or
street name accounts unless otherwise qualified as described above.
PRICE OF SHARES - Purchases of shares are made at the offering price next
determined after the purchase order is received by the fund or American Funds
Service Company; this offering price is effective for orders received prior to
the time of determination of the net asset value and, in the case of orders
placed with dealers, accepted by the Principal Underwriter prior to its close
of business. In the case of orders sent directly to the fund or American Funds
Service Company, an investment dealer MUST be indicated. The dealer is
responsible for promptly transmitting purchase orders to the Principal
Underwriter. Orders received by the investment dealer, the Transfer Agent, or
the fund after the time of the determination of the net asset value will be
entered at the next calculated offering price. Prices which appear in the
newspaper are not always indicative of prices at which you will be purchasing
and redeeming shares of the fund, since such prices generally reflect the
previous day's closing price whereas purchases and redemptions are made at the
next calculated price.
The price you pay for shares, the offering price, is based on the net asset
value per share which is calculated once daily at the close of trading
(currently 4:00 p.m., New York time) each day the New York Stock Exchange is
open as set forth below. The New York Stock Exchange is currently closed on
weekends and on the following holidays: New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas
Day. The net asset value per share is determined as follows:
1. Stocks, and convertible bonds and debentures, traded on the New York Stock
Exchange are valued at the last sale price on such exchange on the day of
valuation, or if there is no sale on the day of valuation, at the last-reported
bid price. Non-convertible bonds and debentures, and other long-term debt
securities normally are valued at prices obtained for the day of valuation from
a bond pricing service, when such prices are available; however, in
circumstances where the Investment Adviser deems it appropriate to do so, an
over-the-counter or exchange quotation may be used. Securities traded
primarily on securities exchanges outside the U.S. are valued at the last sale
price on such exchanges on the day of valuation, or if there is no sale on the
day of valuation, at the last-reported bid price. U.S. Treasury bills,
certificates of deposit issued by banks, corporate short-term notes and other
short-term investments with original or remaining maturities in excess of 60
days are valued at the mean of representative quoted bid and asked prices for
such securities or, if such prices are not available, for securities of
comparable maturity, quality and type. Short-term securities with 60 days or
less to maturity are amortized to maturity based on their cost to the fund if
acquired within 60 days of maturity or, if already held on the 60th day, based
on the value determined on the 61st day. Other securities are valued on the
basis of last sale or bid prices in what is, in the opinion of the Investment
Adviser, the broadest and most representative market, which may be either a
securities exchange or the over-the-counter market. Where quotations are not
readily available, securities are valued at fair value as determined in good
faith by the Board of Directors. The fair value of all other assets is added
to the value of securities to arrive at the total assets;
2. There are deducted from the total assets, thus determined, the liabilities,
including proper accruals of taxes and other expense items; and
3. The value of the net assets so obtained are then divided by the total number
of shares outstanding, and the result, rounded to the nearer cent, is the net
asset value per share.
Any purchase order may be rejected by the Principal Underwriter or the fund.
The Principal Underwriter will not knowingly sell shares directly or
indirectly, or through a unit investment trust to any other investment company,
person or entity, where, after the sale, such investment company, person, or
entity would own beneficially directly, indirectly, or through an investment
trust more than 3% of the outstanding shares of the fund without the consent of
a majority of the fund's Directors.
REDEEMING SHARES
<TABLE>
<CAPTION>
<S> <C>
By writing to American Funds Send a letter of instruction specifying the name of
Service Company (at the the fund, the number of shares or dollar amount to
appropriate address indicated be sold, your name and account number. You should
under "Fund Organization and also enclose any share certificates you wish to
Management - Principal Underwriter redeem. For redemptions over $50,000 and for
and Transfer Agent" in the certain redemptions of $50,000 or less (see below),
prospectus) your signature must be guaranteed by a bank, savings
association, credit union, or member firm of a
domestic stock exchange or the National Association
of Securities Dealers, Inc. that is an eligible
guarantor institution. You should verify with the
institution that it is an eligible guarantor prior
to signing. Additional documentation may be
required for redemption of shares held in corporate,
partnership or fiduciary accounts. Notarization by
a Notary Public is not an acceptable signature
guarantee.
By contacting your investment If you redeem shares through your investment dealer,
dealer you may be charged for this service. SHARES HELD
FOR YOU IN YOUR INVESTMENT DEALER'S STREET NAME MUST
BE REDEEMED THROUGH THE DEALER.
You may have a redemption check You may use this option, provided the account is
sent to you by using American registered in the name of an individual(s), a
FundsLine(r) or by telephoning, UGMA/UTMA custodian, or a non-retirement plan trust.
faxing, or telegraphing American These redemptions may not exceed $10,000 per day,
Funds Service Company (subject to per fund account and the check must be made payable
the conditions noted in this to the shareholder(s) of record and be sent to the
section and in "Telephone address of record provided the address has been used
Purchases, Sales and Exchanges" in with the account for at least 10 days. See
the prospectus) "Fund Organization and Management - Principal
Underwriter and Transfer Agent" in the
Prospectus and "Exchange Privilege" below for the
appropriate telephone or fax number.
In the case of the money Upon request (use the account application for the
market funds, you may have money market funds) you may establish telephone
redemptions wired to your bank by redemption privileges (which will enable you to have
telephoning American Funds Service a redemption sent to your bank account) and/or check
Company ($1,000 or more) or by writing privileges. If you request check writing
writing a check ($250 or more) 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 of
registered shareholders exactly as indicated on your
checking account signature card.
</TABLE>
A SIGNATURE GUARANTEE IS NOT CURRENTLY REQUIRED FOR ANY REDEMPTION OF $50,000
OR LESS PROVIDED THE REDEMPTION CHECK IS MADE PAYABLE TO THE REGISTERED
SHAREHOLDER(S) AND IS MAILED TO THE ADDRESS OF RECORD, PROVIDED THE ADDRESS HAS
BEEN USED WITH THE ACCOUNT FOR AT LEAST 10 DAYS.
CONTINGENT DEFERRED SALES CHARGE - A contingent deferred sales charge of 1%
applies to certain redemptions made within twelve months of purchase on
investments of $1 million or more and on any investment made with no initial
sales charge by any employer-sponsored 403(b) plan or defined contribution plan
qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees. The charge is 1% of the
lesser of the value of the shares redeemed (exclusive of reinvested dividends
and capital gain distributions) or the total cost of such shares. Shares held
for the longest period are assumed to be redeemed first for purposes of
calculating this charge. The charge is waived for exchanges (except if shares
acquired by exchange were then redeemed within 12 months of the initial
purchase); for distributions from qualified retirement plans and other employee
benefit plans; for redemptions resulting from participant-directed switches
among investment options within a participant-directed employer-sponsored
retirement plan; for distributions from 403(b) plans or IRAs due to death,
disability or attainment of age 591/2; for tax-free returns of excess
contributions to IRAs; for redemptions through certain automatic withdrawals
not exceeding 10% of the amount that would otherwise be subject to the charge;
and for redemptions in connection with loans made by qualified retirement
plans.
REDEMPTION OF SHARES - The fund's Articles of Incorporation permit the fund to
direct the Transfer Agent to redeem the shares of any shareholder if (a) the
shares owned by such shareholder have a value (determined, for the purpose of
this sentence only, as the greater of the shareholder's cost or the then net
asset value of the shares, including the reinvestment of income dividends and
capital gain distributions, if any) of less than $150, or (b) such shareholder
owns less than ten (10) shares of capital stock of the fund. Prior notice of
at least 60 days will be given to a shareholder before the involuntary
redemption provision is made effective with respect to the shareholder's
account. The shareholder will have not less than 30 days from the date of such
notice within which to bring the account up to the minimum determined as set
forth above.
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES
AUTOMATIC INVESTMENT PLAN - The automatic investment plan enables shareholders
to make regular monthly or quarterly investments in shares through automatic
charges to their bank accounts. With shareholder authorization and bank
approval, the Transfer Agent will automatically charge the bank account for the
amount specified ($50 minimum), which will be automatically invested in shares
at the offering price on or about the dates you select.. Bank accounts will be
charged on the day or a few days before investments are credited, depending on
the bank's capabilities, and shareholders will receive a confirmation statement
at least quarterly. Participation in the plan will begin within 30 days after
receipt of the account application. If the shareholder's bank account cannot
be charged due to insufficient funds, a stop-payment order or the closing of
the account, the plan may be terminated and the related investment reversed.
The shareholder may change the amount of the investment or discontinue the plan
at any time by writing to the Transfer Agent.
AUTOMATIC REINVESTMENT - Dividends and capital gain distributions are
reinvested in additional shares at no sales charge unless you indicate
otherwise on the account application. You also may elect to have dividends
and/or capital gain distributions paid in cash by informing the fund, American
Funds Service Company or your investment dealer.
CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS - A shareholder in one fund
may elect to cross-reinvest dividends or dividends and capital gain
distributions paid by that fund (the paying fund) into any other fund in The
American Funds Group (the receiving fund) subject to the following conditions:
(i) the aggregate value of the shareholder's account(s) in the paying fund(s)
must equal or exceed $5,000 (this condition is waived if the value of the
account in the receiving fund equals or exceeds that fund's minimum initial
investment requirement), (ii) as long as the value of the account in the
receiving fund is below that fund's minimum initial investment requirement,
dividends and capital gain distributions paid by the receiving fund must be
automatically reinvested in the receiving fund, and (iii) if this privilege is
discontinued with respect to a particular receiving fund, the value of the
account in that fund must equal or exceed the fund's minimum initial investment
requirement or the fund shall have the right, if the shareholder fails to
increase the value of the account to such minimum within 90 days after being
notified of the deficiency, automatically to redeem the account and send the
proceeds to the shareholder. These cross-reinvestments of dividends and
capital gain distributions will be at net asset value (without sales charge).
EXCHANGE PRIVILEGE - You may exchange shares into other funds in The American
Funds Group. Exchange purchases are subject to the minimum investment
requirements of the fund purchased and no sales charge generally applies.
However, exchanges of shares from the money market funds are subject to
applicable sales charges on the fund being purchased, unless the money market
fund shares were acquired by an exchange from a fund having a sales charge, or
by reinvestment or cross-reinvestment of dividends or capital gain
distributions.
You may exchange shares by writing to American Funds Service Company (see
"Redeeming Shares"), by contacting your investment dealer, by using American
FundsLine(r) (see "American FundsLine(r)" below), or by telephoning
800/421-0180 toll-free, faxing (see "Principal Underwriter and Transfer Agent"
in the prospectus for the appropriate fax numbers) or telegraphing American
Funds Service Company. (See "Telephone Redemptions and Exchanges" below.)
Shares held in corporate-type retirement plans for which Capital Guardian Trust
Company serves as trustee may not be exchanged by telephone, fax or telegraph.
Exchange redemptions and purchases are processed simultaneously at the share
prices next determined after the exchange order is received. (See "Purchase of
Shares--Price of Shares.") THESE TRANSACTIONS HAVE THE SAME TAX CONSEQUENCES AS
ORDINARY SALES AND PURCHASES.
AUTOMATIC EXCHANGES - You may automatically exchange shares (in amounts of $50
or more) among any of the funds in The American Funds Group on any day (or
preceding business day if the day falls on a non-business day) of each month
you designate. You must either meet the minimum initial investment requirement
for the receiving fund OR the originating fund's balance must be at least
$5,000 and the receiving fund's minimum must be met within one year.
AUTOMATIC WITHDRAWALS - Withdrawal payments are not to be considered as
dividends, yield or income. Automatic investments may not be made into a
shareholder account from which there are automatic withdrawals. Withdrawals of
amounts exceeding reinvested dividends and distributions and increases in share
value would reduce the aggregate value of the shareholder's account. The
Transfer Agent arranges for the redemption by the fund of sufficient shares,
deposited by the shareholder with the Transfer Agent, to provide the withdrawal
payment specified.
ACCOUNT STATEMENTS - Your account is opened in accordance with your
registration instructions. Transactions in the account, such as additional
investments and dividend reinvestments, will be reflected on regular
confirmation statements from American Funds Service Company. Purchases through
automatic investment plans and certain retirement plans will be confirmed at
least quarterly.
AMERICAN FUNDSLINE(R) - You may check your share balance, the price of your
shares, or your most recent account transaction, redeem shares (up to $10,000
per fund, per account each day), or exchange shares around the clock with
American FundsLine(r). To use this service, call 800/325-3590 from a TouchTonet
telephone. Redemptions and exchanges through American FundsLine(r) are subject
to the conditions noted above and in "Telephone Redemptions and Exchanges"
below. You will need your fund number (see the list of funds in The American
Funds Group under "Purchase of Shares--Investment Minimums and Fund Numbers"),
personal identification number (the last four digits of your Social Security
number or other tax identification number associated with your account) and
account number.
TELEPHONE REDEMPTIONS AND EXCHANGES - By using the telephone (including
American FundsLine(r)), fax or telegraph redemption and/or exchange options,
you agree to hold the fund, American Funds Service Company, any of its
affiliates or mutual funds managed by such affiliates, and each of their
respective directors, trustees, officers, employees and agents harmless from
any losses, expenses, costs or liability (including attorney fees) which may be
incurred in connection with the exercise of these privileges. Generally, all
shareholders are automatically eligible to use these options. However, you may
elect to opt out of these options by writing American Funds Service Company
(you may also reinstate them at any time by writing American Funds Service
Company). If American Funds Service Company does not employ reasonable
procedures to confirm that the instructions received from any person with
appropriate account information are genuine, the fund may be liable for losses
due to unauthorized or fraudulent instructions. In the event that shareholders
are unable to reach the fund by telephone because of technical difficulties,
market conditions, or a natural disaster, redemption and exchange requests may
be made in writing only.
EXECUTION OF PORTFOLIO TRANSACTIONS
Orders for the fund's portfolio securities transactions are placed by the
Investment Adviser. The Investment Adviser strives to obtain the best
available prices in its portfolio transactions taking into account the costs
and promptness of executions. When circumstances relating to a proposed
transaction indicate that a particular broker is in a position to obtain the
best price and execution, the order is placed with that broker. This may or
may not be a broker who has provided investment research, statistical, or other
related services to the Investment Adviser or has sold shares of the fund or
other funds served by the Investment Adviser. The fund does not 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.
As of the end of the fund's most recent fiscal year, amounts held in certain
equity and debt securities of some of its regular brokers and dealers were as
follows: American Express Credit Corp. ($63,754,000) and General Electric
Capital Corp. ($80,892,000).
Brokerage commissions paid on portfolio transactions for the fiscal years ended
September 30, 1996, 1995 and 1994 amounted to $8,933,000, $6,300,000 and
$4,894,000, respectively.
GENERAL INFORMATION
CUSTODIAN OF ASSETS - Securities and cash owned by the fund, including proceeds
from the sale of shares of the fund and of securities in the fund's portfolio,
are held by The Chase Manhattan Bank, One Chase Manhattan Plaza, New York, NY
10081, as Custodian. Non-U.S. securities may be held by the Custodian pursuant
to subcustodial arrangements in non-U.S. banks or foreign branches of U.S.
banks.
TRANSFER AGENT - American Funds Service Company, a wholly owned subsidiary of
the Investment Adviser, maintains the records of each shareholder's account,
processes purchases and redemptions of the fund's shares, acts as dividend and
capital gain distribution disbursing agent, and performs other related
shareholder service functions. American Funds Service Company was paid a fee
of $10,919,000 for the fiscal year ended September 30, 1996.
INDEPENDENT ACCOUNTANTS - Price Waterhouse LLP, 400 South Hope Street, Los
Angeles, CA 90071, has served as the fund's independent accountants since the
fund's inception, providing audit services, preparation of tax returns and
review of certain documents to be filed with the Securities and Exchange
Commission. The financial statements included in this Statement of Additional
Information from the Annual Report have been so included in reliance on the
report of Price Waterhouse LLP given on the authority of said firm as experts
in auditing and accounting.
REPORTS TO SHAREHOLDERS - The fund's fiscal year ends on September 30.
Shareholders are provided at least semi-annually with reports showing the
investment portfolio, financial statements and other information. The fund's
annual financial statements are audited by the fund's independent accountants,
Price Waterhouse LLP, whose selection is determined annually by the Board of
Directors.
PERSONAL INVESTING POLICY -- Capital Research and Management Company and its
affiliated companies have adopted a personal investing policy consistent with
Investment Company Institute guidelines. This policy includes: a ban on
acquisitions of securities pursuant to an initial public offering; restrictions
on acquisitions of private placement securities; pre-clearance and reporting
requirements; review of duplicate confirmation statements; annual
recertification of compliance with codes of ethics; disclosure of personal
holdings by certain investment personnel prior to recommendation for purchase
for the fund; blackout periods on personal investing for certain investment
personnel; ban on short-term trading profits for investment personnel;
limitations on service as a director of publicly traded companies; and
disclosure of personal securities transactions.
REMOVAL OF DIRECTORS BY SHAREHOLDERS - At any meeting of shareholders, duly
called and at which a quorum is present, the shareholders may, by the
affirmative vote of the holders of a majority of the votes entitled to be cast
thereon, remove any director or directors from office and may elect a successor
or successors to fill any resulting vacancies for the unexpired terms of
removed directors. The fund has made an undertaking, at the request of the
staff of the Securities and Exchange Commission, to apply the provisions of
section 16(c) of the 1940 Act with respect to the removal of directors as
though the fund were a common-law trust. Accordingly, the Directors of the
fund shall promptly call a meeting of shareholders for the purpose of voting
upon the question of removal of any director when requested in writing to do so
by the record holders of not less than 10% of the outstanding shares.
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:
DETERMINATION OF NET ASSET VALUE,
REDEMPTION PRICE ANDMAXIMUM OFFERING PRICE PER SHARE -- SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Net asset value and redemption price per share
<S> <C>
(Net assets divided by shares outstanding) $ 17.77
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) $ 18.85
</TABLE>
INVESTMENT RESULTS
The fund's yield is 1.74% based on a 30-day (or one month) period ended
September 30, 1996, 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 average annual total returns for the five-
and ten-year periods ended on September 30, 1996 was 4.26%, 12.23% and 13.17%,
respectively. The average annual total return (T) is computed by using the
value at the end of the period (ERV) of a hypothetical initial investment of
$1,000 (P) over a period of years (n) according to the following formula as
required by the Securities and Exchange Commission: P(1+T)/n/ = ERV.
To calculate total return, an initial investment is divided by the offering
price (which includes the sales charge) as of the first day of the period in
order to determine the initial number of shares purchased. Subsequent dividends
and capital gain distributions are then reinvested at net asset value on the
reinvestment date determined by the Board of Directors. The sum of the initial
shares purchased and shares acquired through reinvestment is multiplied by the
net asset value per share as of the end of the period in order to determine
ending value. The difference between the ending value and the initial
investment divided by the initial investment converted to a percentage equals
total return. The resulting percentage indicates the positive or negative
investment results that an investor would have experienced from reinvested
dividends and capital gain distributions and changes in share price during the
period. Total return may be calculated for one year, five years, ten years and
for other periods of years. The average annual total return over periods
greater than one year may also be computed by utilizing ending values as
determined above.
The following assumptions will be reflected in computations made in accordance
with the formula stated above: (1) deduction of the maximum sales load of
5.75% from the $1,000 initial investment; (2) reinvestment of dividends and
distributions at net asset value on the reinvestment date determined by the
Board; and (3) a complete redemption at the end of any period illustrated.
The fund may also 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.
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 refer to results compiled by organizations such as CDA Investment
Technologies, Ibbottson Associates, Lipper Analytical Services, Morningstar,
Inc. and Wiesenberger Investment Companies Services and by the U.S. Department
of Commerce. Additionally, the fund may, from time to time, refer to results
published in various newspapers or periodicals, including BARRONS, FORBES,
FORTUNE, INSTITUTIONAL INVESTOR, KIPLINGER'S PERSONAL FINANCE MAGAZINE, MONEY,
U.S. NEWS AND WORLD REPORT and THE WALL STREET JOURNAL.
The fund may, from time to time, illustrate the benefits of tax-deferral by
comparing taxable investments to investments made through tax-deferred
retirement plans.
The fund may from time to time compare its investment results with the Consumer
Price Index, which is a measure of the average change in prices over time in a
fixed market basket of goods and services (e.g. food, clothing, fuels,
transportation, and other goods and services that people buy for day-to-day
living).
EXPERIENCE OF THE INVESTMENT ADVISER - Capital Research and Management Company
manages nine common stock funds that are at least 10 years old. In the
rolling 10-year periods since January 1, 1967 (127 in all) those funds have
had better total returns than the Standard and Poor's 500 Composite Stock Index
in 91 of the 127 periods.
Note that past results are not an indication of future investment results and
that the fund has different investment policies from other funds managed by
Capital Research and Management Company. Reference to the other common stock
funds is made solely for the purpose of informing investors about the
experience and history of Capital Research and Management Company.
The investment results set forth below were calculated as described in the
fund's Prospectus.
NPF VS. VARIOUS UNMANAGED INDEXES
<TABLE>
<CAPTION>
Periods Total MSCI Indices Capital
Return Appreciation
10/1 - 9/30 NPF DJIA/1/ S&P 500/2/ World/3/ U.S./4/ NPF NYSE/6/
<S> <C> <C> <C> <C> <C> <C> <C>
1973# - 1996 +2,215% +1,562% +1,421% +1,214% +1,324% +1,095% +499%
1986 - 1996 +245 +358 +303 +188 +309 +180 +175
1985 - 1995 +332 +404 +341 +302 +342 +250 +198
1984 - 1994 +321 +355 +289 +338 +289 +236 +167
1983 - 1993 +278 +321 +293 +328 +291 +196 +165
1982 - 1992 +360 +443 +402 +400 +393 +244 +232
1981 - 1991 +356 +446 +397 +416 +392 +246 +218
1980 - 1990 +275 +314 +269 +285 +266 +166 +132
1979 - 1989 +387 +395 +392 +483 +372 +245 +212
1978 - 1988 +342 +302 +317 +420 +291 +214 +166
1977 - 1987 +584 +415 +432 +580 +397 +386 +241
1976 - 1986 +369 +205 +256 +389 +235 +232 +137
1975 - 1985 +299 +187 +253 +274 +233 +181 +136
1974 - 1984 +403 +241 +326 +288 +297 +248 +186
1973# - 1983 +271 +124 +149 +128 +129 +156 + 64
</TABLE>
/1/ The Dow Jones Average of 30 Industrial stocks is comprised of 30 industrial
companies such as General Motors and General Electric.
/2/ The Standard and Poor's 500 Composite Stock Index is comprised of
industrial, transportation, public utilities and financial stocks and
represents a large portion of the value of issues traded on the New York Stock
Exchange. Selected issues traded on the American Stock Exchange are also
included.
/3/ The Morgan Stanley Capital International World Index is an arithmetical
average, weighted by market value, of the performance of more than 1,400
securities listed on the stock exchanges of Europe, Australia, the Far East,
Canada, New Zealand and the U.S.
/4/ The Morgan Stanley Capital International U.S. Index is an arithmetical
average, weighted by market value, of the performance of more than 300
securities listed on stock exchanges in the U.S.
/5/ The New York Stock Exchange Composite Index is a capitalization weighted
index of all common stocks listed on the exchange.
# From March 13, 1973, the date the fund commenced operations.
IF YOU ARE CONSIDERING NPF FOR RETIREMENT . . .
Here's how much you would have if you had invested $2,000 on
October 1 of each year in NPF over the past 5 and 10 years:
<TABLE>
<CAPTION>
<S> <C>
5 Years 10 Years
(10/1/91 - 9/30/96) (10/1/86 - 9/30/96)
$14,202 $39,677
</TABLE>
SEE THE DIFFERENCE TIME CAN MAKE IN AN INVESTMENT PROGRAM . . .
<TABLE>
<CAPTION>
If you had invested Periods ...and taken all
$10,000 in NPF 10/1 - 9/30 distributions in shares,
this many years ago... your investment would
Number of Years have been worth this
much at September 30, 1996
Value
<S> <C> <C>
1 1995 - 1996 $10,426
2 1994 - 1996 12,370
3 1993 - 1996 13,927
4 1992 - 1996 16,481
5 1991 - 1996 17,807
6 1990 - 1996 22,058
7 1989 - 1996 20,982
8 1988 - 1996 26,844
9 1987 - 1996 23,026
10 1986 - 1996 34,464
11 1985 - 1996 47,849
12 1984 - 1996 55,257
13 1983 - 1996 55,809
14 1982 - 1996 80,392
15 1981 - 1996 86,154
16 1980 - 1996 87,768
17 1979 - 1996 108,522
18 1978 - 1996 125,827
19 1977 - 1996 167,151
20 1976 - 1996 171,545
21 1975 - 1996 202,631
22 1974 - 1996 294,626
23 1973 - 1996 219,548
Lifetime 1973# - 1996 231,461
</TABLE>
# From March 13, 1973, the date the fund commenced operations.
Illustration of a $10,000 investment in NPF with
dividends reinvested and capital gain distributions taken in shares
(For the period March 13, 1973 through September 30, 1996)
<TABLE>
<CAPTION>
COST OF SHARES VALUE OF SHARES
Fiscal Annual Dividends Total From From Dividends Total
Year End Dividends (cumulative) Investment Initial Capital Gains Reinvested Value
Sept. 30 Cost Investment Reinvested
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1973# ---- ---- $10,000 $9,938 ---- ---- $9,938
1974 325 325 10,325 7,163 ---- 239 7,402
1975 401 726 10,726 9,952 ---- 817 10,769
1976 337 1,063 11,063 11,422 ---- 1,298 12,720
1977 280 1,343 11,343 11,236 244 1,570 13,050
1978 318 1,661 11,661 13,908 1,079 2,355 17,342
1979 444 2,105 12,105 15,165 1,868 3,067 20,100
1980 501 2,606 12,606 18,230 2,315 4,321 24,866
1981 931 3,537 13,537 17,905 2,274 5,136 25,315
1982 1,667 5,204 15,204 16,225 4,557 6,369 27,151
1983 1,830 7,034 17,034 21,080 7,382 10,631 39,093
1984 1,205 8,239 18,239 19,259 9,323 10,912 39,494
1985 1,196 9,435 19,435 19,796 13,202 12,580 45,578
1986 1,178 10,613 20,613 24,699 21,436 17,138 63,273
1987 1,393 12,006 22,006 32,052 38,599 24,076 94,727
1988 1,820 13,826 23,826 23,928 37,429 19,876 81,233
1989 2,605 16,431 26,431 27,920 49,773 26,275 103,968
1990 2,617 19,048 29,048 23,718 50,481 24,697 98,896
1991 2,979 22,027 32,027 27,477 63,176 31,840 122,493
1992 2,524 24,551 34,551 28,597 67,989 35,751 132,337
1993 2,172 26,723 36,723 33,173 79,499 43,932 156,604
1994 2,231 28,954 38,954 35,951 90,455 49,939 176,345
1995 2,813 31,767 41,767 39,639 111,254 58,307 209,200
1996 4,129 35,896 45,896 41,484 124,538 65,439 231,461
</TABLE>
The dollar amount of capital gain distributions during the period was $71,386
________________________________________
# From March 13, 1973, the date fund commenced operations.
APPENDIX
DESCRIPTION OF BOND RATINGS
Corporate Debt Securities
MOODY'S INVESTORS SERVICE, INC. rates the long-term debt securities issued by
various entities in categories ranging from "Aaa" to "C" according to quality.
"AAA -- Best quality. These securities carry the smallest degree of investment
risk and are generally referred to as 'gilt edge.' Interest payments are
protected by a large or by an exceptionally stable margin, and principal is
secure. While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the fundamentally
strong position of such issues."
"AA -- High quality by all standards. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities,
fluctuation of protective elements may be of greater amplitude, or there may be
other elements present which make the long-term risks appear somewhat greater."
"A -- Upper medium grade obligations. These bonds possess many favorable
investment attributes. Factors giving security to principal and interest are
considered adequate, but elements may be present which suggest a susceptibility
to impairment sometime in the future."
"BAA -- Medium grade obligations. Interest payments and principal security
appear adequate for the present but certain protective elements may be lacking
or may be characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and , in fact, have
speculative characteristics as well."
"BA -- Have speculative elements; future cannot be considered as well assured.
The protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the future.
Bonds in this class are characterized by uncertainty of position."
"B -- Generally lack characteristics of the desirable investment; assurance of
interest and principal payments or of maintenance of other terms of the
contract over any long period of time may be small."
"CAA -- Of poor standing. Issues may be in default or there may be present
elements of danger with respect to principal or interest."
"CA -- Speculative in a high degree; often in default or have other marked
shortcomings."
"C -- Lowest rated class of bonds; can be regarded as having extremely poor
prospects of ever attaining any real investment standing."
STANDARD & POOR'S CORPORATION rates the long-term securities debt of various
entities in categories ranging from "AAA" to "D" according to quality.
"AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong."
"AA -- High grade. Very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree."
"A - Have a strong capacity to pay interest and repay principal, although they
are somewhat more susceptible to the adverse effects of change in circumstances
and economic conditions, than debt in higher rated categories."
"BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay interest and repay principal than for debt in
higher rated categories."
"BB, B, CCC, CC, C -- Regarded, on balance, as predominantly speculative with
respect to capacity to pay interest and repay principal in accordance with the
terms of the obligation. BB indicates the lowest degree of speculation and C
the highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions."
"C-1 -- Reserved for income bonds on which no interest is being paid."
"D -- In default and payment of interest and/or repayment of principal is in
arrears."
[chart]
<TABLE>
<S> <C>
PORTFOLIO SUMMARY
September 30, 1996
- ---------------------------- --------------------
Percent of
Largest Industry Holdings Net Assets
- ---------------------------- --------------------
Health & Personal Care 8.40%
Banking 7.70%
Telecommunications 6.53%
Broadcasting & Publishing 5.61%
Automobiles 4.93%
Other Industries 51.65%
Bonds & Cash Equivalents 15.18%
</TABLE>
[end chart]
<TABLE>
<S> <C> <C> <C>
New Perspective Fund
Investment Portfolio, September 30, 1996
Shares or Market Percent
Principal Value of Net
Equity-Type Securities Amount (Millions) Assets
- ----------------------------------------- ------------ ------------ ------------
Health & Personal Care- 8.40%
AB Astra, Class A (Sweden) 2,000,000 $84.541
AB Astra, Class A (American Depositary
Receipts) 155,000 6.529
AB Astra, Class B 3,200,000 131.643 1.91%
Ciba-Geigy Ltd. (Switzerland) 122,500 156.591 1.34
Pfizer Inc (USA) 1,300,000 102.863 .88
Teva Pharmaceutical Industries Ltd.
(American Depositary Receipts) (Israel) 1,940,000 89.968 .77
Sandoz Ltd. (Switzerland) 63,015 75.630 .65
Merck & Co., Inc. (USA) 880,000 61.930 .53
SmithKline Beecham PLC (American
Depositary Receipts) (United Kingdom) 1,000,000 60.875 .52
Johnson & Johnson (USA) 800,000 41.000 .35
Glaxo Wellcome PLC (United Kingdom) 563,264 8.824
Glaxo Wellcome PLC (American Depositary
Receipts) 854,000 26.581 .31
Genentech, Inc., Callable Putable Common Stock (USA)/1/ 600,000 31.725 .27
Alza Corp. (USA)/1/ 1,000,000 26.875 .23
Kimberly-Clark Corp. (USA) 300,000 26.438 .23
BioChem Pharma Inc. (Canada)/1/ 500,000 20.063 .17
Abbott Laboratories (USA) 400,000 19.700 .17
Bausch & Lomb Inc. (USA) 225,000 8.269 .07
Banking- 7.70%
Westpac Banking Corp. (Australia) 18,326,389 94.853
Westpac Banking Corp., warrants,
expire 20001 3,000,000 11.230 .91
Barclays PLC (United Kingdom) 6,800,000 99.877 .85
Royal Bank of Canada (Canada) 2,740,000 78.090 .67
Citicorp (USA) 850,000 77.031 .66
Bank of Nova Scotia (Canada) 2,377,300 67.404 .58
Banco de Santander, SA (Spain) 742,000 38.609
Banco de Santander, SA (American
Depositary Receipts) 500,000 26.188 .55
Banque Nationale de Paris (France) 1,500,000 56.808 .49
BankAmerica Corp. (USA) 675,000 55.434 .47
Cie. Financiere de Paribas,
Class A (France) 750,000 48.211 .41
Cie. de Suez (France) 1,100,000 43.853 .38
Australia and New Zealand Banking Group
Ltd. (Australia) 6,496,411 37.171 .32
Sumitomo Bank, Ltd. (Japan) 1,695,000 31.304
Sumitomo Bank, Ltd., 3.125% convertible
debentures 2004 $4,700,000 3.960 .30
Deutsche Bank AG (Germany) 710,000 33.453 .29
Republic New York Corp. (USA) 370,000 25.576 .22
ABN AMRO Holding NV (Netherlands) 418,240 23.198 .20
Svenska Handelsbanken Group, Class A (Sweden) 700,000 17.225 .15
Istituto Mobiliare Italiano SpA
(American Depositary Receipts) (Italy) 600,000 15.300 .13
Asahi Bank Ltd. (Japan) 1,000,000 11.386 .10
Sakura Finance (Bermuda) Trust, Convertible Preference
Share Units (Japan)/1/ 32 1.863 .02
Telecommunications-6.53%
Telefonica de Espana, SA (Spain) 5,631,200 104.615
Telefonica de Espana, SA (American
Depositary Receipts) 76,000 4.228 .93
Telecom Corp. of New Zealand Ltd.
(New Zealand) 15,600,000 73.278
Telecom Corp. of New Zealand Ltd./2/ 5,780,000 27.150 .86
Telefonos de Mexico, SA de CV, Class L
(American Depositary Receipts) (Mexico) 2,959,130 95.062 .81
AirTouch Communications (USA)/1/ 2,882,000 79.615 .68
Vodafone Group PLC (American Depositary
Receipts) (United Kingdom) 2,080,000 70.980 .61
Koninklijke PTT Nederland NV
(Netherlands) 1,629,500 56.095 .47
Tele Danmark AS, Class B (Denmark) 375,000 17.805
Tele Danmark AS, Class B (American
Depositary Receipts) 1,233,700 29.146 .40
MFS Communications Co., Inc. (USA)/1/ 1,050,000 45.806 .39
Hong Kong Telecommunications Ltd. (Hong
Kong) 19,068,463 34.523
Hong Kong Telecommunications Ltd.
(American Depositary Receipts) 429,584 7.733 .36
STET-Societa Finanziaria Telefonica p.a.,
ordinary shares (Italy) 5,890,000 20.483
STET-Societa Finanziaria Telefonica p.a.,
nonconvertible savings shares 7,000,000 18.917 .34
AT&T Corp. (USA) 735,000 38.404 .33
MCI Communications Corp. (USA) 1,225,000 31.391 .27
Telecomunicacoes Brasileiras SA, preferred
nominative (American Depositary Receipts) (Brazil) 76,439 6.000 .05
DDI Corp. (Japan) 500 4.037 .03
Broadcasting & Publishing- 5.61%
News Corp. Ltd. (Australia) 3,927,488 20.607
News Corp. Ltd. (American Depositary
Receipts) 3,991,600 83.325
News Corp. Ltd., preferred shares 1,988,751 8.531
News Corp. Ltd., preferred shares
(American Depositary Receipts) 1,995,800 33.929 1.25
Turner Broadcasting System, Inc., Class B (USA) 3,512,300 99.223 .85
Time Warner Inc. (USA) 2,372,000 91.619 .78
Viacom Inc., Class B (USA)/1/ 2,140,000 75.970 .65
CANAL+ (France) 262,236 64.483 .55
Carlton Communications PLC (United
Kingdom) 4,890,000 36.944 .32
U S WEST Media Group (USA)/1/ 1,900,000 32.061 .27
Elsevier NV (Netherlands) 1,700,000 28.118 .24
Grupo Televisa, SA, Class L (American
Depositary Receipts) (Mexico)/1/ 825,000 23.822 .20
Wolters Kluwer NV (Netherlands) 162,516 20.450 .18
AUDIOFINA (Luxembourg) 415,300 18.560 .16
Pearson PLC (United Kingdom) 1,700,000 18.111 .16
Automobiles- 4.93%
Daimler-Benz AG (Germany)/1/ 1,450,000 79.721
Daimler-Benz AG (American Depositary
Receipts)/1/ 110,000 6.078
Daimler-Benz AG, 4.125% convertible
debentures 2003/2/ DM76,101,000 52.238 1.18
Regie Nationale des Usines Renault, SA (France) 4,247,783 101.244 .87
Bayerische Motoren Werke AG (Germany) 144,500 82.713
Bayerische Motoren Werke AG, preferred
shares 20,318 8.188 .78
Volvo AB, Class B (Sweden) 4,170,000 89.708 .77
Toyota Motor Corp. (Japan) 2,705,000 69.116 .59
Ford Motor Co., Class A (USA) 2,100,000 65.625 .56
General Motors Corp. (USA) 250,000 12.000 .10
Suzuki Motor Corp. (Japan) 800,000 9.754 .08
Electrical & Electronics- 4.82%
ABB AB, Class A (formerly ASEA AB) (Sweden) 115,000 12.188
ABB AB, Class B 760,000 80.314
ABB AB, Class B (American Depositary Receipts) 450,000 47.250
ABB AG (formerly BBC Brown Boveri Ltd.)
(Switzerland) 47,957 58.628 1.69
Nokia Corp., Class A (Finland) 480,000 21.501
Nokia Corp., Class A (American Depositary
Receipts) 1,450,000 64.163
Nokia Corp., Class K 460,000 20.655 .91
Telefonaktiebolaget LM Ericsson, Class B
(Sweden) 2,376,000 59.902
Telefonaktiebolaget LM Ericsson, Class B
(American Depositary Receipts) 1,200,000 30.450 .78
Alcatel Alsthom (France) 650,461 54.847 .47
General Instrument Corp. (USA)/1/ 1,805,200 44.679 .38
Northern Telecom Ltd. (Canada) 750,000 43.313 .37
Siemens AG (Germany) 325,000 17.136 .15
Hitachi, Ltd. (Japan) 900,000 8.713 .07
Chemicals- 4.68%
Praxair, Inc. (USA) 2,579,300 110.910 .95
AGA AB, Class A (Sweden) 1,800,000 29.348
AGA AB, Class B 2,120,000 35.205 .56
E.I. du Pont de Nemours and Co. (USA) 675,000 59.569 .51
Georgia Gulf Corp. (USA)/3/ 1,975,000 59.003 .50
Methanex Corp. (Canada) 6,250,000 49.581 .42
Sherwin-Williams Co. (USA) 981,000 45.494 .39
Hoechst AG (Germany) 1,000,000 36.488 .32
Valspar Corp. (USA) 580,000 28.565 .24
Bayer AG (Germany) 600,000 22.018 .19
Rhone-Poulenc SA, Class A (France) 673,000 18.764 .16
Engelhard Corp. (USA) 813,100 18.701 .16
L'Air Liquide (France) 110,098 17.054 .15
Sumitomo Chemical Co., Ltd. (Japan) 3,395,000 15.706 .13
Energy Sources- 4.26%
TOTAL, Class B (France) 131,077 10.317
TOTAL, Class B (American Depositary
Receipts) 3,018,805 118.111 1.10
Royal Dutch Petroleum Co. (New York
Registered Shares) (Netherlands) 463,000 72.286
Shell Transport and Trading Co., PLC (United Kingdom) 1,000,000 15.251 .75
Repsol SA (Spain) 1,910,000 62.784
Repsol SA (American Depositary Receipts) 76,000 2.518 .56
Unocal Corp. (USA) 1,720,000 61.920 .53
Phillips Petroleum Co. (USA) 1,225,000 52.369 .45
Anadarko Petroleum Corp. (USA) 550,000 30.731 .26
YPF SA, Class D (American Depositary
Receipts) (Argentina) 1,200,000 27.450 .23
ENI SpA (American Depositary Receipts) (Italy) 500,000 25.375 .22
Broken Hill Proprietary Co. Ltd. (Australia) 1,457,410 18.685 .16
Food & Household Products- 3.99%
Nestle SA (Switzerland) 89,782 100.028 .86
Cadbury Schweppes PLC (United Kingdom) 12,430,180 99.841 .85
Unilever NV (Netherlands) 335,000 52.883
Unilever PLC (United Kingdom) 1,660,000 35.482 .75
Reckitt & Colman PLC (United Kingdom) 6,975,000 78.118 .67
Groupe Danone (France) 443,586 64.758 .56
Colgate-Palmolive Co. (USA) 400,000 34.750 .30
Beverages & Tobacco- 3.72%
Philip Morris Companies Inc. (USA) 2,235,000 200.591 1.72
Seagram Co. Ltd. (Canada) 2,600,000 97.175 .83
LVMH Moet Hennessy Louis Vuitton (France) 274,700 59.623 .51
Lion Nathan Ltd. (New Zealand) 12,950,000 32.225 .28
PepsiCo, Inc. (USA) 1,000,000 28.250 .24
American Brands, Inc. (USA) 300,000 12.675 .11
Swedish Match AB (Sweden) 1,170,000 3.533 .03
Machinery & Engineering- 3.56%
Mannesmann AG (Germany) 530,500 198.851 1.70
Caterpillar Inc. (USA) 1,952,900 147.200 1.26
Deere & Co. (USA) 780,000 32.760 .28
Kawasaki Heavy Industries, Ltd. (Japan) 4,200,000 20.221 .17
Schneider SA (France) 375,000 17.643 .15
Multi-Industry- 2.92%
Hutchison Whampoa Ltd. (Hong Kong) 15,781,000 106.121 .91
Lend Lease Corp. Ltd. (Australia) 3,977,310 64.527 .55
LTV Corp. (USA) 4,225,000 49.116 .42
Williams Holdings PLC (United Kingdom) 5,000,000 27.100 .23
Incentive AB, Class A (Sweden) 116,600 6.812
Incentive AB, Class B 193,400 11.270 .16
Canadian Pacific Ltd. (Canada) 750,000 17.344 .15
CITIC Pacific Ltd. (Hong Kong) 3,600,000 16.294 .14
Groupe Bruxelles Lambert SA (Belgium) 123,745 15.364 .13
B.A.T Industries PLC (United Kingdom) 2,126,250 14.152 .12
AlliedSignal Inc. (USA) 200,000 13.175 .11
Electronic Components- 2.27%
Advanced Micro Devices, Inc. (USA)/1/ 3,325,000 49.044 .42
Intel Corp. (USA) 450,000 42.947 .37
Seagate Technology (USA)/1/ 650,000 36.319 .31
Analog Devices, Inc. (USA)/1/ 1,282,500 34.788 .30
Arrow Electronics, Inc. (USA)/1/ 750,000 33.375 .29
Electrocomponents PLC (United Kingdom) 3,000,000 18.067 .15
Murata Manufacturing Co., Ltd. (Japan) 476,000 16.985 .15
Micron Technology, Inc. (USA) 450,000 13.725 .12
Kyocera Corp. (Japan) 176,000 12.544 .11
LSI Logic Corp. (USA)/1/ 250,000 5.813 .05
.
Recreation & Other Consumer Products- 2.24%
EMI Group PLC (United Kingdom) 2,704,145 56.468 .48
Mattel, Inc. (USA) 1,900,000 49.163 .42
Fuji Photo Film Co., Ltd. (Japan) 1,600,000 48.628 .42
Duracell International Inc. (USA) 550,000 35.269 .30
PolyGram NV (New York Registered Shares)
(Netherlands) 427,400 23.828 .20
Nintendo Co., Ltd. (Japan) 350,000 22.436 .19
Eastman Kodak Co. (USA) 200,000 15.700 .13
Hasbro, Inc. (USA) 301,800 11.204 .10
Gold Mines- 2.07%
Placer Dome Inc. (Canada) 3,565,000 84.223 .72
Newmont Mining Corp. (USA) 1,550,000 73.238 .63
Barrick Gold Corp. (Canada) 2,000,000 50.250 .43
Gold Fields of South Africa Ltd. (South Africa) 1,200,000 34.135 .29
Insurance- 1.80%
Internationale Nederlanden Groep NV
(Netherlands) 4,311,018 134.546 1.15
American International Group, Inc. (USA) 516,562 52.044 .45
Societe Centrale des Assurances
Generales de France (France) 485,000 13.579 .12
CKAG Colonia Konzern AG (Germany) 70,700 5.444
CKAG Colonia Konzern, preferred shares 5,550 .365 .05
Munchener Ruckversicherungs-Gesellschaft
(Germany) 1,000 1.769 .02
Yasuda Fire and Marine Insurance Co.,
Ltd. (Japan) 200,000 1.384 .01
Merchandising- 1.56%
Wal-Mart Stores, Inc. (USA) 4,150,000 109.456 .94
Toys 'R' Us, Inc. (USA)/1/ 875,900 25.511 .22
Home Depot, Inc. (USA) 315,000 17.916 .15
Cifra, SA de CV, Class A (Mexico) 2,500,000 3.708
Cifra, SA de CV, Class B 4,500,000 6.484
Cifra, SA de CV, Class C 3,384,800 4.859 .13
Ito-Yokado Co., Ltd. (Japan) 185,000 10.499 .09
WHSmith Group PLC, Class A (United
Kingdom) 500,000 3.692 .03
Forest Products & Paper- 1.55%
Champion International Corp. (USA) 1,000,000 45.875 .39
UPM-Kymmene Corp. (Finland)/1/ 1,953,000 40.639 .34
Louisiana-Pacific Corp. (USA) 900,000 20.475 .18
International Paper Co. (USA) 400,000 17.000 .15
Carter Holt Harvey Ltd. (New Zealand) 6,900,000 15.193 .13
Jefferson Smurfit Corp. (USA)/1/ 1,255,700 14.911 .13
Weyerhaeuser Co. (USA) 300,000 13.838 .12
Rayonier Inc. (USA) 325,000 12.919 .11
Metals: Nonferrous- 1.47%
WMC Ltd. (Australia) 6,037,151 38.844 .33
Aluminum Co. of America (USA) 600,000 35.400 .30
Alumax Inc. (USA)/1/ 1,000,000 33.500 .29
Pechiney, Class A (France) 617,000 26.222 .22
Alcan Aluminium Ltd. (Canada) 800,000 24.000 .21
Teck Corp., Class B (Canada) 700,000 14.268 .12
Appliances & Household Durables- 1.36%
Philips Electronics NV (Netherlands) 1,400,000 50.567
Philips Electronics NV (New York
Registered Shares) 500,000 17.938
Philips Electronics NV, warrants, expire 1998/1/ 500,000 8.475 .66
AB Electrolux, Class B (Sweden) 707,600 39.792 .34
Sony Corp. (Japan) 480,000 30.253 .26
SANYO Electric Co. Ltd. (Japan) 2,170,000 11.653 .10
Energy Equipment- 1.34%
Schlumberger Ltd. (Netherlands Antilles) 1,223,300 103.369 .88
Baker Hughes Inc. (USA) 1,271,100 38.610 .33
Western Atlas Inc. (USA)/1/ 240,000 14.940 .13
Business & Public Services- 1.11%
Cie. Generale des Eaux (France) 376,283 40.872 .34
WMX Technologies, Inc. (USA) 600,000 19.725 .17
Electronic Data Systems Holding Corp. (USA) 300,000 18.413 .16
Reuters Holdings PLC (American Depositary
Receipts) (United Kingdom) 200,000 13.850 .12
Thorn PLC (United Kingdom) 2,283,145 12.982 .11
United Utilities PLC (United Kingdom) 1,074,200 9.586 .08
Federal Express Corp. (USA)/1/ 100,000 7.925 .07
Havas SA (France) 51,300 3.400 .03
Waste Management International PLC
(American Depositary Receipts) (United Kingdom)/1/ 207,400 1.867 .02
Eurotunnel SA, units, comprised of one
share of Eurotunnel SA ordinary and one
share of Eurotunnel PLC ordinary
(France)/1/ 930,000 1.648 .01
Utilities: Electric & Gas- 1.04%
National Power PLC (United Kingdom) 11,300,000 69.552 .59
VEBA AG (Germany) 340,450 17.826 .15
Hongkong Electric Holdings Ltd.
(Hong Kong) 5,213,500 16.855 .14
Enersis SA (American Depositary Receipts)
(Chile) 420,000 13.545 .12
Hong Kong and China Gas Co. Ltd. (Hong
Kong) 2,882,160 4.901 .04
Leisure & Tourism- 1.01%
Carnival Cruise Lines, Inc., Class A (USA) 2,200,000 68.199 .58
Walt Disney Co. (USA) 670,000 42.461 .36
Euro Disney SCA (France)/1/ 3,870,000 8.167
Euro Disney SCA, warrants, expire 2004/1/ 760,000 .206 .07
Transportation: Shipping- 0.75%
Bergesen d.y. AS, Class A (Norway) 1,500,000 31.729
Bergesen d.y. AS, Class B 795,000 16.511 .41
Nippon Yusen KK (Japan) 6,700,000 34.839 .30
Overseas Shipholding Group, Inc. (USA) 300,000 4.950 .04
Industrial Components- 0.74%
Goodyear Tire & Rubber Co. (USA) 1,020,000 47.047 .40
Cie. Generale des Etablissements
Michelin, Class B (France) 550,000 28.060 .24
Rockwell International Corp. (USA) 200,000 11.275 .10
Data Processing & Reproduction- 0.72%
Oracle Corp. (USA)/1/ 950,000 40.433 .35
Sybase, Inc. (USA)/1/ 1,850,000 27.518 .24
Cisco Systems, Inc. (USA)/1/ 200,000 12.413 .11
Autodesk, Inc. (USA) 100,000 2.588 .02
Metals: Steel- 0.60%
Usinor Sacilor (France) 2,300,000 35.492 .30
Companhia Vale do Rio Doce, ordinary
nominative (Brazil) 38,400 .959
Companhia Vale do Rio Doce, preferred
nominative (American Depositary Receipts) 990,240 19.557 .18
Armco Inc. (USA)/1/ 3,000,000 13.500
Armco Inc., convertible preferred 20,000 .885 .12
Miscellaneous Materials & Commodities- 0.52%
Potash Corp. of Saskatchewan Inc.
(Canada) 400,000 29.249 .25
Cie. de Saint-Gobain (France) 122,395 16.589 .14
De Beers/Centenary linked units (South Africa) 500,000 15.546 .13
Building Materials & Components- 0.49%
CEMEX, SA de CV, Class A (Mexico) 2,362,225 8.948
CEMEX, SA de CV CPO 7,380,000 27.613 .31
Holderbank Financiere Glaris Ltd. (Switzerland) 23,000 16.680 .14
Pioneer International Ltd. (Australia) 1,905,300 5.202 .04
Transportation: Rail & Road-0.40%
CSX Corp. (USA) 950,000 47.974 .40
Transportation: Airlines- 0.33%
British Airways PLC (United Kingdom) 1,545,000 13.097
British Airways PLC (American Depositary
Receipts) 305,500 26.081 .33
Aerospace & Military Technology- 0.29%
Rolls-Royce PLC (United Kingdom) 6,000,000 22.476 .19
Bombardier Inc., Class B (Canada) 336,200 4.791 .04
Boeing Co. (USA) 50,000 4.725 .04
Litton Industries, Inc. (USA)/1/ 40,000 1.969 .02
Electronic Instruments- 0.03%
Scitex Corp. Ltd. (Israel) 240,000 2.969 .03
Miscellaneous- 0.01%
Other equity-type securities in initial
period of acquisition .529 .01
------------ ------------
TOTAL EQUITY-TYPE SECURITIES
(cost: $7,413.361 million) 9,913.559 84.82
------------ ------------
Principal
Amount
Bonds (Millions)
- --------------------------------------- ------------
Canadian Government- 0.42%
Canada 9.00% June 2025 C$58.800 49.550 .42
South African Government- 0.32%
South Africa 13.00% August 2010 ZAR200.000 37.861 .32
New Zealand Government- 0.27%
New Zealand 8.00% November 2006 NZ$44.500 31.015 .27
----------- -----------
TOTAL BONDS (cost: $113.102 million) 118.426 1.01
----------- -----------
TOTAL INVESTMENT SECURITIES (cost:
$7,526.463 million) 10,031.985 85.83
----------- -----------
Short-Term Securities
- ------------------------------------------
Corporate Short-Term Notes- 9.99%
Hewlett-Packard Co. 5.30%-5.40%
due 10/25-12/3/96 89.308 88.675 .77
Sandoz Corp. 5.33%-5.40% due 10/1-11/25/96 88.000 87.717 .75
International Business Machines Corp.
5.27%-5.30% due 10/2-10/23/96 85.100 84.890 .73
General Electric Capital Corp. 5.29%-5.40%
due 10/4-11/15/96 81.200 80.892 .69
Ford Credit Europe PLC 5.30%-5.47%
due 10/10-11/18/96 78.800 78.486 .67
Canada Bills 5.27%-5.40% due 10/17-12/11/96 75.300 74.633 .64
National Australia Funding (Delaware)
5.27%-5.28% due 10/15-11/21/96 64.900 64.597 .55
American Express Credit Corp. 5.30%-5.31%
due 10/11-10/21/96 63.900 63.754 .55
J.C. Penney Funding Corp. 5.31%-5.39%
due 11/18-12/12/96 63.700 63.154 .54
Deutsche Bank Financial Inc. 5.25%-5.28%
due 10/21-10/23/96 62.000 61.799 .53
International Lease Finance Corp. 5.27%-5.40%
due 10/15-11/21/96 49.100 48.894 .42
Canadian Wheat Board 5.27%-5.35%
due 11/7-11/25/96 47.500 47.174 .40
Abbey National North America 5.30%-5.33%
due 11/27-12/30/96 41.700 41.261 .35
Toyota Motor Credit Corp. 5.26%-5.38%
due 10/11-12/12/96 40.500 40.267 .34
Daimler-Benz North America Corp. 5.34%-5.39%
due 11/15-12/11/96 37.600 37.274 .32
PepsiCo, Inc. 5.30%-5.31% due 10/18-11/5/96 36.800 36.664 .31
Commonwealth Bank of Australia 5.29%-5.32%
due 10/16-10/24/96 36.600 36.500 .31
Ameritech Corp. 5.28%-5.42% due 10/21-10/29/96 35.700 35.558 .30
Svenska Hendelsbanken 5.30%-5.43%
due 10/16-12/19/96 32.800 32.595 .28
Wool International 5.27%
due 10/30-10/31/96 32.000 31.856 .27
Nestle Capital Corp. 5.37% due 11/7/96 20.000 19.887 .17
Commerzbank U.S. Finance Inc. 5.28%-5.50%
due 11/22-12/6/96 11.850 11.747 .10
Certificates of Deposit-2.80%
Canadian Imperial Bank of Commerce
5.38%-5.50% due 10/29-11/22/96 90.000 89.998 .78
Societe Generale 5.35%-5.48%
due 10/2-11/13/96 82.600 82.599 .71
Swiss Bank Corp. 5.51%-5.52%
due 12/19/96 50.000 50.008 .43
Bayerische Hypotheken- Und Wechsel-Bank AG
5.35%-5.39% due 10/9-12/2/96 45.000 44.999 .39
Morgan Guaranty Trust Co. Eurodollar
5.47% due 11/13/96 40.000 40.003 .34
Commerzbank AG 5.36% due 10/7/96 18.000 18.000 .15
Federal Agency Discount Notes- 0.88%
Federal Home Loan Mortgage Corp.
5.32%-5.38% due 10/17-12/20/96 71.200 70.670 .60
Federal National Mortgage Assn.
5.37% due 12/13/96 33.000 32.645 .28
----------- -----------
TOTAL SHORT-TERM SECURITIES
(cost: $1,597.203 million) 1,597.196 13.67
Excess of cash and receivables
over payables 58.479 .50
------------ ------------
TOTAL SHORT-TERM SECURITIES AND NET CASH 1,655.675 14.17
------------ ------------
NET ASSETS $11,687.660 100.00%
=========== ===========
/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 5.66% of the outstanding voting securities
of Georgia Gulf Corp. which represents investment in an
affiliate as defined in the Investment Company Act of 1940.
The descriptions of the companies 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>
- ---------------------------- ------------------------------
Equity-type securities Equity-type securities
appearing in the portfolio eliminated from the portfolio
since March 31, 1996 since March 31, 1996
- ---------------------------- ------------------------------
AGA Avon Products
Alcatel Alsthom Bristol-Myers Squibb
AlliedSignal Cable and Wireless
Aluminum Co. of America Cheung Kong (Holdings)
Alza Chiron
Arrow Electronics Dow Jones
AUDIOFINA English China Clays
Australia and New Zealand Banking Group Guinness
Autodesk Hanson
Baker Hughes International Business Machines
Bank of Nova Scotia Koninklijke Nederlandsche Hoogovens en Stalfabrieken
DDI Makita
De Beers/Centenary Motorola
Electrocomponents Nippon Telegraph and Telephone
ENI NOVA
Gold Fields of South Africa Parker Hannifin
Kawasaki Heavy Industries Roberts Pharmaceutical
Kyocera SGS-THOMSON Microelectronics
LSI Logic Singapore Airlines
MFS Communications Sun Hung Kai Properties
Murata Manufacturing Swire Pacific
Oracle Telefonica de Argentina
Pechiney
Pioneer International
Rhone-Poulenc
Sakura
SANYO Electric
Schneider
"Shell" Transport and Trading
Societe Centrale des Assurances Generales de France
Swedish Match
U S WEST Media Group
United Utilities
Waste Management International
Williams Holdings
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
New Perspective Fund
Financial Statements
- ---------------------------------------------- --------------------------------
Statement of Assets and Liabilities (dollars in
at September 30, 1996 millions)
- ---------------------------------------------- --------------------------------
Assets:
Investment securities at market
(cost: $7,526.463) $10,031.985
Short-term securities
(cost: $1,597.203) 1,597.196
Cash .469
Receivables for-
Sales of investments $43.305
Sales of fund's shares 24.704
Dividends and accrued interest 33.399 101.408
--------------------------------
11,731.058
Liabilities:
Payables for-
Purchases of investments 26.788
Repurchases of fund's shares 10.045
Management services 4.062
Accrued expenses 2.503 43.398
--------------------------------
Net Assets at September 30, 1996-
Equivalent to $17.77 per share on
657,781,427 shares of $1 par value
capital stock outstanding (authorized
capital stock--1,000,000,000 shares) $11,687.660
================
Statement of Operations (dollars in
for the year ended September 30, 1996 millions)
- ---------------------------------------------- --------------------------------
Investment Income:
Income:
Dividends $ 203.990
Interest 84.929 $ 288.919
----------------
Expenses:
Management services fee 43.463
Distribution expenses 22.300
Transfer agent fee 10.919
Reports to shareholders .969
Registration statement and prospectus 1.146
Postage, stationery and supplies 1.642
Directors' and Advisory Board fees .202
Auditing and legal fees .084
Custodian fee 3.207
Taxes other than federal
income tax .138
Other expenses .101 84.171
--------------------------------
Net investment income 204.748
----------------
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 439.315
Net unrealized appreciation:
Beginning of year 2,116.350
End of year 2,505.461 389.111
--------------------------------
Net realized gain and unrealized appreciation
on investments 828.426
----------------
Net Increase in Net Assets Resulting
from Operations $1,033.174
================
- ---------------------------------------------- --------------------------------
Statement of Changes in Net Assets (dollars in
millions)
Year ended
September 30
1996 1995
- ---------------------------------------------- --------------------------------
Operations:
Net investment income $ 204.748 $ 155.900
Net realized gain on investments 439.315 308.729
Net unrealized appreciation
on investments 389.111 843.525
--------------------------------
Net increase in net assets
resulting from operations 1,033.174 1,308.154
--------------------------------
Dividends and Distributions Paid to
Shareholders:
Dividends from net investment income (181.254) (105.752)
Distributions from net realized gain on
investments (326.785) (355.971)
--------------------------------
Total dividends and distributions (508.039) (461.723)
--------------------------------
Capital Share Transactions:
Proceeds from shares sold: 168,317,771
and 136,794,997 shares, respectively 2,872.559 2,129.286
Proceeds from shares issued in reinvestment
of net investment income dividends and
distributions of net realized gain on
investments: 29,221,609 and 30,235,980 shares,
respectively 477.859 432.534
Cost of shares repurchased: 58,868,182
and 55,659,438 shares, respectively (1,004.893) (869.751)
--------------------------------
Net increase in net assets resulting from
capital share transactions 2,345.525 1,692.069
--------------------------------
Total Increase in Net Assets 2,870.660 2,538.500
Net Assets:
Beginning of year 8,817.000 6,278.500
--------------------------------
End of year (including undistributed
net investment income: $119.565
and $96.071, respectively) $11,687.660 $8,817.000
================================
See Notes to Financial Statements
</TABLE>
<PAGE>
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 representative quoted bid and asked prices or, if such prices are
not available, at prices for securities of comparable maturity, quality and
type. Securities denominated in non-U.S. currencies are generally valued on
the basis of bid quotations. Where pricing service or market quotations are
not readily available, securities will be 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
on securities purchased are amortized over the life of the respective
securities. The fund does not amortize premiums on securities purchased.
Dividends and distributions paid to shareholders are recorded on the
ex-dividend date.
Investment securities 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.
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 $3,207,000 includes $136,000 that was paid by these
credits rather than in cash.
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, 1996, net unrealized appreciation on investments for
federal income tax purposes aggregated $2,506,503,000, of which $2,806,576,000
related to appreciated securities and $300,073,000 related to depreciated
securities. During the year ended September 30, 1996, the fund realized, on a
tax basis, a net capital gain of $431,900,000 on securities transactions. Net
gains related to non-U.S. currency transactions of $7,415,000 were treated as
ordinary income for federal income tax purposes. The capital gain distribution
paid in December 1995 includes $4,830,000 of realized non-U.S. currency gains.
The cost of portfolio securities for federal income tax purposes was
$9,122,678,000 at September 30, 1996.
3. The fee of $43,463,000 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 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; and
0.391% of such assets in excess of $10.5 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, 1996,
distribution expenses under the Plan were $22,300,000. As of September 30,
1996, accrued and unpaid distribution expenses were $1,661,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $10,919,000. American Funds Distributors, Inc. (AFD), the
principal underwriter of the fund's shares, received $12,923,000 (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, 1996, aggregate amounts deferred and earnings thereon
were $257,000.
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, 1996, accumulated undistributed net realized gain on
investments was $382,716,000 and paid-in capital was $8,016,133,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $3,441,935,000 and $1,601,182,000, respectively,
during the year ended September 30, 1996.
Dividend and interest income is recorded net of non-U.S. taxes paid. For the
year ended September 30, 1996, such non-U.S. taxes were $23,742,000. Net
realized currency gains on dividends, interest, withholding taxes reclaimable,
and sales of non-U.S. bonds and notes were $3,597,000 for the year ended
September 30, 1996.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Per-Share Data and Ratios
Year ended September 30
1996 1995 1994 1993 1992
------- ------- ------- --------------
Net Asset Value, Beginning of Year $16.98 $15.40 $14.21 $12.25 $11.77
------- ------- ------- --------------
Income from Investment Operations:
Net investment income .32 .31 .22 .17 .21
Net realized and unrealized gain
on investments 1.40 2.35 1.54 2.04 .71
------- ------- ------- --------------
Total income from
investment operations 1.72 2.66 1.76 2.21 .92
------- ------- ------- --------------
Less Distributions:
Dividends from net
investment income (.321) (.237) (.173) (.178) (.24)
Dividends from net realized
non-U.S. currency gains (1) (.009) (.003) (.027) (.022) -
Distributions from net
realized gains (.600) (.840) (.370) (.050) (.20)
------- ------- ------- --------------
Total distributions (.93) (1.08) (.57) (.25) (.44)
------- ------- ------- --------------
Net Asset Value, End of Year $17.77 $16.98 $15.40 $14.21 $12.25
===== ===== ===== ===== =====
Total Return(2) 10.64% 18.63% 12.61% 18.34% 8.04%
Ratios/Supplemental Data:
Net assets, end of
year (in millions) $11,688 $8,817 $6,279 $4,417 $3,082
Ratio of expenses to average
net assets .82% .83% .84% .87% .85%
Ratio of net income to
average net assets 2.00% 2.12% 1.48% 1.40% 1.82%
Average commissions paid (3) 4.30 cents .72 cents 1.05 cents 1.74 cents 3.02 cents
Portfolio turnover rate 18.12% 22.40% 25.33% 15.02% 6.43%
(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
reflected in the fund's
statement of operations. Shares
traded on a principal basis 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>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
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, 1996, 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, 1996 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.
Price Waterhouse LLP
Los Angeles, California
October 31, 1996
1996 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
<S> <C> <C> <C> <C>
To Shareholders Payment Dividends From Net From Net
of Record Date from Net Realized Realized
Investment Short-Term Long-Term
Income Gains Gains
December 15, December $0.23 - $0.60
1995 18, 1995
May 31, 1996 June 3, $0.10 - -
1996
</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, 1996 is $0.02454 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, 19% 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 AND OTHER TAX
INFORMATION WHICH WILL BE MAILED IN JANUARY 1997 TO DETERMINE THE CALENDAR YEAR
AMOUNTS TO BE INCLUDED ON THEIR RESPECTIVE 1996 TAX RETURNS. SHAREHOLDERS
SHOULD CONSULT THEIR TAX ADVISERS.
