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
(as amended February 20, 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. The prices of
stocks fluctuate based on changes in the financial
condition of issuers and on market and economic
conditions. 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 fundamental investment restrictions (which
are described in the statement of additional
information) and objectives 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.
SECURITIES OPPORTUNITIES, RISKS AND COSTS The fund's assets are
AND INVESTMENT invested globally which, in the opinion of Capital
TECHNIQUES 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.
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.
4
<PAGE>
- -------------------------------------------------------------------------------
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 that 5% of its net assets in bonds rated
Ba or 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. The quality
restrictions described above do not apply to securities
convertible into common stocks.
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.
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 requirement 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.
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
1996). by the fund, while the distribution rate reflects
dividends 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 net
asset value 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.
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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.
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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.
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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.
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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
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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.
