[THE AMERICAN FUNDS GROUP(R)]
[front and back cover: Photographs of New Perspective Fund's annual report
covers from 1973 through 1997]
25 YEARS OF GLOBAL INVESTING
NEW PERSPECTIVE FUND
ANNUAL REPORT
FOR THE YEAR ENDED SEPTEMBER 30, 1998
NEW PERSPECTIVE FUND(R) seeks long-term growth of capital through investments
all over the world, including the United States.
New Perspective is one of the 28 mutual funds in The American Funds Group,(r)
managed by Capital Research and Management Company. Since 1931, Capital has
invested with a long-term focus based on thorough research and attention to
risk.
RESULTS AT A GLANCE
<TABLE>
<CAPTION>
FISCAL 1998
(for the year ended
September 30, 1998)
Total return Capital return
including dividends) (excluding dividends)
<S> <C> <C>
New Perspective Fund +1.2% -0.2%
Morgan Stanley Capital
International Indexes:
World Index +0.5% -1.2%
USA Index +11.0% +9.3%
</TABLE>
- ---
<TABLE>
<CAPTION>
LIFETIME OF THE FUND
(from March 13, 1973,
through September
30, 1998)
Total return Capital return
(including dividends) (excluding dividends)
cumulative annualized cumulative annualized
<S> <C> <C> <C> <C>
New Perspective Fund +3,130.6% +14.6% +1,515.0% +11.5%
Morgan Stanley Capital
International Indexes:
World Index +1,546.6% +11.6% +610.9% +8.0%
USA Index +2,116.6% +12.9% +730.7% +8.6%
</TABLE>
The indexes are unmanaged.
FIGURES SHOWN ARE PAST RESULTS. SHARE PRICE AND RETURN WILL VARY, SO YOU MAY
LOSE MONEY. INVESTING FOR SHORT PERIODS MAKES LOSSES MORE LIKELY. INVESTMENTS
ARE NOT FDIC-INSURED, NOR ARE THEY DEPOSITS OF OR GUARANTEED BY A BANK OR ANY
OTHER ENTITY. INVESTING OUTSIDE THE UNITED STATES IS SUBJECT TO ADDITIONAL
RISKS, SUCH AS CURRENCY FLUCTUATIONS AND POLITICAL INSTABILITY, WHICH ARE
DETAILED IN THE PROSPECTUS.
[Begin Caption]
ABOUT OUR COVER: A 25-year retrospective of New Perspective Fund's annual
report covers.
[End Caption]
FELLOW SHAREHOLDERS:
In a challenging investment climate for world markets, New Perspective Fund
recorded a small gain for the 12 months ended September 30. The value of your
holdings rose 1.2% if you reinvested the two income dividends totaling 31 cents
a share and the capital gain distribution of $1.21 a share that were paid
during the year.
By comparison, the unmanaged Morgan Stanley Capital International (MSCI) World
Index, which measures 23 major stock markets including the United States, rose
0.5% with dividends reinvested. Over the same period, the 201 global equity
funds tracked by Lipper Analytical Services declined an average of 7.6% on a
reinvested basis, placing New Perspective in the top 15% of its universe.
The fund also did well over other periods. It ranked first among the five
global funds in existence since it began 25 years ago, second of 20 funds over
the past 10 years and eighth of 62 funds for the latest five years.
As the table on the left shows, New Perspective Fund has successfully met its
objective of long-term growth of capital. Despite a slight capital loss for the
past 12 months, the fund's value excluding income has increased 1,515.0% over
its 25-year lifetime, significantly higher than the market indexes against
which it is measured. The impact of compounding reinvested dividends was
considerable. The fund's lifetime return with all distributions reinvested was
twice as high: 3,130.6%.
A STUDY IN CONTRASTS
The 12 months ended September 30 coincided with extraordinary volatility in
world markets. Investor sentiment swung from pessimism to hope to pessimism
again as Asia's ongoing difficulties and turmoil in Russia and Latin America
made it increasingly clear that there would be no quick fix for the problems
crippling many of the world's developing nations. As demand in those regions
contracted, many global businesses saw their profit margins squeezed and the
prospect of lower earnings ahead. Stock prices fell commensurately.
For a number of markets, early gains more than offset the steep declines
experienced in late summer. In the U.S., where roughly one third of the fund's
net assets are invested, a robust economy boosted consumer confidence, helping
to push stock prices 11.0% higher for the 12 months. Most European markets
gained ground as well, fueled by a wave of mergers and generally strong
corporate profits. Italy, Germany and France, for example, increased 24.6%,
15.9% and 14.8%, respectively, although markets in the Netherlands (-0.2%) and
Sweden (-11.2%) declined in value. (Market returns are based on MSCI indexes
and expressed in dollar terms, with dividends reinvested.)
The fund also had investments in Asian markets, which, by contrast, fared
poorly across the board. Many economies are in recession, and Japan's repeated
attempts to stimulate a recovery have been thwarted by a virtual collapse of
its banking system. Stocks in Japan slid 33.4% in dollar terms and are
currently at levels not seen since 1986. Hong Kong fell 47.1%, while Canada, a
major trading partner with Asia, dropped 22.6%. Although the fund was not
immune to the declines in Asian markets - they represent about 9% of net assets
- - stock prices in many cases dropped to a range we found quite attractive, and
we took the opportunity to add selectively to our holdings.
[Begin Sidebar]
[photograph: globe]
Where New Perspective's Assets Were Invested
percent invested by country
<TABLE>
<CAPTION>
9/30/97 9/30/98
<S> <C> <C>
ASIA/PACIFIC RIM 12.0% 8.7%
Japan 5.6 5.0
Australia 3.4 2.6
Hong Kong 1.6 .7
New Zealand .8 .3
South Korea .1 .1
Taiwan .5 -
EUROPE 31.9% 32.5%
United Kingdom 6.5 6.7
France 5.6 5.8
Germany 2.4 5.1
Sweden 4.2 3.7
Netherlands 3.6 2.9
Switzerland 3.1 2.5
Finland 1.6 2.2
Spain 2.0 1.6
Italy 1.8 1.1
Denmark .4 .6
Norway .6 .2
Luxembourg .1 .1
NORTH AMERICA 41.1% 40.3%
United States 33.8 34.3
Canada 5.8 4.9
Mexico 1.5 1.1
OTHER 3.6% 2.8%
CASH & EQUIVALENTS 11.4% 15.7%
100.0% 100.0%
</TABLE>
[End Sidebar]
A FOCUS ON INDIVIDUAL COMPANIES
Although broad market movements can have a significant impact on short-term
results, New Perspective's investment focus has always been squarely on the
long-term prospects of individual companies. As we have frequently mentioned,
geographic concentrations are the result of individual decisions about specific
companies rather than particular areas.
Given our emphasis on companies rather than countries, we are pleased to note
that many of the fund's largest holdings not only gained ground during the
year, but also outpaced the overall markets in which they are located. As the
table at right shows, eight of the 10 largest holdings appreciated in price.
These included the fund's largest investment, Pfizer, as well as Viacom,
Mannesmann and Time Warner. On the other side of the ledger, Astra and Micron
Technology were the only two of the 10 that declined.
Regardless of the size of an investment, every decision is based on intensive,
ongoing global research. This analytical approach leads to broad
diversification. On September 30, New Perspective was invested in 222 companies
based in 25 countries. About 16% of net assets were held in cash and
equivalents as a future buying reserve.
DIVERSE INDUSTRIES
The fund has a fairly heavy concentration in telecommunications-related firms.
Many are rapidly expanding the borders of their operations, taking advantage of
worldwide deregulation, alliances with other companies and advances in digital
technology. These developments have helped boost the fortunes of such companies
as Mannesmann, British Telecom (+101.2%), Nokia (+67.2%), AirTouch (+60.8%),
Deutsche Telekom (+60.1%) and Sprint (+44.0%). Telefonica, a major holding, had
increased nearly 40% in the first half of the year but suffered in the second
half from its exposure in Latin America; nonetheless, it was up 15.6% for the
12 months.
Globalization had a decidedly less salutary effect on financial services
companies during the year, particularly those based in, or exposed to,
developing markets. Many of these firms, which had made strong contributions to
results in the past, were hurt by the spate of currency crises and other
problems that spread from Southeast Asia to Russia and Brazil. These included
ING (-2.2%), Westpac (-11.8%) and the Bank of Nova Scotia (-31.6%), which saw
their sharpest declines in the last few months of the fiscal year.
[begin side bar]
[photograph: globe]
NEW PERSPECTIVE FUND VS. THE MAJOR WORLD INDEXES
<TABLE>
<CAPTION>
EXCLUDING DIVIDENDS
LATEST FISCAL YEAR LIFETIME OF THE FUND
MAJOR WORLD STOCK MARKETS/1/ (10/1/97-9/30/98) (3/13/73-9/30/98)
(in order of market Local Adjusted to Local Adjusted to
capitalization,
as of (9/30/98) currency U.S.$/3/ currency U.S.$/3/
<S> <C> <C> <C> <C>
United States
MSCI USA Index - 9.3% - 730.7%
United Kingdom -4.3% 0.7 1,193.3% 789.9
Japan -25.6 -34.0 203.9 478.4
Germany 8.2 14.4 544.6 981.2
France 6.8 13.1 825.6 639.4
Switzerland 2.0 7.0 553.0 1,429.3
Netherlands -7.6 -2.5 862.0 1,349.2
Canada -16.2 -24.0 348.1 193.4
Italy 17.5 22.7 1,217.9 350.6
Hong Kong -49.7 -49.7 306.6 167.4
Australia -3.5 -21.1 592.2 189.9
Spain 7.7 13.1 305.1 63.3
Sweden -9.8 -12.7 3,578.0 1,969.9
Belgium 30.0 37.3 590.4 665.1
Singapore -45.2 -50.2 24.1 84.2
MSCI World Index/4/ - -1.2 - 610.9
NEW PERSPECTIVE FUND - - 0.2% - 1,515.0%
</TABLE>
- ---
<TABLE>
<CAPTION>
INCLUDING DIVIDENDS/2/
LATEST FISCAL YEAR LIFETIME OF THE FUND
(10/1/97-9/30/98) (3/13/73-9/30/98)
Local Adjusted to Local Adjusted to
currency U.S.$/3/ currency U.S.$/3/
<S> <C> <C> <C> <C>
United States
MSCI USA Index - 11.0% - 2,116.6%
United Kingdom -1.7% 3.4 3,922.5% 2,724.6
Japan -24.9 -33.4 321.5 718.3
Germany 9.7 15.9 1,233.1 2,173.3
France 8.4 14.8 2,453.6 1,821.3
Switzerland 3.1 8.2 1,143.9 2,733.1
Netherlands -5.5 -0.2 3,648.1 5,338.3
Canada -14.6 -22.6 996.8 609.3
Italy 19.3 24.6 2,503.8 773.7
Hong Kong -47.0 -47.1 1,055.6 667.2
Australia -0.3 -18.5 2,078.7 791.6
Spain 9.8 15.3 1,988.6 742.8
Sweden -8.3 -11.2 8,482.6 4,674.1
Belgium 33.4 41.0 3,041.5 3,401.3
Singapore -44.1 -49.2 153.6 212.5
MSCI World Index/4/ - 0.5 - 1,546.6
NEW PERSPECTIVE FUND - 1.2% - 3,130.6%
</TABLE>
/1/ United States market represented by the U.S. component of MSCI World Index;
all other markets computed by Capital International Perspective S.A. and
included in MSCI World Index. All indexes are unmanaged.
/2/ Returns are with gross dividends reinvested, i.e., without withholding
taxes removed.
/3/ Figures adjusted to reflect foreign exchange fluctuations relative to the
U.S. dollar.
/4/ Includes the major stock markets throughout the world, weighted by size and
adjusted to reflect foreign exchange fluctuation relative to the U.S. dollar.
U.S. companies currently represent approximately 51% of the total index.
New Perspective's 10 Largest Stock Holdings at Fiscal Year-End (as of 9/30/98)
[photograph: globe]
<TABLE>
<CAPTION>
% OF NPF'S % PRICE CHANGE
COMPANY NET ASSETS COUNTRY FROM 10/1/97-9/30/98
<S> <C> <C> <C>
Pfizer 2.9% U.S. +76.4%
Time Warner 2.6 U.S. +61.6
Philip Morris 2.4 U.S. +10.8
Astra 2.1 Sweden -7.4
Viacom 2.0 U.S. +83.4
Nokia 2.0 Finland +67.2
Mannesmann 2.0 Germany +91.7
Novartis 1.8 Switzerland +4.6
Telefonica 1.5 Spain +15.6
Micron Technology 1.3 U.S. -12.3
</TABLE>
[end side bar]
GROWING OPPORTUNITIES
New Perspective Fund has experienced remarkable growth since it began in March
of 1973. Today, at $17.7 billion in assets, it is the nation's largest global
growth fund and, at 25 years, one of the oldest. Shareholder accounts recently
topped one million, and include a diverse group of individuals, foundations and
corporate retirement plans. We are grateful for the confidence that so many of
you have placed in us.
New Perspective's method of portfolio management, the multiple portfolio
counselor system, is well-suited to accommodating this kind of growth. Because
the fund's assets are divided among a number of portfolio counselors, managers
can be added as assets increase. The fund currently has five primary portfolio
counselors with an aggregate of 140 years of experience among them, and a
research portfolio managed by 40 analysts.
The multiple portfolio counselor system has another benefit. By encouraging a
diversity of investment styles, this strategy has helped us moderate risk by
smoothing out returns over time. It is one of the reasons why New Perspective
Fund has been able to provide shareholders with strong participation in rising
markets and considerable downside resistance.
LOOKING FORWARD AND BACK
It may be difficult to imagine now, but when we introduced New Perspective Fund
25 years ago, the notion of a fund with the flexibility to search the world for
promising investment opportunities was a novel one, regarded skeptically by
many investors.
Now, a quarter century later, thanks to a great deal of hard work and good
judgment on the part of many people, we can look back and say that our
shareholders have met with considerable success. Over its lifetime, New
Perspective Fund has done better than nearly every major market in the world,
including the U.S. As we noted earlier, it has also compared very favorably
with other funds in its universe.
A 25-year history also provides the luxury of developing a meaningful
perspective on the investment landscape. What we have seen is that, although
market movements are notoriously unpredictable, solid, well-managed companies
have tended to provide long-term rewards for their shareholders. That is why
our attention has always been focused on finding those companies, getting to
know them very, very well and investing in the best of them on your behalf.
On the following pages, we invite you to look back at the last quarter century
with some of the people who have been responsible for New Perspective Fund's
success.
We look forward to reporting to you again in six months.
Cordially,
/s/Walter P. Stern
Walter P. Stern
Chairman of the Board
/s/Gina H. Despres
Gina H. Despres
President
November 17, 1998
[photograph: watch]
HERE'S HOW A $10,000 INVESTMENT IN THE FUND GREW between March 13, 1973 - when
the fund was introduced - and September 30, 1998 - the end of the fund's latest
fiscal year. Unlike figures presented earlier in the report, the fund's results
in this chart reflect payment of the maximum sales charge of 5.75%, so the net
amount invested was $9,425, vs. $10,000 in the indexes shown. The indexes are
unmanaged and do not have sales charges, commissions or expenses. As you can
see, the investment in New Perspective would have grown to $304,530 with
dividends reinvested, vs. $164,657 in the Morgan Stanley Capital International
(MSCI) World Index, which reflects results in 23 major markets, and $221,657 in
the MSCI USA Index.
New Perspective's year-by-year results appear in the table under the chart. The
table shows that NPF recorded positive results in 22 of these 26 periods, and
the boxed figure at the bottom right of the table shows that over the entire
25-1/2 years the investment grew at an average compound rate of 14.3% a year.
You can use this table to estimate how much the value of your own holdings has
grown. Let's say, for example, that you have been reinvesting all your
dividends and capital gain distributions and want to know how your investment
has done since September 30, 1988. At that time, according to the table, the
value of the investment illustrated here was $81,233. Since then, it has more
than tripled to $304,530. Thus, in that same period, the value of your
investment - regardless of size - also has more than tripled.
HOW A $10,000 INVESTMENT HAS GROWN
NPF'S RETURN VS. OTHER GLOBAL EQUITY FUNDS
(with distributions reinvested for periods ended September 30, 1998)
New Perspective Fund has done significantly better than most other similar
mutual funds. Over its lifetime, the fund ranked first among the five global
equity funds in existence over this 251/2-year span, according to Lipper
Analytical Services. Here is how the fund ranked over other time periods:
* 10 years:Second out of 20 global equity funds
* 5 years:Eighth out of 62 global equity funds
* 1 year:29th out of 201 global equity funds
Lipper rankings are based on total return and do not reflect the effect of
sales charges.
$304,530/1,2/
New Perspective Fund
with dividends
reinvested
$221,657
MSCI USA Index
with dividends
reinvested
$164,657
MSCI World Index
with dividends
reinvested
$152,236
New Perspective Fund
with dividends
in cash
$10,000/1/
original investment
AVERAGE ANNUAL COMPOUND RETURNS*
(for periods ended September 30, 1998)
10 Years +13.45%
5 Years +12.88%
1 Year -4.58%
*Assumes reinvestment of all distributions and payment of 5.75% sales charge at
the beginning of the stated periods.
[begin mountain chart]
<TABLE>
<CAPTION>
New
Perspective
Year Fund MSCI USA MSCI World
ended TOTAL VALUE Index with Index with
September Dividends Value at Total dividends dividends
30 Reinvested year-end/1/ Return reinvested reinvested
<S> <C> <C> <C> <C> <C>
1973# - $9,938 (0.6)% 9,644 9,496
1974 $325 7,402 (25.5) 5,796 5,886
1975 401 10,769 45.5 7,954 7,647
1976 337 12,720 18.1 10,379 9,328
1977 280 13,050 2.6 9,925 9,685
1978 318 17,342 32.9 10,953 11,895
1979 444 20,100 15.9 12,042 13,362
1980 501 24,866 23.7 14,200 15,945
1981 931 25,315 1.8 13,948 14,919
1982 1,667 27,151 7.3 15,458 15,314
1983 1,830 39,093 44.0 22,064 21,629
1984 1,205 39,494 1.0 23,019 22,861
1985 1,196 45,578 15.4 26,527 28,617
1986 1,178 63,273 38.8 34,776 45,581
1987 1,393 94,727 49.7 49,353 65,809
1988 1,820 81,233 (14.2) 42,818 61,905
1989 2,605 103,968 28.0 56,868 77,872
1990 2,617 98,896 (4.9) 52,008 61,430
1991 2,979 122,493 23.9 68,580 76,958
1992 2,524 132,337 8.0 76,198 76,629
1993 2,172 156,604 18.3 86,165 92,637
1994 2,231 176,345 12.6 89,637 100,116
1995 2,813 209,200 18.6 117,232 115,102
1996 4,129 231,461 10.6 142,355 131,445
1997 4,365 300,835 30.0 199,607 163,819
1998 4,388 304,530/1,2/ 1.2 221,657 164,657
</TABLE>
[end chart]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Year ended September 30 1993# 1974 1975 1976 1977 1978 1979
New Perspective Fund
Total Value
Dividends reinvested -- $325 401 337 280 318 444
Value at year-end/1/ $9,938 7,402 10,769 12,720 13,050 17,342 20,100
Total Return (0.6)% (25.5) 45.5 18.1 2.6 32.9 15.9
Year ended September 30 1980 1981 1982 1983 1984 1985 1986
New Perspective Fund
Total Value
Dividends reinvested 501 931 1,667 1,830 1,205 1,196 1,178
Value at year-end/1/ 24,866 25,315 27,151 39,093 39,494 45,578 63,273
Total Return 23.7 1.8 7.3 44.0 1.0 15.4 38.8
Year ended September 30 1987 1988 1989 1990 1991 1992 1993
New Perspective Fund
Total Value
Dividends reinvested 1,393 1,820 2,605 2,617 2,979 2,524 2,172
Value at year-end/1/ 94,727 81,233 103,968 98,896 122,493 132,337 156,604
Total Return 49.7 (14.2) 28.0 (4.9) 23.9 8.0 18.3
Year ended September 30 1994 1995 1996 1997 1998
New Perspective Fund
Total Value
Dividends reinvested 2,231 2,813 4,129 4,365 4,388
Value at year-end/1/ 176,345 209,200 231,461 300,835 304,530
Total Return 12.6 18.6 10.6 30.0 1.2
</TABLE>
Average annual compound return for 25-1/2 years 14.3%/1/
# For the period March 13, 1973 (commencement of operations), through September
30, 1973.
/1/These figures, unlike those shown elsewhere in this report report, reflect
payment of the maximum sales charge of 5.75% on the $10,000 investment. Thus,
the net amount invested was $9,425. As outlined in the prospectus, the sales
charge is reduced for larger investments. The maximum initial sales charge was
8.5% prior to July 1, 1988. There is no sales charge on dividends or capital
gain distributions that are reinvested in additional shares. No adjustment has
been made for income or capital gain taxes.
/2/Includes reinvested dividends of $44,649 and reinvested capital gain
distributions of $96,895. Past results are not predictive of future results.
[Begin Caption]
Jon Lovelace
Founding President, 1973
[End Caption]
[Begin Caption]
Thierry Vandeventer (left)
Research visit Japan 1979
[End Caption]
[Begin Caption]
Darcy Kopcho (left)
Research visit France 1995
[End Caption]
[photographs: watches and globe]
CONSISTENCY IN THE MIDST OF CHANGE
LOOKING BACK AT NEW PERSPECTIVE FUND'S FIRST QUARTER CENTURY
In our first report to shareholders we made the following observation:
"...World events are setting into motion major new trends that signal
significant changes in international economic and political
relationships....New trade patterns will generate fresh opportunities for many
companies, industries and nations; reduce the potential for others; and in the
process require new investment perspectives."
This forecast was indeed an accurate one, but we could not have anticipated the
degree to which world events would transform the investment landscape. In the
decades that followed, military conflicts, economic recessions, gyrating oil
prices, political upheavals and skyrocketing inflation all roiled financial
markets. At the same time, the ensuing quarter century also brought with it the
flourishing of free trade, the spread of economic freedoms, the birth of new
markets and industries, technological innovation and a wide acceptance of the
concept of investing around the world.
New Perspective Fund began life with an underwriting of $160 million, one of
the largest in the mutual fund industry up to that time. The fund's objective
was growth of capital, but with a somewhat unusual mandate: to seek out
companies that appeared likely to profit from changes in international trade
and in economic and political relationships.
Initially, at least, the fund would focus on U.S. companies with such
international capabilities, but it could invest up to one-third of its assets
in other countries. Gradually, that limit was expanded. Although the U.S. has
consistently remained its largest market, today New Perspective's investment
universe is truly global, with the flexibility to hold any proportion of assets
anywhere in the world.
Over the years, our global presence has broadened to accommodate the scope of
New Perspective's universe. In 1973, the fund's investment adviser had only one
of its four research offices abroad. Today, Capital Research and Management
Company and its subsidiary operate offices out of nine cities, including two in
Europe and three in Asia. This far-flung network is supported by more than 100
analysts and portfolio counselors who conduct thousands of research visits a
year, following companies in dozens of industries and identifying their
potential value as long-term investments. They build a broad base of knowledge
about these companies by communicating with each other, sharing insights,
information and ideas. That interchange helps them build a truly global
perspective.
New Perspective also benefits from the international expertise of its Advisory
Board and Board of Directors, which are made up of individuals who are
knowledgeable about economic, political and social conditions around the world.
Regardless of changes that shape world markets, one thing has remained
consistent: New Perspective Fund's time-tested investment approach. We invest
for the long term, making decisions on the basis of thorough research and
careful attention to risk. Using a company-by-company strategy, we seek
businesses with strong fundamentals whose stocks are selling at reasonable
prices. We employ a multiple portfolio counselor system that has helped deliver
a diversity of styles to our decision-making and consistency to our results. If
that philosophy has occasionally made us seem out of step with the pack, it has
served us - and our shareholders - very well over the long run.
[Begin Caption]
An anniversary year is an appropriate occasion to review past accomplishments
and look forward to new endeavors. On the following pages, we'll highlight
three years in New Perspective Fund's 25-year history: 1973, the year the fund
was introduced; 1985, the midpoint of our quarter century; and 1998, on the
threshold of the future.
[End Caption]
25 YEARS OF GLOBAL INVESTING
[photograph: globe]
[Begin Side Bar]
1973: A Snapshot
(as of 9/30/73)
10 LARGEST HOLDINGS
Atlantic Richfield
Sperry Rand
National Semiconductor
Communications Satellite
Marathon Oil
Alcan Aluminium
Standard Oil of California
Zenith Radio
Texaco
Kerr-McGee
LARGEST INDUSTRIES
Petroleum
Metals
Consumer Electrical/Electronic
Electronic Components
Data Processing
FUND NET ASSETS
$163 million
WORLD MARKET
CAPITALIZATION
$1.4 trillion
(Source: MSCI World Index)
[End Side Bar]
[Begin Caption]
1973
Walter Stern
Founding Chairman New York
[End Caption]
[photograph: globe]
1973
NEW PERSPECTIVE FUND IS BORN
Negotiating the rocky terrain of 1973-1974 was a daunting enterprise. In March,
the month New Perspective Fund began, President Nixon imposed new price
controls in an effort to restrain inflation. The following October, war in the
Middle East touched off an oil crisis: As petroleum prices doubled, inflation
galloped higher and the U.S. economy contracted sharply. Compounding these
difficulties were the unsettling repercussions of the Watergate scandal. These
shocks aggravated a steep, protracted market decline that would ultimately drag
down U.S. stock prices some 48% from their high in mid-January 1973 to their
low in early October 1974. Concerns about Watergate and the international
situation led us to maintain a fairly cautious stance during our first fiscal
year.
At the same time, the convergence of other forces and lower stock prices gave
rise to extraordinary opportunities. Many of the world's economies,
particularly those in the Pacific Basin, were on the cusp of rapid growth.
These countries were not only becoming major trading partners with the U.S.,
they were nurturing vital businesses in their own right. The delinking of the
U.S. dollar from the gold standard in 1973 further encouraged new economic
relationships; with a floating exchange rate, import and export markets
flourished, and with them, global financial markets. Meanwhile, a decade-old
interest equalization tax, which had put severe restrictions on U.S. investors
in international markets, was being challenged; it would be rescinded in
January 1974.
Although global investing was uncharted territory for most U.S. investors, the
Capital organization had been following companies abroad since the early 1950s
and had established a research office in Geneva, Switzerland, in 1962.
[Begin Sidebar]
"The time has come to recognize that the investment dollar is no longer drawn
by some mystical force to the U.S. market exclusively. "
First report to shareholders, March 31, 1973
[End Sidebar]
[Begin Caption]
David Fisher (Left)
Research visit Japan 1975
[End Caption]
[Begin Caption]
1981
Sir Peter Allen, Eikichi Itoh, Bill Newton
Joint meeting with Advisory Board, Canada
[End Caption]
[Begin Caption]
Karin Larson
Research visit Illinois 1975
[End Caption]
[photographs: watches and globe]
Portfolio counselor Thierry Vandeventer has been based in the Geneva site since
the mid-1960s. As an analyst in the fund's early years, he provided crucial
research on international companies. "Very quickly," he says, "we had collected
enough evidence to convince us that there were many interesting investment
opportunities outside the U.S. and that shareholders could benefit from a stock
fund with a global approach."
Proprietary research, one of the hallmarks of Capital's investment approach,
was an absolute necessity in those days. Reliable information was difficult to
come by, particularly outside the U.S. Accounting standards varied by country,
financial disclosure was often vague or incomplete and travel was cumbersome
and expensive.
"To get to Australia back then, you had to make several connections, usually
through Hawaii or Fiji," remembers Bill Grimsley, a portfolio counselor based
in San Francisco. "And once you got there, you often found that companies
distrusted foreign investors, which made getting even a copy of the annual
report a challenge." Today, of course, technology has created an abundance of
data, and our challenge has shifted from collecting information to interpreting
it.
In these early years, the contributions of the fund's Board of Directors and
Advisory Board were especially valuable. Many of our initial contacts with
companies abroad were made through this well-connected group, which
collectively had considerable international experience. These boards continue
to provide important assistance today; several of their original members
continue to serve the fund.
[photograph: watch]
In all, New Perspective Fund had investments in 42 companies at the close of
its first fiscal year. Petroleum and metals companies constituted the largest
industry concentrations and five of the 10 largest holdings. Although personal
computers would not be popular for another 15 years or so, we had begun to
recognize the power of technology: National Semiconductor, Texas Instruments
and IBM were among our earliest investments and would, with occasional
absences, be part of the portfolio for many years.
The vast majority of companies were based in the United States. Depressed
equity prices had made U.S. valuations quite attractive, while a weak dollar
not only boosted exports for American companies but made foreign stocks more
expensive to purchase. The fund held 11 companies based outside the U.S., about
10% of assets. They included Canadian oil stocks as well as a number of
multinational businesses that would make important contributions to results in
the years ahead: Matsushita Electric Industrial of Japan, Royal Dutch Petroleum
of the Netherlands and Alcan Aluminium of Canada.
The economic situation had made stocks unpopular with investors in 1973, but
for Bill Newton and New Perspective's four other original portfolio counselors,
these were the perfect conditions in which to build a portfolio. Bill, who
still manages a portion of the fund, recalls those early years vividly. "It's
true that the investment environment was challenging, but it was also a very
exciting time. For long-term, value-driven investors like us, the opportunity
to buy solid companies at bargain-basement prices was too good to pass up."
1985
ON THE THRESHOLD OF CHANGE
1985 heralded a marked shift in attitudes about global investing. By this time,
most developed nations had recovered from the doldrums of the 1970s. Japan
emerged as an economic powerhouse, sprinting from a minor position to become a
leading world market, second only to the U.S. Elsewhere in the Pacific Basin,
Hong Kong, Australia and South Korea had also established themselves as viable
participants in the global economy.
Businesses reinvented themselves through a flurry of mergers and takeovers,
particularly in the U.S. One notable exception to the mania for consolidation
was the breakup of AT&T in 1984, a move that would ultimately create immense
investment opportunities in the telecommunications area. Service industries in
general were supplanting commodities as the new growth leaders, but the
mid-1980s was also the "sweet spot" for manufacturers of consumer electronics,
such as the VCR and the Sony Walkman.
[photograph: globe]
[Begin Sidebar]
1985:
A SNAPSHOT
(as of 9/30/85)
10 LARGEST HOLDINGS
Deutsche Bank
IBM
Digital Equipment
Intel
National Semiconductor
Imperial Chemical
American International Group
Philip Morris
Matsushita Electric
Honda Motor
LARGEST INDUSTRIES
Data Processing & Reproduction
Electronic Components
Banking
Energy Sources
Electrical & Electronics
FUND NET ASSETS
$673 million
WORLD MARKET
CAPITALIZATION
$3.5 trillion
(Source: MSCI World Index)
[End Sidebar]
[Begin Caption]
1986 Sweden
Martial Chaillet (right)
Research visit
[End Caption]
[Begin Sidebar]
"In Japan, the economy is strong, but stock prices and earnings ratios have
risen to levels that have made many investments there less attractive relative
to values elsewhere."
New Perspective Fund annual report, September 30, 1985
[End Sidebar]
[Begin Caption]
Mark Denning (right) Singapore 1989
Research visit
[End Caption]
[Begin Caption]
Bill Grimsley
London office 1984 England
[End Caption]
[photographs: maps showing Singapore and London]
These developments helped drive stock prices higher. Over the next two years,
the MSCI World Index would appreciate 91% in dollar terms. Portfolio counselor
Gregg Ireland, who was a research analyst in 1985, notes that "the interest in
global markets by mainstream investors went from virtually nonexistent in the
late 1970s to something appreciably more significant by this time. I would add
that because Capital had already been investing abroad for so many years, we
were well ahead of the curve."
One of the companies Gregg followed in the mid-1980s was Royal Dutch Petroleum.
"Their business touches virtually every corner of the globe," he says, "and
that's the basis on which I did my research." He talked to management at
headquarters in The Hague, visited oil wells and refineries in Abu Dhabi,
interviewed experts on the Middle East and called on the company's Asian
offices with Capital analysts from Tokyo and Hong Kong. In view of the
company's outstanding management, a strong balance sheet and a philosophy of
investing for the future, Gregg was convinced that Royal Dutch could continue
to be a successful long-term holding for New Perspective.
Meanwhile, a crash in oil prices in 1985 put the stock within a range that made
it a good value. In making his decision, Gregg was able to draw on a deep well
of expertise. "Capital made its first investment in Royal Dutch in 1953, so we
had a long relationship with the company. Furthermore, I could benefit from the
experience of a number of the original analysts, including Thierry
Vandeventer." Gregg's own long tenure has enabled him to pass his insights on
to some of the younger analysts as well.
By 1985, the Capital organization had developed a truly international presence.
In the years since New Perspective began, we had added research offices in
London, Tokyo and Hong Kong, as well as Washington, D.C. and San Francisco.
Capital had multiple analysts following most industries, which broadened our
geographic expertise. That perspective proved invaluable for determining a
company's relative value, not just in its own market, but on a global basis.
Understanding how Honda, for example, stacked up against Daimler-Benz and Ford
helped us make better investment decisions.
By 1985, New Perspective Fund's portfolio of 105 companies was broadly
diversified. Of 30 industries represented, the two largest were data processing
and electronics. The number of countries represented in the portfolio had grown
to 15, with the U.S. accounting for the largest share. The fund's exposure to
Japan stood at about 10% of assets, about half what it was two years before. We
had begun reducing the fund's position in Japan when our research indicated
that valuation levels had risen beyond what we felt comfortable with. In fact,
the Japanese "bubble" would burst several years later, taking stock prices
sharply lower.
Our reaction to the situation in Japan is a good example of our concern with
risk. A focus on long-term results may cost us short-term gains at times, yet
over the years New Perspective's conservative stance has helped the fund
weather the inevitable downturns and do appreciably better than other funds
when markets rebound. As Bill Grimsley observes, "When you're rejecting the
$flavor of the month,' you frequently have a lot of explaining to do. With a
long perspective, however, what looked wrong for five, 10 or even 15 years
often turns out to be right for the next 15 years."
[Begin side bar]
NEW PERSPECTIVE FUND'S GLOBAL REACH
Countries Visited (in 1997)
[illustration: Illustrated is a map of the world, indicating the countries
that Capital Research and Management Company and Capital Research Company
visited in 1997. Map also indicates the locations of their research offices.]
Research Offices
San Francisco
Los Angeles
New York
Washington, D.C.
London
Geneva
Tokyo
Hong Kong
Singapore
4,568 research calls in U.S. & Canada
1,469 research calls in Europe
176 research calls in Latin America
72 research calls in Africa & the Middle East
1,136 research calls in Asia & the Pacific
Research has always been the lifeblood of New Perspective's investment
approach. As the fund has grown, so has the scope of the research effort behind
it. The fund's investment adviser, Capital Research and Management Company, and
its subsidiary, Capital Research Company, operate one of the industry's most
globally integrated research networks, supported by more than 100 analysts and
portfolio counselors. Over the years, these men and women have built a broad
base of knowledge about the global marketplace. Their expertise is reflected in
the diversity of New Perspective's portfolio.
WHERE ASSETS WERE INVESTED
[photographs: globes]
1973
By Region
U.S. and Canada 55%
Other countries 4
Cash & equivalents 41
1985
By Region
U.S. and Canada 44%
Europe 27
Asia/Pacific 20
Cash & equivalents 9
1998
By Region
U.S. and Canada 39%
Europe 33
Asia/Pacific 9
Other countries 3
Cash & equivalents 16
[End Sidebar]
[Begin Sidebar]
"Our philosophy from the outset has been pretty straightforward: Get to know
solid companies very well, understand their place in the world and figure out
how that world is changing. That should lead you to successful long-term
investments, which is what we've tended to have."
David Fisher, on the occasion of
New Perspective's 25th anniversary, 1998
[End Sidebar]
[Begin Caption]
Alan Greenway
Founding Director
[End Caption]
[Begin Caption]
Jim Ratzlaff
Founding Director
[End Caption]
[photograph: map of Los Angeles]
[Begin Caption]
1990
Gregg Ireland (right) Gulf of Mexico
Research visit
[End Caption]
1998
A TRULY GLOBAL ECONOMY
The intervening years have seen the promise of globalization come to fruition.
Today, most successful businesses cross many borders to serve a world
clientele. Governments have fostered growth by adopting trade pacts, loosening
regulations and encouraging private investment. Industries that were once
government-controlled, such as telecommunications, have been privatized. For
better or for worse, the world's fortunes are firmly linked; the result has
been a flood of innovative products and efficient services.
The acceptance of global investing is reflected in the sheer size of world
equity markets. In our first annual report, we noted that "there are about 80
companies with stock valued at more than $1 billion listed in stock markets
outside the U.S." Today, there are many more companies worth $1 billion, and
some are even considered small by many standards. When New Perspective Fund was
introduced in 1973, world stock markets had a combined value of $1.4 trillion,
roughly equal to Japan's alone today. As of September 30 of this year, the
value of the world's markets has appreciated fourteenfold, to $19.6 trillion.
The bulk of this growth has occurred in the last eight years or so, fed by a
cycle of rising stock prices and an increasing number of new investors. New
Perspective's growth has mirrored this trend. Net assets since 1973 have
increased more than one hundredfold. At $17.7 billion and over one million
shareholders, it is by far the nation's largest global growth fund.
New Perspective's investment universe has broadened as well. In 1973, the fund
held companies based in four countries; in 1985, 15 nations were represented;
today, there are 25.
"The number of viable markets, even in Europe, was fairly limited in 1985,"
notes Mark Denning, a portfolio counselor based in London. "Today, countries
like Portugal, Finland and Denmark support very liquid, reliable financial
markets."
Of course, as we have mentioned many times, we invest in individual companies,
not countries or regions. A concentration in Germany or France, for example,
doesn't stem from a decision to focus a certain percentage of assets in those
countries. Rather, it reflects the sum of judgments on specific businesses that
happen to be based there - a strictly bottom-up approach.
Many of these stocks have been part of New Perspective for quite some time.
Current holdings that appeared in the first annual report include Unilever,
Texas Instruments, Matsushita, Philips Electronics, Royal Dutch, IBM and Time
Warner (as Warner Communications). Although there have been times when we
reduced these holdings or eliminated them altogether, we have followed these
companies continuously, purchasing stocks when valuations warranted. Over the
years, these investments and many others - including those that did not exist
at the fund's inception - have made important contributions to the fund's
lifetime record. (We encourage you to look through the detailed company
listings that begin on page 14.)
As New Perspective has expanded - both in scope and size - the number of
investment professionals has grown with it. The process has been a relatively
smooth one thanks to the multiple portfolio counselor system, which Capital
developed 40 years ago. This team approach, in which assets are divided among a
number of managers, has allowed new fund managers to be seamlessly integrated
as the fund has grown or as other portfolio counselors have retired. New
Perspective Fund now has five primary portfolio counselors. An additional
portion of the fund's assets, accounting for roughly one-quarter of the
portfolio, is the responsibility of more than three dozen research analysts
around the world.
The multiple portfolio counselor system has another important benefit: It
ensures the consistency of the fund's investment approach from generation to
generation. Tim Dunn, who works out of our London office, recently became a
portfolio counselor for the fund. "Many of the pioneers of New Perspective Fund
- - people like Jon Lovelace, David Fisher, Bill Newton, Bill Grimsley and
Thierry Vandeventer - are still on hand to pass on the legacy of their
experience," he says. "They've taught me by example to find global companies
that are positioned to do better than their competitors, to invest in them and
stay invested in them. That strategy has never varied, and it should give
shareholders some comfort to know it will still be in place 25 years from now."
[Begin Caption]
1996
Mike Kerr (left)
Research visit Texas
[End Caption]
[photographs: globe and watch]
[Begin Sidebar]
1998:
A Snapshot
(as of 9/30/98)
10 LARGEST HOLDINGS
Pfizer
Time Warner
Philip Morris
Astra
Viacom
Nokia
Mannesmann
Novartis
Telefonica
Micron Technology
LARGEST INDUSTRIES
Telecommunications
Health & Personal Care
Broadcasting & Publishing
Electrical & Electronics
Electronic Components
FUND NET ASSETS
$17.7 billion
WORLD MARKET
CAPITALIZATION
$19.6 trillion
(Source: MSCI World Index)
[End Sidebar]
New Perspective Fund
Investment Portfolio, September 30, 1998
Largest Industry Holdings
12.25% Telecommunications
10.92% Health & Personal Care
7.11% Broadcasting & Publishing
6.00% Electrical & Electronics
4.15% Electronic Components
43.87% Other Industries
15.70% Cash and Equivalents
<TABLE>
<S> <C> <C> <C>
Shares or Market Percent
Principal Value of Net
Equity Securities Amount (Millions) Assets
- ----------------------------------------- ------------ ----------------------
Telecommunications - 12.25%
Mannesmann AG (Germany) 3,875,000 $355.015 2.00
Telefonica, SA (formerly Telefonica de Espana, SA)
(Spain) 6,823,800 249.100
Telefonica, SA (ADR) 76,000 8.203 1.45
AirTouch Communications (USA) (1) 3,575,000 203.775 1.15
Deutsche Telekom AG (Germany) 6,424,300 199.653 1.13
Telefonos de Mexico, SA de CV, Class L (ADR) (Mexi 3,434,530 151.978 .86
AT&T Corp. (USA) 2,535,000 148.139 .84
WorldCom, Inc. (formerly MCI Communications Corp.)
(USA) 2,892,068 141.350 .80
Vodafone Group PLC (ADR) (United Kingdom) 977,000 110.157 .62
Tele Danmark AS (Denmark) 671,150 66.703
Tele Danmark AS, Class B (ADR) 699,300 33.654 .57
Telecom Italia SpA, ordinary shares (Italy) 4,187,500 28.647
Telecom Italia SpA, nonconvertible savings shares 12,500,000 58.349 .49
France Telecom, SA (France) 1,190,700 70.435 .40
DDI Corp. (Japan) 29,045 64.672 .37
Nippon Telegraph and Telephone Corp. (Japan) 8,850 64.497 .36
Sprint Corp. (USA) 883,400 63.605 .36
Telecom Corp. of New Zealand Ltd. (New Zealand) 10,671,100 40.800
Telecom Corp. of New Zealand Ltd. (2) 4,917,700 18.803 .34
Koninklijke PTT Nederland NV (Netherlands) 1,649,371 50.949 .29
British Telecommunications PLC (United Kingdom) 3,000,000 39.886 .22
Health & Personal Care - 10.92%
Pfizer Inc (USA) 4,870,000 515.916 2.91
Astra AB, Class A (Sweden) 13,026,833 222.616
Astra AB, Class A (ADR) 413,333 7.104
Astra AB, Class B 8,590,533 141.326 2.10
Novartis AG (Switzerland) 199,231 320.288 1.81
SmithKline Beecham PLC (ADR) (United Kingdom) 2,200,000 120.450 .68
Merck & Co., Inc. (USA) 810,500 105.010 .59
Teva Pharmaceutical Industries Ltd. (ADR) (Israel) 2,635,000 99.801 .56
Zeneca Group PLC (United Kingdom) 1,700,000 60.041
Zeneca Group PLC (ADR) 555,000 19.425 .45
Glaxo Wellcome PLC (United Kingdom) 563,264 16.355
Glaxo Wellcome PLC (ADR) 1,044,000 59.639 .43
Alza Corp. (USA) (1) 1,000,000 43.375 .25
Genentech, Inc., callable putable common stock (US 600,000 43.125 .24
Bristol-Myers Squibb Co. (USA) 400,000 41.550 .24
Pharmacia & Upjohn, Inc. (USA) 650,000 32.622 .18
Guidant Corp. (USA) 400,000 29.700 .18
Medtronic, Inc. (USA) 500,000 28.938 .16
Shiseido Co., Ltd. (Japan) 1,689,000 14.907 .08
Avon Products, Inc. (USA) 400,000 11.225 .06
Broadcasting & Publishing - 7.11%
Time Warner Inc. (USA) 5,306,225 464.626 2.62
Viacom Inc., Class A (USA) (1) 500,000 28.750
Viacom Inc., Class B (1) 5,640,000 327.120 2.01
News Corp. Ltd. (Australia) 3,958,997 25.534
News Corp. Ltd. (ADR) 3,991,600 102.285
News Corp. Ltd., preferred shares 2,037,002 11.351
News Corp. Ltd., preferred shares (ADR) 1,995,800 44.656 1.04
CANAL+ (France) 350,623 85.153 .48
Wolters Kluwer NV (Netherlands) 162,516 31.199 .18
Pearson PLC (United Kingdom) 1,700,000 31.190 .18
CBS Corp. (USA) 1,045,000 25.341 .14
Elsevier NV (Netherlands) 1,700,000 25.264 .14
Dow Jones & Co., Inc. (USA) 500,000 23.250 .13
AUDIOFINA (Luxembourg) 415,300 17.485 .10
Grupo Televisa, SA, ordinary participation
certificates (ADR) (Mexico) (1) 825,000 15.933 .09
Electrical & Electronics - 6.00%
Nokia Corp., Class A (Finland) 1,440,000 114.441
Nokia Corp., Class A (ADR) 2,440,000 191.388
Nokia Corp., Class K 623,800 49.514 2.01
Telefonaktiebolaget LM Ericsson, Class B (Sweden) 9,672,000 182.553
Telefonaktiebolaget LM Ericsson, Class B (ADR) 2,200,000 40.425 1.26
Siemens AG (Germany) 3,280,000 181.284 1.02
Northern Telecom Ltd. (Canada) 3,553,420 113.709 .64
Matsushita Communication Industrial Co., Ltd. (Jap 1,550,000 55.629 .31
General Electric Co. (USA) 480,000 38.190 .22
Schneider SA (France) 600,000 31.263 .18
General Instrument Corp. (USA) (1) 1,055,200 22.819 .13
York International Corp. (USA) 680,000 22.695 .13
Alcatel, SA (formerly Alcatel Alsthom) (France) 200,000 17.773 .10
Electronic Components - 4.15%
Micron Technology, Inc. (USA) (1) 7,500,000 228.281 1.29
Intel Corp. (USA) 1,800,000 154.350 .87
Advanced Micro Devices, Inc. (USA) (1) 7,050,000 130.866 .74
Murata Manufacturing Co., Ltd. (Japan) 1,746,000 58.955 .33
Altera Corp. (USA) (1) 1,250,000 43.906 .25
Seagate Technology (USA) (1) 1,400,000 35.088 .20
Analog Devices, Inc. (USA) (1) 1,710,000 27.467 .15
Hirose Electric Co., Ltd. (Japan) 400,000 20.538 .12
Rohm Co., Ltd. (Japan) 200,000 19.043 .11
Texas Instruments Inc. (USA) 300,000 15.825 .09
Banking - 3.98%
Bank of Nova Scotia (Canada) 7,359,000 120.600 .68
Westpac Banking Corp. (Australia) 17,794,543 97.954
Westpac Banking Corp., warrants, expire 2000 (1) 3,000,000 14.956 .64
Royal Bank of Canada (Canada) 2,717,000 110.247 .62
BankAmerica Corp. (USA) 1,200,000 72.150 .41
Citicorp (USA) 610,000 56.692 .32
Banque Nationale de Paris (France) 867,048 46.416 .26
Australia and New Zealand Banking Group Ltd.
(Australia) 6,212,511 33.208 .19
Paribas, Class A (formerly Cie. Financiere de
Paribas) (France) 500,000 26.945 .15
Istituto Mobiliare Italiano SpA (Italy) 1,980,000 26.640 .15
ABN AMRO Holding NV (Netherlands) 1,357,860 23.134 .13
Banco de Santander, SA (Spain) 416,000 6.435
Banco de Santander, SA (ADR) 1,101,600 16.662 .13
First Union Corp. (USA) 426,000 21.806 .12
Sakura Bank, Ltd. (Japan) 12,700,000 18.604 .11
Fuji Bank, Ltd. (Japan) 5,910,000 11.904 .07
Beverages & Tobacco - 3.78%
Philip Morris Companies Inc. (USA) 9,355,000 430.915 2.43
Seagram Co. Ltd. (Canada) 2,800,000 80.325 .45
Asahi Breweries, Ltd. (Japan) 2,777,000 32.951
Asahi Breweries, Ltd., 1.00% convertible
debentures 2003 Y924,000,000 10.016
Asahi Breweries, Ltd., 0.95% convertible
debentures 2002 Y410,000,000 4.264
Asahi Breweries, Ltd., 0.90% convertible
debentures 2001 Y520,000,000 5.332 .30
Gallaher Group PLC (United Kingdom) 2,905,100 21.211
Gallaher Group PLC (ADR) 300,000 8.813 .17
PepsiCo, Inc. (USA) 1,000,000 29.438 .17
Southcorp Ltd. (Australia) 9,000,000 25.059 .14
Cia. Cervejaria Brahma, preferred nominative (Braz 50,172,000 19.681
Cia. Cervejaria Brahma, preferred nominative (ADR) 100,000 0.781 .11
LVMH Moet Hennessy Louis Vuitton (France) 9,700 1.324 .01
Energy Sources - 3.38%
TOTAL, Class B (France) 131,077 16.513
TOTAL, Class B (ADR) 3,109,814 195.335 1.20
Royal Dutch Petroleum Co. (New York Registered
Shares) (Netherlands) 1,952,000 92.964
'Shell' Transport and Trading Co., PLC (United
Kingdom) 3,000,000 18.147 .63
Elf Aquitaine (France) 400,000 49.322
Elf Aquitaine (ADR) 250,000 15.547 .37
Mobil Corp. (USA) 700,000 53.156 .30
Phillips Petroleum Co. (USA) 700,000 31.588 .18
YPF SA, Class D (ADR) (Argentina) 1,200,000 31.200 .17
Talisman Energy Inc. (Canada) (1) 1,400,000 30.010 .17
Unocal Corp. (USA) 800,000 29.000 .16
ENI SpA (Italy) 4,000,000 24.549 .14
RAO Gazprom (ADR) (Russia) 1,341,000 8.683 .05
Broken Hill Proprietary Co. Ltd. (Australia) 371,938 2.663 .01
Data Processing & Reproduction - 2.93%
Oracle Corp. (USA) (1) 2,911,100 84.786 .48
Ascend Communications, Inc. (USA) (1) 1,850,000 84.175 .48
Microsoft Corp. (USA) (1) 760,000 83.648 .47
Fujitsu Ltd. (Japan) 9,223,000 79.712 .45
Cisco Systems, Inc. (USA) (1) 750,000 46.359 .26
International Business Machines Corp. (USA) 300,000 38.400 .22
Compaq Computer Corp. (USA) 1,200,000 37.950 .21
Gateway 2000, Inc. (USA) (1) 500,000 26.063 .15
Silicon Graphics, Inc. (USA) (1) 2,100,000 19.688 .11
Computer Associates International, Inc. (USA) 500,000 18.500 .10
Business & Public Services - 2.79%
Cendant Corp. (USA) (1) 11,400,000 132.525 .75
Reuters Group PLC (United Kingdom) 10,985,400 92.147
Reuters Group PLC (ADR) 300,000 14.925 .61
Suez Lyonnaise des Eaux (France) 447,000 76.095 .43
TNT Post Groep NV (Netherlands) 1,629,500 41.514 .23
Vivendi SA (formerly Cie. Generale des Eaux) (Fran 203,808 40.587
Vivendi SA, warrants, expire 2001 (1) 203,808 0.313 .23
Interpublic Group of Companies, Inc. (USA) 500,000 26.969 .15
Electronic Data Systems Corp. (USA) 800,000 26.550 .15
Rentokil Initial PLC (United Kingdom) 4,200,000 25.701 .15
United Utilities PLC (United Kingdom) 567,286 9.161 .05
Brambles Industries Ltd. (Australia) 350,000 7.558 .04
Insurance - 2.57%
ING Groep NV (Netherlands) 2,486,908 112.063 .63
Fairfax Financial Holdings Ltd. (Canada) 289,700 83.748
Fairfax Financial Holdings Ltd. (USA) (2) 93,000 26.885 .63
American International Group, Inc. (USA) 1,153,437 88.815 .50
Assicurazioni Generali SpA (Italy) 1,508,000 49.267 .28
Allianz AG (Germany) 153,000 47.457 .27
Yasuda Fire and Marine Insurance Co., Ltd. (Japan) 7,299,000 26.730 .15
Guardian Royal Exchange PLC (United Kingdom) 4,142,857 17.973 .10
QBE Insurance Group Ltd. (Australia) 624,097 2.275 .01
Multi-Industry - 2.49%
Siebe PLC (United Kingdom) 27,880,000 89.946 .51
Hutchison Whampoa Ltd. (Hong Kong) 13,216,000 69.589 .39
Williams PLC (United Kingdom) 11,076,923 64.796 .37
Lend Lease Corp. Ltd. (Australia) 2,444,277 52.163 .30
FMC Corp. (USA) (1) 559,800 28.865 .16
TI Group PLC (United Kingdom) 4,472,900 27.038 .15
Canadian Pacific Ltd. (Canada) 1,200,000 24.825 .14
LTV Corp. (USA) 3,975,000 24.347 .14
Lagardere Groupe SCA (France) 850,000 24.253 .14
Investor AB, Class B (Sweden) 520,000 20.160 .11
AlliedSignal Inc. (USA) 400,000 14.150 .08
Chemicals - 2.44%
Praxair, Inc. (USA) 3,207,850 104.857 .59
BOC Group PLC (United Kingdom) 7,751,600 96.084 .55
Valspar Corp. (USA) 1,555,000 46.553 .26
Sherwin-Williams Co. (USA) 1,962,000 42.428 .24
Methanex Corp. (Canada) (1) 7,250,000 41.585 .24
Bayer AG (Germany) 950,000 35.895 .20
Georgia Gulf Corp. (USA) (3) 1,975,000 30.859 .17
L'Air Liquide (France) 125,235 19.845 .11
AGA AB, Class A (Sweden) 800,000 10.406
AGA AB, Class B 300,000 3.711 .08
Automobiles - 2.41%
Renault V.I. SA (France) 3,000,000 119.914 .68
Bayerische Motoren Werke AG (Germany) 80,350 51.410
Bayerische Motoren Werke AG, preferred shares 26,412 9.866 .35
Suzuki Motor Corp. (Japan) 5,538,000 55.733 .31
Chrysler Corp. (USA) 1,000,000 47.875 .27
Honda Motor Co., Ltd. (Japan) 1,000,000 30.396 .17
Nissan Motor Co., Ltd. (Japan) 9,300,000 25.884 .15
Volvo AB, Class B (Sweden) 1,000,000 24.486 .14
Ford Motor Co. (USA) 500,000 23.469 .13
General Motors Corp. (USA) 400,000 21.875 .12
Daimler-Benz AG, 4.125% convertible debentures
2003 (Germany) (2) DM17,000,000 15.829 .09
Food & Household Products - 1.99%
Nestle SA (Switzerland) 60,000 119.713 .68
Groupe Danone (France) 393,552 103.444 .58
Reckitt & Colman PLC (United Kingdom) 5,503,125 81.342 .46
Unilever NV (Netherlands) 300,000 18.884 .11
Archer Daniels Midland Co. (USA) 1,102,500 18.467 .10
Colgate-Palmolive Co. (USA) 150,000 10.275 .06
Gold Mines - 1.91%
Newmont Mining Corp. (USA) 4,000,000 97.000 .55
Placer Dome Inc. (Canada) 7,000,000 96.688 .55
Barrick Gold Corp. (Canada) 3,400,000 68.000 .38
Homestake Mining Co. (USA) 4,500,000 54.563 .31
Gold Fields of South Africa Ltd. (South Africa) 1,741,500 22.302 .12
Leisure & Tourism - 1.44%
Carnival Corp. (USA) 6,600,000 209.963 1.19
Walt Disney Co. (USA) 1,800,000 45.563 .25
Appliances & Household Durables - 1.36%
Sony Corp. (Japan) 1,845,000 128.243 .72
Koninklijke Philips Electronics NV (Netherlands) 1,723,200 92.832 .52
Samsung Electronics Co., Ltd. (South Korea) 634,412 17.362
Samsung Electronics Co., Ltd. (GDR) 193,028 2.707 .12
Forest Products & Paper - 1.31%
Champion International Corp. (USA) 2,200,000 68.888 .39
Louisiana-Pacific Corp. (USA) 2,550,000 51.956 .30
UPM-Kymmene Corp. (Finland) 1,953,000 44.757 .25
International Paper Co. (USA) 600,000 27.975 .16
Rayonier Inc. (USA) 600,000 23.400 .13
Jefferson Smurfit Corp. (USA) (1) 1,255,700 14.441 .08
Merchandising - 1.14%
Wal-Mart Stores, Inc. (USA) 1,850,000 101.056 .57
Home Depot, Inc. (USA) 1,270,000 50.165 .28
Marks & Spencer PLC (United Kingdom) 4,200,000 32.035 .18
Cifra, SA de CV, Class C (Mexico) 3,624,400 4.438
Cifra, SA de CV, Class V (1) 10,995,004 13.959 .11
Utilities: Electric & Gas - 1.00%
Williams Companies, Inc. (USA) 3,198,025 91.943 .52
National Power PLC (United Kingdom) 9,300,000 84.642 .48
Recreation & Other Consumer Products - 0.96%
Nintendo Co., Ltd. (Japan) 650,000 61.129 .35
Hasbro, Inc. (USA) 1,800,000 53.100 .30
Eastman Kodak Co. (USA) 400,000 30.925 .17
EMI Group PLC (United Kingdom) 3,975,569 24.487 .14
Aerospace & Military Technology - 0.71%
Bombardier Inc., Class B (Canada) 5,820,000 64.094 .36
Boeing Co. (USA) 1,800,000 61.763 .35
Textiles & Apparel - 0.61%
NIKE, Inc., Class B (USA) 2,928,000 107.787 .61
Metals: Nonferrous - 0.54%
Aluminum Co. of America (formerly Alumax Inc.) (US 631,313 44.823 .25
WMC Ltd. (Australia) 12,389,336 37.288 .21
Pechiney, Class A (France) 383,309 13.256 .08
Machinery & Engineering - 0.51%
Caterpillar Inc. (USA) 1,350,000 60.159 .34
Deere & Co. (USA) 500,000 15.125 .08
Kvaerner AS, Class A (Norway) 659,240 8.380 .05
UNOVA Inc. (USA) (1) 440,000 7.233 .04
Metals: Steel - 0.48%
Allegheny Teledyne Inc. (USA) 2,040,000 36.338 .20
Usinor Sacilor (France) 2,800,000 31.128 .18
Cia. Vale do Rio Doce, ordinary nominative (Brazil 38,400 0.411
Cia. Vale do Rio Doce, preferred nominative (4) 38,400 0.000
Cia. Vale do Rio Doce, preferred nominative (ADR) 1,184,000 16.872 .10
Energy Equipment - 0.47%
Schlumberger Ltd. (Netherlands Antilles) 598,300 30.102 .17
Baker Hughes Inc. (USA) 1,388,300 29.068 .16
Halliburton Co. (USA) 874,900 24.989 .14
Transportation: Shipping - 0.35%
Bergesen d.y. AS, Class A (Norway) 1,500,000 21.300
Bergesen d.y. AS, Class B 795,000 10.536 .18
Nippon Yusen KK (Japan) 10,525,000 30.913 .17
Transportation: Rail & Road - 0.33%
Union Pacific Corp. (USA) 1,375,000 58.609 .33
Miscellaneous Materials & Commodities - 0.31%
Cie. de Saint-Gobain (France) 320,000 42.427 .24
De Beers Consolidated Mines Ltd. (South Africa) 1,000,000 13.129 .07
Real Estate - 0.30%
Cheung Kong (Holdings) Ltd. (Hong Kong) 11,320,000 52.447 .30
Electronic Instruments - 0.25%
ADVANTEST CORP. (Japan) 1,027,500 43.650 .25
Industrial Components - 0.15%
Bridgestone Corp. (Japan) 1,118,000 22.519 .13
Rockwell International Corp. (USA) 91,000 3.287 .02
Building Materials & Components - 0.10%
Cemex, SA de CV, Class A (Mexico) 2,362,225 5.195
Cemex, SA de CV, ordinary participation certificat 5,777,066 12.705 .10
Financial Services - 0.09%
Associates First Capital Corp., Class A (USA) 259,883 16.957 .09
Miscellaneous - 0.79%
Other equity securities in initial period of
acquisition 139.842 .79
----------------------
TOTAL INVESTMENT SECURITIES
(cost: $11,341.853 million) 14,926.669 84.30
----------------------
Short-Term Securities
- ------------------------------------------
Corporate Short-Term Notes - 11.03%
General Electric Capital Corp. 5.18%-5.54% due $108.600 108.028 .61
10/13-12/7/98
Toyota Motor Credit Corp. 5.47%-5.50% due 10/1- 107.297 106.855 .60
11/20/98
Coca-Cola Co. 5.31%-5.43% due 11/10-12/8/98 107.100 106.242 .60
Ford Motor Credit Co. 5.18%-5.52% due 10/5-11/30/ 103.300 102.784 .58
Abbey National North America 5.41%-5.48% due 100.000 99.139 .56
11/23-12/9/98
Daimler-Benz North America Corp. 5.20%-5.52% due 99.100 98.745 .56
10/8-12/21/98
Deutsche Bank Financial Inc. 5.48%-5.52% due 10/ 95.300 95.007 .54
10/23/98
Canada Bills 5.32%-5.47% due 10/19-12/3/98 91.200 90.634 .51
Halifax PLC 5.48%-5.49% due 10/7-10/19/98 89.640 89.484 .51
British Gas Capital Inc. 5.10%-5.51% due 10/15/98 88.000 86.986 .49
3/11/99
Commerzbank U.S. Finance Inc. 5.50%-5.52% due 86.750 86.451 .49
10/16-10/26/98
Svenska Handelsbanken Group 5.49%-5.50% due 10/21 83.300 82.813 .47
11/20/98
Motorola, Inc. 5.43%-5.49% due 10/22-11/19/98 82.200 81.774 .46
General Motors Acceptance Corp. 5.50% due 10/1- 75.000 74.828 .42
10/22/98
E.I. du Pont de Nemours and Co. 5.46% due 11/4- 74.468 74.061 .42
11/6/98
International Lease Finance Corp. 5.45%-5.50% due 64.600 64.281 .36
10/27-11/13/98
American Express Credit Corp. 5.20%-5.50% due 59.300 59.025 .33
10/23-11/6/98
Repsol International Finance B.V. 4.97%-5.48% due 58.000 57.349 .32
10/2/98-3/30/99
Rank Xerox Capital (Europe) PLC 5.43%-5.49% due 53.597 53.439 .30
10/14-11/12/98
Dresdner U.S. Finance Inc. 5.50% due 10/7/98 50.000 49.946 .28
Shell Oil Co. 5.49% due 10/16/98 50.000 49.878 .28
Commonwealth Bank of Australia 5.42% due 12/14/98 50.000 49.459 .28
BP America Inc. 5.42% due 12/4/98 40.000 39.626 .23
UBS Finance (DE) Inc. 5.48%-5.50% due 10/9- 37.500 37.427 .21
10/21/98
Electricite de France 5.49% due 10/13/98 35.500 35.429 .20
ABN AMRO North America Finance Inc. 5.48%-5.50% 35.400 35.156 .20
due 10/13-12/1/98
Bank of Montreal 5.47% due 10/6/98 20.000 19.982 .12
Hershey Foods Corp. 5.48% due 10/20/98 17.100 17.048 .10
Federal Agency Discount Notes - 2.83%
Freddie Mac 5.00%-5.45% due 10/1/98-2/16/99 301.740 298.936 1.69
Fannie Mae 4.915%-5.42% due 10/5/98-3/26/99 203.900 202.111 1.14
Certificates of Deposit - 1.89%
Canadian Imperial Bank of Commerce 5.46% due 90.000 89.999 .51
11/17-11/23/98
Westdeutsche Landesbank Girozentrale 5.55%-5.56% 85.000 85.000 .48
due 10/8-10/9/98
Bayerische Vereinsbank AG 5.57%-5.59% due 10/5- 80.000 80.000 .45
10/6/98
Societe Generale 5.52%-5.57% due 10/27-10/30/98 80.000 80.000 .45
Non-U.S. Currency - 0.04%
New Taiwanese Dollar NT$260.183 7.608 .04
TOTAL SHORT-TERM SECURITIES (cost: $2,796.784 mill 2,795.530 15.79
Excess of payables over cash and receivables 15.229 .09
----------------------
TOTAL SHORT-TERM SECURITIES AND NET CASH 2,780.301 15.70
----------------------
NET ASSETS $17,706.97 100.00%
=====================
(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 6.38% of the outstanding voting
securities of Georgia Gulf Corp., and thus is
considered an affiliate as defined in the Investment
Company Act of 1940.
(4) Valued under procedures established by the Board of
Directors.
ADR = American Depositary Receipts
GDR = Global Depositary Receipts
The descriptions of the companies shown in the port-
folio 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
New Perspective Fund
Equity-Type Securities Appearing in the
Portfolio Since March 31, 1998
Baker Hughes
Bombardier
Brambles Industries
Cendant
Compaq Computer
First Union
Gateway 2000
Homestake Mining
Interpublic Group of Companies
Marks & Spencer
Matsushita Communication Industrial
Nippon Telegraph & Telephone
Nissan Motor
QBE Insurance Group
Southcorp
TI Group
Unocal
Yasuda Fire & Marine Insurance
Equity-Type Securities Eliminated from the
Portfolio Since March 31, 1998
Accor
Alcan Aluminium
Amgen
Anadarko Petroleum
Applied Materials
Asustek Computer
B.A.T Industries
Cadbury Schweppes
Carlton Communications
Carrefour
Chase Manhattan
Du Pont
Engelhard
Enterprise Oil
Fuji Photo Film
Gillette
Hong Kong Telecommunications
Hongkong Electric Holdings
Istituto Nazionale delle Assicurazioni
Johnson & Johnson
Kawasaki Heavy Industries
Kyocera
Phelps Dodge
PolyGram
Raytheon
Security Capital Group
Swire Pacific
Taiwan Semiconductor Manufacturing
Teck
Telecomunicacoes Brasileiras
Tokyo Electron
Toronto-Dominion Bank
Toyota Motor
</TABLE>
<TABLE>
New Perspective Fund
Financial Statements
- ----------------------------------------- ---------------- ----------------
<S> <C> <C>
Statement of Assets and Liabilities (dollars in
at September 30, 1998 millions)
- ----------------------------------------- ---------------- ----------------
Assets:
Investment securities at market
(cost: $11,341.853) $14,926.669
Short-term securities
(cost: $2,796.784) 2,795.530
Cash .230
Receivables for-
Sales of investments $61.596
Sales of fund's shares 17.617
Forward currency contracts 1.937
Dividends and accrued interest 39.487 120.637
---------------- ----------------
17,843.066
Liabilities:
Payables for-
Purchases of investments 107.639
Repurchases of fund's shares 17.956
Management services 6.010
Accrued expenses 4.491 136.096
---------------- ----------------
Net Assets at September 30, 1998-
Equivalent to $20.50 per share on
863,908,688 shares of $1 par value
capital stock outstanding (authorized
capital stock--1,000,000,000 shares) $17,706.970
================
Statement of Operations
for the year ended September 30, 1998
(dollars in
millions)
- ----------------------------------------- ---------------- ----------------
Investment Income:
Income:
Dividends $ 235.336
Interest 127.111 $ 362.447
----------------
Expenses:
Management services fee 72.691
Distribution expenses 40.459
Transfer agent fee 14.537
Reports to shareholders .512
Registration statement and prospectus 1.223
Postage, stationery and supplies 2.980
Directors' and Advisory Board fees .294
Auditing and legal fees .097
Custodian fee 3.732
Taxes other than federal income tax .222
Other expenses .266 137.013
---------------- ----------------
Net investment income 225.434
----------------
Realized Gain and Change in Unrealized
Appreciation on Investments:
Net realized gain 1,406.817
Net change in unrealized appreciation on
investments (1,488.575)
Net increase in unrealized appreciation
on forward currency contracts 1.937 (1,486.638)
---------------- ----------------
Net realized gain and change in unrealized
appreciation on investments (79.821)
----------------
Net Increase in Net Assets Resulting
from Operations $ 145.613
================
- ----------------------------------------- ---------------- ----------------
Statement of Changes in Net Assets (dollars in millions)
Year ended September 30
1998 1997
- ----------------------------------------- ---------------- ----------------
Operations:
Net investment income $ 225.434 $ 221.926
Net realized gain on investments 1,406.817 922.766
Net change in unrealized appreciation
on investments (1,486.638) 2,567.733
---------------- ----------------
Net increase in net assets
resulting from operations 145.613 3,712.425
---------------- ----------------
Dividends and Distributions Paid to
Shareholders:
Dividends from net investment income (250.381) (224.557)
Distributions from net realized gain on
investments (944.065) (462.037)
---------------- ----------------
Total dividends and distributions (1,194.446) (686.594)
---------------- ----------------
Capital Share Transactions:
Proceeds from shares sold: 141,823,983
and 160,556,117 shares, respectively 3,063.856 3,126.904
Proceeds from shares issued in reinvestment
of net investment income dividends and
distributions of net realized gain on
investments: 58,921,097 and 36,204,990 shares,
respectively 1,133.982 650.157
Cost of shares repurchased: 112,476,829
and 78,902,097 shares, respectively (2,398.119) (1,534.468)
---------------- ----------------
Net increase in net assets resulting from
capital share transactions 1,799.719 2,242.593
---------------- ----------------
Total Increase in Net Assets 750.886 5,268.424
Net Assets:
Beginning of year 16,956.084 11,687.660
---------------- ----------------
End of year (including undistributed
net investment income: $85.257
and $115.664, respectively) $17,706.970 $16,956.084
================ ================
See Notes to Financial Statements
</TABLE>
Notes to Financial Statements
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - 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.
SIGNIFICANT ACCOUNTING POLICIES - The following is a summary of the significant
accounting policies consistently followed by the fund in the preparation of its
financial statements:
SECURITY VALUATION - Equity securities, including depositary receipts, are
valued at the last reported sale price on the exchange or market on which such
securities are traded, as of the close of business on the day the securities
are being valued or, lacking any sales, at the last available bid price. In
cases where equity securities are traded on more than one exchange, the
securities are valued on the exchange or market determined by the investment
adviser to be the broadest and most representative market, which may be either
a securities exchange or the over-the-counter market. Fixed-income securities
are valued at prices obtained from a pricing service, when such prices are
available; however, in circumstances where the investment adviser deems it
appropriate to do so, such securities will be valued at the mean quoted bid and
asked prices or at prices for securities of comparable maturity, quality and
type. Securities with original maturities of one year or less having 60 days or
less to maturity are amortized to maturity based on their cost if acquired
within 60 days of maturity or, if already held on the 60th day, based on the
value determined on the 61st day. Forward currency contracts are valued at the
mean of their representative quoted bid and asked prices. Securities and assets
for which representative market quotations are not readily available are valued
at fair value as determined in good faith by a committee appointed by the Board
of Directors.
NON-U.S. CURRENCY TRANSLATION - Assets or liabilities initially expressed in
terms of non-U.S. currencies are translated into U.S. dollars at the prevailing
market rates at the end of the reporting period. Purchases and sales of
securities and income and expenses are translated into U.S. dollars at the
prevailing market rates on the dates of such transactions. The effects of
changes in non-U.S. currency exchange rates on investment securities are
included with the net realized and unrealized gain or loss on investment
securities.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - As is customary in the
mutual fund industry, securities transactions are accounted for on the date the
securities are purchased or sold. In the event the fund purchases securities on
a delayed delivery or "when-issued" basis, it will segregate with its custodian
liquid assets in an amount sufficient to meet its payment obligations in these
transactions. Realized gains and losses from securities transactions are
reported on an identified cost basis. Dividend and interest income is reported
on the accrual basis. Discounts and premiums on securities purchased are
amortized.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends and distributions paid
to shareholders are recorded on the ex-dividend date.
FORWARD CURRENCY CONTRACTS - The fund may enter into forward currency
contracts, which represent agreements to exchange currencies of different
countries at specified future dates at specified rates. The fund enters into
these contracts to reduce its exposure to fluctuations in foreign exchange
rates arising from investments denominated in non-U.S. currencies. The fund's
use of forward currency contracts involves market risk in excess of the amount
recognized in the statement of assets and liabilities. The contracts are
recorded in the statement of assets and liabilities at their net unrealized
value. The fund records realized gains or losses at the time the forward
contract is closed or offset by a matching contract. The face or contract
amount in U.S. dollars reflects the total exposure the fund has in that
particular contract. Risks may arise upon entering these contracts from the
potential inability of counterparties to meet the terms of their contracts and
from possible movements in non-U.S. exchange rates and securities values
underlying these instruments.
2. FEDERAL INCOME TAXATION
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, 1998, net unrealized appreciation on investments, excluding
forward currency contracts, for federal income tax purposes aggregated
$3,584,550,000, of which $4,918,386,000 related to appreciated securities and
$1,333,836,000 related to depreciated securities. During the year ended
September 30, 1998, the fund realized, on a tax basis, a net capital gain of
$1,412,023,000 on securities transactions.
Net losses related to non-U.S. currency and other transactions of $5,206,000
were treated as an adjustment to ordinary income for federal income tax
purposes. The cost of portfolio securities, excluding forward currency
contracts, for federal income tax purposes was $14,137,649,000 at September 30,
1998.
3. FEES AND TRANSACTIONS WITH RELATED PARTIES
INVESTMENT ADVISORY FEE - The fee of $72,691,000 for management services was
incurred pursuant to an agreement with Capital Research and Management Company
(CRMC), with which certain officers and Directors of the fund are affiliated.
The Investment Advisory and Service Agreement provides for monthly fees,
accrued daily, based on an annual rate of 0.60% of the first $500 million of
average net assets; 0.50% of such assets in excess of $500 million but not
exceeding $1 billion; 0.46% of such assets in excess of $1 billion but not
exceeding $1.5 billion; 0.43% of such assets in excess of $1.5 billion but not
exceeding $2.5 billion; 0.41% of such assets in excess of $2.5 billion but not
exceeding $4 billion; 0.40% of such assets in excess of $4 billion but not
exceeding $6.5 billion; 0.395% of such assets in excess of $6.5 billion but not
exceeding $10.5 billion; 0.39% of such assets in excess of $10.5 billion but
not exceeding $17 billion; and 0.385% of such assets in excess of $17 billion.
DISTRIBUTION EXPENSES - 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, 1998,
distribution expenses under the Plan were $40,459,000. As of September 30,
1998, accrued and unpaid distribution expenses were $3,058,000.
TRANSFER AGENT FEE - American Funds Service Company (AFS), the transfer agent
for the fund, was paid a fee of $14,537,000. American Funds Distributors, Inc.
(AFD), the principal underwriter of the fund's shares, received $11,088,228
(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' FEES - 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 Board. Amounts deferred are not funded and are general unsecured
liabilities of the fund. As of September 30, 1998, aggregate amounts deferred
and earnings thereon were $590,000.
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. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
The fund made purchases and sales of investment securities, excluding
short-term securities, of $4,607,426,000 and $4,621,129,000, respectively,
during the year ended September 30, 1998.
As of September 30, 1998, accumulated undistributed net realized gain on
investments was $1,316,503,000 and additional paid-in capital was
$11,854,745,000. The fund reclassified $5,460,000 to undistributed net
investment income from undistributed net realized gains for the year ended
September 30, 1998.
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 $3,732,000 includes $95,000 that was paid by these credits
rather than in cash.
Dividend and interest income is recorded net of non-U.S. taxes paid. For the
year ended September 30, 1998, such non-U.S. taxes were $20,774,000. Net
realized currency losses on dividends, interest, withholding taxes reclaimable,
and sales of non-U.S. bonds and notes, on a book basis, were $10,527,000 for
the year ended September 30, 1998.
At September 30, 1998, the fund had outstanding forward currency contracts to
sell non-U.S. currencies as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Non-U.S. Currency Contract Amounts U.S. Valuation at 9/30/98
Non-U.S. U.S. Amount Unrealized Appreciation
Japanese Yen expiring Y6,890,225,000 $54,758,000 $52,821,000 $1,937,000
9/21/99
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Year ended September 30
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
Net Asset Value, Beginning of Year $21.86 $17.77 $16.98 $15.40 $14.21
----------- ----------- ----------- ----------- -----------
Income from Investment Operations:
Net investment income .27 .29 .32 .31 .22
Net realized gain and change in
unrealized appreciation on investment (.11) 4.81 1.40 2.35 1.54
----------- ----------- ----------- ----------- -----------
Total income from
investment operations .16 5.10 1.72 2.66 1.76
----------- ----------- ----------- ----------- -----------
Less Distributions:
Dividends from net
investment income (.31) (.323) (.321) (.237) (.173)
Dividends from net realized
non-U.S. currency gains(1) - (.007) (.009) (.003) (.027)
Distributions from net
realized gains (1.21) (.680) (.600) (.840) (.370)
----------- ----------- ----------- ----------- -----------
Total distributions (1.52) (1.01) (.93) (1.08) (.57)
----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Year $20.50 $21.86 $17.77 $16.98 $15.40
============================================================
Total Return(2) 1.23% 29.97% 10.64% 18.63% 12.61%
Ratios/Supplemental Data:
Net assets, end of
year (in millions) $17,707 $16,956 $11,688 $8,817 $6,279
Ratio of expenses to average
net assets .77% .79% .82% .83% .84%
Ratio of net income to
average net assets 1.27% 1.56% 2.00% 2.12% 1.48%
Portfolio turnover rate 29.71% 25.68% 18.12% 22.40% 25.33%
(1) Realized non-U.S. currency gains
are treated as ordinary income for
federal income tax purposes.
(2) Excludes maximum sales charge of 5.75%.
</TABLE>
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, 1998, 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, 1998 by correspondence with the custodian, provide
a reasonable basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
Los Angeles, California
October 30, 1998
Tax Information (unaudited)
We are required to advise you within 60 days of the fund's fiscal year-end
regarding the federal tax status of distributions received by shareholders
during such fiscal year. The distributions made during the fiscal year by the
fund were earned from the following sources:
<TABLE>
<CAPTION>
Dividends and Distributions per Share
To Shareholders Payment Date From Net From Net Realized From Net Realized
of Record Investment Short-term Gains Long-term Gains
Income
<S> <C> <C> <C> <C>
December 12, 1997 December 15, 1997 $.19 $.155 $1.055*
June 5, 1998 June 8, 1998 .12 - -
</TABLE>
*Includes $0.4104 long-term capital gains taxed at a maximum rate of 28%.
The fund also designates as a capital gain distribution a portion of earnings
and profits paid to shareholders in redemption of their shares.
The fund makes an election under the Internal Revenue Code Section 853 to pass
through non-U.S. taxes paid by the fund to its shareholders. The amount of
non-U.S. taxes for the fiscal year ended September 30, 1998 is $0.025 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, 28% 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 retirement plan trusts may need this information for their annual
information reporting.
SINCE THE AMOUNTS ABOVE ARE REPORTED FOR THE FUND'S FISCAL YEAR AND NOT THE
CALENDAR YEAR, SHAREHOLDERS SHOULD REFER TO THEIR FORM 1099-DIV OR OTHER TAX
INFORMATION WHICH WILL BE MAILED IN JANUARY 1999 TO DETERMINE THE CALENDAR YEAR
AMOUNTS TO BE INCLUDED ON THEIR 1998 TAX RETURNS. SHAREHOLDERS SHOULD CONSULT
THEIR TAX ADVISERS.
NEW PERSPECTIVE FUND
BOARD OF DIRECTORS
ELISABETH ALLISON, Cambridge, Massachusetts
Administrative Director, ANZI, Ltd.;
publishing consultant, Harvard Medical School
MICHAEL R. BONSIGNORE, Minneapolis, Minnesota
Chairman of the Board and Chief Executive Officer,
Honeywell Inc.
GINA H. DESPRES, Washington, D.C.
President of the fund
Senior Vice President,
Capital Research and Management Company
ROBERT A. FOX, Livingston, California
President and Chief Executive Officer,
Foster Farms Inc.
ALAN GREENWAY, La Jolla, California
Private investor; President,
Greenway Associates, Inc.
(management consulting services)
KOICHI ITOH, Tokyo, Japan
Group Vice President-Asia/Pacific, Autosplice, Inc.;
former President and Chief Executive Officer,
IMPAC (management consulting services);
former managing partner, VENCA Management
(venture capital)
WILLIAM H. KLING, St. Paul, Minnesota
President, Minnesota Public Radio;
President, Greenspring Co.;
former President, American Public Radio
(now Public Radio International)
JON B. LOVELACE, Los Angeles, California
Vice Chairman of the Board of the fund
Vice Chairman of the Board,
Capital Research and Management Company
JOHN G. MCDONALD, Stanford, California
The IBJ Professor of Finance,
Graduate School of Business,
Stanford University
WILLIAM I. MILLER, Columbus, Indiana
Chairman of the Board,
Irwin Financial Corporation
KIRK P. PENDLETON, Southampton, Pennsylvania
Chairman of the Board and
Chief Executive Officer, Cairnwood, Inc.
(venture capital investment)
DONALD E. PETERSEN, Birmingham, Michigan
Retired; former Chairman of the Board and
Chief Executive Officer, Ford Motor Company
JAMES W. RATZLAFF, San Francisco, California
Senior Partner, The Capital Group Partners L.P.
WALTER P. STERN, New York, New York
Chairman of the Board of the fund
Chairman of the Board,
Capital Group International, Inc.
OTHER OFFICERS
WILLIAM R. GRIMSLEY, San Francisco, California
Senior Vice President of the fund
Senior Vice President and Director,
Capital Research and Management Company
GREGG E. IRELAND, Washington, D.C.
Senior Vice President of the fund
Senior Vice President,
Capital Research and Management Company
THIERRY VANDEVENTER, Geneva, Switzerland
Senior Vice President of the fund
Director, Capital Research and Management Company
JONATHAN O. KNOWLES, Ph.D., London, England
Vice President of the fund
Vice President, Capital Research Company
DARCY B. KOPCHO, Los Angeles, California
Vice President of the fund
Executive Vice President and Director,
Capital Research Company
CATHERINE M. WARD, Los Angeles, California
Vice President of the fund
Senior Vice President and Director,
Capital Research and Management Company
VINCENT P. CORTI, Los Angeles, California
Secretary of the fund
Vice President - Fund Business
Management Group,
Capital Research and Management Company
R. MARCIA GOULD, Brea, California
Treasurer of the fund
Vice President - Fund Business
Management Group,
Capital Research and Management Company
DAYNA YAMABE, Brea, California
Assistant Treasurer of the fund
Assistant Vice President -
Fund Business Management Group,
Capital Research and Management Company
MEMBERS OF THE ADVISORY BOARD
DAVID I. FISHER, Los Angeles, California*
Chairman of the Board, The Capital Group
Companies, Inc.; Chairman of the Board,
Capital Guardian Trust Company
YOICHI FUNABASHI, Ph.D., Tokyo, Japan
Chief Diplomatic Correspondent and columnist
for the Asahi Shimbun
JEAN GANDOIS, Paris, France
Chairman of the Board of Cockerill-Sambre;
former President, Conseil National du Patronat
Francais; former Chairman of the Board and
Chief Executive Officer, Pechiney; former
Chairman of the Board, Pechiney International
CLAUDIO X. GONZALEZ LAPORTE,
Mexico, DF, Mexico
Chairman of the Board and Chief Executive Officer,
Kimberly-Clark de Mexico, SA de CV
SIR PETER HOLMES, London, England
Director and former Chairman of the Board and
Managing Director, The Royal Dutch/Shell Group
of Companies
JAE H. HYUN, New York, New York
Chairman of the Board, Tong Yang Group
BARON GUALTHERUS KRAIJENHOFF,
Nijmegen, Netherlands
Chairman of the Supervisory Council, Akzo NV
PIERRE LESCURE, Paris, France
Chairman of the Board and Chief
Executive Officer, Canal+
SHIJURO OGATA, Tokyo, Japan*
Non-executive Director, Fuji Xerox Co. Ltd.
and Horiba Ltd.
ALESSANDRO OVI, Rome, Italy*
Chief Executive Officer, Tecnitel
ALLEN E. PUCKETT, Pacific Palisades, California
Chairman Emeritus, Hughes Aircraft Company
ROZANNE L. RIDGWAY, Washington, D.C.
Chair, Baltic American Enterprises Fund;
former co-chair, Atlantic Council of the
United States
ORVILLE H. SCHELL, Berkeley, California
Dean, Graduate School of Journalism,
University of California at Berkeley
BRUCE B. TEELE, Melbourne, Australia
Chairman of the Board, Australian Foundation
Investment Co., Ltd.; former Chairman of the Board
and Chief Executive Officer, J.B. Were & Son
*Effective October 1, 1998
DAVID I. FISHER resigned as a Director of the fund effective September 30,
1998. The Directors thank him for his many contributions to the fund and look
forward to his continued participation as an Advisory Board Member.
Mr. Fisher was appointed to the Advisory Board effective October 1, 1998, as
were Shijuro Ogata and Alessandro Ovi.
OFFICES OF THE FUND AND OF THE
INVESTMENT ADVISER,
CAPITAL RESEARCH AND MANAGEMENT COMPANY
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92821-5823
TRANSFER AGENT FOR SHAREHOLDER ACCOUNTS
American Funds Service Company
(Please write to the address nearest you.)
P.O. Box 2205
Brea, California 92822-2205
P.O. Box 659522
San Antonio, Texas 78265-9522
P.O. Box 6007
Indianapolis, Indiana 46206-6007
P.O. Box 2280
Norfolk, Virginia 23501-2280
CUSTODIAN OF ASSETS
The Chase Manhattan Bank
One Chase Manhattan Plaza
New York, New York 10081-0001
COUNSEL
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, California 90071-2899
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
400 South Hope Street
Los Angeles, California 90071-2889
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
For information about your account or any of the fund's services, please
contact your financial adviser. You may also call American Funds Service
Company, toll-free, at 800/421-0180 or visit www.americanfunds.com on the World
Wide Web.
This report is for the information of shareholders of New Perspective Fund, but
it may also be used as sales literature when preceded or accompanied by the
current prospectus, which gives details about charges, expenses, investment
objectives and operating policies of the fund. If used as sales material after
December 31, 1998, this report must be accompanied by an American Funds Group
Quarterly Statistical Update for the most recently completed calendar quarter.
PREPARING FOR THE YEAR 2000.
The fund's key service providers - Capital Research and Management Company, the
investment adviser, and American Funds Service Company, the transfer agent -
are updating their computer systems to process date-related information
properly following the turn of the century. Both are on track to complete
modifications of significant internal systems by the end of 1998. Testing with
business partners, vendors and other service providers is already under way. We
will continue to keep you up to date in our regular publications. If you'd like
more detailed information, call Shareholder Services at 800/421-0180, ext. 21,
or visit our Web site at www.americanfunds.com.
Printed on recycled paper
Litho in USA AGD/AL/3924
Lit. No. NPF-011-1198
[The American Funds Group(r)]
