EUROPACIFIC GROWTH FUND
Part B
Statement of Additional Information
JUNE 1, 1996
(AS AMENDED OCTOBER 11, 1996)
This document is not a prospectus but should be read in conjunction with
the current Prospectus of EuroPacific Growth Fund (the "fund" or "EUPAC") dated
June 1, 1996. The prospectus may be obtained from your investment dealer or
financial planner or by writing to the fund at the following address:
EuroPacific Growth Fund
Attention: Secretary
333 South Hope Street
Los Angeles, CA 90071
(213) 486-9200
The fund has two forms of prospectuses. Each reference to the prospectus
in this Statement of Additional Information includes both of the fund's
prospectuses. Shareholders who purchase shares at net asset value through
eligible retirement plans should note that not all of the services or features
described below may be available to them, and they should contact their
employer for details.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Item Page No.
<S> <C>
Investment Policies 2
Certain Risk Factors Relating to Below Investment Grade Bonds 3
Investment Restrictions 4
Fund Trustees and Officers 6
Management . 11
Dividends, Distributions and Federal Taxes. 13
Purchase of Shares 15
Shareholder Account Services and Privileges 18
Redemption of Shares 18
Execution of Portfolio Transactions 19
General Information 19
Investment Results 21
Description of Bond Ratings 25
Financial Statements Attached
</TABLE>
INVESTMENT POLICIES
INVESTING OUTSIDE THE U.S. - The fund's investment objective is to achieve
long-term growth of capital by investing in securities of issuers domiciled
outside the U.S. The fund's assets are invested in securities of issuers
domiciled outside the United States. (In determining the domicile of an
issuer, Capital Research and Management Company has the discretion to give
prevailing weight to one or more factors which may include where the issuer is
legally organized, where it maintains its principal corporate offices and where
it conducts its principal operations.)
There are risks inherent in investing outside the U.S. (As described in the
fund's Prospectus), many of which are more pronounced for investments in
developing countries, such as many of the countries of Southeast Asia, Latin
America, Eastern Europe and the Middle East. Although there is no universally
accepted definition, a developing country may, for example, be in the initial
stages of its industrialization cycle and/or have a lower per capita gross
national product and/or have a low or middle income economy. In addition, the
possibility of political upheaval and the dependence on foreign economic
assistance may be greater in these developing countries than in developed
countries. Furthermore, markets of developing countries may be more volatile
and have lower trading volume (potentially affecting the liquidity of
securities) and may be subject to legal and/or securities more difficult and
costly) or less restrictive (making it difficult to detect and prevent fraud)
than those of developed countries.
CASH EQUIVALENTS - These securities include (1) commercial paper (short-term
notes up to 9 months in maturity issued by corporations or governmental
bodies), (2) commercial bank obligations (certificates of deposit
(interest-bearing time deposits), bankers' acceptances (time drafts on a
commercial bank where the bank accepts an irrevocable obligation to pay at
maturity) and documented discount notes (corporate promissory discount notes
accompanied by a commercial bank guarantee to pay at maturity)), (3) savings
association and savings bank obligations (certificates of deposit issued by
savings banks or savings associations), (4) securities of the U.S. Government,
its agencies or instrumentalities that mature, or may be redeemed, in one year
or less, and (5) corporate bonds and notes (corporate obligations that mature,
or may be redeemed, in one year or less).
REPURCHASE AGREEMENTS - The fund may enter into repurchase agreements, under
which the fund buys a security and obtains a simultaneous commitment from the
seller to repurchase the security at a specified time and price. Repurchase
agreements permit the fund to maintain liquidity and earn income over periods
of time as short as overnight. The seller must maintain with the fund's
custodian collateral equal to at least 100% of the repurchase price including
accrued interest, as monitored daily by the Investment Adviser. See
"Management" below. The fund will only enter into repurchase agreements
involving securities in which it could otherwise invest and with selected banks
and securities dealers whose financial condition is monitored by the Investment
Adviser. If the seller under the repurchase agreement defaults, the fund may
incur a loss if the value of the collateral securing the repurchase agreement
has declined and may incur disposition costs in connection with liquidating the
collateral. If bankruptcy proceedings are commenced with respect to the
seller, realization upon the collateral by the fund may be delayed or limited.
CURRENCY TRANSACTIONS - The fund has the ability to hold a portion of its
assets in U.S. dollars and other currencies and to enter into certain currency
contracts (on either a spot or forward basis) in connection with investing in
non-U.S. dollar denominated securities including foreign currency exchange and
forward currency contracts. A foreign exchange contract is used to facilitate
settlement of trades. For example, the fund might purchase a currency or enter
into a foreign exchange contract to preserve the U.S. dollar price of
securities it has contracted to purchase. A forward currency contract is an
obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days from the date of the contract agreed upon by the
parties, at a price set at the time of the contract. For example, the fund
might enter into a forward currency contract to protect against an anticipated
decline in value of a foreign currency against the U.S. dollar when it holds
securities denominated in that foreign currency. To avoid having an amount
greater than its net assets subject to market risk in connection with currency
contract transactions, the fund will segregate cash, cash equivalents, or high
quality debt instruments to the extent required by the Securities and Exchange
Commission.
144A SECURITIES - Normally, securities acquired in U.S. private placements are
subject to contractual restrictions on resale and may not be resold except
pursuant to a registration statement under the Securities Act of 1933 or in
reliance upon an exemption from the registration requirements under the Act,
for example, private placements sold pursuant to Rule 144A. Accordingly, any
such obligation will be deemed illiquid (unless procedures for determining
liquidity are adopted by the fund's Board of Trustees), and the fund may incur
certain additional costs in disposing of such securities.
The fund will not invest more than 5% of the value of its total assets in
securities which are subject to contractual restrictions on resale. Non-U.S.
securities that can be freely traded in a foreign securities market and for
which the facts and circumstances support a finding of liquidity are not
included for the purposes of this limitation.
CERTAIN RISK FACTORS RELATING TO BELOW INVESTMENT GRADE BONDS
Certain risk factors relating to investing in below investment grade
securities, bonds rated Ba and BB or below or unrated but determined to be of
equivalent quality (high-yield, high-risk bonds) are discussed below.
SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES - High-yield, high-risk bonds
are very sensitive to adverse economic changes and corporate developments.
During an economic downturn or substantial period of rising interest rates,
highly leveraged issuers may experience financial stress that would adversely
affect their ability to service their principal and interest payment
obligations, to meet projected business goals, and to obtain additional
financing. If the issuer of a bond defaulted on its obligations to pay
interest or principal or entered into bankruptcy proceedings, the fund may
incur losses or expenses in seeking recovery of amounts owed to it. In
addition, periods of economic uncertainty and changes can be expected to result
in increased volatility of market prices of high-yield, high-risk bonds.
PAYMENT EXPECTATIONS - High-yield, high-risk bonds, like other bonds, may
contain redemption or call provisions. If an issuer exercised these provisions
in a declining interest rate market, the fund would have to replace the
security with a lower yielding security, resulting in a decreased return for
investors. Conversely, a high-yield, high-risk bond's value will decrease in a
rising interest rate market, as it will with all bonds.
LIQUIDITY AND VALUATION - There may be little trading in the secondary market
for particular bonds, which may affect adversely the fund's ability to value
accurately or dispose of such bonds. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of high-yield, high-risk bonds, especially in a thin
market.
If, as a result of a downgrade or otherwise, the fund holds more than 5%
of its net assets in high-yield, high-risk bonds, the fund will dispose of the
excess as expeditiously as possible.
INVESTMENT RESTRICTIONS
The fund has adopted certain investment restrictions which may not be
changed without a majority vote of its outstanding shares. Such majority is
defined by the Investment Company Act of 1940 (the "1940 Act") as the vote of
the lesser of (i) 67% or more of the outstanding voting securities present at a
meeting, if the holders of more than 50% of the outstanding voting securities
are present in person or by proxy, or (ii) more than 50% of the outstanding
voting securities. All percentage limitations expressed in the following
investment restrictions are measured immediately after and giving effect to the
relevant transaction. The fund may not:
1. Invest in securities of another issuer (other than the U.S. government or
its agencies or instrumentalities), if immediately after and as a result of
such investment more than 5% of the value of the total assets would be invested
in the securities of such other issuer (except with respect to 25% of the value
of the total assets, the fund may exceed the 5% limitation with regards to
investments in the securities of any one foreign government);
2. Invest in companies for the purpose of exercising control or management;
3. Invest more than 25% of the value of its total assets in the securities of
companies primarily engaged in any one industry;
4. Invest more than 5% of its total assets in the securities of other
investment companies; such investments shall be limited to 3% of the voting
stock of any investment company provided, however, that investment in the open
market of a closed-end investment company where no more than customary brokers'
commissions are involved and investment in connection with a merger,
consolidation, acquisition or reorganization shall not be prohibited by this
restriction;
5. Buy or sell real estate in the ordinary course of its business; however,
the fund may invest in securities secured by real estate or interests therein
or issued by companies, including real estate investment trusts and funds,
which invest in real estate or interests therein;
6. Buy or sell commodities or commodity contracts in the ordinary course of
its business, provided, however, that entering into foreign currency contracts
shall not be prohibited by this restriction;
7. Invest more than 10% of the value of its total assets in securities which
are not readily marketable or more than 5% of the value of its total assets in
securities which are subject to legal or contractual restrictions on resale
(except repurchase agreements) or engage in the business of underwriting of
securities of other issuers, except to the extent that the disposal of an
investment position may technically constitute the fund an underwriter as that
term is defined under the Securities Act of 1933. The fund may buy and sell
securities outside the U.S. which are not registered with the Securities and
Exchange Commission or marketable in the U.S. without regard to this
restriction. The fund may not enter into any repurchase agreement if, as a
result, more than 10% of total assets would be subject to repurchase
agreements maturing in more than seven days. (See "Repurchase Agreements"
above);
8. Lend any of its assets; provided, however that entering into repurchase
agreements, investment in government obligations, publicly traded bonds,
debentures, other debt securities or in cash equivalents such as short term
commercial paper, certificates of deposit, or bankers acceptances, shall not be
prohibited by this restriction;
9. Sell securities short except to the extent that the fund contemporaneously
owns or has the right to acquire, at no additional cost, securities identical
to those sold short;
10. Purchase securities on margin;
11. Borrow amounts in excess of 5% of the value of its total assets or issue
senior securities. In any event, the fund may borrow only as a temporary
measure for extraordinary or emergency purposes and not for investment in
securities;
12. Mortgage, pledge or hypothecate its total assets to any extent;
13. Purchase or retain the securities of any issuer, if those individual
officers and trustees of the fund, its investment adviser or principal
underwriter, each owning beneficially more than 1/2 of 1% of the securities of
such issuer, together own more than 5% of the securities of such issuer;
14. Invest more than 5% of the value of its total assets in securities of
companies having, together with their predecessors, a record of less than three
years of continuous operation;
15. Invest in puts, calls, straddles or spreads, or combinations thereof; or
16. Purchase partnership interests in oil, gas, or mineral exploration,
drilling or mining ventures.
As to 75% of the fund's total assets, investments in any one issuer will
be limited to no more than 10% of the voting securities of such issuer. This
is a non-fundamental policy which may be modified by the Board of Trustees
without shareholder approval.
Pursuant to Ohio Administrative Code the fund will not invest in
securities of registered investment companies that are subject to the
Investment Ccompany Act of 1940.
FUND TRUSTEES AND OFFICERS
TRUSTEES AND TRUSTEE COMPENSATION
(with their principal occupations during the past five years)
<TABLE>
<CAPTION>
NAME, ADDRESS AND POSITION PRINCIPAL AGGREGATE TOTAL TOTAL
AGE WITH OCCUPATION(S) COMPENSATION COMPENSATION NUMBER
REGISTRANT DURING PAST (INCLUDING FROM OF FUND
5 YEARS (POSITIONS VOLUNTARILY ALL FUNDS BOARDS
WITHIN THE DEFERRED MANAGED BY ON WHICH
ORGANIZATIONS COMPENSATION/1/) CAPITAL TRUSTEE
LISTED MAY HAVE FROM FUND RESEARCH AND SERVES
CHANGED DURING DURING FISCAL MANAGEMENT
THIS PERIOD) YEAR ENDED COMPANY/2/
3/31/96
<S> <C> <C> <C> <C> <C>
Elisabeth Allison Trustee Publishing $19,100 $39,100 2
1770 Consultant,
Massachusetts Harvard Medical
Avenue School;
Cambridge, MA Administrative
02140 Director, ANZI,
Age: 49 Ltd. (financial
publishing and
consulting);
former Senior Vice
President,
Planning and
Development,
McGraw Hill, Inc.
+David I. Fisher Trustee Chairman of the None/4/ None/4/ 2
333 South Hope Board,
Street The Capital Group
Los Angeles, CA Companies, Inc.
90072
Age: 56
Robert A. Fox Trustee President and $18,300/3/ $79,550 5
P.O Box 457 Chief Executive
Livingston, CA Officer,
95334 Foster Farms,
Age: 59 Inc.; former
President,
Revlon
International;
former
Chairman and Chief
Executive
Officer, Clarke
Hooper America
(advertising)
Alan Greenway Trustee President, $19,100 $64,100 4
7413 Fairway Road Greenway
La Jolla, CA Associates, Inc.
92037 (management
Age: 68 consulting
services)
+William R. Trustee Senior Vice None/4/ None/4/ 3
Grimsley President and
P.O. Box 7650 Director,
San Francisco, CA Capital Research
94111 and Management
Age: 58 Company
Koichi Itoh Trustee Managing Partner, $18,700 $39,500 2
7-14-11-104 VENCA Management
Minami Aoyama (venture capital)
Minato-ku, Tokyo,
Japan
Age: 55
++William H. Trustee President, $18,300/3/ $67,800 4
Kling Minnesota Public
45 East Seventh Radio;
Street President,
St. Paul, MN Greenspring Co.;
55101 former
Age: 54 President,
American Public
Radio
(now Public Radio
International)
John G. McDonald Trustee The IBJ Professor $17,900/3/ $134,350 7
Graduate School of Finance,
of Business Graduate School of
Stanford Business,
University Stanford
Stanford, CA University
94305
Age: 59
++William I. Trustee Chairman of the $18,700 $39,500 2
Miller Board,
500 Washington Irwin Financial
Street Corporation
Box 929
Columbus, IN
47202
Age: 40
Kirk P. Pendleton Trustee President, None* $24,600 5
Cairnwood, Inc. Cairnwood, Inc.
75 James Way
Southhampton, PA
18966
Age: 56
Donald E. Trustee Former Chairman of $16,900/3/ $62,300 4
Petersen the Board and
222 East Brown, Chief Executive
Suite 460 Officer, Ford
Birmingham, MI Motor
48009 Company
Age: 69
+Walter P. Stern Chairman Chairman, Capital None/4/ None/4/ 8
630 Fifth Avenue of Group
New York, NY the Board International,
10111 Inc.; Vice
Age: 67 Chairman, Capital
Research
International;
Director, The
Capital
Group Companies,
Inc.; Chairman,
Capital
International,
Inc.; Director,
Temple-Inland Inc.
(forest products)
+Thierry President Chairman of the None/4/ None/4/ 2
Vandeventer Board, Capital
3 Place des Research Company
Bergues
1201 Geneva,
Switzerland
Age: 60
</TABLE>
* Mr. Pendleton was elected to the Board of Trustees on September 24, 1996. He
received no compensation from the fund in fiscal year 1996.
+ Trustees who are considered "interested persons" as defined in the Investment
Company Act of 1940, as amended, on the basis of their affiliation with the
fund's Investment Adviser, Capital Research and Management Company.
++ May be deemed an "interested person" of the fund due to membership on the
board of directors of the parent company of a registered broker-dealer.
/1/ Amounts may be deferred by eligible trustees under a non-qualified deferred
compensation plan adopted by the fund in 1993. Deferred amounts accumulate at
an earnings rate determined by the total return of one or more of the funds in
the American Funds Group as designated by the Trustee.
/2/ Capital Research and Management Company manages The American Funds Group
consisting of 28 funds: AMCAP Fund, American Balanced Fund, Inc., American
High-Income Municipal Bond Fund, Inc., American High-Income Trust, American
Mutual Fund, Inc., The Bond Fund of America, Inc., The Cash Management Trust of
America, Capital Income Builder, Inc., Capital World Growth and Income Fund,
Inc., Capital World Bond Fund, Inc., EuroPacific Growth Fund, Fundamental
Investors, Inc., The Growth Fund of America, Inc., The Income Fund of America.
Inc., Intermediate Bond Fund of America, The Investment Company of America,
Limited Term Tax-Exempt Bond Fund of America, The New Economy Fund, New
Perspective Fund, Inc., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of
America, Inc., The Tax-Exempt Fund of California, The Tax-Exempt Fund of
Maryland, The Tax-Exempt Fund of Virginia, The Tax-Exempt Money Fund of
America, The U.S. Treasury Money Fund of America, U.S. Government Securities
Fund and Washington Mutual Investors Fund, Inc. Capital Research and
Management Company also manages American Variable Insurance Series and Anchor
Pathway Fund which serve as the underlying investment vehicles for certain
variable insurance contracts; and Bond Portfolio for Endowments, Inc. and
Endowments, Inc. whose shares may be owned only by tax-exempt organizations.
These amounts reflect the aggregate compensation paid during the most recent
fiscal year of the funds involved.
/3/ Since the plan's adoption, the total amount of deferred compensation
accrued by the fund (plus earnings thereon) for participating Trustees is as
follows: Robert A. Fox ($61,793), William H. Kling ($42,083), John G. McDonald
($36,304), Donald E. Petersen ($14,181). Amounts deferred and accumulated
earnings thereon are not funded and are general unsecured liabilities of the
fund until paid to the Trustee.
/4/ David I. Fisher, William R. Grimsley, Walter P. Stern and Thierry
Vandeventer are affiliated with the Investment Adviser and, accordingly,
receive no compensation from the fund.
OFFICERS
(with their principal occupations during the past five years)#
WALTER P. STERN, Chairman of the Board (see above).
THIERRY VANDEVENTER, President (see above).
STEPHEN E. BEPLER, Executive Vice President. 630 Fifth Avenue, New York, NY,
10111. Senior Vice President and Director, Capital Research
Company.
MARK E. DENNING, Executive Vice President. 25 Bedford Street, London,
England. Senior Vice President, Capital Research Company.
* ROBERT W. LOVELACE, Vice President.
Executive Vice President and Research Director, Capital Research Company.
JANET A. MCKINLEY, Vice President. 630 Fifth Avenue, New York, NY, 10111.
Senior Vice President, Capital Research Company.
** STEVEN N. KEARSLEY, Treasurer.
Vice President and Treasurer, Capital Research and Management Company.
*** VINCENT P. CORTI, Secretary.
Vice President - Fund Business Management Group, Capital Research and
Management Company.
** R. MARCIA GOULD, Assistant Treasurer. Vice President - Fund Business
Management Group, Capital Research and Management Company.
** MARY C. HALL, Assistant Treasurer.
Senior Vice President - Fund Business Management Group, Capital Research and
Management Company.
_________________________
# Positions within the organizations listed may have changed during this
period.
* Address is 11100 Santa Monica Boulevard, Los Angeles, CA 90025.
** Address is 135 South State College Boulevard, Brea, CA 92621.
*** Address is 333 South Hope Street, Los Angeles, CA 90071.
All of the Trustees and officers are also officers and/or directors and/or
trustees of one or more of the other funds for which Capital Research and
Management Company serves as Investment Adviser. No compensation is paid by
the fund to any officer or Trustee who is a director, officer or employee of
the Investment Adviser or affiliated companies. The compensation paid by the
fund to unaffiliated Trustees is $15,000 per annum, plus $1,000 for each Board
of Trustees meeting attended, plus $400 for each meeting attended as a member
of a committee of the Board of Trustees. The Trustees may elect, on a
voluntary basis, to defer all or a portion of their fees through a deferred
compensation plan in effect for the fund. The fund also reimburses certain
expenses of the Trustees who are not affiliated with the Investment Adviser.
As of May 1, 1996 the officers and Trustees of the fund and their families as a
group owned beneficially or of record less than 1% of the outstanding shares of
the fund.
MANAGEMENT
INVESTMENT ADVISER - The Investment Adviser, founded in 1931, maintains
research facilities in the U.S. and abroad, with a staff of professionals, many
of whom have a number of years of investment experience. The Investment
Adviser's research professionals travel several million miles a year, making
more than 5,000 research visits in more than 50 countries around the world.
The Investment Adviser believes that it is able to attract and retain quality
personnel.
An affiliate of the Investment Adviser compiles indices for major stock
markets around the world and compiles and edits the Morgan Stanley Capital
International Perspective, providing financial and market information about
more than 2,400 companies around the world.
The Investment Adviser is responsible for more than $100 billion of
stocks, bonds and money market instruments and serves over five million
investors of all types throughout the world. These investors include privately
owned businesses and large corporations, as well as schools, colleges,
foundations and other non-profit and tax-exempt organizations.
INVESTMENT ADVISORY AND SERVICE AGREEMENT - The Investment Advisory and Service
Agreement (the "Agreement") between the fund and the Investment Adviser, unless
sooner terminated, will continue until March 31, 1997 and may be renewed from
year to year thereafter, provided that any such renewal has been specifically
approved at least annually by (i) the Board of Trustees, or by the vote of a
majority (as defined in the 1940 Act) of the outstanding voting securities, and
(ii) the vote of a majority of Trustees who are not parties to the Agreement or
interested persons (as defined in the 1940 Act) of any such party, cast in
person at a meeting called for the purpose of voting on such approval. The
Agreement provides that the Investment Adviser has no liability to the fund for
its acts or omissions in the performance of its obligations to the fund not
involving willful misconduct, bad faith, gross negligence or reckless disregard
of its obligations under the Agreement. The Agreement also provides that
either party has the right to terminate it, without penalty, upon 60 days'
written notice to the other party and that the Agreement automatically
terminates in the event of its assignment (as defined in the 1940 Act).
The Investment Adviser, in addition to providing investment advisory
services, furnishes the services and pays the compensation and travel expenses
of qualified persons who perform executive, administrative, clerical and
bookkeeping functions of the fund; provides suitable office space and
utilities; and provides necessary small office equipment and general purpose
accounting forms, supplies, and postage used at the offices of the fund
relating to the services furnished by the Investment Adviser.
The fund pays all expenses not specifically assumed by the Investment
Adviser, including, but not limited to, custodian, stock transfer and dividend
disbursing fees and expenses; expenses pursuant to the fund's Plan of
Distribution (described below); costs of designing, printing and mailing
reports, prospectuses, proxy statements and notices to shareholders; taxes;
expenses of the issuance, sale, redemption, or repurchase of shares of the fund
(including stock certificates, registration and qualification fees and
expenses); legal and auditing fees and expenses; compensation, fees, and
expenses paid to Trustees not affiliated with the Investment Adviser;
association dues; and costs of stationery and forms prepared exclusively for
the fund.
The Investment Adviser will reimburse the fund to the extent that the
fund's annual operating expenses, exclusive of taxes, interest, brokerage
costs, distribution expenses and extraordinary expenses such as litigation and
acquisitions, exceed the expense limitations applicable to the fund imposed by
state securities laws or any regulations thereunder. Only one state
(California) continues to impose expense limitations on funds registered for
sale therein. The California provision currently limits annual expenses to the
sum of 2-1/2% of the first $30 million of average net assets, 2% of the next
$70 million and 1-1/2% of the remaining average net assets. Rule 12b-1
distribution plan expenses would be excluded from this limit. Expenditures,
including costs incurred in connection with the purchase or sale of portfolio
securities, which are capitalized in accordance with generally accepted
accounting principles applicable to investment companies, are accounted for as
capital items and not as expenses. The fund might be eligible to exclude
certain additional expenses, such as expenses of maintaining foreign custody of
certain portfolio securities by obtaining a waiver of such limit from
California.
During the fiscal years ended March 31, 1996, 1995 and 1994, the
Investment Adviser's total fees amounted to $51,034,000, $38,787,000 and
$24,646,000, respectively.
PRINCIPAL UNDERWRITER - American Funds Distributors, Inc. (the "Principal
Underwriter") is the principal underwriter of the fund's shares. The fund has
adopted a Plan of Distribution (the "Plan"), pursuant to rule 12b-1 under the
1940 Act (see "Principal Underwriter" in the Prospectus). The Principal
Underwriter receives amounts payable pursuant to the Plan (see below) and
commissions consisting of that portion of the sales charge remaining after the
discounts which it allows to investment dealers. Commissions retained by the
Principal Underwriter on sales of fund shares during the fiscal year ended
March 31, 1996 amounted to $11,178,000 after allowance of $59,403,000 to
dealers. During the fiscal years ended March 31, 1995 and 1994 the Principal
Underwriter retained $10,521,000 and $11,218,000, respectively.
As required by rule 12b-1, the Plan (together with the Principal
Underwriting Agreement) has been approved by the full Board of Trustees and
separately by a majority of the Trustees who are not "interested persons" of
the fund and who have no direct or indirect financial interest in the operation
of the Plan or the Principal Underwriting Agreement, and the Plan has been
approved by the vote of a majority of the outstanding voting securities of the
fund. The officers and Trustees who are "interested persons" of the fund may
be considered to have a direct or indirect financial interest in the operation
of the Plan due to present or past affiliations with the Investment Adviser and
related companies. Potential benefits of the Plan to the fund include improved
shareholder services, savings to the fund in transfer agency costs, savings to
the fund in advisory fees and other expenses, benefits to the investment
process from growth or stability of assets and maintenance of a financially
healthy management organization. The selection and nomination of Trustees who
are not "interested persons" of the fund are committed to the discretion of the
Trustees who are not "interested persons" during the existence of the Plan.
Expenditures under the Plan are reviewed quarterly, and the Plan must be
renewed annually by the Board of Trustees.
Under the Plan the fund may expend up to 0.25% of its average net assets
annually to finance any activity which is primarily intended to result in the
sale of fund shares, provided the fund's Board of Trustees has approved the
category of expenses for which payment is being made. These include service
fees for qualified dealers and dealer commissions and wholesaler compensation
on sales of shares exceeding $1 million (including purchases by any
employer-sponsored 403(b) plan or purchases by any defined contribution plan
qualified under Section 401(a) of the Code including a "401(k)" plan with 200
or more eligible employees). Only expenses incurred during the preceeding 12
months and accrued while the Plan is in effect may be paid by the fund. During
the fiscal year ended March 31, 1996, the fund paid $24,656,000 under the
Plan. As of March 31, 1996, accrued and unpaid distribution expenses were
$1,743,000.
The Glass-Stegall Act and other applicable laws, among other things,
generally prohibit commercial banks from engaging in the business of
underwriting, selling or distributing securities, but permit banks to make
shares of mutual funds available to their customers and to perform
administrative and shareholder servicing functions. However, judicial or
administrative decisions or interpretations of such laws, as well as changes in
either federal or state statutes or regulations relating to the permissible
activities of banks or their subsidiaries of affiliates, could prevent a bank
from continuing to perform all or a part of its servicing activities. If a
bank were prohibited from so acting, shareholder clients of such bank would be
permitted to remain shareholders of the fund and alternate means for continuing
the servicing of such shareholders would be sought. In such event, changes in
the operation of the fund might occur and shareholders serviced by such bank
might no longer be able to avail themselves of any automatic investment or
other services then being provided by such bank. It is not expected that
shareholders would suffer adverse financial consequences as a result of any of
these occurrences.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein, and certain banks and
financial institutions may be required to be registered as dealers pursuant to
state law.
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES
The fund intends to meet all the requirements and has elected the tax
status of a "regulated investment company" under the provisions of Subchapter M
of the Internal Revenue Code of 1986 (the Code). Under Subchapter M, if the
fund distributes within specified times at least 90% of the sum of its
investment company taxable income (net investment income and the excess of net
short-term capital gains over net long-term capital losses), it will be taxed
only on that portion of its investment company taxable income that it retains.
To qualify as a regulated investment company, the fund must (a) derive at
least 90% of its gross income from dividends, interest, certain payments with
respect to securities loans and gains from the sale or other disposition of
stock, securities, currencies or other income derived with respect to its
business of investing in such stock, securities or currencies; (b) derive less
than 30% of its gross income from the sale or other disposition of stock or
securities held for less than three months; and (c) diversify its holdings so
that at the end of each fiscal quarter, (i) at least 50% of the market value of
the fund's assets is represented by cash, U.S. Government securities and other
securities which must be limited, in respect of any one issuer, to an amount
not greater than 5% of the fund's assets and 10% of the outstanding voting
securities of such issuer, and (ii) not more than 25% of the value of its
assets is invested in the securities of any one issuer (other than U.S.
Government securities or the securities of other regulated investment
companies), or in two or more issuers which the fund controls and which are
engaged in the same or similar trades or businesses or related trades or
businesses.
Under the Code, a nondeductible excise tax of 4% is imposed on the excess
of a regulated investment company's "required distribution" for the calendar
year ending within the regulated investment company's taxable year over the
"distributed amount" for such calendar year. The term "required distribution"
generally means the sum of (i) 98% of taxable net investment income) for the
calendar year, (ii) 98% of capital gains (both long-term and short-term) for
the one-year period ending on October 31 (as though the one-year period ending
on October 31 were the regulated investment company's taxable year), and (iii)
the sum of any untaxed, undistributed taxable net investment income and net
capital gains of the regulated investment company for prior periods. The term
"distributed amount" generally means the sum of (i) amounts distributed by the
fund during the calendar year and (ii) any amount on which the fund pays income
tax during the periods described above. The fund intends to distribute net
investment income and net capital gains so as to minimize or avoid the excise
tax liability. Distributions of investment company taxable income, including
short-term capital gains, generally are taxable to the shareholder as ordinary
income, regardless of whether such distributions are paid in cash or reinvested
in additional shares of the fund.
The fund intends to continue distributing to shareholders all of the
excess of net long-term capital gain over net short-term capital loss on sales
of securities ("capital gain distributions"). Such distributions, whether paid
in cash or re-invested in shares, will be taxable to shareholders as long-term
capital gains, regardless of how long a shareholder has held fund shares or
whether such gain was realized by the fund before the shareholder acquired such
shares and was reflected in the price paid for the shares. In particular,
investors should consider the tax implications of purchasing shares just prior
to a dividend or capital gain distribution record date.
Dividends and capital gain distributions generally are taxable to
shareholders at the time they are paid. However, such dividends and
distributions declared in October, November and December and made payable to
shareholders of record in such a month are treated as paid and are thereby
taxable as of December 31, provided that the fund pays the dividend and/or
capital gain distributions no later than the end of January of the following
year.
If a shareholder exchanges or otherwise disposes of shares of the fund
within 90 days of having acquired such shares, and if, as a result of having
acquired those shares, the shareholder subsequently pays a reduced sales charge
for shares of the fund, or of a different fund, the sales charge previously
incurred acquiring the fund's shares shall not be taken into account (to the
extent such previous sales charges do not exceed the reduction in sales
charges) for the purpose of determining the amount of gain or loss on the
exchange, but will be treated as having been incurred in the acquisition of
such other shares. Also, any loss realized on a redemption or exchange of
shares of a fund will be disallowed to the extent substantially identical
shares are reacquired within the 61-day period beginning 30 days before and
ending 30 days after the shares are disposed of.
Sales of forward currency contracts which are intended to hedge against a
change in the value of securities or currencies held by the fund may affect the
holding period of such securities or currencies and, consequently, the nature
of the gain or loss on such securities or currencies upon disposition.
It is anticipated that any net gain realized from the closing out of
forward currency contracts will be considered gain from the sale of securities
or currencies and therefore be qualifying income for purposes of the 90% of
gross income from qualified sources requirement, as discussed above. In order
to avoid realizing excessive gains on securities or currencies held less than
three months, the fund may be required to defer the closing out of a forward
currency contract beyond the time when it would otherwise be advantageous to do
so. It is anticipated that unrealized gains on forward currency contracts,
which have been open for less than three months as of the end of the fund's
fiscal year and which are recognized for tax purposes, will not be considered
gains on securities or currencies held less than three months for purposes of
the 30% test, as discussed above.
The amount of any realized gain or loss on closing out a forward currency
contracts such as a forward commitment for the purchase or sale of foreign
currency will generally result in ordinary income or loss for tax purposes.
Under Code Section 1256, forward currency contracts held by the fund at the end
of each fiscal year will be required to be "marked to market" for federal
income tax purposes, that is, deemed to have been sold at market value. Code
Section 988 may also apply to forward currency contracts. Under Section 988,
each foreign currency gain or loss is generally computed separately and treated
as ordinary income or loss. In the case of overlap between Sections 1256 and
988, special provisions determine the character and timing of any income, gain
or loss. The fund will attempt to monitor Section 988 transactions to avoid an
adverse tax impact.
The fund will distribute to shareholders annually any net long-term
capital gains which have been recognized for federal income tax purposes
(including unrealized gains at the end of the fund's fiscal year on forward
currency contract transactions as discussed above). Such distributions will be
combined with distributions of capital gains realized on the fund's other
investments.
Under the Code, the fund's taxable income for each year will be computed
without regard to any net foreign currency loss and net capital loss
attributable to transactions after October 31, and any such net foreign
currency loss and net capital loss will be treated as arising on the first day
of the following taxable year.
The fund may be required to pay withholding and other taxes imposed by
foreign countries generally at rates from 10% to 40% which would reduce the
fund's investment income. If more than 50% in value of the fund's total assets
at the close of its taxable year consists of securities of foreign issuers, the
fund will be eligible to file elections with the Internal Revenue Service
pursuant to which shareholders of the fund will be required to include their
respective pro rata portions of such withholding taxes in their federal income
tax returns as gross income, treat such amounts as foreign taxes paid by them,
and deduct such amounts in computing their taxable incomes or, alternatively,
use them as foreign tax credits against their federal income taxes. In any
year the fund makes such an election, shareholders will be notified as to the
amount of foreign withholding and other taxes paid by the fund.
As of the date of this statement of additional information, the maximum
federal individual stated tax rate applicable to ordinary income is 39.6%
(effective tax rates may be higher for some individuals due to phase out of
exemptions and elimination of deductions); the maximum individual tax rate
applicable to net capital gain is 28%; and the maximum corporate tax applicable
to ordinary income and net capital gain is 35%. However, to eliminate the
benefit of lower marginal corporate income tax rates, corporations which have
income in excess of $100,000 for a taxable year will be required to pay an
additional income tax liability of up to $11,750 and corporations which have
taxable income in excess of $15,000,000 for a taxable year will be required to
pay an additional amount of tax of up to $100,000. Naturally, the amount of
tax payable by an individual will be affected by a combination of tax law rules
covering, E.G., deductions, credits, deferrals, exemptions, sources of income
and other matters. Under the Code, an individual is generally entitled to
establish and contribute to an IRA each year without regard to extension (prior
to the tax return filing deadline for that year) whereby earnings on
investments are tax-deferred. In addition, in some cases, the IRA contribution
itself may be deductible.
The foregoing is limited to a summary discussion of federal taxation and
should not be viewed as a comprehensive discussion of all provisions of the
Code relevant to investors. Dividends and capital gain distributions may also
be subject to state or local taxes. Shareholders should consult their own tax
advisers for additional details as to their particular tax status.
PURCHASE OF SHARES
PRICE OF SHARES - Purchases of shares are made at the offering price next
determined after the purchase order is received by the fund or American Funds
Service Company; this offering price is effective for orders received prior to
the time of determination of the net asset value and, in the case of orders
placed with dealers, accepted by the Principal Underwriter prior to its close
of business. The dealer is responsible for promptly transmitting purchase
orders to the Principal Underwriter. Orders received by the investment dealer,
the Transfer Agent, or the fund after the time of the determination of the net
asset value will be entered at the next calculated offering price. Prices
which appear in the newspaper are not always indicative of prices at which you
will be purchasing and redeeming shares of the fund, since prices generally
reflect the previous day's closing price whereas purchases and redemptions are
made at the next calculated price.
The price you pay for shares, the offering price, is based on the net
asset value per share which is calculated once daily at the close of trading
(currently 4:00 p.m., New York Time) each day the New York Stock Exchange is
open. The New York Stock Exchange is currently closed on weekends and on the
following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving and Christmas Day. The net
asset value per share is determined as follows:
1. Portfolio securities, including ADR's and EDR's, which are traded on stock
exchanges, are valued at the last sale price on the exchange 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 determined by the officers of the fund to
be the primary market. Equity securities traded in the over-the-counter market
are valued at the last reported sale price prior to the time of valuation or,
lacking any sales, at the last reported bid price. Securities and assets for
which market quotations are not readily available (including restricted
securities which are subject to limitations as to their sale) are valued at
fair value as determined in good faith by or under the direction of the Board
of Trustees. U.S. Treasury bills, and other short-term obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities, with
original or remaining maturities in excess of 60 days are valued at the mean of
representative quoted bid and asked prices for such securities or, if such
prices are not available, are valued at the mean of representative quoted bid
and asked prices for securities of comparable maturity, quality and type.
Short-term securities with 60 days or less to maturity are amortized to
maturity based on their cost if acquired within 60 days of maturity or, if
already held on the 60th day, based on the value determined on the 61st day.
Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed well before the close of
business day in New York. In addition, European or Far Eastern securities
trading may not take place on all business days in New York. Furthermore,
trading takes place in Japanese markets on certain Saturdays and in various
foreign markets on days which are not business days in New York and on which
the fund's net asset value is not calculated. The calculation of net asset
value may not take place contemporaneously with the determination of the prices
of portfolio securities used in such calculation. Events affecting the values
of portfolio securities that occur between the time their prices are determined
and the close of the New York Stock Exchange will not be reflected in the
fund's calculation of net asset value unless the Board of Trustees deems that
the particular event would materially affect net asset value, in which case an
adjustment will be made. Assets or liabilities initially expressed in terms of
foreign currencies are translated prior to the next determination of the net
asset value of the fund's shares, into U.S. dollars at the prevailing market
rates. The fair value of all other assets is added to the value of securities
to arrive at the total assets;
2. There are deducted from the total assets, thus determined, the
liabilities, including accruals of taxes and other expense items; and
3. The net assets so obtained are then divided by the total number of shares
outstanding (excluding treasury shares), and the result, rounded to the nearest
cent, is the net asset value per share.
Any purchase order may be rejected by the Principal Underwriter or by the
fund. The fund will not knowingly sell shares (other than for the reinvestment
of dividends or capital gain distributions) directly or indirectly or through a
unit investment trust to any other investment company, person or entity, where,
after the sale, such investment company, person, or entity would own
beneficially, directly, indirectly, or through a unit investment trust more
than 4.5% of the outstanding shares of the fund without the consent of a
majority of the Board of Trustees.
STATEMENT OF INTENTION - The reduced sales charges and offering prices set
forth in the Prospectus apply to purchases of $50,000 or more made within a
13-month period subject to a statement of intention (the "Statement"). The
Statement is not a binding obligation to purchase the indicated amount. When a
shareholder elects to utilize the Statement in order to qualify for a reduced
sales charge, shares equal to 5% of the dollar amount specified in the
Statement will be held in escrow in the shareholder's account out of the
initial purchase (or subsequent purchases, if necessary) by the Transfer Agent.
All dividends and any capital gain distributions on shares held in escrow will
be credited to the shareholder's account in shares (or paid in cash, if
requested). If the intended investment is not completed within the specified
13-month period, the purchaser will remit to the Principal Underwriter the
difference between the sales charge actually paid and the sales charge which
would have been paid if the total of such purchases had been made at a single
time. If the difference is not paid within 45 days after written request by
the Principal Underwriter or the securities dealer, the appropriate number of
shares held in escrow will be redeemed to pay such difference. If the proceeds
from this redemption are inadequate, the purchaser will be liable to the
Principal Underwriter for the balance still outstanding. The Statement may be
revised upward at any time during the 13-month period, and such a revision will
be treated as a new Statement, except that the 13-month period during which the
purchase must be made will remain unchanged and there will be no retroactive
reduction of the sales charges paid on prior purchases. Existing holdings
eligible for rights of accumulation (see the Prospectus and account
application) may be credited toward satisfying the Statement. During the
Statement period, reinvested dividends and capital gain distributions,
investments in money market funds, and investments made under a right of
reinstatement will not be credited toward satisfying the Statement.
In the case of purchase orders by the trustees of certain retirement plans
by payroll deduction, the sales charge for the investments made during the
13-month period will be handled as follows: The regular monthly payroll
deduction investment will be multiplied by 13 and then multiplied by 1.5.
The current value of existing American Funds investments (other than money
market fund investments) and any rollovers or transfers reasonably anticipated
to be invested in non-money market American Funds during the 13-month period
are added to the figure determined above. The sum is the Statement amount and
applicable sales charge breakpoint level. On the first investment and all
other investments made pursuant to the Statement, a sales charge will be
assessed according to the sales charge breakpoint thus determined. There will
be no retroactive adjustments in sales charges on investments previously made
during the 13-month period.
Shareholders purchasing shares at a reduced sales charge under a Statement
indicate their acceptance of these terms by their first purchase.
DEALER COMMISSIONS - The following commissions will be paid to dealers who
initiate and are responsible for purchases of $1 million or more, for purchases
by any employer-sponsored 403(b) plan or purchases by any defined contribution
plan qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees, and for purchases made at
net asset value by certain retirement plans of organizations with collective
retirement plan assets of $100 million or more: 1.00% on amounts up to $2
million, 0.80% on amounts over $2 million to $3 million, 0.50% on amounts over
$3 million to $50 million, 0.25% on amounts over $50 million to $100 million,
and 0.15% on amounts over $100 million. The level of dealer commission will be
determined based on sales made over a 12-month period commencing from the date
of the first sale at net asset value. See "The American Funds Shareholder
Guide" in the Prospectus for more information.
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES
AUTOMATIC INVESTMENT PLAN - The automatic investment plan enables shareholders
to make regular monthly or quarterly investments in shares through automatic
charges to their bank accounts. With shareholder authorization and bank
approval, the Transfer Agent will automatically charge the bank account for the
amount specified ($50 minimum), which will be automatically invested in shares
at the offering price on or about the dates you select. Bank accounts will be
charged on the day or a few days before investments are credited, depending on
the bank's capabilities, and shareholders will receive a confirmation statement
at least quarterly. Participation in the plan will begin within 30 days after
receipt of the account application. If the shareholder's bank account cannot
be charged due to insufficient funds, a stop-payment order or the closing of
your account, the plan may be terminated and the related investment reversed.
The shareholder may change the amount of the investment or discontinue the plan
at any time by writing to the Transfer Agent.
AUTOMATIC WITHDRAWALS - Withdrawal payments are not to be considered as
dividends, yield or income. Automatic investments may not be made into a
shareholder account from which there are automatic withdrawals. Withdrawals of
amounts exceeding reinvested dividends and distributions and increases in share
value would reduce the aggregate value of the shareholder's account. The
Transfer Agent arranges for the redemption by the fund of sufficient shares,
deposited by the shareholder with the Transfer Agent, to provide the withdrawal
payment specified.
CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS - A shareholder in one fund
may elect to cross-reinvest dividends or dividends and capital gain
distributions paid by that fund (the paying fund) into any other fund in The
American Funds Group (the "receiving fund") subject to the following
conditions: (i) the aggregate value of the shareholder's account(s) in the
paying fund(s) must equal or exceed $5,000 (this condition is waived if the
value of the account in the receiving fund equals or exceeds that fund's
minimum initial investment requirement), (ii) as long as the value of the
account in the receiving fund is below that fund's minimum initial investment
requirement, dividends and capital gain distributions paid by the receiving
fund must be automatically reinvested in the receiving fund, and (iii) if this
privilege is discontinued with respect to a particular receiving fund, the
value of the account in that fund must equal or exceed the fund's minimum
initial investment requirement or the fund shall have the right, if the
shareholder fails to increase the value of the account to such minimum within
90 days after being notified of the deficiency, automatically to redeem the
account and send the proceeds to the shareholder. These cross-reinvestments of
dividends and capital gain distributions will be at net asset value (without
sales charge).
REDEMPTION OF SHARES
The fund's Declaration of Trust permits the fund to direct the Transfer
Agent to redeem the shares of any shareholder for their then current net asset
value per share if at such time the shareholder owns of record, shares having
an aggregate net asset value of less than the minimum initial investment amount
required of new shareholders as set forth in the fund's current registration
statement under the 1940 Act, and subject to such further terms and conditions
as the Board of Trustees of the fund may from time to time adopt.
EXECUTION OF PORTFOLIO TRANSACTIONS
Orders for the fund's portfolio securities transactions are placed by the
Investment Adviser. The Investment Adviser strives to obtain the best
available prices in its portfolio transactions taking into account the costs
and promptness of executions. When circumstances relating to a proposed
transaction indicate that a particular broker is in a position to obtain the
best price and execution, the order is placed with that broker. This may or
may not be a broker who has provided investment research, statistical, or other
related services to the Investment Adviser or has sold shares of the fund or
other funds served by the Investment Adviser. The fund does not consider that
it has an obligation to obtain the lowest available commission rate to the
exclusion of price, service and qualitative considerations.
There are occasions on which portfolio transactions for the fund may be
executed as part of concurrent authorizations to purchase or sell the same
security for other funds served by the Investment Adviser, or for trusts or
other accounts served by affiliated companies of the Investment Adviser.
Although such concurrent authorizations potentially could be either
advantageous or disadvantageous to the fund, they are effected only when the
Investment Adviser believes that to do so is in the interest of the fund. When
such concurrent authorizations occur, the objective is to allocate the
executions in an equitable manner. The fund will not pay a mark-up for
research in principal transactions.
Brokerage commissions paid on portfolio transactions, including dealer
concessions on underwritings, for the fiscal years ended March 31, 1996, 1995
and 1994, amounted to $17,493,000, $7,563,000 and $8,642,000, respectively.
GENERAL INFORMATION
CUSTODIAN OF ASSETS - Securities and cash owned by the fund, including proceeds
from the sale of shares of the fund and of securities in the fund's portfolio,
are held by The Chase Manhattan Bank, N.A., 3 Metrotech Center, Brooklyn , NY
11245, as Custodian. Non-U.S. securities may be held by the Custodian pursuant
to sub-custodial arrangements in non-U.S. banks or foreign branches of U.S.
banks.
INDEPENDENT ACCOUNTANTS - Price Waterhouse LLP, 400 South Hope Street, Los
Angeles, CA 90071, has served as the fund's independent accountants since its
inception, providing audit services, preparation of tax returns and review of
certain documents to be filed with the Securities and Exchange Commission. The
financial statements, included in this Statement of Additional Information from
the Annual Report, have been so included in reliance on the report of Price
Waterhouse LLP given on the authority of said firm as experts in accounting and
auditing. The selection of the fund's independent accountant is made annually
by the Board of Trustees.
REPORTS TO SHAREHOLDERS - The fund's fiscal year ends on March 31.
Shareholders are provided at least semiannually with reports showing the
investment portfolio, financial statements and other information. The fund's
annual financial statements are audited by the fund's independent accountants,
Price Waterhouse LLP, whose selection is determined annually by the Trustees.
REMOVAL OF TRUSTEES BY SHAREHOLDERS - At any meeting of shareholders, duly
called and at which a quorum is present, the shareholders may, by the
affirmative vote of the holders of a majority of the votes entitled to be cast
thereon, remove any Trustee or Trustees from office and may elect a successor
or successors to fill any resulting vacancies for the unexpired terms of
removed Trustees. The fund has made an undertaking, at the request of the
staff of the Securities and Exchange Commission, to apply the provisions of
section 16(c) of the 1940 Act with respect to the removal of Trustees, as
though the fund were a common-law trust. Accordingly, the Trustees of the fund
shall promptly call a meeting of shareholders for the purpose of voting upon
the question of removal of any Trustee when requested in writing to do so by
the record holders of not less than 10% of the outstanding shares.
PERSONAL INVESTING POLICY - Capital Research and Management Company and its
affiliated companies have adopted a personal investing policy consistent with
Investment Company Institute guidelines. This policy includes: a ban on
acquisitions of securities pursuant to an initial public offering; restrictions
on acquisitions of private placement securities; pre-clearance and reporting
requirements; review of duplicate confirmation statements; annual
recertification of compliance with codes of ethics; disclosure of personal
holdings by certain investment personnel prior to recommendation for purchase
for the fund; blackout periods on personal investing for certain investment
personnel; ban on short-term trading profits for investment personnel;
limitations on service as a director of publicly traded companies; and
disclosure of personal securities transactions.
The financial statements including the investment portfolio and the report
of Independent Accountants contained in the Annual Report are included in this
statement of additional information. The following information is not included
in the Annual Report:
DETERMINATION OF NET ASSET VALUE, REDEMPTION PRICE AND
MAXIMUM OFFERING PRICE PER SHARE -- MARCH 31, 1996
<TABLE>
<CAPTION>
<S> <C>
Net asset value and redemption price per share
(Net assets divided by shares outstanding) $24.28
Maximum offering price per share
(100/94.25 of net asset value per share, which takes
into account the fund's current maximum sales charge $25.76
</TABLE>
SHAREHOLDER AND TRUSTEE RESPONSIBILITY - Under the laws of certain states,
including Massachusetts where the fund was organized and California where the
fund's principal office is located, shareholders of a Massachusetts business
trust may, under certain circumstances, be held personally liable as partners
for the obligations of the fund. However, the risk of a shareholder incurring
any financial loss on account of shareholder liability is limited to
circumstances in which the fund itself would be unable to meet its obligations.
The Declaration of Trust contains an express disclaimer of shareholder
liability for acts, omissions, obligations or affairs of the fund and provides
that notice of the disclaimer may be given in each agreement, obligation, or
instrument which is entered into or executed by the fund or Trustees. The
Declaration of Trust provides for indemnification out of fund property of any
shareholder held personally liable for the obligations of the fund and also
provides for the fund to reimburse such shareholder for all legal and other
expenses reasonably incurred in connection with any such claim or liability.
Under the Declaration of Trust, the Trustees, officers, employees or
agents of the fund are not liable for actions or failure to act; however, they
are not protected from liability by reason of their willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties involved in the
conduct of their office.
SHAREHOLDER VOTING RIGHTS - All shares of the fund have equal voting rights and
may be voted in the elections of Trustees and on other matters submitted to the
vote of shareholders. As permitted by Massachusetts law, there will normally
be no meetings of shareholders for the purpose of electing Trustees unless and
until such time as less than a majority of the Trustees holding office have
been elected by shareholders. At that time, the Trustees then in office will
call a shareholders meeting for the election of Trustees. The Trustees must
call a meeting of shareholders for the purpose of voting upon the question of
removal of any Trustee when requested to do so by the record holders of at
least 10% of the outstanding shares. At such meeting, a Trustee may be removed
after the holders of record of not less than two-thirds of the outstanding
shares have declared that the Trustee be removed either by declaration in
writing or by votes cast in person or by proxy. Except as set forth above, the
Trustees shall continue to hold office and may appoint successor Trustees. The
shares do not have cumulative voting rights, which means that the holders of a
majority of the shares voting for the election of Trustees can elect all the
Trustees. No amendment may be made to the Declaration of Trust without the
affirmative vote of a majority of the outstanding shares of the fund, except
that amendments may be made upon the sole approval of the Trustees to conform
the Declaration of Trust to the requirements of applicable Federal laws or
regulations or the requirements of the regulated investment company provisions
of the Code; however, the Trustees shall not be held liable for failing to do
so. If not terminated by the vote or written consent of a majority of the
outstanding shares, the fund will continue indefinitely.
INVESTMENT RESULTS
The fund's yield is 1.71% based on a 30-day (or one month) period ended
March 31, 1996, computed by dividing the net investment income per share earned
during the period by the maximum offering price per share on the last day of
the period, according to the following formula:
YIELD = 2[( a-b/cd + 1)/6/ -1]
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period that
were entitled to receive dividends.
d = the maximum offering price per share on the last day of the period.
The fund's average annual total return for the one year, five year and ten
year periods as of March 31, 1996 were +12.98%, +11.56% and +13.44%,
respectively. The average total return ("T") is computed by equating the value
at the end of the period ("ERV") with a hypothetical initial investment of
$1,000 ("P") over a period of years ("n") according to the following formula as
required by the Securities and Exchange Commission: P(1+T)/n/ = ERV.
The following assumptions will be reflected in computations made in
accordance with the formula stated above: (1) deduction of the maximum sales
load of 5.75% from the $1,000 initial investment; (2) reinvestment of dividends
and distributions at net asset value on the reinvestment date determined by the
Board; and (3) a complete redemption at the end of any period illustrated. In
addition, the fund will provide lifetime average total return figures.
The fund may also, at times, calculate total return based on net asset
value per share (rather than the offering price), in which case the figure
would not reflect the effect of any sales charges which would have been paid if
shares were purchased during the period reflected in the computation.
Consequently, total return calculated in this manner will be higher. These
total returns may be calculated over periods in addition to those described
above. Total return for the unmanaged indices will be calculated assuming
reinvestment of dividends and interest, but will not reflect any deductions for
advisory fees, brokerage costs or administrative expenses.
The fund may include information on its investment results and/or
comparisons of its investment results to various unmanaged indices (such as The
Dow Jones Average of 30 Industrial Stocks and The Standard and Poor's 500
Composite Stock Index) or results of other mutual funds or investment or
savings vehicles in advertisements or in reports furnished to present or
prospective shareholders.
The fund may refer to results compiled by organizations such as CDA
Investment Technologies, Ibbotson Associates, Lipper Analytical Services,
Morningstar, Inc., Wiesenberger Investment Companies Services and the U.S.
Department of Commerce. Additionally, the fund may, from time to time, refer
to results published in various periodicals, including BARRON'S, FORBES,
FORTUNE, INSTITUTIONAL INVESTOR, KIPLINGER'S PERSONAL FINANCE MAGAZINE, MONEY,
U.S. NEWS AND WORLD REPORT and THE WALL STREET JOURNAL.
The fund may from time to time illustrate the benefits of tax-deferral by
comparing taxable investments to investments made through tax-deferred
retirement plans. The fund may, from time to time, compare its investment
results with the Consumer Price Index, which is a measure of the average change
in prices over time in a fixed market basket of goods and services (E.G. food,
clothing and fuels, transportation, and other goods and services that people
buy for day-to-day living).
The investment results set forth below were calculated as described in the
fund's Prospectus. The fund's results will vary from time to time depending
upon market conditions, the composition of the fund's portfolio and operating
expenses of the fund, so that any investment results reported by the fund
should not be considered representative of what an investment in the fund may
earn in any future period. These factors and possible differences in
calculation methods should be considered when comparing the fund's investment
results with those published for other mutual funds, other investment vehicles
and unmanaged indices. The fund's results also should be considered relative
to the risks associated with the fund's investment objective and policies.
EXPERIENCE OF THE INVESTMENT ADVISER - Capital Research and Management Company
manages 9 growth and growth & income common stock funds that are at least 10
years old. In the rolling 10-year periods during which these funds were
managed by Capital Research and Management Company since January 1, 1966 ( 121
in all), those funds have had better total returns than the Standard and Poor's
500 Composite Stock Index in 94 of the 121 periods.
Note that past results are not an indication of future investment results.
Also, the fund has different investment policies than the funds mentioned
above. These results are included solely for the purpose of informing
investors about the experience and history of Capital Research and Management
Company.
EUPAC vs. Various Unmanaged Indices
<TABLE>
<CAPTION>
Period MSCI
4/1 - 3/31 EUPAC S&P 500/1/ EAFE/2/
<S> <C> <C> <C> <C> <C>
1986 - 1996 252.9% 268.5% 192.5%
1984* - 1996 475.3% 506.0% 462.4%
</TABLE>
/1/ The Standard and Poor's 500 Stock Index is comprised of industrial,
transportation, public utilities and financial stocks and represents a large
portion of the value of issues traded on the New York Stock Exchange. Selected
issues traded on the American Stock Exchange are also included.
/2/ The Morgan Stanley Capital International Europe, Australasia and Far East
Index (MSCI EAFE) is an arithmetical average, weighted by market value, of the
more than 1,000 securities listed on the stock exchanges of Europe, Australia,
New Zealand and the Far East.
* From inception on April 16, 1984.
___________________________________
If you are considering EUPAC for an Individual Retirement Account . . .
Here's how much you would have if you had invested $2,000 a year in the fund:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 Year 5 Years 10 Years Lifetime
(4/1/95 - 3/31/96) (4/1/91 - 3/31/96) (4/1/86 - 3/31/96) (4/16/84 - 3/31/96)
$2,260 $13,957 $39,725 $61,314
</TABLE>
___________________________________
See the difference time can make in an investment program...
<TABLE>
<CAPTION>
If you had invested ...and taken all distributions
$10,000 in EUPAC in shares, your investment
this many years ago... would have been worth this
much at March 31, 1996
Periods
Number of Years 4/1 - 3/31 Value
<S> <C> <C>
1 1995-1996 $ 11,298
2 1994-1996 11,375
3 1993-1996 14,364
4 1992-1996 15,468
5 1991-1996 17,280
6 1990-1996 18,850
7 1989-1996 22,057
8 1988-1996 25,298
9 1987-1996 27,352
10 1986-1996 35,286
11 1985-1996 45,476
Lifetime* 1984 57,533
-
1996
</TABLE>
(* from inception on April 16, 1984)
___________________________________
Illustration of a $10,000 investment in EUPAC with dividends reinvested
(For the lifetime of the fund April 16, 1984 through March 31, 1996)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
COST OF SHARES VALUE OF SHARES
Fiscal Total From From From
Year End Annual Dividends Investment Initial Capital Gains Dividends Total
March 31 Dividends (cumulative) Cost Investment Reinvested Reinvested Value
1985* $69 $ 69 $ 10,069 $ 9,876 $ -- $ 72 $ 9,948
1986 35 104 10,104 15,206 -- 162 15,368
1987 118 222 10,222 18,489 1,006 332 19,827
1988 491 713 10,713 17,370 3,213 854 21,437
1989 316 1,029 11,029 18,379 4,969 1,238 24,586
1990 527 1,556 11,556 19,760 7,128 1,874 28,762
1991 656 2,212 12,212 20,845 7,883 2,653 31,381
1992 611 2,823 12,823 22,857 8,645 3,555 35,057
1993 538 3,361 13,361 24,238 9,167 4,349 37,754
1994 515 3,876 13,876 30,151 11,557 5,962 47,670
1995 716 4,592 14,592 28,695 12,927 6,385 48,007
1996 1,132 5,724 15,724 33,352 15,547 8,634 57,533
</TABLE>
The dollar amount of capital gain distributions during the period was $9,081
(* from inception on April 16, 1984)
DESCRIPTION OF BOND RATINGS
Corporate Debt Securities
MOODY'S INVESTORS SERVICE, INC. rates the long-term debt securities issued by
various entities in categories ranging from "Aaa" to "C" according to quality.
"AAA -- Best quality. These securities carry the smallest degree of investment
risk and are generally referred to as 'gilt edge.' Interest payments are
protected by a large or by an exceptionally stable margin, and principal is
secure. While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the fundamentally
strong position of such issues."
"AA -- High quality by all standards. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities,
fluctuation of protective elements may be of greater amplitude, or there may be
other elements present which make the long-term risks appear somewhat greater."
"A -- Upper medium grade obligations. These bonds possess many favorable
investment attributes. Factors giving security to principal and interest are
considered adequate, but elements may be present which suggest a susceptibility
to impairment sometime in the future."
"BAA -- Medium grade obligations. Interest payments and principal security
appear adequate for the present but certain protective elements may be lacking
or may be characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and , in fact, have
speculative characteristics as well."
"BA -- Have speculative elements; future cannot be considered as well assured.
The protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the future.
Bonds in this class are characterized by uncertainty of position."
"B -- Generally lack characteristics of the desirable investment; assurance of
interest and principal payments or of maintenance of other terms of the
contract over any long period of time may be small."
"CAA -- Of poor standing. Issues may be in default or there may be present
elements of danger with respect to principal or interest."
"CA -- Speculative in a high degree; often in default or have other marked
shortcomings."
"C -- Lowest rated class of bonds; can be regarded as having extremely poor
prospects of ever attaining any real investment standing."
STANDARD & POOR'S CORPORATION rates the long-term securities debt of various
entities in categories ranging from "AAA" to "D" according to quality.
"AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong."
"AA -- High grade. Very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree."
"A - Have a strong capacity to pay interest and repay principal, although they
are somewhat more susceptible to the adverse effects of change in circumstances
and economic conditions, than debt in higher rated categories."
"BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay interest and repay principal than for debt in
higher rated categories."
"BB, B, CCC, CC, C -- Regarded, on balance, as predominantly speculative with
respect to capacity to pay interest and repay principal in accordance with the
terms of the obligation. BB indicates the lowest degree of speculation and C
the highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions."
"C-1 -- Reserved for income bonds on which no interest is being paid."
"D -- In default and payment of interest and/or repayment of principal is in
arrears."
EuroPacific Growth Fund
Investment Portfolio March 31, 1996
Industry Diversification
8.95% Telecommunications
7.26% Banking
6.30% Broadcasting & Publishing
4.61% Automobiles
4.47% Health & Personal Care
55.01% Other Industries
13.40% Bonds, Cash and Equivalents
Percent
Largest Individual of Net
Holdings Assets
Astra 2.37%
Mannesmann 2.13
Internationale Nederlanden
Groep NV (ING) 1.84
News Corp. 1.47
ASEA/BBC Brown Boveri 1.44
Australia and New Zealand
Banking Group 1.43
Volvo 1.30
Ciba-Geigy 1.25
Nestle 1.17
Hutchison Whampoa 1.04
<TABLE>
<CAPTION>
EQUITY-TYPE SECURITIES
(common and preferred stocks and convertible
debentures)
Shares or Market Percent
Principal Value of Net
Amount (Millions) Assets
<S> <C> <C> <C>
Telecommunications- 8.95%
Telecom Corp. of New Zealand Ltd. (New Zealand) 19,091,200 $ 85.795
Telecom Corp. of New Zealand Ltd./1/ 6,740,000 30.289
Telecom Corp. of New Zealand Ltd. (American
Depositary Receipts) 31,800 2.278 .96%
Telefonos de Mexico, SA de CV, Class L
(American Depositary Receipts) (Mexico) 2,950,000 96.981
Telefonos de Mexico, SA de CV, Class L 9,612,500 15.970 .91
Telecomunicacoes Brasileiras SA, preferred
nominative (American Depositary Receipts) (Brazil) 2,123,114 105.625 .86
Telecom Italia Mobile SpA (Italy) 55,430,000 100.595
Telecom Italia Mobile SpA, savings shares 4,320,000 4.712 .85
Koninklijke PTT Nederland NV (Netherlands) 2,471,900 97.272 .79
Nippon Telegraph and Telephone Corp. (Japan) 11,334 82.810 .67
Hong Kong Telecommunications Ltd. (Hong Kong) 40,952,833 81.810 .66
Tele Danmark AS, Class B (Denmark) 1,000,000 52.110
Tele Danmark AS, Class B (American
Depositary Receipts) 1,050,400 27.179 .64
Telefonica de Espana, SA (Spain) 3,068,800 48.715
Telefonica de Espana, SA (American
Depositary Receipts) 153,000 7.267 .45
Philippine Long Distance Telephone Co.
(American Depositary Receipts) (Philippines) 426,250 22.698
Philippine Long Distance Telephone Co.,
convertible preferred shares, Series III (Global
Depositary Receipts) 400,000 20.700
Philippine Long Distance Telephone Co., convertible
preferred shares, Series II (Global Depositary
Receipts)/1/ 220,000 6.710 .41
Telecom Italia SpA (Italy) 23,957,300 37.925
Telecom Italia SpA, savings shares 3,600,000 5.053 .35
Mahanagar Telephone Nigam Ltd. (India) 7,600,000 40.354 .33
Vodafone Group PLC (American Depositary Receipts)
(United Kingdom) 470,000 17.625
Vodafone Group PLC 2,548,700 9.432 .22
Perusahaan Perseroan (Persero) PT Indonesian
Satellite Corp. (American Depositary Receipts)
(Indonesia) 715,500 24.416
Perusahaan Perseroan (Persero) PT
Indonesian Satellite Corp. 400,000 1.373 .21
Korea Mobile Telecommunications Corp. (South Korea) 15,865 19.471 .16
DDI Corp. (Japan) 2,400 18.275 .15
STET-Societa Finanziaria Telefonica p.a.,
nonconvertible savings shares (Italy) 2,750,000 5.514
STET-Societa Finanziaria Telefonica p.a. 1,835,000 5.100 .09
Telecom Argentina STET-France Telecom SA, Class B
(American Depositary Receipts) (Argentina) 188,900 7.839
Telecom Argentina STET-France Telecom SA, Class B 590,000 2.467 .08
BCE Mobile Communications Inc. (Canada)/2/ 305,000 9.986 .08
Kokusai Denshin Denwa Co., Ltd. (Japan) 70,300 6.496 .05
Pakistan Telecommunication Corp. (Global Depositary
Receipts)(Pakistan)/1/ /2/ 25,000 2.400 .02
Rogers Cantel Mobile Communications Inc., Class B 50,000 1.200 .01
(Canada)/2/
Banking- 7.26%
Australia and New Zealand Banking Group Ltd.
(Australia) 36,798,675 175.955 1.43
Svenska Handelsbanken Group, Class A (Sweden) 5,457,300 105.979 .86
Westpac Banking Corp. (Australia) 20,955,130 98.561 .80
ABN AMRO Holding NV (Netherlands) 1,905,402 94.820 .77
Banco de Santander, SA (Spain) 1,666,800 79.378
Banco de Santander, SA (American Depositary 308,200 14.562 .76
Receipts)
Royal Bank of Canada (Canada) 2,900,000 67.819 .55
HSBC Holdings PLC (United Kingdom) 3,610,000 54.145 .44
Banco Popular Espanol, SA (Spain) 245,000 42.327 .34
National Australia Bank Ltd. (Australia) 4,152,195 36.983 .30
MBL International Finance, 3.00% convertible
debentures 2002(Bermuda) $25,200,000 27.720 .23
Grupo Financiero Banamex Accival, SA de CV,
Class B (Mexico)/2/ 9,530,000 20.425
Grupo Financiero Banamex Accival, SA de CV,
Class L /2/ 1,865,900 3.577 .19
Bank of Montreal (Canada) 865,000 20.150 .16
Bangkok Bank Public Co. Ltd., 3.25% convertible
debentures 2004(Thailand) $10,000,000 11.550
Bangkok Bank Public Co. Ltd. 600,000 8.081 .16
Korea First Bank (South Korea)/2/ 2,010,000 17.756 .14
Safra Republic Holdings SA (Luxembourg) 68,000 7.378 .06
Shinhan Bank (South Korea) 204,473 4.862 .04
Merita Ltd., Class A (Finland)/2/ 1,711,233 4.030 .03
Broadcasting & Publishing- 6.30%
News Corp. Ltd. (American Depositary Receipts)
(Australia) 3,958,200 91.039
News Corp. Ltd. 7,944,474 46.490
News Corp. Ltd., preferred shares (American
Depositary Receipts) 1,181,600 23.927
News Corp. Ltd., preferred shares 4,006,153 20.345 1.47
Mediaset (Italy)/1/ /3/ 2,021,818 71.009 .58
CANAL+ (France) 292,175 68.399 .56
Elsevier NV (Netherlands) 1,725,000 26.421
Reed International PLC (United Kingdom) 1,155,634 19.531 .37
Soft Bank Corp. (Japan) 244,720 49.845 .40
Grupo Televisa, SA (American Depositary
Receipts) (Mexico)/2/ 1,791,800 44.571 .36
Television Broadcasts Ltd. (Hong Kong) 11,467,000 42.182 .34
Wolters Kluwer NV (Netherlands) 360,579 39.686 .32
Carlton Communications PLC (United Kingdom) 5,441,250 37.614 .30
Rogers Communications Inc., Class B (Canada)/2/ 3,614,800 32.820 .27
Pearson PLC (United Kingdom) 3,210,000 32.771 .27
Publishing & Broadcasting Ltd. (PBL) (Australia) 6,508,626 28.477 .23
NV Verenigd Bezit VNU (Netherlands) 1,670,000 27.803 .23
News International PLC, special
dividend shares (United Kingdom) 5,041,200 24.848 .20
Independent Newspapers, PLC (Ireland) 2,638,272 21.048 .17
Television Francaise /1/ (France) 165,000 16.887 .14
British Sky Broadcasting Group PLC (American
Depositary Receipts)(United Kingdom) 212,900 8.543 .07
TeleWest Communications PLC (American
Depositary Receipts)(United Kingdom)/2/ 131,000 2.816 .02
Multi-Industry- 4.96%
Hutchison Whampoa Ltd. (Hong Kong) 20,345,000 128.373 1.04
Orkla AS, Class A (Norway) 1,974,000 90.864
Orkla AS, Class B 500,000 21.962 .91
Lend Lease Corp. Ltd. (Australia) 4,253,898 61.553 .50
Jardine Strategic Holdings Ltd. (Singapore -
Incorporated in Bermuda) 12,375,000 39.105
Jardine Strategic Holdings Ltd., 7.50%
convertible Eurobonds 2049 $11,631,000 12.159
Jardine Strategic Holdings Ltd. (American
Depositary Receipts) 300,000 1.838
Jardine Strategic Holdings Ltd., warrants,
expire 1998 /2/ 1,375,000 .516 .43
Brierley Investments Ltd. (New Zealand) 51,086,070 48.698
Brierley Investments Ltd., convertible
preferred shares 2,105,750 1.821 .41
Industriforvaltnings AB Kinnevik, Class B, 10.50%
convertible debentures 1997 (Sweden) SKR66,000,000 20.091
Industriforvaltnings AB Kinnevik, Class B 443,440 15.294
Industriforvaltnings AB Kinnevik, Class A 302,260 10.334 .37
Incentive AB, Class B (Sweden) 350,000 17.740
Incentive AB, Class A 289,900 14.694 .26
Hanson PLC (United Kingdom) 5,063,694 14.836
Hanson PLC (American Depositary Receipts) 700,000 10.500 .20
Swire Pacific Ltd., Class A (Hong Kong) 2,690,000 23.651 .19
Preussag AG (Germany) 78,500 21.832 .18
Ayala Corp., Class B (Philippines) 14,681,000 21.342 .17
Groupe Bruxelles Lambert SA (Belgium) 147,800 19.054
Groupe Bruxelles Lambert SA, warrants, expire 1998/2/ 126,900 1.314 .17
Investor AB, Class B, 8.00% convertible debentures SKR28,000,000 7.075 .06
2001 (Sweden)
Chargeurs (France) 22,000 5.636 .05
B A T Industries PLC (United Kingdom) 253,414 1.870 .02
Automobiles- 4.61%
Volvo AB, Class B (Sweden) 6,865,600 160.096 1.30
Toyota Motor Corp. (Japan) 4,890,000 107.824 .87
Bayerische Motoren Werke AG (Germany) 169,481 88.587
Bayerische Motoren Werke AG, preferred shares 43,636 16.201 .85
Suzuki Motor Corp. (Japan) 5,645,000 69.620 .56
Daimler-Benz AG (Germany) 112,115 60.995 .50
Regie Nationale des Usines Renault SA (France) 1,208,700 35.069 .28
Peugeot SA (France) 200,000 30.525 .25
Health & Personal Care- 4.47%
AB Astra, Class A (Sweden) 5,140,000 238.559
AB Astra, Class B 1,150,000 53.029 2.37
Sandoz Ltd. (Switzerland) 104,000 121.916 .99
Glaxo Wellcome PLC (United Kingdom) 2,185,000 27.375
Glaxo Wellcome PLC (American Depositary Receipts) 450,000 11.306 .31
Teva Pharmaceutical Industries Ltd. (American
Depositary Receipts) (Israel) 800,000 30.800 .25
SmithKline Beecham PLC (American Depositary
Receipts) (United Kingdom) 500,000 25.750 .21
Wella AG, preferred shares (Germany) 46,587 22.407 .18
Banyu Pharmaceutical Co., Ltd. (Japan) 806,000 10.467 .09
Sankyo Co., Ltd. (Japan) 397,000 9.088 .07
Insurance- 4.41%
Internationale Nederlanden Groep NV (Netherlands) 2,410,492 175.117
Internationale Nederlanden Groep NV, warrants,
expire 2001 /2/ 11,600,000 51.897 1.84
Munchener Ruckversicherungs-Gesellschaft,
registered shares(Germany) 19,433 40.485
Munchener Ruckversicherungs-Gesellschaft 3,000 5.285
Munchener Ruckversicherungs-Gesellschaft,
registered shares, warrants, expire 1998 /2/ 5,053 .705 .38
Corporacion Mapfre, CIR, SA (Spain) 757,223 38.807
Corporacion Mapfre, CIR, SA, 8.50% convertible
debentures 1999 /3/ ESP427,770,00 3.447 .34
0
Yasuda Fire and Marine Insurance Co., Ltd. (Japan) 5,223,000 38.893 .32
Irish Life PLC (Ireland) 7,412,864 30.105 .24
PartnerRE Holdings Ltd. (Incorporated in Bermuda) 1,001,900 29.807 .24
Union de Assurances Federales (France) 210,000 26.459 .22
Istituto Nazionale delle Assicurazioni SpA (Italy) 19,320,500 26.378 .21
GIO Australia Holdings Ltd. (Australia) 10,106,056 22.503 .18
CKAG Colonia Konzern AG (Germany) 28,488 21.424
CKAG Colonia Konzern AG, preferred shares 1,553 .942 .18
Baloise Holding (Switzerland) 8,600 18.645 .15
Sampo Insurance Co. Ltd., Class A (Finland) 146,500 8.229 .07
Chiyoda Fire & Marine Insurance Co., Ltd. (Japan) 750,000 4.555 .04
Electrical & Electronic- 3.56%
ASEA AB, Class B (Sweden) 504,300 52.029
ASEA AB, Class A 400,000 41.569
ASEA AB, Class B (American Depositary Receipts) 240,000 24.780
BBC Brown Boveri Ltd, Class A (Switzerland) 48,874 59.429 1.44
Telefonaktiebolaget LM Ericsson, Class B (Sweden) 3,293,180 72.595
Telefonaktiebolaget LM Ericsson, Class B (American
Depositary Receipts) 660,000 14.107 .70
Nokia Corp., Class K (Finland) 1,100,000 38.237
Nokia Corp., Class A 192,000 6.715 .37
Siemens AG (Germany) 60,000 33.028 .27
Makita Corp. (Japan) 2,016,000 30.326 .25
Northern Telecom Ltd. (Canada) 500,000 23.875 .19
Johnson Electric Holdings Ltd. (Hong Kong -
Incorporated in Bermuda) 6,916,800 14.041 .11
Tokyo Electron Ltd. (Japan) 377,000 12.857 .10
LG Electronics Inc. (South Korea) 300,000 8.169 .07
Hitachi, Ltd. (Japan) 810,000 7.871 .06
Machinery & Engineering- 3.51%
Mannesmann AG (Germany) 720,512 262.626 2.13
VA Technologie AG (Austria) 437,500 53.969 .44
Kawasaki Heavy Industries, Ltd. (Japan) 9,945,000 50.733 .41
Atlas Copco AB, Class A (Sweden) 2,640,000 47.507 .39
Mitsubishi Heavy Industries Ltd. (Japan) 1,753,000 15.134 .12
Sidel SA (France) 9,020 2.305 .02
Utilities: Electric & Gas- 3.37%
Korea Electric Power Corp. (South Korea) 1,348,300 56.254
Korea Electric Power Corp. (American Depositary
Receipts) 740,000 17.020 .59
Hongkong Electric Holdings Ltd. (Hong Kong) 14,481,500 47.092 .38
PowerGen PLC (United Kingdom) 5,400,000 43.962 .36
Consolidated Electric Power Asia Ltd. (Hong
Kong - Incorporated in Bermuda) 24,059,312 39.819
Consolidated Electric Power Asia Ltd. (American
Depositary Receipts)/1/ 231,000 3.823 .35
National Power PLC (United Kingdom) 5,350,000 38.126 .31
Edison SpA (Italy) 7,150,000 35.896 .29
Centrais Eletricas Brasileiras SA, preferred
nominative (American Depositary Receipts) (Brazil)/2/ 1,194,000 15.522
Centrais Eletricas Brasileiras SA, ordinary
nominative (American Depositary Receipts)/2/ 982,000 12.766 .23
Hong Kong and China Gas Co. Ltd. (Hong Kong) 11,719,080 23.108 .19
China Light & Power Co., Ltd. (Hong Kong) 5,000,000 22.563 .18
Huaneng Power International, Inc., Class N
(American Depositary Receipts) (People's
Republic of China)/2/ 925,000 15.841 .13
Scottish Power PLC (United Kingdom) 3,000,000 15.817 .13
CESP - Companhia Energetica de Sao Paulo, preferred
nominative (American Depositary Receipts)
(Brazil)/2/ 723,420 7.234
CESP - Companhia Energetica de Sao Paulo,
ordinary nominative /2/ 202,192,000 5.466
CESP - Companhia Energetica de Sao Paulo,
preferred nominative (American Depositary
Receipts)/1/ /2/ 83,664 .837 .11
Ceske Energeticke Zavody, AS (Czech Republic)/2/ 245,000 9.248 .08
Manila Electric Co., Class B (Philippines) 598,788 5.291 .04
Food & Household Products- 2.99%
Nestle SA (Switzerland) 128,225 144.603 1.17
Groupe Danone (France) 518,000 79.471 .65
Reckitt & Colman PLC (United Kingdom) 7,675,000 77.944 .63
NV Verenigde Bedrijven Nutricia (Netherlands) 380,000 38.074 .31
PT Indofood Sukses Makmur (Indonesia) 5,566,000 26.020 .21
Universal Robina Corp. (Philippines) 6,000,000 2.926 .02
Energy Sources- 2.83%
Royal Dutch Petroleum Co. (Netherlands) 550,000 77.915
Royal Dutch Petroleum Co. (New York
Registered Shares) 115,000 16.244
'Shell' Transport and Trading Co., PLC (New
York Registered Shares) (United Kingdom) 135,000 10.834 .85
TOTAL, Class B (France) 972,347 65.699
TOTAL, Class B (American Depositary Receipts) 910,827 30.968 .78
Repsol SA (Spain) 950,000 35.826
Repsol SA (American Depositary Receipts) 500,000 18.687 .44
Petrofina SA (Belgium) 154,900 43.513 .35
YPF SA, Class D (American Depositary
Receipts)(Argentina) 967,000 19.461 .16
Broken Hill Proprietary Co. Ltd. (Australia) 1,083,047 15.417 .13
Engen Ltd. (South Africa) 770,000 5.450 .05
Sasol Ltd. (South Africa) 413,917 4.038 .03
Petron Corp. (Philippines) 8,475,000 3.647 .03
Fletcher Challenge Energy Division (New Zealand) 814,725 1.742 .01
Beverages & Tobacco- 2.70%
Coca-Cola Amatil Ltd. (Australia) 10,174,157 102.384 .83
Seagram Co. Ltd. (Canada) 1,700,000 55.038 .45
LVMH Moet Hennessy Louis Vuitton (France) 170,000 43.176 .35
Panamerican Beverages, Inc., Class A (Mexico) 834,100 33.677 .27
San Miguel Corp., Class B (Philippines) 9,122,000 30.709 .25
PT Hanjaya Mandala Sampoerna (Indonesia) 2,265,000 23.672 .19
Lion Nathan Ltd. (New Zealand) 8,300,400 20.459 .17
South African Breweries Ltd. (South Africa) 450,000 14.255 .11
Heineken Holding NV, Class A (Netherlands) 49,093 9.659 .08
Business & Public Services- 2.57%
Mai PLC (United Kingdom) 6,000,000 35.937 .29
Quebecor Printing Inc. (Canada) 1,792,000 32.211 .26
United Utilities PLC (United Kingdom) 3,371,427 31.769 .26
Reuters Holdings PLC (United Kingdom) 2,866,700 31.103 .25
NTT Data Communication Systems Corp. (Japan) 895 27.261 .22
Hyder PLC (United Kingdom) 2,350,000 27.021 .22
Thames Water PLC (United Kingdom) 3,039,925 26.651 .22
Havas SA (France) 300,000 25.451 .21
Autopistas, Concesionaria Espanola, SA (Spain) 1,800,000 18.276 .15
Waste Management International PLC (American
Depositary Receipts)(United Kingdom)/2/ 1,635,000 16.146 .13
Secom Co., Ltd. (Japan) 220,000 14.368 .12
Eurotunnel SA, units, comprised of one share of
Eurotunnel SA ordinary and one share of
Eurotunnel PLC ordinary (France)/2/ 13,741,006 13.544 .11
BAA PLC (United Kingdom) 1,520,000 12.410 .10
SAP AG, preferred shares (Germany) 30,000 4.321 .03
Chemicals- 2.27%
Ciba-Geigy Ltd. (Switzerland) 123,500 154.531 1.25
AGA AB, Class B (Sweden) 3,430,000 50.921
AGA AB, Class A 108,700 1.638 .43
L'Air Liquide (France) 174,371 31.776 .26
Akzo Nobel NV (Netherlands) 150,000 16.682 .14
Sumitomo Chemical Co., Ltd. (Japan) 2,358,000 12.117 .10
DSM NV (Netherlands) 123,306 11.705 .09
Merchandising- 1.94%
H & M Hennes & Mauritz AB, Class B (Sweden) 967,150 68.890 .56
Tesco PLC (United Kingdom) 9,500,000 38.634 .31
Amway Japan Ltd. (American Depositary
Receipts) (Japan) 715,000 17.786
Amway Japan Ltd. 335,000 16.902 .28
Ito-Yokado Co., Ltd. (Japan) 534,000 31.682 .26
Cifra, SA de CV, Class A (Mexico) 9,395,000 12.682
Cifra, SA de CV, Class C 8,067,200 10.610
Cifra, SA de CV, Class B 1,076,400 1.430 .20
Woolworths Ltd. (Australia) 9,393,675 22.458 .18
WHSmith Group PLC (United Kingdom) 1,500,000 10.186 .08
Delhaize 'Le Lion' SA (Belgium) 150,000 6.360 .05
Chain Store Okuwa Co., Ltd. (Japan) 148,000 1.936 .02
Industrial Components- 1.90%
Compagnie Generale des Etablissements Michelin,
Class B (France) 1,394,000 66.487
Compagnie Generale des Etablissements
Michelin, convertible preferred shares 56,266 3.198 .56
Calsonic Corp. (Japan) 3,985,000 31.275 .25
Morgan Crucible Co. PLC (United Kingdom) 3,346,966 20.864 .17
MINEBEA Co., Ltd. (Japan) 2,078,000 17.765 .14
Bridgestone Corp. (Japan) 1,000,000 16.724 .14
Valeo (France) 309,061 16.430 .13
Nikon Corp. (Japan) 1,260,000 15.422 .13
Continental AG (Germany) 875,000 15.407 .12
Sumitomo Electric Industries, Ltd. (Japan) 710,000 9.552 .08
BICC PLC (United Kingdom) 1,500,000 7.668 .06
Magna International Inc., Class A (Canada) 150,600 6.946 .06
Autoliv AB (American Depositary Receipts) (Sweden)/1/ 70,000 3.580 .03
Orbital Engine Corp. Ltd. (Australia)/2/ 5,039,242 3.150
Orbital Engine Corp. Ltd. (American Depositary
Receipts)/2/ 43,573 .251 .03
Metals: Nonferrous- 1.87%
Pechiney, Class A (France) 1,474,785 61.694 .50
Cominco Ltd. (Canada) 2,325,000 55.219 .45
WMC Ltd. (Australia) 8,178,192 54.056 .44
Outokumpu Oy, Class A (Finland) 2,120,000 35.861 .29
Teck Corp., Class B (Canada) 740,000 16.152 .13
Inco Ltd. (Canada) 260,000 8.223 .06
Recreation & Other Consumer Products- 1.75%
Nintendo Co., Ltd. (Japan) 1,783,300 113.966 .92
THORN EMI PLC (United Kingdom) 3,157,535 81.118 .66
PolyGram NV (New York Registered Shares)
(Netherlands) 350,000 21.087 .17
Forest Products & Paper- 1.33%
Kymmene Corp. (Finland) 1,150,000 32.173
Kymmene Corp., 8.25% convertible debentures 2043 FIM40,000,000 9.506 .34
Stora Kopparbergs Bergslags AB, Class B (Sweden) 2,300,000 29.489 .24
Kimberly-Clark de Mexico, SA de CV, Class A (Mexico) 1,400,000 26.837 .22
AssiDoman AB (Sweden) 828,000 18.563 .15
Carter Holt Harvey Ltd. (New Zealand) 8,224,336 18.144 .15
Repola Ltd. (Finland) 690,000 13.789 .11
MAYR-MELNHOF Karton AG (Austria)/2/ 160,000 7.012 .06
Sappi BVI Finance Ltd., 7.50% convertible debentures
2002 (South Africa)/1/ $6,000,000 5.670 .04
Fletcher Challenge Paper Division (New Zealand)/2/ 1,629,450 3.040 .02
Appliances & Household Durables- 1.22%
AB Electrolux, Class B (Sweden) 1,110,000 54.347 .44
Sony Corp. (Japan) 843,000 50.330 .41
SANYO Electric Co., Ltd. (Japan) 3,625,000 21.676 .18
Philips Electronics NV (Netherlands) 560,000 20.376 .16
Leifheit AG (Germany) 76,650 3.178 .03
Samsung Electronics Co., Ltd. (Global Depositary
Receipts) (South Korea)/1/ 1,239 .073 .00
Electronic Components- 1.08%
Kyocera Corp. (Japan) 1,233,000 83.636 .68
Murata Manufacturing Co., Ltd. (Japan) 1,245,000 42.807 .34
Nichicon Corp. (Japan) 550,000 7.194 .06
Real Estate- 0.86%
Sun Hung Kai Properties Ltd. (Hong Kong) 6,250,000 55.962 .45
Hysan Development Co. Ltd. (Hong Kong) 7,550,000 24.357 .20
Mitsui Fudosan Co., Ltd. (Japan) 1,480,000 19.221 .15
C&P Homes, Inc. (Philippines) 9,137,000 6.903 .06
Miscellaneous Materials & Commodities- 0.70%
Compagnie de Saint-Gobain (France) 317,409 41.253 .33
English China Clays PLC (United Kingdom) 6,144,300 27.800 .23
SGL Carbon AG (Germany) 183,000 17.482 .14
Aerospace & Military Technology- 0.69%
Bombardier Inc., Class B (Canada) 4,285,500 63.276 .51
Rolls-Royce PLC (United Kingdom) 6,694,781 22.016 .18
Building Materials & Components- 0.58%
Holderbank Financiere Glaris Ltd. (Switzerland) 58,938 44.476 .36
CEMEX, SA de CV, ordinary participation
certificates (Mexico) 2,686,000 9.600
CEMEX, SA de CV, Class B 2,210,625 8.505
CEMEX, SA de CV, Class A 1,793,075 6.421 .20
Fletcher Challenge Building Division (New Zealand)/2/ 814,725 2.003 .02
Wholesale & International Trade- 0.49%
ITOCHU Corp. (Japan) 4,067,000 28.499 .23
Mitsubishi Corp. (Japan) 1,947,000 25.467 .21
Finning Ltd. (Canada) 400,000 6.530 .05
Leisure & Tourism- 0.47%
Euro Disney SCA (France)/2/ 7,320,000 20.511
Euro Disney SCA, warrants, expire 2004 /2/ 1,100,000 .400 .17
Granada Group PLC (United Kingdom) 1,602,281 18.338 .15
Mandarin Oriental International Ltd. (Singapore -
Incorporated in Bermuda) 10,420,065 13.129 .11
Rank Organisation PLC (United Kingdom) 700,000 5.176 .04
Transportation: Airlines- 0.44%
British Airways PLC (American Depositary Receipts)
(United Kingdom) 354,400 29.061
British Airways PLC 1,056,000 8.637 .31
Singapore Airlines Ltd. (Singapore) 1,124,000 11.655 .09
Swissair Schweizerische Luftverkehr AG 4,700 4.937 .04
(Switzerland)/2/
Gold Mines- 0.41%
Ashanti Goldfields Co. Ltd. (Global Depositary
Receipts) (Ghana) 1,116,900 27.923
Ashanti Goldfields Co. Ltd., 5.50% convertible
debentures 2003 $16,834,000 17.339
Ashanti Goldfields Co. Ltd. (Global Depositary
Receipts)/1/ 210,000 5.250 .41
Transportation: Shipping- 0.38%
Nippon Yusen KK (Japan) 4,270,000 24.296 .20
Stolt-Nielsen SA, Class B (American Depositary
Receipts)(Incorporated in Luxembourg) 632,000 11.297 .09
Bergesen D.Y. AS, Class B (Norway) 650,000 10.954 .09
Transportation: Rail & Road- 0.31%
TNT Ltd. (Australia)/2/ 19,550,000 24.134 .20
Canadian National Railway System (Canada) 400,000 6.900 .06
Nippon Konpo Unyu Soko Co., Ltd. (Japan) 775,000 6.582 .05
Metals: Steel- 0.21%
Pohang Iron & Steel Co., Ltd. (American Depositary
Receipts)(South Korea) 526,800 12.775
Pohang Iron & Steel Co., Ltd. 7,870 .661 .11
Thyssen AG (Germany) 50,000 9.068 .07
Acerinox, SA (Spain) 31,460 3.549 .03
Financial Services - 0.14%
ORIX Corp. (Japan) 250,500 9.479 .08
Acom Co., Ltd. (Japan) 210,000 8.103 .06
Data Processing & Reproduction- 0.10%
Riso Kagaku Corp. (Japan) 70,000 5.984 .05
Olivetti SpA (Italy)/2/ 11,250,000 5.747 .05
Construction & Housing- 0.06%
Kinden Corp. (Japan) 369,600 5.732 .05
Sumitomo Forestry Co., Ltd. (Japan) 90,000 1.379 .01
Electronic Instruments- 0.03%
Barco NV (Belgium) 30,000 4.144 .03
Miscellaneous- 4.88%
Other equity-type securities in initial period of
acquisition 602.005 4.88
----------- -------
-
TOTAL EQUITY-TYPE SECURITIES
(cost: $8,555.464 million) 10,682.362 86.60
----------- -------
-
BONDS
Principal
Amount
(Millions)
Argentinean Government- 0.50%
Argentina 6.8125% March 2005 /4/ $86.000 $62.028 .50%
New Zealand Government- 0.01%
New Zealand 8.00% July 1998 NZ$1.500 1.012 .01
Supranational- 0.06%
International Bank for Reconstruction and
Development 12.50% July 1997 NZ$11.000 7.846 .06
----------- -------
-
TOTAL BONDS (cost: $49.787 million) 70.886 .57
----------- -------
-
SHORT-TERM SECURITIES
Corporate Short-Term Notes- 7.28%
Toronto-Dominion Holdings USA Inc. 5.14%-5.36%
due 4/1-7/1/96 $101.250 100.766 .82
General Electric Capital Corp. 5.19%-5.35%
due 4/29-5/16/96 83.600 83.084 .67
National Australia Funding (Delaware) Inc.
5.205%-5.37% due 4/16-5/14/96 82.100 81.845 .66
Canada Bills 5.10%-5.25% due 4/16-6/21/96 67.700 67.147 .54
Ford Motor Credit Co. 5.14%-5.29% due 4/9-5/28/96 65.300 65.169 .53
Ford Credit Europe PLC 5.16%-5.21% due 4/2-4/15/96 65.000 64.925 .53
American Express Credit Corp. 5.15%-5.30%
due 4/3-5/24/96 62.500 62.343 .51
Sandoz Corp. 5.12%-5.33% due 4/12-5/15/96 53.400 53.134 .43
Daimler-Benz North America Corp. 5.12%-5.26%
due 4/11-6/21/96 53.400 52.835 .43
Canadian Imperial Holdings Inc. 5.105% due 5/2/96 50.000 49.773 .40
Bayerische Vereinsbank AG 5.13%-5.27%
due 4/10-5/28/96 43.500 43.273 .35
Coca-Cola Co. 5.11% due 4/19/96 35.000 34.905 .28
SmithKline Beecham Corp. 5.16% due 4/8/96 32.300 32.263 .26
Halifax Building Society 5.10%-5.25% due 4/4-5/7/96 31.200 31.130 .25
ABN AMRO North America Finance Inc. 5.06% due 5/6/96 29.500 29.348 .24
Canadian Wheat Board 5.03%-5.30% due 4/15-5/17/96 28.700 28.573 .23
AT&T Corp. 5.35% due 4/1/96 17.925 17.922 .15
Certificates of Deposit- 2.84%
Societe Generale 5.22%-5.45% due 4/3-5/9/96 89.500 89.500 .73
National Westminster Bank PLC 5.18%-5.33%
due 4/22-5/21/96 86.000 85.999 .70
Commerzbank AG 5.15%-5.36% due 5/20-5/31/96 70.000 69.988 .57
Credit Suisse 5.19% due 4/9/96 40.000 40.000 .32
Morgan Guaranty Trust Co. of New York 5.25%
due 4/11/96 40.000 40.000 .32
Bayerische Landesbank Girozentrale 5.43% due 4/4/96 25.000 25.000 .20
Federal Agency Discount Notes- 2.44%
Federal National Mortgage Assn. 5.00%-5.09%
due 4/4-5/29/96 113.700 113.249 .92
Federal Home Loan Bank 5.00%-5.21% due 5/3-6/10/96 106.275 105.520 .86
Federal Home Loan Mortgage Corp. 5.00%-5.29%
due 4/22-5/28/96 82.190 81.717 .66
----------- -------
-
TOTAL SHORT-TERM SECURITIES
(cost: $1,549.491 million) 1,549.408 12.56
----------- -------
-
TOTAL INVESTMENT SECURITIES
(cost: $10,154.742 million) 12,302.656 99.73
Excess of cash and receivables over payables 32.745 .27
----------- -------
-
NET ASSETS $12,335.401 100.00%
=========== =======
=
</TABLE>
/1/ Purchased in a private placement transaction; resale to the public may
require registration or may extend only to qualified institutional buyers
/2/ Non-income-producing securities.
/3/ Valued under procedures established by the Board of Trustees.
/4/ Coupon rate may change periodically.
See Notes to Financial Statements
EQUITY-TYPE SECURITIES APPEARING IN THE PORTFOLIO SINCE SEPTEMBER 30, 1995
Acom
AGA
BAA
Banyu Pharmaceutical
BARCO
British Sky Broadcasting Group
Canadian National Railway System
Chargeurs
Engen
Groupe Danone
Grupo Televisa
PT Hanjaya Mandala Sampoerna
HSBC Holdings
Kawasaki Heavy Industries
Kokusai Denshin Denwa
Korea Mobile Telecommunications
LG Electronics
LVMH Moet Hennessy Louis Vuitton
Mahanagar Telephone Nigam
MAI
MBL International Finance
Mediaset
Northern Telecom
NTT Data Communication Systems
NV Verenigde Bedrijven Nutricia
ORIX
PartnerRE Holdings
Pohang Iron & Steel
Publishing & Broadcasting
Royal Bank of Canada
Sasol
Sidel
SmithKline Beecham
Soft Bank
South African Breweries
Stolt-Nielsen
Swissair Schweizerische Luftverkehr
Tokyo Electron
Union des Assurances Federales
EQUITY-TYPE SECURITIES ELIMINATED FROM THE PORTFOLIO SINCE SEPTEMBER 30, 1995
Alusuisse-Lonza Holding
ARBED
PT Bank Internasional Indonesia
British Gas
Cable and Wireless
Cartiere Burgo
Cathay Pacific Airways
Companhia Cervejaria Brahma
CS Holding Group
Deutsche Bank
Eastern Group
ECI Telecom
Elf Gabon
Forte
GEA
Higashi Nihon House
Holdingmaatschappij De Telegraaf
PT Indah Kiat Pulp & Paper
Nihon Dempa Kogyo
NOVA
Philippine National Bank
Pilkington
Poliet
Samsung Co.
Sandvik
Scitex
Sembawang Shipyard
Shun Tak Holdings
Sika Finanz
Telefonica de Argentina
Thai Telephone & Telecommunication
Tolmex
EuroPacific Growth Fund
Financial Statements
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
at March 31, 1996 (dollars in millions)
- ---------------------------------------------- ----------- -----------
<S> <C> <C>
ASSETS:
Investment securities at market
(cost: $10,154.742) $12,302.656
Cash .909
Receivables for-
Sales of investments $40.314
Sales of fund's shares 35.548
Open forward currency contracts 1.921
Dividends and accrued interest 35.635 113.418
----------- -----------
12,416.983
LIABILITIES:
Payables for-
Purchases of investments 56.521
Repurchases of fund's shares 15.401
Management services 5.004
Accrued expenses 4.656 81.582
----------- -----------
NET ASSETS AT MARCH 31, 1996-
Equivalent to $24.28 per share on
508,129,481 shares of beneficial
interest issued and outstanding;
unlimited shares authorized 12,335.401
===========
Statement of Operations
for the year ended March 31, 1996 (dollars in millions)
- ---------------------------------------------- ----------- -----------
INVESTMENT INCOME:
Income:
Dividends $197.288
Interest 117.858 315.146
-----------
Expenses:
Management services fee 51.034
Distribution expenses 24.656
Transfer agent fee 11.473
Reports to shareholders 1.121
Registration statement and prospectus 1.491
Postage, stationery and supplies 1.564
Trustees' fees .147
Auditing and legal fees .087
Custodian fee 6.624
Taxes other than federal income tax .182
Other expenses .035 98.414
----------- -----------
Net investment income 216.732
-----------
REALIZED GAIN AND UNREALIZED
APPRECIATION ON INVESTMENTS:
Net realized gain 328.434
Net increase in unrealized appreciation on
investments 1,274.147
Net unrealized appreciation on open
forward currency contracts 7.358 1,281.505
----------- -----------
Net realized gain and change in unrealized
appreciation on investments 1,609.939
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS 1,826.671
===========
- ---------------------------------------------- ----------- -----------
Statement of Changes in Net Assets Year ended March 31
(dollars in millions) 1996 1995
- ---------------------------------------------- ----------- -----------
OPERATIONS:
Net investment income $216.732 $139.493
Net realized gain on investments 328.434 118.330
Net change in unrealized appreciation
on investments 1,281.505 (240.920)
----------- -----------
Net increase in net assets
resulting from operations 1,826.671 16.903
----------- -----------
DIVIDENDS AND DISTRIBUTIONS PAID TO
SHAREHOLDERS:
Dividends from net investment income (221.348) (117.777)
Distributions from net realized gain on
investments (93.827) (296.792)
----------- -----------
Total dividends and distributions (315.175) (414.569)
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold: 186,653,832
and 182,082,807 shares, respectively 4,301.025 3,929.930
Proceeds from shares issued in reinvestment
of net investment income dividends and
distributions of net realized gain on
investments: 13,154,617 and 18,345,378 shares,
respectively 296.950 389.766
Cost of shares repurchased: 102,718,162
and 82,279,286 shares, respectively (2,361.627) (1,763.865)
----------- -----------
Net increase in net assets resulting from
capital share transactions 2,236.348 2,555.831
----------- -----------
TOTAL INCREASE IN NET ASSETS 3,747.844 2,158.165
NET ASSETS:
Beginning of year 8,587.557 6,429.392
---------- -----------
End of year (including undistributed
net investment income: $37.536
and $40.615, respectively) $12,335.401 $8,587.557
=========== ===========
</TABLE>
See Notes to Financial Statements
NOTES TO FINANCIAL STATEMENTS
1. EuroPacific Growth Fund (the "fund") is registered under the Investment
Company Act of 1940 as an open-end, diversified management investment company.
The fund seeks long-term capital appreciation by investing in the securities of
companies based outside the U.S. The following paragraphs summarize the
significant accounting policies consistently followed by the fund in the
preparation of its financial statements:
Equity-type securities traded on a national securities exchange (or
reported on the NASDAQ national market) and securities traded in the
over-the-counter market are stated at the last reported sales price on the day
of valuation; other securities, and securities for which no sale was reported
on that date, are stated at the last quoted bid price. Long-term and short-term
securities with original or remaining maturities in excess of 60 days,
including forward currency contracts, are valued at the mean of their quoted
bid and asked prices. Short-term securities with 60 days or less to maturity
are valued at amortized cost, which approximates market value. Securities for
which market quotations are not readily available are valued at fair value as
determined in good faith by the Valuation Committee of the Board of Trustees.
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 on securities
purchased are amortized over the life of the respective securities. The fund
does not amortize premiums on securities purchased. Dividends and distributions
paid to shareholders are recorded on the ex-dividend date.
Investment securities and other assets and liabilities, including forward
currency contracts, denominated in non-U.S. currencies are recorded in the
financial statements after translation into U.S. dollars utilizing rates of
exchange on the last business day of the year. Purchases and sales of
investment securities, income, and expenses are calculated using the prevailing
exchange rate as accrued. The fund does not identify the portion of each amount
shown in the fund's statement of operations under the caption "Realized Gain
and Unrealized Appreciation on Investments" that arises from changes in
non-U.S. currency exchange rates.
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 $6,624,000 includes $149,000 that was paid by these
credits rather than in cash.
Net realized gains and net unrealized gains of the fund derived in India
are subject to certain non-U.S. taxes at a rate of 30%. The fund provides for
such non-U.S. taxes on investment income, net realized gains and net unrealized
gains.
2. It is the fund's policy to continue to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its net taxable income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision is
required.
As of March 31, 1996, net unrealized appreciation on investments,
excluding forward currency contracts, for book and federal income tax purposes
aggregated $2,147,914,000, net of accumulated deferred taxes totaling
$1,429,000 on unrealized appreciation of Indian securities, of which
$2,467,419,000 related to appreciated securities and $319,505,000 related to
depreciated securities. During the year ended March 31, 1996, the fund
realized, on a tax basis, a net capital gain of $319,302,000 on securities
transactions. Net gains related to non-U.S. currency and other transactions of
$9,132,000 were treated as ordinary income for federal income tax purposes. The
cost of portfolio securities, excluding forward currency contracts, for book
and federal income tax purposes was $10,154,742,000 at March 31, 1996.
3. The fee of $51,034,000 for management services was paid pursuant to an
agreement with Capital Research and Management Company (CRMC), with which
certain officers and Trustees of the fund are affiliated. The Investment
Advisory and Service Agreement provides for monthly fees, accrued daily, based
on an annual rate of 0.69% of the first $500 million of average net assets;
0.59% of such assets in excess of $500 million but not exceeding $1.0 billion;
0.53% of such assets in excess of $1.0 billion but not exceeding $1.5 billion;
0.50% of such assets in excess of $1.5 billion but not exceeding $2.5 billion;
0.48% of such assets in excess of $2.5 billion but not exceeding $4.0 billion;
0.47% of such assets in excess of $4.0 billion but not exceeding $6.5 billion;
0.465% of such assets in excess of $6.5 billion but not exceeding $10.5
billion; and 0.462% of such assets in excess of $10.5 billion.
Pursuant to a Plan of Distribution, the fund may expend up to 0.25% of its
average net assets annually for any activities primarily intended to result in
sales of fund shares, provided the categories of expenses for which
reimbursement is made are approved by the fund's Board of Trustees. Fund
expenses under the Plan include payments to dealers to compensate them for
their selling and servicing efforts. During the year ended March 31, 1996,
distribution expenses under the Plan were $24,656,000. As of March 31, 1996,
accrued and unpaid distribution expenses were $1,743,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $11,473,000. American Funds Distributors, Inc. (AFD), the
principal underwriter of the fund's shares, received $11,178,000 (after
allowances to dealers) as its portion of the sales charges paid by purchasers
of the fund's shares. Such sales charges are not an expense of the fund and,
hence, are not reflected in the accompanying statement of operations.
Trustees of the fund 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 March 31, 1996, aggregate amounts deferred and earnings thereon were
$154,000.
CRMC is owned by The Capital Group Companies, Inc. AFS and AFD are both
wholly owned subsidiaries of CRMC. Certain Trustees and officers of the fund
are or may be considered to be affiliated with CRMC, AFS, and AFD. No such
persons received any remuneration directly from the fund.
4. As of March 31, 1996, accumulated undistributed net realized gain on
investments was $242,259,000 and paid-in capital was $9,389,840,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $4,223,394,000 and $1,888,117,000, respectively,
during the year ended March 31, 1996.
Dividend and interest income is recorded net of non-U.S. taxes paid. For
the year ended March 31, 1996, such non-U.S. taxes were $22,479,000. Net
realized currency gains on dividends, interest, withholding taxes reclaimable,
and sales of non-U.S. bonds and notes were $4,469,000 for the year ended March
31, 1996.
The fund reclassified $1,537,000 to undistributed net investment income
from undistributed net realized gains and $3,126,000 to undistributed net
realized currency gains from undistributed net realized gains for the year
ended March 31, 1996.
The fund may enter into forward currency contracts, which represent an
agreement to exchange currencies of different countries at a specified future
date at a specified rate. 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 face or
contract amount in U.S. dollars reflects the total exposure the fund has in
that particular contract. Losses 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. At March 31, 1996, the fund had outstanding
forward currency contracts to sell non-U.S. currencies as follows:
NON-U.S. CURRENCY SALE CONTRACTS
<TABLE>
<CAPTION>
Contract Amount U.S. Valuation at 3/31/96
Non-U.S. U.S. Amount Unrealized
Appreciation
<S> <C> <C> <C> <C>
Japanese Yen expiring
7/11/96 to 1/17/97 Y8,446,775,000 $83,050,734 $81,129,363 $1,921,371
</TABLE>
- -------
Per-Share Data and Ratios /1/
<TABLE>
<CAPTION>
Year ended March 31
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Year $20.89 $21.95 $17.64 $16.64 $15.18
------- ------ ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .46 .35 .24 .22 .28
Net realized and unrealized
gain (loss) on investments 3.63 (.19) 4.37 1.04 1.48
------- ------ ------- ------- -------
Total income from investment
operations 4.09 .16 4.61 1.26 1.76
------- ------ ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment
income (.49) (.317) (.187) (.222) (.30)
Dividends from net realized
non-U.S. currency gains /2/ - (.003) (.043) (.038) -
Distributions from net
realized gains (.21) (.90) (.07) - -
------- ------ ------- ------- -------
Total distributions (.70) (1.22) (.30) (.26) (.30)
------- ------ ------- ------- -------
Net Asset Value, End of Year $24.28 $20.89 $21.95 $17.64 $16.64
======= ====== ======= ======= =======
Total Return /3/ 19.84% .71% 26.27% 7.69% 11.71%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(in millions) $12,335 $8,588 $6,429 $2,992 $1,933
Ratio of expenses to average
net assets .95% .97% .99% 1.10% 1.24%
Ratio of net income to average
net assets 2.09% 1.80% 1.13% 1.40% 1.85%
Portfolio turnover rate 21.77% 16.02% 21.37% 10.35% 9.65%
</TABLE>
/1/ Adjusted to reflect the 100% share dividend effective June 10, 1993.
/2/ Realized non-U.S. currency gains are treated as ordinary income for federal
income tax
purposes.
/3/ This was calculated without deducting a sales charge. The maximum sales
charge is 5.75% of the fund's offering price.
To the Board of Trustees and Shareholders of EuroPacific Growth Fund:
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 EuroPacific Growth Fund (the
"Trust") at March 31, 1996, the results of its operations, the changes in its
net assets and the per-share data and ratios for the years indicated in
conformity with generally accepted accounting principles. These financial
statements and per-share data and ratios (hereafter referred to as "financial
statements") are the responsibility of the Trust'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 March 31, 1996 by correspondence with the custodian and brokers
and the application of alternative auditing procedures where confirmations from
brokers were not received, provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
Los Angeles, California
April 30, 1996
Tax Information (unaudited)
We are required to advise you within 60 days of the fund's fiscal year-end
regarding the federal tax status of distributions received by shareholders
during such fiscal year. The distributions made during the fiscal year by the
fund were earned from the following sources:
Dividends and Distributions per Share
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
To Shareholders of Payment Date From Net From Net From Net
Record Investment Realized Short- Realized Long-
Income Term Gains Term Gains
June 2, 1995 June 5, 1995 $0.07 - $0.06
December 15, 1995 December 18, 1995 0.42 - 0.15
</TABLE>
The fund makes an election under the Internal Revenue Code Section 853 to pass
through non-U.S. taxes paid by the fund to its shareholders. The amount of
non-U.S. taxes for the fiscal year ended March 31, 1996 is $0.04351 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, none of the
dividends paid by the fund from net investment income represents qualifying
dividends.
Dividends and distributions received by retirement plans such as IRAs,
Keogh-type plans, and 403(b) plans need not be reported as taxable income.
However, many plan retirement trusts may need this information for their annual
information reporting.
SINCE THE AMOUNTS ABOVE ARE REPORTED FOR THE FUND'S FISCAL YEAR AND NOT THE
CALENDAR YEAR, SHAREHOLDERS SHOULD REFER TO THEIR FORM 1099 DIV OR OTHER TAX
INFORMATION WHICH WAS MAILED IN JANUARY 1996 UNDER SEPARATE COVER TO DETERMINE
THE CALENDAR YEAR AMOUNTS TO BE INCLUDED ON THEIR RESPECTIVE 1995 TAX RETURNS.
SHAREHOLDERS SHOULD CONSULT THEIR TAX ADVISERS.
