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[LOGO OF THE AMERICAN FUNDS GROUP(R)]
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EuroPacific Growth Fund
Prospectus
JUNE 1, 1997
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EUROPACIFIC GROWTH FUND
333 South Hope Street
Los Angeles, CA 90071
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TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C>
Expenses 3 Investment Results 9
........................................ ......................................
Financial Highlights 4 Dividends, Distributions and Taxes 10
........................................ ......................................
Investment Policies and Risks 5 Fund Organization and Management 11
........................................ ......................................
Securities and Investment Techniques 6 Shareholder Services 14
........................................
Multiple Portfolio Counselor System 7
</TABLE>
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The fund's investment objective is to achieve long-term growth of capital by
investing in securities of issuers domiciled outside the U.S. Normally, the
fund seeks to achieve this investment objective by investing primarily in
equity securities of issuers domiciled in Europe or the Pacific Basin.
This prospectus presents information you should know before investing in the
fund. You should keep it on file for future reference.
YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. YOUR INVESTMENT IN THE FUND IS NOT
A DEPOSIT OR OBLIGATION OF, OR INSURED OR GUARANTEED BY, ANY ENTITY OR PERSON
INCLUDING THE U.S. GOVERNMENT AND THE FEDERAL DEPOSIT INSURANCE CORPORATION.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
16-010-0697
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EXPENSES
The effect of the expenses described below is reflected in the fund's share
price or return.
You may pay certain shareholder transaction expenses when you buy or sell
shares of the fund. Fund operating expenses are paid out of the fund's assets
and are factored into its share price.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum sales charge on purchases
(as a percentage of offering price) 5.75%
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SALES CHARGES ARE REDUCED OR ELIMINATED FOR LARGER PURCHASES. There is no sales
charge on reinvested dividends, and no deferred sales charge or redemption or
exchange fees. A contingent deferred sales charge of 1% applies on certain
redemptions made within 12 months following purchases without a sales charge.
FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
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<S> <C>
Management fees 0.48 %
................................................................................
12b-1 expenses 0.23 %/1/
................................................................................
Other expenses 0.19 %
................................................................................
Total fund operating expenses 0.90 %
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/1/ 12b-1 expenses may not exceed 0.25% of the fund's average net assets
annually. Due to these distribution expenses, long-term shareholders may pay
more than the economic equivalent of the maximum front-end sales charge
permitted by the National Association of Securities Dealers, Inc.
EXAMPLES
Assuming a hypothetical annual return of 5% and shareholder transaction and
operating expenses as described above, for every $1,000 you invested, you would
pay the following total expenses over the following periods:
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One year $66
................................................................................
Three years $85
................................................................................
Five years $104
................................................................................
Ten years $162
THESE EXAMPLES ARE NOT MEANT TO REPRESENT YOUR ACTUAL INVESTMENT RESULTS OR
EXPENSES, WHICH MAY VARY. YOUR EXPENSES WILL BE LESS IF YOU QUALIFY TO PURCHASE
SHARES AT A REDUCED OR NO SALES CHARGE.
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EUROPACIFIC GROWTH FUND / PROSPECTUS 3
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FINANCIAL HIGHLIGHTS
The following information has been audited by Price Waterhouse LLP, independent
accountants. This table should be read together with the financial statements
which are included in the statement of additional information and annual
report.
SELECTED PER-SHARE DATA
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31/1/
.......................
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $24.28 $ 20.89 $21.95 $17.64 $16.64 $15.18 $14.39 $13.38 $12.64 $13.46
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INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .46 .46 .35 .24 .22 .28 .28 .25 .23 .23
.......................................................................................................
Net realized and
unrealized gain (loss)
on investments 3.28 3.63 (.19) 4.37 1.04 1.48 1.02 1.95 1.54 .63
.......................................................................................................
Total income
from investment
operations 3.74 4.09 .16 4.61 1.26 1.76 1.30 2.20 1.77 .86
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LESS DISTRIBUTIONS:
Dividends from net
investment income (.41) (.49) (.317) (.187) (.222) (.30) (.33) (.28) (.18) (.33)
.......................................................................................................
Dividends from net
realized non-U.S.
currency gains/2/ (.03) -- (.003) (.043) (.038) -- -- -- -- --
.......................................................................................................
Distributions from net
realized gains (.88) (.21) (.90) (.07) -- -- (.18) (.91) (.85) (1.35)
.......................................................................................................
Total distributions (1.32) (.70) (1.22) (.30) (.26) (.30) (.51) ( 1.19) (1.03) (1.68)
.......................................................................................................
Net asset value, end of
year $26.70 $ 24.28 $20.89 $21.95 $17.64 $16.64 $15.18 $14.39 $13.38 $12.64
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Total return/3/ 15.88% 19.84% .71% 26.27% 7.69% 11.71% 9.11% 16.99% 14.69% 8.12%
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RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of year
(in millions) $16,737 $12,335 $8,588 $6,429 $2,992 $1,933 $1,138 $ 584 $ 228 $ 188
.......................................................................................................
Ratio of expenses to
average net assets .90% .95% .97% .99% 1.10% 1.24% 1.28% 1.24% 1.30% 1.21%
.......................................................................................................
Ratio of net income to
average net assets 1.77% 2.09% 1.80% 1.13% 1.40% 1.85% 2.23% 2.29% 1.87% 1.56%
.......................................................................................................
Average commissions
paid/4/ 1.36c 1.10c .21c .08c .25c .22c 2.09c 2.17c 2.42c 3.48c
.......................................................................................................
Portfolio turnover rate % 21.77% 16.02% 21.37% 10.35% 9.65% 8.58% 25.82% 35.47% 28.90%
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</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/ Calculated without deducting a sales charge. The maximum sales charge is
5.75% of the fund's offering price.
/4/ Brokerage commissions paid on portfolio transactions increase the cost of
securities purchased or reduce the proceeds of securities sold and are not
separately reflected in the fund's statement of operations. Shares traded
on a principal basis (without commissions), such as most over-the-counter
and fixed-income transactions, are excluded. Generally, non-U.S.
commissions are lower than U.S. commissions when expressed as cents per
share but higher when expressed as a percentage of transactions because of
the lower per-share prices of many non-U.S. securities.
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4 EUROPACIFIC GROWTH FUND / PROSPECTUS
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INVESTMENT POLICIES AND RISKS
The fund aims to provide you with long-term growth of capital by investing in
securities of issuers domiciled outside the U.S.
Under normal market conditions, the fund seeks to achieve this investment
objective by investing primarily (at least 65% of its total assets) in
securities of issuers domiciled in Europe or the Pacific Basin. The Pacific
Basin is generally defined as those countries bordering the Pacific Ocean.
In addition, the fund may invest in securities of issuers domiciled in other
countries including developing countries. In determining the domicile of an
issuer, Capital Research and Management Company takes into account such
factors as where the company is legally organized, and/or maintains its
principal corporate offices, and/or conducts its principal operations.
The fund's assets may be invested in common stocks, securities convertible
into common stocks, straight debt securities (generally rated in the top three
quality categories by Standard & Poor's Corporation or Moody's Investors
Service, Inc. or unrated but determined to be of equivalent quality by
Capital Research and Management Company), government securities,
nonconvertible preferred stocks, repurchase agreements, or cash or cash
equivalents (such as commercial paper, commercial bank obligations, and
securities of the U.S. Government, its agencies and instrumentalities).
These securities may be denominated in U.S. dollars or other currencies.
MORE INFORMATION ON THE FUND'S INVESTMENT POLICIES IS CONTAINED IN ITS
STATEMENT OF ADDITIONAL INFORMATION.
The fund's fundamental investment restrictions (described in the statement of
additional information) and objective may not be changed without shareholder
approval. All other investment practices may be changed by the fund's board of
trustees.
ACHIEVEMENT OF THE FUND'S INVESTMENT OBJECTIVE CANNOT, OF COURSE, BE ASSURED
DUE TO THE RISK OF CAPITAL LOSS FROM FLUCTUATING PRICES INHERENT IN ANY
INVESTMENT IN SECURITIES.
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EUROPACIFIC GROWTH FUND / PROSPECTUS 5
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SECURITIES AND INVESTMENT TECHNIQUES
EQUITY SECURITIES
Equity securities represent an ownership position in a company. These
securities may include common stocks, and securities with
equity conversion or purchase rights. The prices of equity securities fluctuate
based on changes in the financial condition of their issuers and on market and
economic conditions. The fund's results will be related to the overall market
for these securities. The growth-oriented, equity-type securities generally
purchased by the fund may involve greater risk than is customarily associated
with investing in stocks of larger, more established companies and may be
subject to greater price swings.
DEBT SECURITIES
Bonds and other debt securities are used by issuers to borrow money. Issuers
pay investors interest and generally must repay the amount borrowed at
maturity. Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. The prices of
debt securities fluctuate depending on such factors as interest rates, credit
quality and maturity. In general their prices decline when interest rates rise
and vice versa.
The fund may invest up to 5% of its total assets in debt securities rated Baa
or BBB or below by Moody's Investors Service, Inc. or Standard & Poor's
Corporation or in unrated securities that are determined to be of equivalent
quality by Capital Research and Management Company. Securities rated Ba and
BB or below are commonly known as "high-yield, high-risk" or "junk" bonds.
The market prices of these securities may fluctuate more than higher quality
securities and may decline significantly in periods of general economic
difficulty. The quality restrictions described above do not apply to
securities convertible into common stocks.
Capital Research and Management Company attempts to reduce the risks described
above through diversification of the portfolio and by credit analysis of each
issuer as well as by monitoring broad economic trends and corporate and
legislative developments.
OTHER SECURITIES
The fund may also invest in securities that have both equity and debt
characteristics such as non-convertible preferred stocks and convertible
securities. Non-convertible preferred stocks are similar to debt in that they
have a stated dividend rate akin to the coupon of a bond or note even though
they are often classified as equity securities. The prices and yields of non-
convertible preferred stocks generally move with changes in interest rates and
the issuer's credit quality, similar to the factors affecting debt securities.
Bonds, preferred stocks, and other securities may sometimes be converted
into shares of common stock or other securities at a stated exchange ratio.
These securities prior to conversion pay a fixed rate of interest or a
dividend. Because convertible securities have both debt and equity
characteristics their value varies in response to many factors, including
the value of the underlying equity, general market and economic conditions,
convertible market valuations, as well as changes in interest rates,
credit spreads, and the credit quality of the issuer.
INVESTING IN VARIOUS COUNTRIES
Investing outside the U.S. involves special risks, particularly in certain
developing countries, caused by, among other things, fluctuating currency
values; different accounting, auditing, and financial reporting regulations and
practices in some countries; changing local and regional economic, political,
and social conditions; greater market volatility; differing securities market
structures; and various administrative difficulties such as delays in clearing
and settling portfolio transactions or in receiving payment of dividends.
However, in the
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6 EUROPACIFIC GROWTH FUND / PROSPECTUS
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opinion of Capital Research and Management Company, investing outside the U.S.
also can reduce certain portfolio risks due to greater diversification
opportunities.
Additional costs could be incurred in connection with the fund's investment
activities outside the U.S. Brokerage commissions may be higher outside the
U.S., and the fund will bear certain expenses in connection with its currency
transactions. Furthermore, increased custodian costs may be associated with the
maintenance of assets in certain jurisdictions.
CURRENCY TRANSACTIONS
The fund can purchase and sell currencies to facilitate securities transactions
and enter into forward currency contracts to hedge against changes in currency
exchange rates. While entering into forward currency transactions could
minimize the risk of loss due to a decline in the value of the hedged currency,
it could also limit any potential gain which might result from an increase in
the value of the currency. The fund will not generally attempt to protect
against all potential changes in exchange rates.
PRIVATE PLACEMENTS
Normally, securities acquired in private placements are subject to contractual
restrictions on resale. Any such securities will be considered illiquid unless
they have been specifically determined to be liquid taking into account factors
such as the frequency and volume of trading and the commitment of dealers to
make markets under procedures which may be adopted by the fund's board of
trustees. 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 restricted securities; however, non-U.S. securities that can be
freely traded in a securities market outside the U.S. are excluded from this
limitation.
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MULTIPLE PORTFOLIO COUNSELOR SYSTEM
The basic investment philosophy of Capital Research and Management Company is
to seek fundamental values at reasonable prices, using a system of
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EUROPACIFIC GROWTH FUND / PROSPECTUS 7
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multiple portfolio counselors in managing mutual fund assets. Under this system
the portfolio of the fund is divided into segments which are managed by
individual counselors. Counselors decide how their respective segments will be
invested (within the limits provided by the fund's objective and policies and
by Capital Research and Management Company's investment committee). In
addition, Capital Research and Management Company's research professionals make
investment decisions with respect to a portion of the fund's portfolio. The
primary individual portfolio counselors for the fund are listed below.
<TABLE>
<CAPTION>
==============================================================================================================
Years of Experience as
Investment Professional
(approximate)
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Years of Experience With Capital
Portfolio Counselors as Portfolio Counselor Research and
for (and Research Professional, Management
EuroPacific Growth Fund if applicable) for Company or
Primary Title(s) EuroPacific Growth Fund its Affiliates Total Years
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<S> <C> <C> <C> <C>
Thierry Trustee and President 13 years (since the 34 years 34 years
Vandeventer of the fund. fund began operations)
Chairman of the
Board, Capital
Research Company*
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Stephen E. Executive Vice 13 years (since the 25 years 31 years
Bepler President of the fund. fund began operations)
Senior Vice President,
Capital Research
Company*
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Mark E. Executive Vice 6 years (in addition 15 years 15 years
Denning President of the fund. to 3 years as a research
Senior Vice President professional prior to
and Director, Capital becoming a portfolio
Research Company* counselor for the fund)
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Robert W. Vice President of the 3 years (in addition 12 years 12 years
Lovelace fund. Executive Vice to 7 years as a research
President and professional prior to
Director, Capital becoming a portfolio
Research Company* counselor for the fund)
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Janet A. Vice President of the 7 years (in addition 15 years 21 years
McKinley fund. Senior Vice to 5 years as a research
President, Capital professional prior to
Research Company* becoming a portfolio
counselor for the fund)
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Martial Chaillet Senior Vice President, 3 years (in addition to 5 25 years 25 years
Capital Research years as a research
Company* professional prior to
becoming a portfolio
counselor for the fund)
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The fund began operations on April 16, 1984.
* Company affiliated with Capital Research and Management Company.
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</TABLE>
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8 EuroPacific Growth Fund / Prospectus
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INVESTMENT RESULTS
The fund may from time to time compare investment results to various indices or
other mutual funds. Fund results may be calculated on a total return, yield
and/or distribution rate basis. Currently the fund calculates investment
results only on a total return basis. Results calculated without a sales charge
will be higher.
X TOTAL RETURN is the change in value of an investment in the fund over a given
period, assuming reinvestment of any dividends and capital gain
distributions.
X YIELD is computed by dividing the net investment income per share earned by
the fund over a given period of time by the maximum offering price per share
on the last day of the period, according to a formula mandated by the
Securities and Exchange Commission. A yield calculated using this formula may
be different than the income actually paid to shareholders.
X DISTRIBUTION RATE reflects dividends that were paid by the fund. The
distribution rate is calculated by dividing the dividends paid over the last
12 months by the sum of the month-end price and the capital gain
distributions paid over the last 12 months.
INVESTMENT RESULTS
(FOR PERIODS ENDED MARCH 31, 1997)
<TABLE>
<CAPTION>
AVERAGE
ANNUAL THE FUND THE FUND AT
TOTAL AT NET MAXIMUM MSCI
RETURNS: ASSET VALUE/1/ SALES CHARGE/1/,/2/ EAFE/3/
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<S> <C> <C> <C>
One year 15.88% 9.23% 1.75%
................................................................................
Five years 13.72% 12.38% 10.91%
................................................................................
Ten years 12.89% 12.23% 6.32%
................................................................................
Lifetime/4/ 16.30% 15.77% 14.41%
</TABLE>
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/1/ These fund results were calculated according to a standard that is required
for all stock and bond funds.
/2/ The maximum sales charge has been deducted.
/3/ Morgan Stanley Capital International EAFE (Europe, Australasia, Far East)
Index measures all major stock markets outside North America. This index is
unmanaged and does not reflect sales charges, commissions or expenses.
/4/ The fund began operations April 16, 1984.
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EUROPACIFIC GROWTH FUND / PROSPECTUS 9
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Calendar Year Returns @ NAV
1996 18.64%
1995 12.87
1994 1.13
1993 35.60
1992 2.30
1991 18.59
1990 -0.11
1989 24.19
1988 20.95
1987 7.50
Past results are not an indication of future results.
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DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
The fund usually pays dividends, which may fluctuate, in June and December.
Capital gains, if any, are also usually distributed in December. When a
dividend or capital gain is distributed, the net asset value per share is
reduced by the amount of the payment.
FEDERAL TAXES
In any fiscal year in which the fund qualifies as a regulated investment
company and distributes to shareholders all of its net investment income and
net capital gains, the fund itself is relieved of federal income tax.
Generally, all dividends and capital gains are taxable whether they are
reinvested or received in cash -- unless you are exempt from taxation or
entitled to tax deferral. Early each year, you will be notified as to the
amount and federal tax status of all income distributions paid during the prior
year. Such distributions may also be subject to state or local taxes. The tax
treatment of redemptions from a retirement plan account may differ from
redemptions from an ordinary shareholder account.
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10 EUROPACIFIC GROWTH FUND / PROSPECTUS
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YOU MUST PROVIDE THE FUND WITH A CERTIFIED CORRECT TAXPAYER IDENTIFICATION
NUMBER (GENERALLY YOUR SOCIAL SECURITY NUMBER) AND CERTIFY THAT YOU ARE NOT
SUBJECT TO BACKUP WITHHOLDING. IF YOU FAIL TO DO SO THE IRS CAN REQUIRE THE
FUND TO WITHHOLD 31% OF YOUR TAXABLE DISTRIBUTIONS AND REDEMPTIONS. Federal law
also requires the fund to withhold 30% or the applicable tax treaty rate from
dividends paid to certain nonresident alien, non-U.S. partnership and non-U.S.
corporation shareholder accounts.
This is a brief summary of some of the tax laws that affect your investment in
the fund. Please see the statement of additional information and your tax
adviser for further information.
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FUND ORGANIZATION AND MANAGEMENT
FUND ORGANIZATION AND VOTING RIGHTS
The fund, an open-end, diversified management investment company, was organized
as a Massachusetts business trust in 1993. All fund operations are supervised
by the fund's board of trustees who meet periodically and perform duties
required by applicable state and federal laws. Members of the board who are not
employed by Capital Research and Management Company or its affiliates are paid
certain fees for services rendered to the fund as described in the statement of
additional information. They may elect to defer all or a portion of these fees
through a deferred compensation plan in effect for the fund. The fund does not
hold annual meetings of shareholders. However, significant corporate matters
which require shareholder approval, such as certain elections of board members
or a change in a fundamental investment policy, will be presented to
shareholders at a meeting called for such purpose. Shareholders have one vote
per share owned. At the request of the holders of at least 10% of the shares,
the fund will hold a meeting at which any member of the board could be removed
by a majority vote.
THE INVESTMENT ADVISER
Capital Research and Management Company, a large and experienced investment
management organization founded in 1931, is the investment adviser to the fund
and other funds, including those in The American Funds Group. Capital Research
and Management Company, a wholly owned subsidiary of The Capital Group
Companies, Inc., is headquartered at 333 South Hope Street, Los Angeles, CA
90071. Capital Research and Management
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EUROPACIFIC GROWTH FUND / PROSPECTUS 11
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Company manages the investment portfolio and business affairs of the fund. The
management fee paid by the fund to Capital Research and Management Company may
not exceed 0.69% of the fund's average net assets annually and declines at
certain asset levels. The total management fee paid by the fund, as a
percentage of average net assets, for the previous fiscal year is discussed
earlier under "Expenses."
Capital Research and Management Company and its affiliated companies have
adopted a personal investing policy that is consistent with the recommendations
contained in the May 9, 1994 report issued by the Investment Company
Institute's Advisory Group on Personal Investing. This policy has also been
incorporated into the fund's "code of ethics."
PLAN OF DISTRIBUTION
The fund has a Plan of Distribution or "12b-1 Plan" under which it may finance
activities primarily intended to sell shares, provided the categories of
expenses are approved in advance by the board and the expenses paid under the
Plan were incurred within the preceding 12 months and accrued while the Plan is
in effect. The 12b-1 fee paid by the fund, as a percentage of average net
assets, for the previous fiscal year is discussed earlier under "Expenses."
PORTFOLIO TRANSACTIONS
Orders for the fund's portfolio securities transactions are placed by Capital
Research and Management Company, which strives to obtain the best available
prices, taking into account the costs and quality of executions. Fixed-income
securities are generally traded on a "net" basis with a dealer acting as
principal for its own account without a stated commission, although the price
of the security usually includes a profit to the dealer. In underwritten
offerings, securities are usually purchased at a fixed price which includes an
amount of compensation to the dealer, generally referred to as a concession or
discount. On occasion, securities may be purchased directly from an issuer, in
which case no commissions or discounts are paid. In the over-the-counter
market, purchases and sales are transacted directly with principal market-
makers except in those circumstances where it appears better prices and
executions are available elsewhere.
Subject to the above policy, when two or more brokers (either directly or
through their correspondent clearing agents) are in a position to offer
comparable prices and executions, preference may be given to brokers who have
sold shares of the fund or have provided investment research, statistical, and
other related services for the benefit of the fund and/or other funds served by
Capital Research and Management Company.
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12 EUROPACIFIC GROWTH FUND / PROSPECTUS
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PRINCIPAL UNDERWRITER AND TRANSFER AGENT
American Funds Distributors, Inc. and American Funds Service Company serve as
the principal underwriter and transfer agent for the fund, respectively. They
are headquartered at 333 South Hope Street, Los Angeles, CA 90071 and 135 South
State College Boulevard, Brea, CA 92821, respectively.
AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS
[MAP OF UNITED STATES]
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EUROPACIFIC GROWTH FUND / PROSPECTUS 13
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SHAREHOLDER SERVICES
The fund offers you a valuable array of services you can use to alter your
investment program as your needs and circumstances change. These services,
which are summarized below, are available only in states where they may be
legally offered and may be terminated or modified at any time upon 60 days'
written notice. A COMPLETE DESCRIPTION OF SHAREHOLDER SERVICES AND ACCOUNT
POLICIES IS CONTAINED IN THE FUND'S STATEMENT OF ADDITIONAL INFORMATION. In
addition, an easy-to-read guide to owning a fund in The American Funds Group
titled "Welcome to the Family" is sent to new shareholders and is available by
writing or calling American Funds Service Company.
THE SERVICES DESCRIBED MAY NOT BE AVAILABLE THROUGH SOME RETIREMENT PLANS OR
ACCOUNTS HELD BY INVESTMENT DEALERS. IF YOU ARE INVESTING IN SUCH A MANNER, YOU
SHOULD CONTACT YOUR PLAN ADMINISTRATOR/TRUSTEE OR DEALER ABOUT WHAT SERVICES
ARE AVAILABLE AND WITH QUESTIONS ABOUT YOUR ACCOUNT.
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PURCHASING SHARES
HOW TO PURCHASE SHARES
Generally, you may open an account by contacting any investment dealer
authorized to sell the fund's shares. You may add to your account through your
dealer or directly through American Funds Service Company by mail, wire, or
bank debit. You may also establish or add to your account by exchanging shares
from any of your other accounts in The American Funds Group. The fund and
American Funds Distributors reserve the right to reject any purchase order for
any reason. This includes exchange purchase orders that may place an unfair
burden on other shareholders due to their frequency.
Various purchase options are available as described below subject to certain
investment minimums and limitations described in the statement of additional
information and "Welcome to the Family."
X Automatic Investment Plan
You may invest monthly or quarterly through automatic withdrawals from your
bank account.
X Automatic Reinvestment
You may reinvest your dividends and capital gain distributions into the fund
(with no sales charge). This will be done automatically unless you elect to
have the dividends and/or capital gain distributions paid to you in cash.
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14 EUROPACIFIC GROWTH FUND / PROSPECTUS
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X Cross-Reinvestment
You may invest your dividends and capital gain distributions into any other
fund in The American Funds Group.
X Exchange Privilege
You may exchange your shares into other funds in The American Funds Group
generally with no sales charge. Exchanges of shares from the money market
funds that were initially purchased with no sales charge will generally be
subject to the appropriate sales charge. You may also elect to automatically
exchange shares among any of the funds in The American Funds Group. Exchange
requests may be made in writing, by telephone including American
FundsLine(R) (see below) or by fax. EXCHANGES HAVE THE SAME TAX CONSEQUENCES
AS ORDINARY SALES AND PURCHASES.
X Retirement Plans
You may invest in the fund through various retirement plans. For further
information contact your investment dealer or American Funds Distributors.
SHARE PRICE
The fund's share price, also called net asset value, is determined as of the
close of trading (normally 4:00 p.m., Eastern time) every day the New York
Stock Exchange is open. The fund calculates its net asset value per share,
generally using market prices, by dividing the total value of its assets after
subtracting liabilities by the number of its shares outstanding. Shares are
purchased at the offering price next determined after your investment is
received and accepted by American Funds Service Company. The offering price is
the net asset value plus a sales charge, if applicable.
SHARE CERTIFICATES
Shares are credited to your account and certificates are not issued unless you
request them by writing to American Funds Service Company.
INVESTMENT MINIMUMS
<TABLE>
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<S> <C>
To establish an account $ 250
For a retirement plan account $ 250
For a retirement plan account through payroll deduction $ 25
To add to an account $ 50
For a retirement plan account $ 25
</TABLE>
- --------------------------------------------------------------------------------
EUROPACIFIC GROWTH FUND / PROSPECTUS 15
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
SALES CHARGES
A sales charge may apply, as described below, when purchasing shares. Sales
charges may be reduced for larger purchases as indicated below.
<TABLE>
<CAPTION>
SALES CHARGE AS A
PERCENTAGE OF
...................
DEALER
NET CONCESSION AS
OFFERING AMOUNT % OF OFFERING
INVESTMENT PRICE INVESTED PRICE
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
........................................................................
$50,000 but less than $100,000 4.50% 4.71% 3.75%
........................................................................
$100,000 but less than $250,000 3.50% 3.63% 2.75%
........................................................................
$250,000 but less than $500,000 2.50% 2.56% 2.00%
........................................................................
$500,000 but less than $1 million 2.00% 2.04% 1.60%
........................................................................
$1 million or more and certain
other investments described below see below see below see below
</TABLE>
PURCHASES NOT SUBJECT TO SALES CHARGES
Investments of $1 million or more and investments made by employer-sponsored
defined contribution-type plans with 200 or more eligible employees are sold
with no initial sales charge. A 1% CONTINGENT DEFERRED SALES CHARGE MAY BE
IMPOSED ON CERTAIN REDEMPTIONS MADE WITHIN ONE YEAR OF PURCHASE BY THESE
ACCOUNTS. A dealer concession of up to 1% may be paid by the fund from its Plan
of Distribution on these investments. Investments by retirement plans,
foundations or endowments with $50 million or more in assets may be made with
no sales charge and are not subject to a contingent deferred sales charge. A
dealer concession of up to 1% may be paid by American Funds Distributors on
these investments. Investments by certain individuals and entities including
employees and other associated persons of dealers authorized to sell shares of
the fund and Capital Research and Management Company and its affiliated
companies are not subject to a sales charge.
- --------------------------------------------------------------------------------
16 EUROPACIFIC GROWTH FUND / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
ADDITIONAL DEALER COMPENSATION
In addition to the concessions listed, up to 0.25% of average net assets is
paid annually to qualified dealers for providing certain services pursuant to
the fund's Plan of Distribution. During 1997, American Funds Distributors will
also provide additional compensation to the top one hundred dealers who have
sold shares of funds in The American Funds Group based on the pro rata share of
a qualifying dealer's sales.
REDUCING YOUR SALES CHARGE
You and your immediate family may combine investments to reduce your costs. You
must let your investment dealer or American Funds Service Company know if you
qualify for a reduction in your sales charge using one or any combination of
the methods described below.
X Aggregation
Investments that may be aggregated include those made by you, your spouse
and your children under the age of 21, if all parties are purchasing shares
for their own account(s), including any business account solely "controlled
by," as well as any retirement plan or trust account solely for the benefit
of, these individuals. Investments made for multiple employee benefit plans
of a single employer or "affiliated" employers may be aggregated provided
they are not also aggregated with individual accounts. Finally, investments
made by a common trust fund or other diversified pooled account not
specifically formed for the purpose of accumulating fund shares may be
aggregated.
Purchases made for nominee or street name accounts will generally not be
aggregated with those made for other accounts unless qualified as described
above.
X Concurrent Purchases
You may combine concurrent purchases of two or more funds in The American
Funds Group, except direct purchases of the money market funds. Shares of
the money market funds purchased through an exchange, reinvestment or cross-
reinvestment from a fund having a sales charge do qualify.
X Right of Accumulation
You may take into account the current value of your existing holdings in The
American Funds Group to determine your sales charge. Direct purchases of the
money market funds are excluded.
- --------------------------------------------------------------------------------
EUROPACIFIC GROWTH FUND / PROSPECTUS 17
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
X Statement of Intention
You may enter into a non-binding commitment to invest a certain amount
(which, at your request, may include purchases made during the previous 90
days) in non-money market fund shares over a 13-month period. A portion of
your account may be held in escrow to cover additional sales charges which
may be due if your total investments over the statement period are
insufficient to qualify for the applicable sales charge reduction.
- --------------------------------------------------------------------------------
SELLING SHARES
HOW TO SELL SHARES
You may sell (redeem) shares in your account by contacting your investment
dealer or American Funds Service Company. You may also use American
FundsLine(R) (see below). In addition, you may sell shares in amounts of $50 or
more automatically. If you sell shares through your investment dealer you may
be charged for this service. Shares held for you in your dealer's street name
must be sold through the dealer.
Shares are sold at the net asset value next determined after your request is
received in good order by American Funds Service Company. Sale requests may be
made in writing, by telephone, including American FundsLine(R) (see below), or
by fax. Sales by telephone or fax are limited to $50,000 in accounts registered
to individual(s) (including non-retirement trust accounts). In addition, checks
must be made payable to the registered shareholder(s) and mailed to an address
of record that has been used with the account for at least 10 days. Proceeds
will not be mailed until sufficient time has passed to provide reasonable
assurance that checks or drafts (including certified or cashier's checks) for
shares purchased have cleared (which may take up to 15 calendar days from the
purchase date). Except for delays relating to clearance of checks for share
purchases or in extraordinary circumstances (and as permissible under the
Investment Company Act of 1940), sale proceeds will be paid on or before the
seventh day following receipt and acceptance of an order. The fund may, with 60
days' written notice, close your account if due to a sale of shares the account
has a value of less than the minimum required initial investment.
Generally, written requests to sell shares must be signed by you and must
include any shares you wish to sell that are in certificate form. Your
signature must be guaranteed by a bank, savings association, credit union, or
member firm of a domestic stock exchange or the National Association of
Securities Dealers, Inc., that is an eligible guarantor institution. A
signature guarantee is not currently required for any sale of $50,000 or less
provided the check is made
- --------------------------------------------------------------------------------
18 EUROPACIFIC GROWTH FUND / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
payable to the registered shareholder(s) and is mailed to the address of record
on the account, and provided the address has been used with the account for at
least 10 days. Additional documentation may be required for sales of shares
held in corporate, partnership or fiduciary accounts.
You may reinvest proceeds from a redemption or a dividend or capital gain
distribution without a sales charge in any fund in The American Fund Group
within 90 days after the date of the redemption or distribution. Reinvestment
will be at the next calculated net asset value after receipt and acceptance by
American Funds Service Company.
- --------------------------------------------------------------------------------
OTHER IMPORTANT THINGS TO REMEMBER
AMERICAN FUNDSLINE(R)
You may check your share balance, the price of your shares, or your most recent
account transactions, sell shares (up to $50,000 per shareholder each day), or
exchange shares around the clock with American FundsLine(R). To use this
service, call 800/325-3590 from a TouchTone(TM) telephone.
TELEPHONE PURCHASES, SALES AND EXCHANGES
Unless you opt out of the telephone (including American FundsLine(R)) or fax
purchase, sale and/or exchange options (see below), you agree to hold the fund,
American Funds Service Company, any of its affiliates or mutual funds managed
by such affiliates, and each of their respective directors, trustees, officers,
employees and agents harmless from any losses, expenses, costs or liability
(including attorney fees) which may be incurred in connection with the exercise
of these privileges provided American Funds Service Company employs reasonable
procedures to confirm that the instructions received from any person with
appropriate account information are genuine. If reasonable procedures are not
employed, the fund may be liable for losses due to unauthorized or fraudulent
instructions.
Generally, all shareholders are automatically eligible to use these options.
However, you may elect to opt out of these options by writing American Funds
Service Company. (You may also reinstate them at any time by writing to
American Funds Service Company.)
ACCOUNT STATEMENTS
You will receive regular confirmation statements reflecting transactions in
your account. Purchases through automatic investment plans and certain
retirement plans will be confirmed at least quarterly.
- --------------------------------------------------------------------------------
EUROPACIFIC GROWTH FUND / PROSPECTUS 19
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
NOTES
- --------------------------------------------------------------------------------
20 EUROPACIFIC GROWTH FUND / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
NOTES
- --------------------------------------------------------------------------------
EUROPACIFIC GROWTH FUND / PROSPECTUS 21
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
NOTES
- --------------------------------------------------------------------------------
22 EUROPACIFIC GROWTH FUND / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
NOTES
- --------------------------------------------------------------------------------
EUROPACIFIC GROWTH FUND / PROSPECTUS 23
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
FOR SHAREHOLDER SERVICES FOR DEALER SERVICES
<S> <C>
American Funds American Funds
Service Company Distributors
800/421-0180 ext. 1 800/421-9900 ext. 11
FOR 24-HOUR INFORMATION
American American Funds
FundsLine(R) Internet Web site
800/325-3590 http://www.americanfunds.com
</TABLE>
Telephone conversations may be recorded or monitored for
verification, recordkeeping and quality assurance purposes.
------------------------------------------------------------
OTHER FUND INFORMATION
ANNUAL/SEMI-ANNUAL STATEMENT OF ADDITIONAL
REPORT TO SHAREHOLDERS INFORMATION (SAI)
Includes financial Contains more detailed
statements, detailed information on all aspects
performance information, of the fund, including the
portfolio holdings, a fund's financial statements.
statement from portfolio
management and the auditor's
report.
A current SAI has been filed
with the Securities and
Exchange Commission ("SEC").
It is incorporated by
CODE OF ETHICS reference into this
prospectus and is available
Includes a description of along with other related
the fund's personal materials on the SEC's
investing policy. Internet Web site at
http://www.sec.gov.
To request a free copy of any of the documents above:
Call American Funds or Write to the Secretary
Service Company of the fund
800/421-0180 ext. 1 333 South Hope Street
Los Angeles, CA 90071
[LOGO OF
RECYCLE PAPER]
This prospectus has been printed on recycled paper.
- --------------------------------------------------------------------------------
24 EUROPACIFIC GROWTH FUND / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
EUROPACIFIC GROWTH FUND
333 South Hope Street
Los Angeles, California 90071
The fund's investment objective
is to achieve long-term growth of
capital by investing in
securities of issuers domiciled
outside the U.S. Normally, the
fund seeks to achieve this
investment objective by investing
primarily in equity securities of
issuers domiciled in Europe or
the Pacific Basin.
This prospectus relates only to
shares of the fund offered
without a sales charge to
eligible retirement plans. For a
prospectus regarding shares of
the fund to be acquired
otherwise, contact the Secretary
of the fund at the address
indicated above.
This prospectus presents
information you should know
before investing in the fund. It
should be retained for future
reference.
More detailed information about
the fund, including the fund's
financial statements, is
contained in the statement of
additional information dated
March 1, 1997, which is
incorporated by reference and has
been filed with the Securities
and Exchange Commission. The
statement of additional
information is available to you
without charge, by writing to
the Secretary of the fund at
the above address or calling
American Funds Service Company.
SHARES OF THE FUND ARE NOT
DEPOSITS OR OBLIGATIONS OF, OR
INSURED OR GUARANTEED BY, THE
U.S. GOVERNMENT, ANY FINANCIAL
INSTITUTION, THE FEDERAL DEPOSIT
INSURANCE CORPORATION, OR ANY
OTHER AGENCY, ENTITY OR PERSON.
THE PURCHASE OF FUND SHARES
INVOLVES INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN
APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL
OFFENSE.
RP 16-010-0697
June 1, 1997
<PAGE>
- -------------------------------------------------------------------------------
SUMMARY OF This table is designed to help you understand costs of
EXPENSES investing in the fund. These are historical expenses;
your actual expenses may vary.
Average annual
expenses paid over SHAREHOLDER TRANSACTION EXPENSES
a 10-year period Certain retirement plans may purchase shares of the
would be funds with no sales charge./1/ The fund also has no
approximately $11 sales charge on reinvested dividends, deferred sales
per year, assuming charge, redemption fees or exchange fees.
a $1,000
investment and a ANNUAL FUND OPERATING EXPENSES
5% annual return (as a percentage of average net assets)
with no sales Management fees................................. 0.48%
charge. 12b-1 expenses.................................. 0.23%/2/
Other expenses (including audit, legal,
shareholder services, transfer agent and
custodian expenses)............................ 0.19%
Total fund operating expenses................... 0.90%
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the
following cumulative
expenses on a $1,000
investment, assuming
a 5% annual return./3/ $9 $29 $50 $111
</TABLE>
/1/ Retirement plans of organizations with $100 million
or more in collective retirement plan assets may
purchase shares of the fund with no sales charge. In
addition, any employer-sponsored 403(b) plan or
defined contribution plan qualified under Section
401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees or
any other purchaser investing at least $1 million in
shares of the fund (or in combination with shares of
other funds in The American Funds Group other than
the money market funds) may purchase shares at net
asset value; however, a contingent deferred sales
charge of 1% applies on certain redemptions made
within 12 months following such purchases. (See
"Redeeming Shares--Contingent Deferred Sales
Charge.")
/2/ These expenses may not exceed 0.25% of the fund's
average net assets annually. (See "Fund Organization
and Management--Plan of Distribution.") Due to these
distribution expenses, long-term shareholders may pay
more than the economic equivalent of the maximum
front-end sales charge permitted by the National
Association of Securities Dealers.
/3/ Use of this assumed 5% return is required by the
Securities and Exchange Commission; it is not an
illustration of past or future investment results.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES; ACTUAL
EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.
TABLE OF CONTENTS
Summary of Expenses.................... 2
Financial Highlights................... 3
Investment Objective and Policies...... 3
Investing Around the World............. 4
Investment Results..................... 6
Dividends, Distributions and Taxes..... 7
Fund Organization and Management....... 7
Purchasing Shares...................... 9
Shareholder Services................... 11
Redeeming Shares....................... 11
2
<PAGE>
- -------------------------------------------------------------------------------
FINANCIAL The following information has been audited by Price
HIGHLIGHTS Waterhouse LLP, independent accountants, whose
(For a share unqualified report covering each of the most recent
outstanding five years is included in the statement of additional
throughout the information. This information should be read in
fiscal year) conjunction with the financial statements and
accompanying notes which appear in the statement of
additional information.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31/1/
----------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
------- ------- ------- ------- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Year............................ $24.28 $20.89 $21.95 $17.64 $16.64 $15.18 $14.39 $13.38 $12.64 $13.46
------- ------- ------- ------- ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income........... .46 .35 .24 .22 .28 .28 .25 .23 .23
Net realized and unrealized gain
(loss) on investments.......... 3.28 3.63 (.19) 4.37 1.04 1.48 1.02 1.95 1.54 .63
------- ------- ------- ------- ------ ------ ------ ------ ------ ------
Total income from investment
operations..................... 3.74 4.09 .16 4.61 1.26 1.76 1.30 2.20 1.77 .86
------- ------- ------- ------- ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment
income......................... (.41) (.49) (.317) (.187) (.222) (.30) (.33) (.28) (.18) (.33)
Dividends from net realized non-
U.S. currency gains/2/......... (.03) -- (.003) (.043) (.038) -- -- -- -- --
Distributions from net realized
gains.......................... (.88) (.21) (.90) (.07) -- -- (.18) (.91) (.85) (1.35)
------- ------- ------- ------- ------ ------ ------ ------ ------ ------
Total distributions............. (1.32) (.70) (1.22) (.30) (.26) (.30) (.51) (1.19) (1.03) (1.68)
------- ------- ------- ------- ------ ------ ------ ------ ------ ------
Net Asset Value, End of Year..... $26.70 $24.28 $ 20.89 $ 21.95 $ 17.64 $16.64 $15.18 $14.39 $13.38 $12.64
======= ======= ======= ======= ====== ====== ====== ====== ====== ======
Total Return/3/................. 15.88% 19.84% .71% 26.27% 7.69% 11.71% 9.11% 16.99% 14.69% 8.12%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in mil-
lions)......................... $16,737 $12,335 $ 8,588 $ 6,429 $ 2,992 $1,933 $1,138 $ 584 $ 228 $ 188
Ratio of expenses to average net
assets......................... .90% .95% .97% .99% 1.10% 1.24% 1.28% 1.24% 1.30% 1.21%
Ratio of net income to average
net assets..................... 1.77% 2.09% 1.80% 1.13% 1.40% 1.85% 2.23% 2.29% 1.87% 1.56%
Average commissions paid/4/ 1.36 c 1.10 c .21 c .08 c .25 c .22 c 2.09 c 2.17 c 2.42 c 3.48 c
Portfolio turnover rate......... 25.82% 21.77% 16.02% 21.37% 10.35% 9.65% 8.58% 25.82% 35.47% 28.90%
</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.
/4/ Brokerage commissions paid on portfolio transactions increase the cost of
securities purchased or reduce the proceeds of securities sold and are not
separately reflected in the fund's statement of operations. Shares traded
on a principal bases (without commissions), such as most over-the-counter
and fixed-income transactions, are excluded. Generally, non-U.S.
commissions are lower than U.S. commissions when expressed as cents per
share but higher when expressed as a percentage of transactions
because of the lower per-share prices of many non-U.S. securities.
INVESTMENT The fund's investment objective is to achieve long-term
OBJECTIVE AND growth of capital by investing in securities of issuers
POLICIES domiciled outside the U.S. Under normal market
conditions, the fund seeks to achieve this investment
The fund's goal is objective by investing primarily (at least 65% of its
to provide you assets) in equity securities of issuers domiciled in
with long-term Europe or the Pacific Basin. The Pacific Basin is
growth of capital generally defined as those countries bordering the
by investing in Pacific Ocean. (In determining the domicile of an
issuers domiciled issuer, the fund's investment adviser, Capital
outside the U.S. 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 principal
corporate offices and where it conducts its
principal operations.) The assets of the fund will be
invested with geographic flexibility; accordingly,
investments may be made from time to time in issuers
domiciled in, or governments of, developing countries.
The fund's investment adviser currently does not intend
to invest more than 20% of the fund's total assets
(taken at cost) in securities of issuers domiciled in,
3
<PAGE>
- -------------------------------------------------------------------------------
or governments of, developing countries. See "Investing
Around the World--Opportunities, Risks and Costs" and
the statement of additional information.
The fund may also invest in securities convertible into
common stocks, straight debt securities (generally
rated in the top three quality categories by Moody's
Investors Service, Inc. or Standard & Poor's
Corporation, or determined to be of equivalent quality
by Capital Research and Management Company), government
securities, nonconvertible preferred stocks, repurchase
agreements, or cash or cash equivalents (such as
commercial paper, commercial bank obligations, and
securities of the U.S. Government, its agencies and
instrumentalities). These securities may be issued by
U.S. or non-U.S. entities and may be denominated in
U.S. dollars or other currencies. In addition, up to
5% of the fund's assets may be invested in lower
rated straight debt securities (including securities
commonly referred to as "junk" or "high-yield,
high-risk" bonds) or in unrated securities that are
determined to be of equivalent quality. High-yield,
high-risk bonds carry a higher degree of investment
risk and are considered speculative. For example, bonds
rated Ca or CC are described as "speculative in a high
degree; often in default or hav[ing] other marked
shortcomings." (See the statement of additional
information for a description of cash equivalents.)
The fund's investment restrictions (which are described
in the statement of additional information) and
objective cannot be changed without shareholder
approval. All other investment practices may be changed
by the board of trustees.
ACHIEVEMENT OF THE FUND'S INVESTMENT OBJECTIVE CANNOT,
OF COURSE, BE ASSURED DUE TO THE RISK OF CAPITAL LOSS
FROM FLUCTUATING PRICES INHERENT IN ANY INVESTMENT IN
SECURITIES AND THE SPECIAL RISKS ASSOCIATED WITH
INVESTING OUTSIDE THE U.S. DESCRIBED HEREIN.
INVESTING AROUND OPPORTUNITIES, RISKS AND COSTS The fund's assets are
THE WORLD invested in securities of issuers domiciled outside the
United States which, in the opinion of Capital Research
Investing outside and Management Company, enhances the fund's ability to
the U.S. involves meet its objective of long-term growth of capital.
expanded
opportunities, Of course, investing outside the U.S. involves special
special risks and risks particularly in certain developing countries,
increased costs. caused by, among other things: fluctuating currency
values; different accounting, auditing, and financial
reporting regulations and practices in some countries;
changing local and regional economic, political, and
social conditions; greater market
4
<PAGE>
- -------------------------------------------------------------------------------
volatility; differing securities market structures; and
various administrative difficulties such as delays in
clearing and settling portfolio transactions or in re-
ceiving payment of dividends. However, in the opinion
of Capital Research and Management Company, investing
outside the U.S. also can reduce certain portfolio
risks due to greater diversification opportunities.
Additional costs could be incurred in connection with
the fund's investment activities outside the U.S.
Brokerage commissions may be higher outside the U.S.,
and the fund will bear certain expenses in connection
with its currency transactions. Furthermore, increased
custodian costs may be associated with the maintenance
of assets in certain jurisdictions.
CURRENCY TRANSACTIONS The fund has the ability to
purchase and sell currencies to facilitate securities
transactions and to enter into forward currency
contracts to hedge against changes in currency exchange
rates. While entering into forward transactions could
minimize the risk of loss due to a decline in the value
of the hedged currency, it could also limit any
potential gain which might result from an increase in
the value of the currency.
RULE 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 that Act, such
as private placements under Rule 144A, accordingly, any
such security will be deemed illiquid (unless
determined to be liquid in accordance with procedures
which may be 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
restricted securities; however, non-U.S. securities
that can be freely traded in a securities market
outside the U.S. are excluded from this limitation.
MULTIPLE PORTFOLIO COUNSELOR SYSTEM The basic
investment philosophy of Capital Research and
Management Company is to seek fundamental values at
reasonable prices, using a system of multiple portfolio
counselors in managing mutual fund assets. Under this
system the portfolio of the fund is divided into
segments which are managed by individual counselors.
Counselors decide how their respective segments will be
invested (within the limits provided by the fund's
objective and policies and by Capital Research and
Management Company's
5
<PAGE>
- -------------------------------------------------------------------------------
investment committee). In addition, Capital Research
and Management Company's research professionals make
investment decisions with respect to a portion of the
fund's portfolio. The primary individual portfolio
counselors for the fund are listed below.
<TABLE>
<CAPTION>
YEARS OF EXPERIENCE
AS
INVESTMENT PROFESSIONAL
(APPROXIMATE)
YEARS OF EXPERIENCE AS
PORTFOLIO COUNSELOR WITH CAPITAL
(AND RESEARCH RESEARCH AND
PORTFOLIO PROFESSIONAL, MANAGEMENT
COUNSELORS FOR IF APPLICABLE) FOR COMPANY OR
EUROPACIFIC GROWTH EUROPACIFIC GROWTH ITS TOTAL
FUND PRIMARY TITLE(S) FUND (APPROXIMATE) AFFILIATES YEARS
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thierry Vandeventer Trustee and President Since the fund began 34 years 34 years
of the fund. Chairman operations in 1984
of the Board, Capital
Research Company*
- -------------------------------------------------------------------------------------------
Stephen E. Bepler Executive Vice Since the fund began 25 years 31 years
President of the operations
fund. Senior Vice in 1984
President, Capital
Research Company*
- -------------------------------------------------------------------------------------------
Mark E. Denning Executive Vice 6 years (in addition 15 years 15 years
President of the to 3 years as a
fund. Senior Vice research professional
President and prior to becoming a
Director, Capital portfolio counselor
Research Company* for the fund)
- -------------------------------------------------------------------------------------------
Robert W. Lovelace Vice President of the 3 years (in addition 12 years 12 years
fund, Executive Vice to 7 years as a
President and research professional
Director, prior to becoming a
Capital Research portfolio counselor
Company* for the fund)
- -------------------------------------------------------------------------------------------
Janet A. McKinley Vice President of the 7 years (in addition 15 years 21 years
fund. Senior Vice to 5 years as a
President, Capital research professional
Research Company* prior to becoming a
portfolio counselor
for the fund)
- -------------------------------------------------------------------------------------------
Martial Chaillet Senior Vice 3 years (in addition 25 years 25 years
President, Capital to 5 years as a
Research Company* research professional
prior to becoming a
portfolio counselor
for the fund)
- ------------------------------------------------------------------------------------------
* COMPANY AFFILIATED WITH CAPITAL RESEARCH AND MANAGEMENT COMPANY.
- ------------------------------------------------------------------------------------------
</TABLE>
INVESTMENT The fund may from time to time compare its investment
RESULTS results to various unmanaged indices or other mutual
funds in reports to shareholders, sales literature and
The fund has advertisements. The results may be calculated on a
averaged a total total return, yield and/or distribution rate basis for
return of 16.30% a various periods, with or without sales charges. Results
year (at no sales calculated without a sales charge will be higher. Total
charge) over its returns assume the reinvestment of all dividends and
lifetime capital gain distributions.
(April 16, 1984 The fund's distribution rate is calculated by dividing
through March 31, the dividends paid by the fund over the last 12 months
1997). by the sum of the month-end price and the capital gains
paid over the last 12 months. The SEC yield reflects
income the fund expects to earn based on its current
portfolio of securities, while the distribution rate is
based solely on the fund's past dividends. Accordingly,
the fund's SEC yield and distribution rate may differ.
6
<PAGE>
- -------------------------------------------------------------------------------
The fund's total return over the past 12 months and
average annual total returns over the past five-year
and ten-year periods as of March 31, 1997, were 15.88%,
13.72% and 12.89%, respectively. These results were
calculated in accordance with Securities and Exchange
Commission requirements with no sales charge. Of
course, past results are not an indication of future
results. Further information regarding the fund's
investment results is contained in the fund's annual
report which may be obtained without charge by writing
to the Secretary of the fund at the address indicated
on the cover of this prospectus.
DIVIDENDS, DIVIDENDS AND DISTRIBUTIONS Dividends are usually paid
DISTRIBUTIONS AND in June and December. All capital gains, if any, are
TAXES distributed annually, usually in December. When a
dividend or capital gain is distributed, the net asset
Income value per share is reduced by the amount of the
distributions are payment.
usually made in
June and December. FEDERAL TAXES The fund intends to operate as a
"regulated investment company" under the Internal
Revenue Code. In any fiscal year in which the fund so
qualifies and distributes to shareholders all of its
net investment income and net capital gains, the fund
itself is relieved of federal income tax. The tax
treatment of redemptions from a retirement plan may
differ from redemptions from an ordinary shareholder
account.
The fund may be required to pay withholding and other
taxes imposed by various countries in connection with
its investments outside the U.S., generally at rates
from 10% to 40%, which would reduce the fund's
investment income.
This is a brief summary of some of the tax laws that
affect your investment in the fund. Please see the
statement of additional information and your tax
adviser for further information.
FUND ORGANIZATION FUND ORGANIZATION AND VOTING RIGHTS The fund, an open-
AND MANAGEMENT end diversified management investment company, was
organized as a Massachusetts business trust in 1983.
The fund is a The fund's board supervises fund operations and
member of The performs duties required by applicable state and
American Funds federal law. Members of the board who are not employed
Group, which is by Capital Research and Management Company or its
managed by one of affiliates are paid certain fees for services rendered
the largest and to the fund as described in the statement of additional
most experienced information. They may elect to defer all or a portion
investment of these fees through a deferred compensation plan in
advisers. effect for the fund. All shareholders have one vote per
share owned, and at the request of holders of at least
10% of the shares, the fund will hold a meeting at
which any member of the board could be removed and a
successor elected. There will not usually be a
shareholder meeting in any year except, for example,
when the election of the board is required to be acted
upon by shareholders under the Investment Company Act
of 1940.
7
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THE INVESTMENT ADVISER Capital Research and Management
Company, a large and experienced investment management
organization founded in 1931, is the investment adviser
to the fund and other funds, including those in The
American Funds Group. Capital Research and Management
Company is located at 333 South Hope Street, Los
Angeles, CA 90071 and at 135 South State College
Boulevard, Brea, CA 92621. Capital Research and
Management Company manages the investment portfolio and
business affairs of the fund and receives a fee at the
annual rate of 0.69% on the first $500 million of the
fund's average net assets, plus 0.59% on such assets in
excess of $500 million to $1 billion, plus 0.53% on
such assets in excess of $1 billion to $1.5 billion,
plus 0.50% on such assets in excess of $1.5 billion to
$2.5 billion, plus 0.48% on such assets in excess of
$2.5 billion to $4 billion, plus 0.47% on such assets
in excess of $4 billion to $6.5 billion, plus 0.46% on
such assets in excess of $6.5 billion to $10.5 billion,
plus 0.45% on such assets in excess of $10.5 billion
to $17 billion, plus 0.445% of such assets in excess of
$17 billion.
Capital Research and Management Company is a wholly
owned subsidiary of The Capital Group Companies, Inc.
(formerly "The Capital Group, Inc."), which is located
at 333 South Hope Street, Los Angeles, CA 90071. The
research activities of Capital Research and Management
Company are conducted by affiliated companies which
have offices in Los Angeles, San Francisco, New York,
Washington, D.C., London, Geneva, Singapore, Hong Kong
and Tokyo.
Capital Research and Management Company and its
affiliated companies have adopted a personal investing
policy that is consistent with the recommendations
contained in the report dated May 9, 1994 issued by the
Investment Company Institute's Advisory Group on
Personal Investing. (See the statement of additional
information.) This policy has also been incorporated
into the fund's "code of ethics" which is available
from the fund's Secretary upon request.
PORTFOLIO TRANSACTIONS Orders for the fund's portfolio
securities transactions are placed by Capital Research
and Management Company, which strives to obtain the
best available prices, taking into account the costs
and quality of executions. In the over-the-counter
market, purchases and sales are transacted directly
with principal market-makers except in those
circumstances where it appears better prices and
executions are available elsewhere.
Subject to the above policy, when two or more brokers
are in a position to offer comparable prices and
executions, preference may be given to brokers who have
sold shares of the fund or have provided investment
research, statistical, and other related services for
the benefit of the fund and/or of other funds served by
Capital Research and Management Company.
8
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PRINCIPAL UNDERWRITER American Funds Distributors,
Inc., a wholly owned subsidiary of Capital Research and
Management Company, is the principal underwriter of the
fund's shares. American Funds Distributors is located
at 333 South Hope Street, Los Angeles, CA 90071, 135
South State College Boulevard, Brea, CA 92821, 8000 IH-
10 West, San Antonio, TX 78230, 8332 Woodfield Crossing
Boulevard, Indianapolis, IN 46240 and 5300 Robin Hood
Road, Norfolk, VA 23513. Telephone conversations with
American Funds Distributors may be recorded or
monitored for verification, recordkeeping and quality
assurance purposes.
PLAN OF DISTRIBUTION The fund has a plan of
distribution or "12b-1 Plan" under which it may finance
activities primarily intended to sell shares, provided
the categories of expenses are approved in advance by
the board and the expenses paid under the plan were
incurred within the last 12 months and accrued while
the plan is in effect. Expenditures by the fund under
the plan may not exceed 0.25% of its average net assets
annually (all of which may be for service fees).
TRANSFER AGENT American Funds Service Company, 800/421-
0180, a wholly owned subsidiary of Capital Research and
Management Company, is the fund's transfer agent and
performs shareholder service functions. American Funds
Service Company is located at 333 South Hope Street,
Los Angeles, CA 90071, 135 South State College
Boulevard, Brea, CA 92821, 8000 1H-10 West, San
Antonio, TX 78230, 8332 Woodfield Crossing Boulevard,
Indianapolis, IN 46240, and 5300 Robin Hood Road,
Norfolk, VA 23513. It was paid a fee of $13,929,000 for
the fiscal year ended March 31, 1997. Telephone
conversations with American Funds Service Company may
be recorded or monitored for verification, record-
keeping and quality assurance purposes.
PURCHASING SHARES ALL ORDERS TO PURCHASE SHARES MUST BE MADE THROUGH YOUR
RETIREMENT PLAN. FOR MORE INFORMATION ABOUT HOW TO PUR-
CHASE SHARES OF THE COMPANY THROUGH YOUR EMPLOYER'S
PLAN OR LIMITATIONS ON THE AMOUNT THAT MAY BE PUR-
CHASED, PLEASE CONSULT WITH YOUR EMPLOYER. Shares are
sold to eligible retirement plans at the net asset
value per share next determined after receipt of an or-
der by the fund or American Funds Service Company. Or-
ders must be received before the close of regular trad-
ing on the New York Stock Exchange in order to receive
that day's net asset value. Plans of organizations with
collective retirement plan assets of $100 million or
more may purchase shares at net asset value. In addi-
tion, any employer-sponsored 403(b) plan or defined
contribution plan qualified under Section 401(a) of the
Internal Revenue Code including a "401(k)" plan with
200 or more eligible employees or any other plan that
invests at least $1 million in shares of the fund (or
in combination with shares of other funds in The Ameri-
can Funds Group
9
<PAGE>
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other than the money market funds) may purchase shares
at net asset value; however, a contingent deferred
sales charge of 1% is imposed on certain redemptions
within 12 months of the purchase. (See "Redeeming
Shares-- Contingent Deferred Sales Charge.") Plans may
also qualify to purchase $1 million in fund shares sub-
ject to a commission over a maximum of 13 consecutive
months. Certain redemptions of such shares may also be
subject to a contingent deferred sales charge as de-
scribed above. (See the statement of additional infor-
mation.)
The minimum initial investment is $250, except that the
money market funds have a minimum of $1,000 for indi-
vidual retirement accounts (IRAs). Minimums are reduced
to $50 for purchases through "Automatic Investment
Plans" (except for the money market funds) or to $25
for purchases by retirement plans through payroll de-
ductions and may be reduced or waived for shareholders
of other funds in The American Funds Group.
During 1997, American Funds Distributors will
provide additional compensation to the top one hundred
dealers who have sold shares of the fund or other funds
in The American Funds Group, based on a pro rata share
of a qualifying dealer's sales. American Funds
Distributors will, on an annual basis, determine the
advisability of continuing these payments.
Qualified dealers currently are paid a continuing serv-
ice fee not to exceed 0.25% of average net assets
(0.15% in the case of the money market funds) annually
in order to promote selling efforts and to compensate
them for providing certain services. (See "Fund Organi-
zation and Management--Plan of Distribution.") These
services include processing purchase and redemption
transactions, establishing shareholder accounts and
providing certain information and assistance with re-
spect to the fund.
Shares of the fund are offered to other shareholders
pursuant to another prospectus at public offering
prices that may include an initial sales charge.
SHARE PRICE Shares are offered to eligible retirement
plans at the net asset value after the order is
received by the fund or American Funds Service Company.
In the case of orders sent directly to the company or
American Funds Service Company, an investment dealer
MUST be indicated. Dealers are responsible for promptly
transmitting orders. (See the statement of additional
information under "Purchase of Shares--Price of
Shares.")
The fund's net asset value per share is determined as
of the close of trading (currently 4:00 p.m., New York
time) on each day the New York Stock Exchange is open.
The current value of the fund's total assets, less all
liabilities, is divided by the total number of shares
outstanding and the result, rounded to the nearer cent,
is the net asset value per share.
10
<PAGE>
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SHAREHOLDER Subject to any restrictions contained in your plan, you
SERVICES can exchange your shares for shares of other funds in
The American Funds Group which are offered through the
plan at net asset value. In addition, again depending
on any restrictions in your plan, you may be able to
exchange shares automatically or cross-reinvest
dividends in shares of other funds. Contact your plan
administrator/trustee regarding how to use these
services. Also, see the fund's statement of additional
information for a description of these and other
services that may be available through your plan. These
services are available only in states where the fund to
be purchased may be legally offered and may be
terminated or modified at any time upon 60 days'
written notice.
REDEEMING Subject to any restrictions imposed by your employer's
SHARES plan, you can sell your shares through the plan to the
fund any day the New York Stock Exchange is open. For
more information about how to sell shares of the fund
through your retirement plan, including any charges
that may be imposed by the plan, please consult with
your employer.
--------------------------------------------------------
By contacting Your plan administrator/trustee must
your plan send a letter of instruction
administrator/ specifying the name of the fund, the
trustee number of shares or dollar amount to
be sold, and, if applicable, your
name and account number. For your
protection, if you redeem more than
$50,000, the signatures of the
registered owners (i.e., trustees or
their legal representatives) must be
guaranteed by a bank, savings
association, credit union, or member
firm of a domestic stock exchange or
the National Association of
Securities Dealers, Inc., that is an
eligible guarantor institution. Your
plan administrator/trustee should
verify with the institution that it
is an eligible guarantor prior to
signing. Additional documentation may
be required to redeem shares from
certain accounts. Notarization by a
Notary Public is not an acceptable
signature guarantee.
--------------------------------------------------------
By contacting Shares may also be redeemed through
your an investment dealer; however you or
investment your plan may be charged for this
dealer service. SHARES HELD FOR YOU IN AN
INVESTMENT DEALER'S STREET NAME MUST
BE REDEEMED THROUGH THE DEALER.
--------------------------------------------------------
THE PRICE YOU RECEIVE FOR THE SHARES YOU REDEEM IS THE
NET ASSET VALUE NEXT DETERMINED AFTER YOUR ORDER AND
ALL REQUIRED DOCUMENTATION ARE RECEIVED BY THE FUND OR
AMERICAN FUNDS SERVICE COMPANY. (SEE "PURCHASING
SHARES--SHARE PRICE.")
CONTINGENT DEFERRED SALES CHARGE A contingent deferred
sales charge of 1% applies to certain redemptions made
within 12 months of purchase on investments of $1
million or more and on any investment made with no
initial sales charge by any employer-sponsored 403(b)
plan or defined contribution plan qualified under
Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees. The
charge is 1% of the lesser of the value of the shares
redeemed (exclusive of reinvested dividends and capital
gain distributions) or the total cost of such shares.
Shares held for the longest period are assumed to be
redeemed first for purposes of calculating this
11
<PAGE>
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charge. The charge is waived for exchanges (except if
shares acquired by exchange were then redeemed within
12 months of the initial purchase); for distributions
from qualified retirement plans and other employee
benefit plans; for redemptions resulting from
participant-directed switches among investment options
within a participant-directed employer-sponsored
retirement plan; and for redemptions in connection with
loans made by qualified retirement plans.
OTHER IMPORTANT THINGS TO REMEMBER The net asset value
for redemptions is determined as indicated under
"Purchasing Shares--Share Price." Because the fund's
net asset value fluctuates, reflecting the market value
of the fund's portfolio, the amount you receive for
shares redeemed may be more or less than the amount
paid for them.
Redemption proceeds will not be mailed until sufficient
time has passed to provide reasonable assurance that
checks or drafts (including certified or cashier's
checks) for shares purchased have cleared (which may
take up to 15 calendar days from the purchase date).
Except for delays relating to clearance of checks for
share purchases or in extraordinary circumstances (and
as permissible under the Investment Company Act of
1940), redemption proceeds will be paid on or before
the seventh day following receipt of a proper
redemption request.
[RECYCLE LOGO] This prospectus has been printed on
recycled paper that meets the
guidelines of the United States
Environmental Protection Agency.
This prospectus relates only to shares of the fund
offered without a sales charge to eligible
retirement plans. For a prospectus regarding shares
of the fund to be acquired otherwise, contact the
Secretary of the fund at the address indicated on
the front.
12
EUROPACIFIC GROWTH FUND
Part B
Statement of Additional Information
JUNE 1, 1997
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,
1997. 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
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
ITEM PAGE NO.
Description of Certain Securities and Investment Techniques 1
Investment Restrictions 3
Fund Trustees and Officers 6
Management . 10
Dividends, Distributions and Federal Taxes. 13
Purchase of Shares 16
Redeeming Shares 23
Shareholder Account Services and Privileges 24
Execution of Portfolio Transactions 26
General Information 27
Investment Results 29
Description of Bond Ratings 33
Financial Statements attached
DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT TECHNIQUES
THE DESCRIPTIONS BELOW ARE INTENDED TO SUPPLEMENT THE MATERIAL IN THE
PROSPECTUS UNDER "INVESTMENT POLICIES AND RISKS."
The fund's assets may be invested in securities through depositary receipts
which may be denominated in various currencies. For example, the fund may
purchase American Depositary Receipts which are U.S. dollar denominated
securities designed for use in the U.S. securities markets and which represent
and may be converted to the underlying security.
INVESTING IN VARIOUS COUNTRIES - The fund may invest in securities issued or
guaranteed by governments (including states, provinces or municipalities) of
countries other than the U.S., or by their agencies, authorities or
instrumentalities, or by supranational entities organized or supported by
several national governments. Investing outside the U.S. involves special
risks (as described in the fund's Prospectus). Securities issued by non-U.S.
governments may or may not be supported by the full faith and credit of the
governmental entities. Additionally governmental issuers of non-U.S.
securities may be unwilling to repay principal and interest when due and may
require that the conditions for payment be renegotiated. The fund has no
current intention (at least during the next twelve months) to invest more than
5% of its assets in securities issued by non-U.S. governmental entities.
The fund's assets will be invested with geographic flexibility; accordingly,
investments may be made from time to time in issuers domiciled in, or
governments of, developing countries. The fund's investment adviser currently
does not intend to invest more than 20% of the fund's total assets (taken at
cost) in securities of issuers domiciled in, or governments of, developing
countries.
The risks of investing outside the U.S. may be more pronounced for investments
in developing countries, such as some 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 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).
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), (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 that mature,
or may be redeemed, in one year or less.
OTHER SECURITIES - The fund may also invest in securities that have both equity
and debt characteristics such as non-convertible preferred stocks and
convertible securities. Non-convertible preferred stocks are similar to debt
in that they have a stated dividend rate akin to the coupon of a bond or note
even though they are often classified as equity securities. The prices and
yields of non-convertible preferred stocks generally move with changes in
interest rates and the issuer's credit quality, similar to the factors
affecting debt securities.
Bonds, preferred stocks, and other securities may sometimes be converted into
shares of common stock or other securities at a stated exchange ratio. These
securities prior to conversion pay a fixed rate of interest or a dividend.
Because convertible securities have both debt and equity characteristics their
value varies in response to many factors, including the value of the underlying
equity, general market and economic conditions, convertible market valuations,
as well as changes in interest rates, credit spreads, and the credit quality of
the issuer. The fund may invest in convertible securities rated in a variety
of credit quality categories, including those rated as low as C by Moody's
Investors Service, Inc. or D by Standard & Poor's Corporation. The fund has no
current intention (at least during the next twelve months) to invest more than
5% of its assets in convertible securities rated below A by Moody's or S&P.
WARRANTS AND RIGHTS - In addition, the fund may purchase warrants, which are
usually issued together with bonds or preferred stocks. Warrants generally
entitle the holder to buy a proportionate amount of common stock at a specified
price, usually higher than the current market price. Warrants may be issued
with an expiration date or in perpetuity. The fund may also invest in rights
to purchase common stocks. Rights are similar to warrants except that they
normally entitle the holder to purchase common stock at a lower price than the
current market price. Rights generally expire in less than four weeks.
REPURCHASE AGREEMENTS - The fund has no current intention (at least during the
next twelve months) to invest more than 5% of its assets in 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 Capital Research and
Management Company (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. The fund will segregate
liquid assets which will be marked to market daily to meet its forward
commitments to the extent required by the Securities and Exchange Commission.
Certain provisions of the Internal Revenue Code may affect the extent to which
the fund may enter into forward contracts. Such transactions may also affect,
for U.S. federal income tax purposes, the character and timing of income, gain
or loss recognized by the fund.
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. Additionally,
investing in private placement securities could have the effect of increasing
the level of illiquidity of the fund's portfolio to the extent that "qualified"
institutional investors become, for a period of time, uninterested in
purchasing these securities.
The fund will not invest more than 10% of its total assets in illiquid
securities or 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:
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.
Subsequent to its purchase by the fund, certain bonds or notes may cease to be
rated or their ratings may be reduced below the minimum rating required for
purchase by the fund. Neither event requires the elimination of such
obligations from the fund's portfolio, but the Investment Adviser will consider
such an event in its determination of whether the fund should continue to hold
such obligations in its portfolio. If, however, 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.
FUND TRUSTEES AND OFFICERS
TRUSTEES AND TRUSTEE COMPENSATION
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NAME, POSITION PRINCIPAL AGGREGATE TOTAL TOTAL
ADDRESS AND WITH OCCUPATION(S) COMPENSATION COMPENSATION NUMBER
AGE REGISTRANT DURING PAST 5 (INCLUDING (INCLUDING OF FUND
YEARS VOLUNTARILY VOLUNTARILY BOARDS
(POSITIONS DEFERRED DEFERRED ON
WITHIN THE COMPENSATION/1/) COMPENSATION/1/) WHICH
ORGANIZATIONS FROM FUND DURING FROM TRUSTEE
LISTED MAY FISCAL YEAR ALL FUNDS SERVES
HAVE CHANGED ENDED 3/31/97 MANAGED BY /3/
DURING THIS CAPITAL RESEARCH
PERIOD) AND
MANAGEMENT
COMPANY/2/
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Elisabeth Trustee Administrative Director, $19,900 $38,800 2.00
Allison ANZI, Ltd.
ANZI, Ltd. (financial
1770 publishing
Massachusetts Ave. and
Cambridge, consulting);
MA 02140 Publishing
Age: 50 Consultant,
Harvard
Medical
School;
former Senior
Vice
President,
Planning and
Development,
McGraw Hill,
Inc.
Michael R. Trustee Chairman of $1,000 $3,500 2
Bonsignore the Board and
Honeywell Chief
Plaza Executive
P.O. Box 524 Officer,
Minneapolis, Honeywell
MN 55440 Inc.
Age: 56
+David I. Trustee Chairman of None/4/ None/4/ 2.00
Fisher the Board,
333 South The Capital
Hope Street Group
Los Angeles, Companies,
CA 90072 Inc.
Age: 57
Robert A. Trustee President and $19,100/5/ $84,500 5.00
Fox Chief
P.O. Box 457 Executive
Livingston, Officer,
CA 95334 Foster Farms,
Age: 60 Inc.; former
President,
Revlon
International; former
Chairman and
Chief
Executive
Officer,
Clarke Hooper
America
(advertising)
Alan Trustee President, $15,700 $70,350 4.00
Greenway Greenway
7413 Fairway Associates,
Road Inc.
La Jolla, CA (management
92037 consulting
Age: 69 services)
+William R. Trustee Senior Vice None/4/ None/4/ 3.00
Grimsley President and
One Market Director,
Plaza Capital
Steuart Research and
Tower, Suite Management
1800 Company
San
Francisco,
CA 94105
Age: 59
Koichi Itoh Trustee President and $19,600 $39,400 2.00
Ginzaya Chief
Building 2F Executive
1-3-2 Officer,
Shinkawa IMPAC
Chuo-ku, (management
Tokyo, Japan consulting
Age: 56 services);
former
Managing
Partner,
VENCA
Management
(venture
capital)
++William H. Trustee President, $19,100/5/ $72,750 4.00
Kling Minnesota
45 East Public Radio;
Seventh President,
Street Greenspring
St. Paul, MN Co.; former
55101 President,
Age: 55 American
Public Radio
(now Public
Radio
International)
John G. Trustee The IBJ $18,300/5/ $144,600 7.00
McDonald Professor of
Graduate Finance,
School of Graduate
Business School of
Stanford Business,
University Stanford
Stanford, CA University
94305
Age: 60
++William I. Trustee Chairman of $19,100 $38,400 2.00
Miller the Board,
500 Irwin
Washington Financial
Street Corporation
Box 929
Columbus, IN
47202
Age: 41
Kirk P. Trustee President, $7,650 $68,294 5
Pendleton Cairnwood,
Cairnwood, Inc. (venture
Inc. capital
75 James Way investment)
Southhampton, PA 18966
Age: 57
Donald E. Trustee Former $18,300/5/ $66,650 4.00
Petersen Chairman of
222 East the Board and
Brown, Suite Chief
460 Executive
Birmingham, Officer, Ford
MI 48009 Motor
Age: 70 Company
+Walter P. Chairman Chairman, None/4/ None/4/ 8.00
Stern of Capital Group
630 Fifth the Board International, Inc.;
Avenue Chairman,
New York, NY Capital
10111 International, Inc.; Vice
Age: 68 Chairman,
Capital
Research
International, Inc.;
Director,
Temple-Inland
Inc. (forest
products)
+Thierry President Chairman of None/4/ None/4/ 2.00
Vandeventer the Board,
3 Place des Capital
Bergues Research
1201 Geneva, Company
Switzerland
Age: 61
</TABLE>
+ 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.
/3/ Includes funds managed by Capital Research and Management Company and
affiliates.
/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.
/5/ Amounts deferred and accumulated earnings thereon are not funded and are
general unsecured liabilities of the fund until paid to the Trustee. 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 ($89,063), Koichi Itoh ($10,103), William H. Kling ($68,083), John G.
McDonald ($56,992), William I. Miller ($10,103), Kirk P. Pendleton ($8,202),
Donald E. Petersen ($16,373).
OFFICERS
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NAME AND ADDRESS AGE POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S)
REGISTRANT DURING PAST 5 YEARS
Walter P. Stern
(see above)
Thierry Vandeventer
(see above)
Stephen E. Bepler 54 Executive Vice President Senior Vice President,
630 Fifth Avenue Capital
New York, NY 10111
Research Company
Mark E. Denning 39 Executive Vice President Senior Vice President and
25 Bedford Street
London, England
Director, Capital Reserach
Company
Robert W. Lovelace 34 Vice President Executive Vice President and
11100 Santa Monica Blvd.
Los Angeles, CA 90025
Director, Capital Research
Company
Janet A. McKinley 42 Vice President Senior Vice President,
630 Fifth Avenue Capital Research Company
New York, NY 10111
Vincent P. Corti 40 Secretary Vice President - Fund
333 South Hope Street Business Management Group,
Los Angeles, CA 90071 Capital Research and
Management Company
R. Marcia Gould 42 Treasurer Vice President - Fund
135 South State College Business Mangement Group,
Blvd. Capital Research and
Brea, CA 92821 Management Company
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</TABLE>
All of the officers listed are officers or employees of the Investment Adviser
or affiliated companies. No compensation is paid by the fund to any Trustee or
officer who is a director, officer or employee of the Investment Adviser or
affiliated companies. The fund pays fees of $15,000 per annum to Trustees who
are not affiliated with the Investment Adviser, 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, 1997
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 (Los Angeles, San Francisco, New
York, Washington D.C., London, Geneva, Hong Kong, Singapore and Tokyo), with a
staff of professionals, many of whom have a number of years of investment
experience. The Investment Adviser is located at 333 South Hope Street, Los
Angeles, CA 90071, and at 135 South State College Boulevard, Brea, CA 92821.
The Investment Adviser's 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. The Investment Adviser is a wholly owned subsidiary
of The Capital Group Companies, Inc.
An affiliate of the Investment Adviser compiles indices for major stock markets
around the world and compiles and edits the Morgan Stanley Capital
International Perspective, providing financial and market information about
more than 2,400 companies around the world.
The Investment Adviser is responsible for more than $100 billion of stocks,
bonds and money market instruments and serves over five million investors of
all types. These investors include privately owned businesses and large
corporations, as well as schools, colleges, foundations and other non-profit
and tax-exempt organizations.
INVESTMENT ADVISORY AND SERVICE AGREEMENT - The Investment Advisory and Service
Agreement (the "Agreement") between the fund and the Investment Adviser, unless
sooner terminated, will continue until March 31, 1998 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.
As compensation for its services, the Investment Adviser receives a monthly fee
which is accrued daily, calculated at the annual rate of 0.69% on the first
$500 million of the fund's 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, 0.46% of such assets in excess
of $6.5 billion but not exceeding $10.5 billion, 0.45% of such assets in
excess of $10.5 billion but not exceeding $17 billion, and 0.445% of such
assets in excess of $17 billion. During the fiscal years ended March 31, 1997,
1996 and 1995, the Investment Adviser's total fees amounted to $70,142,000,
$51,034,000 and $38,787,000, respectively.
PRINCIPAL UNDERWRITER - American Funds Distributors, Inc. (the Principal
Underwriter) is the principal underwriter of the fund's shares. The Principal
Underwriter is located at 333 South Hope Street, Los Angeles, CA 90071, 135
South State College Boulevard, Brea, CA 92821, 8000 IH-10 West, San Antonio, TX
78230, 8332 Woodfield Crossing Boulevard, Indianapolis, IN 46240, and 5300
Robin Hood Road, Norfolk, VA 23513. The fund has adopted a Plan of
Distribution (the Plan), pursuant to rule 12b-1 under the 1940 Act. The
Principal Underwriter receives amounts payable pursuant to the Plan (see below)
and commissions consisting of that portion of the sales charge remaining after
the discounts which it allows to investment dealers. Commissions retained by
the Principal Underwriter on sales of fund shares during the fiscal year ended
March 31, 1997 amounted to $10,806,000 after allowance of $55,552,000 to
dealers. During the fiscal years ended March 31, 1996 and 1995 the Principal
Underwriter retained $11,178,000 and $10,521,000, 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 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 made. These include service fees for qualified
dealers and dealer commissions and wholesaler compensation on sales of shares
exceeding $1 million (including purchases by any employer-sponsored 403(b) plan
or purchases by any defined contribution plan qualified under Section 401(a) of
the Internal Revenue Code including a "401(k)" plan with 200 or more eligible
employees). Only expenses incurred during the preceding 12 months and accrued
while the Plan is in effect may be paid by the fund. During the fiscal year
ended March 31, 1997, the fund paid or accrued $34,026,000 in compensation to
dealers under the Plan.
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 or affiliates, could prevent a bank from continuing to
perform all or a part of its servicing activities. If a bank were prohibited
from so acting, shareholder clients of such bank would be permitted to remain
shareholders of the fund and alternate means for continuing the servicing of
such shareholders would be sought. In such event, changes in the operation of
the fund might occur and shareholders serviced by such bank might no longer be
able to avail themselves of any automatic investment or other services then
being provided by such bank. It is not expected that shareholders would suffer
adverse financial consequences as a result of any of these occurrences.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein, and certain banks and
financial institutions may be required to be registered as dealers pursuant to
state law.
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES
The fund intends to meet all the requirements and has elected the tax status of
a "regulated investment company" under the provisions of Subchapter M of the
Internal Revenue Code of 1986 (the Code). Under Subchapter M, if the fund
distributes within specified times at least 90% of the sum of its investment
company taxable income (net investment income and the excess of net short-term
capital gains over net long-term capital losses) and its tax-exempt interest,
if any, it will be taxed only on that portion of 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, cash items, U.S. Government securities,
securities of other regulated investment companies and other securities (but
such other securities must be limited, in respect of any one issuer, to an
amount not greater than 5% of the fund's assets and 10% of the outstanding
voting securities of such issuer), and (ii) not more than 25% of the value of
its assets is invested in the securities of any one issuer (other than U.S.
Government securities or the securities of other regulated investment
companies), or in two or more issuers which the fund controls and which are
engaged in the same or similar trades or businesses or related trades or
businesses.
Under the Code, a nondeductible excise tax of 4% is imposed on the excess of a
regulated investment company's "required distribution" for the calendar year
ending within the regulated investment company's taxable year over the
"distributed amount" for such calendar year. The term "required distribution"
means the sum of (I) 98% of ordinary income (generally net investment income)
for the calendar year, (ii) 98% of capital gains (both long-term and
short-term) for the one-year period ending on October 31 (as though the
one-year period ending on October 31 were the regulated investment company's
taxable year), and (iii) the sum of any untaxed, undistributed net investment
income and net capital gains of the regulated investment company for prior
periods. The term "distributed amount" generally means the sum of (I) amounts
actually distributed by the fund from its current year's ordinary income and
capital gain net income and (ii) any amount on which the fund pays income tax
for the year. The fund intends to distribute net investment income and net
capital gains so as to minimize or avoid the excise tax liability.
The amount of any realized gain or loss on closing out a 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 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. 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 in acquiring the fund's shares shall not be taken into account (to the
extent such previous sales charges do not exceed the reduction in sales
charges) for the purpose of determining the amount of gain or loss on the
exchange, but will be treated as having been incurred in the acquisition of
such other shares. Also, any loss realized on a redemption or exchange of
shares of a fund will be disallowed to the extent substantially identical
shares are reacquired within the 61-day period beginning 30 days before and
ending 30 days after the shares are disposed of.
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 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. Tax conventions between certain countries and the U.S. may
reduce or eliminate such taxes. If more than 50% in value of the fund's total
assets at the close of its taxable year consists of securities of foreign
issuers, the fund will be eligible to file elections with the Internal Revenue
Service pursuant to which shareholders of the fund will be required to include
their respective pro rata portions of such withholding taxes in their federal
income tax returns as gross income, treat such amounts as foreign taxes paid by
them, and deduct such amounts in computing their taxable incomes or,
alternatively, use them as foreign tax credits against their federal income
taxes. In any year the fund makes such an election, shareholders will be
notified as to the amount of foreign withholding and other taxes paid by the
fund.
As of the date of this statement of additional information, the maximum federal
individual stated tax rate applicable to ordinary income is 39.6% (effective
tax rates may be higher for some individuals due to phase out of exemptions and
elimination of deductions); the maximum individual tax rate applicable to net
capital gains is 28%; and the maximum corporate tax applicable to ordinary
income and net capital gains is 35%. However, to eliminate the benefit of
lower marginal corporate income tax rates, corporations which have 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 a shareholder with respect to either distributions from the fund or
disposition of fund shares will be affected by a combination of tax law rules
covering, E.G., deductions, credits, deferrals, exemptions, sources of income
and other matters. Under the Code, an individual is entitled to establish 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 situations.
PURCHASE OF SHARES
<TABLE>
<CAPTION>
METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS
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See "Investment Minimums and Fund $50 minimum (except where a
Numbers" for initial lower minimum is noted under
investment minimums. "Investment Minimums and Fund
Numbers").
By contacting Visit any investment dealer who is Mail directly to your
your investment registered in the state where the investment dealer's address
dealer purchase is made and who has a printed on your account
sales agreement with American Funds statement.
Distributors.
By mail Make your check payable to the fund Fill out the account additions
and mail to the address indicated form at the bottom of a recent
on the account application. Please account statement, make your
indicate an investment dealer on check payable to the fund,
the account application. write your account number on
your check, and mail the check
and form in the envelope
provided with your account
statement.
By telephone Please contact your investment Complete the "Investments by
dealer to open account, then follow Phone" section on the account
the procedures for additional application or American
investments. FundsLink Authorization Form.
Once you establish the
privilege, you, your financial
advisor or any person with your
account information can call
American FundsLine(r) and make
investments by telephone
(subject to conditions noted in
"Telephone Purchases,
Redemptions and Exchanges"
below).
By wire Call 800/421-0180 to obtain Your bank should wire your
your account number(s), if additional investments in the
necessary. Please indicate an same manner as described under
investment dealer on the "Initial Investment."
account. Instruct your bank to
wire funds to:
Wells Fargo Bank
155 Fifth Street
Sixth Floor
San Francisco, CA 94106
(ABA #121000248)
For credit to the account of:
American Funds Service
Company a/c #4600-076178
(fund name)
(your fund acct. no.)
THE FUNDS AND AMERICAN FUNDS DISTRIBUTORS RESERVE THE RIGHT TO REJECT ANY PURCHASE ORDER.
</TABLE>
INVESTMENT MINIMUMS AND FUND NUMBERS - Here are the minimum initial investments
required by the funds in The American Funds Group along with fund numbers for
use with our automated phone line, American FundsLine(r) (see description
below):
<TABLE>
<CAPTION>
FUND MINIMUM FUND
INITIAL NUMBER
INVESTMENT
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STOCK AND STOCK/BOND FUNDS
AMCAP Fund(r) 02
$1,000
American Balanced Fund(r) 11
500
American Mutual Fund(r) 03
250
Capital Income Builder(r) 12
1,000
Capital World Growth and Income Fund(sm) 33
1,000
EuroPacific Growth Fund(r) 16
250
Fundamental Investors(sm) 10
250
The Growth Fund of America(r) 05
1,000
The Income Fund of America(r) 06
1,000
The Investment Company of America(r) 04
250
The New Economy Fund(r) 14
1,000
New Perspective Fund(r) 07
250
SMALLCAP World Fund(r) 35
1,000
Washington Mutual Investors Fund(sm) 01
250
BOND FUNDS
American High-Income Municipal Bond Fund(r) 40
1,000
American High-Income Trust(sm) 21
1,000
The Bond Fund of America(sm) 08
1,000
Capital World Bond Fund(r) 31
1,000
Intermediate Bond Fund of America(sm) 23
1,000
Limited Term Tax-Exempt Bond Fund of America(sm) 43
1,000
The Tax-Exempt Bond Fund of America(r) 19
1,000
The Tax-Exempt Fund of California(r)* 20
1,000
The Tax-Exempt Fund of Maryland(r)* 24
1,000
The Tax-Exempt Fund of Virginia(r)* 25
1,000
U.S. Government Securities Fund(sm) 22
1,000
MONEY MARKET FUNDS
The Cash Management Trust of America(r) 09
2,500
The Tax-Exempt Money Fund of America(sm) 39
2,500
The U.S. Treasury Money Fund of America(sm) 49
2,500
___________
*Available only in certain states.
</TABLE>
For retirement plan investments, the minimum is $250, except that the money
market funds have a minimum of $1,000 for individual retirement accounts
(IRAs). Minimums are reduced to $50 for purchases through "Automatic
Investment Plans" (except for the money market funds) or to $25 for purchases
by retirement plans through payroll deductions and may be reduced or waived for
shareholders of other funds in The American Funds Group. TAX-EXEMPT FUNDS
SHOULD NOT SERVE AS RETIREMENT PLAN INVESTMENTS. The minimum is $50 for
additional investments (except as noted above).
DEALER COMMISSIONS - The sales charges you pay when purchasing the stock,
stock/bond, and bond funds of The American Funds Group are set forth below.
The money market funds of The American Funds Group are offered at net asset
value. (See "Investment Minimums and Fund Numbers" for a listing of the
funds.)
<TABLE>
<CAPTION>
AMOUNT OF PURCHASE SALES CHARGE AS DEALER
AT THE OFFERING PRICE PERCENTAGE OF THE: CONCESSION
AS PERCENTAGE
OF THE
OFFERING
PRICE
<S> <C> <C> <C>
NET AMOUNT OFFERING
INVESTED PRICE
STOCK AND STOCK/BOND FUNDS
Less than $50,000
6.10% 5.75% 5.00%
$50,000 but less than $100,000
4.71 4.50 3.75
BOND FUNDS
Less than $25,000
4.99 4.75 4.00
$25,000 but less than $50,000
4.71 4.50 3.75
$50,000 but less than $100,000
4.17 4.00 3.25
STOCK, STOCK/BOND, AND BOND FUNDS
$100,000 but less than $250,000
3.63 3.50 2.75
$250,000 but less than $500,000
2.56 2.50 2.00
$500,000 but less than $1,000,000
2.04 2.00 1.60
$1,000,000 or more
none none (see below)
</TABLE>
Commissions of up to 1% will be paid to dealers who initiate and are
responsible for purchases of $1 million or more, for purchases by any
employer-sponsored 403(b) plan or purchases by any defined contribution plan
qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees, and for purchases made
at net asset value by certain retirement plans of organizations with
collective retirement plan assets of $50 million or more; 1.00% on amounts
of $1 million to $2 million, 0.80% on amounts over $2 million to $3 million,
0.50% on amounts over $3 million to $50 million, 0.25% on amounts over $50
million to $100 million, and 0.15% on amounts over $100 million. The level
of dealer commissions will be determined based on sales made over a 12-month
period commencing from the date of the first sale at net asset value.
American Funds Distributors, at its expense (from a designated percentage of
its income), will, during calendar year 1997, provide additional compensation
to dealers. Currently these payments are limited to the top one hundred dealers
who have sold shares of the fund or other funds in The American Funds Group.
These payments will be based on a pro rata share of a qualifying dealer's
sales. American Funds Distributors will, on an annual basis, determine the
advisability of continuing these payments.
Any employer-sponsored 403(b) plan or defined contribution plan qualified under
Section 401(a) of the Internal Revenue Code including a "401(k)" plan with 200
or more eligible employees or any other purchaser investing at least $1 million
in shares of the fund (or in combination with shares of other funds in The
American Funds Group other than the money market funds) may purchase shares at
net asset value; however, a contingent deferred sales charge of 1% is imposed
on certain redemptions made within twelve months of the purchase. (See
"Redeeming Shares--Contingent Deferred Sales Charge.") Investments by
retirement plans, foundations or endowments with $50 million or more in assets
may be made with no sales charge and are not subject to a contingent deferred
sales charge.
Qualified dealers currently are paid a continuing service fee not to exceed
0.25% of average net assets (0.15% in the case of the money market funds)
annually in order to promote selling efforts and to compensate them for
providing certain services. These services include processing purchase and
redemption transactions, establishing shareholder accounts and providing
certain information and assistance with respect to the fund.
NET ASSET VALUE PURCHASES - The stock, stock/bond and bond funds may sell
shares at net asset value to: (1) current or retired directors, trustees,
officers and advisory board members of the funds managed by Capital Research
and Management Company, employees of Washington Management Corporation,
employees and partners of The Capital Group Companies, Inc. and its affiliated
companies, certain family members of the above persons, and trusts or plans
primarily for such persons; (2) current registered representatives, retired
registered representatives with respect to accounts established while active,
or full-time employees (and their spouses, parents, and children) of dealers
who have sales agreements with American Funds Distributors (or who clear
transactions through such dealers) and plans for such persons or the dealers;
(3) companies exchanging securities with the fund through a merger, acquisition
or exchange offer; (4) trustees or other fiduciaries purchasing shares for
certain retirement plans of organizations with retirement plan assets of $50
million or more; (5) insurance company separate accounts; (6) accounts managed
by subsidiaries of The Capital Group Companies, Inc.; and (7) The Capital Group
Companies, Inc., its affiliated companies and Washington Management
Corporation. Shares are offered at net asset value to these persons and
organizations due to anticipated economies in sales effort and expense.
STATEMENT OF INTENTION - The reduced sales charges and offering prices set
forth in the Prospectus apply to purchases of $50,000 or more made within a
13-month period subject to a statement of intention (the "Statement"). The
Statement is not a binding obligation to purchase the indicated amount. When a
shareholder elects to utilize a Statement in order to qualify for a reduced
sales charge, shares equal to 5% of the dollar amount specified in the
Statement will be held in escrow in the shareholder's account out of the
initial purchase (or subsequent purchases, if necessary) by the Transfer Agent.
All dividends and any capital gain distributions on shares held in escrow will
be credited to the shareholder's account in shares (or paid in cash, if
requested). If the intended investment is not completed within the specified
13-month period, the purchaser will remit to the Principal Underwriter the
difference between the sales charge actually paid and the sales charge which
would have been paid if the total of such purchases had been made at a single
time. If the difference is not paid within 45 days after written request by
the Principal Underwriter or the securities dealer, the appropriate number of
shares held in escrow will be redeemed to pay such difference. If the proceeds
from this redemption are inadequate, the purchaser will be liable to the
Principal Underwriter for the balance still outstanding. The Statement may be
revised upward at any time during the 13-month period, and such a revision will
be treated as a new Statement, except that the 13-month period during which the
purchase must be made will remain unchanged and there will be no retroactive
reduction of the sales charges paid on prior purchases. Existing holdings
eligible for rights of accumulation (see the prospectus and account
application) may be credited toward satisfying the Statement. During the
Statement period reinvested dividends and capital gain distributions,
investments in money market funds, and investments made under a right of
reinstatement will not be credited toward satisfying the Statement.
In the case of purchase orders by the trustees of certain retirement plans by
payroll deduction, the sales charge for the investments made during the
13-month period will be handled as follows: The regular monthly payroll
deduction investment will be multiplied by 13 and then multiplied by 1.5. The
current value of existing American Funds investments (other than money market
fund investments) and any rollovers or transfers reasonably anticipated to be
invested in non-money market American Funds during the 13-month period are
added to the figure determined above. The sum is the Statement amount and
applicable breakpoint level. On the first investment and all other investments
made pursuant to the Statement, a sales charge will be assessed according to
the sales charge breakpoint thus determined. There will be no retroactive
adjustments in sales charges on investments previously made during the 13-month
period.
Shareholders purchasing shares at a reduced sales charge under a Statement
indicate their acceptance of these terms with their first purchase.
AGGREGATION - Sales charge discounts are available for certain aggregated
investments. Qualifying investments include those by you, your spouse and your
children under the age of 21, if all parties are purchasing shares for their
own account(s), which may include purchases through employee benefit plan(s)
such as an IRA, individual-type 403(b) plan or single-participant Keogh-type
plan or by a business solely controlled by these individuals (for example, the
individuals own the entire business) or by a trust (or other fiduciary
arrangement) solely for the benefit of these individuals. Individual purchases
by a trustee(s) or other fiduciary(ies) may also be aggregated if the
investments are (1) for a single trust estate or fiduciary account, including
an employee benefit plan other than those described above or (2) made for two
or more employee benefit plans of a single employer or of affiliated employers
as defined in the Investment Company Act of 1940, again excluding employee
benefit plans described above, or (3) for a diversified common trust fund or
other diversified pooled account not specifically formed for the purpose of
accumulating fund shares. Purchases made for nominee or street name accounts
(securities held in the name of an investment dealer or another nominee such as
a bank trust department instead of the customer) may not be aggregated with
those made for other accounts and may not be aggregated with other nominee or
street name accounts unless otherwise qualified as described above.
PRICE OF SHARES - Purchases of shares are made at the offering price next
determined after the purchase order is received by the fund or American Funds
Service Company; this offering price is effective for orders received prior to
the time of determination of the net asset value and, in the case of orders
placed with dealers, accepted by the Principal Underwriter prior to its close
of business. In the case of orders sent directly to the fund or American Funds
Service Company, an investment dealer MUST be indicated. The dealer is
responsible for promptly transmitting purchase orders to the Principal
Underwriter. Orders received by the investment dealer, the Transfer Agent, or
the fund after the time of the determination of the net asset value will be
entered at the next calculated offering price. Prices which appear in the
newspaper are not always indicative of prices at which you will be purchasing
and redeeming shares of the fund, since 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 Principal Underwriter will not knowingly sell shares directly or indirectly
or through a unit investment trust to any other investment company, person or
entity, where, after the sale, such investment company, person, or entity would
own beneficially, directly, indirectly, or through 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.
REDEEMING SHARES
<TABLE>
<CAPTION>
<S> <C>
By writing to American Funds Send a letter of instruction specifying the name
Service Company (at the of the fund, the number of shares or dollar amount
appropriate address indicated to be sold, your name and account number. You
under "Fund Organization and should also enclose any share certificates you
Management - Principal wish to redeem. For redemptions over $50,000 and
Underwriter and Transfer Agent" for certain redemptions of $50,000 or less (see
in the prospectus) below), your signature must be guaranteed by a
bank, savings association, credit union, or member
firm of a domestic stock exchange or the National
Association of Securities Dealers, Inc. that is an
eligible guarantor institution. You should verify
with the institution that it is an eligible
guarantor prior to signing. Additional
documentation may be required for redemption of
shares held in corporate, partnership or fiduciary
accounts. Notarization by a Notary Public is not
an acceptable signature guarantee.
By contacting your investment If you redeem shares through your investment
dealer dealer, you may be charged for this service.
SHARES HELD FOR YOU IN YOUR INVESTMENT DEALER'S
STREET NAME MUST BE REDEEMED THROUGH THE DEALER.
You may have a redemption check You may use this option, provided the account is
sent to you by using American registered in the name of an individual(s), a
FundsLine(r) or by telephoning, UGMA/UTMA custodian, or a non-retirement plan
faxing, or trust. These redemptions may not exceed $50,000
telegraphing American Funds per shareholder, per day, per fund account and the
Service Company (subject to the check must be made payable to the shareholder(s)
conditions noted in this section of record and be sent to the address of record
and in "Telephone Purchases, provided the address has been used with the
Sales and Exchanges" in the account for at least 10 days. See "Fund
prospectus) Organization and Management - Principal
Underwriter and Transfer Agent" in the prospectus
and "Exchange Privilege" below for the appropriate
telephone or fax number.
In the case of the money Upon request (use the account application for the
market funds, you may have money market funds) you may establish telephone
redemptions wired to your bank by redemption privileges (which will enable you to
telephoning American Funds have a redemption sent to your bank account)
Service Company ($1,000 or more) and/or check writing privileges. If you request
or by writing a check ($250 or check writing privileges, you will be provided
more) with checks that you may use to draw against your
account. These checks may be made payable to
anyone you designate and must be signed by the
authorized number of registered shareholders
exactly as indicated on your checking account
signature card.
</TABLE>
A SIGNATURE GUARANTEE IS NOT CURRENTLY REQUIRED FOR ANY REDEMPTION OF $50,000
OR LESS PROVIDED THE REDEMPTION CHECK IS MADE PAYABLE TO THE REGISTERED
SHAREHOLDER(S) AND IS MAILED TO THE ADDRESS OF RECORD, PROVIDED THE ADDRESS HAS
BEEN USED WITH THE ACCOUNT FOR AT LEAST 10 DAYS.
CONTINGENT DEFERRED SALES CHARGE - A contingent deferred sales charge of 1%
applies to certain redemptions made within twelve months of purchase on
investments of $1 million or more and on any investment made with no initial
sales charge by any employer-sponsored 403(b) plan or defined contribution plan
qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees. The charge is 1% of the
lesser of the value of the shares redeemed (exclusive of reinvested dividends
and capital gain distributions) or the total cost of such shares. Shares held
for the longest period are assumed to be redeemed first for purposes of
calculating this charge. The charge is waived for exchanges (except if shares
acquired by exchange were then redeemed within 12 months of the initial
purchase); for distributions from qualified retirement plans and other employee
benefit plans; for redemptions resulting from participant-directed switches
among investment options within a participant-directed employer-sponsored
retirement plan; for distributions from 403(b) plans or IRAs due to death,
disability or attainment of age 591/2; for tax-free returns of excess
contributions to IRAs; for redemptions through certain automatic withdrawals
not exceeding 10% of the amount that would otherwise be subject to the charge;
and for redemptions in connection with loans made by qualified retirement
plans.
REDEMPTION OF SHARES - The fund's 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.
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES
AUTOMATIC INVESTMENT PLAN - The automatic investment plan enables shareholders
to make regular monthly or quarterly investments in shares through automatic
charges to their bank accounts. With shareholder authorization and bank
approval, the Transfer Agent will automatically charge the bank account for the
amount specified ($50 minimum), which will be automatically invested in shares
at the offering price on or about the dates you select. Bank accounts will be
charged on the day or a few days before investments are credited, depending on
the bank's capabilities, and shareholders will receive a confirmation statement
at least quarterly. Participation in the plan will begin within 30 days after
receipt of the account application. If the shareholder's bank account cannot
be charged due to insufficient funds, a stop-payment order or the closing of
the account, the plan may be terminated and the related investment reversed.
The shareholder may change the amount of the investment or discontinue the plan
at any time by writing to the Transfer Agent.
AUTOMATIC REINVESTMENT - Dividends and capital gain distributions are
reinvested in additional shares at no sales charge unless you indicate
otherwise on the account application. You also may elect to have dividends
and/or capital gain distributions paid in cash by informing the fund, American
Funds Service Company or your investment dealer.
CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS - A shareholder in one fund
may elect to cross-reinvest dividends or dividends and capital gain
distributions paid by that fund (the paying fund) into any other fund in The
American Funds Group (the receiving fund) subject to the following conditions:
(I) the aggregate value of the shareholder's account(s) in the paying fund(s)
must equal or exceed $5,000 (this condition is waived if the value of the
account in the receiving fund equals or exceeds that fund's minimum initial
investment requirement), (ii) as long as the value of the account in the
receiving fund is below that fund's minimum initial investment requirement,
dividends and capital gain distributions paid by the receiving fund must be
automatically reinvested in the receiving fund, and (iii) if this privilege is
discontinued with respect to a particular receiving fund, the value of the
account in that fund must equal or exceed the fund's minimum initial investment
requirement or the fund shall have the right, if the shareholder fails to
increase the value of the account to such minimum within 90 days after being
notified of the deficiency, automatically to redeem the account and send the
proceeds to the shareholder. These cross-reinvestments of dividends and
capital gain distributions will be at net asset value (without sales charge).
EXCHANGE PRIVILEGE - You may exchange shares into other funds in The American
Funds Group. Exchange purchases are subject to the minimum investment
requirements of the fund purchased and no sales charge generally applies.
However, exchanges of shares from the money market funds are subject to
applicable sales charges on the fund being purchased, unless the money market
fund shares were acquired by an exchange from a fund having a sales charge, or
by reinvestment or cross-reinvestment of dividends or capital gain
distributions.
You may exchange shares by writing to American Funds Service Company (see
"Redeeming Shares"), by contacting your investment dealer, by using American
FundsLine(r) (see "American FundsLine(r)" below), or by telephoning
800/421-0180 toll-free, faxing (see "Principal Underwriter and Transfer Agent"
in the prospectus for the appropriate fax numbers) or telegraphing American
Funds Service Company. (See "Telephone Redemptions and Exchanges" below.)
Shares held in corporate-type retirement plans for which Capital Guardian Trust
Company serves as trustee may not be exchanged by telephone, fax or telegraph.
Exchange redemptions and purchases are processed simultaneously at the share
prices next determined after the exchange order is received. (See "Purchase of
Shares--Price of Shares.") THESE TRANSACTIONS HAVE THE SAME TAX CONSEQUENCES AS
ORDINARY SALES AND PURCHASES.
AUTOMATIC EXCHANGES - You may automatically exchange shares (in amounts of $50
or more) among any of the funds in The American Funds Group on any day (or
preceding business day if the day falls on a non-business day) of each month
you designate. You must either meet the minimum initial investment requirement
for the receiving fund OR the originating fund's balance must be at least
$5,000 and the receiving fund's minimum must be met within one year.
AUTOMATIC WITHDRAWALS - Withdrawal payments are not to be considered as
dividends, yield or income. Automatic investments may not be made into a
shareholder account from which there are automatic withdrawals. Withdrawals of
amounts exceeding reinvested dividends and distributions and increases in share
value would reduce the aggregate value of the shareholder's account. The
Transfer Agent arranges for the redemption by the fund of sufficient shares,
deposited by the shareholder with the Transfer Agent, to provide the withdrawal
payment specified.
ACCOUNT STATEMENTS - Your account is opened in accordance with your
registration instructions. Transactions in the account, such as additional
investments and dividend reinvestments, will be reflected on regular
confirmation statements from American Funds Service Company. Purchases through
automatic investment plans and certain retirement plans will be confirmed at
least quarterly.
AMERICAN FUNDSLINE(R) - You may check your share balance, the price of your
shares, or your most recent account transaction, redeem shares (up to $50,000
per shareholder each day), or exchange shares around the clock with American
FundsLine(r). To use this service, call 800/325-3590 from a TouchTonet
telephone. Redemptions and exchanges through American FundsLine(r) are subject
to the conditions noted above and in "Telephone Redemptions and Exchanges"
below. You will need your fund number (see the list of funds in The American
Funds Group under "Purchase of Shares--Investment Minimums and Fund Numbers"),
personal identification number (the last four digits of your Social Security
number or other tax identification number associated with your account) and
account number.
TELEPHONE REDEMPTIONS AND EXCHANGES - By using the telephone (including
American FundsLine(r)), fax or telegraph redemption and/or exchange options,
you agree to hold the fund, American Funds Service Company, any of its
affiliates or mutual funds managed by such affiliates, and each of their
respective directors, trustees, officers, employees and agents harmless from
any losses, expenses, costs or liability (including attorney fees) which may be
incurred in connection with the exercise of these privileges. Generally, all
shareholders are automatically eligible to use these options. However, you may
elect to opt out of these options by writing American Funds Service Company
(you may also reinstate them at any time by writing American Funds Service
Company). If American Funds Service Company does not employ reasonable
procedures to confirm that the instructions received from any person with
appropriate account information are genuine, the fund may be liable for losses
due to unauthorized or fraudulent instructions. In the event that shareholders
are unable to reach the fund by telephone because of technical difficulties,
market conditions, or a natural disaster, redemption and exchange requests may
be made in writing only.
EXECUTION OF PORTFOLIO TRANSACTIONS
Orders for the fund's portfolio securities transactions are placed by the
Investment Adviser. The Investment Adviser strives to obtain the best
available prices in its portfolio transactions taking into account the costs
and promptness of executions. When circumstances relating to a proposed
transaction indicate that a particular broker (either directly or through their
correspondent clearing agents) 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 for the fiscal years ended
March 31, 1997, 1996 and 1995, amounted to $18,418,000, $17,493,000 and
$7,563,000, respectively.
GENERAL INFORMATION
CUSTODIAN OF ASSETS - Securities and cash owned by the fund, including proceeds
from the sale of shares of the fund and of securities in the fund's portfolio,
are held by The Chase Manhattan Bank, One Chase Manhattan Plaza, New York, NY
10081, as Custodian. Non-U.S. securities may be held by the Custodian pursuant
to sub-custodial arrangements in non-U.S. banks or foreign branches of U.S.
banks.
TRANSFER AGENT - American Funds Service Company, a wholly owned subsidiary of
the Investment Adviser, maintains the records of each shareholder's account,
processes purchases and redemptions of the fund's shares, acts as dividend and
capital gain distribution disbursing agent, and performs other related
shareholder service functions. American Funds Service Company was paid a fee
of $13,929,000 for the fiscal year ended March 31, 1997.
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.
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.
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.
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, 1997
<TABLE>
<CAPTION>
<S> <C>
Net asset value and redemption price per share
(Net assets divided by shares outstanding) $26.70
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) $28.33
</TABLE>
INVESTMENT RESULTS
The fund's yield is 1.61% based on a 30-day (or one month) period ended March
31, 1997, 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, 1997 were 9.23%, 12.38% and 12.23%, 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 nine common stock funds that are at least 10 years old. In the rolling
10-year periods since January 1, 1967 ( 127 in all) those funds have had better
total returns than the Standard and Poor's 500 Composite Stock Index in 91 of
the 127 periods.
Note that past results are not an indication of future investment results.
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>
1987 - 1997 217.0% 250.1% 84.5%
1984* - 1997 566.7% 625.9% 472.2%
</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
(4/1/96 - 3/31/97) (4/1/92 - 3/31/97) (4/1/87 - 3/31/97) (4/16/84 - 3/31/97)
$2,185 $14,353 $40,042 $73,251
</TABLE>
___________________________________
SEE THE DIFFERENCE TIME CAN MAKE IN AN INVESTMENT PROGRAM...
<TABLE>
<CAPTION>
<S> <C> <C>
If you had invested ...and taken all distributions in
$10,000 in EUPAC shares, your investment
this many years ago... would have been worth this
much at March 31, 1997
Periods
Number of Years 4/1 - 3/31 Value
1 1996-1997 $ 10,923
2 1995-1997 13,092
3 1994-1997 13,181
4 1993-1997 16,646
5 1992-1997 17,925
6 1991-1997 20,025
7 1990-1997 21,844
8 1989-1997 25,561
9 1988-1997 29,316
10 1987-1997 31,696
11 1986-1997 40,891
12 1985-1997 63,158
Lifetime* 1984-1997 66,672
</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, 1997)
<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
1997 1,063 6,787 16,787 36,676 19,366 10,630 66,672
</TABLE>
The dollar amount of capital gain distributions during the period was $11,188.
(* 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."
<TABLE>
EuroPacific Growth Fund
Investment Portfolio March 31, 1997
<S> <C> <C> <C>
Percent
Industry Diversification Largest Individual of Net
9.95% Telecommunications Holdings Assets
9.03% Banking Novartis 2.22%
6.72% Automobiles Astra 1.83%
6.66% Health & Personal Care ING 1.68
5.34% Broadcasting & Publishing Mannesmann 1.68
48.92% Other Industries Bayerische Motoren Werke 1.46
13.38% Bonds, Cash and Equivalents Volvo 1.39
Telefonica de Espana 1.27
Orkla 1.17
Australia and New Zealand
Banking Group 1.16
Bank of Nova Scotia 1.16
EQUITY-TYPE SECURITIES Shares or Market Percent
(common and preferred stocks and convertible debentures) Principal Value of Net
Amount (Millions) Assets
Telecommunications- 8.68%
Telefonica de Espana, SA (Spain) 8,155,000 $ 201.997
Telefonica de Espana, SA (American Depositary Receipts) 153,000 10.978 1.27%
Telecom Italia Mobile SpA (Italy) 51,390,000 150.635
Telecom Italia Mobile SpA, savings shares 23,105,000 39.389 1.14
Telefonos de Mexico, SA de CV, Class L (American
Depositary Receipts) (Mexico) 4,372,000 168.322
Telefonos de Mexico, SA de CV, Class L 9,612,500 18.479 1.12
Hong Kong Telecommunications Ltd. (Hong Kong) 77,653,848 132.794 .79
British Telecommunications PLC (United Kingdom) 15,950,000 116.797 .70
Telecom Corp. of New Zealand Ltd. (New Zealand) 16,780,173 76.388
Telecom Corp. of New Zealand Ltd. /1/ 6,519,900 29.680
Telecom Corp. of New Zealand Ltd. (American Depositary
Receipts) 31,800 2.258 .65
Telecom Italia SpA (Italy) 24,605,000 62.949
Telecom Italia SpA, savings shares 18,000,000 38.940 .61
Koninklijke PTT Nederland NV (Netherlands) 2,601,900 96.387 .58
Tele Danmark AS, Class B (Denmark) 1,000,000 52.532
Tele Danmark AS, Class B (American Depositary Receipts) 1,050,400 27.442 .48
Telefonica del Peru SA (American Depositary Receipts) (Peru) 2,987,900 66.481 .40
Telecomunicacoes Brasileiras SA, preferred nominative
(American Depositary Receipts) (Brazil) 577,436 59.115 .35
Philippine Long Distance Telephone Co. (American Depositary
Receipts) (Philippines) 426,250 25.522
Philippine Long Distance Telephone Co., convertible preferred
shares, Series III (Global Depositary Receipts) 400,000 22.000
Philippine Long Distance Telephone Co., convertible preferred
shares, Series II (Global Depositary Receipts) /1/ 220,000 7.480 .33
Perusahaan Perseroan (Persero) PT Indonesian Satellite Corp.
(American Depositary Receipts) (Indonesia) 1,078,600 28.853
Perusahaan Perseroan (Persero) PT Indonesian Satellite Corp. 8,550,000 22.800 .31
Mahanagar Telephone Nigam Ltd. (India) 7,600,000 51.162 .31
SK Telecom Co. Ltd. (South Korea) 39,880 37.138 .22
STET-Societa Finanziaria Telefonica p.a., nonconvertible
savings shares (Italy) 6,100,000 22.118
STET-Societa Finanziaria Telefonica p.a. 3,335,000 14.933 .22
Deutsche Telekom AG (Germany) 1,213,500 27.856 .17
Videsh Sanchar Nigam Ltd. (Global Depositary Receipts)
(India) /1/ /2/ 1,511,309 26.523 .16
DDI Corp. (Japan) 2,400 15.160 .09
Vodafone Group PLC (American Depositary Receipts)
(United Kingdom) 105,000 4.633 .03
Kokusai Denshin Denwa Co., Ltd. (Japan) 70,300 4.100 .02
Banking- 9.03%
Australia and New Zealand Banking Group Ltd. (Australia) 30,631,058 194.064 1.16
Bank of Nova Scotia (Canada) 5,266,300 193.723 1.16
Royal Bank of Canada (Canada) 3,847,700 149.325 .89
ABN AMRO Holding NV (Netherlands) 1,905,402 131.015 .78
Banco de Santander, SA (Spain) 1,531,800 107.259
Banco de Santander, SA (American Depositary Receipts) 308,200 20.958 .77
Westpac Banking Corp. (Australia) 21,935,130 127.275 .76
HSBC Holdings PLC (Hong Kong) 4,776,800 110.971
HSBC Holdings PLC (United Kingdom) 172,223 4.229 .69
Lloyds TSB Group plc (United Kingdom) 11,670,000 95.814 .57
Sakura Bank, Ltd. (Japan) 7,311,000 40.978
Sakura Finance (Bermuda) Trust, convertible preference share
units 269 12.336 .32
Bank of Scotland (United Kingdom) 8,045,000 42.315 .25
Bank of Tokyo-Mitsubishi, Ltd. (Japan) 1,151,000 17.967
MBL International Finance, 3.00% convertible debentures 2002
(Bermuda) $15,000,000 15.394 .20
Grupo Financiero Banamex Accival, SA de CV, Class B (Mexico) /2/ 9,530,000 21.667
Grupo Financiero Banamex Accival, SA de CV, Class L /2/ 2,207,777 4.456 .16
National Australia Bank Ltd. (Australia) 2,060,606 26.094 .16
Allied Irish Banks, PLC (Ireland) 3,750,000 25.580 .15
Kookmin Bank (Global Depositary Receipts) (South Korea) /1/ 1,390,000 24.985 .15
Hanil Bank (South Korea) 4,241,600 23.749 .14
Fuji Bank, Ltd. (Japan) 1,340,000 15.498
Fuji International Finance (Bermuda) Trust, convertible
preference share units 260 5.930 .13
Toyo Trust and Banking Co., Ltd. (Japan) 2,700,000 18.627 .11
Barclays PLC (United Kingdom) 1,000,000 16.782 .10
Yasuda Trust and Banking Co., Ltd. (Japan) 5,100,000 14.231 .08
Credit Commercial de France (France) 250,501 12.015 .07
Bangkok Bank Public Co. Ltd., 3.25% convertible debentures
2004 (Thailand) Y10,000,000 9.300 .06
Mitsui Trust and Banking Co. Ltd. (Japan) 1,475,000 8.470 .05
Korea First Bank (South Korea) 2,010,000 8.216 .05
Shinhan Bank (South Korea) 454,473 6.480 .04
Asahi Bank, Ltd. (Japan) 850,000 5.349 .03
Sumitomo Bank, Ltd., 0.75% convertible debentures 2001
(Japan) DM100,000,000 .849 .00
Automobiles- 6.72%
Bayerische Motoren Werke AG (Germany) 271,909 220.004
Bayerische Motoren Werke AG, preferred shares 43,636 24.453 1.46
Volvo AB, Class B (Sweden) 8,545,000 232.758 1.39
Daimler-Benz AG (Germany) /2/ 1,221,150 97.633
Daimler-Benz AG, 4.125% convertible debentures 2003 /1/ $101,914,000 86.735 1.10
Honda Motor Co., Ltd. (Japan) 4,784,000 142.777 .85
Toyota Motor Corp. (Japan) 4,890,000 123.792 .74
Suzuki Motor Corp. (Japan) 7,859,000 76.276 .46
Regie Nationale des Usines Renault, SA (France) 1,924,454 48.702 .29
Peugeot SA (France) 300,000 34.223 .20
Volkswagen AG (Germany) 44,400 24.535 .15
Hyundai Motor Co. (Global Depositary Receipts) (South Korea) /1/ 940,000 7.661
Hyundai Motor Co. (Global Depositary Receipts) 800,000 6.520 .08
Health & Personal Care- 6.66%
Novartis AG (Switzerland) 300,088 372.399 2.22
AB Astra, Class A (Sweden) 5,340,000 254.815
AB Astra, Class B 1,130,000 52.124 1.83
Zeneca Group PLC (United Kingdom) 3,750,000 108.638 .65
Elan Corp., PLC (American Depositary Receipts) (Ireland) /2/ 2,294,600 78.303 .47
Glaxo Wellcome PLC (United Kingdom) 2,185,000 40.099
Glaxo Wellcome PLC (American Depositary Receipts) 1,000,000 35.375 .45
Hoya Corp. (Japan) 1,544,000 69.183 .41
Teva Pharmaceutical Industries Ltd. (American Depositary
Receipts) (Israel) 800,000 44.400 .27
SmithKline Beecham PLC (American Depositary Receipts)
(United Kingdom) 500,000 35.000 .21
Synthelabo (France) 128,000 13.121 .08
Sankyo Co., Ltd. (Japan) 442,000 12.190 .07
Multi-Industry- 5.40%
Orkla AS, Class A (Norway) 1,974,000 158.938
Orkla AS, Class B 500,000 37.680 1.17
Hutchison Whampoa Ltd. (Hong Kong) 19,430,000 146.072 .87
Siebe PLC (United Kingdom) 5,450,000 91.911 .55
Swire Pacific Ltd., Class A (Hong Kong) 10,305,000 81.129 .48
Lend Lease Corp. Ltd. (Australia) 4,341,120 74.409 .44
Jardine Strategic Holdings Ltd. (Singapore - Incorporated in
Bermuda) 14,375,000 49.737
Jardine Strategic Holdings Ltd., 7.50% convertible Eurobonds
2049 $11,631,000 12.707
Jardine Strategic Holdings Ltd. (American Depositary
Receipts) 300,000 2.064
Jardine Strategic Holdings Ltd., warrants, expire 1998 /2/ 1,375,000 .447 .39
Brierley Investments Ltd. (New Zealand) 42,638,320 39.709
Brierley Investments Ltd., convertible preferred shares 2,105,750 1.829 .25
B A T Industries PLC (United Kingdom) 4,720,000 40.149 .24
Industriforvaltnings AB Kinnevik, Class B (Sweden) 1,059,111 29.130
Industriforvaltnings AB Kinnevik, Class A 302,260 8.133 .22
Imasco Ltd. (Canada) 1,350,000 34.001 .20
Ayala Corp., Class B (Philippines) 28,716,500 29.436 .18
Preussag AG (Germany) 78,500 21.160
Preussag AG, warrants, expire 2001 /2/ 30,200 1.774 .14
Incentive AB, Class B (Sweden) 250,000 16.966
Incentive AB, Class A 59,850 4.046 .13
First Pacific Co. Ltd. (Hong Kong) 15,928,210 20.249 .12
Groupe Bruxelles Lambert SA, warrants, expire 1998 (Belgium) /2/ 126,900 2.602 .02
Broadcasting & Publishing- 5.34%
News Corp. Ltd. (American Depositary Receipts) (Australia) 3,958,200 71.248
News Corp. Ltd., preferred shares 11,017,777 43.195
News Corp. Ltd. 7,982,052 37.239
News Corp. Ltd., preferred shares (American Depositary
Receipts) 1,181,600 17.576 1.01
Mediaset SPA (Italy) /1/ /2/ 16,174,544 65.047 .39
Mediaset SPA /1/ 8,093,000 32.547 .19
CANAL+ (France) 373,495 73.516 .44
Soft Bank Corp. (Japan) 895,440 56.852 .34
Carlton Communications PLC (United Kingdom) 5,441,250 46.687 .28
Television Broadcasts Ltd. (Hong Kong) 11,467,000 46.619 .28
Publishing & Broadcasting Ltd. (PBL) (Australia) 8,558,626 46.170 .28
Grupo Televisa, SA (American Depositary Receipts) (Mexico) /2/ 1,791,800 44.571 .27
Thompson Corp. (Canada) 2,150,000 42.497 .25
Pathe (France) 140,300 35.955 .21
Independent Newspapers, PLC (Ireland) 6,506,544 35.075 .21
NV Verenigd Bezit VNU (Netherlands) 1,670,000 34.360 .21
Reed International PLC (United Kingdom) 1,155,634 21.284
Elsevier NV (Netherlands) 725,000 11.786 .20
Wolters Kluwer NV (Netherlands) 257,659 31.025 .19
Pearson PLC (United Kingdom) 2,210,000 26.481 .16
Daily Mail and General Trust PLC, Class A (United Kingdom) 790,000 21.426 .13
Nippon Television Network Corp. (Japan) 75,000 20.564 .12
Television Francaise 1 SA (France) 165,000 16.532 .10
United News & Media PLC, 6.125% convertible debentures 2003
(United Kingdom) GBP7,400,000 12.772 .08
Energy Sources- 3.80%
TOTAL, Class B (France) 1,177,461 102.030
TOTAL, Class B (American Depositary Receipts) 1,033,547 43.797 .87
Royal Dutch Petroleum Co. (Netherlands) 400,000 72.619
Royal Dutch Petroleum Co. (New York Registered Shares) 115,000 20.125
'Shell' Transport and Trading Co., PLC (New York Registered
Shares) (United Kingdom) 225,000 23.513 .69
Repsol SA (American Depositary Receipts) (Spain) 1,150,000 46.862
Repsol SA 950,000 40.599 .52
Societe Nationale Elf Aquitaine (France) 850,000 87.284 .52
Sasol Ltd. (South Africa) 4,169,940 44.587 .27
Suncor Inc. (Canada) 1,000,000 44.085 .26
Woodside Petroleum Ltd. (Australia) 4,200,000 30.937 .18
ENI SpA (American Depositary Receipts) (Italy) 550,000 27.844 .17
YPF SA, Class D (American Depositary Receipts)(Argentina) 967,000 25.625 .15
Broken Hill Proprietary Co. Ltd. (Australia) 1,115,955 14.875 .09
Petrofina SA (Belgium) 40,000 13.943 .08
Insurance- 3.33%
Internationale Nederlanden Groep NV (Netherlands) 6,228,206 245.330
Internationale Nederlanden Groep NV, warrants, expire 2001 /2/ 4,100,000 36.605 1.68
Royal Sun Alliance (United Kingdom) 7,651,295 56.217 .34
PartnerRe Holdings Ltd. (Incorporated in Bermuda) 1,587,400 56.154 .34
Union de Assurances Federales (France) 386,667 49.959 .30
Corporacion Mapfre, CIR, SA (Spain) 839,382 43.543 .26
GIO Australia Holdings Ltd. (Australia) 10,106,056 29.636 .18
CKAG Colonia Konzern AG (Germany) 284,880 26.806
CKAG Colonia Konzern AG, preferred shares 15,530 1.261 .17
Yasuda Fire and Marine Insurance Co., Ltd. (Japan) 1,190,000 5.871 .03
Munchener Ruckversicherungs-Gesellschaft (Germany) 3,000 5.484 .03
Food & Household Products- 3.32%
Nestle SA (Switzerland) 137,225 160.662 .96
Unilever PLC (United Kingdom) 4,030,000 106.979 .64
Groupe Danone (France) 628,224 99.729 .60
Reckitt & Colman PLC (United Kingdom) 6,816,250 91.648 .55
Cadbury Schweppes PLC (United Kingdom) 8,109,282 71.978 .43
PT Indofood Sukses Makmur (Indonesia) 9,416,500 20.795 .12
Universal Robina Corp. (Philippines) 7,600,000 3.462 .02
Beverages & Tobacco- 3.10%
Coca-Cola Amatil Ltd. (Australia) 10,381,075 98.728 .59
Seagram Co. Ltd. (Canada) 1,700,000 65.025 .39
South African Breweries Ltd. (South Africa) 1,942,533 61.542 .37
LVMH Moet Hennessy Louis Vuitton (France) 232,000 56.400 .34
Panamerican Beverages, Inc., Class A (Mexico) 1,034,100 55.454 .33
San Miguel Corp., Class B (Philippines) 12,728,800 44.217 .26
Lion Nathan Ltd. (New Zealand) 15,940,000 37.888 .23
Cia. Cervejaria Brahma, preferred shares (Brazil) 45,665,000 29.775 .18
Swedish Match AB (Sweden) 8,413,000 29.551 .18
PT Hanjaya Mandala Sampoerna (Indonesia) 4,530,000 21.234 .13
ITC Ltd. (India) 1,700,000 17.012 .10
Utilities: Electric & Gas- 2.91%
Centrais Eletricas Brasileiras SA Electrobras, preferred
nominative (American Depositary Receipts) (Brazil) 3,200,500 68.011
Centrais Eletricas Brasileiras SA Electrobras, ordinary
nominative (American Depositary Receipts) 1,287,000 26.223 .56
Cia. Energetica de Minas Gerais - CEMIG (American
Depositary Receipts) (Brazil) 1,428,550 58.571
Cia. Energetica de Minas Gerais - CEMIG, preferred
nominative 421,000,000 17.333
Cia. Energetica de Minas Gerais - CEMIG, ordinary
nominative 105,000,000 4.462 .49
Cia. Energetica de Minas Gerais - CEMIG (American
Depositary Receipts) /1/ 23,100 .947
Korea Electric Power Corp. (South Korea) 1,589,580 46.281
Korea Electric Power Corp. (American Depositary Receipts) 740,000 12.950
Korea Electric Power Corp., 5.00% convertible debentures 2001 $5,000,000 4.900 .38
National Power PLC (United Kingdom) 7,135,400 57.059 .34
Hongkong Electric Holdings Ltd. (Hong Kong) 14,481,500 51.118 .31
Scottish Power PLC (United Kingdom) 7,504,300 43.604 .26
CESP - Cia. Energetica de Sao Paulo, ordinary nominative
(Brazil) /2/ 264,120,000 14.341
CESP - Cia. Energetica de Sao Paulo, preferred
nominative (American Depositary Receipts) /2/ 723,420 10.490
CESP - Cia. Energetica de Sao Paulo, preferred
nominative (American Depositary Receipts) /1/ /2/ 83,664 1.213 .16
Enersis SA (American Depositary Receipts) (Chile) 741,800 23.552 .14
Huaneng Power International, Inc., Class N (American
Depositary Receipts) (People's Republic of China) /2/ 925,000 20.697 .12
Manila Electric Co., Class B (Philippines) 1,753,424 13.979 .08
PowerGen PLC (United Kingdom) 1,175,000 11.453 .07
Machinery & Engineering- 2.71%
Mannesmann AG (Germany) 736,012 281.436 1.68
Valmet Oy (Finland) 3,400,000 60.922 .36
Kvaerner AS, Class A (Norway) 910,000 49.398 .29
Kawasaki Heavy Industries, Ltd. (Japan) 6,800,000 26.454 .16
Komori Corp. (Japan) 1,237,000 24.712 .15
Mitsubishi Heavy Industries, Ltd. (Japan) 1,753,000 11.413 .07
Business & Public Services- 2.52%
Rentokil Group PLC (United Kingdom) 13,710,000 94.648 .57
Brambles Industries Ltd. (Australia) 3,350,000 55.083 .33
Hyder PLC (United Kingdom) 3,850,000 49.993 .30
United Utilities PLC (United Kingdom) 3,921,427 40.479 .24
Thames Water PLC (United Kingdom) 3,039,925 33.153 .20
Quebecor Printing Inc. (Canada) 1,492,000 27.604 .16
Havas SA (France) 330,000 24.549 .15
NTT Data Communications Systems Corp. (Japan) 895 23.816 .14
Severn Trent PLC (United Kingdom) 1,890,000 21.529 .13
Reuters Holdings PLC (United Kingdom) 1,916,700 19.501 .12
Securitas AB, Class B (Sweden) 467,000 13.061 .08
Secom Co., Ltd. (Japan) 220,000 12.367 .07
Thorn PLC (United Kingdom) 1,918,940 5.283 .03
Eurotunnel SA, units, comprised of one share of Eurotunnel SA
ordinary and one share of Eurotunnel PLC ordinary (France) /2/ 605,900 .712 .00
Metals: Nonferrous- 2.23%
Pechiney, Class A (France) 2,630,000 106.951 .64
Cominco Ltd. (Canada) 2,600,000 70.525 .42
WMC Ltd. (Australia) 8,767,748 55.411 .33
Inco Ltd. (Canada) 1,490,000 48.611 .29
Outokumpu Oy, Class A (Finland) 1,200,000 22.589 .13
Alcan Aluminium Ltd. (Canada) 600,000 20.325 .12
The RTZ Corp. (United Kingdom) 1,280,000 20.271 .12
Teck Corp., Class B (Canada) 900,000 19.678 .12
Noranda Inc. (Canada) 450,000 9.968 .06
Electronic Components- 2.21%
Rohm Co., Ltd. (Japan) 1,572,000 115.955 .69
Kyocera Corp. (Japan) 1,383,000 78.524 .47
Murata Manufacturing Co., Ltd. (Japan) 2,060,000 73.976 .44
ASM Lithography Holding NV (Netherlands) /2/ 940,000 73.052 .44
Hirose Electric Co., Ltd. (Japan) 405,000 22.242 .13
Delta Electronics Industrial Co., 0.50% convertible
debentures 2004 (Taiwan) $7,250,000 7.558 .04
Electrical & Electronic- 2.14%
ABB AG, Class A (Switzerland) 44,074 52.979
ABB AB, Class B (Sweden) 369,300 41.315
ABB AB, Class B (American Depositary Receipts) 210,000 22.732
ABB AB, Class A 180,000 20.209 .82
Telefonaktiebolaget LM Ericsson, Class B (Sweden) 2,621,880 91.574
Telefonaktiebolaget LM Ericsson, Class B (American Depositary
Receipts) 660,000 22.316 .68
Nokia Corp., Class K (Finland) 1,113,000 66.776
Nokia Corp., Class A 192,000 11.635 .47
Northern Telecom Ltd. (Canada) 230,000 15.036 .09
Johnson Electric Holdings Ltd. (Hong Kong - Incorporated in
Bermuda) 3,901,300 9.919 .06
Tokyo Electron Ltd. (Japan) 86,900 2.882 .02
Recreation & Other Consumer Products- 1.58%
Nintendo Co., Ltd. (Japan) 1,589,500 114.160 .68
Fuji Photo Film Co., Ltd. (Japan) 1,400,000 46.085 .28
Bajaj Auto Ltd. (India) 1,365,000 34.411
Bajaj Auto Ltd. (Global Depositary Receipts) 50,000 1.862 .22
Sony Music Entertainment (Japan) Inc. (Japan) 697,000 25.368 .15
Square Co., Ltd. (Japan) 539,600 21.647 .13
PolyGram NV (New York Registered Shares) (Netherlands) 250,000 12.312 .07
EMI Group PLC (United Kingdom) 417,764 7.656 .05
Merchandising- 1.55%
Tesco PLC (United Kingdom) 9,601,830 55.160 .33
Cifra, SA de CV, Class B (Mexico) /2/ 16,576,400 23.031
Cifra, SA de CV, Class A /2/ 13,558,176 18.735
Cifra, SA de CV, Class C /2/ 8,067,200 11.209 .32
H & M Hennes & Mauritz AB, Class B (Sweden) 214,250 28.683 .17
Amway Japan Ltd. (American Depositary Receipts) (Japan) 715,000 10.099
Amway Japan Ltd. 335,000 9.212
AJL PEPS Trust 465,000 7.324 .15
Woolworths Ltd. (Australia) 8,547,244 22.853 .14
Coles Myer Ltd. (Australia) 4,830,347 22.725 .14
George Weston Ltd. (Canada) 300,000 14.851 .09
Ito-Yokado Co., Ltd. (Japan) 280,000 12.456 .07
Carrefour SA (France) 20,000 12.426 .07
WHSmith Group PLC (United Kingdom) 1,500,000 11.120 .07
Industrial Components- 1.25%
Cie. Generale des Etablissements Michelin, Class B
(France) 1,334,000 79.413
Cie. Generale des Etablissements Michelin, convertible
preferred shares 52,266 3.077 .49
Bridgestone Corp. (Japan) 2,221,000 41.675 .25
Morgan Crucible Co. PLC (United Kingdom) 3,408,240 26.610 .16
Sumitomo Electric Industries, Ltd. (Japan) 1,742,000 23.670 .14
Calsonic Corp. (Japan) 3,745,000 19.173 .11
MINEBEA Co., Ltd. (Japan) 2,078,000 17.311 .10
Chemicals- 1.22%
AGA AB, Class B (Sweden) 3,430,000 50.693 .30
Hoechst AG (Germany) 1,150,000 46.558 .28
BASF AG, warrants, expire 2001 (Germany) /2/ 250,000 45.999 .27
L'Air Liquide (France) 229,946 36.380 .22
Ciba Specialty Chemicals Holdings (Switzerland) 165,667 13.698 .08
DSM NV (Netherlands) 123,306 12.448 .07
Appliances & Household Durables- 1.15%
Philips Electronics NV (Netherlands) 1,605,000 74.856 .45
Sony Corp. (Japan) 937,000 65.554 .39
AB Electrolux, Class B (Sweden) 823,000 51.272 .31
SANYO Electric Co., Ltd. (Japan) 85,000 .321 .00
Forest Products & Paper- 0.86%
UPM-Kymmene Corp. (Finland) 2,300,000 50.705
UPM-Kymmene Corp., 8.25% convertible debentures 2043 FIM40,000,000 9.664 .36
Stora Kopparbergs Bergslags AB, Class B (Sweden) 2,150,000 29.781 .18
AssiDoman AB (Sweden) 828,000 21.950 .13
Carter Holt Harvey Ltd. (New Zealand) 8,224,336 17.434 .10
MAYR-MELNHOF Karton AG (Austria) /2/ 160,000 8.478 .05
Kimberly-Clark de Mexico, SA de CV, Class A (Mexico) 1,615,000 6.507 .04
Building Materials & Components- 0.73%
CEMEX, SA de CV, ordinary participation certificates (Mexico) 16,746,650 61.343
CEMEX, SA de CV, Class B 2,210,625 8.907
CEMEX, SA de CV, Class A 1,793,075 6.557 .46
Holderbank Financiere Glaris Ltd. (Switzerland) 58,938 45.211 .27
Real Estate- 0.63%
Sun Hung Kai Properties Ltd. (Hong Kong) 6,250,000 66.144 .40
Mitsui Fudosan Co., Ltd. (Japan) 1,480,000 15.322 .09
C & P Homes, Inc. (Philippines) 27,730,500 13.160 .08
Mitsubishi Estate Co., Ltd. (Japan) 900,000 9.609 .06
Miscellaneous Materials & Commodities- 0.52%
Cie. de Saint-Gobain (France) 325,071 49.290 .29
SGL Carbon AG (Germany) 281,600 38.649 .23
Transportation: Shipping- 0.39%
Stolt-Nielsen SA, Class B (American Depositary Receipts)
(Incorporated in Luxembourg) 845,000 14.920
Stolt-Nielsen SA 837,000 14.438 .18
Nippon Yusen KK (Japan) 5,110,000 18.102 .11
Bergesen D.Y. AS, Class B (Norway) 785,000 17.259 .10
Metals: Steel- 0.37%
Kawasaki Steel Corp. (Japan) 17,111,000 49.822 .30
Thyssen AG (Germany) 50,000 11.283 .07
Pohang Iron & Steel Co., Ltd. (South Korea) 7,870 .494 .00
Aerospace & Military Technology- 0.30%
Bombardier Inc., Class B (Canada) 1,307,000 23.661 .14
British Aerospace PLC (United Kingdom) 970,000 21.755 .13
Rolls-Royce PLC (United Kingdom) 1,250,000 4.685 .03
Leisure & Tourism- 0.30%
Granada Group PLC (United Kingdom) 1,621,709 24.457 .15
Euro Disney SCA (France) /2/ 7,320,000 13.027
Euro Disney SCA, warrants, expire 2004 /2/ 1,100,000 .237 .08
Mandarin Oriental International Ltd. (Singapore -
Incorporated in Bermuda) 9,670,312 11.894 .07
Wholesale & International Trade- 0.20%
Mitsui & Co., Ltd. (Japan) 2,700,000 19.829 .12
Mitsubishi Corp. (Japan) 1,447,000 12.874 .08
Transportation: Rail & Road- 0.15%
Guangshen Railway Co. Ltd., Class H (American Depositary
Receipts) (People's Republic of China) /2/ 1,148,000 25.112 .15
Gold Mines- 0.14%
Ashanti Goldfields Co. Ltd. (Global Depositary Receipts)
(Ghana) 1,501,900 20.651
Ashanti Goldfields Co. Ltd., 5.50% convertible debentures
2003 $3,000,000 2.550 .14
Financial Services - 0.12%
ORIX Corp. (Japan) 250,500 11.042 .07
ACOM Co., Ltd. (Japan) 210,000 8.747 .05
Data Processing & Reproduction- 0.08%
Olivetti SpA (Italy) /2/ 32,900,000 11.851 .07
Riso Kagaku Corp. (Japan) 45,000 2.522 .01
Miscellaneous- 3.71%
Other equity-type securities in initial period of acquisition 621.493 3.71
----------- --------
TOTAL EQUITY-TYPE SECURITIES (cost: $11,293.056 million) 14,498.245 86.62
----------- --------
BONDS
Principal
Amount
(Millions)
Argentina Government- 0.62%
Argentina 6.75% March 2005 /3/ $83.420 74.557 .45
Argentina 11.375% January 2017 14.500 14.881 .09
Argentina 11.75% February 2007 ARP14.000 14.072 .08
New Zealand Government- 0.31%
New Zealand 8.00% November 2006 NZ$75.000 52.187 .31
Broadcasting & Publishing- 0.00%
Grupo Televisa, SA 0%/13.25% May 2008 /4/ $20.000 $12.850 .08%
----------- --------
TOTAL BONDS (cost: $132.999 million) 168.547 1.01
----------- --------
SHORT-TERM SECURITIES
Corporate Short-Term Notes- 8.62%
General Electric Capital Corp. 5.31%-5.48% due 4/2-5/14/97 $110.600 110.297 .66
Canada Bills 5.21%-5.34% due 4/21-6/9/97 106.900 106.168 .63
Commonwealth Bank of Australia 5.34%-5.35% due 6/5-6/12/97 90.000 89.029 .53
National Australia Funding (Delaware) Inc. 5.29%-5.33%
due 4/17-6/2/97 88.500 87.971 .53
Svenska Handelsbanken Group 5.35%-5.70% due 4/2-4/30/97 84.800 84.623 .50
Toyota Motor Credit Corp. 5.28%-5.29% due 4/9-5/12/97 82.300 82.015 .49
ABN-AMRO North America Finance Inc. 5.28%-5.32%
due 4/30-5/27/97 81.800 81.284 .49
Ford Credit Europe PLC 5.33%-5.51% due 4/8-4/25/97 79.700 79.527 .47
Halifax Building Society 5.29%-5.56% due 4/1-6/13/97 78.100 77.497 .46
International Lease Finance Corp. 5.26%-5.62% due 4/8-5/16/97 77.500 77.143 .46
Deutsche Bank Financial Inc. 5.31%-5.35% due 4/14-6/10/97 74.700 74.429 .44
International Business Machines Corp. 5.27%-5.50%
due 4/3-5/8/97 74.000 73.815 .44
Barclays U.S. Funding Corp. 5.29%-5.365% due 4/4-6/17/97 73.800 73.540 .44
Abbey National North America 5.27%-5.35% due 4/23-6/10/97 60.000 59.530 .36
American Express Credit Corp. 5.31%-5.32% due 4/2-5/8/97 58.000 57.857 .35
Bank of Montreal 5.27%-5.30% due 4/29/97 56.500 56.257 .34
Siemens Capital Corp. 5.27%-5.34% due 4/11-5/16/97 53.600 53.325 .32
Canadian Wheat Board 5.26%-5.47% due 4/28-5/20/97 45.000 44.729 .27
Daimler-Benz North America Corp. 5.26%-5.33% due 4/24-6/5/97 32.000 31.839 .19
Ford Motor Credit Co. 5.32%-5.48% due 5/2-5/19/97 24.900 24.763 .15
Canadian Imperial Holdings Inc. 5.32% due 4/15/97 16.400 16.364 .10
Certificates of Deposit- 2.17%
Societe Generale 5.37%-5.43% due 4/1-5/5/97 80.800 80.800 .48
Canadian Imperial Bank of Commerce 5.30%-5.34%
due 4/18-4/29/97 75.000 75.000 .45
Rabobank Nederland N.V. 5.40%-5.43% due 4/9-6/10/97 55.000 54.988 .33
Swiss Bank Corp. 5.41% due 4/7/97 40.000 40.000 .24
Abbey National PLC 5.41% due 5/6/97 40.000 39.999 .24
National Westminster Bank PLC 5.375% due 4/1/97 30.000 30.000 .18
Deutsche Bank AG 5.36% due 5/12/97 29.000 28.998 .17
ABN-AMRO Bank 5.40% due 4/8/97 13.500 13.500 .08
Federal Agency Discount Notes- 0.85%
Federal Home Loan Mortgage Corp. 5.26%-5.55% due 5/1-6/23/97 81.800 81.168 .48
Federal National Mortgage Assn. 5.22%-5.30% due 5/7-6/6/97 62.500 62.044 .37
Non-U.S. Government Short-Term Notes- 0.05%
International Bank for Reconstruction and Development
12.50% July 1997 NZ$11.000 7.774 .05
Non-U.S. Currency- 0.06%
New Taiwanese Dollar NT$275.100 9.996 .06
----------- --------
TOTAL SHORT-TERM SECURITIES (cost: $1,965.841 million) 1,966.269 11.75
----------- --------
TOTAL INVESTMENT SECURITIES (cost: $13,391.896 million) 16,633.061 99.38
Excess of cash and receivables over payables 103.982 .62
----------- --------
NET ASSETS $16,737.043 100.00%
=========== ========
/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/ Coupon rate may change periodically.
/4/ Represents a zero-coupon bond which will convert to an
interest-bearing security at a later date.
The descriptions of the companies shown in the portfolio,
which were obtained from published reports and other sources
believed to be reliable, are supplemental and are not
covered by the Report of Independent Accountants.
See Notes to Financial Statements
</TABLE>
EQUITY-TYPE SECURITIES APPEARING IN THE PORTFOLIO SINCE SEPTEMBER 30, 1996
Alcan Aluminium
B A T Industries
Bank of Scotland
Cia. Cervejaria Brahma
British Aerospace
British Telecommunications
Carrefour
Coles Myer
Daily Mail and General Trust
Delta Electronics
Deutsche Telekom
Elf Aquitaine
Enersis
Fuji Bank
Hoechst
Honda Motor
Imasco
ITC
Lloyds TSB Group
Mitsubishi Estate
RTZ
Siebe
Swire Pacific
United News & Media
Videsh Sanchar Nigam
Volkswagen
George Weston
Woodside Petroleum
Zeneca
EQUITY-TYPE SECURITIES ELIMINATED FROM THE PORTFOLIO SINCE SEPTEMBER 30, 1996
Akzo Nobel
Atlas Copco
Autopistas, Concesionaria Espanola
Banco Popular Espanol
Banyu Pharmaceutical
BCE Mobile Communications
BICC
British Airways
Canadian National Railway
Consolidated Electric Power Asia
Continental
CS Holding
Deutsche Bank
Edison
Engen
Hitachi
Hong Kong and China Gas
Irish Life
Istituto Nazionale delle Assicurazioni
ITOCHU
Merita
Nippon Konpo Unyu Soko
Nippon Telegraph and Telephone
NV Verenigde Bedrijven Nutricia
Orbital Engine
Petron
Rank Organisation
Rogers Cantel Mobile Communications
Siemens
Sumitomo Chemical
Svenska Handelsbanken
TeleWest Communications
TNT
Uni-Charm
VA Technologie
Waste Management
<TABLE>
EuroPacific Growth Fund
Financial Statements
- ---------------------------------------------- ---------- ----------
Statement of Assets and Liabilities
at March 31, 1997 (dollars in millions)
- ---------------------------------------------- ---------- ----------
<S> <C> <C>
ASSETS:
Investment securities at market
(cost: $13,391.896) $16,633.061
Cash 5.109
Receivables for-
Sales of investments $141.441
Sales of fund's shares 40.506
Forward currency contracts 7.982
Dividends and accrued interest 51.532 241.461
---------- ----------
16,879.631
LIABILITIES:
Payables for-
Purchases of investments 98.164
Repurchases of fund's shares 30.984
Management services 6.792
Accrued expenses 6.648 142.588
---------- ----------
NET ASSETS AT MARCH 31, 1997-
Equivalent to $26.70 per share on
626,897,929 shares of beneficial
interest issued and outstanding;
unlimited shares authorized $16,737.043
===========
Statement of Operations
for the year ended March 31, 1997 (dollars in millions)
- ---------------------------------------------- ---------- ----------
INVESTMENT INCOME:
Income:
Dividends $281.489
Interest 108.052 $389.541
----------
Expenses:
Management services fee 70.142
Distribution expenses 34.026
Transfer agent fee 13.929
Reports to shareholders 1.197
Registration statement and prospectus 1.259
Postage, stationery and supplies 1.948
Trustees' fees .162
Auditing and legal fees .092
Custodian fee 8.284
Taxes other than federal income tax .231
Other expenses .170 131.440
---------- ----------
Net investment income 258.101
----------
REALIZED GAIN AND UNREALIZED
APPRECIATION ON INVESTMENTS:
Net realized gain 799.451
Net increase in unrealized appreciation
on investments 1,092.178
Net increase in unrealized appreciation
on forward currency contracts 6.061 1,098.239
---------- ----------
Net realized gain and unrealized appreciation
on investments 1,897.690
----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $2,155.791
===========
- ---------------------------------------------- ----------------------------------
Statement of Changes in Net Assets Year ended Year ended
(dollars in millions) 3/31/97 3/31/96
- ---------------------------------------------- ---------- ----------
OPERATIONS:
Net investment income $ 258.101 $ 216.732
Net realized gain on investments 799.451 328.434
Net increase in unrealized appreciation
on investments 1,098.239 1,281.505
---------- ----------
Net increase in net assets
resulting from operations 2,155.791 1,826.671
---------- ----------
DIVIDENDS AND DISTRIBUTIONS PAID TO
SHAREHOLDERS:
Dividends from net investment income (236.013) (221.348)
Distributions from net realized gain on
investments (503.619) (93.827)
---------- ----------
Total dividends and distributions (739.632) (315.175)
---------- ----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold: 195,364,825
and 186,653,832 shares, respectively 4,950.543 4,301.025
Proceeds from shares issued in reinvestment
of net investment income dividends and
distributions of net realized gain on
investments: 28,349,252 and 13,154,617 shares,
respectively 704.707 296.950
Cost of shares repurchased: 104,945,629
and 102,718,162 shares, respectively (2,669.767) (2,361.627)
---------- ----------
Net increase in net assets resulting from
capital share transactions 2,985.483 2,236.348
---------- ----------
TOTAL INCREASE IN NET ASSETS 4,401.642 3,747.844
NET ASSETS:
Beginning of year 12,335.401 8,587.557
---------- ----------
End of year (including undistributed
net investment income: $50.769
and $37.536, respectively) $16,737.043 $12,335.401
=========== ===========
See Notes to Financial Statements
</TABLE>
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 by the Board of
Trustees or a committee thereof.
As is customary in the mutual fund industry, securities transactions are
accounted for on the date the securities are purchased or sold. In the event
the fund purchases securities on a delayed delivery or "when-issued" basis, it
will segregate with its custodian liquid assets in an amount sufficient to meet
its payment obligations in these transactions. Realized gains and losses from
securities transactions are reported on an identified cost basis. Dividend and
interest income is reported on the accrual basis. Discounts and premiums on
securities purchased are amortized over the life of the respective securities.
Dividends and distributions paid to shareholders are recorded on the
ex-dividend date.
Investment securities, cash balances, and other assets and liabilities,
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 effects of changes in foreign currency
exchange rates on investment securities are included with the net realized and
unrealized gain or loss on investment securities.
Pursuant to the custodian agreement, the fund receives credits against its
custodian fee for imputed interest on certain balances with the custodian bank.
The custodian fee of $8,284,000 includes $121,000 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 10%. 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, 1997, net unrealized appreciation on investments, excluding
forward currency contracts, for book and federal income tax purposes aggregated
$3,241,165,000, net of accumulated deferred taxes totaling $2,098,000 on
unrealized appreciation of Indian securities, of which $3,676,697,000 related
to appreciated securities and $435,532,000 related to depreciated securities.
During the year ended March 31, 1997, the fund realized, on a tax basis, a net
capital gain of $793,915,000 on securities transactions. Net gains related to
non-U.S. currency transactions of $5,536,000 were treated as ordinary income
for federal income tax purposes. The capital gain distributions paid in June
and December, 1996 included $16,382,000 of realized non-U.S. currency gains.
The cost of portfolio securities, excluding forward currency contracts, for
book and federal income tax purposes was $13,391,896,000 at March 31, 1997.
3. The fee of $70,142,000 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 in effect through March 31, 1997, 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.
The Board of Trustees has approved a new agreement containing a reduced fee
schedule. Effective April 1, 1997, fees are 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; 0.46% of such assets in excess of
$6.5 billion but not exceeding $10.5 billion; 0.45% of such assets in excess of
$10.5 billion but not exceeding $17 billion; and 0.445% of such assets in
excess of $17 billion.
Pursuant to a Plan of Distribution, the fund may expend up to 0.25% of its
average net assets annually for any activities primarily intended to result in
sales of fund shares, provided the categories of expenses for which
reimbursement is made are approved by the fund's Board of 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, 1997,
distribution expenses under the Plan were $34,026,000. As of March 31, 1997,
accrued and unpaid distribution expenses were $2,712,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $13,929,000. American Funds Distributors, Inc. (AFD), the
principal underwriter of the fund's shares, received $10,806,000 (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 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, 1997,
aggregate amounts deferred and earnings thereon were $259,000.
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, 1997, accumulated undistributed net realized gain on
investments was $558,387,000 and paid-in capital was $12,256,131,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $5,351,778,000 and $3,324,306,000, respectively,
during the year ended March 31,1997.
Dividend and interest income is recorded net of non-U.S. taxes paid. For the
year ended March 31, 1997, such non-U.S. taxes were $38,900,000. Net realized
currency losses on dividends, interest, withholding taxes reclaimable, and
sales of non-U.S. bonds and notes were $1,399,000 for the year ended March 31,
1997.
The fund reclassified $8,855,000 from undistributed net investment income to
undistributed net realized gains; $6,763,000 from undistributed net realized
gains to undistributed net realized currency gains; and $423,000 from
paid-in-capital to undistributed net realized gains for the year ended March
31, 1997.
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, 1997, the fund had outstanding
forward currency contracts to sell non-U.S. currencies as follows:
Non-U.S. Currency Sale Contracts
<TABLE>
<CAPTION>
Non-U.S. Currency Contract Amounts U.S. Valuation at 3/31/97
Sale Contracts
Non-U.S. U.S. Amount Unrealized
Appreciation
<S> <C> <C> <C> <C>
Japanese Yen expiring Y6,035,175,000 $58,035,713 $50,053,549 $7,982,164
5/2/97 to 11/14/97
</TABLE>
<TABLE>
Per-Share Data and Ratios /1/
Year
ended
March
31
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Year $24.28 $20.89 $21.95 $17.64 $16.64
---------------------------------------------
Income From Investment
Operations:
Net investment income .46 .46 .35 .24 .22
Net realized and unrealized
gain (loss) on investments 3.28 3.63 (.19) 4.37 1.04
------------------------------------- -------
Total income from investment
operations 3.74 4.09 .16 4.61 1.26
------------------------------------- -------
Less Distributions:
Dividends from net investment
income (.41) (.49) (.317) (.187) (.222)
Dividends from net realized
non-U.S. currency gains /2/ (.03) - (.003) (.043) (.038)
Distributions from net
realized gains (.88) (.21) (.90) (.07) -
------------------------------------- -------
Total distributions (1.32) (.70) (1.22) (.30) (.26)
------------------------------------- -------
Net Asset Value, End of Year $ 26.70 $ 24.28 $ 20.89 $ 21.95 $ 17.64
===================================== =======
Total Return /3/ 15.88% 19.84% .71% 26.27% 7.69%
Ratios/Supplemental Data:
Net assets, end of year
(in millions) $16,737 $12,335 $8,588 $6,429 $2,992
Ratio of expenses to average
net assets .90% .95% .97% .99% 1.10%
Ratio of net income to average
net assets 1.77% 2.09% 1.80% 1.13% 1.40%
Average commissions paid per
share /4/ 1.36 c 1.10 c .21 c .08 c .25 c
Portfolio turnover rate 25.82% 21.77% 16.02% 21.37% 10.35%
/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/ Calculated without deducting a sales charge. The maximum
sales charge is 5.75% of the fund's offering price.
/4/ Brokerage commissions paid on portfolio transactions increase
the cost of securities purchased or reduce the proceeds of securities
sold and are not separately reflected in the fund's statement of operations.
Shares traded on a principal basis (without commissions), such as most
over-the-counter and fixed-income transactions, are excluded. Generally,
non-U.S. commissions are lower than U.S. commissions when expressed as
cents per share but higher when expressed as a percentage of
transactions because of the lower per-share prices of many non-U.S.
securities.
</TABLE>
To the Board of 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
"Fund") at March 31, 1997, the results of its operations, the changes in its
net assets and the per-share data and ratios for the years indicated in
conformity with generally accepted accounting principles. These financial
statements and per-share data and ratios (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation of
securities at March 31, 1997 by correspondence with the custodian and brokers
and the application of alternative auditing procedures where confirmations from
brokers were not received, provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
Los Angeles, California
April 30, 1997
Tax Information (unaudited)
We are required to advise you within 60 days of the fund's fiscal year-end
regarding the federal tax status of distributions received by shareholders
during such fiscal year. The distributions made during the fiscal year by the
fund were earned from the following sources:
<TABLE>
<CAPTION>
Dividends and Distributions per Share
From Net From Net From Net
To Shareholders Investment Realized Short- Realized Long-
of Record Payment Date Income term Gains term Gains
<S> <C> <C> <C> <C>
May 31, 1996 June 3, 1996 $.08 $.042 $.448
December 13, 1996 December 16, 1996 .36 - .39
</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, 1997 is $0.06148 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 1997 UNDER SEPARATE COVER TO DETERMINE
THE CALENDAR YEAR AMOUNTS TO BE INCLUDED ON THEIR 1996 TAX RETURNS.
SHAREHOLDERS SHOULD CONSULT THEIR TAX ADVISERS.
