[THE AMERICAN FUNDS GROUP(R)]
EUROPACIFIC GROWTH FUND
[illustration of the globe]
1998 SEMI-ANNUAL REPORT
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1998
EUROPACIFIC GROWTH FUND(R)
Seeks long-term capital appreciation by investing in the securities of
companies based outside the United States. About half the world's investment
opportunities can be found beyond the borders of our country. As a shareholder
in the fund, you have access to what we believe are the best of those
opportunities.
EuroPacific is one of the 28 mutual funds in The American Funds Group,(r)
managed by Capital Research and Management Company. Since 1931, Capital has
invested with a long-term focus based on thorough research and attention to
risk.
A LOOK AT THE FUND'S RESULTS
(as of September 30, 1998, at net asset value with all distributions
reinvested)
Six months -13.7%
12 months -9.3
Lifetime (since April 16, 1984) +638.2
Average annual compound return over lifetime +14.8
Fund results in this report were computed without a sales charge unless
otherwise indicated. Here are the returns, with all distributions reinvested,
through September 30, 1998, assuming payment of the 5.75% maximum sales charge
at the beginning of the stated periods:
<TABLE>
<CAPTION>
<S> <C> <C>
Average Annual
Total Return Compound Return
TEN YEARS +203.81% +11.75%
FIVE YEARS +51.25 +8.63
ONE YEAR -14.55 -
</TABLE>
Sales charges are lower for accounts of $50,000 or more.
FIGURES SHOWN ARE PAST RESULTS. SHARE PRICE AND RETURN WILL VARY, SO YOU MAY
LOSE MONEY. INVESTING FOR SHORT PERIODS MAKES LOSSES MORE LIKELY. INVESTMENTS
ARE NOT FDIC-INSURED, NOR ARE THEY DEPOSITS OF OR GUARANTEED BY A BANK OR ANY
OTHER ENTITY. INVESTING OUTSIDE THE UNITED STATES IS SUBJECT TO ADDITIONAL
RISKS, SUCH AS CURRENCY FLUCTUATIONS, POLITICAL INSTABILITY, DIFFERING
SECURITIES REGULATIONS AND PERIODS OF ILLIQUIDITY, WHICH ARE DETAILED IN THE
FUND'S PROSPECTUS.
FELLOW SHAREHOLDERS:
Since we reported to you last, world stock markets have declined sharply,
effectively ending a remarkable span of solid gains. Asia's stubborn
difficulties and new turmoil in other regions left investors extremely
skittish, making the past six-month period one of the most volatile in recent
memory. The greatest losses for most markets, and for your fund, occurred in
late summer.
In this environment, EuroPacific Growth Fund's results were disappointing. For
the six months ended September 30, the value of your investment fell 13.7% if,
like most shareholders, you reinvested the income dividend of 21 cents a share
and the capital gain distribution of 48 cents that were paid in June.
That was in line with the 13.2% drop in the unmanaged Morgan Stanley Capital
International (MSCI) EAFE(r) (Europe, Australasia, Far East) Index. The index
measures 21 major markets outside the United States, but does not include
Canada or Latin America, regions in which the fund also invests.
EuroPacific's six-month decline more than erased gains made during the previous
six months, leaving the fund with a 12-month decline of 9.3%. While we realize
how discouraging these figures must be, particularly for our newer
shareholders, we would point out that over longer, more meaningful periods,
EuroPacific has generated very attractive returns: Over its 14-year lifetime,
the fund has risen 638.2% (or 14.8% annualized), and for the past 10 years it
is up 222.3% (or 12.4% annualized). These gains are well ahead of EAFE's 490.8%
and 69.3% returns for the respective periods.
Your fund also weathered the market turbulence better than many comparable
funds. It placed first among the 13 funds in existence over its lifetime,
according to Lipper Analytical Services, and finished well over other periods.
For the 10 years ended September 30, it ranked third out of 36 comparable
funds; for the five years, it ranked 21st of 142 funds; and for the 12 months,
it placed 214th of 489 funds. (Lipper rankings are based on total return and do
not reflect the effect of sales charges.)
SHARP CORRECTIONS
During this six-month period, the aftershocks of Asia's financial difficulties
spread and intensified. Japan's attempts to stimulate an economic recovery were
frustrated by the virtual collapse of its banking system. (Shortly after the
close of the period, the Japanese government announced a sizable rescue package
for its ailing banks.) Hong Kong, which earlier had been an oasis of relative
calm, became another casualty of the region's troubles; its monetary authority
was forced to take steps to ward off assaults on its currency by various
financial speculators, including hedge funds. With most Asian economies mired
in recession, both local businesses and global firms with significant interests
in the region have seen their profit margins squeezed and the prospect of lower
earnings ahead.
Russia was the next domino to fall; its already-ravaged economy was dealt
another blow by a currency crisis that culminated in the default of its
domestic debt. Shortly thereafter, investor concern turned toward Latin
America. Most of the economies there have been on fairly strong footing;
nonetheless, a severe round of selling forced the Brazilian government to take
steps to defend its currency, the real.
With little likelihood of a quick fix to this tangle of difficulties, investor
pessimism prevailed. The shock to equity prices was widespread: Of the world's
major stock markets, only two, Finland and Belgium, showed gains for the six
months. Most markets posted double-digit declines, whether measured in U.S.
dollars or local currencies. They included Australia (-14%), Canada (-29%),
Hong Kong (-26%), Japan (-19%), Mexico (-36%), Sweden (-17%) and the United
Kingdom (-13%), to name just a few. A number of markets, such as Germany (-1%)
and France (-7%), fared less poorly. The U.S. market, meanwhile, fell 6%.
(Market returns are based on MSCI country indexes and expressed in U.S. dollar
terms, with dividends reinvested.)
A LOOK AT THE PORTFOLIO
In this environment, relatively few of our holdings did well. Of 272 companies
held over the entire six-month period, only 46 gained in price. Declines were
broad-based, although financial services firms, particularly those with
considerable exposure to developing markets, were hit especially hard. Among
our positions in this sector were Westpac (-18%), ING (-21%) and the Bank of
Nova Scotia (-40%). Other sizable holdings that fell included car manufacturer
BMW (-42%); Astra (-17%), a pharmaceutical concern; and mobile phone giant
Ericsson (-21%). In many cases, prices dropped to levels we found quite
attractive, and we took the opportunity to add selectively to our holdings.
That said, a number of our larger investments appreciated in price.
Telecommunications-related issues in general continued to do well. These
included Mannesmann, our largest holding, which rose 25%. Other notable gainers
included Nokia (+47%), the mobile telephone maker, as well as service providers
Orange (+51%), Deutsche Telekom (+43%) and France Telecom (+12%). An exception
was Telefonica, EuroPacific's fifth-largest holding. It suffered from a large
exposure in Latin America, declining 17%.
WHERE THE FUND'S ASSETS ARE INVESTED
(percent invested by country)
EuroPacific invests primarily in the stocks of companies based in Europe and
the Pacific Basin.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
EAFE
EuroPacific Index*
Growth Fund
(3/31/98) (9/30/98) (9/30/98)
Europe
United Kingdom 14.8% 14.7% 23.0%
Germany 4.9 7.8 11.1
France 6.2 6.3 9.5
Sweden 5.4 4.8 2.9
Netherlands 4.7 4.4 5.6
Switzerland 4.3 4.2 7.6
Italy 2.8 2.6 4.8
Finland 1.7 2.5 1.1
Spain 2.7 1.8 3.2
Norway 2.0 1.3 .5
Denmark .7 1.1 1.0
Other Europe .8 0.7 3.5
51.0 52.2 73.8
Pacific Basin
Asia
Japan 12.6 12.4 20.4
Australia 5.6 5.9 2.7
Hong Kong 3.8 2.3 2.0
Philippines 1.1 .8 -
Other Asia 2.0 .6 1.1
The Americas
Canada 5.1 4.0 -
Mexico 2.6 2.1 -
Other Americas .5 .6 -
Other
Argentina 1.3 1.3 -
Brazil 1.9 .9 -
South Africa .7 .8 -
India .6 .6 -
Other Countries 1.8 1.9 -
6.3 5.5 -
Cash & 9.4 13.6 -
Equivalents
TOTAL 100.0% 100.0% 100.0%
</TABLE>
*Weighted by market capitalization
[Begin Pull Quote]
Just as we temper our enthusiasm about unusually strong short-term gains, so,
too, do we take a measured view of sudden broad declines.
[End Pull Quote]
EuroPacific's geographic concentrations were little changed from six months
ago, although market action decreased our exposure to some countries and
increased it to others. As the table on page 3 shows, Europe-based companies
once again dominated the portfolio. We are finding attractive valuations
throughout Europe and are encouraged by the upcoming monetary union, which
should present interesting business opportunities going forward. Elsewhere,
Pacific Basin countries accounted for slightly under one-third of net assets.
Japan, at 12.4% of net assets, is the fund's second-largest country
concentration. With about 14% of net assets in cash and equivalents, we
maintained a relatively conservative stance during the period; at the same
time, our generous cash position leaves us with ample buying reserves.
LOOKING AHEAD
We have mentioned in recent reports our long-standing concerns about the high
level of world stock valuations. In a major downturn such as the one we have
seen, many speculative excesses may be washed away, a healthy thing for the
market long term. Unfortunately, a receding tide often takes all boats for a
while, and stocks that are fairly priced tend to fall along with those that
have been bid up to unrealistic levels. Moreover, in a decline this severe,
recovering lost ground can take time.
It is never pleasant to see the value of an investment decline, but we would
emphasize that, just as we temper our enthusiasm about unusually strong
short-term gains, so, too, do we take a measured view of sudden broad declines.
Our long-term perspective allows us to make carefully reasoned judgments about
events that may influence a company's underlying value and future earning
power. We evaluate those events constantly and ultimately act on our
convictions about what is most appropriate for shareholders.
Finally, we wish to note that Thierry Vandeventer has stepped down as
EuroPacific's president, a position he has held since 1990. He will continue to
serve the fund as vice chairman and as one of six portfolio counselors. The
board of trustees wishes to thank Thierry for his commendable and tireless
efforts as president. EuroPacific's new president is Mark Denning, who will
retain his portfolio counselor role. He is based in London.
We look forward to reporting to you again in six months.
Cordially,
/s/Walter P. Stern /s/Mark E. Denning
Walter P. Stern Mark E. Denning
Chairman of the Board President
November 13, 1998
<TABLE>
EuroPacific Growth Fund
Investment Portfolio, September 30, 1998
<S> <C> <C> <C>
[PIE CHART]
Industry Diversification
Percent of Net Assets
17.11% Telecommunications
6.88% Banking
6.15% Health & Personal Care
5.34% Business & Public Services
5.25% Broadcasting & Publishing
45.46% Other Industries
13.81% Bonds, Cash and Equivalents
[end pie chart]
Largest Percent
Individual of Net
Holdings Assets
Mannesmann 3.10
Novartis 1.97
Astra 1.89
Nokia 1.66
Telefonica 1.63
Deutsche Telekom 1.54
News Corp. 1.46
Bayerische Motoren Werke 1.37
ING Groep 1.28
Telecom Italia Mobile 1.27
EQUITY SECURITIES
(common and preferred stocks and convertible debentures)
Shares or Market Percent
Principal Value of Net
Amount (Millions Assets
Telecommunications- 3088.97%
Mannesmann AG (Germany) 6,107,500 559.549 559.55
Telefonica, SA (formerly Telefonica de Espana, SA) (Spain) 7,589,981 277.069
Telefonica, SA (ADR) 162,090 17.496 294.57
Deutsche Telekom AG (Germany) 8,943,300 277.939 277.94
Telecom Italia Mobile SpA (Italy) 27,905,000 162.743
Telecom Italia Mobile SpA, savings shares 20,705,000 66.352 229.10
Telefonos de Mexico, SA de CV, Class L (ADR) (Mexico) 4,597,000 203.417
Telefonos de Mexico, SA de CV, Class L 9,612,500 21.564 224.98
France Telecom, SA (France) 2,619,444 154.951 154.95
Tele Danmark AS (Denmark) 997,200 99.107
Tele Danmark AS, Class B (ADR) 1,012,100 48.707 147.81
Orange PLC (United Kingdom)(1) 15,274,500 146.539 146.54
Koninklijke PTT Nederland NV (Netherlands) 3,741,984 115.591 115.59
Telefonica de Argentina SA, Class B (ADR) (Argentina) 3,610,050 106.271 106.27
Compania de Telecomunicaciones de Chile SA (ADR)(Chile) 4,197,973 80.286 80.30
COLT Telecom Group PLC (United Kingdom) (1) 9,272,800 79.041 79.04
Telecom Italia SpA, nonconvertible savings shares (Italy) 16,565,100 77.325 77.33
British Telecommunications PLC (United Kingdom) 5,422,000 72.087 72.09
Telecom Corp. of New Zealand Ltd. (New Zealand) 13,889,200 53.105
Telecom Corp. of New Zealand Ltd. (2) 4,107,000 15.703
Telecom Corp. of New Zealand Ltd. (ADR) 63,600 1.916 70.72
Telecom Argentina SA, Class B (ADR) (Argentina) 2,088,900 62.014 62.01
Philippine Long Distance Telephone Co. (ADR) (Philippines) 1,624,094 32.888
Philippine Long Distance Telephone Co., convertible preferred shares,
Series III (GDR) 400,000 15.600
Philippine Long Distance Telephone Co. 533,120 11.275 59.76
Nippon Telegraph and Telephone Corp. (Japan) 7,300 53.201 53.20
Hong Kong Telecommunications Ltd. (Hong Kong) 20,575,044 40.494 40.49
Mahanagar Telephone Nigam Ltd. (India) 6,850,000 32.731
Mahanagar Telephone Nigam Ltd. (GDR) (2) 570,600 6.776 39.51
Telefonica del Peru SA, Class B (ADR) (Peru) 2,408,900 29.509 29.51
DDI Corp. (Japan) 12,400 27.610 27.61
Videsh Sanchar Nigam Ltd. (GDR) (India)(2) 1,711,309 18.782
Videsh Sanchar Nigam Ltd. 450,000 8.787 27.57
Magyar Tavkozlesi Rt.(ADR) (Hungary) 1,240,500 26.903 26.90
Vodafone Group PLC (ADR) (United Kingdom) 105,000 11.839
Vodafone Group PLC 672,583 7.800 19.64
SK Telecom Co., Ltd. (South Korea) 41,371 19.568 19.57
Telecomunicacoes Brasileiras SA (Brazil)(1) 270,000 19.018 19.02
Millicom International Cellular SA (Luxembourg)(1) 440,000 10.835 10.84
Perusahaan Perseroan (Persero) PT Indonesian Satellite Corp. (ADR)
(Indonesia) 892,700 4.742
Perusahaan Perseroan (Persero) PT Indonesian Satellite Corp. 7,290,500 3.972 8.71
Telstra Corp. Ltd. (Australia) 2,800,000 7.846 7.85
Banking- 1242.28%
Bank of Nova Scotia (Canada) 12,098,200 198.266 198.27
Westpac Banking Corp. (Australia) 24,746,110 136.221 136.22
Royal Bank of Canada (Canada) 2,502,700 101.552 101.55
Australia and New Zealand Banking Group Ltd. (Australia) 16,868,939 90.169 90.17
ForeningsSparbanken AB, Class A (Sweden) 3,400,000 78.048 78.05
ABN AMRO Holding NV (Netherlands) 4,328,000 73.737 73.74
Bank of Scotland (United Kingdom) 7,385,000 70.411 70.41
HSBC Holdings PLC (United Kingdom) 3,508,374 64.295 64.30
Sakura Bank, Ltd. (Japan) 32,369,000 47.417
Sakura Finance (Bermuda) Trust, convertible preference share units 1,614,000,00 4.610 52.03
Fuji Bank, Ltd. (Japan) 10,018,000 20.178
Fuji JGB Investment LLC, Series A, 9.87% noncumulative preferred securities,
perpetual (2) $41,000,000 18.185 38.36
Commonwealth Bank of Australia (Australia) 2,984,361 35.328 35.33
Asahi Bank, Ltd. (Japan) 12,594,000 35.053 35.05
Tokai Bank, Ltd. (Japan) 9,662,000 34.323 34.32
Unidanmark A/S, Class A (Denmark) 444,100 32.176 32.18
Bangkok Bank PCL (Thailand) (1) 32,400,000 30.798 30.80
Allied Irish Banks, PLC (Ireland) 1,748,771 25.775 25.78
Christiania Bank (Norway) 7,898,500 24.888 24.89
Lloyds TSB Group PLC (United Kingdom) 2,034,000 22.587 22.59
STB Cayman Capital Ltd. 0.50% convertible debentures 2007 (Japan) Y5,925,000,0 20.831 20.83
Royal Bank of Scotland Group PLC (United Kingdom) 1,300,000 14.949 14.95
MBL International Finance 3.00% convertible debentures 2002 (Bermuda)$15,000,000 12.806 12.81
Banco Itau SA, preferred nominative (Brazil) 26,766,100 12.645 12.65
Mitsui Trust and Banking Co., Ltd. (Japan) 8,525,000 7.555
MTI Capital (Cayman) Ltd. 0.50% convertible debentures 2007 Y1,400,000,0 3.538 11.09
Unibanco-Uniao de Bancos Brasileiros SA (GDR) (Brazil) 800,000 10.800 10.80
Toyo Trust and Banking Co., Ltd. (Japan) 2,800,000 6.132 6.13
Bank of Montreal (Canada) 120,000 4.326 4.33
Grupo Financiero Banamex Accival, SA de CV, Class L (Mexico)(1) 1,828,177 1.773 1.77
Kookmin Bank (GDR) (South Korea) (2) 508,615 1.200 1.20
Shinhan Bank (South Korea)(1) 477,196 1.110 1.11
Hanil Bank (South Korea)(1) 1,564,760 .569 .57
Health & Personal Care- 1110.72%
Novartis AG (Switzerland) 221,066 355.391 355.39
Astra AB, Class A (Sweden) 17,214,400 294.177
Astra AB, Class B 2,832,267 46.595 340.77
Zeneca Group PLC (United Kingdom) 5,693,900 201.099 201.10
Glaxo Wellcome PLC (United Kingdom) 2,185,000 63.443
Glaxo Wellcome PLC (ADR) 1,000,000 57.125 120.57
SmithKline Beecham PLC (ADR) (United Kingdom) 1,000,000 54.750 54.75
Synthelabo (France) 128,000 23.595 23.60
Shiseido Co., Ltd. (Japan) 1,647,000 14.536 14.54
Business & Public Services- 964.39%
Rentokil Initial PLC (formerly Rentokil Group PLC) (United Kingdom) 34,522,600 211.250 211.25
Reuters Group PLC (United Kingdom) 16,128,266 135.286
Reuters Group PLC (ADR) 134,333 6.683 141.97
Vivendi SA (France) 482,170 96.021 96.02
TNT Post Groep NV (Netherlands) 3,696,900 94.184 94.18
Brambles Industries Ltd. (Australia) 4,005,000 86.486 86.49
United Utilities PLC (United Kingdom) 4,228,414 68.280 68.28
Hyder PLC (United Kingdom) 3,850,000 60.895 60.90
Thames Water PLC (United Kingdom) 2,786,597 55.455 55.46
Suez Lyonnaise des Eaux (France) 320,000 54.475 54.48
Securitas AB, Class B (Sweden) 777,000 39.834 39.83
Ratin A/S, Class B (Denmark) 140,000 24.366 24.36
Dimension Data Holdings Ltd. (South Africa)(1) 5,231,200 21.242 21.24
Merkantildata ASA (Norway) 1,300,000 9.933 9.93
Broadcasting & Publishing- 948.33%
News Corp. Ltd. (ADR) (Australia) 3,958,200 101.429
News Corp. Ltd., preferred shares 14,201,417 79.135
News Corp. Ltd. 8,727,899 56.292
News Corp. Ltd., preferred shares (ADR) 1,181,600 26.438 263.29
CANAL+ (France) 680,015 165.150 165.15
Mediaset SpA (Italy) (2) 9,174,544 62.019
Mediaset SpA 8,093,000 54.708 116.73
SOFTBANK CORP. (Japan) 1,649,400 67.653 67.65
Societa Elettrica Sopracenerina SA, Class A (Switzerland)(1) 270,000 45.392 45.39
Pearson PLC (United Kingdom) 2,460,000 45.133 45.13
Publishing & Broadcasting Ltd. (Australia) 10,974,237 38.760 38.76
Thomson Corp. (Canada) 1,660,000 38.358 38.36
Daily Mail and General Trust PLC, Class A (United Kingdom) 969,000 35.293 35.29
Grupo Televisa, SA, ordinary participation certificates (ADR)
(Mexico)(1) 1,791,800 34.604 34.60
Television Broadcasts Ltd. (Hong Kong) 10,677,000 27.283 27.28
Pathe (France) 100,000 18.737 18.74
Nippon Television Network Corp. (Japan) 57,000 15.948 15.95
Modern Times Group MTG AB, Class B (ADR) (Sweden)(1) 211,822 12.021
Modern Times Group MTG AB, Class A (1) 302,260 3.450 15.47
United News & Media PLC 6.125% convertible debentures 2003
(United Kingdom) GBP7,400,000 12.463 12.46
Independent Newspapers, PLC (Ireland) 2,249,202 8.066 8.08
Electrical & Electronics- 802.22%
Nokia Corp., Class K (Finland) 1,937,200 153.764
Nokia Corp., Class A 1,004,600 79.838
Nokia Corp., Class A (ADR) 850,000 66.672 300.27
Telefonaktiebolaget LM Ericsson, Class B (Sweden) 7,740,100 146.090
Telefonaktiebolaget LM Ericsson, Class B (ADR) 3,580,000 65.783 211.87
Siemens AG (Germany) 3,318,000 183.384 183.38
Matsushita Communication Industrial Co., Ltd. (Japan) 1,600,000 57.423 57.42
Premier Farnell PLC (United Kingdom) 13,567,800 34.557 34.56
Northern Telecom Ltd. (Canada) 460,000 14.720 14.72
Automobiles- 682.96%
Bayerische Motoren Werke AG (Germany) 354,480 226.917
Bayerische Motoren Werke AG, preferred shares 56,726 21.191 248.11
Suzuki Motor Corp. (Japan) 14,200,000 142.905 142.91
Peugeot SA (France) 500,000 85.296 85.30
Volvo AB, Class B (Sweden) 2,500,000 61.214 61.21
Honda Motor Co., Ltd. (Japan) 1,000,000 30.396 30.40
Mitsubishi Motors Corp. (Japan) 17,000,000 28.016 28.02
Mazda Motor Corp. (Japan) (1) 6,505,000 23.584 23.58
Toyota Motor Corp. (Japan) 1,000,000 22.340 22.34
Porsche AG, preferred shares (Germany) 10,000 17.365 17.37
Daimler-Benz AG 4.125% convertible debentures 2003 (Germany) (2) DM13,522,000 12.591 12.59
Nissan Motor Co., Ltd. (Japan) 4,000,000 11.133 11.13
Energy Sources- 645.79%
Royal Dutch Petroleum Co. (Netherlands) 1,600,000 79.401
Royal Dutch Petroleum Co. (New York Registered Shares) 280,000 13.335
"Shell" Transport and Trading Co., PLC (New York Registered Shares)
(United Kingdom) 675,000 24.595 117.33
Elf Aquitaine (France) 850,000 104.809 104.81
TOTAL, Class B (ADR) (France) 1,033,547 64.920
TOTAL, Class B 185,693 23.394 88.31
Broken Hill Proprietary Co. Ltd. (Australia) 11,882,269 85.089 85.09
Sasol Ltd. (South Africa) 13,213,700 60.404 60.41
Imperial Oil Ltd. (Canada) 3,450,000 52.613 52.61
YPF SA, Class D (ADR) (Argentina) 1,817,000 47.242 47.24
Norsk Hydro AS (Norway) 650,000 23.690
Norsk Hydro AS (ADR) 500,000 18.000 41.69
ENI SpA (Italy) 3,500,000 21.481
ENI SpA (ADR) 250,000 15.313 36.79
Woodside Petroleum Ltd. (Australia) 2,200,000 11.503 11.51
Electronic Components- 591.61%
Rohm Co., Ltd. (Japan) 2,235,000 212.810 212.81
Murata Manufacturing Co., Ltd. (Japan) 5,781,000 195.198 195.20
Hoya Corp. (Japan) 2,294,000 82.331 82.33
Hirose Electric Co., Ltd. (Japan) 1,460,000 74.962 74.95
Siliconware Precision Industries Co., Ltd. (Taiwan) (1) 12,294,400 17.902 17.90
Delta Electronics, Inc. 0.50% convertible debentures 2004 (Taiwan) (2)$7,250,000 7.033 7.03
LG Semicon Co., Ltd. (South Korea) (1) 200,000 1.392 1.39
Multi-Industry- 588.41%
Siebe PLC (United Kingdom) 49,200,000 158.729 158.73
Orkla AS, Class A (Norway) 7,896,000 107.850
Orkla AS, Class B 2,000,000 23.801 131.65
Lend Lease Corp. Ltd. (Australia) 3,456,553 73.766 73.77
Swire Pacific Ltd., Class A (Hong Kong) 21,605,000 68.034 68.03
Hutchison Whampoa Ltd. (Hong Kong) 7,735,000 40.729 40.73
Cie. Financiere Richemont AG, units, Class A (Switzerland) 29,500 37.829 37.83
TI Group PLC (United Kingdom) 3,983,500 24.080 24.08
Gambro AB, Class A (formerly Incentive AB) (Sweden) 771,500 7.330
Gambro AB, Class B 750,000 7.078 14.41
Jardine Strategic Holdings Ltd. (Singapore - Incorporated In Bermuda) 11,106,844 12.218
Jardine Strategic Holdings Ltd. (ADR) 300,000 .660 12.88
Lagardere Groupe SCA (France) 450,000 12.840 12.84
Ayala Corp. (Philippines) 62,388,750 7.099 7.10
Groupe Bruxelles Lambert SA, warrants, expire 1998 (Belgium) (1) 126,900 4.274 4.27
PT Astra International (Indonesia)(1) 54,000,000 1.910 1.91
Brierley Investments Ltd. (New Zealand) 1,000,000 .180 .18
Merchandising- 548.45%
Dixons Group PLC (United Kingdom) 15,150,000 155.120 155.12
Kingfisher PLC (United Kingdom) 6,842,600 63.438 63.44
Carrefour SA (France) 98,000 62.098 62.10
Cifra, SA de CV, Class V (Mexico)(1) 36,408,570 46.224
Cifra, SA de CV, Class C (1) 8,402,600 10.289 56.51
Tesco PLC (United Kingdom) 17,744,600 50.318 50.32
Koninklijke Ahold NV (Netherlands) 1,076,010 32.153
Koninklijke Ahold NV 3.00% convertible debentures 2003 $18,900,000 10.348 42.50
H & M Hennes & Mauritz AB, Class B (Sweden) 500,000 36.346 36.35
Safeway PLC (United Kingdom) 7,615,000 35.655 35.66
Coles Myer Ltd. (Australia) 5,311,047 22.668 22.67
Ito-Yokado Co., Ltd. (Japan) 280,000 13.331 13.33
Woolworths Ltd. (Australia) 2,422,159 8.357 8.36
AJL PEPS Trust (Japan) (1) 465,000 2.093 2.09
Insurance- 496.21%
ING Groep NV (Netherlands) 5,134,681 231.375 231.38
Royal & Sun Alliance Insurance Group PLC (United Kingdom) 7,753,283 67.142 67.14
PartnerRe Holdings Ltd. (Singapore - Incorporated in Bermuda) 1,621,900 64.977 64.98
Union des Assurances Federales (France) 493,960 57.294 57.29
Corporacion Mapfre, CIR, SA (Spain) 1,511,568 30.093 30.09
Guardian Royal Exchange PLC (United Kingdom) 5,991,142 25.992 25.99
Swiss Life-Glaxo Wellcome 2.00% convertible debentures 2003
(Switzerland) (2) $10,000,000 10.388
Swiss Life-Mannesmann 1.50% convertible debentures 2003 (2) $8,000,000 8.950 19.34
Beverages & Tobacco- 416.80%
Foster's Brewing Group Ltd. (Australia) 53,200,000 116.056 116.06
Coca-Cola Amatil Ltd. (Australia) 11,472,023 30.256
Coca-Cola Beverages PLC (United Kingdom)(1) 18,705,484 43.638 .41
Asahi Breweries, Ltd. (Japan) 4,460,000 52.920
Asahi Breweries, Ltd. 1.00% convertible debentures 2003 Y924,000,000 10.016
Asahi Breweries, Ltd. 0.90% convertible debentures 2001 Y520,000,000 5.332
Asahi Breweries, Ltd. 0.95% convertible debentures 2002 Y410,000,000 4.264 72.53
Panamerican Beverages, Inc., Class A (Mexico) 3,322,800 59.187 59.19
South African Breweries Ltd. (South Africa) 3,851,134 57.876 57.88
San Miguel Corp., Class B (Philippines) 29,880,120 38.810 38.81
Swedish Match AB (Sweden) 11,076,924 34.468 34.47
Seagram Co. Ltd. (Canada) 1,200,000 34.425 34.43
Cia. Cervejaria Brahma, preferred nominative (Brazil) 4,930,200 1.934 1.93
LVMH Moet Hennessy Louis Vuitton (France) 7,937 1.084 1.08
I.T.C. Ltd. (India) 372 .006 .01
Food & Household Products- 376.06%
Nestle SA (Switzerland) 104,415 208.331 208.33
Reckitt & Colman PLC (United Kingdom) 4,979,581 73.604 73.60
Cadbury Schweppes PLC (United Kingdom) 4,000,000 51.755 51.76
Groupe Danone (France) 161,185 42.367 42.37
Recreation & Other Consumer Products- 305.81%
Nintendo Co., Ltd. (Japan) 1,687,000 158.654 158.65
Fuji Photo Film Co., Ltd. (Japan) 1,280,000 44.064 44.06
EMI Group PLC (United Kingdom) 6,565,067 40.437 40.44
Bajaj Auto Ltd. (India) 2,047,500 31.161
Bajaj Auto Ltd. (GDR) 75,000 1.369 32.53
Sony Music Entertainment (Japan) Inc. (Japan) 494,700 16.233 16.23
Square Co., Ltd. (Japan) 730,000 13.902 13.90
Appliances & Household Durables- 257.97%
Sony Corp. (Japan) 1,975,500 137.314 137.31
Philips Electronics NV (Netherlands) 1,190,000 64.108 64.11
Samsung Electronics Co., Ltd. (South Korea) 1,967,263 53.839
Samsung Electronics Co., Ltd., preferred shares (GDR)(2) 193,026 2.707 56.55
Utilities: Electric & Gas- 235.78%
National Power PLC (United Kingdom) 7,135,400 64.941 64.94
Cia. Energetica de Minas Gerais - CEMIG, preferred nominative (ADR)
(Brazil) 1,386,740 30.162
Cia. Energetica de Minas Gerais - CEMIG, preferred nominative 801,324,596 17.441
Cia. Energetica de Minas Gerais - CEMIG, ordinary nominative 311,044,152 4.461
Cia. Energetica de Minas Gerais - CEMIG, preferred nominative (ADR)(2) 26,066 .567 52.63
Centrais Eletricas Brasileiras SA - ELETROBRAS, Class B, preferred nominative
(ADR) (Brazil) 2,900,500 30.455
Centrais Eletricas Brasileiras SA - ELETROBRAS, ordinary nominative (ADR) 869,400 8.477 38.93
Scottish Power PLC (United Kingdom) 3,646,200 35.290 35.29
Manila Electric Co., Class B (Philippines) 9,540,381 18.313 18.31
Cia. Paranaense de Energia - COPEL, Class B, preferred nominative
(ADR) Br1,350,000,000 8.883
Cia. Paranaense de Energia - COPEL, Class B, preferred nominative (ADR) 668,000 4.259 13.14
Hongkong Electric Holdings Ltd. (Hong Kong) 1,681,000 5.782 5.78
LIGHT-Servicos de Eletricidade SA (Brazil) 30,800,000 3.846 3.85
CESP - Cia. Energetica de Sao Paulo, preferred nominative (ADR) (Brazil) 455,084 1.763
CESP - Cia. Energetica de Sao Paulo, preferred nominative (ADR) (2) 297,000 1.151 2.91
Real Estate- 220.46%
Cheung Kong (Holdings) Ltd. (Hong Kong) 28,399,000 131.577 131.58
Sun Hung Kai Properties Ltd. (Hong Kong) 8,150,000 28.872 28.87
Security Capital Global Realty (Luxembourg)(1),(2),(3) 1,125,000 22.500 22.51
Ayala Land, Inc. (Philippines) 102,554,123 15.088 15.09
Mitsui Fudosan Co., Ltd. (Japan) 2,230,000 11.417 11.42
Mitsubishi Estate Co., Ltd. (Japan) 1,680,000 10.988 10.99
Chemicals- 219.97%
BOC Group PLC (United Kingdom) 7,580,000 93.957 93.96
Bayer AG (Germany) 2,240,000 84.637 84.64
L'Air Liquide (France) 261,095 41.373 41.37
Financial Services - 206.05%
Newcourt Credit Group Inc. (Canada) 4,613,900 119.469 119.47
Nichiei Co., Ltd. (Japan) 1,067,900 72.039 72.04
ORIX Corp. (Japan) 210,000 14.535 14.54
Forest Products & Paper- 182.20%
UPM-Kymmene Corp. (Finland) 3,280,800 75.187 75.19
Buhrmann NV (formerly Koninklijke KNP BT) (Netherlands) 2,744,000 51.120 51.12
AssiDoman AB (Sweden) 828,000 15.945 15.95
Stora Kopparbergs Bergslags AB, Class B (Sweden) 1,650,000 15.677 15.68
Abitibi-Consolidated Inc. (Canada) 1,700,000 14.933 14.93
MAYR-MELNHOF Karton AG (Austria) 207,000 9.327 9.33
Building Materials & Components- 160.21%
Holderbank Financiere Glaris Ltd. (Switzerland) 73,938 76.065 76.07
Cemex, SA de CV, ordinary participation certificates (Mexico) 18,063,379 39.726
Cemex, SA de CV, Class B 2,210,625 5.511
Cemex, SA de CV, Class A, ordinary participation certificates 1,793,075 3.943 49.18
BPB PLC (United Kingdom) 5,500,000 22.320 22.33
Caradon PLC (United Kingdom) 6,000,000 12.633 12.63
Industrial Components- 143.74%
Minebea Co., Ltd. (Japan) 4,967,000 40.419 40.42
Cie. Generale des Etablissements Michelin, Class B (France) 1,009,444 39.629 39.63
Bridgestone Corp. (Japan) 1,724,000 34.725 34.73
Morgan Crucible Co. PLC (United Kingdom) 3,475,836 16.998 17.01
NSK Ltd. (Japan) 3,470,000 11.945 11.95
Metals: Nonferrous- 124.26%
Pechiney, Class A (France) 1,878,675 64.969 64.97
WMC Ltd. (Australia) 9,753,391 29.354 29.35
Alcan Aluminium Ltd. (Canada) 400,000 9.375 9.38
Cominco Ltd. (Canada) 805,000 8.905 8.91
Teck Corp., Class B (Canada) 900,000 8.053 8.06
Inco Ltd. (Canada) 350,000 3.588 3.59
Aerospace & Military Technology- 91.04%
Bombardier Inc., Class B (Canada) 8,266,700 91.039 91.04
Machinery & Engineering- 77.38%
Valmet OY (Finland) 3,400,000 39.796 39.80
Kawasaki Heavy Industries, Ltd. (Japan) 6,800,000 13.697 13.70
Komori Corp. (Japan) 683,000 12.131 12.13
Kvaerner AS, Class A (Norway) 924,800 11.756 11.75
Electronic Instruments- 76.47%
ADVANTEST CORP. (Japan) 1,470,200 62.456 62.45
Tokyo Electron Ltd. (Japan) 575,000 14.024 14.02
Data Processing & Reproduction- 73.00%
Fujitsu Ltd. (Japan) 8,446,000 72.997 73.00
Transportation: Shipping- 63.11%
Bergesen d.y. AS, Class B (Norway) 1,130,000 14.976
Bergesen d.y. AS, Class A 542,800 7.708 22.68
Nippon Yusen KK (Japan) 7,000,000 20.560 20.56
Stolt-Nielsen SA (Incorporated in Luxembourg) 837,000 9.939
Stolt-Nielsen SA, Class B (ADR) 845,000 9.929 19.87
Transportation: Airlines- 54.83%
Qantas Airways Ltd. (Australia) 18,254,686 28.460 28.46
Cathay Pacific Airways Ltd. (Hong Kong) 28,000,000 26.379 26.37
Textiles & Apparel- 41.42%
Gucci Group NV (New York Registered Shares) (Netherlands) 750,000 27.094 27.09
Adidas-Salomon AG (Germany) 125,000 14.334 14.33
Leisure & Tourism- 25.05%
Granada Group PLC (United Kingdom) 1,631,313 20.498 20.50
Mandarin Oriental International Ltd. (Singapore) 9,670,312 4.545 4.55
Metals: Steel- 23.96%
Kawasaki Steel Corp. (Japan) 20,446,500 23.961 23.96
Wholesale & International Trade- 12.35%
Mitsui & Co., Ltd. (Japan) 3,000,000 12.349 12.35
Transportation: Rail & Road- 1.92%
Guangshen Railway Co. Ltd., Class H (ADR) (People's Republic of China 286,400 1.915 1.92
Miscellaneous- 389.08%
Other equity securities in initial period of acquisition 389.066 389.08
-----------------
TOTAL EQUITY SECURITIES (cost: $13,969.591 million) 15,562.6015562.60
-----------------
BONDS
Principal
Amount
(Millions)
Argentinean Government- 23.46%
Argentina 11.375% January 2017 $14.500 13.340 13.34
Argentina 11.75% February 2007 ARP14.000 10.117 10.12
Broadcasting & Publishing- 13.60%
Grupo Televisa, SA 0%/13.25% May 2008 (4) $20.000 13.600 13.60
-----------------
TOTAL BONDS (cost: $43.606 million) 37.057 37.06
-----------------
Principal Market Percent
Amount Value of Net
SHORT-TERM SECURITIES (Millions) (Millions Assets
Corporate Short-Term Notes- 1811.74%
Halifax PLC 5.48%-5.49% due 10/7-10/19/98 112.000 111.802 111.80
Canada Bills 5.32%-5.47% due 10/19-12/1/98 106.700 106.177 106.18
Procter & Gamble Co. 5.18%-5.47% due 10/22-12/29/98 104.900 104.171 104.17
General Electric Capital Services, Inc. 5.18%-5.50% due 10/14-12/7/98 101.300 100.742 100.74
Abbey National North America 5.41%-5.50% due 10/13-12/9/98 100.000 99.330 99.33
Xerox Capital (Europe) PLC 5.49%-5.51% due 10/14-10/20/98 87.600 87.388 87.39
Commerzbank U.S. Finance Inc. 5.49%-5.52% due 10/16-10/23/98 87.550 87.308 87.31
Daimler-Benz North America Corp. 5.36%-5.50% due 10/14-12/18/98 82.800 82.314 82.31
Deutsche Bank Financial Inc. 5.48%-5.525% due 10/6-10/22/98 80.000 79.853 79.85
General Motors Acceptance Corp. 5.48%-5.50% due 10/15-11/16/98 80.100 79.709 79.71
Toyota Motor Credit Corp. 5.50%-5.51% due 10/9-10/29/98 78.100 77.902 77.90
American Express Credit Corp. 5.34%-5.49% due 10/29-12/9/98 76.300 75.779 75.78
Ford Credit Europe PLC 5.51%-5.52% due 10/7-10/21/98 75.000 74.812 74.81
Bank of Montreal 5.47%-5.50% due 10/6/98 70.600 70.535 70.54
International Lease Finance Corp. 5.39%-5.50% due 10/6-11/20/98 57.800 57.657 57.66
BP America Inc. 5.32% due 12/14/98 57.400 56.781 56.78
Reed Elsevier Inc. 5.31%-5.53% due 11/3-12/15/98 (2) 51.500 51.072 51.07
ABN AMRO North America Finance Inc. 5.48% due 12/1/98 50.000 49.551 49.56
Commonwealth Bank of Australia 5.42% due 12/14/98 50.000 49.459 49.46
Svenska Handelsbanken Inc. 5.33%-5.49% due 11/19-12/14/98 48.300 47.843 47.85
France Telecom 5.49% due 11/2-11/5/98 47.650 47.395 47.40
Rio Tinto America, Inc. 5.50%-5.51% due 10/15-11/12/98 (2) 46.300 46.142 46.14
Associates Corp. of North America 5.77% due 10/1/98 45.300 45.293 45.29
Shell Oil Co 5.49% due 10/13/98 35.000 34.930 34.93
Electricite de France 5.47%-5.49% due 10/2-10/13/98 33.900 33.852 33.85
British Gas Capital Inc. 5.50% due 10/20-11/12/98 30.000 29.841 29.84
Novartis Finance Corp. 5.47%-5.50% due 10/1-10/5/98 (2) 24.100 24.088 24.09
Certificates of Deposit- 330.01%
Canadian Imperial Bank of Commerce 5.26%-5.46% due 11/17-11/30/98 100.000 100.000 100.00
Westdeutsche Landesbank Girozentrale 5.55%-5.56% due 10/8-10/9/98 100.000 100.000 100.00
Societe Generale 5.52%-5.57% due 10/27-10/30/98 80.000 80.000 80.01
Svenska Handelsbanken Inc. 5.58% due 10/19/98 50.000 50.001 50.00
Federal Agency Discount Notes- 324.83%
Fannie Mae 5.11%-5.42% due 10/5-12/15/98 173.800 172.770 172.77
Freddie Mac 5.125%-5.44% due 10/1-12/18/98 152.800 152.062 152.06
Non-U.S. Currency- 7.40%
New Taiwanese Dollar NT$252.997 7.398 7.40
-----------------
TOTAL SHORT-TERM SECURITIES (cost: $2,475.515 million) 2,473.957 13.70
-----------------
TOTAL INVESTMENT SECURITIES (cost: $16,488.712 million) 18,073.6118073.62
Excess of payables over cash and receivables 17.060 17.07
-----------------
NET ASSETS $18,056.5 100.00
=================
(1) Non-income-producing securities.
(2) Purchased in a private placement transaction; resale to the
public may require registration or sale only to qualified
institutional buyers.
(3) Valued under procedures established by the Board of Trustees.
(4) Step bond; coupon rate will increase at a later date.
ADR = American Depoistary Receipts
GDR = Global Depositary Receipts
See Notes to Financial Statements
EQUITY SECURITIES APPEARING IN THE PORTFOLIO SINCE MARCH 31, 1998
Abitibi-Consolidated
Adidas-Salomon
Banco Itau
Bangkok Bank
Bayer
BPB
Cathay Pacific Airways
Christiania Bank
Cia. Paranaense de Energia - COPEL
COLT Telecom Group
Commonwealth Bank of Australia
Lagardere Groupe
LIGHT-Servicos de Eletricidade
Magyar Tavkozlesi
Matsushita Communication Industrial
Merkantildata
Millicom International Cellular
Mitsubishi Motors
Nissan Motor
Porsche
PT Astra International
Ratin
Royal Bank of Scotland
Siemens
Siliconware Precision Industries
Societa Elettrica Sopracenerina
Swiss Life
Telstra
Unidanmark
Vivendi
EQUITY SECURITIES ELIMINATED FROM THE PORTFOLIO SINCE MARCH 31, 1998
ABB
Ashanti Goldfields
ASM Lithography
AXA Colonia Konzern
Banco de Santander
Carlton Communications
Edaran Otomobil Nasional
FXF Trust
Imasco
Johnson Electric Holdings
Korea Electric Power
Kyocera
PolyGram
Portugal Telecom
Quebecor Printing
Repsol
Severn Trent
SGL Carbon
Singapore Press Holdings
Societe Generale
Suncor Energy
Taiwan Semiconductor Manufacturing
Teva Pharmaceutical
Unified Energy System of Russia
Unilever
Williams Holdings
</TABLE>
<TABLE>
<S> <C> <C>
EuroPacific Growth Fund (unaudited)
Financial Statements
- ---------------------------------------------- --------------- --------------
Statement of Assets and Liabilities
at September 30, 1998 (dollars in millions)
- ---------------------------------------------- ---------------- -------------
ASSETS:
Investment securities at market
(cost: $16,488.712) $18,073.614
Cash 11.299
Receivables for-
Sales of investments $54.353
Sales of fund's shares 13.165
Dividends and accrued interest 67.457 134.975
---------------------------------
18,219.888
LIABILITIES:
Payables for-
Purchases of investments 119.541
Repurchases of fund's shares 30.289
Forward currency contracts 0.240
Management services 7.126
Accrued expenses 6.138 163.334
---------------------------------
NET ASSETS AT SEPTEMBER 30, 1998-
Equivalent to $24.91 per share on
724,843,062 shares of beneficial
interest issued and outstanding;
unlimited shares authorized $18,056.554
===============
Statement of Operations (unaudited)
for the six months ended September 30, 1998 (dollars in millions)
- ---------------------------------------------- --------------- -------------
INVESTMENT INCOME:
Income:
Dividends $233.490
Interest 57.607 $291.097
-------------------
Expenses:
Management services fee 48.785
Distribution expenses 23.031
Transfer agent fee 7.852
Reports to shareholders .537
Registration statement and prospectus 1.004
Postage, stationery and supplies 1.571
Trustees' fees .102
Auditing and legal fees .091
Custodian fee 3.765
Other expenses .158 86.896
---------------------------------
Net investment income 204.201
---------------
REALIZED GAIN AND CHANGE IN UNREALIZED
APPRECIATION ON INVESTMENTS:
Net realized gain 750.295
Net change in unrealized appreciation
on investments (3,869.771)
Net change in unrealized appreciation
on forward currency contracts (4.062) (3,873.833)
---------------------------------
Net realized gain and change in unrealized
appreciation on investments (3,123.538)
---------------
NET CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS (2,919.337)
===============
- -------------------------------------------------------------------------------
Statement of Changes in Net Assets Six months Year ended
(dollars in millions) ended 9/30/1998* 3/31/1998
- -------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 204.201 $ 314.266
Net realized gain on investments 750.295 1,082.594
Net change in unrealized appreciation
on investments (3,873.833) 2,212.606
---------------------------------
Net change in net assets resulting
from operations (2,919.337) 3,609.466
---------------------------------
DIVIDENDS AND DISTRIBUTIONS PAID TO
SHAREHOLDERS:
Dividends from net investment income (151.338) (294.902)
Distributions from net realized gain on
investments (345.917) (1,301.823)
---------------------------------
Total dividends and distributions (497.255) (1,596.725)
---------------------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold: 71,120,030
and 177,804,677 shares, respectively 2,031.939 4,969.746
Proceeds from shares issued in reinvestment
of net investment income dividends and
distributions of net realized gain on
investments: 16,377,781 and 58,392,228 shares,
respectively 475.567 1,529.590
Cost of shares repurchased: 83,725,150
and 142,024,433 shares, respectively (2,350.543) (3,932.937)
---------------------------------
Net increase in net assets resulting from
capital share transactions 156.963 2,566.399
---------------------------------
TOTAL CHANGE IN NET ASSETS (3,259.629) 4,579.140
NET ASSETS:
Beginning of period 21,316.183 16,737.043
--------------------------------
End of period (including undistributed
net investment income: $124.147
and $71.284, respectively) $18,056.554 $21,316.183
=================================
* Unaudited
See Notes to Financial Statements
</TABLE>
Notes to Financial Statements
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - 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 United States.
SIGNIFICANT ACCOUNTING POLICIES - The following is a summary of the significant
accounting policies consistently followed by the fund in the preparation of its
financial statements:
SECURITY VALUATION - Equity securities, including depositary receipts, are
valued at the last reported sale price on the exchange or market on which such
securities are traded, as of the close of business on the day the securities
are being valued or, lacking any sales, at the last available bid price. In
cases where equity securities are traded on more than one exchange, the
securities are valued on the exchange or market determined by the investment
adviser to be the broadest and most representative market, which may be either
a securities exchange or the over-the-counter market. Fixed-income securities
are valued at prices obtained from a pricing service, when such prices are
available; however, in circumstances where the investment adviser deems it
appropriate to do so, such securities will be valued at the mean quoted bid and
asked prices or at prices for securities of comparable maturity, quality and
type. Securities with original maturities of one year or less having 60 days or
less to maturity are amortized to maturity based on their cost if acquired
within 60 days of maturity or, if already held on the 60th day, based on the
value determined on the 61st day. Forward currency contracts are valued at the
mean of their representative quoted bid and asked prices. Securities and assets
for which representative market quotations are not readily available are valued
at fair value as determined in good faith by a committee appointed by the Board
of Trustees.
NON-U.S. CURRENCY TRANSLATION - Assets or liabilities initially expressed in
terms of non-U.S. currencies are translated into U.S. dollars at the prevailing
market rates at the end of the reporting period. Purchases and sales of
securities and income and expenses are translated into U.S. dollars at the
prevailing market rates on the dates of such transactions. The effects of
changes in non-U.S. currency exchange rates on investment securities are
included with the net realized and unrealized gain or loss on investment
securities.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - As is customary in the
mutual fund industry, securities transactions are accounted for on the date the
securities are purchased or sold. In the event the fund purchases securities on
a delayed delivery or "when-issued" basis, it will segregate with its custodian
liquid assets in an amount sufficient to meet its payment obligations in these
transactions. Realized gains and losses from securities transactions are
reported on an identified cost basis. Dividend and interest income is reported
on the accrual basis. Discounts and premiums on securities purchased are
amortized.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends and distributions paid
to shareholders are recorded on the ex-dividend date.
FORWARD CURRENCY CONTRACTS - The fund may enter into forward currency
contracts, which represent agreements to exchange currencies of different
countries at specified future dates at specified rates. The fund enters into
these contracts to reduce its exposure to fluctuations in foreign exchange
rates arising from investments denominated in non-U.S. currencies. The fund's
use of forward currency contracts involves market risk in excess of the amount
recognized in the statement of assets and liabilities. The contracts are
recorded in the statement of assets and liabilities at their net unrealized
value. The fund records realized gains or losses at the time the forward
contract is closed or offset by a matching contract. The face or contract
amount in U.S. dollars reflects the total exposure the fund has in that
particular contract. Risks may arise upon entering these contracts from the
potential inability of counterparties to meet the terms of their contracts and
from possible movements in non-U.S. exchange rates and securities values
underlying these instruments.
2. NON-U.S. TAXATION
Net realized gain and net unrealized gain 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 gain and net unrealized gain.
3. FEDERAL INCOME TAXATION
It is the fund's policy to continue to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its net taxable income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision is
required.
As of September 30, 1998, net unrealized appreciation on investments, excluding
forward currency contracts, for book and federal income tax purposes aggregated
$1,583,989,000, net of accumulated deferred taxes totaling $913,000 on
unrealized appreciation of Indian securities, of which $4,037,588,000 related
to appreciated securities and $2,452,686,000 related to depreciated securities.
During the six months ended September 30, 1998, the fund realized, on a tax
basis, a net capital gain of $743,082,000 on securities transactions.
Net gains related to non-U.S. currency and other transactions of $7,213,000
were treated as ordinary income for federal income tax purposes. The cost of
portfolio securities, excluding forward currency contracts, for federal income
tax purposes was $16,568,587,000 at September 30, 1998.
4. FEES AND TRANSACTIONS WITH RELATED PARTIES
INVESTMENT ADVISORY FEE - The fee of $48,785,000 for management services was
incurred pursuant to an agreement with Capital Research and Management Company
(CRMC), with which certain officers and Trustees of the fund are affiliated.
The Investment Advisory and Service Agreement provides for monthly fees,
accrued daily, based on an annual rate of 0.69% of the first $500 million of
average net assets; 0.59% of such assets in excess of $500 million but not
exceeding $1.0 billion; 0.53% of such assets in excess of $1.0 billion but not
exceeding $1.5 billion; 0.50% of such assets in excess of $1.5 billion but not
exceeding $2.5 billion; 0.48% of such assets in excess of $2.5 billion but not
exceeding $4.0 billion; 0.47% of such assets in excess of $4.0 billion but not
exceeding $6.5 billion; 0.46% 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 $17.0 billion; and 0.445% of such assets in excess of $17.0
billion.
DISTRIBUTION EXPENSES - Pursuant to a Plan of Distribution, the fund may expend
up to 0.25% of its average net assets annually for any activities primarily
intended to result in sales of fund shares, provided the categories of expenses
for which reimbursement is made are approved by the fund's Board of Trustees.
Fund expenses under the Plan include payments to dealers to compensate them for
their selling and servicing efforts. During the six months ended September 30,
1998, distribution expenses under the Plan were $23,031,000. As of September
30, 1998, accrued and unpaid distribution expenses were $3,058,000.
TRANSFER AGENT FEE - American Funds Service Company (AFS), the transfer agent
for the fund, was paid a fee of $7,852,000. American Funds Distributors, Inc.
(AFD), the principal underwriter of the fund's shares, received $3,724,000
(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.
DEFERRED TRUSTEES' FEES - 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 September 30, 1998, aggregate amounts deferred and earnings thereon
were $470,000.
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.
5. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
The fund made purchases and sales of investment securities, excluding
short-term securities, of $2,591,992,000 and $3,158,648,000, respectively,
during the six months ended September 30, 1998.
As of September 30, 1998, accumulated undistributed net realized gain on
investments and accumulated currency losses were $740,671,000 and paid-in
capital was $14,881,548,000.
Pursuant to the custodian agreement, the fund receives credits against its
custodian fee for imputed interest on certain balances with the custodian bank.
The custodian fee of $3,765,000 includes $69,000 that was paid by these credits
rather than in cash.
Dividend and interest income is recorded net of non-U.S. taxes paid. For the
six months ended September 30, 1998, such non-U.S. taxes were $27,857,000. Net
realized currency losses on dividends, interest, withholding taxes reclaimable,
and sales of non-U.S. bonds and notes, on a book basis, were $1,777,000 for the
six months ended September 30, 1998.
At September 30, 1998, the fund had outstanding forward currency contracts to
sell non-U.S. currencies as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Contract Amounts U.S. Valuation at 9/30/98
Unrealized
Appreciation
Non-U.S. U.S. Amount (Depreciation)
Australian Dollar
expiring 12/21/98 A$8,000,000 $4,732,000 $4,749,000 $(17,000)
Brazilian Real
expiring 10/6/98 R$72,468,000 58,750,000 60,713,000 )1,963,000)
Japanese Yen
expiring 10/9/98 to
9/21/99 Y11,519,300,000 88,235,000 86,495,000 1,740,000
151,717,000 151,957,000 $(240,000)
</TABLE>
<TABLE>
Per-Share Data and Ratios
<S> <C> <C> <C> <C> <C> <C>
Six monthsYear ended
ended March 31
9/30/98 (1 1998 1997 1996 1995 1994
Net Asset Value, Beginning
of Period $29.56 $26.70 $24.28 $20.89 $21.95 $17.64
--------------------------------------------------------
Income From Investment
Operations:
Net investment income .28 .45 .46 .46 .35 .24
Net realized gain and change
in unrealized appreciation
on investments (4.24) 4.79 3.28 3.63 (.19) 4.37
-------------------------------------------------------
Total income (loss) from
investment operations (3.96) 5.24 3.74 4.09 .16 4.61
-------------------------------------------------------
Less Distributions:
Dividends from net investment
income (.21) (.433) (.41) (.49) (.317) (.187)
Dividends from net realized
non-U.S. currency gains (2) - (.017) (.03) - (.003) (.043)
Distributions from net
realized gains (.48) (1.93) (.88) (.21) (.90) (.07)
-------------------------------------------------------
Total distributions (.69) (2.38) (1.32) (.70) (1.22) (.30)
-------------------------------------------------------
Net Asset Value, End of Period $ 24.91 $ 29.56 $ 26.70 $ 24.28 $ 20.89 $ 21.95
=======================================================
Total Return (3) (13.73)% (4) 20.97% 15.88% 19.84% .71% 26.27%
Ratios/Supplemental Data:
Net assets, end of period
(in millions) $18,057 $21,316 $16,737 $12,335 $8,588 $6,429
Ratio of expenses to average
net assets .42% (4) .86% .90% .95% .97% .99%
Ratio of net income to average
net assets 1.00% (4) 1.64% 1.77% 2.09% 1.80% 1.13%
Portfolio turnover rate 14.06% (4) 30.51% 25.82% 21.77% 16.02% 21.37%
(1) Unaudited
(2) Realized non-U.S. currency
gains are treated as ordinary
income for federal income tax
purposes.
(3) Excludes maximum sales charge
of 5.75%.
(4) Based on operations for the
period shown and, accordingly,
not representative of a full year.
</TABLE>
THE AMERICAN FUNDS GROUP(R)
SHAREHOLDER SERVICES
SERVICES TO MATCH YOUR LIFESTYLE
AMERICAN FUNDSLINE(R) AND FUNDSLINE ONLINE(SM) - Use our 24-hour phone service
or visit our Web site to get fund information and handle a variety of
transactions - all on your timetable.
AMERICAN FUNDSLINK(SM) - Link your American Funds accounts with your bank
account. You can have fund dividends or automatic fund withdrawals deposited
directly into your bank account. Or you can invest money directly from your
bank account into your fund account on either a systematic or on-demand basis.
OTHER AUTOMATIC TRANSACTIONS - You can reinvest dividends into the same fund or
another fund, make withdrawals, and exchange shares between funds - quarterly,
monthly or during the months you specify.
DIVIDEND AND CAPITAL GAIN OPTIONS - Use your dividend and capital gain
distributions to meet your changing needs. You may:
* Automatically reinvest distributions back into the fund at no sales charge.
* Cross-reinvest dividends into another fund at no sales charge. (Certain
restrictions apply.)
* Have dividends mailed or sent electronically to you or to someone else.
EXCHANGE PRIVILEGES - When it's time to adjust your portfolio to meet your
changing investment goals, you can easily exchange shares from one American
Fund to another - usually without paying a sales charge. Certain restrictions
apply and there generally are tax consequences. Please consult your financial
adviser and read the prospectus before you exchange shares.
QUESTIONS? - For more information about these services or any of the American
Funds, please read a current prospectus, which you may obtain from your
financial adviser or our Web site.
THESE SERVICES ARE SUBJECT TO CHANGE OR TERMINATION.
TO CONTACT AMERICAN FUNDS:
* Shareholder Services Representative, toll-free, 8 a.m. to 8 p.m. ET -
800/421-0180
* American FundsLine, toll-free 24-hour voice response service - 800/325-3590
* FundsLine OnLine, Web site - www.americanfunds.com
* By mail - Write to the service center nearest you. (If you live outside the
U.S., please write to the Western Service Center.)
[map of the United States broken into service center areas]
WESTERN
SERVICE CENTER
American Funds Service Company
P.O. Box 2205
Brea, California 92822-2205
WEST CENTRAL
SERVICE CENTER
American Funds Service Company
P.O. Box 659522
San Antonio, Texas 78265-9522
EAST CENTRAL
SERVICE CENTER
American Funds Service Company
P.O. Box 6007
Indianapolis, Indiana 46206-6007
EASTERN
SERVICE CENTER
American Funds Service Company
P.O. Box 2280
Norfolk, Virginia 23501-2280
Offices of the fund and of the investment adviser,
Capital Research and Management Company
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92821-5823
Transfer agent for shareholder accounts
American Funds Service Company
(Please write to the address nearest you.)
P.O. Box 2205
Brea, California 92822-2205
P.O. Box 659522
San Antonio, Texas 78265-9522
P.O. Box 6007
Indianapolis, Indiana 46206-6007
P.O. Box 2280
Norfolk, Virginia 23501-2280
CUSTODIAN OF ASSETS
The Chase Manhattan Bank
One Chase Manhattan Plaza
New York, New York 10081-0001
COUNSEL
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, California 90071-2899
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
This report is for the information of shareholders of EuroPacific Growth Fund,
but it may also be used as sales literature when preceded or accompanied by the
current prospectus, which gives details about charges, expenses, investment
objectives and operating policies of the fund. If used as sales material after
December 31, 1998, this report must be accompanied by an American Funds Group
Quarterly Statistical Update for the most recently completed calendar quarter.
PREPARING FOR THE YEAR 2000
The fund's key service providers - Capital Research and Management Company, the
investment adviser, and American Funds Service Company, the transfer agent -
are updating their computer systems to process date-related information
properly following the turn of the century. Both are on track to complete
modifications of significant internal systems by the end of 1998. Testing with
business partners, vendors and other service providers is already under way. We
will continue to keep you up to date in our regular publications. If you'd like
more detailed information, call Shareholder Services at 800/421-0180, ext. 21,
or visit our Web site at www.americanfunds.com.
Printed on recycled paper
Litho in USA BDA/GRS/3982
Lit. No. EUPAC-013-1198
