[The American Funds Group(r)]
EUROPACIFIC GROWTH FUND
OUR FIFTEENTH YEAR
1999 Annual Report
for the year ended March 31
[cover: satellite picture of earth]
EUROPACIFIC GROWTH FUND(r) seeks long-term capital appreciation by investing in
the securities of companies based outside the United States. About half of 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 29 MUTUAL FUNDS IN THE AMERICAN FUNDS GROUP,(R) THE
NATION'S THIRD-LARGEST MUTUAL FUND FAMILY. FOR MORE THAN SIX DECADES, CAPITAL
RESEARCH AND MANAGEMENT COMPANY, THE AMERICAN FUNDS ADVISER, HAS INVESTED WITH
A LONG-TERM FOCUS BASED ON THOROUGH RESEARCH AND ATTENTION TO RISK.
A LOOK AT THE FUND'S RESULTS
(through March 31, 1999, with all distributions reinvested)
<TABLE>
<CAPTION>
<S> <C> <C>
Cumulative Average annual
return compound return
One year +8.2% -
Five years +83.0 +12.9%
Ten years +254.9 +13.5
Lifetime (since April 16, 1984) +825.7 +16.0
</TABLE>
EUROPACIFIC RANKED FIRST OVER ITS LIFETIME
Throughout its lifetime, EuroPacific's results have compared very favorably
with other funds in its universe. Here is how the fund ranked among
international funds over several periods:
<TABLE>
<CAPTION>
<S> <C>
One year 40th of 559 funds (top 8%)
Five years 10th of 165 funds (top 7%)
Ten years 3rd of 37 funds (top 9%)
Lifetime 1st of 13 funds (top 8%)
</TABLE>
Source: Lipper, Inc. Rankings are based on total return and do not reflect the
effects of sales charges.
Fund results in this report were computed without a sales charge unless
otherwise indicated. The year-by-year record of an investment made in the fund
at the 5.75% maximum sales charge is shown on page 5. (Sales charges are lower
for accounts of $50,000 or more.)
FIGURES SHOWN ARE PAST RESULTS AND ARE NOT PREDICTIVE OF FUTURE 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.
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 -
have updated all significant computer systems to process date-related
information properly following the turn of the century. Testing of these and
other significant systems with business partners, vendors and other service
providers will continue through much of 1999. We will continue to keep you up
to date in our regular publications. If you would like more detailed
information, call Shareholder Services at 800/421-0180, ext. 21, or visit our
Web site at www.americanfunds.com.
INTERNATIONAL INVESTING: THE 25-YEAR RECORD
[Begin Caption]
U.S. Stock Market
[flag]
All Major Stock Markets Outside North America
[globe]
The percentages on the top lines represent the U.S. stock market; the lower
lines are for all major stock markets outside North America.
[End Caption]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1974 1975 1976 1977 1978
- -28% +36% +23% -8% +6%
- -22% +37% +4% +19% +34%
globe globe flag globe globe
1979 1980 1981 1982 1983
+.14 +30% -4% +22% +22%
+6% +24% -1% -1% +25%
flag flag globe flag globe
1984 1985 1986 1987 1988
+6 +33% +18% +4% +16%
+8% +57% +70% +25% +29%
globe globe globe globe globe
1989 1990 1991 1992 1993
+31% -2% +31% +7% +10%
+11% -23% +12% -12% +33%
flag flag flag flag globe
1994 1995 1996 1997 1998
+2% +38% +24% +34% +31%
+8% +12% +6% +2% +20%
globe flag flag flag flag
</TABLE>
Note: These figures, based on U.S. dollars, are for calendar years and include
reinvestment of dividends.
Source: MSCI
This chart, which has appeared in most reports for EuroPacific Growth Fund,
shows that stock markets outside North America have done better than the U.S.
market in 13 of the past 25 calendar years.
Over the entire period, the Morgan Stanley Capital International (MSCI) EAFE(r)
(Europe, Australasia, Far East) Index, which measures all major stock markets
outside North America, gained 2,239% (an average of 13.4% a year), while the
MSCI U.S. index rose 2,958% (an annual average of 14.7%). Both indexes are
unmanaged and include reinvestment of dividends.
While the U.S. stock market has been exceptionally strong in recent years, we
are convinced that investing outside the United States makes sense over the
long term. We also know that negotiating the unfamiliar terrain of
international markets can be especially challenging. That is why so many people
choose to invest overseas through actively managed mutual funds such as
EuroPacific Growth Fund. Over the years, EuroPacific's investment professionals
have helped shareholders participate in opportunities for growth, avoid
potential pitfalls and achieve consistently attractive long-term returns.
FELLOW SHAREHOLDERS:
Like blind men describing an elephant, one's impression of fiscal 1999 depends
on what part of the year you focus on. The first half, March through September,
presented a dismal picture of global turmoil and plummeting stock prices.
During the second half, investor pessimism evaporated as suddenly as it had
materialized, propelling equity markets to new heights. The turbulence, on the
upside as well as the downside, made the 12-month period one of the most
volatile in recent memory.
That volatility was reflected in EuroPacific Growth Fund's annual return. A
loss of 13.7% in the first half of the fiscal year was more than offset by
strong gains in the second. That resulted in a 12-month total return of 8.2%
for shareholders who reinvested income dividends, totaling 36 cents a share,
and capital gain distributions, totaling $1.26 a share, that were paid during
the year.
EuroPacific's 8.2% increase was ahead of the 6.4% rise in the unmanaged Morgan
Stanley Capital International (MSCI) EAFE(r) (Europe, Australasia, Far East)
Index. The index measures 20 major markets outside the U.S., but does not
include Canada or Latin America, regions in which the fund invests. The fund
also outpaced by a wide margin the average return for the 559 international
funds tracked by Lipper, Inc., which ended the year unchanged.
These latest results bring EuroPacific's total return since beginning operation
in April 1984 to 825.7% - an average compound return of 16.0% a year. By
comparison, the EAFE index had an average annual compound return of 14.2%,
while the average international fund provided 13.1%. EuroPacific's return once
again placed it first among all 13 U.S.-based international funds in existence
throughout its 15-year lifetime; it has held this number one position for the
past nine consecutive fiscal years.
TEETER, THEN TOTTER. Investors began to grow skittish in early summer, when it
became increasingly apparent that Asia's difficulties had deeper roots than
initially suspected, and had started to spread. As fresh currency turmoil beset
first Russia and then Latin America, global stock markets declined sharply. The
EAFE index fell 13% from mid-July to the end of August, while U.S. stocks lost
almost 20% of their value. Then, just as investors began to resign themselves
to a gloomy winter, stock markets staged a turnaround, rising from the downturn
to regain all of their lost ground, and then some.
In Europe, most markets rebounded in varying degrees from the losses in late
summer, fueled by a spate of merger activity and optimism about the
introduction of the common currency, the euro. Stock prices in the United
Kingdom, where the fund has the largest concentration of holdings, rose 4% for
the year. France and Italy returned 11% and 9%, respectively, while Germany
(+1%) and Spain (+1%) finished the year modestly higher. Almost none surpassed
the U.S. market's 21% gain, although Finland rose 96%. (Market returns are
based on MSCI country indexes, expressed in dollar terms, and assume
reinvestment of dividends.)
Most Asian economies remain in the doldrums, but investors returned cautiously
to the region in the first quarter of 1999 amid early rumblings of a recovery.
In February, the Japanese government took steps to pull the country out of its
worst recession since World War II; it cut taxes and increased the money supply
to help stimulate growth. Stocks bounced back smartly, finishing the year 16%
higher in dollar terms. Elsewhere in the Pacific Rim, South Korea (+64%),
Australia (+6%) and Hong Kong (+3%) also rebounded from earlier lows.
EuroPacific was well-positioned to benefit from the rallies in those markets.
We had been building up our positions in Japanese companies earlier in the year
when stock prices were still quite low. Technology-related issues, such as
Murata (+93%), Fujitsu (+54%) and Rohm (+30%), tended to post the largest
increases, but other holdings that did well included Asahi Bank (+29%) and
automakers Mazda (+51%) and Honda (+25%). Sony Music (+84%) rose on
announcements that the company would restructure. Korea's Samsung Electronics
increased 47%, while Australian-based News Corp. gained 14%.
A FOCUS ON INDIVIDUAL COMPANIES. Although broad market movements can have a
significant impact on short-term results, EuroPacific's investment focus has
always been squarely on the long-term prospects of individual companies. As we
have frequently mentioned in these reports, geographic concentrations merely
reflect the sum of individual decisions made about companies located in a
particular area.
Given our emphasis on companies rather than countries, we are pleased to note
that many of our largest positions not only gained ground during the year, but
also outpaced the overall markets in which they are traded. Notable among the
10 largest holdings were: Dixons (+138%), a British retailer of consumer
electronics; Mannesmann (+75%), the German telecommunications company; and
Telefonos de Mexico (+16%). Nokia, the fund's sixth-largest holding, was also
the biggest gainer for the year, appreciating an impressive 194%. On the other
side of the ledger, Novartis took a breather after a period of strong returns,
declining 8%, the worst showing among our 10 largest holdings.
Reflecting our company-by-company approach, the fund remains well-diversified.
On March 31, the portfolio held stocks of nearly 250 companies based in 33
countries. We invite you to familiarize yourself with these holdings by leafing
through the portfolio listings that begin on page 14.
STRONG GAINS IN TELECOMMUNICATIONS. EuroPacific's investments span more than 25
industries. At 19% of net assets, the portfolio's heaviest concentration is in
telecommunications-related issues, as it has been for some time now. The sector
has experienced tremendous growth in recent years, both in terms of the scope
of operations and in the sheer number of phone companies in which the fund can
invest.
Many service providers are joining forces to help offset the high costs of
jump-starting that growth. For example, Vodafone (+79%) announced in January
that it was acquiring AirTouch, and British Telecom (+51%) recently formed an
alliance with AT&T. We discuss the telecommunications industry in greater
detail in the article following this letter.
Globalization had a decidedly less salutary effect on financial services
companies, another sector experiencing a consolidation wave. As a group, banks
fared poorly during the period, hurt by the wave of currency crises and other
problems in the world's developing nations. Most Asian banks declined; Canadian
banks, such as the Bank of Nova Scotia (-22%) and the Royal Bank of Canada
(-21%), fell due to anti-merger rulings by the government during the year.
Despite the recent setbacks, long-term prospects for the banking industry are
encouraging. Interest rates continue to drop, which should stimulate borrowing;
strong measures by the Japanese government have already begun to restore the
tarnished reputation of its banking system; and Europe's monetary union should
eventually boost the fortunes of firms that can stay competitive.
[Begin Sidebar]
WHERE THE FUND'S ASSETS WERE 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 Growth Fund Index*
(3/31/99) (3/31/98) (3/31/99)
EUROPE
United Kingdom 15.4% 14.8% 22.3%
Germany 7.0 4.9 9.5
France 5.6 6.2 9.3
Sweden 5.5 5.4 2.7
Netherlands 4.8 4.7 5.9
Italy 4.4 2.8 5.0
Switzerland 3.2 4.3 7.3
Finland 2.6 1.7 1.8
Norway 1.1 2.0 .4
Ireland .9 .3 .5
Denmark .9 .7 .8
Spain .8 2.7 3.1
Other Europe .6 .3 2.5
52.8 50.8 71.1
PACIFIC BASIN
Asia
Japan 13.9 12.6 23.1
Australia 6.1 5.6 2.8
Hong Kong 1.4 3.8 2.1
South Korea 1.4 .7 -
Taiwan 1.4 .4 -
Philippines 1.0 1.1 -
Other Asia .8 .9 .9
THE AMERICAS
Canada 4.0 5.1 -
Mexico 3.1 2.6 -
Other Americas .5 .7 -
33.6 33.5 28.9
OTHER
Brazil 1.1 1.9 -
South Africa .9 .7 -
India .5 .6 -
Other Countries 1.7 3.1 -
4.2 6.3 -
Cash & 9.4 9.4 -
Equivalents
TOTAL 100.0% 100.0% 100.0%
</TABLE>
*Weighted by market capitalization
[End Sidebar]
GROWING OPPORTUNITIES. EuroPacific has grown dramatically since it began in
April of 1984. At the close of its first fiscal year, the fund had assets of
just $26 million. Today, at $22 billion in assets, it is the nation's largest
international fund, and at 15 years, one of the oldest. Shareholder accounts,
astonishingly, now stand at close to one million, and include a diverse group
of individuals, foundations and corporate retirement plans. We are grateful for
the confidence so many of you have placed in us.
EuroPacific's method of investment management is well-suited to accommodating
growth. The multiple portfolio counselor system, as it is called, was developed
40 years ago by the fund's investment adviser, Capital Research and Management
Company, and is used for all of the American Funds. Because assets are divided
among a number of portfolio counselors, managers can be added as the fund
expands. The system also encourages a diversity of investment styles, a
strategy we believe has helped us moderate risk by smoothing out returns.
EuroPacific currently has seven portfolio counselors with an average of 20
years of experience, and a research portfolio involving 28 analysts.
Growth has another important benefit - namely, that economies of scale make
owning your fund a good value. As the table on page 33 shows, EuroPacific's
annual expense ratio has continued to trend downward, to 0.84% in fiscal 1999,
or just $84 for every $10,000 invested. That is less than half of the 1.92%
average expense ratio for foreign equity funds, as measured by
CDA/Wiesenberger.
A 15-YEAR PERSPECTIVE. In an era when international travel has become
commonplace, when technology allows split-second communication across
continents, and when world economies have become inextricably linked, it may be
difficult to imagine a time when few investors ventured beyond the borders of
their own countries. Yet that was the case just 15 years ago, when we
introduced EuroPacific.
Today, we are pleased that we can look back and say that our optimism about
international investing has been amply repaid and that our shareholders have
met with considerable success. As globalization becomes a reality, we are
convinced that world markets will continue to provide attractive opportunities
for growth.
The past decade and a half has also given us a chance to develop a meaningful
perspective on the investment landscape. What we have learned is that market
movements are notoriously unpredictable, but that solid, well-managed
companies, no matter where they are located, have generally provided long-term
rewards for their shareholders. That is why our attention has always been
focused on finding those companies, getting to know them very, very well and
investing in the best of them on your behalf.
On the following pages, we invite you to look back at how EuroPacific's
universe has changed in these past 15 years.
We look forward to reporting to you in six months.
Cordially,
/s/William R. Grimsley /s/Mark Denning
William R. Grimsley Mark Denning
Chairman of the Board President
May 10, 1999
Walter Stern, EuroPacific's founding chairman of the board and a fund trustee,
has stepped down from both positions. The board of trustees wishes to thank him
for his many years of service and his tireless efforts on the fund's behalf.
EuroPacific's new chairman is William Grimsley, who will retain his role as
trustee. As we noted in our semi-annual report, Mark Denning replaced Thierry
Vandeventer as president in October.
Here's how a $10,000 investment in the fund grew between its inception on April
16, 1984, and March 31, 1999. The chart shows the high, low and closing values
for each year. As you can see, that $10,000 investment would have increased in
value to $87,258 with all distributions reinvested. That long-term growth has
occurred despite events which may have negatively affected world markets over
the short term.
The fund's year-by-year results appear in the table under the chart. Those
results have been positive in each of 14 full fiscal years since operations
began. The boxed figure at the far right shows that over EuroPacific's
lifetime, an investment in the fund, made at the maximum sales charge, grew at
an average compound rate of 15.6% a year.
The black line tracks the Morgan Stanley Capital International EAFE (Europe,
Australasia, Far East) Index. The Japanese market is the largest component in
the index, which helps explain why the fund lagged behind the index early in
its life and has outpaced it more recently.
HOW A $10,000 INVESTMENT HAS GROWN
[begin mountain chart]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
EUROPACIFIC
Year GROWTH FUND/1//2/ Consumer
Ended with Dividends MSCI EAFE/3/ Price Index
March 31 Reinvested Index (Inflation) World Event
1985 9,848 10,348 10,320 Iran/Iraq tensions escalate
1986 15,368 19,228 10,553 Gorbachev calls for sweeping
changes
1987 19,827 31,010 10,873 Bombing of Libya
1988 21,437 36,220 11,300 Global stock market collapse
1989 24,586 40,522 11,862 Eastern European uprising
1990 28,762 35,925 12,483 Tiananmen Square massacre
1991 31,981 36,954 13,094 Persian Gulf War
1992 35,057 34,104 13,511 USSR disintegrates
1993 37,754 38,200 13,928 European currency crisis
1994 47,670 46,923 14,277 Rwandan violence intensifies
1995 48,007 49,913 14,685 Mexican peso devalued
1996 57,533 56,238 15,102 Israeli Prime Minister
assassinated
1997 66,672 5,224 15,519 Japanese banking crisis
1998 80,656 68,054 15,732 Asian "flu"
1999 87,258 72,386 16,004 Balkan conflict
</TABLE>
[end chart]
$87,258 /1//2/
EuroPacific
Growth Fund
with dividends
reinvested
$72,386/3/
MSCI EAFE
Index
$16,00/4/
Consumer Price
Index (inflation)
$10,000/1/
original
investment
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Year Ended 1985* 1986 1987 1988 1989 1990 1991
March 31
Total Value
Dividends $69 35 118 491 316 527 656
Reinvested
Value at $9,948 15,368 19,827 21,437 24,586 28,762 31,381
Year-End/1/
EuroPacific's
Total Return -0.5% 54.5 29.0 8.1 14.7 17.0 9.1
Year Ended 1992 1993 1994 1995 1996 1997 1998
March 31
Total Value
Dividends 611 538 515 716 1,132 1,063 1,156
Reinvested
Value at Year-End/1/ 35,057 37,754 47,670 48,007 57,533 66,672 80,656
EuroPacific's
Total Return 11.7 7.7 26.3 0.7 19.8 15.9 21.0
Year Ended 1999
March 31
Total Value
Dividends 992
Reinvested
Value at Year-End/1/ 87,258
EuroPacific's
Total Return 8.2
</TABLE>
Average annual compound rate of return for fund's lifetime:
15.6%/1/
* For the period April 16, 1984 (when the fund began operations) through March
31, 1985.
/1/ Results reflect payment of the maximum sales charge of 5.75% on the $10,000
investment. Thus, the net amount invested was $9,425. As outlined in the
prospectus, the sales charge is reduced for larger investments. There is no
sales charge on dividends or capital gains distributions that are reinvested in
additional shares. The maximum initial sales charge was 8.5% prior to July 1,
1988. No adjustment has been made for income or capital gains taxes.
/2/Includes reinvested dividends of $8,935 and reinvested capital gain
distributions of $19,589.
/3/ With dividends reinvested. The index is unmanaged and does not reflect
sales charges, commissions or expenses.
/4/ Begins April 30, 1984. Computed from data supplied by the U.S. Department
of Labor, Bureau of Labor Statistics.
Past results are not predictive of future results.
Average Annual Compound Returns/1/
(with all distributions reinvested, for periods ended March 31, 1999)
<TABLE>
<CAPTION>
<S> <C>
Ten Years 12.83%
Five Years 11.52%
One Year 1.98%
</TABLE>
[Begin Sidebar]
MARKET CAPITALIZATION
OUTSIDE THE U.S.: $1.4 trillion
(As of 3/31/84. Source: MSCI)
NUMBER OF U.S.-BASED
INTERNATIONAL MUTUAL FUNDS: 11
(As of 6/30/84. Source: Lipper, Inc.)
THEN
EUROPACIFIC
A FUND SNAPSHOT
(As of 3/31/85)
10 LARGEST HOLDINGS
* Hitachi
* Siemens
* Ericsson
* Honda
* Tsubakimoto Chain
* MFI Furniture
* Fujitsu
* Matsushita Electric
* Pharmacia
* Makita Electric
GEOGRAPHIC CONCENTRATIONS
[begin pie chart]
Japan (26%)
U.K. (14%)
Germany (9%)
Sweden (7%)
Hong Kong (6%)
Other countries (14%)
Cash (24%)
[end chart]
FUND NET ASSETS: $26 million
JAPAN'S BUBBLE INFLATES:
* 1984 market value of Japanese stocks: $632 billion ($2.8 trillion today).
* At the height of Japan's real estate bubble, Tokyo's Imperial Park was worth
more than the entire state of California.
* By the time stock prices peaked in December 1989, we had reduced
EuroPacific's Japanese position to 13% of net assets, affording shareholders
considerable downside protection.
[illustration of Japan]
[End Sidebar]
CAPITALIZING ON CHANGE:
A LOOK BACK AT EUROPACIFIC GROWTH FUND'S FIRST 15 YEARS
World markets have undergone remarkable changes since 1984. Through it all,
EuroPacific Growth Fund has maintained a consistent approach: get to know
companies inside and out, invest for the long term and avoid taking excessive
risks. If that philosophy has occasionally made us seem out of step with the
pack, it has served us - and our shareholders - very well over the years.
EuroPacific Growth Fund was created in the belief that international markets
offered U.S. investors two important benefits: First, over the long run,
diversification could help offset the volatility that often comes with
investing in one market, even if that market is the United States; second,
taking advantage of investment opportunities beyond our borders could make good
sense.
It was a view that had few takers in 1984. With U.S. stocks making progress,
and a strong dollar trimming gains from foreign securities, most American
investors simply preferred to stay home. What's more, international markets
were notoriously difficult to trade in. Stock exchanges were often restricted
or closed to foreigners. Publicly held companies had scant interest in minority
shareholders, and accounting standards differed from country to country. Much
of the world remained in the grip of socialist or communist governments,
offering little or no opportunity for profitable investments. As a result, when
EuroPacific began operations in 1984, it was one of only 11 stock mutual funds
investing exclusively outside the United States. By the end of its first fiscal
year, the fund's net assets had reached just $26 million.
Today, of course, that scenario is greatly changed. The intervening years have
seen communism fall and market economies flourish. Deregulation has encouraged
companies to look beyond their geographic borders to grow and stay competitive,
and the quickening of technological innovation has created entire industries
that didn't exist when EuroPacific began. Meanwhile, the rapid expansion of
developing nations has stimulated demand for everything from basic
infrastructure to consumer goods; the financial markets of these countries have
also widened our investment universe. Today, companies take their
responsibilities to shareholders very seriously and global markets have made
great strides forward, operating more freely and efficiently than ever.
[Begin Sidebar]
WHEN EUROPACIFIC BEGAN IN 1984, MOST AMERICANS PREFERRED TO INVEST AT HOME.
TODAY, THAT SCENARIO IS GREATLY CHANGED.
[End Sidebar]
With the convergence of these forces, international investing has gained wide
acceptance. When EuroPacific was introduced in April 1984, stock markets
outside the U.S. had a combined value of $1.4 trillion, slightly more than
Germany's today. Fifteen years later, the value of international markets has
grown eightfold, to $11.8 trillion. EuroPacific's growth has mirrored this
trend. At $22 billion in assets, and close to one million shareholder accounts,
it is by far the nation's largest international growth fund.
EuroPacific's investment universe has broadened as well. At the close of its
first fiscal year, the fund had investments in 55 companies based in 12
countries. Today, the number of companies has grown to nearly 250 and the
number of countries represented to 33; the portfolio touches down on every
continent but Antarctica.
Over the years, our global research has expanded to accommodate the
ever-increasing scope of that universe. The fund's investment adviser, Capital
Research and Management Company, now operates research bases out of nine
cities, including two in Europe and three in Asia. This far-flung network
comprises more than 100 analysts and portfolio counselors who conduct thousands
of visits a year to identify companies' potential value as long-term
investments. Ultimately, we think it helps us make better decisions on your
behalf.
It would be impossible in these few pages to chronicle everything that has
happened in world markets in the last decade and a half. To help bring our
research-oriented approach to life, we have chosen instead to highlight a
region, an industry and a company - Europe, telecommunications and Ericsson -
which exemplify why we believe international investing makes sense, and what
makes EuroPacific Growth Fund so special.
[Begin Sidebar]
MARKET CAPITALIZATION
OUTSIDE THE U.S.: $11.8 trillion
(As of 3/31/99. Source: MSCI)
NUMBER OF U.S.-BASED
INTERNATIONAL MUTUAL FUNDS: 559
(As of 3/31/99. Source: Lipper, Inc.)
STOCK MARKETS OPENING
TO FOREIGN INVESTORS IN
THE PAST FIVE YEARS:
China, Czech Republic,
Hungary, Morocco,
Poland, Russia
(Source: MSCI)
[photo: open door]
A FUND SNAPSHOT
(As of 3/31/99)
10 LARGEST HOLDINGS
* Mannesmann
* Telecom Italia
* Astra
* Telefonos de Mexico
* Deutsche Telekom
* Nokia
* Novartis
* News Corp.
* Dixons Group
* Ericsson
GEOGRAPHIC CONCENTRATIONS
[begin pie chart]
U.K. (15%)
Japan (14%)
Germany (7%)
Australia (6%)
France (6%)
Other countries (43%)
Cash (9%)
[end chart]
FUND NET ASSETS: $22 billion
NOW
EUROPACIFIC
A MULTIPLE PORTFOLIO
COUNSELOR SYSTEM
[illustration: cameos of seven people]
EuroPacific's assets are divided among SEVEN PORTFOLIO COUNSELORS, each of whom
manages his or her portion independently.
Another portion is managed by the fund's research analysts.
This approach has been employed since the fund began.
[End Sidebar]
[Begin Sidebar]
EUROPE'S LARGEST
COMPANIES IN 1984
(by market capitalization)
* Royal Dutch Petroleum
* British Petroleum
* Shell
* General Electric (U.K.)
* Daimler-Benz
* Siemens
* Imperial Chemical Industries
* B*A*T Industries
* Nestle
* Glaxo
(Source: MSCI Perspective)
Capital Research and Management Company opened its first European research
office in 1962, in Geneva; a London office followed in 1979. Its first European
investment was in 1953, in Royal Dutch Petroleum.
THE "THATCHER REVOLUTION" sweeps the U.K., financed in part by discovery of
North Sea oil in the late 1970s. Taxes are cut and industries are privatized.
Inflation is reduced, but unemployment soars.
[photo: Thatcher]
EUROPE
THEN
COMMUNISM LOSES ITS GRIP
The late 1980s saw Moscow launch economic reforms, Eastern Europe move toward a
market economy, and the Berlin Wall dismantled.
[photo: Berlin Wall]
[End Sidebar]
EUROPE: A REGION REDEFINES ITSELF. As EuroPacific's name would suggest,
European companies have always played a major role in the portfolio. Successful
holdings over the years have included such "international blue chips" as Royal
Dutch Petroleum, Michelin and BMW, as well as smaller, lesser known firms with
above-average growth potential. Prospects for the future are even more
encouraging, as Europe transforms itself from a collection of separate
interests into an economic powerhouse. The contrast with Asia, which was
growing rapidly in the mid-1980s and is now struggling with a severe recession,
is startling.
Investing in Europe was difficult in the fund's early years. Thierry
Vandeventer, a portfolio counselor who has worked out of Capital's Geneva
office for the last 35 years, recalls that acquiring stocks for the portfolio
was something of a challenge. "In the early 1980s," he notes, "most financial
markets were less than hospitable to foreign investors. In Switzerland, for
example, foreigners could only buy bearer, or unregistered, shares. These were
sold at a steep premium to the registered shares available to Swiss investors,
which meant that locals could buy the same stock much more cheaply." There were
other obstacles. Trading costs were high. Some markets executed orders by hand,
resulting in long delays in settlements. What's more, because accounting
practices differed from country to country, evaluating and comparing balance
sheets often required detective work.
Compounding these difficulties was a less than robust business environment.
Decades of generous government subsidies had bloated industries and discouraged
free enterprise. Many companies, such as telephone service providers and
electric and water utilities, were government-sponsored; in the early 1980s,
President Mitterand also nationalized France's major banks and insurance
companies, as well as some of its largest industrial companies. In the U.K.,
the pro-business Thatcher government was just beginning to reverse years of
welfare dependence and crippling labor strikes.
The situation is vastly improved today. Financial markets are generally
well-managed, and restrictions on foreign ownership of stock have eased
considerably. Companies have become much more transparent and willing to
disclose financial information. Hundreds of companies that were once state-run
have been privatized, creating new investment opportunities. Corporate
management is increasingly concerned about improving profits and their
responsibilities to shareholder interests. These changes were driven, in part,
by U.S. institutional investors, who had become major forces in European stock
markets, but another catalyst was the Continent's burgeoning equity culture: In
1998, Europeans poured nearly $80 billion dollars into stock mutual funds.
[Begin Sidebar]
WITH THE PUSH TOWARD ECONOMIC CONVERGENCE, EUROPE'S MOST REWARDING INVESTMENT
OPPORTUNITIES MAY LIE AHEAD.
[End Sidebar]
The net effect has been remarkable growth in European markets - from about $530
billion in 1984 to more than $7.6 trillion today. In 1984, European stocks
accounted for 37% of international markets; today, they account for nearly
two-thirds, a market capitalization that includes Portugal, Ireland, Hungary
and Poland - markets that were scarcely viable 15 years ago.
Europe's greatest metamorphosis - and its most rewarding investment
opportunities - may lie ahead, with the advent of a single currency and the
push toward economic convergence. Even before the euro was officially adopted
this year, governments across the continent began slashing budget deficits and
reducing inflation to qualify for acceptance into the union. Although
unemployment is still quite high in much of Europe, the pieces are in place for
an economic renaissance.
"Euroland," as the European Union has been dubbed, is a massive marketplace
that may eventually rival the U.S. in size and influence. There can be numerous
benefits for businesses - access to a larger pool of capital and a removal of
tax barriers, to name two - but there are daunting challenges as well. A single
monetary unit will expose pricing disparities once masked by currency
differences, making some businesses less competitive. Retailers, banks,
pharmaceutical companies and automakers are being forced to make dramatic
changes in the way they operate as they scramble for position in a pan-European
market. Many are aggressively cutting costs, or restructuring. Others are
pooling their resources by consolidating; the value of European mergers
approached $600 billion in 1998, a record. Not all businesses will thrive in
this environment; it is our challenge to judge which will fare well in the
future.
[Begin Sidebar]
EUROPE'S LARGEST
COMPANIES TODAY
(by market capitalization)
* Novartis
* Roche Holding
* Glaxo Wellcome
* Royal Dutch Petroleum
* Nestle
* British Petroleum
* Allianz
* British Telecom
* Deutsche Telekom
* France Telecom
(Source: MSCI Perspective)
European stock prices have increased dramatically in the last 15 years.
[begin line graph]
<TABLE>
<CAPTION>
<S> <C>
Date Dividends in cash
3/31/84 $10,000
9/30/84 8,947
3/31/85 9,899
9/30/85 12,466
3/31/86 18,956
9/30/86 20,083
3/31/87 24,499
9/30/87 27,047
3/31/88 22,809
9/30/88 22,459
3/31/89 25,443
9/30/89 28,655
3/31/90 30,525
9/30/90 27,176
3/31/91 30,302
9/30/91 31,278
3/31/92 30,781
9/30/92 31,392
3/31/93 31,291
9/30/93 34,372
3/31/94 36,725
9/30/94 37,378
3/31/95 39,596
9/30/95 43,363
3/31/96 45,999
9/30/96 48,471
3/31/97 55,154
9/30/97 64,480
3/31/98 76,988
9/30/98 68,739
3/31/99 79,267
</TABLE>
[end graph]
(From 4/1/84-3/31/99. Source: MSCI-Europe, with dividends in cash.)
The New York Stock Exchange lists 172 SECURITIES of companies based in Europe.
(As of 3/31/99)
In 1998, Europeans invested roughly the same amount as Americans in stock and
bond funds - more than $200 billion - although the largest part went to bond
funds.
EUROPE
NOW
THE BIRTH OF "EUROLAND":
* The genesis of the euro was the Maastricht Treaty, signed by members of the
European Union (EU) in 1991.
* The euro was formally introduced on January 1, 1999, although hard currency
won't be in circulation until 2002.
* ELEVEN EU COUNTRIES have adopted the euro: Austria, Belgium, Finland, France,
Germany, Ireland, Italy, Luxembourg, the Netherlands, Spain and Portugal.
Greece failed to qualify; Denmark, Sweden and the U.K. opted not to join.
* Stocks and bonds are already being traded in euros, including many of
EuroPacific's holdings.
[graphic: symbol of euro]
[End Sidebar]
[Begin Sidebar]
COST OF A FIVE-MINUTE CALL TO CHINA FROM THE U.S.
1984
$11.50
1999
$3.30*
*Excludes monthly service charge.
(Source: AT&T)
[illustration: China, U.S., and phones]
TELECOMMUNICATIONS
THEN
In 1984, British Telecom became the first large government-owned telephone
company to be privatized.
EuroPacific's first telecommunications holding, Philippine Long Distance, was
acquired in 1986.
Fewer than half of all offices had a fax machine in 1984; today, nearly every
office has one. Fax machines are expected to be in 25% of all homes by 2000.
Motorola produced the first wireless phone, a brick-sized contraption that cost
$4,000, in 1984.
[photo: wireless phone]
[End Sidebar]
Interestingly, even as European companies are transforming themselves, our
research approach has remained consistent. According to Mark Denning,
EuroPacific's president and one of its seven portfolio counselors, there's a
simple reason for that. "Successful companies are finally positioning
themselves the way we've always researched them - in a global context, as
European, rather than French, Italian or British. Because we evaluate
individual companies on a global basis, rather than concentrating on a
particular country, we don't have to change the way we go about our business."
TELECOMMUNICATIONS: A GLOBAL CONVERGENCE. Although telephones have been helping
people stay in touch for more than a century, the telecommunications industry
today is in the process of reinventing itself. Phone lines are now linking
voice, data and video, and doing it more clearly and less expensively than
ever. And in the last decade, wireless phones have gone from being a novelty to
a mass-market consumer product and an indispensable business tool.
Technological progress has put telecommunications at the very heart of the
information revolution.
Like many revolutions, it seemed to come from nowhere. Not long ago, phone
service around the world tended to be slow, expensive or simply nonexistent.
There was little incentive to improve. AT&T's monopoly in the U.S. seemed
unassailable, and most overseas phone companies were bureaucratic, state-run
operations.
All of that changed in 1984, the year EuroPacific was born. In the U.S., the
passage of the Telecommunications Act brought Ma Bell's monopoly in this
country to an end. As other barriers to competition crumbled, phone companies
began to find ways to improve services, operate more efficiently and increase
profits. Some developing nations that had virtually no phone service two
decades ago have leapfrogged developed nations by building infrastructures that
accommodate fixed lines, wireless technology and Internet access. For example,
Telecomunicaciones de Chile, a fund holding, has one of the world's few
all-digital networks.
Outside the U.S., these enhancements have been financed in large part by a wave
of privatizations. In stock offerings worth some $160 billion, governments have
sold off all or portions of their national telephone companies in the last 15
years. In the 1980s, these included NTT of Japan and British Telecom. More
recent privatizations include Deutsche Telekom, France Telecom, KPN of the
Netherlands and Swisscom.
Telecommunications stocks have proven to be very attractive investments indeed.
As a group, they had an average annual return of 20% over the past five years,
as measured by MSCI; in the past fiscal year, they increased 32%.
Telecommunications is also by far EuroPacific's largest industry concentration,
consisting of 31 companies and accounting for close to one fifth of net assets.
The industry is constantly evolving - and highly competitive. Worldwide
deregulation has opened once-protected markets. To survive, phone companies
must offer an increasing number of services at ever lower costs. David Riley, a
EuroPacific analyst based in Geneva, has been impressed by how effectively some
firms are meeting these challenges, particularly for their corporate clients.
"In some sense, globalization breeds globalization. As businesses have expanded
the parameters of their operations, they have demanded more sophisticated,
reliable services. Phone companies have responded by expanding right along with
them."
Mergers, such as the acquisition by Vodafone, a U.K.-based cellular operator,
of AirTouch, the U.S. mobile phone company, can help companies tap into new
markets and leverage the cost of growth. Both Vodafone and AirTouch do
substantial business outside the countries in which they are based, and the new
single entity will be a truly global operator. New entrants in the industry,
such as COLT Telecom of the U.K., are challenging the notion of domestic phone
service by building pan-European networks to meet the needs of business
customers in Europe's financial centers.
[Begin Sidebar]
More than 40 telephone companies have been privatized since 1984, in sales
worth some $160 billion.
The world's largest telephone company by revenue is Japan's Nippon Telephone &
Telegraph. The largest by market value is AT&T.
Ten years ago, there were 4 million mobile phone subscribers; TODAY THERE ARE
300 MILLION, a number that is expected to double by 2000.
[photo: woman talking on phone]
TELECOMMUNICATIONS
NOW
Telecommunications companies account for nearly one fifth of EuroPacific's
portfolio.
About $1 trillion is spent annually on telecommunications products and
services.
Worldwide Internet data traffic over telephone lines is expected to surpass
voice transmissions by the year 2000.
[photo: satellite]
[End Sidebar]
[Begin Sidebar]
L.M. ERICSSON founded his telegraph repair company in 1876, the same year
Alexander Graham Bell applied for his patent on the telephone in the U.S.
[photo: telegraph]
ERICSSON
THEN
Ericsson has always had a GLOBAL FOCUS: It first did business in China in 1892,
in Brazil in 1924. Today, these markets represent 13% and 6% of sales,
respectively. Sweden, its home market, accounts for only 4%.
In 1984, TELEPHONE SWITCHES were the largest segment of Ericsson's business.
The company sold its first WIRELESS SYSTEM in 1981.
[photo: repairmen]
[End Sidebar]
In addition to partnering with each other, telecommunications firms are linking
up with technology companies. Data now make up more than half of all
transmissions across telephone lines, and service providers are borrowing
technology from the Internet that can send information faster and more cheaply
than traditional circuits. This convergence of the telecommunications and
computer industries is the next wave of the information revolution. It will
have enormous implications going forward.
As telecommunication crosses geographic and industry boundaries, research
becomes more critical than ever. David spends a lot of time studying companies
on his own, but his work isn't done until he has talked with other Capital
associates with relevant areas of expertise. Working in a telecommunications
"cluster" helps him and other analysts leverage their many hours of research
and close the circle of information. "The constant interplay of perspectives is
essential to the process," stresses David. "Without it, it's like using an
encyclopedia with $A' through $M' missing."
ERICSSON: A LEADER IN WIRELESS TECHNOLOGY. If service providers are the driving
force behind the rapid changes in communications, companies like Ericsson have
been the engines that have made it all possible. Ericsson may be best known for
its sophisticated cell phones, but its primary business is mobile
infrastructure - the equipment that makes wireless networks run. In this, it is
an industry leader, supplying about 40% of the world's mobile telephone
systems. The company, which is based in Stockholm, is truly a global
enterprise, with operations in more than 130 countries, including a firm
foothold in developing nations.
Although mobile telephony is a fairly new phenomenon, Ericsson has been in
EuroPacific's portfolio since 1984, making it one of the fund's oldest
holdings. Back then, the bulk of Ericsson's sales came from public switches,
the devices that direct the path of phone calls. Portfolio counselor Martial
Chaillet, then an analyst for the fund, remembers being impressed by the
company's commitment to expanding its cellular business. "Even then, management
was very forward-thinking about the potential for wireless technology," he
says. "They were not afraid to make the investments necessary to become the
market leaders." When the stock price fell in 1984, he recommended it for the
fund. Since then, Ericsson has remained in the portfolio continuously, although
we have bought and sold shares as valuations warranted. Over the years, the
stock has made important contributions to the fund's lifetime record.
In an industry in which technology is king, Ericsson has maintained its
dominant position by committing enormous resources to research and development.
Jesper Lyckeus, a London-based analyst who follows the company today, notes
that "When it comes to planning for the future, Ericsson doesn't take short
cuts. They devote a higher proportion of their revenues to research than their
competitors do. If that means sacrificing earnings in the near term, management
knows they will reap the real benefits down the line."
Today, Ericsson continues to be in the vanguard. It provides links to every
technological standard of mobile communications around the world, giving it a
truly global reach. It is also developing the third generation of "smart
phones" that will combine wireless voice and data communications. (The first
two generations were analog and digital voice communication, developed in the
1980s and 1990s, respectively.) In all likelihood, these are mere baby-steps
into the technological revolution that will transform the world in the years
ahead.
Ericsson's strategy - intensive research and a long-term perspective - fits
neatly with Capital's own investment approach. "Investors who take a snapshot
view of a stock can lose sight of the larger landscape," says Jesper. "That can
lead them to underestimate the real value of a company. The bright side is that
their shortsightedness often provides opportunities for long-term investors
like us."
[Begin Sidebar]
[illustration: earth]
About 40% of the world's wireless phone subscribers - MORE THAN 75 MILLION
PEOPLE - are connected to Ericsson's systems. Its products are used in more
than 130 COUNTRIES.
Ericsson is CHINA'S #1 SUPPLIER of mobile phones. Coincidentally, the word
"Ericsson" translates roughly as "loyalty" in Mandarin.
[photo: man talking on phone]
ERICSSON
NOW
HALF OF THEIR REVENUES come from wireless networks, one-quarter from mobile
handsets.
About 15% of Ericsson's budget is spent on research.
SWEDEN claims the world's second-highest concentration of cell phone users,
about 45% of the population. (Finland is first, with 50%.)
[illustration: Sweden]
[End Sidebar]
<TABLE>
<S> <C> <C> <C>
EuroPacific Growth Fund
Investment Portfolio, March 31, 1999
Largest Percent
Individual of Net
Industry Diversification Holdings Assets
Percent of Net Assets
19.13% Telecommunications Mannesmann 3.42
8.43% Banking Telecom Italia 2.50
7.20% Health & Personal Care Astra 2.42
5.61% Broadcasting & Publishing Telefonos de Mexico 1.67
5.38% Electronic Components Deutsche Telekom 1.65
44.28% Other Industries Nokia 1.65
.56% Bonds & Notes Novartis 1.59
9.41% Cash and Equivalents News Corp. 1.45
Dixons Group 1.37
Ericsson 1.34
Shares or Market Percent
Principal Value of Net
EQUITY SECURITIES (common and preferred stocks and convertible debentures ) Amount (Millions) Assets
- -------------------------------------------- -------- -------- --------
TELECOMMUNICATIONS - 19.13%
Mannesmann AG (Germany) 5,907,500 754.277 3.42
Telecom Italia SpA, nonconvertible savings shares (Italy) 55,084,500 327.525
Telecom Italia SpA, ordinary shares 21,200,000 225.173 2.50
Telefonos de Mexico, SA de CV, Class L (ADR) (Mexico) 5,147,000 337.129
Telefonos de Mexico, SA de CV, Class L 9,612,500 31.419 1.67
Deutsche Telekom AG (Germany) 8,929,983 363.839 1.65
Orange PLC (United Kingdom) (1) 15,274,500 213.649 .97
Telecom Italia Mobile SpA (Italy) 14,805,000 99.150
Telecom Italia Mobile SpA, savings shares 20,705,000 79.823 .81
Telefonica, SA (Spain) 3,779,900 160.289 .73
Swisscom AG (Switzerland) (1) 406,810 159.091 .72
Tele Danmark AS (Denmark) 997,200 98.816
Tele Danmark AS, Class B (ADR) 1,012,100 49.593 .67
COLT Telecom Group PLC (United Kingdom) (1) 7,696,000 138.438
COLT Telecom Group PLC 2.00% convertible debentures 2005 DM5,000,000 3.197 .64
Koninklijke PTT Nederland NV (Netherlands) 3,240,947 128.900 .58
France Telecom, SA (France) 1,274,444 103.026 .47
DDI Corp. (Japan) 21,755 102.852 .47
Vodafone Group PLC (United Kingdom) 4,274,948 79.313
Vodafone Group PLC (ADR) 105,000 19.714 .45
Teleglobe Inc. (Canada) 3,100,000 94.388 .43
Telecom Corp. of New Zealand Ltd. (New Zealand) 13,889,200 67.844
Telecom Corp. of New Zealand Ltd. (2) 4,107,000 20.061
Telecom Corp. of New Zealand Ltd. (ADR) 63,600 2.480 .41
Philippine Long Distance Telephone Co. (ADR) (Philippines) 1,624,094 42.023
Philippine Long Distance Telephone Co., convertible preferred
Series III (GDR) 400,000 19.000
Philippine Long Distance Telephone Co. 533,120 14.088 .34
NTT Mobile Communications Network, Inc. (Japan) 1,479 73.045 .33
Compania de Telecomunicaciones de Chile SA (ADR) (Chile) 3,051,273 71.896 .33
British Telecommunications PLC (United Kingdom) 4,000,000 65.489 .30
Videsh Sanchar Nigam Ltd. (GDR) (India) (2) 3,781,159 38.568
Videsh Sanchar Nigam Ltd. 450,000 7.227
Videsh Sanchar Nigam Ltd. (GDR) 486,950 4.967 .22
SK Telecom Co., Ltd. (ADR) (South Korea) 1,861,650 22.689
SK Telecom Co., Ltd. 21,927 19.072 .19
Telefonica de Argentina SA, Class B (ADR) (Argentina) 1,189,400 35.979 .16
Mahanagar Telephone Nigam Ltd. (India) 6,850,000 28.571
Mahanagar Telephone Nigam Ltd. (GDR) (2) 570,600 6.063 .16
Telefonica del Peru SA, Class B (ADR) (Peru) 2,408,900 30.713 .14
Perusahaan Perseroan (Persero) PT Indonesian Satellite Corp.
(ADR) (Indonesia) 892,700 11.549
Perusahaan Perseroan (Persero) PT Indonesian Satellite Corp. 7,290,500 9.770 .09
Magyar Tavkozlesi Rt. (ADR) (Hungary) 655,500 17.535 .08
Telstra Corp. Ltd. (Australia) 2,800,000 14.691 .07
Telecom Argentina STET-France Telecom SA, Class B (ADR) (Argentina) 439,300 12.053 .05
Millicom International Cellular SA (Luxembourg) (1) 440,000 11.440 .05
Telesp Celular Participacoes SA, preferred nominative (Brazil) 194,412,100 7.255
Telesp Celular Participacoes SA, ordinary nominative 39,540,000 .945 .03
BANKING - 8.43%
Bank of Nova Scotia (Canada) 12,098,200 257.212 1.16
Westpac Banking Corp. (Australia) 25,275,696 184.750 .85
ABN AMRO Holding NV (Netherlands) 8,528,000 177.642 .80
Fuji Bank, Ltd. (Japan) 12,871,000 76.172
Fuji JGB Investment LLC, Series A, 9.87% noncumulative
preferred (2) 41,000,000 36.490 .50
HSBC Holdings PLC (United Kingdom) 3,508,374 110.019 .50
Sakura Bank, Ltd. (Japan) 32,369,000 98.104
Sakura Finance (Bermuda) Trust, convertible preference share units 1,614,000,000 9.606 .49
Australia and New Zealand Banking Group Ltd. (Australia) 14,736,339 107.245 .49
Bank of Scotland (United Kingdom) 7,385,000 98.629 .45
Asahi Bank, Ltd. (Japan) 15,834,000 83.548 .38
Royal Bank of Canada (Canada) 1,752,700 82.258 .37
ForeningsSparbanken AB, Class A (Sweden) 3,400,000 80.072 .36
Bangkok Bank PCL (Thailand) (1) 32,400,000 66.475 .31
Tokai Bank, Ltd. (Japan) 9,662,000 62.320 .28
Commonwealth Bank of Australia (Australia) 3,666,248 60.328 .27
Hang Seng Bank Ltd. (Hong Kong) 6,095,500 56.047 .25
STB Cayman Capital Ltd. 0.50% convertible debentures 2007 (Japan) Y5,925,000,000 49.021 .22
Royal Bank of Scotland Group PLC (United Kingdom) 2,067,974 45.106 .20
Banque Nationale de Paris (France) 475,000 41.321 .19
Allied Irish Banks, PLC (Ireland) 1,050,000 18.128 .08
Barclays Bank PLC (United Kingdom) 522,400 15.103 .07
Unidanmark A/S, Class A (Denmark) 212,000 14.478 .07
Unibanco-Uniao de Bancos Brasileiros SA, units (GDR) (Brazil) 600,000 11.550 .05
MBL International Finance (Bermuda) Trust 3.00% convertible
debentures 2002 (Bermuda) $10,000,000 10.625 .05
Toyo Trust and Banking Co., Ltd. (Japan) 2,800,000 8.723 .04
HEALTH & PERSONAL CARE - 7.20%
Astra AB, Class A (Sweden) 20,514,400 470.640
Astra AB, Class B 2,832,267 64.288 2.42
Novartis AG (Switzerland) 215,866 350.673 1.59
Zeneca Group PLC (United Kingdom) 5,693,900 266.975 1.21
Elan Corp., PLC (ADR) (Ireland) (1) 2,337,400 163.034 .74
Glaxo Wellcome PLC (United Kingdom) 2,185,000 72.887
Glaxo Wellcome PLC (ADR) 1,000,000 66.937 .63
SmithKline Beecham PLC (ADR) (United Kingdom) 850,000 60.775 .28
Synthelabo (France) 128,000 27.837 .13
Shiseido Co., Ltd. (Japan) 1,628,000 22.540 .10
Fujisawa Pharmaceutical Co. Ltd. (Japan) 1,469,000 23.129 .10
BROADCASTING & PUBLISHING - 5.61%
News Corp. Ltd. (ADR) (Australia) 3,958,200 116.767
News Corp. Ltd., preferred 15,423,952 106.270
News Corp. Ltd. 8,735,006 64.803
News Corp. Ltd., preferred (ADR) 1,181,600 32.494 1.45
CANAL + (France) 680,015 199.265 .90
Mediaset SpA (Italy) (2) 9,174,544 86.207
Mediaset SpA 8,093,000 76.045 .73
Grupo Televisa, SA, ordinary participation certificates
(ADR) (Mexico) (1) 4,347,700 136.409 .62
Pearson PLC (United Kingdom) 2,460,000 55.873 .25
Thomson Corp. (Canada) 1,660,000 46.524 .21
Fuji Television Network Inc. (Japan) 9,195 46.577 .21
Nippon Television Network Corp. (Japan) 113,650 43.752 .20
Pathe (France) 165,000 42.384 .19
Television Broadcasts Ltd. (Hong Kong) 10,677,000 38.924 .18
Publishing & Broadcasting Ltd. (Australia) 5,429,789 31.060 .14
Arnoldo Mondadori Editore SpA (Italy) (1) 1,950,000 29.105 .13
Modern Times Group MTG AB, Class B (ADR) (Sweden) (1) 211,822 18.852
Modern Times Group MTG AB, Class A (1) 302,260 5.113 .11
Societe Europeenne des Satellites SA, Class A (FDR) (Luxemborg) (1) 150,000 20.399 .09
Daily Mail and General Trust PLC, Class A (United Kingdom) 395,000 19.149 .09
United News & Media PLC 6.125% convertible
debentures 2003 (United Kingdom) GBP7,400,000 12.670 .06
Independent Newspapers, PLC (Ireland) 2,249,202 10.196 .05
ELECTRONIC COMPONENTS - 5.38%
Murata Manufacturing Co., Ltd. (Japan) 5,371,000 285.667 1.29
Rohm Co., Ltd. (Japan) 2,235,000 266.992 1.21
Samsung Electronics Co., Ltd. (South Korea) 3,324,289 257.592
Samsung Electronics Co., Ltd. (GDR) (2) 203,596 8.327 1.21
Hoya Corp. (Japan) 2,294,000 130.145 .59
Hon Hai Precision Industry Co. Ltd. (Taiwan) (1) 19,400,000 103.678 .47
Hirose Electric Co., Ltd. (Japan) 1,000,000 83.580 .38
Siliconware Precision Industries Co., Ltd. (Taiwan) 23,199,400 47.281 .21
LG Semicon Co., Ltd. (South Korea) 395,233 4.046 .02
BUSINESS & PUBLIC SERVICES - 5.16%
Rentokil Initial PLC (United Kingdom) 31,860,900 197.123 .89
Reuters Group PLC (United Kingdom) 12,094,933 177.176 .80
TNT Post Groep (Netherlands) 5,126,900 154.384 .70
Vivendi SA (France) 482,170 118.600 .56
Brambles Industries Ltd. (Australia) 4,005,000 102.039 .46
United Utilities PLC (United Kingdom) 4,978,414 60.237 .27
Securitas AB, Class B (Sweden) 3,108,000 49.175 .22
Hyder PLC (United Kingdom) 3,850,000 48.758 .22
Hays PLC (United Kingdom) 4,600,000 47.904 .22
Thames Water PLC (United Kingdom) 2,786,597 42.349 .19
Comparex Holdings Ltd. (South Africa) 4,500,000 35.127 .16
Ratin A/S, Class B (Denmark) 140,000 25.224 .11
Dimension Data Holdings Ltd. (South Africa) (1) 5,267,818 23.424 .11
ALTRAN TECHNOLOGIES (France) 100,000 25.364 .11
TT Tieto Oy (Finland) 500,000 20.588 .09
SAP AG (Germany) 37,000 11.900 .05
ELECTRICAL & ELECTRONICS - 4.40%
Nokia Corp., Class A (Finland) 1,438,000 231.408
Nokia Corp., Class A (ADR) 850,000 132.388 1.65
Telefonaktiebolaget LM Ericsson, Class B (Sweden) 8,580,100 208.853
Telefonaktiebolaget LM Ericsson, Class B (ADR) 3,620,000 86.201 1.34
Matsushita Communication Industrial Co., Ltd. (Japan) 1,600,000 108.198 .49
Siemens AG (Germany) 1,000,000 66.809 .30
ECI Telecom Ltd. (Israel) 1,765,000 61.775 .28
Premier Farnell PLC (United Kingdom) 13,567,800 47.280 .21
Northern Telecom Ltd. (Canada) 460,000 28.577 .13
AUTOMOBILES - 3.91%
Bayerische Motoren Werke AG (Germany) 383,480 249.771
Bayerische Motoren Werke AG, preferred 56,726 20.873 1.22
Suzuki Motor Corp. (Japan) 14,565,000 193.175 .87
Volvo AB, Class B (Sweden) 4,970,000 130.353 .59
Honda Motor Co., Ltd. (Japan) 1,890,000 85.365 .39
Peugeot SA (France) 500,000 71.881 .33
Mitsubishi Motors Corp. (Japan) (1) 17,820,000 66.496 .30
Porsche AG, preferred (Germany) 10,000 24.554 .11
Nissan Motor Co., Ltd. (Japan) 4,000,000 15.534 .07
Mazda Motor Corp. (Japan) 1,669,000 6.482 .03
MERCHANDISING - 3.40%
Dixons Group PLC (United Kingdom) 14,350,000 302.774 1.37
Kingfisher PLC (United Kingdom) 6,862,231 86.629 .40
Carrefour SA (France) 98,000 75.521 .34
Cifra, SA de CV, Class V (Mexico) (1) 36,408,570 57.167
Cifra, SA de CV, Class C (1) 8,402,600 12.981 .32
Koninklijke Ahold NV (Netherlands) 1,076,010 41.228
Koninklijke Ahold NV 3.00% convertible debentures 2003 $18,900,000 12.096 .24
Tesco PLC (United Kingdom) 17,744,600 47.510 .22
H & M Hennes & Mauritz AB, Class B (Sweden) 500,000 37.729 .17
Safeway PLC (United Kingdom) 7,615,000 29.945 .14
Coles Myer Ltd. (Australia) 5,311,047 28.886 .13
George Weston Ltd. (Canada) 350,000 14.801 .06
Amway Japan Ltd. (ADR) (Japan) 581,250 2.543 .01
Edgars Stores Ltd. (South Africa) 57,720 .298 .00
ENERGY SOURCES - 2.82%
Royal Dutch Petroleum Co. (Netherlands) 1,600,000 85.049
Royal Dutch Petroleum Co. (New York Registered Shares) 280,000 14.560
"Shell" Transport and Trading Co., PLC
(New York Registered Shares) (United Kingdom) 675,000 27.422 .57
Broken Hill Proprietary Co. Ltd. (Australia) 14,767,604 126.246 .57
Elf Aquitaine (France) 790,000 107.263 .49
TOTAL, Class B (ADR) (France) 828,807 50.557
TOTAL, Class B 185,693 22.868 .33
Sasol Ltd. (South Africa) 13,213,700 65.404 .30
Norsk Hydro AS (Norway) 650,000 26.495
Norsk Hydro AS (ADR) 500,000 20.187 .21
ENI SpA (Italy) 3,500,000 22.401
ENI SpA (ADR) 250,000 15.781 .17
YPF SA, Class D (ADR) (Argentina) 850,000 26.828 .12
Electrafina SA (Belgium) 107,764 12.503 .06
INSURANCE - 2.73%
ING Groep NV (Netherlands) 5,231,681 288.257 1.31
PartnerRe Holdings Ltd. (Singapore - Incorporated in Bermuda) 2,031,900 82.292 .37
Royal & Sun Alliance Insurance Group PLC (United Kingdom) 7,753,283 73.299 .33
Union des Assurances Federales (France) 493,960 59.177 .27
Allied Zurich PLC (United Kingdom) (1) 4,065,000 54.760 .25
Swiss Life-Glaxo Wellcome 2.00% convertible debentures
2003 (Switzerland) (2) $15,000,000 16.970
Swiss Life-Mannesmann 1.50% convertible debentures 2003 (2) $8,000,000 10.490 .12
Corporacion Mapfre, CIR, SA (Spain) 858,500 16.947 .08
MULTI-INDUSTRY - 2.44%
Orkla AS, Class A (Norway) 7,896,000 121.076
Orkla AS, Class B 2,000,000 26.656 .67
BTR Siebe PLC (formerly Siebe PLC) (United Kingdom) 30,780,000 137.303 .62
Lend Lease Corp. Ltd. (Australia) 7,006,526 89.472 .40
Hutchison Whampoa Ltd. (Hong Kong) 7,735,000 60.890 .28
Lagardere Groupe SCA (France) 920,000 29.878 .14
TI Group PLC (United Kingdom) 3,983,500 25.835 .12
Swire Pacific Ltd., Class A (Hong Kong) 5,000,000 23.229 .10
Ayala Corp. (Philippines) 62,388,750 18.991 .09
PT Astra International (Indonesia) (1) 54,000,000 5.180 .02
Groupe Bruxelles Lambert SA (Belgium) (1) 126,900 .006 .00
BEVERAGES & TOBACCO - 1.98%
Foster's Brewing Group Ltd. (Australia) 54,501,800 160.770 .73
South African Breweries PLC (United Kingdom) (1) 7,947,287 69.000 .31
Panamerican Beverages, Inc., Class A (Mexico) 3,322,800 58.357 .26
Coca-Cola Amatil Ltd. (Australia) 9,534,119 41.450
Coca-Cola Beverages PLC (United Kingdom) (1) 9,567,371 15.512 .26
Swedish Match AB (Sweden) 11,076,924 38.827 .18
San Miguel Corp., Class B (Philippines) 17,556,700 29.337 .13
Asahi Breweries, Ltd. (Japan) 1,056,000 13.819
Asahi Breweries, Ltd. 1.00% convertible debentures 2003 Y413,000,000 4.707
Asahi Breweries, Ltd. 0.90% convertible debentures 2001 Y296,000,000 3.399
Asahi Breweries, Ltd. 0.95% convertible debentures 2002 Y178,000,000 1.958 .11
I.T.C. Ltd. (India) 372 .008 .00
FOOD & HOUSEHOLD PRODUCTS - 1.70%
Reckitt & Colman PLC (United Kingdom) 11,772,175 127.627 .58
Nestle SA (Switzerland) 69,000 125.535 .57
Groupe Danone (France) 161,185 40.552 .18
Raisio Group PLC (Finland) 3,771,700 34.968 .16
Cadbury Schweppes PLC (United Kingdom) 2,000,000 29.168 .13
Benckiser NV, Class B (Netherlands) 300,000 16.821 .08
RECREATION & OTHER CONSUMER PRODUCTS - 1.64%
Nintendo Co., Ltd. (Japan) 1,702,200 146.868 .66
EMI Group PLC (United Kingdom) 10,500,000 74.958 .34
Fuji Photo Film Co., Ltd. (Japan) 1,280,000 48.412 .22
Sony Music Entertainment (Japan) Inc. (Japan) 474,800 35.875 .16
Bajaj Auto Ltd. (India) 2,047,500 29.777
Bajaj Auto Ltd. (GDR) 75,000 1.275 .14
Square Co., Ltd. (Japan) 730,000 26.069 .12
APPLIANCES & HOUSEHOLD DURABLES - 1.33%
Sony Corp. (Japan) 2,153,500 199.078 .90
Koninklijke Philips Electronics NV (formerly Philips Electronics NV)
(Netherlands) 1,170,000 95.277 .43
UTILITIES: ELECTRIC & GAS - 1.29%
Cia. Energetica de Minas Gerais - CEMIG, preferred nominative
(ADR) (Brazil) 3,433,226 75.960
Cia. Energetica de Minas Gerais - CEMIG, ordinary nominative 311,044,152 4.298
Cia. Energetica de Minas Gerais - CEMIG, preferred nominative
(ADR) (2) 26,066 .577
Cia. Energetica de Minas Gerais - CEMIG, preferred nominative 596 0 .36
Manila Electric Co., Class A (GDR) (Philippines) (1,2,3) 3,110,000 39.379
Manila Electric Co., Class B 9,540,381 31.636 .32
National Power PLC (United Kingdom) 7,135,400 54.881 .25
Centrais Eletricas Brasileiras SA - ELETROBRAS,
Class B, preferred nominative (ADR) (Brazil) 2,100,500 21.530
Centrais Eletricas Brasileiras SA - ELETROBRAS,
ordinary nominative (ADR) 419,000 3.981 .12
Scottish Power PLC (United Kingdom) 2,350,000 20.586 .09
Cia. Paranaense de Energia - COPEL, Class B, preferred nominative
(ADR) (Brazil) 2,018,000 15.135 .07
Enersis SA (ADR) (Chile) 316,900 8.497 .04
LIGHT-Servicos de Eletricidade SA (Brazil) 41,650,000 3.886 .02
CESP - Cia. Energetica de Sao Paulo, preferred nominative
(ADR) (Brazil) 455,084 2.731
CESP - Cia. Energetica de Sao Paulo, preferred nominative (ADR) (2) 297,000 1.782 .02
REAL ESTATE - 1.16%
Cheung Kong (Holdings) Ltd. (Hong Kong) 10,138,000 77.190 .35
Sun Hung Kai Properties Ltd. (Hong Kong) 8,150,000 61.001 .28
Hongkong Land Holdings Ltd. (Hong Kong - Incorporated in Bermuda) 34,363,300 44.672 .20
Mitsubishi Estate Co., Ltd. (Japan) 2,657,000 27.030 .12
Ayala Land, Inc. (Philippines) 83,880,000 24.447 .11
Security Capital Global Realty (Luxembourg) (1,2,3) 1,125,000 22.500 .10
INDUSTRIAL COMPONENTS - 1.07%
NGK Spark Plug Co., Ltd. (Japan) 6,412,000 73.945 .33
Minebea Co., Ltd. (Japan) 4,559,000 47.110 .22
Cie. Generale des Etablissements Michelin, Class B (France) 1,009,444 45.269 .20
Valeo (France) 530,000 41.472 .19
Bridgestone Corp. (Japan) 775,000 19.759 .09
Morgan Crucible Co. PLC (United Kingdom) 2,550,836 8.848 .04
FOREST PRODUCTS & PAPER - 1.03%
UPM-Kymmene Corp. (Finland) 3,680,800 101.701 .45
Abitibi-Consolidated Inc. (Canada) 9,500,000 85.074 .39
Stora Enso Oyj (formerly Stora Kopparbergs Bergslags AB) (Finland) 2,394,843 23.780 .11
AssiDoman AB (Sweden) 828,000 16.829 .08
FINANCIAL SERVICES - 0.96%
Nichiei Co., Ltd. (Japan) 1,342,900 120.288 .54
Newcourt Credit Group Inc. (Canada) 2,231,640 60.251 .27
ORIX Corp. (Japan) 420,000 31.522 .15
DATA PROCESSING & REPRODUCTION - 0.90%
Fujitsu Ltd. (Japan) 8,446,000 135.621 .62
Acer Inc. (Taiwan) (1) 47,125,000 62.748 .28
CHEMICALS - 0.75%
BOC Group PLC (United Kingdom) 6,430,000 89.705 .41
L'Air Liquide (France) (1) 261,095 38.889 .18
Bayer AG (Germany) 600,000 22.471 .10
Imperial Chemical Industries PLC (ADR) (United Kingdom) 430,000 15.399 .06
BUILDING MATERIALS & COMPONENTS - 0.60%
Cemex, SA de CV, ordinary participation certificates (Mexico) 18,063,379 73.753
Cemex, SA de CV, Class B 2,210,625 9.282
Cemex, SA de CV, Class A, ordinary participation certificates 1,793,075 7.444 .41
Holderbank Financiere Glaris Ltd. (Switzerland) 38,045 42.601 .19
MACHINERY & ENGINEERING - 0.58%
GKN PLC (United Kingdom) 4,270,000 65.168 .30
Valmet Oy (Finland) 3,400,000 39.081 .18
Kvaerner AS, Class A (Norway) 924,800 16.455 .07
Kawasaki Heavy Industries, Ltd. (Japan) 3,330,000 7.253 .03
METALS: NONFERROUS - 0.56%
Pechiney, Class A (France) 2,878,675 104.083 .47
WMC Ltd. (Australia) 6,064,917 19.351 .09
OTHER INDUSTRIES - 2.08%
Bombardier Inc., Class B (Canada) 8,400,000 110.607 .50
Seagram Co. Ltd. (Canada) 1,200,000 60.000 .27
Buhrmann NV (Netherlands) 2,744,000 47.682 .22
ADVANTEST CORP. (Japan) 545,200 41.655 .19
Mitsui & Co., Ltd. (Japan) 5,600,000 37.869 .17
Qantas Airways Ltd. (Australia) 14,109,102 37.369 .17
Granada Group PLC (United Kingdom) 1,648,765 33.835 .15
Tokyo Electron Ltd. (Japan) 575,000 29.757 .14
Stolt-Nielsen SA, Class B (ADR) (Incorporated in Luxembourg) 1,147,500 13.985
Stolt-Nielsen SA 837,000 9.050 .10
Bergesen d.y. AS, Class B (Norway) 1,130,000 14.622
Bergesen d.y. AS, Class A 542,800 7.446 .10
Rank Group PLC (United Kingdom) 2,500,000 9.120 .04
Mandarin Oriental International Ltd. (Singapore) 9,670,312 6.286 .03
MISCELLANEOUS - 1.79%
Other equity securities in intial period of acquisition 394.852 1.79
---------- ----------
TOTAL EQUITY SECURITIES (cost: $13,907.584 million) 19,881.562 90.03
---------- ----------
BONDS & NOTES
Principal
Amount
(Millions)
BROADCASTING & PUBLISHING - .08%
Grupo Televisa, SA 0%/13.25% 2008 (4) $20.000 16.850 .08
MULTI-INDUSTRY - .01%
Hutchison Whampoa Finance (CI) Ltd., Series D, 6.988% 2037 (1) 1.350 1.278
Hutchison Whampoa, Series C, 7.50% 2027 (1) 1.450 1.248 .01
GOVERMENTS AND GOVERNMENTAL AUTHORITIES
(excluding U.S. government) - .47%
Brazil (Federal Republic of), Bearer 8.00% 2014 130.645 83.286 .38
Argentina (Republic of)11.75% 2007 ARP14.000 12.854
Argentina (Republic of)11.375% 2017 7.500 7.097 .09
---------- ----------
TOTAL BONDS & NOTES (cost: $111.319 million) 122.613 .56
---------- ----------
Principal Market Percent
Amount Value of Net
SHORT-TERM SECURITIES (Millions) (Millions) Assets
Corporate Short-Term Notes - 7.03%
BMW U.S. Capital Corp. 4.77%-4.80% due 4/12-5/5/1999 92.000 91.786 .42
International Business Machines Corp. 4.81%-4.86%
due 4/21-6/10/1999 80.000 79.590 .36
FCE Bank PLC 4.81%-4.83% due 4/09-5/21/1999 79.200 78.870 .36
Ciesco LP 4.78%-4.83% due 4/8-5/20/1999 77.900 77.511 .35
Associates First Capital Finance BV 4.83%-4.87%
due 4/29-6/7/1999 77.400 76.967 .35
Abbey National North America 4.80%-4.84% due 4/12-5/13/1999 75.000 74.681 .33
DaimlerChrylser NA Holdings 4.82%-4.87% due 4/28-5/24/1999 70.775 70.375 .33
Halifax PLC 4.75%-4.83% due 4/7-6/3/1999 68.500 68.186 .31
Xerox Capital (Europe) PLC 4.78%-4.80% due 4/27-5/5/1999 66.000 65.723 .29
Toyota Motor Credit Corp. 4.80%-4.82% due 4/6-6/28/1999 57.671 57.233 .26
Lloyds Bank PLC 4.83%-4.84% due 4/1-4/6/1999 57.200 57.173 .26
Rio Tinto America Inc. 4.83%-4.84% due 5/25-6/7/1999 56.000 55.496 .25
American Honda Finance Corp. 4.83%-4.85% due 4/13-5/25/1999 55.200 54.880 .25
British Columbia (Province of) 4.77%-4.97% due 4/13-5/13/1999 53.775 53.634 .25
Canadian Wheat Board 4.80% due 5/27/1999 53.283 52.875 .24
General Electric Capital Corp. 4.80%-4.84% due 5/7-5/19/1999 51.400 51.108 .23
Commonwealth Bank of Australia 4.85% due 4/12/1999 50.000 49.920 .23
American Express Credit Corp. 4.77%-4.82% due 4/23-4/26/1999 45.300 45.148 .20
Svenska Handelsbanken 4.78%-4.89% due 5/3-5/28/1999 45.000 44.783 .20
Motiva Enterprises LLC 4.83%-4.88% due 4/9-5/11/1999 42.500 42.304 .19
Westpac Capital Corp. 4.82% due 4/13/1999 40.000 39.931 .19
Telstra Corp. Ltd. 4.80%-4.86% due 4/16-5/14/1999 40.000 39.876 .18
France Telecom 4.83% due 4/13-5/17/1999 40.000 39.801 .18
Repsol International Finance BV 4.80%-4.82% due 5/10-7/15/1999 38.800 38.367 .17
Siemens Capital Corp. 4.74%-4.80% due 4/21-5/26/1999 36.800 36.660 .16
BP America Inc. 4.74%-4.79% due 4/22-5/13/1999 35.900 35.774 .16
ABN-AMRO North America Finance Inc. 4.80% due 4/8/1999 25.000 24.973 .11
Societe Generale North America Inc. 4.78% due 4/28/1999 25.000 24.906 .11
Barclays U.S. Funding Corp. 4.81% due 6/8/1999 25.000 24.767 .11
Federal Agency Discount Notes - 1.65%
Freddie Mac 4.73%-4.80% due 4/12-6/10/1999 193.600 192.393 .87
Fannie Mae 4.71%-4.79% due 4/6-6/10/1999 171.539 170.980 .78
Certificates of Deposit - 0.57%
Barclays Bank PLC 4.87% due 4/15/1999 50.000 50.000 .23
Rabobank Nederland NV 4.85% due 5/6/1999 50.000 49.997 .23
Canadian Imperial Bank of Commerce 4.84% due 4/5/1999 25.000 25.000 .11
Non-U.S. Currency - 0.03%
New Taiwanese Dollar NT$255.268 7.707 .03
---------- ----------
TOTAL SHORT-TERM SECURITIES (cost: $2,050.961 million) 2,049.375 9.28
---------- ----------
TOTAL INVESTMENT SECURITIES (cost: $16,069.864 million) 22,053.550 99.87
Excess of cash and receivables over payables 29.425 .13
---------- ----------
NET ASSETS $22,082.975 100.00%
========== ======
(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 Depositary Receipts
GDR = Global Depositary Receipts
FDR = Fiduciary Depositary Receipts
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 SECURITIES APPEARING IN THE PORTFOLIO SINCE SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
Acer Elan Imperial Chemical Industries
Allied Zurich Electrafina NGK Spark Plug
ALTRAN TECHNOLOGIES Enersis NTT Mobile Communications Network
Amway Japan Fuji Television Network Raisio Group
Arnoldo Mondadori Editore Fujisawa Pharmaceutical Rank Group
Banque Nationale de Paris George Weston SAP
Barclays Bank GKN Swisscom
Benckiser Hang Seng Bank Teleglobe
Comparex Holdings Hays Telesp Celular
ECI Telecom Hon Hai Precision Industry TT Tieto
Edgars Stores Hongkong Land Holdings Valeo
</TABLE>
EQUITY SECURITIES ELIMINATED FROM THE PORTFOLIO SINCE SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
Adidas-Salomon Grupo Financiero Banamex Accival MAYR-MELNHOF Karton
AJL PEPS Trust Guangshen Railway Merkantildata
Alcan Aluminium Guardian Royal Exchange Mitsui Fudosan
Banco Itau Gucci Group Mitsui Trust and Banking
Bank of Montreal Hanil Bank MTI Capital (Cayman)
BPB Hongkong Electric Holdings Nippon Telegraph and Telephone
Brierley Investments Hong Kong Telecommunications Nippon Yusen
Caradon Imperial Oil NSK
Cathay Pacific Inco Shinhan Bank
Christiania Bank Ito-Yokado SOFTBANK
Cia. Cervejaria Brahma Jardine Strategic Holdings Suez Lyonnaise des Eaux
Cie. Financiere Richemont Kawasaki Steel Teck
Cominco Komori Telecomunicacoes Brasileiras
Daimler-Benz Kookmin Bank Toyota Motor
Delta Electronics Lloyds TSB Group Woodside Petroleum
Gambro LVMH Moet Hennessy Louis Vuitton Woolworths
</TABLE>
<TABLE>
<S> <C> <C>
EuroPacific Growth Fund
Financial Statements
- ----------------------------- -------- --------
Statement of Assets and Liabilities
at March 31, 1999 (dollars in millions)
- ----------------------------- -------- --------
ASSETS:
Investment securities at market
(cost: $16,069.864) $22,053.550
Cash 1.578
Receivables for-
Sales of investments $17.919
Sales of fund's shares 29.897
Dividends and accrued interest 82.915 130.731
-------- --------
22,185.859
LIABILITIES:
Payables for-
Purchases of investments 44.356
Repurchases of fund's shares 43.456
Management services 8.583
Accrued expenses 6.489 102.884
-------- --------
NET ASSETS AT MARCH 31, 1999-
Equivalent to $30.21 per share on
730,990,876 shares of beneficial
interest issued and outstanding;
unlimited shares authorized $22,082.975
==========
Statement of Operations
for the year ended March 31, 1999 (dollars in millions)
- ----------------------------- -------- --------
INVESTMENT INCOME:
Income:
Dividends $341.656
Interest 132.846 $474.502
--------
Expenses:
Management services fee 96.690
Distribution expenses 48.882
Transfer agent fee 15.869
Reports to shareholders .653
Registration statement and prospectus 1.183
Postage, stationery and supplies 2.872
Trustees' fees .207
Auditing and legal fees .096
Custodian fee 7.402
Taxes other than federal income tax .321
Other expenses .379 174.554
-------- --------
Net investment income 299.948
--------
REALIZED GAIN AND UNREALIZED
APPRECIATION ON INVESTMENTS:
Net realized gain 769.649
Net change in unrealized appreciation on:
Investments 527.740
Net increase in unrealized appreciation
Forward currency contracts (3.822) 523.918
-------- --------
Net realized gain and unrealized
appreciation on investments 1,293.567
--------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $1,593.515
==========
- ----------------------------- -------- --------
Statement of Changes in Net Assets Year ended March 31
(dollars in millions) 1999 1998
- ----------------------------- -------- --------
OPERATIONS:
Net investment income $ 299.948 $ 314.266
Net realized gain on investments 769.649 1,082.594
Net increase in unrealized appreciation
on investments 523.918 2,212.606
-------- --------
Net increase in net assets resulting
from operations 1,593.515 3,609.466
-------- --------
DIVIDENDS AND DISTRIBUTIONS PAID TO
SHAREHOLDERS:
Dividends from net investment income (258.117) (294.902)
Distributions from net realized gain on
investments (901.166) (1301.823)
-------- --------
Total dividends and distributions (1159.283) (1596.725)
-------- --------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold: 149,373,115
and 177,804,677 shares, respectively 4,252.412 4,969.746
Proceeds from shares issued in reinvestment
of net investment income dividends and
distributions of net realized gain on
investments: 39,600,216 and 58,392,228 shares,
respectively 1,110.693 1,529.590
Cost of shares repurchased: 179,052,856
and 142,024,433 shares, respectively (5030.545) (3932.937)
-------- --------
Net increase in net assets resulting from
capital share transactions 332.560 2,566.399
-------- --------
TOTAL INCREASE IN NET ASSETS 766.792 4,579.140
NET ASSETS:
Beginning of year 21,316.183 16,737.043
-------- --------
End of year (including undistributed
net investment income: $65.361
and $71.284, respectively) $22,082.975 $21,316.183
========== ==========
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 March 31, 1999, net unrealized appreciation on investments, excluding
forward currency contracts, for book and federal income tax purposes aggregated
$5,983,490,000, net of accumulated deferred taxes totaling $196,000 on
unrealized appreciation of Indian securities, of which $6,848,150,000 related
to appreciated securities and $864,464,000 related to depreciated securities.
During the year ended March 31, 1999, the fund realized, on a tax basis, a net
capital gain of $767,021,000 on securities transactions. Net gains related to
non-U.S. currency and other transactions of $2,628,000 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
$16,079,407,000 at March 31, 1999.
4. FEES AND TRANSACTIONS WITH RELATED PARTIES
INVESTMENT ADVISORY FEE - The fee of $96,690,000 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 year ended March 31, 1999,
distribution expenses under the Plan were $48,882,000. As of March 31, 1999,
accrued and unpaid distribution expenses were $3,794,000.
American Funds Distributors, Inc. (AFD), the principal underwriter of the
fund's shares, received $6,399,000 (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.
TRANSFER AGENT FEE - American Funds Service Company (AFS), the transfer agent
for the fund, was paid a fee of $15,869,000.
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 March 31, 1999, aggregate deferred compensation and earnings thereon since
the plan's adoption (1993), net of any payments to Trustees, were $654,000.
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 $5,832,297,000 and $6,423,027,000, respectively,
during the year ended March 31, 1999.
As of March 31, 1999, accumulated undistributed net realized gain on
investments was $137,172,000 and paid-in capital was $15,166,355,000. The fund
reclassified $99,000 to undistributed net investment income from undistributed
net realized gains; and reclassified $47,853,000 and $67,505,000 from
undistributed net investment income and undistributed net realized gains,
respectively, to paid-in capital for the year ended March 31, 1999.
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 $7,402,000 includes $179,000 that was paid by these
credits rather than in cash.
Dividend and interest income is recorded net of non-U.S. taxes paid. For the
year ended March 31, 1999, such non-U.S. taxes were $38,344,000. Net realized
currency losses on dividends, interest, sales of non-U.S. bonds and notes, and
other receivables and payables, on a book basis, were $808,000 for the year
ended March 31, 1999.
At March 31, 1999, the fund had no outstanding forward currency contracts to
sell non-U.S. currencies.
<TABLE>
<S> <C> <C> <C> <C> <C>
Per-Share Data and Ratios
Year Ended March 31
1999 1998 1997 1996 1995
Net Asset Value, Beginning of Year $29.56 $26.70 $24.28 $20.89 $21.95
------ ------ ------ ------ ------
Income From Investment Operations:
Net investment income .42 .45 .46 .46 .35
Net gains or losses on securities (both
realized and unrealized) 1.85 4.79 3.28 3.63 (.19)
------ ------ ------ ------ ------
Total from investment operations 2.27 5.24 3.74 4.09 .16
------ ------ ------ ------ ------
Less Distributions:
Dividends (from net investment income) (.36) (.433) (.41) (.49) (.317)
Dividends (from net realized non-U.S. currency gains) (1) - (.017) (.03) - (.003)
Distributions (from capital gains) (1.26) (1.93) (.88) (.21) (.90)
------ ------ ------ ------ ------
Total distributions (1.62) (2.38) (1.32) (.70) (1.22)
------ ------ ------ ------ ------
Net Asset Value, End of Year $30.21 $29.56 $26.70 $24.28 $20.89
====== ====== ====== ====== ======
Total Return (2) 8.18% 20.97% 15.88% 19.84% .71%
Ratios/Supplemental Data:
Net assets, end of year (in millions) $22,083 $21,316 $16,737 $12,335 $8,588
Ratio of expenses to average net assets .84% .86% .90% .95% .97%
Ratio of net income to average net assets 1.45% 1.64% 1.77% 2.09% 1.80%
Portfolio turnover rate 31.73% 30.51% 25.82% 21.77% 16.02%
(1) Realized non-U.S. currency gains are treated as ordinary
income for federal income tax purposes.
(2) Excludes maximum sales charge of 5.75%.
</TABLE>
Report of Independent Accountants
To the Board of 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, 1999, 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, 1999 by correspondence with the custodian, provide a
reasonable basis for the opinion expressed above.
/s/ PRICEWATERHOUSECOOPERS LLP
Los Angeles, California
April 30, 1999
EUROPACIFIC GROWTH FUND
SHAREHOLDER SERVICES
AMERICAN FUNDSLINE(R)
Stay on top of your investment day and night by calling our 24-hour automated
phone system. Order checks, exchange shares between funds, sell shares, confirm
transactions - all on your timetable.
FUNDSLINE ONLINE(R)
Visit our Web site when you want to obtain information about your account or
the funds, make redemptions and exchanges or download a prospectus.
AMERICAN FUNDSLINK(SM)
Link your fund account to your bank account for direct transfers between the
two. Also allows you to purchase shares using American FundsLine or FundsLine
Online.
AUTOMATIC TRANSACTIONS
Use this service when you want to make transactions on a regular basis. You may
purchase shares, invest dividends in the same fund or another American Fund,
sell shares and exchange shares between funds - all handled automatically per
your instructions.
REDUCED SALES CHARGE
Add to your purchasing power by reducing your sales charge. Purchases of
$50,000 or more (stock funds or stock and bond funds) and $25,000 or more (bond
funds) qualify for a reduced sales charge. To help reach a breakpoint, you may
- -
* Add your purchase to the value of all your eligible household accounts and/or
* Add your present purchase to purchases you intend to make over 13 months
Assets in money market fund accounts generally don't apply when determining
sales charges.
RETIREMENT PLANS
Look to the American Funds for your retirement plan needs, whether a new or
rollover IRA, a Roth or traditional IRA, or a company-sponsored SIMPLE IRA,
401(k) or 403(b) plan.
FLEXIBLE DIVIDEND OPTIONS
Use your dividend and capital gain distributions to meet your changing needs.
You may -
* Invest dividends and capital gain distributions back into the fund
* Diversify by investing dividends and capital gain distributions into another
American Fund
* Take dividends in cash
* Have dividends paid directly to someone else
BECAUSE CERTAIN TRANSACTIONS HAVE RESTRICTIONS OR TAX CONSEQUENCES, PLEASE
CONSULT YOUR FINANCIAL ADVISER BEFORE REQUESTING CHANGES.
WOULD YOU LIKE MORE INFORMATION?
Your financial adviser will be happy to explain these services in greater
detail, or you may
contact American Funds Service Company.
To contact American Funds Service Company:
Shareholder Services Representative - 8 a.m. to 8 p.m. Eastern time -
800/421-0180
American FundsLine - 24-hour automated telephone system - 800/325-3590
FundsLine OnLine - Web site - www.americanfunds.com
By mail - Write to the service center nearest you.
(If you live outside the United States, please write to the western service
center.)
WESTERN
AMERICAN FUNDS
SERVICE COMPANY
[map of Western part of U.S.]
P.O. Box 2205
Brea, CA 92822-2205
WEST CENTRAL
AMERICAN FUNDS
SERVICE COMPANY
[map of West Central part of U.S.]
P.O. Box 659522
San Antonio, TX 78265-9522
EAST CENTRAL
AMERICAN FUNDS
SERVICE COMPANY
[map of East Central part of U.S.]
P.O. Box 6007
Indianapolis, IN 46206-6007
EASTERN
AMERICAN FUNDS
SERVICE COMPANY
[map of Eastern part of U.S.]
P.O. Box 2280
Norfolk, VA 23501-2280
Please obtain the applicable prospectuses from your financial adviser or our
Web site and read them carefully before investing or sending money. American
Funds reserves the right to terminate or modify these services.
Tax Information (unaudited)
We are required to advise you within 60 days of the fund's fiscal year-end
regarding the federal tax status of distributions received by shareholders
during such fiscal year. The distributions made during the fiscal year by the
fund were earned from the following sources:
<TABLE>
<CAPTION>
Dividends and Distributions per Share
To Payment Date From Net From Net From Net
Shareholders of Record Investment Realized Realized
Income Short-term Long-term
Gains Gains
<S> <C> <C> <C> <C>
June 5, 1998 June 8, 1998 $ .21 - $ .48
December 16, 1998 December 17, 1998 .15 - .78
</TABLE>
The fund also designates as a capital gain distribution a portion of earnings
and profits paid to shareholders in redemption of their shares.
The fund makes an election under the Internal Revenue Code Section 853 to pass
through non-U.S. taxes paid by the fund to its shareholders. The amount of
non-U.S. taxes for the fiscal year ended March 31, 1999 is $0.0533 on a
per-share basis. Foreign source income earned by the fund was $0.3154 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 retirement plan trusts may need this information for their annual
information reporting.
SINCE THE AMOUNTS ABOVE ARE REPORTED FOR THE FUND'S FISCAL YEAR AND NOT THE
CALENDAR YEAR, SHAREHOLDERS SHOULD REFER TO THEIR FORM 1099-DIV AND OTHER TAX
INFORMATION WHICH WERE MAILED IN JANUARY 1999 TO DETERMINE THE CALENDAR YEAR
AMOUNTS TO BE INCLUDED ON THEIR 1998 TAX RETURNS. SHAREHOLDERS SHOULD CONSULT
THEIR TAX ADVISERS.
EUROPACIFIC GROWTH FUND
BOARD OF TRUSTEES
ELISABETH ALLISON, Cambridge, Massachusetts
Administrative Director, ANZI, Ltd.
(financial publishing and consulting);
publishing consultant, Harvard Medical School
MICHAEL R. BONSIGNORE, Minneapolis, Minnesota
Chairman of the Board and Chief Executive Officer,
Honeywell Inc.
GINA H. DESPRES,* Washington, D.C.
Senior Vice President,
Capital Research and Management Company
ROBERT A. FOX, Livingston, California
President and Chief Executive Officer,
Foster Farms Inc.
ALAN GREENWAY, La Jolla, California
Private investor; President, Greenway Associates, Inc.
(management consulting services)
WILLIAM R. GRIMSLEY, San Francisco, California
Chairman of the Board of the fund
Senior Vice President and Director,
Capital Research and Management Company;
Director, The Capital Group Companies, Inc.
KOICHI ITOH, Tokyo, Japan
Group Vice President - Asia/Pacific, Autosplice,
Inc.; former President and Chief Executive Officer, IMPAC
(management consulting services); former
managing partner, VENCA Management
(venture capital investment)
WILLIAM H. KLING, St. Paul, Minnesota
President, Minnesota Public Radio;
President, Greenspring Co.;
former President, American Public Radio
(now Public Radio International)
JOHN G. MCDONALD, Stanford, California
The IBJ Professor of Finance,
Graduate School of Business, Stanford University
WILLIAM I. MILLER, Columbus, Indiana
Chairman of the Board, Irwin Financial Corporation
KIRK P. PENDLETON, Southampton, Pennsylvania
Chairman of the Board and Chief Executive Officer,
Cairnwood, Inc. (venture capital investment)
DONALD E. PETERSEN, Birmingham, Michigan
Retired; former Chairman of the Board and
Chief Executive Officer, Ford Motor Company
THIERRY VANDEVENTER, Geneva, Switzerland
Vice Chairman of the Board of the fund
Director, Capital Research and Management Company
*Effective April 16, 1999.
OTHER OFFICERS
MARK E. DENNING, London, England
President of the fund
Director, Capital Research and Management Company;
Senior Vice President and Director,
Capital Research Company
STEPHEN E. BEPLER, New York, New York
Executive Vice President of the fund
Senior Vice President, Capital Research Company
ROBERT W. LOVELACE, Los Angeles, California
Senior Vice President of the fund
Executive Vice President and Director, Capital Research
Company; Vice President, Capital Research and
Management Company
JANET A. MCKINLEY, New York, New York
Senior Vice President of the fund
Director, Capital Research and Management Company;
Senior Vice President, Capital Research Company
ALWYN HEONG, New York, New York
Vice President of the fund
Vice President, Capital Research Company
HIROMI ISHIKAWA, Tokyo, Japan
Vice President of the fund
Vice President, Capital Research Company
VINCENT P. CORTI, Los Angeles, California
Secretary of the fund
Vice President - Fund Business Management Group,
Capital Research and Management Company
R. MARCIA GOULD, Brea, California
Treasurer of the fund
Vice President - Fund Business Management
Group, Capital Research and Management Company
DAYNA YAMABE, Brea, California
Assistant Treasurer of the fund
Assistant Vice President - Fund Business
Management Group, Capital Research and
Management Company
WALTER P. STERN, Founding Chairman of the Board
and Trustee, retired from the fund in April 1999.
The Trustees wish to thank him
for his many contributions to the fund.
CORPORATE INFORMATION
OFFICES OF THE FUND AND OF THE INVESTMENT ADVISER,
CAPITAL RESEARCH AND MANAGEMENT COMPANY
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92821-5823
TRANSFER AGENT FOR SHAREHOLDER ACCOUNTS
American Funds Service Company
(Please write to the address nearest you.)
P.O. Box 2205
Brea, California 92822-2205
P.O. Box 659522
San Antonio, Texas 78265-9522
P.O. Box 6007
Indianapolis, Indiana 46206-6007
P.O. Box 2280
Norfolk, Virginia 23501-2280
CUSTODIAN OF ASSETS
The Chase Manhattan Bank
One Chase Manhattan Plaza
New York, New York 10081-0001
COUNSEL
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, California 90071-2899
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
400 South Hope Street
Los Angeles, California 90071-2889
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
FOR INFORMATION ABOUT YOUR ACCOUNT OR ANY OF THE FUND'S SERVICES, PLEASE
CONTACT YOUR FINANCIAL ADVISER. YOU MAY ALSO CALL AMERICAN FUNDS SERVICE
COMPANY, TOLL-FREE, AT 800/421-0180 OR VISIT WWW.AMERICANFUNDS.COM ON THE WORLD
WIDE WEB.
This report is for the information of shareholders of 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
June 30, 1999, this report must be accompanied by an American Funds Group
Statistical Update for the most recently completed calendar quarter.
Printed on recycled paper
Litho in USA BDA/GRS/3917
Lit. No. EUPAC-011-0599
