<PAGE>
The American Funds Logo
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EuroPacific
Growth Fund(R)
Prospectus
JUNE 1, 1999
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR
DISAPPROVED OF THESE SECURITIES. FURTHER, IT HAS NOT
DETERMINED THAT THIS PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
EUROPACIFIC GROWTH FUND
333 South Hope Street
Los Angeles, CA 90071
TICKER SYMBOL: AEPGX NEWSPAPER ABBREV.: Eupac FUND NO.: 16
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TABLE OF CONTENTS
<TABLE>
<S> <C>
Risk/Return Summary 2
..............................................................
Fees and Expenses of the Fund 5
..............................................................
Investment Objective, Strategies and Risks 6
..............................................................
Year 2000 9
..............................................................
Management and Organization 10
..............................................................
Shareholder Information 12
..............................................................
Purchase and Exchange of Shares 13
..............................................................
Distribution Arrangements 17
..............................................................
Financial Highlights 18
</TABLE>
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16-010-0699/B
EUROPACIFIC GROWTH FUND / PROSPECTUS 1
<PAGE>
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RISK/RETURN SUMMARY
The fund seeks to make your investment grow over time by investing primarily in
stocks of issuers located in Europe or the Pacific Basin.
The fund is designed for investors seeking greater capital appreciation through
investments in stocks of issuers based outside the U.S. Investors in the fund
should have a long-term perspective and be able to tolerate potentially wide
price fluctuations.
An investment in the fund is subject to risks, including the possibility that
the fund may decline in value in response to world political, social and
economic instability, and currency fluctuations. The prices of equity securities
will be affected by events specifically involving the companies whose securities
are owned in the fund.
You may lose money by investing in the fund. The likelihood of loss is greater
if you invest for a shorter period of time.
Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.
2 EUROPACIFIC GROWTH FUND / PROSPECTUS
<PAGE>
INVESTMENT RESULTS
The following information illustrates how the fund's results fluctuate. Past
results are not an indication of future results.
Here are the fund's results calculated without a sales charge on a calendar
year basis. (If a sales charge were included, results would be lower.)
[bar chart]
1989 24.19
1990 -0.11
1991 18.59
1992 2.30
1993 35.60
1994 1.13
1995 12.87
1996 18.64
1997 9.19
1998 15.54
[end bar chart]
The fund's year-to-date return for the three months ended March 31, 1999 was
6.37%.
The fund's highest/lowest quarterly results during this time period were:
X HIGHEST 17.89% (quarter ended December 31, 1998)
X LOWEST -13.85% (quarter ended September 30, 1990)
EUROPACIFIC GROWTH FUND / PROSPECTUS 3
<PAGE>
For periods ended December 31, 1998:
<TABLE>
<CAPTION>
THE FUND WITH
MAXIMUM MORGAN STANLEY
AVERAGE ANNUAL SALES CHARGE CAPITAL INTERNATIONAL
TOTAL RETURN DEDUCTED(1) EAFE INDEX(2)
- --------------------------------------------------------------------------------
<S> <C> <C>
One Year 8.89% 20.33%
......................................................................................................
Five Years 9.99% 9.50%
......................................................................................................
Ten Years 12.63% 5.85%
......................................................................................................
Lifetime(3) 15.38% 14.29%
</TABLE>
(1) These fund results were calculated according to a formula which requires
that the maximum sales charge of 5.75% be deducted and include the
reinvestment of dividend and capital gain distributions. Results would be
higher if they were calculated at net asset value.
(2) The Morgan Stanley Capital International EAFE (Europe, Australasia, Far
East) Index measures all major stock markets outside North America. This
index is unmanaged and does not reflect sales charges, commissions or
expenses.
(3) The fund began investment operations on April 16, 1984.
4 EUROPACIFIC GROWTH FUND / PROSPECTUS
<PAGE>
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FEES AND EXPENSES OF THE FUND
The following describes the fees and expenses that you may pay if you buy and
hold shares of the fund.
SHAREHOLDER FEES
(fees paid directly from your investment)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Maximum sales charge imposed on purchases
(as a percentage of offering price) 5.75%(1)
...............................................................................
Maximum sales charge imposed on reinvested dividends 0%
...............................................................................
Maximum deferred sales charge 0%(2)
...............................................................................
Redemption or exchange fees 0%
</TABLE>
(1) Sales charges are reduced or eliminated for larger purchases.
(2) A contingent deferred sales charge of 1% applies on certain redemptions made
within 12 months following any purchases you made without a sales charge.
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from fund assets)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Management Fees 0.47%
................................................................................
Service (12b-1) Fees 0.24%*
................................................................................
Other Expenses 0.13%
................................................................................
Total Annual Fund Operating Expenses 0.84%
</TABLE>
*12b-1 expenses may not exceed 0.25% of the fund's average net assets annually.
EXAMPLE
This Example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
One Year $ 656
................................................................................
Three Years $ 828
................................................................................
Five Years $1,014
................................................................................
Ten Years $1,553
</TABLE>
EUROPACIFIC GROWTH FUND / PROSPECTUS 5
<PAGE>
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INVESTMENT OBJECTIVE, STRATEGIES AND RISKS
The fund's investment objective is to provide you with long-term growth of
capital. It invests primarily in stocks of issuers located in Europe or the
Pacific Basin.
The prices of equity securities may decline in response to certain events,
including those directly involving the companies whose securities are owned in
the fund, adverse conditions affecting the general economy, overall market
declines, world political, social and economic instability, and currency
fluctuations. Investments outside the U.S. may be affected by these events to a
greater extent and may also be affected by differing securities regulations, and
administrative difficulties such as delays in clearing and settling portfolio
transactions. These risks are potentially heightened in connection with
investments in developing countries. The growth-oriented, equity-type securities
generally purchased by the fund may involve large price swings and potential for
loss.
The fund may also hold cash or money market instruments of any issuer to any
extent deemed appropriate. The size of the fund's cash position will vary and
will depend on various factors, including market conditions and purchases and
redemptions of fund shares. A larger cash position could detract from the
achievement of the fund's objective, but it also provides greater liquidity to
meet redemptions or to make additional investments, and it would reduce the
fund's exposure in the event of a market downturn.
The fund relies on the professional judgment of its investment adviser, Capital
Research and Management Company, to make decisions about the fund's portfolio
securities. The basic investment philosophy of Capital Research and Management
Company is to seek undervalued securities that represent good long-term
investment opportunities. Securities may be sold when they are judged to no
longer represent good long-term value.
6 EUROPACIFIC GROWTH FUND / PROSPECTUS
<PAGE>
ADDITIONAL INVESTMENT RESULTS
For periods ended December 31, 1998:
<TABLE>
<CAPTION>
MORGAN STANLEY
AVERAGE ANNUAL THE FUND WITH LIPPER CAPITAL INTERNATIONAL
TOTAL RETURN NO SALES CHARGE(1) AVERAGE(2) EAFE INDEX(3)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
One Year 15.54% 13.02% 20.33%
........................................................................................
Five Years 11.30% 7.98% 9.50%
........................................................................................
Ten Years 13.30% 9.35% 5.85%
........................................................................................
Lifetime(4) 15.85% 13.19% 14.29%
</TABLE>
(1) These fund results were calculated according to a formula that is required
for all stock and bond funds and includes the reinvestment of dividend and
capital gain distributions.
(2) The Lipper International Funds Average consists of funds that invest assets
in securities with primary trading markets outside the United States. Sales
charges and commissions are not reflected in the results of the underlying
funds.
(3) The Morgan Stanley Capital International EAFE (Europe, Australasia, Far
East) Index measures all major stock markets outside North America. This
index is unmanaged and does not reflect sales charges, commissions or
expenses.
(4) The fund began investment operations on April 16, 1984.
EUROPACIFIC GROWTH FUND / PROSPECTUS 7
<PAGE>
The following chart illustrates the asset mix of the fund's investment
portfolio as of the end of the fund's fiscal year, March 31, 1999.
INDUSTRY DIVERSIFICATION
<TABLE>
<CAPTION>
HEALTH & BROADCASTING & ELECTRONIC CASH AND
TELECOMMUNICATIONS BANKING PERSONAL CARE PUBLISHING COMPONENTS EQUIVALENTS BONDS & NOTES
- ------------------ ------- ------------- -------------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
19.13 8.43 7.20 5.61 5.38 9.41 0.56
</TABLE>
<TABLE>
<CAPTION>
OTHER
TELECOMMUNICATIONS INDUSTRIES
- ------------------ ----------
<S> <C>
19.13 44.28
</TABLE>
<TABLE>
<CAPTION>
PERCENT INVESTED BY PERCENT OF
COUNTRY NET ASSETS
- ----------------------------------
<S> <C>
EUROPE
United Kingdom 15.4%
Germany 7.0
France 5.6
Sweden 5.5
Netherlands 4.8
Italy 4.4
Switzerland 3.2
Finland 2.6
Norway 1.1
Ireland .9
Denmark .9
Spain .8
Other Europe .6
.......................................................
PACIFIC BASIN
ASIA
.......................................................
Japan 13.9%
Australia 6.1
Hong Kong 1.4
South Korea 1.4
Taiwan 1.4
Philippines 1.0
Other Asia .8
.......................................................
THE AMERICAS
.......................................................
Canada 4.0%
Mexico 3.1
Other Americas .5
.......................................................
OTHER
.......................................................
Brazil 1.1%
South Africa .9
India .5
Other Countries 1.7
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------
<S> <C>
TEN LARGEST PERCENT OF
INDIVIDUAL HOLDINGS NET ASSETS
Mannesmann 3.42%
.......................................................
Telecom Italia 2.50
.......................................................
Astra 2.42
.......................................................
Telefonos de Mexico 1.67
.......................................................
Deutsche Telekom 1.65
.......................................................
Nokia 1.65
.......................................................
Novartis 1.59
.......................................................
News Corp. 1.45
.......................................................
Dixons Group 1.37
.......................................................
Ericsson 1.34
.......................................................
</TABLE>
Because the fund is actively managed, its holdings will change
from time to time.
8 EUROPACIFIC GROWTH FUND / PROSPECTUS
<PAGE>
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YEAR 2000
The date-related computer issue known as the "Year 2000 problem" could have an
adverse impact on the quality of services provided to the fund and its
shareholders. However, the fund understands that its key service
providers -- including the investment adviser and its affiliates -- are taking
steps to address the issue. In addition, the Year 2000 problem may adversely
affect the issuers in which the fund invests. For example, issuers may incur
substantial costs to address the problem. They may also suffer losses caused by
corporate and governmental data processing errors. These risks may be
particularly acute in certain countries outside the U.S. in which the fund may
invest and may adversely affect the fund's net asset value and total return. The
fund and its investment adviser will continue to monitor developments relating
to this issue.
EUROPACIFIC GROWTH FUND / PROSPECTUS 9
<PAGE>
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MANAGEMENT AND ORGANIZATION
INVESTMENT ADVISER
Capital Research and Management Company, an experienced investment management
organization founded in 1931, serves as investment adviser to the fund and other
funds, including those in The American Funds Group. Capital Research and
Management Company, a wholly owned subsidiary of The Capital Group Companies,
Inc., is headquartered at 333 South Hope Street, Los Angeles, CA 90071. Capital
Research and Management Company manages the investment portfolio and business
affairs of the fund. The total management fee paid by the fund, as a percentage
of average net assets, for the previous fiscal year is discussed earlier under
"Fees and Expenses."
Capital Research and Management Company and its affiliated companies have
adopted a personal investing policy that is consistent with the recommendations
contained in the May 9, 1994 report issued by the Investment Company Institute's
Advisory Group on Personal Investing. This policy has also been incorporated
into the fund's code of ethics.
MULTIPLE PORTFOLIO COUNSELOR SYSTEM
Capital Research and Management Company uses a system of multiple portfolio
counselors in managing mutual fund assets. Under this approach the portfolio of
a fund is divided into segments which are managed by individual counselors.
Counselors decide how their respective segments will be invested, within the
limits provided by a fund's objective(s) and policies and by Capital Research
and Management Company's investment committee. In addition, Capital Research and
Management Company's research professionals may make investment decisions with
respect to a portion of a fund's portfolio. The primary individual portfolio
counselors for EuroPacific Growth Fund are listed on the following page.
10 EUROPACIFIC GROWTH FUND / PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
APPROXIMATE YEARS OF EXPERIENCE
AS AN INVESTMENT PROFESSIONAL
YEARS OF EXPERIENCE (INCLUDING THE LAST FIVE YEARS)
AS PORTFOLIO COUNSELOR .....................................
(AND RESEARCH WITH CAPITAL
PROFESSIONAL, IF RESEARCH AND
PORTFOLIO COUNSELORS APPLICABLE) FOR MANAGEMENT
FOR EUROPACIFIC EUROPACIFIC GROWTH FUND COMPANY
GROWTH FUND PRIMARY TITLE(S) (APPROXIMATE) OR AFFILIATES TOTAL YEARS
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
THIERRY VANDEVENTER Vice Chairman of the 15 years (since the 36 years 36 years
Board of the fund. fund began operations)
Director, Capital
Research and
Management Company
-----------------------------------------------------------------------------------------------------------
MARK E. President of the 8 years (plus 3 years 17 years 17 years
DENNING fund. Director, as a research
Capital Research and professional prior to
Management Company. becoming a portfolio
Senior Vice counselor for the fund)
President, Capital
Research Company*
-----------------------------------------------------------------------------------------------------------
STEPHEN E. Executive Vice 15 years (since the 27 years 33 years
BEPLER President of the fund began operations)
fund. Senior Vice
President, Capital
Research Company*
-----------------------------------------------------------------------------------------------------------
ROBERT W. LOVELACE Senior Vice 5 years (plus 7 years 14 years 14 years
President of the as a research
fund. Vice professional prior to
President, Capital becoming a portfolio
Research and counselor for the fund)
Management Company.
Executive Vice
President and
Director, Capital
Research Company*
-----------------------------------------------------------------------------------------------------------
JANET A. Senior Vice 9 years (plus 5 years 17 years 23 years
MCKINLEY President of the as a research
fund. Director, professional prior to
Capital Research and becoming a portfolio
Management Company. counselor for the fund)
Senior Vice
President, Capital
Research Company*
-----------------------------------------------------------------------------------------------------------
ALWYN Vice President of 3 years (plus 4 years 7 years 11 years
HEONG the fund. Vice as a research
President, Capital professional prior to
Research Company* becoming a portfolio
counselor for the fund)
-----------------------------------------------------------------------------------------------------------
MARTIAL Senior Vice 5 years (plus 5 years 27 years 27 years
CHAILLET President and as a research
Director, Capital professional prior to
Research Company* becoming a portfolio
counselor for the fund)
-----------------------------------------------------------------------------------------------------------
</TABLE>
* Company affiliated with Capital Research and Management Company.
The fund began investment operations on April 16, 1984.
EUROPACIFIC GROWTH FUND / PROSPECTUS 11
<PAGE>
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SHAREHOLDER INFORMATION
American Funds Service Company, the fund's transfer agent, offers you a wide
range of services you can use to alter your investment program should your needs
and circumstances change. These services are available only in states where they
may be legally offered and may be terminated or modified at any time upon 60
days' written notice. For your convenience, American Funds Service Company has
four service centers across the country.
AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS
CALL TOLL-FREE FROM ANYWHERE IN THE U.S.
(8 A.M. TO 8 P.M. ET):
800/421-0180
U.S. CALL TOLL-FREE MAP 1/3
<TABLE>
<S> <C> <C> <C>
WESTERN SERVICE WESTERN CENTRAL EASTERN CENTRAL EASTERN SERVICE
CENTER SERVICE CENTER SERVICE CENTER CENTER
American Funds American Funds American Funds American Funds
Service Company Service Company Service Company Service Company
P.O. Box 2205 P.O. Box 659522 P.O. Box 6007 P.O. Box 2280
Brea, California San Antonio, Indianapolis, Norfolk, Virginia
92822-2205 Texas Indiana 23501-2280
Fax: 714/671-7080 78265-9522 46206-6007 Fax: 757/670-4773
Fax: 210/474-4050 Fax: 317/735-6620
</TABLE>
A COMPLETE DESCRIPTION OF THE SERVICES WE OFFER ARE DESCRIBED IN THE FUND'S
STATEMENT OF ADDITIONAL INFORMATION. In addition, an easy-to-read guide to
owning a fund in The American Funds Group titled "Welcome to the Family" is sent
to new shareholders and is available by writing or calling American Funds
Service Company.
You may invest in the fund through various retirement plans. However, some
retirement plans or accounts held by investment dealers may not offer certain
services. If you have any questions, please contact your plan
administrator/trustee or dealer.
12 EUROPACIFIC GROWTH FUND / PROSPECTUS
<PAGE>
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PURCHASE AND EXCHANGE OF SHARES
PURCHASE
Generally, you may open an account by contacting any investment dealer
authorized to sell the fund's shares. You may purchase additional shares using
various options described in the statement of additional information and
"Welcome to the Family."
EXCHANGE
You may exchange your shares into other funds in The American Funds Group
generally without a sales charge. Exchanges of shares from the money market
funds initially purchased without a sales charge generally will be subject to
the appropriate sales charge. Exchanges have the same tax consequences as
ordinary sales and purchases. See "Transactions by Telephone . . ." for
information regarding electronic exchanges.
THE FUND AND AMERICAN FUNDS DISTRIBUTORS, THE FUND'S PRINCIPAL UNDERWRITER,
RESERVE THE RIGHT TO REJECT ANY PURCHASE ORDER FOR ANY REASON. ALTHOUGH THERE IS
CURRENTLY NO SPECIFIC LIMIT ON THE NUMBER OF EXCHANGES YOU CAN MAKE IN A PERIOD
OF TIME, THE FUND AND AMERICAN FUNDS DISTRIBUTORS RESERVE THE RIGHT TO REJECT
ANY PURCHASE ORDER AND MAY TERMINATE THE EXCHANGE PRIVILEGE OF ANY INVESTOR
WHOSE PATTERN OF EXCHANGE ACTIVITY THEY HAVE DETERMINED INVOLVES ACTUAL OR
POTENTIAL HARM TO THE FUND.
INVESTMENT MINIMUMS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
To establish an account $250
For a retirement plan account $250
For a retirement plan account through payroll $ 25
deduction
To add to an account $ 50
For a retirement plan account through payroll $ 25
deduction
</TABLE>
SHARE PRICE
The fund calculates its share price, also called net asset value, as of 4:00
p.m. New York time, which is the normal close of trading on the New York Stock
Exchange, every day the Exchange is open. In calculating net asset value, market
prices are used when available. If a market price for a particular security is
not available, the fund will determine the appropriate price for the security.
Your shares will be purchased at the offering price, or sold at the net asset
value, next determined after American Funds Service Company receives and accepts
your request. The offering price is the net asset value plus a sales charge, if
applicable.
EUROPACIFIC GROWTH FUND / PROSPECTUS 13
<PAGE>
SALES CHARGE
A sales charge may apply to your purchase. Your sales charge may be reduced for
larger purchases as indicated below.
<TABLE>
<CAPTION>
SALES CHARGE AS A PERCENTAGE OF
.................................
NET DEALER CONCESSION
OFFERING AMOUNT AS % OF
INVESTMENT PRICE INVESTED OFFERING PRICE
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
....................................................................................................................................
$50,000 but less than $100,000 4.50% 4.71% 3.75%
....................................................................................................................................
$100,000 but less than
$250,000 3.50% 3.63% 2.75%
....................................................................................................................................
$250,000 but less than
$500,000 2.50% 2.56% 2.00%
....................................................................................................................................
$500,000 but less $1 million 2.00% 2.04% 1.60%
....................................................................................................................................
$1 million or more and certain
other
investments described below see below see below see below
</TABLE>
PURCHASES NOT SUBJECT TO SALES CHARGE
Investments of $1 million or more and investments made by employer-sponsored
defined contribution-type plans with 100 or more eligible employees are sold
with no initial sales charge. A 1% CONTINGENT DEFERRED SALES CHARGE MAY BE
IMPOSED ON CERTAIN REDEMPTIONS BY ACCOUNTS THAT INVEST WITH NO INITIAL SALES
CHARGE (OTHER THAN EMPLOYER-SPONSORED PLANS), IF REDEMPTIONS ARE MADE WITHIN ONE
YEAR OF PURCHASE. A dealer concession of up to 1% may be paid by the fund under
its Plan of Distribution on investments made with no initial sales charge.
REDUCING YOUR SALES CHARGE
You and your immediate family may combine investments to reduce your sales
charge. You must let your investment dealer or American Funds Service Company
know if you qualify for a reduction in your sales charge using one or any
combination of the methods described in the statement of additional information
and "Welcome to the Family."
14 EUROPACIFIC GROWTH FUND / PROSPECTUS
<PAGE>
PLAN OF DISTRIBUTION
The fund has a Plan of Distribution or "12b-1 Plan" under which it may finance
activities primarily intended to sell shares, provided the categories of
expenses are approved in advance by the fund's board of directors. Up to 0.25%
of average net assets is paid annually to qualified dealers for providing
certain services pursuant to the fund's Plan of Distribution. The 12b-1 fee paid
by the fund, as a percentage of average net assets, for the previous fiscal year
is indicated earlier under "Fees and Expenses of the Fund." Since these fees are
paid out of the fund's assets on an ongoing basis, over time they will increase
the cost of an investment and may cost you more than paying higher initial sales
charges.
OTHER COMPENSATION TO DEALERS
American Funds Distributors may provide additional compensation to, or sponsor
informational meetings for, dealers as described in the statement of additional
information.
HOW TO SELL SHARES
Once a sufficient period of time has passed to reasonably assure that checks or
drafts (including certified or cashiers' checks) for shares purchased have
cleared (normally 15 calendar days), you may sell (redeem) those shares in any
of the following ways:
THROUGH YOUR DEALER (CERTAIN CHARGES MAY APPLY)
- Shares held for you in your dealer's name must be sold through the dealer.
WRITING TO AMERICAN FUNDS SERVICE COMPANY
- Requests must be signed by the registered shareholder(s)
- A signature guarantee is required if the redemption is:
-- Over $50,000;
-- Made payable to someone other than the registered shareholder(s); or
-- Sent to an address other than the address of record, or an address of
record which has been changed within the last 10 days.
- Additional documentation may be required for sales of shares held in
corporate, partnership or fiduciary accounts.
EUROPACIFIC GROWTH FUND / PROSPECTUS 15
<PAGE>
TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY, OR BY USING AMERICAN
FUNDSLINE(R) OR AMERICAN FUNDSLINE ONLINE(R):
- Redemptions by telephone or fax (including American FundsLine and American
FundsLine OnLine) are limited to $50,000 per shareholder each day
- Checks must be made payable to the registered shareholder
- Checks must be mailed to an address of record that has been used with the
account for at least 10 days
TRANSACTIONS BY TELEPHONE, FAX, AMERICAN FUNDSLINE, OR AMERICAN FUNDSLINE ONLINE
Generally, you are automatically eligible to use these services for redemptions
and exchanges unless you notify us in writing that you do not want any or all of
these services. You may reinstate these services at any time.
Unless you decide not to have telephone, fax, or computer services on your
account(s), you agree to hold the fund, American Funds Service Company, any of
its affiliates or mutual funds managed by such affiliates, and each of their
respective directors, trustees, officers, employees and agents harmless from any
losses, expenses, costs or liabilities (including attorney fees) which may be
incurred in connection with the exercise of these privileges, provided American
Funds Service Company employs reasonable procedures to confirm that the
instructions received from any person with appropriate account information are
genuine. If reasonable procedures are not employed, the fund may be liable for
losses due to unauthorized or fraudulent instructions.
16 EUROPACIFIC GROWTH FUND / PROSPECTUS
<PAGE>
- --------------------------------------------------------------------------------
DISTRIBUTION ARRANGEMENTS
DIVIDENDS AND DISTRIBUTIONS
The fund intends to pay dividends to you, usually twice a year. Capital gains,
if any, are also usually distributed twice a year.
You may elect to reinvest dividends and/or capital gain distributions to
purchase additional shares of this fund or any other fund in The American Funds
Group or you may elect to receive them in cash.
TAX CONSEQUENCES
As with any investment, your investment in the fund could have tax consequences.
If you are not investing through a tax-advantaged retirement account, you should
consider these tax consequences.
TAXES ON DISTRIBUTIONS
Distributions you receive from the fund are subject to income tax and may also
be subject to state or local taxes.
For federal tax purposes, the fund's dividends and distributions of short-term
capital gains are taxable to you as ordinary income. The fund's distributions of
long-term capital gains are taxable to you as capital gains. Any taxable
distributions you receive from the fund will normally be taxable to you when
made, regardless of whether you reinvest distributions or receive them in cash.
TAXES ON TRANSACTIONS
Your redemptions, including exchanges, may result in a capital gain or loss for
federal tax purposes. A capital gain or loss on your investment in the fund is
the difference between the cost of your shares, including any sales charges, and
the price you receive when you sell them.
Please see the statement of additional information, "Welcome to the Family"
guide and your tax adviser for further information.
EUROPACIFIC GROWTH FUND / PROSPECTUS 17
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the fund's
results for the past five years. Certain information reflects financial results
for a single fund share. The total returns in the table represent the rate that
an investor would have earned or lost on an investment in the fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by PricewaterhouseCoopers LLP, whose report, along with the fund's
financial statements, are included in the statement of additional information,
which is available upon request.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31
...........................
1999 1998 1997 1996 1995
-------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $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 period $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 period $22,083 $21,316 $16,737 $12,335 588
...........................................................................................................................
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%
</TABLE>
(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%.
18 EUROPACIFIC GROWTH FUND / PROSPECTUS
<PAGE>
- --------------------------------------------------------------------------------
NOTES
EUROPACIFIC GROWTH FUND / PROSPECTUS 19
<PAGE>
- --------------------------------------------------------------------------------
NOTES
20 EUROPACIFIC GROWTH FUND / PROSPECTUS
<PAGE>
- --------------------------------------------------------------------------------
NOTES
EUROPACIFIC GROWTH FUND / PROSPECTUS 21
<PAGE>
<TABLE>
<S> <C> <C>
FOR SHAREHOLDER FOR RETIREMENT PLAN FOR DEALER
SERVICES SERVICES SERVICES
American Funds Call your employer or American Funds
Service Company plan administrator Distributors
800/421-0180 800/421-9900 ext.11
</TABLE>
<TABLE>
<S> <C>
FOR 24-HOUR INFORMATION
American American Funds
FundsLine(R) Internet Web site
800/325-3590 http://www.americanfunds.com
Telephone conversations may be recorded or monitored for
verification, recordkeeping and quality assurance purposes.
------------------------------------------------------------
MULTIPLE TRANSLATIONS
This prospectus may be translated into other languages. In
the event of any inconsistencies or ambiguity as to the
meaning of any word or phrase in a translation, the English
text will prevail.
------------------------------------------------------------
OTHER FUND INFORMATION
ANNUAL/SEMI-ANNUAL REPORT TO SHAREHOLDERS
Contains additional information about the fund, including
financial statements, investment results, portfolio
holdings, a statement from portfolio management discussing
market conditions and the fund's investment strategies, and
the independent accountants' report (in the annual report).
STATEMENT OF ADDITIONAL INFORMATION (SAI)
Contains more detailed information on all aspects of the
fund, including the fund's financial statements.
A current SAI has been filed with the Securities and
Exchange Commission ("SEC") and is incorporated by reference
into this prospectus. The SAI and other related materials
about the fund are available for review or to be copied at
the SEC's Public Reference Room in Washington, D.C.
(1-800-SEC-0330) or on the SEC's Internet Web site at
http://www.sec.gov.
CODE OF ETHICS
Includes a description of the fund's personal investing
policy.
To request a free copy of any of the documents above:
Call American Funds or Write to the Secretary of
Service Company the fund
800/421-0180 ext.1 333 South Hope Street
Los Angeles, CA 90071
</TABLE>
Investment Company File No. 811-3734
[LOGO] Printed on recycled paper
THE FUND PROVIDES SPANISH TRANSLATIONS IN CONNECTION WITH THE PUBLIC OFFERING
AND SALE OF ITS SHARES. THE FOLLOWING IS A FAIR AND ACCURATE ENGLISH
TRANSLATION OF A SPANISH LANGUAGE PROSPECTUS FOR THE FUND.
/s/ Vincent P. Corti
Vincent P. Corti
Secretary
<PAGE>
The American Funds Logo
- --------------------------------------------------------------------------------
EuroPacific
Growth Fund(R)
Prospectus
JUNE 1, 1999
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR
DISAPPROVED OF THESE SECURITIES. FURTHER, IT HAS NOT
DETERMINED THAT THIS PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
EUROPACIFIC GROWTH FUND
333 South Hope Street
Los Angeles, CA 90071
TICKER SYMBOL: AEPGX NEWSPAPER ABBREV.: Eupac FUND NO.: 16
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Risk/Return Summary 2
..............................................................
Fees and Expenses of the Fund 5
..............................................................
Investment Objective, Strategies and Risks 6
..............................................................
Year 2000 9
..............................................................
Management and Organization 10
..............................................................
Shareholder Information 12
..............................................................
Purchase and Exchange of Shares 13
..............................................................
Distribution Arrangements 17
..............................................................
Financial Highlights 18
</TABLE>
- --------------------------------------------------------------------------------
16-010-0699/B
EUROPACIFIC GROWTH FUND / PROSPECTUS 1
<PAGE>
- --------------------------------------------------------------------------------
RISK/RETURN SUMMARY
The fund seeks to make your investment grow over time by investing primarily in
stocks of issuers located in Europe or the Pacific Basin.
The fund is designed for investors seeking greater capital appreciation through
investments in stocks of issuers based outside the U.S. Investors in the fund
should have a long-term perspective and be able to tolerate potentially wide
price fluctuations.
An investment in the fund is subject to risks, including the possibility that
the fund may decline in value in response to world political, social and
economic instability, and currency fluctuations. The prices of equity securities
will be affected by events specifically involving the companies whose securities
are owned in the fund.
You may lose money by investing in the fund. The likelihood of loss is greater
if you invest for a shorter period of time.
Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.
2 EUROPACIFIC GROWTH FUND / PROSPECTUS
<PAGE>
INVESTMENT RESULTS
The following information illustrates how the fund's results fluctuate. Past
results are not an indication of future results.
Here are the fund's results calculated without a sales charge on a calendar
year basis. (If a sales charge were included, results would be lower.)
[bar chart]
1989 24.19
1990 -0.11
1991 18.59
1992 2.30
1993 35.60
1994 1.13
1995 12.87
1996 18.64
1997 9.19
1998 15.54
[end bar chart]
The fund's year-to-date return for the three months ended March 31, 1999 was
6.37%.
The fund's highest/lowest quarterly results during this time period were:
X HIGHEST 17.89% (quarter ended December 31, 1998)
X LOWEST -13.85% (quarter ended September 30, 1990)
EUROPACIFIC GROWTH FUND / PROSPECTUS 3
<PAGE>
For periods ended December 31, 1998:
<TABLE>
<CAPTION>
THE FUND WITH
MAXIMUM MORGAN STANLEY
AVERAGE ANNUAL SALES CHARGE CAPITAL INTERNATIONAL
TOTAL RETURN DEDUCTED(1) EAFE INDEX(2)
- --------------------------------------------------------------------------------
<S> <C> <C>
One Year 8.89% 20.33%
......................................................................................................
Five Years 9.99% 9.50%
......................................................................................................
Ten Years 12.63% 5.85%
......................................................................................................
Lifetime(3) 15.38% 14.29%
</TABLE>
(1) These fund results were calculated according to a formula which requires
that the maximum sales charge of 5.75% be deducted and include the
reinvestment of dividend and capital gain distributions. Results would be
higher if they were calculated at net asset value.
(2) The Morgan Stanley Capital International EAFE (Europe, Australasia, Far
East) Index measures all major stock markets outside North America. This
index is unmanaged and does not reflect sales charges, commissions or
expenses.
(3) The fund began investment operations on April 16, 1984.
4 EUROPACIFIC GROWTH FUND / PROSPECTUS
<PAGE>
- --------------------------------------------------------------------------------
FEES AND EXPENSES OF THE FUND
The following describes the fees and expenses that you may pay if you buy and
hold shares of the fund.
SHAREHOLDER FEES
(fees paid directly from your investment)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Maximum sales charge imposed on purchases
(as a percentage of offering price) 5.75%(1)
...............................................................................
Maximum sales charge imposed on reinvested dividends 0%
...............................................................................
Maximum deferred sales charge 0%(2)
...............................................................................
Redemption or exchange fees 0%
</TABLE>
(1) Sales charges are reduced or eliminated for larger purchases.
(2) A contingent deferred sales charge of 1% applies on certain redemptions made
within 12 months following any purchases you made without a sales charge.
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from fund assets)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Management Fees 0.47%
................................................................................
Service (12b-1) Fees 0.24%*
................................................................................
Other Expenses 0.13%
................................................................................
Total Annual Fund Operating Expenses 0.84%
</TABLE>
*12b-1 expenses may not exceed 0.25% of the fund's average net assets annually.
EXAMPLE
This Example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
One Year $ 656
................................................................................
Three Years $ 828
................................................................................
Five Years $1,014
................................................................................
Ten Years $1,553
</TABLE>
EUROPACIFIC GROWTH FUND / PROSPECTUS 5
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS
The fund's investment objective is to provide you with long-term growth of
capital. It invests primarily in stocks of issuers located in Europe or the
Pacific Basin.
The prices of equity securities may decline in response to certain events,
including those directly involving the companies whose securities are owned in
the fund, adverse conditions affecting the general economy, overall market
declines, world political, social and economic instability, and currency
fluctuations. Investments outside the U.S. may be affected by these events to a
greater extent and may also be affected by differing securities regulations, and
administrative difficulties such as delays in clearing and settling portfolio
transactions. These risks are potentially heightened in connection with
investments in developing countries. The growth-oriented, equity-type securities
generally purchased by the fund may involve large price swings and potential for
loss.
The fund may also hold cash or money market instruments of any issuer to any
extent deemed appropriate. The size of the fund's cash position will vary and
will depend on various factors, including market conditions and purchases and
redemptions of fund shares. A larger cash position could detract from the
achievement of the fund's objective, but it also provides greater liquidity to
meet redemptions or to make additional investments, and it would reduce the
fund's exposure in the event of a market downturn.
The fund relies on the professional judgment of its investment adviser, Capital
Research and Management Company, to make decisions about the fund's portfolio
securities. The basic investment philosophy of Capital Research and Management
Company is to seek undervalued securities that represent good long-term
investment opportunities. Securities may be sold when they are judged to no
longer represent good long-term value.
6 EUROPACIFIC GROWTH FUND / PROSPECTUS
<PAGE>
ADDITIONAL INVESTMENT RESULTS
For periods ended December 31, 1998:
<TABLE>
<CAPTION>
MORGAN STANLEY
AVERAGE ANNUAL THE FUND WITH LIPPER CAPITAL INTERNATIONAL
TOTAL RETURN NO SALES CHARGE(1) AVERAGE(2) EAFE INDEX(3)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
One Year 15.54% 13.02% 20.33%
........................................................................................
Five Years 11.30% 7.98% 9.50%
........................................................................................
Ten Years 13.30% 9.35% 5.85%
........................................................................................
Lifetime(4) 15.85% 13.19% 14.29%
</TABLE>
(1) These fund results were calculated according to a formula that is required
for all stock and bond funds and includes the reinvestment of dividend and
capital gain distributions.
(2) The Lipper International Funds Average consists of funds that invest assets
in securities with primary trading markets outside the United States. Sales
charges and commissions are not reflected in the results of the underlying
funds.
(3) The Morgan Stanley Capital International EAFE (Europe, Australasia, Far
East) Index measures all major stock markets outside North America. This
index is unmanaged and does not reflect sales charges, commissions or
expenses.
(4) The fund began investment operations on April 16, 1984.
EUROPACIFIC GROWTH FUND / PROSPECTUS 7
<PAGE>
The following chart illustrates the asset mix of the fund's investment
portfolio as of the end of the fund's fiscal year, March 31, 1999.
INDUSTRY DIVERSIFICATION
<TABLE>
<CAPTION>
HEALTH & BROADCASTING & ELECTRONIC CASH AND
TELECOMMUNICATIONS BANKING PERSONAL CARE PUBLISHING COMPONENTS EQUIVALENTS BONDS & NOTES
- ------------------ ------- ------------- -------------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
19.13 8.43 7.20 5.61 5.38 9.41 0.56
</TABLE>
<TABLE>
<CAPTION>
OTHER
TELECOMMUNICATIONS INDUSTRIES
- ------------------ ----------
<S> <C>
19.13 44.28
</TABLE>
<TABLE>
<CAPTION>
PERCENT INVESTED BY PERCENT OF
COUNTRY NET ASSETS
- ----------------------------------
<S> <C>
EUROPE
United Kingdom 15.4%
Germany 7.0
France 5.6
Sweden 5.5
Netherlands 4.8
Italy 4.4
Switzerland 3.2
Finland 2.6
Norway 1.1
Ireland .9
Denmark .9
Spain .8
Other Europe .6
.......................................................
PACIFIC BASIN
ASIA
.......................................................
Japan 13.9%
Australia 6.1
Hong Kong 1.4
South Korea 1.4
Taiwan 1.4
Philippines 1.0
Other Asia .8
.......................................................
THE AMERICAS
.......................................................
Canada 4.0%
Mexico 3.1
Other Americas .5
.......................................................
OTHER
.......................................................
Brazil 1.1%
South Africa .9
India .5
Other Countries 1.7
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------
<S> <C>
TEN LARGEST PERCENT OF
INDIVIDUAL HOLDINGS NET ASSETS
Mannesmann 3.42%
.......................................................
Telecom Italia 2.50
.......................................................
Astra 2.42
.......................................................
Telefonos de Mexico 1.67
.......................................................
Deutsche Telekom 1.65
.......................................................
Nokia 1.65
.......................................................
Novartis 1.59
.......................................................
News Corp. 1.45
.......................................................
Dixons Group 1.37
.......................................................
Ericsson 1.34
.......................................................
</TABLE>
Because the fund is actively managed, its holdings will change
from time to time.
8 EUROPACIFIC GROWTH FUND / PROSPECTUS
<PAGE>
- --------------------------------------------------------------------------------
YEAR 2000
The date-related computer issue known as the "Year 2000 problem" could have an
adverse impact on the quality of services provided to the fund and its
shareholders. However, the fund understands that its key service
providers -- including the investment adviser and its affiliates -- are taking
steps to address the issue. In addition, the Year 2000 problem may adversely
affect the issuers in which the fund invests. For example, issuers may incur
substantial costs to address the problem. They may also suffer losses caused by
corporate and governmental data processing errors. These risks may be
particularly acute in certain countries outside the U.S. in which the fund may
invest and may adversely affect the fund's net asset value and total return. The
fund and its investment adviser will continue to monitor developments relating
to this issue.
EUROPACIFIC GROWTH FUND / PROSPECTUS 9
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT AND ORGANIZATION
INVESTMENT ADVISER
Capital Research and Management Company, an experienced investment management
organization founded in 1931, serves as investment adviser to the fund and other
funds, including those in The American Funds Group. Capital Research and
Management Company, a wholly owned subsidiary of The Capital Group Companies,
Inc., is headquartered at 333 South Hope Street, Los Angeles, CA 90071. Capital
Research and Management Company manages the investment portfolio and business
affairs of the fund. The total management fee paid by the fund, as a percentage
of average net assets, for the previous fiscal year is discussed earlier under
"Fees and Expenses."
Capital Research and Management Company and its affiliated companies have
adopted a personal investing policy that is consistent with the recommendations
contained in the May 9, 1994 report issued by the Investment Company Institute's
Advisory Group on Personal Investing. This policy has also been incorporated
into the fund's code of ethics.
MULTIPLE PORTFOLIO COUNSELOR SYSTEM
Capital Research and Management Company uses a system of multiple portfolio
counselors in managing mutual fund assets. Under this approach the portfolio of
a fund is divided into segments which are managed by individual counselors.
Counselors decide how their respective segments will be invested, within the
limits provided by a fund's objective(s) and policies and by Capital Research
and Management Company's investment committee. In addition, Capital Research and
Management Company's research professionals may make investment decisions with
respect to a portion of a fund's portfolio. The primary individual portfolio
counselors for EuroPacific Growth Fund are listed on the following page.
10 EUROPACIFIC GROWTH FUND / PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
APPROXIMATE YEARS OF EXPERIENCE
AS AN INVESTMENT PROFESSIONAL
YEARS OF EXPERIENCE (INCLUDING THE LAST FIVE YEARS)
AS PORTFOLIO COUNSELOR .....................................
(AND RESEARCH WITH CAPITAL
PROFESSIONAL, IF RESEARCH AND
PORTFOLIO COUNSELORS APPLICABLE) FOR MANAGEMENT
FOR EUROPACIFIC EUROPACIFIC GROWTH FUND COMPANY
GROWTH FUND PRIMARY TITLE(S) (APPROXIMATE) OR AFFILIATES TOTAL YEARS
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
THIERRY VANDEVENTER Vice Chairman of the 15 years (since the 36 years 36 years
Board of the fund. fund began operations)
Director, Capital
Research and
Management Company
-----------------------------------------------------------------------------------------------------------
MARK E. President of the 8 years (plus 3 years 17 years 17 years
DENNING fund. Director, as a research
Capital Research and professional prior to
Management Company. becoming a portfolio
Senior Vice counselor for the fund)
President, Capital
Research Company*
-----------------------------------------------------------------------------------------------------------
STEPHEN E. Executive Vice 15 years (since the 27 years 33 years
BEPLER President of the fund began operations)
fund. Senior Vice
President, Capital
Research Company*
-----------------------------------------------------------------------------------------------------------
ROBERT W. LOVELACE Senior Vice 5 years (plus 7 years 14 years 14 years
President of the as a research
fund. Vice professional prior to
President, Capital becoming a portfolio
Research and counselor for the fund)
Management Company.
Executive Vice
President and
Director, Capital
Research Company*
-----------------------------------------------------------------------------------------------------------
JANET A. Senior Vice 9 years (plus 5 years 17 years 23 years
MCKINLEY President of the as a research
fund. Director, professional prior to
Capital Research and becoming a portfolio
Management Company. counselor for the fund)
Senior Vice
President, Capital
Research Company*
-----------------------------------------------------------------------------------------------------------
ALWYN Vice President of 3 years (plus 4 years 7 years 11 years
HEONG the fund. Vice as a research
President, Capital professional prior to
Research Company* becoming a portfolio
counselor for the fund)
-----------------------------------------------------------------------------------------------------------
MARTIAL Senior Vice 5 years (plus 5 years 27 years 27 years
CHAILLET President and as a research
Director, Capital professional prior to
Research Company* becoming a portfolio
counselor for the fund)
-----------------------------------------------------------------------------------------------------------
</TABLE>
* Company affiliated with Capital Research and Management Company.
The fund began investment operations on April 16, 1984.
EUROPACIFIC GROWTH FUND / PROSPECTUS 11
<PAGE>
- --------------------------------------------------------------------------------
SHAREHOLDER INFORMATION
American Funds Service Company, the fund's transfer agent, offers you a wide
range of services you can use to alter your investment program should your needs
and circumstances change. These services are available only in states where they
may be legally offered and may be terminated or modified at any time upon 60
days' written notice. For your convenience, American Funds Service Company has
four service centers across the country.
AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS
CALL TOLL-FREE FROM ANYWHERE IN THE U.S.
(8 A.M. TO 8 P.M. ET):
800/421-0180
U.S. CALL TOLL-FREE MAP 1/3
<TABLE>
<S> <C> <C> <C>
WESTERN SERVICE WESTERN CENTRAL EASTERN CENTRAL EASTERN SERVICE
CENTER SERVICE CENTER SERVICE CENTER CENTER
American Funds American Funds American Funds American Funds
Service Company Service Company Service Company Service Company
P.O. Box 2205 P.O. Box 659522 P.O. Box 6007 P.O. Box 2280
Brea, California San Antonio, Indianapolis, Norfolk, Virginia
92822-2205 Texas Indiana 23501-2280
Fax: 714/671-7080 78265-9522 46206-6007 Fax: 757/670-4773
Fax: 210/474-4050 Fax: 317/735-6620
</TABLE>
A COMPLETE DESCRIPTION OF THE SERVICES WE OFFER ARE DESCRIBED IN THE FUND'S
STATEMENT OF ADDITIONAL INFORMATION. In addition, an easy-to-read guide to
owning a fund in The American Funds Group titled "Welcome to the Family" is sent
to new shareholders and is available by writing or calling American Funds
Service Company.
You may invest in the fund through various retirement plans. However, some
retirement plans or accounts held by investment dealers may not offer certain
services. If you have any questions, please contact your plan
administrator/trustee or dealer.
12 EUROPACIFIC GROWTH FUND / PROSPECTUS
<PAGE>
- --------------------------------------------------------------------------------
PURCHASE AND EXCHANGE OF SHARES
PURCHASE
Generally, you may open an account by contacting any investment dealer
authorized to sell the fund's shares. You may purchase additional shares using
various options described in the statement of additional information and
"Welcome to the Family."
EXCHANGE
You may exchange your shares into other funds in The American Funds Group
generally without a sales charge. Exchanges of shares from the money market
funds initially purchased without a sales charge generally will be subject to
the appropriate sales charge. Exchanges have the same tax consequences as
ordinary sales and purchases. See "Transactions by Telephone . . ." for
information regarding electronic exchanges.
THE FUND AND AMERICAN FUNDS DISTRIBUTORS, THE FUND'S PRINCIPAL UNDERWRITER,
RESERVE THE RIGHT TO REJECT ANY PURCHASE ORDER FOR ANY REASON. ALTHOUGH THERE IS
CURRENTLY NO SPECIFIC LIMIT ON THE NUMBER OF EXCHANGES YOU CAN MAKE IN A PERIOD
OF TIME, THE FUND AND AMERICAN FUNDS DISTRIBUTORS RESERVE THE RIGHT TO REJECT
ANY PURCHASE ORDER AND MAY TERMINATE THE EXCHANGE PRIVILEGE OF ANY INVESTOR
WHOSE PATTERN OF EXCHANGE ACTIVITY THEY HAVE DETERMINED INVOLVES ACTUAL OR
POTENTIAL HARM TO THE FUND.
INVESTMENT MINIMUMS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
To establish an account $250
For a retirement plan account $250
For a retirement plan account through payroll $ 25
deduction
To add to an account $ 50
For a retirement plan account through payroll $ 25
deduction
</TABLE>
SHARE PRICE
The fund calculates its share price, also called net asset value, as of 4:00
p.m. New York time, which is the normal close of trading on the New York Stock
Exchange, every day the Exchange is open. In calculating net asset value, market
prices are used when available. If a market price for a particular security is
not available, the fund will determine the appropriate price for the security.
Your shares will be purchased at the offering price, or sold at the net asset
value, next determined after American Funds Service Company receives and accepts
your request. The offering price is the net asset value plus a sales charge, if
applicable.
EUROPACIFIC GROWTH FUND / PROSPECTUS 13
<PAGE>
SALES CHARGE
A sales charge may apply to your purchase. Your sales charge may be reduced for
larger purchases as indicated below.
<TABLE>
<CAPTION>
SALES CHARGE AS A PERCENTAGE OF
.................................
NET DEALER CONCESSION
OFFERING AMOUNT AS % OF
INVESTMENT PRICE INVESTED OFFERING PRICE
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
....................................................................................................................................
$50,000 but less than $100,000 4.50% 4.71% 3.75%
....................................................................................................................................
$100,000 but less than
$250,000 3.50% 3.63% 2.75%
....................................................................................................................................
$250,000 but less than
$500,000 2.50% 2.56% 2.00%
....................................................................................................................................
$500,000 but less $1 million 2.00% 2.04% 1.60%
....................................................................................................................................
$1 million or more and certain
other
investments described below see below see below see below
</TABLE>
PURCHASES NOT SUBJECT TO SALES CHARGE
Investments of $1 million or more and investments made by employer-sponsored
defined contribution-type plans with 100 or more eligible employees are sold
with no initial sales charge. A 1% CONTINGENT DEFERRED SALES CHARGE MAY BE
IMPOSED ON CERTAIN REDEMPTIONS BY ACCOUNTS THAT INVEST WITH NO INITIAL SALES
CHARGE (OTHER THAN EMPLOYER-SPONSORED PLANS), IF REDEMPTIONS ARE MADE WITHIN ONE
YEAR OF PURCHASE. A dealer concession of up to 1% may be paid by the fund under
its Plan of Distribution on investments made with no initial sales charge.
REDUCING YOUR SALES CHARGE
You and your immediate family may combine investments to reduce your sales
charge. You must let your investment dealer or American Funds Service Company
know if you qualify for a reduction in your sales charge using one or any
combination of the methods described in the statement of additional information
and "Welcome to the Family."
14 EUROPACIFIC GROWTH FUND / PROSPECTUS
<PAGE>
PLAN OF DISTRIBUTION
The fund has a Plan of Distribution or "12b-1 Plan" under which it may finance
activities primarily intended to sell shares, provided the categories of
expenses are approved in advance by the fund's board of directors. Up to 0.25%
of average net assets is paid annually to qualified dealers for providing
certain services pursuant to the fund's Plan of Distribution. The 12b-1 fee paid
by the fund, as a percentage of average net assets, for the previous fiscal year
is indicated earlier under "Fees and Expenses of the Fund." Since these fees are
paid out of the fund's assets on an ongoing basis, over time they will increase
the cost of an investment and may cost you more than paying higher initial sales
charges.
OTHER COMPENSATION TO DEALERS
American Funds Distributors may provide additional compensation to, or sponsor
informational meetings for, dealers as described in the statement of additional
information.
HOW TO SELL SHARES
Once a sufficient period of time has passed to reasonably assure that checks or
drafts (including certified or cashiers' checks) for shares purchased have
cleared (normally 15 calendar days), you may sell (redeem) those shares in any
of the following ways:
THROUGH YOUR DEALER (CERTAIN CHARGES MAY APPLY)
- Shares held for you in your dealer's name must be sold through the dealer.
WRITING TO AMERICAN FUNDS SERVICE COMPANY
- Requests must be signed by the registered shareholder(s)
- A signature guarantee is required if the redemption is:
-- Over $50,000;
-- Made payable to someone other than the registered shareholder(s); or
-- Sent to an address other than the address of record, or an address of
record which has been changed within the last 10 days.
- Additional documentation may be required for sales of shares held in
corporate, partnership or fiduciary accounts.
EUROPACIFIC GROWTH FUND / PROSPECTUS 15
<PAGE>
TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY, OR BY USING AMERICAN
FUNDSLINE(R) OR AMERICAN FUNDSLINE ONLINE(R):
- Redemptions by telephone or fax (including American FundsLine and American
FundsLine OnLine) are limited to $50,000 per shareholder each day
- Checks must be made payable to the registered shareholder
- Checks must be mailed to an address of record that has been used with the
account for at least 10 days
TRANSACTIONS BY TELEPHONE, FAX, AMERICAN FUNDSLINE, OR AMERICAN FUNDSLINE ONLINE
Generally, you are automatically eligible to use these services for redemptions
and exchanges unless you notify us in writing that you do not want any or all of
these services. You may reinstate these services at any time.
Unless you decide not to have telephone, fax, or computer services on your
account(s), you agree to hold the fund, American Funds Service Company, any of
its affiliates or mutual funds managed by such affiliates, and each of their
respective directors, trustees, officers, employees and agents harmless from any
losses, expenses, costs or liabilities (including attorney fees) which may be
incurred in connection with the exercise of these privileges, provided American
Funds Service Company employs reasonable procedures to confirm that the
instructions received from any person with appropriate account information are
genuine. If reasonable procedures are not employed, the fund may be liable for
losses due to unauthorized or fraudulent instructions.
16 EUROPACIFIC GROWTH FUND / PROSPECTUS
<PAGE>
- --------------------------------------------------------------------------------
DISTRIBUTION ARRANGEMENTS
DIVIDENDS AND DISTRIBUTIONS
The fund intends to pay dividends to you, usually twice a year. Capital gains,
if any, are also usually distributed twice a year.
You may elect to reinvest dividends and/or capital gain distributions to
purchase additional shares of this fund or any other fund in The American Funds
Group or you may elect to receive them in cash.
TAX CONSEQUENCES
As with any investment, your investment in the fund could have tax consequences.
If you are not investing through a tax-advantaged retirement account, you should
consider these tax consequences.
TAXES ON DISTRIBUTIONS
Distributions you receive from the fund are subject to income tax and may also
be subject to state or local taxes.
For federal tax purposes, the fund's dividends and distributions of short-term
capital gains are taxable to you as ordinary income. The fund's distributions of
long-term capital gains are taxable to you as capital gains. Any taxable
distributions you receive from the fund will normally be taxable to you when
made, regardless of whether you reinvest distributions or receive them in cash.
TAXES ON TRANSACTIONS
Your redemptions, including exchanges, may result in a capital gain or loss for
federal tax purposes. A capital gain or loss on your investment in the fund is
the difference between the cost of your shares, including any sales charges, and
the price you receive when you sell them.
Please see the statement of additional information, "Welcome to the Family"
guide and your tax adviser for further information.
EUROPACIFIC GROWTH FUND / PROSPECTUS 17
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the fund's
results for the past five years. Certain information reflects financial results
for a single fund share. The total returns in the table represent the rate that
an investor would have earned or lost on an investment in the fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by PricewaterhouseCoopers LLP, whose report, along with the fund's
financial statements, are included in the statement of additional information,
which is available upon request.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31
...........................
1999 1998 1997 1996 1995
-------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $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 period $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 period $22,083 $21,316 $16,737 $12,335 588
...........................................................................................................................
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%
</TABLE>
(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%.
18 EUROPACIFIC GROWTH FUND / PROSPECTUS
<PAGE>
- --------------------------------------------------------------------------------
NOTES
EUROPACIFIC GROWTH FUND / PROSPECTUS 19
<PAGE>
- --------------------------------------------------------------------------------
NOTES
20 EUROPACIFIC GROWTH FUND / PROSPECTUS
<PAGE>
- --------------------------------------------------------------------------------
NOTES
EUROPACIFIC GROWTH FUND / PROSPECTUS 21
<PAGE>
<TABLE>
<S> <C> <C>
FOR SHAREHOLDER FOR RETIREMENT PLAN FOR DEALER
SERVICES SERVICES SERVICES
American Funds Call your employer or American Funds
Service Company plan administrator Distributors
800/421-0180 800/421-9900 ext.11
</TABLE>
<TABLE>
<S> <C>
FOR 24-HOUR INFORMATION
American American Funds
FundsLine(R) Internet Web site
800/325-3590 http://www.americanfunds.com
Telephone conversations may be recorded or monitored for
verification, recordkeeping and quality assurance purposes.
------------------------------------------------------------
MULTIPLE TRANSLATIONS
This prospectus may be translated into other languages. In
the event of any inconsistencies or ambiguity as to the
meaning of any word or phrase in a translation, the English
text will prevail.
------------------------------------------------------------
OTHER FUND INFORMATION
ANNUAL/SEMI-ANNUAL REPORT TO SHAREHOLDERS
Contains additional information about the fund, including
financial statements, investment results, portfolio
holdings, a statement from portfolio management discussing
market conditions and the fund's investment strategies, and
the independent accountants' report (in the annual report).
STATEMENT OF ADDITIONAL INFORMATION (SAI)
Contains more detailed information on all aspects of the
fund, including the fund's financial statements.
A current SAI has been filed with the Securities and
Exchange Commission ("SEC") and is incorporated by reference
into this prospectus. The SAI and other related materials
about the fund are available for review or to be copied at
the SEC's Public Reference Room in Washington, D.C.
(1-800-SEC-0330) or on the SEC's Internet Web site at
http://www.sec.gov.
CODE OF ETHICS
Includes a description of the fund's personal investing
policy.
To request a free copy of any of the documents above:
Call American Funds or Write to the Secretary of
Service Company the fund
800/421-0180 ext.1 333 South Hope Street
Los Angeles, CA 90071
</TABLE>
Investment Company File No. 811-3734
[LOGO] Printed on recycled paper
<PAGE>
EUROPACIFIC GROWTH FUND
Part B
Statement of Additional Information
JUNE 1, 1999
This document is not a prospectus but should be read in conjunction with the
current prospectus of EuroPacific Growth Fund (the fund or EUPAC) dated June 1,
1999. The prospectus may be obtained from your investment dealer or financial
planner or by writing to the fund at the following address:
EuroPacific Growth Fund
Attention: Secretary
333 South Hope Street
Los Angeles, CA 90071
(213) 486-9200
Shareholders who purchase shares at net asset value through eligible retirement
plans should note that not all of the services or features described below may
be available to them, and they should contact their employer for details.
TABLE OF CONTENTS
Item Page No.
Certain Investment Limitations and Guidelines 2
Description of Certain Securities and Investment Techniques 2
Fundamental Policies and Investment Restrictions 6
Fund Organization 7
Fund Trustees and Officers 8
Management 12
Dividends, Distributions and Federal Taxes 14
Purchase of Shares 18
Selling Shares 24
Shareholder Account Services and Privileges 26
Execution of Portfolio Transactions 28
General Information 28
Investment Results and Related Statistics 31
Description of Bond Ratings 35
Financial Statements Attached
CERTAIN INVESTMENT LIMITATIONS AND GUIDELINES
The following limitations and guidelines are considered at the time of
purchase, under normal market conditions, and are based on a percentage of the
fund's net assets unless otherwise noted. This summary is not intended to
reflect all of the fund's investment limitations.
INVESTMENT OBJECTIVE
- - Generally, the fund will invest at least 65% of its assets in securities of
issuers domiciled in Europe or the Pacific Basin.
DEBT SECURITIES
- - The fund may invest up to 5% of its assets in debt securities rated Baa and
BBB or below by Moody's Investor Service, Inc. or Standard & Poor's Corporation
or in unrated securities that are determined to be of equivalent quality by
Capital Research and Management Company (the "Investment Adviser").
DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT TECHNIQUES
The fund may experience difficulty liquidating certain portfolio securities
during significant market declines or periods of heavy redemptions.
The descriptions below are intended to supplement the material in the
prospectus under "Investment Objective, Strategies and Risks."
EQUITY SECURITIES -- Equity securities represent an ownership position in a
company. The prices of equity securities fluctuate based on changes in the
financial condition of their issuers and on market and economic conditions. The
fund's results will be related to the overall market for these securities. The
growth-oriented, equity-type securities generally purchased by the fund may
involve large price swings and potential for loss.
DEBT SECURITIES -- Bonds and other debt securities are used by issuers to
borrow money. Issuers pay investors interest and generally must repay the
amount borrowed at maturity. Some debt securities, such as zero coupon bonds,
do not pay current interest but are purchased at a discount from their face
values. The prices of debt securities fluctuate depending on such factors as
interest rates, credit quality and maturity. In general their prices decline
when interest rates rise and vice versa.
The fund may invest up to 5% of its assets in debt securities rated Baa and BBB
or below by Moody's Investor Service, Inc. or Standard & Poor's Corporation or
in unrated securities that are determined to be of equivalent quality by the
Investment Adviser. Securities rated Ba and BB or below are commonly known as
"high-yield, high-risk" or "junk" bonds. The market prices of these securities
may fluctuate more than higher quality securities and may decline significantly
in periods of general economic difficulty.
CERTAIN RISK FACTORS RELATING TO HIGH-YIELD, HIGH-RISK BONDS
SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES -- High-yield, high-risk
bonds are very sensitive to adverse economic changes and corporate
developments. During an economic downturn or substantial period of rising
interest rates, highly leveraged issuers or issuers whose revenue is very
sensitive to economic conditions may experience financial stress that would
adversely affect their ability to service their principal and interest payment
obligations, to meet projected business goals, and to obtain additional
financing. If the issuer of a bond defaulted on its obligations to pay
interest or principal or entered into bankruptcy proceedings, the fund may
incur losses or expenses in seeking recovery of amounts owed to it. In
addition, periods of economic uncertainty and changes can be expected to result
in increased volatility of market prices of high-yield, high-risk bonds.
PAYMENT EXPECTATIONS -- High-yield, high-risk bonds, may contain redemption or
call provisions. If an issuer exercised these provisions in a declining
interest rate market, the fund would have to replace the security with a lower
yielding security, resulting in a decreased return for investors. Conversely,
a high-yield, high-risk bond's value will decrease in a rising interest rate
market, as will the value of the fund's assets.
LIQUIDITY AND VALUATION -- There may be little trading in the secondary market
for particular bonds, which may affect adversely the fund's ability to value
accurately or dispose of such bonds. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of high-yield, high-risk bonds, especially in a thin
market.
OTHER SECURITIES -- The fund may also invest in securities that have equity and
debt characteristics such as non-convertible preferred stocks and convertible
securities. These securities may at times resemble equity more than debt and
vice versa. Non-convertible preferred stocks are similar to debt in that they
have a stated dividend rate akin to the coupon of a bond or note even though
they are often classified as equity securities. The prices and yields of
non-convertible preferred stocks generally move with changes in interest rates
and the issuer's credit quality, similar to the factors affecting debt
securities.
Bonds, preferred stocks, and other securities may sometimes be converted into
common stock or other securities at a stated exchange ratio. These securities
prior to conversion pay a fixed rate of interest or a dividend. Because
convertible securities have both debt and equity characteristics, their value
varies in response to many factors, including the value of the underlying
equity, general market and economic conditions, convertible market valuations,
as well as changes in interest rates, credit spreads, and the credit quality of
the issuer.
The fund may invest in convertible securities rated in a variety of credit
quality categories, including those rated as low as C by Moody's Investors
Service, Inc. or D by Standard & Poor's Corporation. The fund has no current
intention (at least during the next 12 months) to invest more than 5% of its
assets in convertible securities rated below A by Moody's or S&P.
INVESTING IN VARIOUS COUNTRIES -- The fund has the ability to invest outside
the U.S. Investing outside the U.S. involves special risks caused by, among
other things: fluctuating currency values; different accounting, auditing, and
financial reporting regulations and practices in some countries; changing local
and regional economic, political, and social conditions; expropriation or
confiscatory taxation; greater market volatility; differing securities market
structures; and various administrative difficulties such as delays in clearing
and settling portfolio transactions or in receiving payment of dividends.
However, in the opinion of the Investment Adviser, investing outside the U.S.
also can reduce certain portfolio risks due to greater diversification
opportunities.
The risks described above are potentially heightened in connection with
investments in developing countries. Although there is no universally accepted
definition, a developing country is generally considered to be a country which
is in the initial stages of its industrialization cycle with a low per capita
gross national product. For example, political and/or economic structures in
these countries may be in their infancy and developing rapidly. Historically,
the markets of developing countries have been more volatile than the markets of
developed countries. The fund may only invest in securities of issuers in
developing countries to a limited extent.
Additional costs could be incurred in connection with the fund's investment
activities outside the U.S. Brokerage commissions may be higher outside the
U.S., and the fund will bear certain expenses in connection with its currency
transactions. Furthermore, increased custodian costs may be associated with the
maintenance of assets in certain jurisdictions.
CURRENCY TRANSACTIONS -- The fund can purchase and sell currencies to
facilitate securities transactions and enter into forward currency contracts to
protect against changes in currency exchange rates. A forward currency
contract is an obligation to purchase or sell a specific currency at a future
date, which may be any fixed number of days from the date of the contract
agreed upon by the parties, at a price set at the time of the contract.
Forward currency contracts entered into by the fund will involve the purchase
or sale of a currency against the U.S. dollar. While entering into forward
currency transactions could minimize the risk of loss due to a decline in the
value of the hedged currency, it could also limit any potential gain which
might result from an increase in the value of the currency. The fund will not
generally attempt to protect against all potential changes in exchange rates.
The fund will segregate liquid assets which will be marked to market daily to
meet its forward contract commitments to the extent required by the Securities
and Exchange Commission.
Certain provisions of the Internal Revenue Code may limit the extent to which
the fund may enter into forward contracts. Such transactions may also affect,
for U.S. federal income tax purposes, the character and timing of income, gain
or loss recognized by the fund.
WARRANTS AND RIGHTS -- In addition, the fund may purchase warrants, which are
usually issued together with bonds or preferred stocks. Warrants generally
entitle the holder to buy a proportionate amount of common stock at a specified
price, usually higher than the current market price. Warrants may be issued
with an expiration date or in perpetuity. The fund may also invest in rights
to purchase common stocks. Rights are similar to warrants except that they
normally entitle the holder to purchase common stock at a lower price than the
current market price. Rights generally expire in less than four weeks.
RESTRICTED SECURITIES AND LIQUIDITY -- The fund may purchase securities subject
to restrictions on resale. All such securities not actively traded outside the
U.S. will be considered illiquid unless they have been specifically determined
to be liquid under procedures which may be adopted by the fund's board of
trustees, taking into account factors such as the frequency and volume of
trading, the commitment of dealers to make markets and the availability of
qualified investors, all of which can change from time to time. The fund may
incur certain additional costs in disposing of illiquid securities.
The fund will not invest more than 10% of its assets in illiquid securities or
more than 5% of its assets in securities which are subject to contractual
restrictions on resale. Non-U.S. securities that can be freely traded in a
foreign securities market and for which the facts and circumstances support a
finding of liquidity are not included for the purposes of this limitation.
U.S. GOVERNMENT SECURITIES -- The fund may invest in securities guaranteed by
the U.S. Government. These include: (1) direct obligations of the U.S.
Treasury (such as Treasury bills, notes and bonds) and (2) federal agency
obligations guaranteed as to principal and interest by the U.S. Treasury. In
these securities, the payment of principal and interest is unconditionally
guaranteed by the U.S. Government, and thus they are of the highest possible
credit quality. Such securities are subject to variations in market value due
to fluctuations in interest rates, but, if held to maturity, will be paid in
full.
Certain securities issued by U.S. Government instrumentalities and certain
federal agencies are neither direct obligations of, nor guaranteed by, the U.S.
Treasury. However, they generally involve federal sponsorship in one way or
another; some are backed by specific types of collateral; some are supported by
the issuer's right to borrow from the U.S. Treasury; some are supported by the
discretionary authority of the U.S. Treasury to purchase certain obligations of
the issuer; others are supported only by the credit of the issuing government
agency or instrumentality. These agencies and instrumentalities include, but
are not limited to, Federal Land Banks, Farmers Home Administration, Central
Bank Cooperatives, and Federal Intermediate Credit Banks.
CASH AND CASH EQUIVALENTS -- The fund may invest in cash and cash equivalents.
These securities include (1) commercial paper (short-term notes issued by
corporations or governmental bodies), (2) commercial bank obligations (E.G.
certificates of deposit (interest-bearing time deposits), and bankers'
acceptances (time drafts on a commercial bank where the bank accepts an
irrevocable obligation to pay at maturity), (3) savings association and bank
obligations (E.G. certificates of deposit issued by savings banks or savings
associations), (4) securities of the U.S. Government, its agencies or
instrumentalities that mature, or may be redeemed, in one year or less, and (5)
corporate bonds and notes that mature, or that may be redeemed, in one year or
less.
REPURCHASE AGREEMENTS -- The fund may enter into repurchase agreements, under
which the fund buys a security and obtains a simultaneous commitment from the
seller to repurchase the security at a specified time and price. Repurchase
agreements permit the fund to maintain liquidity and earn income over periods
of time as short as overnight. The seller must maintain with the fund's
custodian collateral equal to at least 100% of the repurchase price, including
accrued interest, as monitored daily by the Investment Adviser. The fund will
only enter into repurchase agreements involving securities in which it could
otherwise invest and with selected banks and securities dealers whose financial
condition is monitored by the Investment Adviser. If the seller under the
repurchase agreement defaults, the fund may incur a loss if the value of the
collateral securing the repurchase agreement has declined and may incur
disposition costs in connection with liquidating the collateral. If bankruptcy
proceedings are commenced with respect to the seller, realization upon the
collateral by the fund may be delayed or limited.
FUNDAMENTAL POLICIES AND INVESTMENT RESTRICTIONS
The fund has adopted the following fundamental policies and investment
restrictions which may not be changed without a majority vote of its
outstanding shares. Such majority is defined by the Investment Company Act of
1940 (the "1940 Act") as the vote of the lesser of (i) 67% or more of the
outstanding voting securities present at a meeting, if the holders of more than
50% of the outstanding voting securities are present in person or by proxy, or
(ii) more than 50% of the outstanding voting securities. All percentage
limitations expressed in the following investment restrictions are measured
immediately after and giving effect to the relevant transaction. The fund may
not:
1. Invest in securities of another issuer (other than the U.S. government or
its agencies or instrumentalities), if immediately after and as a result of
such investment more than 5% of the value of the total assets would be invested
in the securities of such other issuer (except with respect to 25% of the value
of the total assets, the fund may exceed the 5% limitation with regards to
investments in the securities of any one foreign government);
2. Invest in companies for the purpose of exercising control or management;
3. Invest more than 25% of the value of its total assets in the securities of
companies primarily engaged in any one industry;
4. Invest more than 5% of its total assets in the securities of other
investment companies; such investments shall be limited to 3% of the voting
stock of any investment company provided, however, that investment in the open
market of a closed-end investment company where no more than customary brokers'
commissions are involved and investment in connection with a merger,
consolidation, acquisition or reorganization shall not be prohibited by this
restriction;
5. Buy or sell real estate in the ordinary course of its business; however, the
fund may invest in securities secured by real estate or interests therein or
issued by companies, including real estate investment trusts and funds, which
invest in real estate or interests therein;
6. Buy or sell commodities or commodity contracts in the ordinary course of its
business, provided, however, that entering into foreign currency contracts
shall not be prohibited by this restriction;
7. Invest more than 10% of the value of its total assets in securities which
are not readily marketable or more than 5% of the value of its total assets in
securities which are subject to legal or contractual restrictions on resale
(except repurchase agreements) or engage in the business of underwriting of
securities of other issuers, except to the extent that the disposal of an
investment position may technically constitute the fund an underwriter as that
term is defined under the Securities Act of 1933. The fund may buy and sell
securities outside the U.S. which are not registered with the Securities and
Exchange Commission or marketable in the U.S. without regard to this
restriction. The fund may not enter into any repurchase agreement if, as a
result, more than 10% of total assets would be subject to repurchase
agreements maturing in more than seven days. (See "Repurchase Agreements"
above);
8. Lend any of its assets; provided, however that entering into repurchase
agreements, investment in government obligations, publicly traded bonds,
debentures, other debt securities or in cash equivalents such as short term
commercial paper, certificates of deposit, or bankers acceptances, shall not be
prohibited by this restriction;
9. Sell securities short except to the extent that the fund contemporaneously
owns or has the right to acquire, at no additional cost, securities identical
to those sold short;
10. Purchase securities on margin;
11. Borrow amounts in excess of 5% of the value of its total assets or issue
senior securities. In any event, the fund may borrow only as a temporary
measure for extraordinary or emergency purposes and not for investment in
securities;
12. Mortgage, pledge or hypothecate its total assets to any extent;
13. Purchase or retain the securities of any issuer, if those individual
officers and trustees of the fund, its investment adviser or principal
underwriter, each owning beneficially more than 1/2 of 1% of the securities of
such issuer, together own more than 5% of the securities of such issuer;
14. Invest more than 5% of the value of its total assets in securities of
companies having, together with their predecessors, a record of less than three
years of continuous operation;
15. Invest in puts, calls, straddles or spreads, or combinations thereof; or
16. Purchase partnership interests in oil, gas, or mineral exploration,
drilling or mining ventures.
With respect to fundamental investment restriction #7, the fund will not invest
more than 10% of the value of its net assets in securities which are not
readily marketable or more than 5% of the value of its net assets in securities
which are subject to legal or contractual restrictions on resale (except
repurchase agreements).
In addition, it is a non-fundamental policy of the fund as to 75% of the fund's
total assets, investments in any one issuer will be limited to no more than 10%
of the voting securities of such issuer.
FUND ORGANIZATION
The fund, an open-end, diversified management investment company was organized
as a Massachusetts business trust on May 17, 1983.
All fund operations are supervised by the fund's Board of Trustees. The Board
meets periodically and performs duties required by applicable state and federal
laws. Members of the board who are not employed by the Investment Adviser or
its affiliates are paid certain fees for services rendered to the fund as
described in "Fund Trustees and Officers - Trustees and Trustee Compensation"
below. They may elect to defer all or a portion of these fees through a
deferred compensation plan in effect for the fund.
FUND TRUSTEES AND OFFICERS
TRUSTEES AND TRUSTEE COMPENSATION
<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE POSITION PRINCIPAL AGGREGATE TOTAL TOTAL
WITH OCCUPATION(S) COMPENSATION COMPENSATION NUMBER
REGISTRANT DURING PAST 5 (INCLUDING (INCLUDING OF FUND
YEARS VOLUNTARILY VOLUNTARILY BOARDS
DEFERRED DEFERRED ON WHICH
COMPENSATION COMPENSATION TRUSTEE
/1/) FROM /1/) FROM ALL SERVES
FUND DURING FUNDS MANAGED /2/
FISCAL YEAR BY CAPITAL
ENDED RESEARCH AND
3/31/99 MANAGEMENT
COMPANY OR ITS
AFFILIATES/2/
FOR THE YEAR
ENDED 3/31/99
<S> <C> <C> <C> <C> <C>
Elisabeth Allison Trustee Administrative $20,900 $39,300 3
ANZI, Ltd. Director, ANZI,
1770 Massachusetts Ave. Ltd. (financial
Cambridge, MA 02140 publishing and
Age: 52 consulting);
Publishing
Consultant,
Harvard Medical
School; former
Senior Vice
President,
Planning and
Development,
McGraw Hill, Inc.
Michael R. Bonsignore Trustee Chairman of the $20,900/3/ $39,300 3
Honeywell Plaza Board and Chief
P.O. Box 524 Executive
Minneapolis, MN 55440 Officer,
Age: 58 Honeywell Inc.
+ Gina H. Despres Trustee Senior Vice None/4/ None/4/ 2
3000 K Street, N.W. President,
Washington, DC 20007 Capital Research
Age: 58 and Management
Company
Robert A. Fox Trustee President and $20,000/3/ $114,700 7
P.O. Box 457 Chief Executive
Livingston, CA 95334 Officer, Foster
Age: 62 Farms, Inc.
Alan Greenway Trustee President, $20,900 $74,150 5
7413 Fairway Road Greenway
La Jolla, CA 92037 Associates, Inc.
Age: 71 (management
consulting
services)
+ William R. Grimsley Chairman Senior Vice None/4/ None/4/ 5
One Market Plaza of the President and
Steuart Tower, Suite Board Director,
1800 Capital Research
San Francisco, CA and Management
94105 Company
Age: 61
Koichi Itoh Trustee Group Vice $22,150/3/ $42,700 3
Autosplice Inc. President,
3-7-39 Minami-cho Autosplice Inc.,
Higashi-Kurume City former President
Tokyo, Japan 203-0031 and Chief
Age: 58 Executive
Officer, IMPAC
(management
consulting
services); former
Managing Partner,
VENCA Management
(venture capital)
William H. Kling Trustee President, $20,000/3/ $76,950 6
45 East Seventh Street Minnesota Public
St. Paul, MN 55101 Radio;
Age: 57 President,
Greenspring Co.;
former
President,
American Public
Radio
(now Public Radio
International)
John G. McDonald Trustee The IBJ Professor $20,000/3/ $232,200 9
Graduate School of of Finance,
Business Graduate School
Stanford University of Business,
Stanford, CA 94305 Stanford
Age: 62 University
++ William I. Miller Trustee Chairman of the $20,900/3/ $40,200 3
500 Washington Street Board,
Box 929 Irwin Financial
Columbus, IN 47202 Corporation
Age: 43
Kirk P. Pendleton Trustee Chairman/Chief $20,900/3/ $110,600 6
Cairnwood, Inc. Executive
75 James Way Officer,
Southhampton, PA 18966 Cairnwood, Inc.
Age: 59 (venture capital
investment)
Donald E. Petersen Trustee Former Chairman $20,000/3/ $73,800 5
222 East Brown, Suite of the Board and
460 Chief Executive
Birmingham, MI 48009 Officer, Ford
Age: 72 Motor
Company
+ Thierry Vandeventer Vice Director, Capital None/4/ None/4/ 2
3 Place des Bergues Chairman Research and
1201 Geneva, of the Management
Switzerland Board Company
Age: 63
</TABLE>
+ Trustees who are considered "interested persons" as defined in the
Investment Company Act of 1940, as amended, on the basis of their affiliation
with the fund's Investment Adviser, Capital Research and Management Company.
++ May be deemed an "interested person" of the fund due to membership on the
board of directors of the parent company of a registered broker-dealer.
1 Amounts may be deferred by eligible trustees under a non-qualified deferred
compensation plan adopted by the fund in 1993. Deferred amounts accumulate at
an earnings rate determined by the total return of one or more of the funds in
The American Funds Group as designated by the Trustee.
2 Capital Research and Management Company manages The American Funds Group
consisting of 29 funds: AMCAP Fund, Inc., American Balanced Fund, Inc.,
American High-Income Municipal Bond Fund, Inc., American High-Income Trust,
American Mutual Fund, Inc., The Bond Fund of America, Inc., The Cash Management
Trust of America, Capital Income Builder, Inc., Capital World Growth and Income
Fund, Inc., Capital World Bond Fund, Inc., EuroPacific Growth Fund, Fundamental
Investors, Inc., The Growth Fund of America, Inc., The Income Fund of America.
Inc., Intermediate Bond Fund of America, The Investment Company of America,
Limited Term Tax-Exempt Bond Fund of America, The New Economy Fund, New
Perspective Fund, Inc., New World Fund, Inc., SMALLCAP World Fund, Inc., The
Tax-Exempt Bond Fund of America, Inc., The Tax-Exempt Fund of California, The
Tax-Exempt Fund of Maryland, The Tax-Exempt Fund of Virginia, The Tax-Exempt
Money Fund of America, The U.S. Treasury Money Fund of America, U.S. Government
Securities Fund and Washington Mutual Investors Fund, Inc. Capital Research
and Management Company also manages American Variable Insurance Series and
Anchor Pathway Fund which serve as the underlying investment vehicles for
certain variable insurance contracts; and Endowments, Inc. whose shareholders
are limited to (i) any entity exempt from taxation under Section 501(c)(3) of
the Internal Revenue Code of 1986, as amended ("501(c)(3) organization"); (ii)
any trust, the present or future beneficiary of which is a 501(c)(3)
organization; and (iii) any other entity formed for the primary purpose of
benefiting a 501(c)(3) organization. An affiliate of Capital Research and
Management Company, Capital International, Inc., manages Emerging Markets
Growth Fund, Inc.
3 Since the deferred compensation plan's adoption, the total amount of
deferred compensation accrued by the fund (plus earnings thereon) as of the
fiscal year ended March 31, 1999 for participating Trustees is as follows:
Michael R. Bonsignore ($46,458), Robert A. Fox ($183,915), Koichi Itoh
($63,532), William H. Kling ($102,938), John G. McDonald ($111,321), William I.
Miller ($63,326), Kirk P. Pendleton ($59,172) and Donald E. Petersen ($23,176).
Amounts deferred and accumulated earnings thereon are not funded and are
general unsecured liabilities of the fund until paid to the Trustee.
4 Gina H. Despres, William R. Grimsley and Thierry Vandeventer are affiliated
with the Investment Adviser and, accordingly, receive no compensation from the
fund.
<TABLE>
<CAPTION>
OFFICERS
NAME AND ADDRESS AGE POSITION(S) HELD PRINCIPAL OCCUPATION(S)
WITH REGISTRANT DURING
PAST 5 YEARS
<S> <C> <C> <C>
Mark E. Denning 41 President and Senior Vice President and
25 Bedford Street Principal Executive Director, Capital Research
London, England Officer Company; Director, Capital
Research and Management
Company
Stephen E. Bepler 56 Executive Vice Senior Vice President,
630 Fifth Avenue President Capital Research Company
New York, NY 10111
Robert W. Lovelace 36 Senior Vice Executive Vice President and
11100 Santa Monica Blvd. President Director, Capital Research
Los Angeles, CA 90025 Company; Vice President,
Capital Research and
Management Company
Janet A. McKinley 44 Senior Vice Senior Vice President,
630 Fifth Avenue President Capital Research Company;
New York, NY 10111 Director, Capital Research
and Management Company
Alwyn Heong 39 Vice President Vice President, Capital
630 Fifth Avenue Research Company
New York, NY 10111
Hiromi Ishikawa 37 Vice President Vice President, Capital
Yamato Seimei Building Research Company
1-1-7 Uchisaiwaicho,
Chiyodaku
Tokyo 100, Japan
Vincent P. Corti 42 Secretary Vice President - Fund
333 South Hope Street Business Management Group,
Los Angeles, CA 90071 Capital Research and
Management Company
R. Marcia Gould 44 Treasurer Vice President - Fund
135 South State College Business Management Group,
Blvd. Capital Research and
Brea, CA 92821 Management Company
Dayna G. Yamabe 31 Assistant Treasurer Assistant Vice President -
135 South State College Fund Business Management
Blvd. Group, Capital Research and
Brea, CA 92821 Management Company
</TABLE>
All of the officers listed are officers or employees of the Investment Adviser
or affiliated companies. No compensation is paid by the fund to any Trustee or
officer who is a director, officer or employee of the Investment Adviser or
affiliated companies. Each unaffiliated Trustee is paid a fee of $18,000 per
annum, plus $1,000 for each Board of Trustees meeting attended, plus $500 for
each meeting attended as a member of a committee of the Board of Trustees. No
pension or retirement benefits are accrued as part of fund expenses. The
Trustees may elect, on a voluntary basis, to defer all or a portion of their
fees through a deferred compensation plan in effect for the fund. As of May 1,
1999 the officers and Trustees of the fund and their families as a group owned
beneficially or of record less than 1% of the outstanding shares of the fund.
MANAGEMENT
INVESTMENT ADVISER -- The Investment Adviser, founded in 1931, maintains
research facilities in the U.S. and abroad (Los Angeles, San Francisco, New
York, Washington D.C., London, Geneva, Hong Kong, Singapore and Tokyo), with a
staff of professionals, many of whom have a number of years of investment
experience. The Investment Adviser is located at 333 South Hope Street, Los
Angeles, CA 90071, and at 135 South State College Boulevard, Brea, CA 92821.
The Investment Adviser's professionals travel several million miles a year,
making more than 5,000 research visits in more than 50 countries around the
world. The Investment Adviser believes that it is able to attract and retain
quality personnel. The Investment Adviser is a wholly owned subsidiary of The
Capital Group Companies, Inc.
An affiliate of the Investment Adviser compiles indices for major stock markets
around the world and compiles and edits the Morgan Stanley Capital
International Perspective, providing financial and market information about
more than 2,400 companies around the world.
The Investment Adviser is responsible for managing more than $200 billion of
stocks, bonds and money market instruments and serves over eight million
investors of all types. These investors include privately owned businesses and
large corporations as well as schools, colleges, foundations and other
non-profit and tax-exempt organizations.
INVESTMENT ADVISORY AND SERVICE AGREEMENT -- The Investment Advisory and
Service Agreement (the "Agreement") between the fund and the Investment
Adviser, unless sooner terminated, will continue until December 31, 1999 and
may be renewed from year to year thereafter, provided that any such renewal has
been specifically approved at least annually by (i) the Board of Trustees, or
by the vote of a majority (as defined in the 1940 Act) of the outstanding
voting securities, and (ii) the vote of a majority of Trustees who are not
parties to the Agreement or interested persons (as defined in the 1940 Act) of
any such party, cast in person at a meeting called for the purpose of voting on
such approval. The Agreement provides that the Investment Adviser has no
liability to the fund for its acts or omissions in the performance of its
obligations to the fund not involving willful misconduct, bad faith, gross
negligence or reckless disregard of its obligations under the Agreement. The
Agreement also provides that either party has the right to terminate it,
without penalty, upon 60 days' written notice to the other party and that the
Agreement automatically terminates in the event of its assignment (as defined
in the 1940 Act).
The Investment Adviser, in addition to providing investment advisory services,
furnishes the services and pays the compensation and travel expenses of
qualified persons who perform executive, administrative, clerical and
bookkeeping functions of the fund; provides suitable office space and
utilities; and provides necessary small office equipment and general purpose
accounting forms, supplies, and postage used at the offices of the fund
relating to the services furnished by the Investment Adviser.
The fund pays all expenses not specifically assumed by the Investment Adviser,
including, but not limited to, custodian, stock transfer and dividend
disbursing fees and expenses; expenses pursuant to the fund's Plan of
Distribution (described below); costs of designing, printing and mailing
reports, prospectuses, proxy statements and notices to shareholders; taxes;
expenses of the issuance, sale, redemption, or repurchase of shares of the fund
(including stock certificates, registration and qualification fees and
expenses); legal and auditing fees and expenses; compensation, fees, and
expenses paid to Trustees not affiliated with the Investment Adviser;
association dues; and costs of stationery and forms prepared exclusively for
the fund.
The Investment Adviser will reimburse the fund to the extent that the fund's
annual operating expenses, exclusive of taxes, interest, brokerage costs,
distribution expenses and extraordinary expenses such as litigation and
acquisitions, exceed the expense limitations applicable to the fund imposed by
state securities laws or any regulations thereunder. Expenditures, including
costs incurred in connection with the purchase or sale of portfolio securities,
which are capitalized in accordance with generally accepted accounting
principles applicable to investment companies, are accounted for as capital
items and not as expenses. The fund might be eligible to exclude certain
additional expenses, such as expenses of maintaining foreign custody of certain
portfolio securities by obtaining a waiver of such limit from California.
As compensation for its services, the Investment Adviser receives a monthly fee
which is accrued daily, calculated at the annual rate of 0.69% on the first
$500 million of the fund's average net assets, 0.59% of such assets in excess
of $500 million but not exceeding $1.0 billion, 0.53% of such assets in excess
of $1.0 billion but not exceeding $1.5 billion, 0.50% of such assets in excess
of $1.5 billion but not exceeding $2.5 billion, 0.48% of such assets in excess
of $2.5 billion but not exceeding $4.0 billion, 0.47% of such assets in excess
of $4.0 billion but not exceeding $6.5 billion, 0.46% of such assets in excess
of $6.5 billion but not exceeding $10.5 billion, 0.45% of such assets in
excess of $10.5 billion but not exceeding $17 billion, and 0.445% of such
assets in excess of $17 billion. During the fiscal years ended March 31, 1999,
1998 and 1997, the Investment Adviser's total fees amounted to $96,690,000,
$90,507,000 and $70,142,000, respectively.
PRINCIPAL UNDERWRITER -- American Funds Distributors, Inc. (the Principal
Underwriter) is the principal underwriter of the fund's shares. The Principal
Underwriter is located at 333 South Hope Street, Los Angeles, CA 90071, 135
South State College Boulevard, Brea, CA 92821, 3500 Wiseman Boulevard, San
Antonio, TX 78251, 8332 Woodfield Crossing Boulevard, Indianapolis, IN 46240,
and 5300 Robin Hood Road, Norfolk, VA 23513. The fund has adopted a Plan of
Distribution (the Plan), pursuant to rule 12b-1 under the 1940 Act. The
Principal Underwriter receives amounts payable pursuant to the Plan (see below)
and commissions consisting of that portion of the sales charge remaining after
the discounts which it allows to investment dealers. Commissions retained by
the Principal Underwriter on sales of fund shares for the fiscal year ended
March 31, 1999 amounted to $6,399,000 after allowance of $31,625,000 to
dealers. During the fiscal years ended March 31, 1998 and 1997 the Principal
Underwriter retained $10,044,000 and $10,806,000, respectively after an
allowance of $50,962,000 and $55,552,000, respectively.
As required by rule 12b-1 and the 1940 Act, the Plan (together with the
Principal Underwriting Agreement) has been approved by the full Board of
Trustees and separately by a majority of the Trustees who are not "interested
persons" of the fund and who have no direct or indirect financial interest in
the operation of the Plan or the Principal Underwriting Agreement, and the Plan
has been approved by the vote of a majority of the outstanding voting
securities of the fund. The officers and Trustees who are "interested persons"
of the fund may be considered to have a direct or indirect financial interest
in the operation of the Plan due to present or past affiliations with the
Investment Adviser and related companies. Potential benefits of the Plan to
the fund include improved shareholder services, savings to the fund in transfer
agency costs, savings to the fund in advisory fees and other expenses, benefits
to the investment process from growth or stability of assets and maintenance of
a financially healthy management organization. The selection and nomination of
Trustees who are not "interested persons" of the fund are committed to the
discretion of the Trustees who are not "interested persons" during the
existence of the Plan. The Plan is reviewed quarterly and must be renewed
annually by the Board of Trustees.
Under the Plan the fund may expend up to 0.25% of its average net assets
annually to finance any activity primarily intended to result in the sale of
fund shares, provided the fund's Board of Trustees has approved the category of
expenses for which payment is being made. These include service fees for
qualified dealers and dealer commissions and wholesaler compensation on sales
of shares exceeding $1 million (including purchases by any employer-sponsored
403(b) plan, any defined contribution plan qualified under Section 401(a) of
the Internal Revenue Code including a "401(k)" plan with 100 or more eligible
employees or a community foundation).
Commissions on sales of shares exceeding $1 million (including purchases by any
employer-sponsored 403(b) plan or purchases by any defined contribution plan
qualified under Section 401(a) of the Internal Revenue Code, including any
"401(k)" plan with 100 or more eligible employees) in excess of the Plan
limitation not reimbursed during the most recent fiscal quarter are recoverable
for five quarters, provided that such commissions do not exceed the annual
expense limit. After five quarters, commissions are not recoverable. During
the fiscal year ended March 31, 1999, the fund paid or accrued $48,882,000
under the Plan.
The Glass-Stegall Act and other applicable laws, among other things, generally
prohibit commercial banks from engaging in the business of underwriting,
selling or distributing securities, but permit banks to make shares of mutual
funds available to their customers and to perform administrative and
shareholder servicing functions. However, judicial or administrative decisions
or interpretations of such laws, as well as changes in either federal or state
statutes or regulations relating to the permissible activities of banks or
their subsidiaries or affiliates, could prevent a bank from continuing to
perform all or a part of its servicing activities. If a bank were prohibited
from so acting, shareholder clients of such bank would be permitted to remain
shareholders of the fund and alternate means for continuing the servicing of
such shareholders would be sought. In such event, changes in the operation of
the fund might occur and shareholders serviced by such bank might no longer be
able to avail themselves of any automatic investment or other services then
being provided by such bank. It is not expected that shareholders would suffer
adverse financial consequences as a result of any of these occurrences.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein, and certain banks and
financial institutions may be required to be registered as dealers pursuant to
state law.
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES
DIVIDENDS -- The fund intends to follow the practice of distributing
substantially all of its investment company taxable income which includes any
excess of net realized short-term gains over net realized long-term capital
losses. The fund may follow the practice of distributing the entire excess of
net realized long-term capital gains over net realized short-term capital
losses. However, the fund may retain all or part of such gain for
reinvestment, after paying the related federal taxes for which shareholders may
then be able to claim a credit against their federal tax liability. If the
fund does not distribute the amount of capital gain and/or net investment
income required to be distributed by an excise tax provision of the Code, the
fund may be subject to that excise tax. In certain circumstances, the fund may
determine that it is in the interest of shareholders to distribute less than
the required amount. In this case, the fund will pay any income or excise
taxes due.
The fund intends to distribute twice a year its investment company taxable
income, including any net short-term capital gains in excess of net long-term
capital losses, and any net capital gains realized during each fiscal year.
Additional distributions may be made, if necessary.
Dividends will be reinvested in shares of the fund unless shareholders indicate
in writing that they wish to receive them in cash or in shares of other
American Funds, as provided in the prospectus.
TAXES -- The fund intends to elect to be treated as a regulated investment
company under Subchapter M of the Code. A regulated investment company
qualifying under Subchapter M of the Code is required to distribute to its
shareholders at least 90% of its investment company taxable income (including
the excess of net short-term capital gain over net long-term capital losses)
and generally is not subject to federal income tax to the extent that it
distributes annually its investment company taxable income and net realized
capital gains in the manner required under the Code. The fund intends to
distribute annually all of its investment company taxable income and net
realized capital gains and therefore does not expect to pay federal income tax,
although in certain circumstances the fund may determine that it is in the
interest of shareholders to distribute less than that amount.
The fund will be subject to a 4% nondeductible excise tax on amounts required
to be but not distributed under a prescribed formula. The formula requires the
fund to distribute to shareholders for a calendar year an amount equal to at
least 98% of the fund's ordinary income for that calendar year, at least 98% of
the excess of its capital gains over capital losses realized during the
one-year period ending October 31 during such year, and all ordinary income and
capital gains for prior years that were not previously distributed.
Investment company taxable income generally includes dividends, interest, net
short-term capital gains in excess of net long-term capital losses, and certain
foreign currency gains, if any, less expenses and certain foreign currency
losses, if any. Net capital gains for a fiscal year are computed by taking
into account any capital loss carry-forward of the fund.
If any net long-term capital gains in excess of net short-term capital losses
are retained by a fund for reinvestment, requiring federal income taxes to be
paid thereon by the fund, the fund intends to elect to treat such capital gains
as having been distributed to shareholders. As a result, each shareholder will
report such capital gains as long-term capital gains taxable to individual
shareholders at a maximum 20% capital gains rate, will be able to claim a pro
rata share of federal income taxes paid by the fund on such gains as a credit
against personal federal income tax liability, and will be entitled to
increase the adjusted tax basis on fund shares by the difference between a pro
rata share of the retained gains and their related tax credit.
Distributions of investment company taxable income are taxable to shareholders
as ordinary income.
Distributions of the excess of net long-term capital gains over net short-term
capital losses which the fund properly designates as "capital gain dividends"
generally will be taxable to individual shareholders at a maximum 20% capital
gains rate, regardless of the length of time the shares of the fund have been
held by such shareholders. Such distributions are not eligible for the
dividends-received deduction. Any loss realized upon the redemption of shares
held at the time of redemption for six months or less from the date of their
purchase will be treated as a long-term capital loss to the extent of any
amounts treated as distributions of long-term capital gain during such
six-month period.
Distributions of investment company taxable income and net realized capital
gains to individual shareholders will be taxable as described above, whether
received in shares or in cash. Shareholders electing to receive distributions
in the form of additional shares will have a cost basis for federal income tax
purposes in each share so received equal to the net asset value of a share on
the reinvestment date.
All distributions of investment company taxable income and net realized capital
gain, whether received in shares or in cash, must be reported by each
shareholder subject to tax on his or her federal income tax return. Dividends
and capital gains distributions declared in October, November or December and
payable to shareholders of record in such a month will be deemed to have been
received by shareholders on December 31 if paid during January of the following
year. Redemptions of shares, including exchanges for shares of another
American Fund, may result in tax consequences (gain or loss) to the shareholder
and must also be reported on the shareholder's federal income tax return.
Distributions by the fund result in a reduction in the net asset value of the
fund's shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution would nevertheless be taxable to
the shareholder as ordinary income or capital gain as described above, even
though, from an investment standpoint, it may constitute a partial return of
investment capital. For this reason, investors should consider the tax
implications of buying shares just prior to a distribution. The price of
shares purchased at that time includes the amount of the forthcoming
distribution. Those purchasing just prior to a distribution will then receive
a partial return of investment capital upon the distribution, which will
nevertheless be taxable to them.
Dividend and interest income received by the fund from sources outside the U.S.
may be subject to withholding and other taxes imposed by such foreign
jurisdictions. Tax conventions between certain countries and the U.S. may
reduce or eliminate these foreign taxes, however. Most foreign countries do
not impose taxes on capital gains in respect of investments by foreign
investors.
The fund may make the election permitted under Section 853 of the Code so that
shareholders may (subject to limitations) be able to claim a credit or
deduction on their federal income tax returns for, and will be required to
treat as part of the amounts distributed to them, their pro rata portion of
qualified taxes paid by the Fund to foreign countries (which taxes relate
primarily to investment income). The fund may make an election under Section
853 of the Code, provided that more than 50% of the value of the total assets
of the fund at the close of the taxable year consists of securities in foreign
corporations. The foreign tax credit available to shareholders is subject to
certain limitations imposed by the Code.
Under the Code, gains or losses attributable to fluctuations in exchange rates
which occur between the time the fund accrues receivables or liabilities
denominated in a foreign currency and the time the fund actually collects such
receivables, or pays such liabilities, generally are treated as ordinary income
or ordinary loss. Similarly, on disposition of debt securities denominated in
a foreign currency and on disposition of certain futures contracts, forward
contracts and options, gains or losses attributable to fluctuations in the
value of foreign currency between the date of acquisition of the security or
contract and the date of disposition are also treated as ordinary gain or loss.
These gains or losses, referred to under the Code as "Section 988" gains or
losses, may increase or decrease the amount of the fund's investment company
taxable income to be distributed to its shareholders as ordinary income.
A portion of the difference between the issue price of zero coupon securities
and their face value ("original issue discount") is considered to be income to
the Fund each year, even though the fund will not receive cash interest
payments from these securities. This original issue discount (imputed income)
will comprise a part of the investment company taxable income of the fund which
must be distributed to shareholders in order to maintain the qualification of
the fund as a regulated investment company and to avoid federal income tax at
the level of the fund. Shareholders will be subject to income tax on such
original issue discount, whether or not they elect to receive their
distributions in cash.
If the fund invests in stock of certain passive foreign investment companies,
the fund may be subject to U.S. federal income taxation on a portion of any
"excess distribution" with respect to, or gain from the disposition of, such
stock. The tax would be determined by allocating such distribution or gain
ratably to each day of the fund's holding period for the stock. The
distribution or gain so allocated to any taxable year of the fund, other than
the taxable year of the excess distribution or disposition, would be taxed to
the fund at the highest ordinary income rate in effect for such year, and the
tax would be further increased by an interest charge to reflect the value of
the tax deferral deemed to have resulted from the ownership of the foreign
company's stock. Any amount of distribution or gain allocated to the taxable
year of the distribution or disposition would be included in the fund's
investment company taxable income and, accordingly, would not be taxable to the
fund to the extent distributed by the fund as a dividend to its shareholders.
To avoid such tax and interest, the fund intends to elect to treat these
securities as sold on the last day of its fiscal year and recognize any gains
for tax purposes at that time. Under this election, deductions for losses are
allowable only to the extent of any prior recognized gains, and both gains and
losses will be treated as ordinary income or loss. The fund will be required
to distribute any resulting income, even though it has not sold the security
and received cash to pay such distributions.
The fund will be required to report to the IRS all distributions of investment
company taxable income and capital gains as well as gross proceeds from the
redemption or exchange of fund shares, except in the case of certain exempt
shareholders. Under the backup withholding provisions of Section 3406 of the
Code, distributions of investment company taxable income and capital gains and
proceeds from the redemption or exchange of the shares of a regulated
investment company may be subject to withholding of federal income tax at the
rate of 31% in the case of non-exempt U.S. shareholders who fail to furnish the
investment company with their taxpayer identification numbers and with required
certifications regarding their status under the federal income tax law.
Withholding may also be required if the fund is notified by the IRS or a broker
that the taxpayer identification number furnished by the shareholder is
incorrect or that the shareholder has previously failed to report interest or
dividend income. If the withholding provisions are applicable, any such
distributions and proceeds, whether taken in cash or reinvested in additional
shares, will be reduced by the amounts required to be withheld.
Shareholders of the fund may be subject to state and local taxes on
distributions received from the fund and on redemptions of the fund's shares.
Each distribution is accompanied by a brief explanation of the form and
character of the distribution. In January of each year fund shareholders will
receive a statement of the federal income tax status of all distributions.
The foregoing discussion of U.S. federal income tax law relates solely to the
application of that law to U.S. persons, I.E., U.S. citizens and residents and
U.S. corporations, partnerships, trusts and estates. Each shareholder who is
not a U.S. person should consider the U.S. and foreign tax consequences of
ownership of shares of the fund, including the possibility that such a
shareholder may be subject to a U.S. withholding tax at a rate of 30% (or at a
lower rate under an applicable income tax treaty) on dividend income received
by him or her.
Shareholders should consult their tax advisers about the application of the
provisions of tax law described in this statement of additional information in
light of their particular tax situations.
PURCHASE OF SHARES
<TABLE>
<CAPTION>
<S> <C> <C>
METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS
See "Investment Minimums and $50 minimum (except where a
Fund Numbers" for initial lower minimum is noted under
investment minimums. "Investment Minimums and Fund
Numbers").
By contacting Visit any investment dealer who Mail directly to your investment
your investment is registered in the state dealer's address printed on your
dealer where the purchase is made and account statement.
who has a sales agreement with
American Funds Distributors.
By mail Make your check payable to the Fill out the account additions
fund and mail to the address form at the bottom of a recent
indicated on the account account statement, make your
application. Please indicate check payable to the fund, write
an investment dealer on the your account number on your
account application. check, and mail the check and
form in the envelope provided
with your account statement.
By telephone Please contact your investment Complete the "Investments by
dealer to open account, then Phone" section on the account
follow the procedures for application or American
additional investments. FundsLink Authorization Form.
Once you establish the
privilege, you, your financial
advisor or any person with your
account information can call
American FundsLine(R) and make
investments by telephone
(subject to conditions noted in
"Shareholder Account Services
and Privileges - Telephone and
Computer Purchases, Redemptions
and Exchanges" below).
By computer Please contact your investment Complete the American FundsLink
dealer to open account, then Authorization Form. Once you
follow the procedures for established the privilege, you,
additional investments. your financial adviser or any
person with your account
information may access American
FundsLine OnLine(SM) on the
Internet and make investments by
computer (subject to conditions
noted in "Shareholder Account
Services and Privileges -
Telephone and Computer
Purchases, Redemptions and
Exchanges" below).
By wire Call 800/421-0180 to obtain Your bank should wire your
your account number(s), if additional investments in the
necessary. Please indicate an same manner as described under
investment dealer on the "Initial Investment."
account. Instruct your bank to
wire funds to:
Wells Fargo Bank
155 Fifth Street, Sixth Floor
San Francisco, CA 94106
(ABA #121000248)
For credit to the account of:
American Funds Service
Company a/c #4600-076178
(fund name)
(your fund acct. no.)
THE FUNDS AND AMERICAN FUNDS DISTRIBUTORS RESERVE THE RIGHT TO REJECT ANY PURCHASE
ORDER.
</TABLE>
INVESTMENT MINIMUMS AND FUND NUMBERS -- Here are the minimum initial
investments required by the funds in The American Funds Group along with fund
numbers for use with our automated phone line, American FundsLine(R) (see
description below):
<TABLE>
<CAPTION>
<S> <C> <C>
FUND MINIMUM FUND
INITIAL NUMBER
INVESTMENT
STOCK AND STOCK/BOND FUNDS
AMCAP Fund(R) $1,000 02
American Balanced Fund(R) 500 11
American Mutual Fund(R) 250 03
Capital Income Builder(R) 1,000 12
Capital World Growth and Income 1,000 33
Fund(SM)
EuroPacific Growth Fund(R) 250 16
Fundamental Investors(SM) 250 10
The Growth Fund of America(R) 1,000 05
The Income Fund of America(R) 1,000 06
The Investment Company of America(R) 250 04
The New Economy Fund(R) 1,000 14
New Perspective Fund(R) 250 07
New World Fund 5,000 36
SMALLCAP World Fund(R) 1,000 35
Washington Mutual Investors Fund(SM) 250 01
BOND FUNDS
American High-Income Municipal Bond 1,000 40
Fund(R)
American High-Income Trust(SM) 1,000 21
The Bond Fund of America(SM) 1,000 08
Capital World Bond Fund(R) 1,000 31
Intermediate Bond Fund of 1,000 23
America(SM)
Limited Term Tax-Exempt Bond Fund of 1,000 43
America(SM)
The Tax-Exempt Bond Fund of 1,000 19
America(R)
The Tax-Exempt Fund of 1,000 20
California(R)*
The Tax-Exempt Fund of Maryland(R)* 1,000 24
The Tax-Exempt Fund of Virginia(R)* 1,000 25
U.S. Government Securities Fund(SM) 1,000 22
MONEY MARKET FUNDS
The Cash Management Trust of 2,500 09
America(R)
The Tax-Exempt Money Fund of 2,500 39
America(SM)
The U.S. Treasury Money Fund of 2,500 49
America(SM)
___________
*Available only in certain states.
</TABLE>
For retirement plan investments, the minimum is $250, except that the money
market funds have a minimum of $1,000 for IRAs. Minimums are reduced to $50
for purchases through "Automatic Investment Plans" (except for the money market
funds) or to $25 for purchases by retirement plans through payroll deductions
and may be reduced or waived for shareholders of other funds in The American
Funds Group. TAX-EXEMPT FUNDS SHOULD NOT SERVE AS RETIREMENT PLAN INVESTMENTS.
The minimum is $50 for additional investments (except as noted above).
SALES CHARGES -- The sales charges you pay when purchasing the stock,
stock/bond, and bond funds of The American Funds Group are set forth below.
The money market funds of The American Funds Group are offered at net asset
value. (See "Investment Minimums and Fund Numbers" for a listing of the
funds.)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AMOUNT OF PURCHASE SALES CHARGE AS DEALER
AT THE OFFERING PRICE PERCENTAGE OF THE: CONCESSION
AS PERCENTAGE
OF THE
OFFERING
PRICE
NET AMOUNT OFFERING
INVESTED PRICE
STOCK AND STOCK/BOND
FUNDS
Less than $50,000 6.10% 5.75% 5.00%
$50,000 but less than 4.71 4.50 3.75
$100,000
BOND FUNDS
Less than $25,000 4.99 4.75 4.00
$25,000 but less than 4.71 4.50 3.75
$50,000
$50,000 but less than 4.17 4.00 3.25
$100,000
STOCK, STOCK/BOND, AND
BOND FUNDS
$100,000 but less than 3.63 3.50 2.75
$250,000
$250,000 but less than 2.56 2.50 2.00
$500,000
$500,000 but less than 2.04 2.00 1.60
$1,000,000
$1,000,000 or more none none (see below)
</TABLE>
PURCHASES NOT SUBJECT TO SALES CHARGES -- Investment of $1 million or more and
investments made by employer-sponsored defined contribution-type plans with 100
or more eligible employees are sold with no initial sales charge. A contingent
deferred sales charge may be imposed on certain redemptions by these accounts
made within one year of purchases. Investments by retirement plans,
foundations or endowments with $50 million or more in assets, and
employer-sponsored defined contribution-type plans with 100 or more eligible
employees made with no sales charge are not subject to a contingent deferred
sales charge.
In addition, the stock, stock/bond and bond funds may sell shares at net asset
value to:
(1) current or retired directors, trustees, officers and advisory board
members of the funds managed by Capital Research and Management Company,
employees of Washington Management Corporation, employees and partners of The
Capital Group Companies, Inc. and its affiliated companies, certain family
members of the above persons, and trusts or plans primarily for such persons;
(2) current registered representatives, retired registered representatives
with respect to accounts established while active, or full-time employees (and
their spouses, parents, and children) of dealers who have sales agreements with
American Funds Distributors (or who clear transactions through such dealers)
and plans for such persons or the dealers;
(3) companies exchanging securities with the fund through a merger,
acquisition or exchange offer;
(4) trustees or other fiduciaries purchasing shares for certain retirement
plans of organizations with retirement plan assets of $50 million or more;
(5) insurance company separate accounts;
(6) accounts managed by subsidiaries of The Capital Group Companies, Inc.; and
(7) The Capital Group Companies, Inc., its affiliated companies and Washington
Management Corporation. Shares are offered at net asset value to these persons
and organizations due to anticipated economies in sales effort and expense.
DEALER COMMISSIONS -- Commissions of up to 1% will be paid to dealers who
initiate and are responsible for purchases of $1 million or more, for purchases
by any employer-sponsored 403(b) plan or purchases by any defined contribution
plan qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 100 or more eligible employees, and for purchases made at
net asset value by certain retirement plans of organizations with collective
retirement plan assets of $50 million or more: 1.00% on amounts of $1 million
to $4 million, 0.50% on amounts over $4 million to $10 million, and 0.25% on
amounts over $10 million.
OTHER COMPENSATION TO DEALERS -- American Funds Distributors, at its expense
(from a designated percentage of its income), currently provides additional
compensation to dealers. Currently these payments are limited to the top 100
dealers who have sold shares of the fund or other funds in The American Funds
Group. These payments will be based principally on a pro rata share of a
qualifying dealer's sales. American Funds Distributors will, on an annual
basis, determine the advisability of continuing these payments.
Qualified dealers currently are paid a continuing service fee not to exceed
0.25% of average net assets (0.15% in the case of the money market funds)
annually in order to promote selling efforts and to compensate them for
providing certain services. These services include processing purchase and
redemption transactions, establishing shareholder accounts and providing
certain information and assistance with respect to the fund.
REDUCING YOUR SALES CHARGE -- You and your immediate family may combine
investments to reduce your costs. You must let your investment dealer or
American Funds Service Company (the "Transfer Agent") know if you qualify for a
reduction in your sales charge using one or any combination of the methods
described below.
STATEMENT OF INTENTION -- You may enter into a non-binding commitment to
purchase shares of a fund(s) over a over a 13-month period and receive the same
sales charge as if all shares had been purchased at once. This includes
purchases made during the previous 90 days, but does not include appreciation
of your investment or reinvested distributions. The reduced sales charges and
offering prices set forth in the Prospectus apply to purchases of $50,000 or
more made within a 13-month period subject to the following statement of
intention (the "Statement"). The Statement is not a binding obligation to
purchase the indicated amount. When a shareholder elects to utilize a
Statement in order to qualify for a reduced sales charge, shares equal to 5% of
the dollar amount specified in the Statement will be held in escrow in the
shareholder's account out of the initial purchase (or subsequent purchases, if
necessary) by the Transfer Agent. All dividends and any capital gain
distributions on shares held in escrow will be credited to the shareholder's
account in shares (or paid in cash, if requested). If the intended investment
is not completed within the specified 13-month period, the purchaser will remit
to the Principal Underwriter the difference between the sales charge actually
paid and the sales charge which would have been paid if the total of such
purchases had been made at a single time. If the difference is not paid within
45 days after written request by the Principal Underwriter or the securities
dealer, the appropriate number of shares held in escrow will be redeemed to pay
such difference. If the proceeds from this redemption are inadequate, the
purchaser will be liable to the Principal Underwriter for the balance still
outstanding. The Statement may be revised upward at any time during the
13-month period, and such a revision will be treated as a new Statement, except
that the 13-month period during which the purchase must be made will remain
unchanged and there will be no retroactive reduction of the sales charges paid
on prior purchases. Existing holdings eligible for rights of accumulation (see
the account application) may be credited toward satisfying the Statement.
During the Statement period reinvested dividends and capital gain
distributions, investments in money market funds, and investments made under a
right of reinstatement will not be credited toward satisfying the Statement.
When the trustees of certain retirement plans purchase shares by payroll
deduction, the sales charge for the investments made during the 13-month period
will be handled as follows: The regular monthly payroll deduction investment
will be multiplied by 13 and then multiplied by 1.5. The current value of
existing American Funds investments (other than money market fund investments)
and any rollovers or transfers reasonably anticipated to be invested in
non-money market American Funds during the 13-month period are added to the
figure determined above. The sum is the Statement amount and applicable
breakpoint level. On the first investment and all other investments made
pursuant to the Statement, a sales charge will be assessed according to the
sales charge breakpoint thus determined. There will be no retroactive
adjustments in sales charges on investments previously made during the 13-month
period.
Shareholders purchasing shares at a reduced sales charge under a Statement
indicate their acceptance of these terms with their first purchase.
AGGREGATION -- Sales charge discounts are available for certain aggregated
investments. Qualifying investments include those by you, your spouse and your
children under the age of 21, if all parties are purchasing shares for their
own account(s), which may include purchases through employee benefit plan(s)
such as an IRA, individual-type 403(b) plan or single-participant Keogh-type
plan or by a business solely controlled by these individuals (for example, the
individuals own the entire business) or by a trust (or other fiduciary
arrangement) solely for the benefit of these individuals. Individual purchases
by a trustee(s) or other fiduciary(ies) may also be aggregated if the
investments are (1) for a single trust estate or fiduciary account, including
an employee benefit plan other than those described above, or (2) made for two
or more employee benefit plans of a single employer or of affiliated employers
as defined in the Investment Company Act of 1940, again excluding employee
benefit plans described above, or (3) for a diversified common trust fund or
other diversified pooled account not specifically formed for the purpose of
accumulating fund shares. Purchases made for nominee or street name accounts
(securities held in the name of an investment dealer or another nominee such as
a bank trust department instead of the customer) may not be aggregated with
those made for other accounts and may not be aggregated with other nominee or
street name accounts unless otherwise qualified as described above.
CONCURRENT PURCHASES -- You may combine purchases of two or more funds in The
American Funds Group, except direct purchases of the money market funds.
Shares of money market funds purchased through an exchange, reinvestment or
cross-reinvestment from a fund having a sales charge do qualify.
RIGHT OF ACCUMULATION -- You may take into account the current value of your
existing holdings in The American Funds Group, as well as your holdings in
Endowments (shares of which may be owned only by tax-exempt organizations), to
determine your sales charge on investments in accounts eligible to be
aggregated, or when making a gift to an individual or charity. Direct
purchases of the money market funds are excluded.
PRICE OF SHARES -- Shares are purchased at the offering price next determined
after the purchase order is received and accepted by the fund or the Transfer
Agent; this offering price is effective for orders received prior to the time
of determination of the net asset value and, in the case of orders placed with
dealers, accepted by the Principal Underwriter prior to its close of business.
In the case of orders sent directly to the fund or The Transfer Agent, an
investment dealer MUST be indicated. The dealer is responsible for promptly
transmitting purchase orders to the Principal Underwriter. Orders received by
the investment dealer, the Transfer Agent, or the fund after the time of the
determination of the net asset value will be entered at the next calculated
offering price. Prices which appear in the newspaper are not always indicative
of prices at which you will be purchasing and redeeming shares of the fund,
since such prices generally reflect the previous day's closing price whereas
purchases and redemptions are made at the next calculated price.
The price you pay for shares, the offering price, is based on the net asset
value per share which is calculated once daily at the close of trading
(currently 4:00 p.m., New York time) each day the New York Stock Exchange is
open. For example, if the Exchange closes at 1:00 p.m. on one day and at 4:00
p.m. on the next, the fund's share price would be determined as of 4:00 p.m.
New York time on both days. The New York Stock Exchange is currently closed on
weekends and on the following holidays: New Year's Day, Martin Luther King,
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving and Christmas Day.
All portfolio securities of funds managed by Capital Research and Management
Company (other than money market funds) are valued, and the net asset value per
share is determined as follows:
1. 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 representative quoted bid and asked prices.
Assets or liabilities initially expressed in terms of foreign currencies are
translated prior to the next determination of the net asset value of the fund's
shares into U.S. dollars at the prevailing market rates.
Securities and assets for which representative market quotations are not
readily available are valued at fair value as determined in good faith under
policies approved by the fund's Board. The fair value of all other assets is
added to the value of securities to arrive at the total assets;
2. Liabilities, including accruals of taxes and other expense items, are
deducted from total assets; and
3. Net assets so obtained are then divided by the total number of shares
outstanding, and the result, rounded to the nearer cent, is the net asset value
per share
Any purchase order may be rejected by the Principal Underwriter or by the fund.
The Principal Underwriter will not knowingly sell shares of the fund directly
or indirectly to any person or entity, where, after the sale, such person or
entity would own beneficially directly or indirectly more than 4.5% of the
outstanding shares of the fund without the consent of a majority of the fund's
Board of Trustees.
SELLING SHARES
Shares are sold at the net asset value next determined after your request is
received in good order by American Funds Service Company. You may sell
(redeem) shares in your account in any of the following ways:
THROUGH YOUR DEALER (certain charges may apply)
- - Shares held for you in your dealer's street name must be sold through the
dealer.
WRITING TO AMERICAN FUNDS SERVICE COMPANY
- - Requests must be signed by the registered shareholder(s)
- - A signature guarantee is required if the redemption is:
-- Over $50,000;
-- Made payable to someone other than the registered shareholder(s); or
-- Sent to an address other than the address of record, or an address of
record which has been changed within the last 10 days.
Your signature may be guaranteed by a domestic stock exchange or the National
Association of Securities Dealers, Inc., bank, savings association or credit
union that is an eligible guarantor institution.
- - Additional documentation may be required for sales of shares held in
corporate, partnership or fiduciary accounts.
- - You must include any shares you wish to sell that are in certificate form.
TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY, OR BY USING AMERICAN
FUNDSLINE(R) OR AMERICAN FUNDSLINE ONLINE(SM)
- - Redemptions by telephone or fax (including American FundsLine(R) and
American FundsLine OnLine(SM)) are limited to $50,000 per shareholder each day.
- - Checks must be made payable to the registered shareholder(s).
- - Checks must be mailed to an address of record that has been used with the
account for at least 10 days.
MONEY MARKET FUNDS
- - You may have redemptions of $1,000 or more wired to your bank by writing
American Funds Service Company.
- - You may establish check writing privileges (use the money market funds
application).
-- If you request check writing privileges, you will be provided with checks
that you may use to draw against your account. These checks may be made
payable to anyone you designate and must be signed by the authorized number or
registered shareholders exactly as indicated on your checking account signature
card.
Redemption proceeds will not be mailed until sufficient time has passed to
provide reasonable assurance that checks or drafts (including certified or
cashier's checks) for shares purchased have cleared (which may take up to 15
calendar days from the purchase date). Except for delays relating to clearance
of checks for share purchases or in extraordinary circumstances (and as
permissible under the Investment Company Act of 1940), sale proceeds will be
paid on or before the seventh day following receipt and acceptance of an order.
Interest will not accrue or be paid on amounts that represent uncashed
distribution or redemption checks.
You may reinvest proceeds from a redemption or a dividend or capital gain
distribution without a sales charge (any contingent deferred sales charge paid
will be credited to your account) in any fund in The American Funds Group
within 90 days after the date of the redemption or distribution. Redemption
proceeds of shares representing direct purchases in the money market funds are
excluded. Proceeds will be reinvested at the next calculated net asset value
after your request is received and accepted by American Funds Service Company.
CONTINGENT DEFERRED SALES CHARGE -- A contingent deferred sales charge of 1%
applies to certain redemptions from funds other than the money market funds
made within twelve months of purchase on investments of $1 million or more
(other than redemptions by employer-sponsored retirement plans). The charge is
1% of the lesser of the value of the shares redeemed (exclusive of reinvested
dividends and capital gain distributions) or the total cost of such shares.
Shares held for the longest period are assumed to be redeemed first for
purposes of calculating this charge. The charge is waived for exchanges
(except if shares acquired by exchange were then redeemed within 12 months of
the initial purchase); for distributions from 403(b) plans or IRAs due to
death, disability or attainment of age 591/2; for tax-free returns of excess
contributions to IRAs; for redemptions through certain automatic withdrawals
not exceeding 10% of the amount that would otherwise be subject to the charge.
REDEMPTION OF SHARES -- The fund's Declaration of Trust permits the fund to
direct the Transfer Agent to redeem the shares of any shareholder for their
then current net asset value per share if at such time the shareholder owns of
record, shares having an aggregate net asset value of less than the minimum
initial investment amount required of new shareholders as set forth in the
fund's current registration statement under the 1940 Act, and subject to such
further terms and conditions as the Board of Trustees of the fund may from time
to time adopt.
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES
AUTOMATIC INVESTMENT PLAN -- An automatic investment plan enables you to make
monthly or quarterly investments into the American Funds through automatic
debits from your bank account. To set up a plan you must fill out an account
application and specify the amount you would like to invest ($50 minimum) and
the date on which you would like your investments to occur. The plan will
begin within 30 days after your account application is received. Your bank
account will be debited on the day or a few days before your investment is
made, depending on the bank's capabilities. American Funds Service Company
will then invest your money into the fund you specified on or around the date
you specified. If your bank account cannot be debited due to insufficient
funds, a stop-payment or closing of the account, the plan may be terminated and
the related investment reversed. You may change the amount of the investment
or discontinue the plan at any time by writing to the Transfer Agent.
AUTOMATIC REINVESTMENT -- Dividends and capital gain distributions are
reinvested in additional shares at no sales charge unless you indicate
otherwise on the account application. You also may elect to have dividends
and/or capital gain distributions paid in cash by informing the fund, American
Funds Service Company or your investment dealer.
CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS -- You may cross-reinvest
dividends and capital gains ("distributions") into any other fund in The
American Funds Group at net asset value, subject to the following conditions:
(a) The aggregate value of your account(s) in the fund(s) paying distributions
equals or exceeds $5,000 (this is waived if the value of the account in the
fund receiving the distributions equals or exceeds that fund's minimum initial
investment requirement),
(b) If the value of the account of the fund receiving distributions is below
the minimum initial investment requirement, distributions must be automatically
reinvested,
(c) If you discontinue the cross-reinvestment of distributions, the value of
the account of the fund receiving distribution must equal or exceed the minimum
initial investment requirement. If you do not meet this requirement within 90
days of notification, the fund has the right to automatically redeem the
account.
EXCHANGE PRIVILEGE -- You may exchange shares into other funds in The American
Funds Group. Exchange purchases are subject to the minimum investment
requirements of the fund purchased and no sales charge generally applies.
However, exchanges of shares from the money market funds are subject to
applicable sales charges on the fund being purchased, unless the money market
fund shares were acquired by an exchange from a fund having a sales charge, or
by reinvestment or cross-reinvestment of dividends or capital gain
distributions.
You may exchange shares by writing to American Funds Service Company (see
"Redeeming Shares"), by contacting your investment dealer, by using American
FundsLine(R) and American FundsLine OnLine(SM) (See "American FundsLine(R) and
American FundsLine OnLine(SM)" below), or by telephoning 800/421-0180
toll-free, faxing (see "Principal Underwriter and Transfer Agent" in the
prospectus for the appropriate fax numbers) or telegraphing American Funds
Service Company. (See "Telephone and Computer Purchases, Redemptions and
Exchanges" below.) Shares held in corporate-type retirement plans for which
Capital Guardian Trust Company serves as trustee may not be exchanged by
telephone, computer, fax or telegraph. Exchange redemptions and purchases are
processed simultaneously at the share prices next determined after the exchange
order is received. (See "Purchase of Shares--Price of Shares.") THESE
TRANSACTIONS HAVE THE SAME TAX CONSEQUENCES AS ORDINARY SALES AND PURCHASES.
AUTOMATIC EXCHANGES -- You may automatically exchange shares in amounts of $50
or more among any of the funds in The American Funds Group on any day (or
preceding business day if the day falls on a non-business day of each month you
designate. You must either (a) meet the minimum initial investment requirement
for the receiving fund OR (b) the originating fund's balance must be at least
$5,000 and the receiving fund's minimum must be met within one year.
AUTOMATIC WITHDRAWALS -- Withdrawal payments are not to be considered as
dividends, yield or income. Automatic investments may not be made into a
shareholder account from which there are automatic withdrawals. Withdrawals of
amounts exceeding reinvested dividends and distributions and increases in share
value would reduce the aggregate value of the shareholder's account. The
Transfer Agent arranges for the redemption by the company of sufficient shares,
deposited by the shareholder with the Transfer Agent, to provide the withdrawal
payment specified.
ACCOUNT STATEMENTS -- Your account is opened in accordance with your
registration instructions. Transactions in the account, such as additional
investments will be reflected on regular confirmation statements from American
Funds Service Company. Dividend and capital gain reinvestments and purchases
through automatic investment plans and certain retirement plans will be
confirmed at least quarterly.
AMERICAN FUNDSLINE(R) AND AMERICAN FUNDSLINE ONLINE(SM)-- You may check your
share balance, the price of your shares, or your most recent account
transaction, redeem shares (up to $50,000 per shareholder each day), or
exchange shares around the clock with American FundsLine(R) and American
FundsLine OnLine(SM). To use these services, call 800/325-3590 from a
TouchTone(TM) telephone or access the American Funds Web site on the Internet
at www.americanfunds.com. Redemptions and exchanges through American
FundsLine(R) and American FundsLine OnLine(SM) are subject to the conditions
noted above and in "Shareholder Account Services and Privileges - Telephone and
Computer Purchases, Redemptions and Exchanges" below. You will need your fund
number (see the list of funds in The American Funds Group under "Purchase of
Shares--Investment Minimums and Fund Numbers"), personal identification number
(the last four digits of your Social Security number or other tax
identification number associated with your account) and account number.
TELEPHONE AND COMPUTER PURCHASES, REDEMPTIONS AND EXCHANGES -- By using the
telephone (including American FundsLine(R)) or computer (including American
FundsLine OnLine(SM)), fax or telegraph purchase, redemption and/or exchange
options, you agree to hold the fund, American Funds Service Company, any of its
affiliates or mutual funds managed by such affiliates, and each of their
respective directors, trustees, officers, employees and agents harmless from
any losses, expenses, costs or liability (including attorney fees) which may be
incurred in connection with the exercise of these privileges. Generally, all
shareholders are automatically eligible to use these options. However, you may
elect to opt out of these options by writing American Funds Service Company
(you may also reinstate them at any time by writing American Funds Service
Company). If American Funds Service Company does not employ reasonable
procedures to confirm that the instructions received from any person with
appropriate account information are genuine, the fund may be liable for losses
due to unauthorized or fraudulent instructions. In the event that shareholders
are unable to reach the fund by telephone because of technical difficulties,
market conditions, or a natural disaster, redemption and exchange requests may
be made in writing only.
SHARE CERTIFICATES -- Shares are credited to your account and certificates are
not issued unless you request them by writing to the Transfer Agent.
EXECUTION OF PORTFOLIO TRANSACTIONS
Orders for the fund's portfolio securities transactions are placed by the
Investment Adviser. The Investment Adviser strives to obtain the best
available prices in its portfolio transactions taking into account the costs
and quality of executions. When, in the opinion of the Investment Adviser,
two or more brokers (either directly or through their correspondent clearing
agents) are in a position to obtain the best price and execution, preference
may be given to brokers who have sold shares of the fund or who have provided
investment research, statistical, or other related services to the Investment
Adviser. The fund does not consider that it has an obligation to obtain the
lowest available commission rate to the exclusion of price, service and
qualitative considerations.
There are occasions on which portfolio transactions for the fund may be
executed as part of concurrent authorizations to purchase or sell the same
security for other funds served by the Investment Adviser, or for trusts or
other accounts served by affiliated companies of the Investment Adviser.
Although such concurrent authorizations potentially could be either
advantageous or disadvantageous to the fund, they are effected only when the
Investment Adviser believes that to do so is in the interest of the fund. When
such concurrent authorizations occur, the objective is to allocate the
executions in an equitable manner. The fund will not pay a mark-up for
research in principal transactions.
Brokerage commissions paid on portfolio transactions for the fiscal years ended
March 31, 1999, 1998 and 1997, amounted to $24,925,000, $22,795,000 and
$18,418,000, respectively.
GENERAL INFORMATION
CUSTODIAN OF ASSETS -- Securities and cash owned by the fund, including
proceeds from the sale of shares of the fund and of securities in the fund's
portfolio, are held by The Chase Manhattan Bank, One Chase Manhattan Plaza, New
York, NY 10081, as Custodian. Non-U.S. securities may be held by the
Custodian pursuant to sub-custodial arrangements in non-U.S. banks or foreign
branches of U.S. banks.
TRANSFER AGENT -- American Funds Service Company, a wholly owned subsidiary of
the Investment Adviser, maintains the records of each shareholder's account,
processes purchases and redemptions of the fund's shares, acts as dividend and
capital gain distribution disbursing agent, and performs other related
shareholder service functions. American Funds Service Company was paid a fee
of $15,869,000 for the fiscal year ended March 31, 1999.
INDEPENDENT ACCOUNTANTS -- PricewaterhouseCoopers LLP, 400 South Hope Street,
Los Angeles, CA 90071, has served as the fund's independent accountants since
its inception, providing audit services, preparation of tax returns and review
of certain documents to be filed with the Securities and Exchange Commission.
The financial statements included in this Statement of Additional Information
from the Annual Report have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in accounting and auditing. The selection of the fund's
independent accountants is reviewed and determined annually by the Board of
Trustees.
REPORTS TO SHAREHOLDERS -- The fund's fiscal year ends on March 31.
Shareholders are provided at least semiannually with reports showing the
investment portfolio, financial statements and other information. The fund's
annual financial statements are audited by the fund's independent accountants,
PricewaterhouseCoopers LLP, whose selection is determined annually by the Board
of Trustees. In an effort to reduce the volume of mail shareholders receive
from the fund when a household owns more than one account, the Transfer Agent
has taken steps to eliminate duplicate mailings of shareholder reports. To
receive additional copies of a report, shareholders should contact the Transfer
Agent.
YEAR 2000 --The fund and its shareholders depend on the proper functioning of
computer systems maintained by the Investment Adviser and its affiliates and
other key service providers. Many computer systems in use today will require
reprogramming or replacement prior to the year 2000 because of the way they
store dates and make date-related calculations. The fund understands that
these service providers are taking steps to address the "Year 2000 problem".
However, there can be no assurance that these steps will be sufficient to avoid
any adverse impact on the fund. In addition, the fund's investments could be
adversely affected by the Year 2000 problem. For example, the markets for
securities in which the fund invests could experience settlement problems and
liquidity issues. Corporate and governmental data processing errors may cause
losses for individual companies and overall economic uncertainties. Earnings of
individual issuers are likely to be affected by the costs of addressing the
problem, which may be substantial and may be reported inconsistently.
PERSONAL INVESTING POLICY -- Capital Research and Management Company and its
affiliated companies have adopted a personal investing policy consistent with
Investment Company Institute guidelines. This policy includes: a ban on
acquisitions of securities pursuant to an initial public offering; restrictions
on acquisitions of private placement securities; pre-clearance and reporting
requirements; review of duplicate confirmation statements; annual
recertification of compliance with codes of ethics; blackout periods on
personal investing for certain investment personnel; ban on short-term trading
profits for investment personnel; limitations on service as a director of
publicly traded companies; and disclosure of personal securities transactions.
OTHER INFORMATION -- The financial statements including the investment
portfolio and the report of Independent Accountants contained in the Annual
Report are included in this statement of additional information. The following
information is not included in the Annual Report:
DETERMINATION OF NET ASSET VALUE, REDEMPTION PRICE AND
MAXIMUM OFFERING PRICE PER SHARE -- MARCH 31, 1999
Net asset value and redemption price per share
(Net assets divided by shares outstanding) $30.21
Maximum offering price per share
(100/94.25 of net asset value per share, which takes into
account the fund's current maximum sales charge) $32.05
SHAREHOLDER AND TRUSTEE RESPONSIBILITY -- Under the laws of certain states,
including Massachusetts where the fund was organized and California where the
fund's principal office is located, shareholders of a Massachusetts business
trust may, under certain circumstances, be held personally liable as partners
for the obligations of the fund. However, the risk of a shareholder incurring
any financial loss on account of shareholder liability is limited to
circumstances in which the fund itself would be unable to meet its obligations.
The Declaration of Trust contains an express disclaimer of shareholder
liability for acts, omissions, obligations or affairs of the fund and provides
that notice of the disclaimer may be given in each agreement, obligation, or
instrument which is entered into or executed by the fund or Trustees. The
Declaration of Trust provides for indemnification out of fund property of any
shareholder held personally liable for the obligations of the fund and also
provides for the fund to reimburse such shareholder for all legal and other
expenses reasonably incurred in connection with any such claim or liability.
Under the Declaration of Trust, the Trustees, officers, employees or agents of
the fund are not liable for actions or failure to act; however, they are not
protected from liability by reason of their willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct
of their office.
SHAREHOLDER VOTING RIGHTS -- All shares of the fund have equal voting rights
and may be voted in the elections of Trustees and on other matters submitted to
the vote of shareholders. As permitted by Massachusetts law, there will
normally be no meetings of shareholders for the purpose of electing Trustees
unless and until such time as less than a majority of the Trustees holding
office have been elected by shareholders. At that time, the Trustees then in
office will call a shareholders meeting for the election of Trustees. The
Trustees must call a meeting of shareholders for the purpose of voting upon the
question of removal of any Trustee when requested to do so by the record
holders of at least 10% of the outstanding shares. At such meeting, a Trustee
may be removed after the holders of record of not less than two-thirds of the
outstanding shares have declared that the Trustee be removed either by
declaration in writing or by votes cast in person or by proxy. Except as set
forth above, the Trustees shall continue to hold office and may appoint
successor Trustees. The shares do not have cumulative voting rights, which
means that the holders of a majority of the shares voting for the election of
Trustees can elect all the Trustees. No amendment may be made to the
Declaration of Trust without the affirmative vote of a majority of the
outstanding shares of the fund, except that amendments may be made upon the
sole approval of the Trustees to conform the Declaration of Trust to the
requirements of applicable Federal laws or regulations or the requirements of
the regulated investment company provisions of the Code; however, the Trustees
shall not be held liable for failing to do so. If not terminated by the vote
or written consent of a majority of the outstanding shares, the fund will
continue indefinitely.
REMOVAL OF TRUSTEES BY SHAREHOLDERS - At any meeting of shareholders, duly
called and at which a quorum is present, the shareholders may, by the
affirmative vote of the holders of a majority of the votes entitled to be cast
thereon, remove any Trustee or Trustees from office and may elect a successor
or successors to fill any resulting vacancies for the unexpired terms of
removed Trustees. The fund has made an undertaking, at the request of the
staff of the Securities and Exchange Commission, to apply the provisions of
section 16(c) of the 1940 Act with respect to the removal of Trustees, as
though the fund were a common-law trust. Accordingly, the Trustees of the fund
shall promptly call a meeting of shareholders for the purpose of voting upon
the question of removal of any Trustee when requested in writing to do so by
the record holders of not less than 10% of the outstanding shares.
INVESTMENT RESULTS AND RELATED STATISTICS
The fund's yield is 1.13% based on a 30-day (or one month) period ended March
31, 1999, computed by dividing the net investment income per share earned
during the period by the maximum offering price per share on the last day of
the period, according to the following formula:
YIELD = 2[( a-b/cd + 1)/6/ -1]
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends.
d = the maximum offering price per share on the last day of the period.
The fund's one year total return and average annual total return for the five-
and ten-year periods ended March 31, 1999 were 1.98%, 11.52% and 12.83%,
respectively. The average total return ("T") is computed by equating the value
at the end of the period ("ERV") with a hypothetical initial investment of
$1,000 ("P") over a period of years ("n") according to the following formula as
required by the Securities and Exchange Commission: P(1+T)/n/ = ERV.
The following assumptions will be reflected in computations made in accordance
with the formula stated above: (1) deduction of the maximum sales load of
5.75% from the $1,000 initial investment; (2) reinvestment of dividends and
distributions at net asset value on the reinvestment date determined by the
Board; and (3) a complete redemption at the end of any period illustrated. In
addition, the fund will provide lifetime average total return figures.
The fund may also, at times, calculate total return based on net asset value
per share (rather than the offering price), in which case the figure would not
reflect the effect of any sales charges which would have been paid if shares
were purchased during the period reflected in the computation. Consequently,
total return calculated in this manner will be higher. These total returns may
be calculated over periods in addition to those described above. Total return
for the unmanaged indices will be calculated assuming reinvestment of dividends
and interest, but will not reflect any deductions for advisory fees, brokerage
costs or administrative expenses.
The fund may include information on its investment results and/or comparisons
of its investment results to various unmanaged indices (such as The Dow Jones
Average of 30 Industrial Stocks and The Standard and Poor's 500 Composite Stock
Index) or results of other mutual funds or investment or savings vehicles in
advertisements or in reports furnished to present or prospective shareholders.
The fund may also, from time to time, combine its results with those of other
funds in The American Funds Group for purposes of illustrating investment
strategies involving multiple funds.
The fund may refer to results and surveys compiled by organizations such as CDA
Investment Technologies, Ibbotson Associates, Lipper Analytical Services,
Morningstar, Inc., Wiesenberger Investment Companies Services and the U.S.
Department of Commerce. Additionally, the fund may, from time to time, refer
to results published in various periodicals, including BARRON'S, FORBES,
FORTUNE, INSTITUTIONAL INVESTOR, KIPLINGER'S PERSONAL FINANCE MAGAZINE, MONEY,
U.S. NEWS AND WORLD REPORT and THE WALL STREET JOURNAL.
The fund may from time to time illustrate the benefits of tax-deferral by
comparing taxable investments to investments made through tax-deferred
retirement plans. The fund may, from time to time, compare its investment
results with the Consumer Price Index, which is a measure of the average change
in prices over time in a fixed market basket of goods and services (E.G. food,
clothing and fuels, transportation, and other goods and services that people
buy for day-to-day living).
The investment results set forth below were calculated as described in the
fund's Prospectus. The fund's results will vary from time to time depending
upon market conditions, the composition of the fund's portfolio and operating
expenses of the fund, so that any investment results reported by the fund
should not be considered representative of what an investment in the fund may
earn in any future period. These factors and possible differences in
calculation methods should be considered when comparing the fund's investment
results with those published for other mutual funds, other investment vehicles
and unmanaged indices. The fund's results also should be considered relative
to the risks associated with the fund's investment objective and policies.
EXPERIENCE OF THE INVESTMENT ADVISER -- Capital Research and Management Company
manages nine growth and growth-income funds that are at least 10 years old. In
the rolling 10-year periods since January 1, 1969 (138 in all), those funds
have had better total returns than their comparable Lipper indexes in 128 of
the 138 periods.
Note that past results are not an indication of future investment results.
Also, the fund has different investment policies than the funds mentioned
above. These results are included solely for the purpose of informing
investors about the experience and history of Capital Research and Management
Company.
EUPAC VS. VARIOUS UNMANAGED INDICES
<TABLE>
<CAPTION>
Period MSCI
4/1 - 3/31 EUPAC S&P 500/1/ EAFE/2/
<S> <C> <C> <C>
1989 - 1999 234.5% 465.8% 78.6%
1988 - 1998 254.7% 464.7% 87.9%
1987 - 1997 217.0% 250.1% 84.5%
1986 - 1996 252.9% 268.5% 192.5%
1985 - 1995 354.8% 283.9% 382.3%
1984* - 1998 706.6% 973.4% 586.5%
</TABLE>
/1/ The Standard and Poor's 500 Stock Index is comprised of industrial,
transportation, public utilities and financial stocks and represents a large
portion of the value of issues traded on the New York Stock Exchange. Selected
issues traded on the American Stock Exchange are also included.
/2/ The Morgan Stanley Capital International Europe, Australasia and Far East
Index (MSCI EAFE) is an arithmetical average, weighted by market value, of the
more than 1,000 securities listed on the stock exchanges of Europe, Australia,
New Zealand and the Far East.
* From inception on April 16, 1984.
IF YOU ARE CONSIDERING EUPAC FOR AN INDIVIDUAL RETIREMENT ACCOUNT . . .
Here's how much you would have if you had invested $2,000 a year in the fund:
<TABLE>
<CAPTION>
1 Year 5 Years 10 Years Lifetime
(4/1/98 - 3/31/99) (4/1/94 - 3/31/99) (4/1/89 - 3/31/99) (4/16/84 - 3/31/99)
<S> <C> <C> <C>
2,040 $14,243 $40,942 $100,391
</TABLE>
___________________________________
SEE THE DIFFERENCE TIME CAN MAKE IN AN INVESTMENT PROGRAM...
<TABLE>
<CAPTION>
If you had invested ...and taken all distributions
$10,000 in EUPAC in shares, your investment
this many years ago... would have been worth this
much at March 31, 1999
<S> <C> <C>
Periods
Number of Years 4/1 - 3/31 Value
1 1998-1999 $ 10,198
2 1997-1999 12,335
3 1996-1999 14,295
4 1995-1999 17,135
5 1994-1999 17,251
6 1993-1999 21,785
7 1992-1999 23,459
8 1991-1999 26,208
9 1990-1999 28,589
10 1989-1999 33,453
11 1988-1999 38,368
12 1987-1999 41,483
13 1986-1999 53,517
14 1985-1999 82,658
Lifetime* 1984-1999 87,258
</TABLE>
(* from inception on April 16, 1984)
___________________________________
Illustration of a $10,000 investment in EUPAC with dividends reinvested
(For the lifetime of the fund April 16, 1984 through March 31, 1999)
<TABLE>
<CAPTION>
COST OF SHARES VALUE OF SHARES
Fiscal Annual Dividends Total From From From Total
Year End Dividends (cumulative) Investment Initial Capital Gains Dividends Value
March 31 Cost Investment Reinvested Reinvested
<S> <C> <C> <C> <C> <C> <C> <C>
1985* $69 $69 $10,069 $9,876 $-- $72 $9,948
1986 35 104 10,104 15,206 -- 162 15,368
1987 118 222 10,222 18,489 1,006 332 19,827
1988 491 713 10,713 17,370 3,213 854 21,437
1989 316 1,029 11,029 18,379 4,969 1,238 24,586
1990 527 1,556 11,556 19,760 7,128 1,874 28,762
1991 656 2,212 12,212 20,845 7,883 2,653 31,381
1992 611 2,823 12,823 22,857 8,645 3,555 35,057
1993 538 3,361 13,361 24,238 9,167 4,349 37,754
1994 515 3,876 13,876 30,151 11,557 5,962 47,670
1995 716 4,592 14,592 28,695 12,927 6,385 48,007
1996 1,132 5,724 15,724 33,352 15,547 8,634 57,533
1997 1,063 6,787 16,787 36,676 19,366 10,630 66,672
1998 1,156 7,943 17,943 40,604 26,958 13,094 80,656
1999 992 8,935 18,935 41,497 31,320 14,441 87,258
</TABLE>
The dollar amount of capital gain distributions during the period was
$19,589.(* from inception on April 16, 1984)
DESCRIPTION OF BOND RATINGS
Corporate Debt Securities
MOODY'S INVESTORS SERVICE, INC. rates the long-term debt securities issued by
various entities in categories ranging from "Aaa" to "C" according to quality.
"Aaa -- Best quality. These securities carry the smallest degree of investment
risk and are generally referred to as 'gilt edge.' Interest payments are
protected by a large or by an exceptionally stable margin, and principal is
secure. While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the fundamentally
strong position of such issues."
"Aa -- High quality by all standards. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities,
fluctuation of protective elements may be of greater amplitude, or there may be
other elements present which make the long-term risks appear somewhat greater."
"A -- Upper medium grade obligations. These bonds possess many favorable
investment attributes. Factors giving security to principal and interest are
considered adequate, but elements may be present which suggest a susceptibility
to impairment sometime in the future."
"Baa -- Medium grade obligations. Interest payments and principal security
appear adequate for the present but certain protective elements may be lacking
or may be characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and , in fact, have
speculative characteristics as well."
"Ba -- Have speculative elements; future cannot be considered as well assured.
The protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the future.
Bonds in this class are characterized by uncertainty of position."
"B -- Generally lack characteristics of the desirable investment; assurance of
interest and principal payments or of maintenance of other terms of the
contract over any long period of time may be small."
"Caa -- Of poor standing. Issues may be in default or there may be present
elements of danger with respect to principal or interest."
"Ca -- Speculative in a high degree; often in default or have other marked
shortcomings."
"C -- Lowest rated class of bonds; can be regarded as having extremely poor
prospects of ever attaining any real investment standing."
STANDARD & POOR'S CORPORATION rates the long-term securities debt of various
entities in categories ranging from "AAA" to "D" according to quality.
"AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong."
"AA -- High grade. Very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree."
"A - Have a strong capacity to pay interest and repay principal, although they
are somewhat more susceptible to the adverse effects of change in circumstances
and economic conditions, than debt in higher rated categories."
"BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay interest and repay principal than for debt in
higher rated categories."
"BB, B, CCC, CC, C -- Regarded, on balance, as predominantly speculative with
respect to capacity to pay interest and repay principal in accordance with the
terms of the obligation. BB indicates the lowest degree of speculation and C
the highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions."
"C-1 -- Reserved for income bonds on which no interest is being paid."
"D -- In default and payment of interest and/or repayment of principal is in
arrears."
<TABLE>
<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>
<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
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.
