SEC File Nos. 333-67455
811-9105
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
Registration Statement
Under
the Securities Act of 1933
Post-Effective Amendment No. 6
and
Registration Statement
Under
The Investment Company Act of 1940
Amendment No. 7
NEW WORLD FUND, INC.
(Exact Name of Registrant as specified in charter)
333 South Hope Street
Los Angeles, California 90071
(Address of principal executive offices)
Registrant's telephone number, including area code:
(213) 486-9200
Vincent P. Corti
Capital Research and Management Company
333 South Hope Street
Los Angeles, California 90071
(name and address of agent for service)
Copies to:
MICHAEL J. FAIRCLOUGH, ESQ.
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, California 90071
(Counsel for the Registrant)
Approximate date of proposed public offering:
It is proposed that this filing become effective on February 15, 2002,
pursuant to paragraph (b) of rule 485.
[logo - American Funds(sm)]
The right choice for the long term(sm)
NEW WORLD FUND(sm)
PROSPECTUS
February 15, 2002
Table of Contents
1 Risk/Return Summary
5 Fees and Expenses of the Fund
7 Investment Objective, Strategies and Risks
11 Management and Organization
13 Shareholder Information
14 Choosing a Share Class
16 Purchase and Exchange of Shares
18 Sales Charges
20 Sales Charge Reductions and Waivers
21 Plans of Distribution
22 How to Sell Shares
23 Distributions and Taxes
24 Financial Highlights
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED OF THESE SECURITIES. FURTHER, IT HAS NOT DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
[This page is intentionally left blank.]
New World Fund / Prospectus
Risk/Return Summary
The fund seeks to make your investment grow over time by investing primarily in stocks of companies with significant exposure to countries with developing economies and/or markets. The fund may also invest in debt securities of issuers, including issuers of lower rated bonds, with exposure to these countries.
The fund is designed for investors seeking capital appreciation. Investors in the fund should have a long-term perspective and be able to tolerate potentially wide price fluctuations. Your investment in the fund is subject to risks, including the possibility that the value of the fund's investments may fluctuate in response to economic, political or social events in the U.S. or abroad. The prices of securities owned by the fund may be affected by events specifically involving the companies issuing those securities. The values of debt securities owned by the fund may be affected by changing interest rates and credit risk assessments. Lower quality or longer maturity bonds may be subject to greater price fluctuations than higher quality or shorter maturity bonds.
Although all securities in the fund's portfolio may be adversely affected by currency fluctuations or global political, social or economic instability, securities issued by entities based outside the U.S., particularly in countries with developing economies or markets, may be affected to a greater extent.
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.
YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.
New World Fund / Prospectus
HISTORICAL INVESTMENT RESULTS
The following information provides some indication of the risks of investing in the fund by showing changes in the fund's investment results from year to year and by showing how the fund's average annual total returns for various periods compare with those of a broad measure of market performance. Past results are not an indication of future results.
[bar chart]
CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES
(Results do not include a sales charge; if one were included,
results would be lower.)
2000 -20.90%
2001 -3.96%
[end chart]
Highest/lowest quarterly results during this time period were:
HIGHEST 15.38% (quarter ended December 31, 2001) LOWEST -18.32% (quarter ended September 30, 2001) |
New World Fund / Prospectus
Unlike the bar chart on the previous page, the Investment Results Table on the following page reflects, as required by Securities and Exchange Commission rules, the fund's results with the maximum initial or deferred sales charge imposed. Class A share results reflect the maximum initial sales charge of 5.75%. Class A sales charges are reduced for purchases of $25,000 or more.
Class B share results reflect the applicable contingent deferred sales charge. These charges begin to decline after 12 months and are eliminated after six years.
Results would be higher if calculated without a sales charge. All fund results reflect the reinvestment of dividend and capital gain distributions.
The fund's results are shown on a pre-tax and after-tax basis, as required by Securities and Exchange Commission rules. Total returns shown "after taxes on distributions" reflect the effect of taxable distributions (for example, dividend or capital gain distributions) by the fund. Total returns shown "after taxes on distributions and sale of fund shares" assume that you sold your fund shares at the end of the particular time period, and as a result, reflect the effect of both taxable distributions by the fund and any taxable gain or loss realized upon the sale of the shares.
After-tax returns are calculated using the highest historical individual federal income tax rates and do not reflect the impact of state and local taxes. After-tax returns are shown only for Class A shares; after-tax returns for other share classes will vary.
YOUR ACTUAL AFTER-TAX RETURNS DEPEND ON YOUR INDIVIDUAL TAX SITUATION AND LIKELY WILL DIFFER FROM THE RESULTS SHOWN ON THE FOLLOWING PAGE. IN ADDITION, AFTER-TAX RETURNS ARE NOT RELEVANT IF YOU HOLD YOUR FUND SHARES THROUGH TAX-DEFERRED ARRANGEMENTS, SUCH AS A 401(K) PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR COLLEGEAMERICA ACCOUNT.
Since the fund's Class C and F shares were first available on March 15, 2001 and the fund's Class 529 shares were first available on February 15, 2002, comparable results for these classes are not available for the 2001 calendar year.
New World Fund / Prospectus
INVESTMENT RESULTS TABLE (WITH MAXIMUM SALES CHARGES IMPOSED)
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2001:
ONE YEAR LIFETIME
---------------------------------------------------------------------------
CLASS A - BEGAN 6/17/99
Before Taxes -9.47% -5.51%
After Taxes on Distributions -10.33% -6.19%
After Taxes on Distributions and Sale of Fund Shares -5.70% -4.66%
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CLASS B - BEGAN 3/15/00
Before Taxes -9.45% -18.00%
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INDEXES/1/
MSCI All Country World Free Index/2/ -15.91% -6.82%
MSCI Emerging Markets Free Index/3/ -2.37% -8.14%
|
1 Lifetime results are as of the date Class A shares first became available.
2 The Morgan Stanley Capital International All Country World Free Index measures
23 developed stock markets throughout the world (including the U.S.), as well
as 26 emerging stock markets. This index includes eight markets with "free"
indices reflecting actual investable opportunities for global investors by
taking into account local market restrictions on share ownership by foreigners.
This index is unmanaged and does not reflect sales charges, commissions,
expenses or taxes.
3 The Morgan Stanley Capital International Emerging Markets Free Index measures
26 emerging stock markets throughout the world. In determining whether a market
is an emerging market, MSCI evaluates factors such as gross domestic product
per capita; local government regulations that limit or ban foreign ownership;
the regulatory environment; perceived investment risk; or a general perception
by the investment community that the country should be classified as
"emerging." This index includes eight markets with "free" indices reflecting
actual investable opportunities for global investors by taking into account
local market restrictions on share ownership by foreigners. This index is
unmanaged and does not reflect sales charges, commissions, expenses or taxes.
New World Fund / Prospectus
Fees and Expenses of the Fund
SHAREHOLDER FEES TABLE (PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS A/1/ CLASS B/1/ CLASS C/1/ CLASS E/1/ CLASS F/1/
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Maximum sales charge
imposed on purchases
(as a percentage of 5.75 %/2/ none none none none
offering price)
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Maximum sales charge
imposed on reinvested none none none none none
dividends
------------------------------------------------------------------------------------
Maximum deferred none/3/ 5.00%/4/ 1.00%/5/ none none
sales charge
------------------------------------------------------------------------------------
Redemption or
exchange fees none none none none none
|
1 Includes versions of these classes offered through CollegeAmerica, a 529
college savings plan sponsored by the Virginia College Savings Plan, an agency
of the Commonwealth of Virginia. Class E shares are only available through
CollegeAmerica to employer-sponsored plans.
2 Sales charges are reduced or eliminated for purchases of $25,000 or more.
3 A contingent deferred sales charge of 1% applies on certain redemptions made
within 12 months following purchases of $1 million or more made without a sales
charge.
4 Deferred sales charge is reduced after 12 months and eliminated after six
years.
5 Deferred sales charge is eliminated after 12 months.
ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS)
CLASS A CLASS B CLASS C/1/ CLASS F/1/
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Management Fees 0.79% 0.79% 0.79% 0.79%
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Distribution and/or 0.21% 1.00% 1.00% 0.25%
Service (12b-1) Fees/2/
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Other Expenses 0.29% 0.34% 0.40% 0.36%
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Total Annual Fund
Operating Expenses 1.29% 2.13% 2.19% 1.40%
CLASS CLASS CLASS CLASS CLASS
529-A/3/ 529-B/3/ 529-C/3/ 529-E/3/ 529-F/3/
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Management Fees 0.79% 0.79% 0.79% 0.79% 0.79%
-------------------------------------------------------------------------------
Distribution and/or 0.18% 1.00% 1.00% 0.50% 0.25%
Service (12b-1) Fees/4/
-------------------------------------------------------------------------------
Other Expenses/5/ 0.38% 0.38% 0.38% 0.38% 0.38%
-------------------------------------------------------------------------------
Total Annual Fund
Operating Expenses 1.35% 2.17% 2.17% 1.67% 1.42%
|
1 Annualized.
2 Class A and F 12b-1 fees may not exceed 0.30% and 0.50%, respectively, of the
class' average net assets annually.
3 Based on estimated amounts for the current fiscal year.
4 Class 529-A and 529-F 12b-1 fees may not exceed 0.50% of each class' average
net assets annually. Class 529-E 12b-1 fees may not exceed 0.75% of the class'
average net assets annually.
5 Includes 0.10% paid to the Virginia College Savings Plan for administrative
services it provides in overseeing CollegeAmerica.
New World Fund / Prospectus
EXAMPLE
The examples below are intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. The examples assume that you invest $10,000 in the fund for the time periods indicated, that your investment has a 5% return each year, that all dividend and capital gain distributions are reinvested, and that the fund's operating expenses remain the same as shown on the previous page. The examples assuming redemption do not reflect the effect of any taxable gain or loss at the time of the redemption.
Although your actual costs may be higher or lower, based on these assumptions, your cumulative estimated expenses would be:
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
-------------------------------------------------------------------------------
Class A/1/ $699 $ 960 $ 1,242 $2,042
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Class B - assuming redemption/2/ $716 $1,067 $ 1,344 $2,248
-------------------------------------------------------------------------------
Class B - assuming no redemption $216 $ 667 $ 1,144 $2,248
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Class C - assuming redemption/3/ $322 $ 685 $ 1,175 $2,524
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Class C - assuming no redemption $222 $ 685 $ 1,175 $2,524
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Class F - excludes intermediary fees/4/ $143 $ 443 $ 766 $1,680
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Class 529-A/1/ $705 $ 978 $1,272 $2,105
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Class 529-B - assuming redemption/2/ $720 $1,079 $ 1,364 $2,295
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Class 529-B - assuming no redemption $220 $ 679 $ 1,164 $2,295
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Class 529-C - assuming redemption/3/ $320 $ 679 $ 1,164 $2,503
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Class 529-C - assuming no redemption $220 $ 679 $ 1,164 $2,503
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Class 529-E $170 $ 526 $ 907 $1,976
-------------------------------------------------------------------------------
Class 529-F - excludes intermediary $145 $ 449 $ 776 $1,702
fees/4/
|
1 Reflects the maximum initial sales charge in the first year.
2 Reflects applicable contingent deferred sales charges through year six and
Class A or 529-A expenses for years nine and ten because Class B and 529-B
shares automatically convert to Class A and 529-A shares, respectively, after
eight years.
3 Reflects contingent deferred sales charge during the first year.
4 Does not include fees charged by financial intermediaries, which are independent of fund expenses and will increase the overall cost of your investment. Intermediary fees typically range from 0.50% to 3.00% of assets annually depending on services offered.
New World Fund / Prospectus
Investment Objective, Strategies and Risks
The fund's investment objective is long-term capital appreciation. The fund may invest in equity securities of any company, regardless of where it is based, if the fund's investment adviser determines that a significant portion of a company's assets or revenues (generally 20% or more) are attributable to developing countries. Under normal market conditions, the fund will invest at least 35% of its assets in equity and debt securities of issuers primarily based in qualified countries that have developing economies and/or markets. In addition, the fund may invest up to 25% of its assets in debt securities of issuers, including issuers of lower rated bonds and government bonds, primarily based in qualified countries or that have a significant portion of their assets or revenues attributable to developing countries.
In determining whether a country is qualified, the fund will consider such factors as the country's per capita gross domestic product, the percentage of the country's economy that is industrialized, market capital as a percentage of gross domestic product, the overall regulatory environment, the presence of government regulation limiting or banning foreign ownership, and restrictions on repatriation of initial capital, dividends, interest, and/or capital gains. The fund's investment adviser will maintain a list of qualified countries and securities in which the fund may invest. Qualified developing countries in which the fund may invest currently include, but are not limited to, Argentina, Brazil, Chile, China, Colombia, Croatia, Czech Republic, Egypt, Hungary, India, Israel, Jordan, Malaysia, Mexico, Morocco, Panama, Peru, Philippines, Poland, Russia, South Africa, South Korea, Thailand, Turkey and Venezuela.
The prices of securities held by the fund may decline in response to certain events, including: those directly involving the companies whose securities are owned in the fund; conditions affecting the general economy; overall market changes; global political, social or economic instability; and currency and interest rate fluctuations. The growth-oriented, equity-type securities generally purchased by the fund may involve large price swings and potential for loss, particularly in the case of smaller capitalization stocks. Smaller capitalization stocks are often more difficult to value or dispose of, more difficult to obtain information about, and more volatile than stocks of larger, more established companies.
Investments in securities issued by entities based outside the U.S. may be subject to the risks described above to a greater extent and may also be affected by differing securities regulations, higher transaction costs, and administrative difficulties such as delays in clearing and settling portfolio transactions. Investing in countries with developing economies and/or markets generally involves risks in addition to and greater than those generally associated with investing in developed countries. For instance, developing countries may have less developed legal and accounting systems. The governments of these countries may be more unstable and likely to impose capital controls, nationalize a company or industry, place restrictions on foreign ownership and on withdrawing sale proceeds of securities from the country, and/or impose punitive taxes that could adversely
New World Fund / Prospectus
affect security prices. In addition, the economies of these countries may be dependent on relatively few industries that are more susceptible to local and global changes. Securities markets in these countries are also relatively small and have substantially lower trading volumes. As a result, securities issued in these countries may be more volatile and potentially less liquid than securities issued in countries with more developed economies or markets.
The values of most debt securities held by the fund may be affected by changing interest rates and by changes in effective maturities and credit ratings of these securities. For example, the values of debt securities in the fund's portfolio generally will decline when interest rates rise and increase when interest rates fall. In addition, falling interest rates may cause an issuer to redeem or "call" a security before its stated maturity, which may result in the fund having to reinvest the proceeds in lower yielding securities. Debt securities are also subject to credit risk, which is the possibility that the credit strength of an issuer will weaken and/or an issuer of a debt security will fail to make timely payments of principal or interest and the security will go into default. Lower quality or longer maturity securities generally have higher rates of interest and may be subject to greater price fluctuations than higher quality or shorter maturity securities. The fund's investment adviser attempts to reduce these risks through diversification of the portfolio and with ongoing credit analysis of each issuer, as well as by monitoring economic and legislative developments.
The fund may also hold cash or money market instruments. 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 in a period of rising market prices; conversely, it would reduce the fund's magnitude of loss in the event of a general market downturn and provide liquidity to make additional investments or to meet redemptions.
The fund relies on the professional judgment of its investment adviser, Capital Research and Management Company, to make decisions about the fund's portfolio investments. The basic investment philosophy of the investment adviser is to seek reasonably priced securities that represent above average long-term growth opportunities. This is accomplished not only through fundamental analysis, but also by meeting with company executives and employees, suppliers, customers and competitors in order to gain in-depth knowledge of a company's true value. Securities may be sold when the investment adviser believes they no longer represent good long-term value.
New World Fund / Prospectus
INVESTMENT RESULTS TABLE (WITHOUT SALES CHARGES IMPOSED)
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2001:
ONE YEAR LIFETIME
-----------------------------------------------------------------------------
CLASS A - BEGAN 6/17/99
Before Taxes -3.96% -3.27%
After Taxes on Distributions -4.87% -3.97%
After Taxes on Distributions and Sale of Fund Shares -2.34% -2.90%
-----------------------------------------------------------------------------
CLASS B - BEGAN 3/15/00
Before Taxes -4.77% -16.18%
-----------------------------------------------------------------------------
INDEXES/1/
MSCI All Country World Free Index/2/ -15.91% -6.82%
MSCI Emerging Markets Free Index/3/ -2.37% -8.14%
|
1 Lifetime results are as of the date Class A shares first became available.
2 The Morgan Stanley Capital International All Country World Free Index measures
23 developed stock markets throughout the world (including the U.S.), as well
as 26 emerging stock markets. This index includes eight markets with "free"
indices reflecting actual investable opportunities for global investors by
taking into account local market restrictions on share ownership by foreigners.
This index is unmanaged and does not reflect sales charges, commissions,
expenses or taxes.
3 The Morgan Stanley Capital International Emerging Markets Free Index measures
26 emerging stock markets throughout the world. In determining whether a market
is an emerging market, MSCI evaluates factors such as gross domestic product
per capita; local government regulations that limit or ban foreign ownership;
the regulatory environment; perceived investment risk; or a general perception
by the investment community that the country should be classified as
"emerging." This index includes eight markets with "free" indices reflecting
actual investable opportunities for global investors by taking into account
local market restrictions on share ownership by foreigners. This index is
unmanaged and does not reflect sales charges, commissions, expenses or taxes.
New World Fund / Prospectus
[pie chart]
HOLDINGS BY INDUSTRY AS OF OCTOBER 31, 2001
Banks 7.59%
Electronic Equipment & Instruments 7.46%
Pharmaceuticals 5.77%
Oil & Gas 5.33%
Beverages 4.82%
Other Industries 49.52%
Bonds and Notes 10.49%
Cash & Equivalents 9.02%
[end chart]
New World Fund / Prospectus
LARGEST EQUITY HOLDINGS AS OF OCTOBER 31, 2001
PERCENT OF NET ASSETS
--------------------------------------------------------------
Housing Development Finance 2.57%
--------------------------------------------------------------
Samsung SDI 2.23
---------------------------------------
Petrobras 1.99
--------------------------------------------------------------
Samsung Electronics 1.86
--------------------------------------------------------------
Sappi 1.77
--------------------------------------------------------------
Aventis 1.50
--------------------------------------------------------------
Fomento Economico Mexicano 1.47
--------------------------------------------------------------
Coca-Cola 1.40
--------------------------------------------------------------
Unibanco-Uniao de Bancos Brasileiros 1.39
--------------------------------------------------------------
Samsung Electro-Mechanics 1.33
--------------------------------------------------------------
|
Because the fund is actively managed, its holdings will change over time.
For updated information on the fund's portfolio holdings, please visit us at www.americanfunds.com.
New World Fund / Prospectus
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 appears earlier in the Annual Fund Operating Expenses Table.
New World Fund / Prospectus
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 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 New World Fund are:
PORTFOLIO COUNSELOR/ PORTFOLIO COUNSELOR PRIMARY TITLE WITH INVESTMENT ADVISER
FUND TITLE (IF APPLICABLE) EXPERIENCE IN THIS FUND (OR AFFILIATE) AND INVESTMENT EXPERIENCE
--------------------------------------------------------------------------------------------------------
ROBERT W. LOVELACE 3 years President and Director, Capital Research Company
President, Principal
Executive Officer and Investment professional for 17 years, all with
Director Capital Research and Management Company or
affiliate
--------------------------------------------------------------------------------------------------------
MARK E. DENNING 3 years Director, Capital Research and Management Company
Senior Vice President
Investment professional for 20 years, all with
Capital Research and Management Company or
affiliate
--------------------------------------------------------------------------------------------------------
DAVID C. BARCLAY 3 years Senior Vice President and Director, Capital
Vice President Research and Management Company
Investment professional for 21 years in total;14
years with Capital Research and Management
Company or affiliate
--------------------------------------------------------------------------------------------------------
ALWYN HEONG 3 years Senior Vice President, Capital Research Company
Vice President
Investment professional for 13 years in total;10
years with Capital Research and Management
Company or affiliate
--------------------------------------------------------------------------------------------------------
CARL M. KAWAJA 3 years Senior Vice President and Director, Capital
Vice President Research Company
Investment professional for 14 years in total;11
years with Capital Research and Management
Company or affiliate
--------------------------------------------------------------------------------------------------------
|
New World Fund / Prospectus
Shareholder Information
SHAREHOLDER SERVICES
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 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
Access the American Funds website : www.americanfunds.com
[map of the United States]
Western Western Central Eastern Central Eastern Service Center Service Center Service Center Service Center American Funds American Funds American Funds American Funds Service Company Service Company Service Company Service Company P.O. Box 25065 P.O. Box 659522 P.O. Box 6007 P.O. Box 2280 Santa Ana, San Antonio, Texas Indianapolis, Indiana Norfolk, Virginia California 78265-9522 46206-6007 23501-2280 92799-5065 Fax: 210/474-4050 Fax: 317/735-6620 Fax: 757/670-4773 Fax: 714/671-7080 |
A MORE DETAILED DESCRIPTION OF POLICIES AND SERVICES IS INCLUDED IN THE FUND'S STATEMENT OF ADDITIONAL INFORMATION AND THE OWNER'S GUIDE SENT TO NEW AMERICAN FUNDS SHAREHOLDERS TITLED "WELCOME TO THE FAMILY." 529 CLASS SHAREHOLDERS SHOULD ALSO REFER TO THE COLLEGEAMERICA PROGRAM DESCRIPTION FOR INFORMATION ON POLICIES AND SERVICES SPECIFICALLY RELATING TO THEIR COLLEGEAMERICA ACCOUNT(S). These documents are available by writing or calling American Funds Service Company.
New World Fund / Prospectus
Choosing a Share Class
The fund offers different classes of shares through this prospectus. Class A, B, C and F shares may be purchased through various investment programs or accounts, including many types of retirement plans. The services or share classes available to you may vary depending upon how you wish to purchase shares of the fund.
Investors residing in any state may purchase Class 529-A, 529-B, 529-C, 529-E and 529-F shares through an account established with CollegeAmerica. The 529-A, 529-B, 529-C and 529-F share classes are structured similarly to the corresponding Class A, B, C and F shares. For example, the same initial sales charges apply to Class 529-A shares as they do to Class A shares. Class 529-E shares are only available to investors participating in CollegeAmerica through an eligible employer plan.
Each share class represents investments in the same portfolio of securities, but each class has its own sales charge and expense structure, allowing you to choose the class that best meets your situation. WHEN YOU PURCHASE SHARES OF THE FUND, YOU MUST CHOOSE A SHARE CLASS. IF NONE IS CHOSEN, YOUR INVESTMENT WILL BE MADE IN CLASS A SHARES OR, IN THE CASE OF A COLLEGEAMERICA INVESTMENT, CLASS 529-A SHARES.
Factors you should consider in choosing a class of shares include:
. how long you expect to own the shares;
. how much you intend to invest;
. total expenses associated with owning shares of each class;
. whether you qualify for any reduction or waiver of sales charges (for example, Class A or 529-A shares may be a less expensive option over time if you qualify for a sales charge reduction or waiver);
. whether you plan to take any distributions in the near future (for example, the contingent deferred sales charge will not be waived if you sell your Class 529-B or 529-C shares to cover higher education expenses);
. Class B and C shares are generally not available to certain retirement plans, including employer-sponsored retirement plans such as 401(k) plans, 457 plans, employer-sponsored 403(b) plans, and money purchase pension and profit sharing plans;
. Class F and 529-F shares are generally only available to fee-based programs of investment firms that have special agreements with the fund's distributor and certain registered investment advisers.
EACH INVESTOR'S FINANCIAL CONSIDERATIONS ARE DIFFERENT. YOU SHOULD SPEAK WITH YOUR FINANCIAL ADVISER TO HELP YOU DECIDE WHICH SHARE CLASS IS BEST FOR YOU.
UNLESS OTHERWISE NOTED, REFERENCES IN THE FOLLOWING PAGES TO CLASS A, B, C OR F SHARES ALSO REFER TO THE CORRESPONDING CLASS 529-A, 529-B, 529-C OR 529-F SHARES.
New World Fund / Prospectus
SUMMARY OF THE PRIMARY DIFFERENCES AMONG SHARE CLASSES
CLASS A SHARES
Initial sales charge up to 5.75% (reduced or eliminated for purchases of
$25,000 or more)
Contingent deferred none (except on certain redemptions on purchases of $1
sales charge million or more made without an initial sales charge)
12b-1 fees up to 0.30% annually (529-A may not exceed 0.50%
annually)
Dividends generally higher than other classes due to lower
annual expenses
Purchase maximum none
Conversion none
CLASS B SHARES
Initial sales charge none
Contingent deferred starts at 5.00% and declines until it reaches 0% after
sales charge six years
12b-1 fees 1.00% annually
Dividends generally lower than A and F shares due to higher
distribution fees and other expenses, but higher than
C shares due to lower other expenses
Purchase maximum $100,000
Conversion automatic conversion to A or 529-A shares after eight
years, reducing future annual expenses
CLASS C SHARES
Initial sales charge none
Contingent deferred 1.00% if shares are sold within one year after being
sales charge purchased
12b-1 fees 1.00% annually
Dividends generally lower than other classes due to higher
distribution fees and other expenses
Purchase maximum $500,000
Conversion automatic conversion to F shares after 10 years,
reducing future annual expenses (529-C shares will not
convert to 529-F shares)
CLASS F SHARES
Initial sales charge none
Contingent deferred none
sales charge
12b-1 fees currently 0.25% annually (may not exceed 0.50%
annually)
Dividends generally higher than B and C shares due to lower
distribution fees, but lower than A shares due to
higher other expenses
Purchase maximum none
Conversion none
CLASS 529-E SHARES
Initial sales charge none
Contingent deferred none
sales charge
12b-1 fees currently 0.50% annually (may not exceed 0.75%
annually)
Dividends generally higher than 529-B and 529-C shares due to
lower distribution fees, but lower than 529-A and
529-F shares due to higher distribution fees
Purchase maximum none
Conversion none
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New World Fund / Prospectus
Purchase and Exchange of Shares
PURCHASE OF CLASS A, B AND C SHARES
You may generally open an account and purchase Class A, B and C shares by contacting any investment dealer (who may impose transaction charges in addition to those described in this prospectus) authorized to sell the fund's shares. You may purchase additional shares in various ways, including through your investment dealer and by mail, telephone, the Internet and bank wire.
PURCHASE OF CLASS F SHARES
You may generally open an account and purchase Class F shares only through fee-based programs of investment firms that have special agreements with the fund's distributor and certain registered investment advisers. These firms and advisers typically charge ongoing fees for services they provide.
PURCHASE OF CLASS 529 SHARES
Class 529 shares may be purchased only through a CollegeAmerica account. You may open a CollegeAmerica account and purchase 529 shares by contacting any investment dealer (who may impose transaction charges in addition to those described in this prospectus) authorized to sell a CollegeAmerica account. You may purchase additional shares in various ways, including through your investment dealer and by mail, telephone, the Internet and bank wire.
Class 529-E shares may only be purchased by employees participating in CollegeAmerica through an eligible employer plan.
EXCHANGE
Generally, you may exchange your shares into shares of the same class of other
funds in The American Funds Group without a sales charge. Class A, C or F shares
may generally be exchanged into the corresponding 529 share class without a
sales charge. Class B shares may not be exchanged into Class 529-B shares.
EXCHANGES FROM CLASS A, C OR F SHARES TO THE CORRESPONDING 529 SHARE CLASS,
PARTICULARLY IN THE CASE OF UNIFORM GIFTS TO MINORS ACT OR UNIFORM TRANSFER TO
MINORS ACT CUSTODIAL ACCOUNTS, MAY RESULT IN SIGNIFICANT LEGAL AND TAX
CONSEQUENCES AS DESCRIBED IN THE COLLEGEAMERICA PROGRAM DESCRIPTION. PLEASE
CONSULT YOUR FINANCIAL ADVISER PRIOR TO MAKING SUCH AN EXCHANGE.
Exchanges of shares from the money market funds in The American Funds Group initially purchased without a sales charge generally will be subject to the appropriate sales charge. For purposes of computing the contingent deferred sales charge on Class B and C shares, the length of time you have owned your shares will be measured from the date of original purchase and will not be affected by any permitted exchange.
New World Fund / Prospectus
Exchanges have the same tax consequences as ordinary sales and purchases. For example, to the extent you exchange shares held in a taxable account that are worth more now than what you paid for them, the gain will be subject to taxation. See "Transactions by Telephone, Fax or the Internet" for information regarding electronic exchanges.
THE FUND AND AMERICAN FUNDS DISTRIBUTORS, THE FUND'S DISTRIBUTOR, RESERVE THE RIGHT TO REJECT ANY PURCHASE ORDER FOR ANY REASON. THE FUND IS NOT DESIGNED TO SERVE AS A VEHICLE FOR FREQUENT TRADING IN RESPONSE TO SHORT-TERM FLUCTUATIONS IN THE STOCK MARKET. ACCORDINGLY, PURCHASES THAT ARE PART OF EXCHANGE ACTIVITY THAT THE FUND AND AMERICAN FUNDS DISTRIBUTORS HAVE DETERMINED COULD INVOLVE ACTUAL OR POTENTIAL HARM TO THE FUND MAY BE REJECTED.
PURCHASE MINIMUMS AND MAXIMUMS
PURCHASE MINIMUMS FOR ALL CLASSES OF SHARES
-------------------------------------------------------------------------
To establish an account (including retirement plan accounts) $ 250
For a retirement plan account through payroll deduction $ 25
or employer-sponsored CollegeAmerica account
To add to an account $ 50
For a retirement plan account through payroll deduction $ 25
or employer-sponsored CollegeAmerica account
-------------------------------------------------------------------------
PURCHASE MAXIMUM FOR CLASS B SHARES $100,000
-------------------------------------------------------------------------
PURCHASE MAXIMUM FOR CLASS C SHARES $500,000
|
VALUING SHARES
The fund's net asset value is the value of a single share. The fund calculates
its net asset value, each day the New York Stock Exchange is open, as of 4:00
p.m. New York time, the normal close of regular trading. Assets are valued
primarily on the basis of market quotations. However, the fund has adopted
procedures for making "fair value" determinations if market quotations are not
readily available.
Your shares will be purchased at the net asset value (plus any applicable sales charge in the case of Class A shares), or sold at the net asset value next determined after American Funds Service Company receives and accepts your request. A contingent deferred sales charge may apply at the time you sell certain Class A, B and C shares.
New World Fund / Prospectus
Sales Charges
CLASS A
The initial sales charge you pay when you buy Class A shares differs depending upon the amount you invest and may be reduced or eliminated for larger purchases as indicated below. Any applicable sales charge will be paid directly from your investment and, as a result, will reduce the amount of your investment.
SALES CHARGE AS A
PERCENTAGE OF
DEALER
NET COMMISSION
OFFERING AMOUNT AS % OF
INVESTMENT PRICE INVESTED OFFERING PRICE
---------------------------------------------------------------------------
Less than $25,000 5.75% 6.10% 5.00%
---------------------------------------------------------------------------
$25,000 but less than $50,000 5.00% 5.26% 4.25%
---------------------------------------------------------------------------
$50,000 but less than $100,000 4.50% 4.71% 3.75%
---------------------------------------------------------------------------
$100,000 but less than $250,000 3.50% 3.63% 2.75%
---------------------------------------------------------------------------
$250,000 but less than $500,000 2.50% 2.56% 2.00%
---------------------------------------------------------------------------
$500,000 but less than $750,000 2.00% 2.04% 1.60%
---------------------------------------------------------------------------
$750,000 but less than $1 million 1.50% 1.52% 1.20%
---------------------------------------------------------------------------
$1 million or more and certain other none none none
investments described below
---------------------------------------------------------------------------
|
CLASS A PURCHASES NOT SUBJECT TO SALES CHARGE
INVESTMENTS OF $1 MILLION OR MORE MAY BE SUBJECT TO A 1% CONTINGENT DEFERRED SALES CHARGE IF SHARES ARE SOLD WITHIN ONE YEAR OF PURCHASE. Employer-sponsored defined contribution-type plans investing $1 million or more, or with 100 or more eligible employees, and Individual Retirement Account rollovers involving retirement plan assets invested in the American Funds, may invest with no sales charge and are not subject to a contingent deferred sales charge. Also exempt are investments made through retirement plans, endowments or foundations with $50 million or more in assets, and investments made through accounts that purchased fund shares before March 15, 2001 and are part of certain qualified fee-based programs. The distributor may pay dealers up to 1% on investments made in Class A shares with no initial sales charge. The fund may reimburse the distributor for these payments through its Plans of Distribution (see below).
New World Fund / Prospectus
CLASS B AND C SHARES
Class B and C shares are sold without any initial sales charge. American Funds Distributors pays 4% of the amount invested to dealers who sell Class B shares and 1% to dealers who sell Class C shares.
For Class C shares, a contingent deferred sales charge of 1% applies if shares are sold within one year of purchase. For Class B shares, a contingent deferred sales charge may be applied to shares you sell within six years of purchase, as shown in the table below.
CLASS B SHARES SOLD WITHIN YEAR 1 2 3 4 5 6 ---------------------------------------------------------------- CONTINGENT DEFERRED SALES CHARGE 5% 4% 4% 3% 2% 1% |
Shares acquired through reinvestment of dividend or capital gain distributions are not subject to a contingent deferred sales charge. In addition, the contingent deferred sales charge may be waived in certain circumstances. See "Contingent Deferred Sales Charge Waivers" below. The contingent deferred sales charge is based on the original purchase cost or the current market value of the shares being sold, whichever is less. For purposes of determining the contingent deferred sales charge, if you sell only some of your shares, shares that are not subject to any contingent deferred sales charge will be sold first, followed by shares that you have owned the longest.
See "Plans of Distribution" below for ongoing compensation paid to your dealer or financial adviser for all share classes.
CONVERSION OF CLASS B AND C SHARES
Class B shares automatically convert to Class A shares in the month of the eight-year anniversary of the purchase date. Class C shares automatically convert to Class F shares in the month of the ten-year anniversary of the purchase date; however, Class 529-C shares will not convert to Class 529-F shares. The Internal Revenue Service currently takes the position that these automatic conversions are not taxable. Should its position change, the automatic conversion feature may be suspended. If this happens, you would have the option of converting your Class B, 529-B or C shares to the respective share classes at the anniversary dates described above, but you might face certain tax consequences as a result.
CLASS F AND 529-E SHARES
Class F and Class 529-E shares are sold without any initial or contingent deferred sales charge.
New World Fund / Prospectus
Sales Charge Reductions and Waivers
You must let your investment dealer or American Funds Service Company know at the time you purchase shares if you qualify for a reduction in your Class A initial sales charge or waiver of your Class B or C contingent deferred sales charge.
REDUCING YOUR CLASS A INITIAL SALES CHARGE
You and your "immediate family" (your spouse and your children under the age of 21) may combine investments to reduce your Class A sales charge.
AGGREGATING ACCOUNTS
To receive a reduced Class A sales charge, investments made by you and your immediate family (see above) may be aggregated if made for your own account(s) and/or certain other accounts, such as:
. trust accounts established by the above individuals. However, if the person(s) who established the trust is deceased, the trust account may be aggregated with accounts of the primary beneficiary of the trust;
.solely controlled business accounts;
.single-participant retirement plans.
CONCURRENT PURCHASES
You may combine simultaneous purchases of any class of shares of two or more American Funds, as well as individual holdings in various American Legacy variable annuities or variable life insurance policies, to qualify for a reduced Class A sales charge. Direct purchases of money market funds are excluded.
RIGHTS OF ACCUMULATION
You may take into account the current value (or if greater, the amount you invested less any withdrawals) of your existing holdings in any class of shares of the American Funds, as well as individual holdings in various American Legacy variable annuities or variable life insurance policies, to determine your Class A sales charge. Direct purchases of money market funds are excluded.
STATEMENT OF INTENTION
You may reduce your Class A sales charges by establishing a Statement of Intention. A Statement of Intention allows you to combine all non-money market fund purchases of all share classes you intend to make over a 13-month period, as well as individual American Legacy variable annuity and life insurance policies, to determine the applicable sales charge. At your request, purchases made during the previous 90 days may be included; however, capital appreciation and reinvested dividends and capital gains do not apply toward these combined purchases. A portion of your account may be
New World Fund / Prospectus
held in escrow to cover additional Class A sales charges that may be due if your total investments over the 13-month period do not qualify for the applicable sales charge reduction.
CONTINGENT DEFERRED SALES CHARGE WAIVERS
The contingent deferred sales charge on Class A, B and C shares may be waived in the following cases:
. when receiving payments through systematic withdrawal plans (up to 12% of the value of each fund account);
. when receiving required minimum distributions from retirement accounts upon reaching age 70 1/2;
. for redemptions due to death or post-purchase disability of the shareholder (this generally excludes trusts); or
. for redemptions due to a beneficiary's death, post-purchase disability or receipt of a scholarship (only applies to 529 share classes).
Plans of Distribution
The fund has Plans of Distribution or "12b-1 Plans" 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. The plans provide for annual expenses of up to 0.30% for Class A shares, up to 0.50% for Class 529-A shares, 1.00% for Class B, 529-B, C and 529-C shares, up to 0.75% for Class 529-E shares, and up to 0.50% for Class F and 529-F shares. For all share classes, up to 0.25% of these expenses may be used to pay service fees to qualified dealers for providing certain shareholder services. The amount remaining for each share class may be used for distribution expenses.
The 12b-1 fees paid by the fund, as a percentage of average net assets, for the previous fiscal year are indicated earlier in the Annual Fund Operating Expenses Table. Since these fees are paid out of the fund's assets or income on an ongoing basis, over time they will increase the cost and reduce the return of an investment. The higher fees for Class B and C shares may cost you more over time than paying the initial sales charge for Class A shares.
OTHER COMPENSATION TO DEALERS
American Funds Distributors may pay, or sponsor informational meetings for, dealers as described in the statement of additional information.
New World Fund / Prospectus
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 OR FINANCIAL ADVISER (CERTAIN CHARGES MAY APPLY)
. Shares held for you in your dealer's name must be sold through the dealer.
. Class F shares must be sold through your dealer or financial adviser.
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 $75,000;
-- 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 that has been changed within the last 10 days.
. American Funds Service Company reserves the right to require signature guarantee(s) on any redemptions.
. Additional documentation may be required for sales of shares held in corporate, partnership or fiduciary accounts.
TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY, OR USING THE INTERNET
. Redemptions by telephone, fax or the Internet (including American FundsLine(R) and American FundsLine OnLine(R)) are limited to $75,000 per American Funds 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 OR THE INTERNET
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 Internet 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, it and/or the fund may be liable for losses due to unauthorized or fraudulent instructions.
New World Fund / Prospectus
Distributions and Taxes
DIVIDENDS AND DISTRIBUTIONS
The fund intends to distribute dividends to you, usually in December. Capital gains, if any, are usually distributed in December. When a dividend or capital gain is distributed, the net asset value per share is reduced by the amount of the payment.
You may elect to reinvest dividend and/or capital gain distributions to purchase
additional shares of this fund or other American Funds, or you may elect to
receive them in cash. Most shareholders do not elect to take capital gain
distributions in cash because these distributions reduce principal value.
Dividend and capital gain distributions by 529 share classes will be
automatically reinvested.
TAXES ON DISTRIBUTIONS
Distributions you receive from the fund may be subject to income tax and may also be subject to state or local taxes - unless you are exempt from taxation.
For federal tax purposes, any taxable dividends and distributions of short-term capital gains are treated as ordinary income. The fund's distributions of net long-term capital gains are taxable to you as long-term 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 is the difference between the cost of your shares, including any sales charges, and the price you receive when you sell them.
PLEASE SEE YOUR TAX ADVISER FOR MORE INFORMATION. HOLDERS OF 529 SHARES SHOULD REFER TO THE COLLEGEAMERICA PROGRAM DESCRIPTION FOR MORE INFORMATION REGARDING THE TAX CONSEQUENCES OF SELLING 529 SHARES.
New World Fund / Prospectus
Financial Highlights
The financial highlights table is intended to help you understand the fund's results for the past five years and is currently only shown for Class A, B, C and F shares. A similar table will be shown for the 529 share classes beginning with the fund's 2002 fiscal year end. 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 Deloitte & Touche LLP, whose report, along with the fund's financial statements, is included in the statement of additional information, which is available upon request.
CLASS A
YEAR ENDED OCTOBER 31
June 17 to
2001 2000 October 31,
1999/1/
NET ASSET VALUE, BEGINNING OF YEAR $ 22.81 $23.67 $23.56
--------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .47/2/ .42/2/ .16
Net losses on securities (3.87 )/2/ (1.08 )/2/ (.05)
(both realized and unrealized)
--------------------------------------------------------------------------------
Total from investment operations (3.40 ) (.66 ) .11
--------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends (from net investment income) (.37 ) (.20 ) .00
NET ASSET VALUE, END OF YEAR $ 19.04 $22.81 $23.67
--------------------------------------------------------------------------------
TOTAL RETURN/3/ (15.13 )% (2.91 )% .47%
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in millions) $ 1,053 $1,279 $ 739
--------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.29 % 1.35 % 1.46%/4/
--------------------------------------------------------------------------------
Ratio of net income to average net assets 2.15 % 1.61 % 1.83%/4/
|
1 Based on operations for the period shown and, accordingly, not representative
of a full year (unless otherwise noted).
2 Based on average shares outstanding.
3 Total returns exclude all sales charges, including contingent deferred sales
charges.
4 Annualized.
New World Fund / Prospectus
CLASS B CLASS C CLASS F
Year ended March 15 to March 15 to March 15 to
October 31, October 31, October 31, October 31,
2001 2000/1/ 2001/1/ 2001/1/
NET ASSET VALUE, $ 22.71 $ 29.09 $ 21.44 $ 21.57
BEGINNING OF PERIOD
-------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS/2/:
Net investment income .28 .20 .09 .21
Net losses on
securities (3.85) (6.58) (2.77) (2.80)
(both realized and
unrealized)
-------------------------------------------------------------------------------
Total from investment (3.57) (6.38) (2.68) (2.59)
operations
-------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends (from net (.32) .00 .00 .00
investment income)
NET ASSET VALUE, END $ 18.82 $ 22.71 $ 18.76 $ 18.98
OF PERIOD
-------------------------------------------------------------------------------
TOTAL RETURN/3/ (15.91)% (21.93)% (12.50)% (12.01)%
-------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of $ 20 $ 16 $ 3 $ 3
period (in millions)
-------------------------------------------------------------------------------
Ratio of expenses to 2.13% 2.03%/4/ 2.19%/4/ 1.40%/4/
average net assets
-------------------------------------------------------------------------------
Ratio of net income to 1.32% .93%/4/ .69%/4/ 1.62%/4/
average net assets
|
1 Based on operations for the period shown and, accordingly, not representative
of a full year (unless otherwise noted).
2 Based on average shares outstanding.
3 Total returns exclude all sales charges, including contingent deferred sales
charges.
4 Annualized.
YEAR ENDED OCTOBER 31
2001 2000 1999
Portfolio turnover rate for all classes of 40.13% 30.07% .83%
shares
|
New World Fund / Prospectus
NOTES
New World Fund / Prospectus
NOTES
[logo - AMERICAN FUNDS(sm)]
The right choice for the long term/SM/
FOR SHAREHOLDER SERVICES American Funds Service Company
800/421-0180
FOR RETIREMENT PLAN SERVICES Call your employer or plan
administrator
FOR DEALER SERVICES American Funds Distributors
800 /421-9900, ext. 11
FOR COLLEGEAMERICA American Funds Service Company
800 /421-0180, ext. 529
American FundsLine(R)
FOR 24-HOUR INFORMATION 800/325-3590
American FundsLine OnLine(R)
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. If there is any inconsistency or ambiguity as to the meaning of any word or phrase in a translation, the English text will prevail.
ANNUAL/SEMI-ANNUAL REPORTS TO SHAREHOLDERS The shareholder reports contain 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).
COLLEGEAMERICA PROGRAM DESCRIPTION The Program Description contains additional information about the policies and services related to CollegeAmerica accounts.
STATEMENT OF ADDITIONAL INFORMATION (SAI) AND CODES OF ETHICS The SAI contains more detailed information on all aspects of the fund, including the fund's financial statements, and is incorporated by reference into this prospectus. The Codes of Ethics describe the personal investing policies adopted by the fund and the fund's iinvestment adviser and its affiliated companies.
The Codes of Ethics and current SAI have been filed with the Securities and Exchange Commission ("SEC"). These 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. (202/942-8090) or on the EDGAR database on the SEC's Internet Web site at http://www.sec.gov, or, after payment of a duplicating fee, via e-mail request to publicinfo@sec.gov or by writing the SEC's Public Reference Section, Washington, D.C. 20549-0102.
HOUSEHOLD MAILINGS Each year you are automatically sent an updated prospectus, annual and semi-annual report for the fund. You may also occasionally receive proxy statements for the fund. In order to reduce the volume of mail you receive, when possible, only one copy of these documents will be sent to shareholders that are part of the same family and share the same residential address.
If you would like to receive individual copies of these documents, or a free copy of the SAI, Codes of Ethics or CollegeAmerica Program Description, please call American Funds Service Company at 800/421-0180 or write to the Secretary of the fund at 333 South Hope Street, Los Angeles, California 90071.
[RECYCLED LOGO]
Printed on recycled paper Investment Company File No. 811-9105 NWF-010-0202/MC ------------------------------------------------------------------------------- THE CAPITAL GROUP COMPANIES Capital International Capital Guardian Capital Research and Management Capital Bank and Trust American Funds |
THE FUND PROVIDES SPANISH TRANSLATION 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
|
[logo - American Funds(sm)]
The right choice for the long term(sm)
NEW WORLD FUND(sm)
PROSPECTUS
February 15, 2002
Table of Contents
1 Risk/Return Summary
5 Fees and Expenses of the Fund
7 Investment Objective, Strategies and Risks
11 Management and Organization
13 Shareholder Information
14 Choosing a Share Class
16 Purchase and Exchange of Shares
18 Sales Charges
20 Sales Charge Reductions and Waivers
21 Plans of Distribution
22 How to Sell Shares
23 Distributions and Taxes
24 Financial Highlights
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED OF THESE SECURITIES. FURTHER, IT HAS NOT DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
[This page is intentionally left blank.]
New World Fund / Prospectus
Risk/Return Summary
The fund seeks to make your investment grow over time by investing primarily in stocks of companies with significant exposure to countries with developing economies and/or markets. The fund may also invest in debt securities of issuers, including issuers of lower rated bonds, with exposure to these countries.
The fund is designed for investors seeking capital appreciation. Investors in the fund should have a long-term perspective and be able to tolerate potentially wide price fluctuations. Your investment in the fund is subject to risks, including the possibility that the value of the fund's investments may fluctuate in response to economic, political or social events in the U.S. or abroad. The prices of securities owned by the fund may be affected by events specifically involving the companies issuing those securities. The values of debt securities owned by the fund may be affected by changing interest rates and credit risk assessments. Lower quality or longer maturity bonds may be subject to greater price fluctuations than higher quality or shorter maturity bonds.
Although all securities in the fund's portfolio may be adversely affected by currency fluctuations or global political, social or economic instability, securities issued by entities based outside the U.S., particularly in countries with developing economies or markets, may be affected to a greater extent.
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.
YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.
New World Fund / Prospectus
HISTORICAL INVESTMENT RESULTS
The following information provides some indication of the risks of investing in the fund by showing changes in the fund's investment results from year to year and by showing how the fund's average annual total returns for various periods compare with those of a broad measure of market performance. Past results are not an indication of future results.
[bar chart]
CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES
(Results do not include a sales charge; if one were included,
results would be lower.)
2000 -20.90%
2001 -3.96%
[end chart]
Highest/lowest quarterly results during this time period were:
HIGHEST 15.38% (quarter ended December 31, 2001) LOWEST -18.32% (quarter ended September 30, 2001) |
New World Fund / Prospectus
Unlike the bar chart on the previous page, the Investment Results Table on the following page reflects, as required by Securities and Exchange Commission rules, the fund's results with the maximum initial or deferred sales charge imposed. Class A share results reflect the maximum initial sales charge of 5.75%. Class A sales charges are reduced for purchases of $25,000 or more.
Class B share results reflect the applicable contingent deferred sales charge. These charges begin to decline after 12 months and are eliminated after six years.
Results would be higher if calculated without a sales charge. All fund results reflect the reinvestment of dividend and capital gain distributions.
The fund's results are shown on a pre-tax and after-tax basis, as required by Securities and Exchange Commission rules. Total returns shown "after taxes on distributions" reflect the effect of taxable distributions (for example, dividend or capital gain distributions) by the fund. Total returns shown "after taxes on distributions and sale of fund shares" assume that you sold your fund shares at the end of the particular time period, and as a result, reflect the effect of both taxable distributions by the fund and any taxable gain or loss realized upon the sale of the shares.
After-tax returns are calculated using the highest historical individual federal income tax rates and do not reflect the impact of state and local taxes. After-tax returns are shown only for Class A shares; after-tax returns for other share classes will vary.
YOUR ACTUAL AFTER-TAX RETURNS DEPEND ON YOUR INDIVIDUAL TAX SITUATION AND LIKELY WILL DIFFER FROM THE RESULTS SHOWN ON THE FOLLOWING PAGE. IN ADDITION, AFTER-TAX RETURNS ARE NOT RELEVANT IF YOU HOLD YOUR FUND SHARES THROUGH TAX-DEFERRED ARRANGEMENTS, SUCH AS A 401(K) PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR COLLEGEAMERICA ACCOUNT.
Since the fund's Class C and F shares were first available on March 15, 2001 and the fund's Class 529 shares were first available on February 15, 2002, comparable results for these classes are not available for the 2001 calendar year.
New World Fund / Prospectus
INVESTMENT RESULTS TABLE (WITH MAXIMUM SALES CHARGES IMPOSED)
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2001:
ONE YEAR LIFETIME
---------------------------------------------------------------------------
CLASS A - BEGAN 6/17/99
Before Taxes -9.47% -5.51%
After Taxes on Distributions -10.33% -6.19%
After Taxes on Distributions and Sale of Fund Shares -5.70% -4.66%
---------------------------------------------------------------------------
CLASS B - BEGAN 3/15/00
Before Taxes -9.45% -18.00%
---------------------------------------------------------------------------
INDEXES/1/
MSCI All Country World Free Index/2/ -15.91% -6.82%
MSCI Emerging Markets Free Index/3/ -2.37% -8.14%
|
1 Lifetime results are as of the date Class A shares first became available.
2 The Morgan Stanley Capital International All Country World Free Index measures
23 developed stock markets throughout the world (including the U.S.), as well
as 26 emerging stock markets. This index includes eight markets with "free"
indices reflecting actual investable opportunities for global investors by
taking into account local market restrictions on share ownership by foreigners.
This index is unmanaged and does not reflect sales charges, commissions,
expenses or taxes.
3 The Morgan Stanley Capital International Emerging Markets Free Index measures
26 emerging stock markets throughout the world. In determining whether a market
is an emerging market, MSCI evaluates factors such as gross domestic product
per capita; local government regulations that limit or ban foreign ownership;
the regulatory environment; perceived investment risk; or a general perception
by the investment community that the country should be classified as
"emerging." This index includes eight markets with "free" indices reflecting
actual investable opportunities for global investors by taking into account
local market restrictions on share ownership by foreigners. This index is
unmanaged and does not reflect sales charges, commissions, expenses or taxes.
New World Fund / Prospectus
Fees and Expenses of the Fund
SHAREHOLDER FEES TABLE (PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS A/1/ CLASS B/1/ CLASS C/1/ CLASS E/1/ CLASS F/1/
------------------------------------------------------------------------------------
Maximum sales charge
imposed on purchases
(as a percentage of 5.75 %/2/ none none none none
offering price)
------------------------------------------------------------------------------------
Maximum sales charge
imposed on reinvested none none none none none
dividends
------------------------------------------------------------------------------------
Maximum deferred none/3/ 5.00%/4/ 1.00%/5/ none none
sales charge
------------------------------------------------------------------------------------
Redemption or
exchange fees none none none none none
|
1 Includes versions of these classes offered through CollegeAmerica, a 529
college savings plan sponsored by the Virginia College Savings Plan, an agency
of the Commonwealth of Virginia. Class E shares are only available through
CollegeAmerica to employer-sponsored plans.
2 Sales charges are reduced or eliminated for purchases of $25,000 or more.
3 A contingent deferred sales charge of 1% applies on certain redemptions made
within 12 months following purchases of $1 million or more made without a sales
charge.
4 Deferred sales charge is reduced after 12 months and eliminated after six
years.
5 Deferred sales charge is eliminated after 12 months.
ANNUAL FUND OPERATING EXPENSES TABLE (DEDUCTED FROM FUND ASSETS)
CLASS A CLASS B CLASS C/1/ CLASS F/1/
-------------------------------------------------------------------------------
Management Fees 0.79% 0.79% 0.79% 0.79%
-------------------------------------------------------------------------------
Distribution and/or 0.21% 1.00% 1.00% 0.25%
Service (12b-1) Fees/2/
-------------------------------------------------------------------------------
Other Expenses 0.29% 0.34% 0.40% 0.36%
-------------------------------------------------------------------------------
Total Annual Fund
Operating Expenses 1.29% 2.13% 2.19% 1.40%
CLASS CLASS CLASS CLASS CLASS
529-A/3/ 529-B/3/ 529-C/3/ 529-E/3/ 529-F/3/
-------------------------------------------------------------------------------
Management Fees 0.79% 0.79% 0.79% 0.79% 0.79%
-------------------------------------------------------------------------------
Distribution and/or 0.18% 1.00% 1.00% 0.50% 0.25%
Service (12b-1) Fees/4/
-------------------------------------------------------------------------------
Other Expenses/5/ 0.38% 0.38% 0.38% 0.38% 0.38%
-------------------------------------------------------------------------------
Total Annual Fund
Operating Expenses 1.35% 2.17% 2.17% 1.67% 1.42%
|
1 Annualized.
2 Class A and F 12b-1 fees may not exceed 0.30% and 0.50%, respectively, of the
class' average net assets annually.
3 Based on estimated amounts for the current fiscal year.
4 Class 529-A and 529-F 12b-1 fees may not exceed 0.50% of each class' average
net assets annually. Class 529-E 12b-1 fees may not exceed 0.75% of the class'
average net assets annually.
5 Includes 0.10% paid to the Virginia College Savings Plan for administrative
services it provides in overseeing CollegeAmerica.
New World Fund / Prospectus
EXAMPLE
The examples below are intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. The examples assume that you invest $10,000 in the fund for the time periods indicated, that your investment has a 5% return each year, that all dividend and capital gain distributions are reinvested, and that the fund's operating expenses remain the same as shown on the previous page. The examples assuming redemption do not reflect the effect of any taxable gain or loss at the time of the redemption.
Although your actual costs may be higher or lower, based on these assumptions, your cumulative estimated expenses would be:
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
-------------------------------------------------------------------------------
Class A/1/ $699 $ 960 $ 1,242 $2,042
-------------------------------------------------------------------------------
Class B - assuming redemption/2/ $716 $1,067 $ 1,344 $2,248
-------------------------------------------------------------------------------
Class B - assuming no redemption $216 $ 667 $ 1,144 $2,248
-------------------------------------------------------------------------------
Class C - assuming redemption/3/ $322 $ 685 $ 1,175 $2,524
-------------------------------------------------------------------------------
Class C - assuming no redemption $222 $ 685 $ 1,175 $2,524
-------------------------------------------------------------------------------
Class F - excludes intermediary fees/4/ $143 $ 443 $ 766 $1,680
-------------------------------------------------------------------------------
Class 529-A/1/ $705 $ 978 $1,272 $2,105
-------------------------------------------------------------------------------
Class 529-B - assuming redemption/2/ $720 $1,079 $ 1,364 $2,295
-------------------------------------------------------------------------------
Class 529-B - assuming no redemption $220 $ 679 $ 1,164 $2,295
-------------------------------------------------------------------------------
Class 529-C - assuming redemption/3/ $320 $ 679 $ 1,164 $2,503
-------------------------------------------------------------------------------
Class 529-C - assuming no redemption $220 $ 679 $ 1,164 $2,503
-------------------------------------------------------------------------------
Class 529-E $170 $ 526 $ 907 $1,976
-------------------------------------------------------------------------------
Class 529-F - excludes intermediary $145 $ 449 $ 776 $1,702
fees/4/
|
1 Reflects the maximum initial sales charge in the first year.
2 Reflects applicable contingent deferred sales charges through year six and
Class A or 529-A expenses for years nine and ten because Class B and 529-B
shares automatically convert to Class A and 529-A shares, respectively, after
eight years.
3 Reflects contingent deferred sales charge during the first year.
4 Does not include fees charged by financial intermediaries, which are independent of fund expenses and will increase the overall cost of your investment. Intermediary fees typically range from 0.50% to 3.00% of assets annually depending on services offered.
New World Fund / Prospectus
Investment Objective, Strategies and Risks
The fund's investment objective is long-term capital appreciation. The fund may invest in equity securities of any company, regardless of where it is based, if the fund's investment adviser determines that a significant portion of a company's assets or revenues (generally 20% or more) are attributable to developing countries. Under normal market conditions, the fund will invest at least 35% of its assets in equity and debt securities of issuers primarily based in qualified countries that have developing economies and/or markets. In addition, the fund may invest up to 25% of its assets in debt securities of issuers, including issuers of lower rated bonds and government bonds, primarily based in qualified countries or that have a significant portion of their assets or revenues attributable to developing countries.
In determining whether a country is qualified, the fund will consider such factors as the country's per capita gross domestic product, the percentage of the country's economy that is industrialized, market capital as a percentage of gross domestic product, the overall regulatory environment, the presence of government regulation limiting or banning foreign ownership, and restrictions on repatriation of initial capital, dividends, interest, and/or capital gains. The fund's investment adviser will maintain a list of qualified countries and securities in which the fund may invest. Qualified developing countries in which the fund may invest currently include, but are not limited to, Argentina, Brazil, Chile, China, Colombia, Croatia, Czech Republic, Egypt, Hungary, India, Israel, Jordan, Malaysia, Mexico, Morocco, Panama, Peru, Philippines, Poland, Russia, South Africa, South Korea, Thailand, Turkey and Venezuela.
The prices of securities held by the fund may decline in response to certain events, including: those directly involving the companies whose securities are owned in the fund; conditions affecting the general economy; overall market changes; global political, social or economic instability; and currency and interest rate fluctuations. The growth-oriented, equity-type securities generally purchased by the fund may involve large price swings and potential for loss, particularly in the case of smaller capitalization stocks. Smaller capitalization stocks are often more difficult to value or dispose of, more difficult to obtain information about, and more volatile than stocks of larger, more established companies.
Investments in securities issued by entities based outside the U.S. may be subject to the risks described above to a greater extent and may also be affected by differing securities regulations, higher transaction costs, and administrative difficulties such as delays in clearing and settling portfolio transactions. Investing in countries with developing economies and/or markets generally involves risks in addition to and greater than those generally associated with investing in developed countries. For instance, developing countries may have less developed legal and accounting systems. The governments of these countries may be more unstable and likely to impose capital controls, nationalize a company or industry, place restrictions on foreign ownership and on withdrawing sale proceeds of securities from the country, and/or impose punitive taxes that could adversely
New World Fund / Prospectus
affect security prices. In addition, the economies of these countries may be dependent on relatively few industries that are more susceptible to local and global changes. Securities markets in these countries are also relatively small and have substantially lower trading volumes. As a result, securities issued in these countries may be more volatile and potentially less liquid than securities issued in countries with more developed economies or markets.
The values of most debt securities held by the fund may be affected by changing interest rates and by changes in effective maturities and credit ratings of these securities. For example, the values of debt securities in the fund's portfolio generally will decline when interest rates rise and increase when interest rates fall. In addition, falling interest rates may cause an issuer to redeem or "call" a security before its stated maturity, which may result in the fund having to reinvest the proceeds in lower yielding securities. Debt securities are also subject to credit risk, which is the possibility that the credit strength of an issuer will weaken and/or an issuer of a debt security will fail to make timely payments of principal or interest and the security will go into default. Lower quality or longer maturity securities generally have higher rates of interest and may be subject to greater price fluctuations than higher quality or shorter maturity securities. The fund's investment adviser attempts to reduce these risks through diversification of the portfolio and with ongoing credit analysis of each issuer, as well as by monitoring economic and legislative developments.
The fund may also hold cash or money market instruments. 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 in a period of rising market prices; conversely, it would reduce the fund's magnitude of loss in the event of a general market downturn and provide liquidity to make additional investments or to meet redemptions.
The fund relies on the professional judgment of its investment adviser, Capital Research and Management Company, to make decisions about the fund's portfolio investments. The basic investment philosophy of the investment adviser is to seek reasonably priced securities that represent above average long-term growth opportunities. This is accomplished not only through fundamental analysis, but also by meeting with company executives and employees, suppliers, customers and competitors in order to gain in-depth knowledge of a company's true value. Securities may be sold when the investment adviser believes they no longer represent good long-term value.
New World Fund / Prospectus
INVESTMENT RESULTS TABLE (WITHOUT SALES CHARGES IMPOSED)
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2001:
ONE YEAR LIFETIME
-----------------------------------------------------------------------------
CLASS A - BEGAN 6/17/99
Before Taxes -3.96% -3.27%
After Taxes on Distributions -4.87% -3.97%
After Taxes on Distributions and Sale of Fund Shares -2.34% -2.90%
-----------------------------------------------------------------------------
CLASS B - BEGAN 3/15/00
Before Taxes -4.77% -16.18%
-----------------------------------------------------------------------------
INDEXES/1/
MSCI All Country World Free Index/2/ -15.91% -6.82%
MSCI Emerging Markets Free Index/3/ -2.37% -8.14%
|
1 Lifetime results are as of the date Class A shares first became available.
2 The Morgan Stanley Capital International All Country World Free Index measures
23 developed stock markets throughout the world (including the U.S.), as well
as 26 emerging stock markets. This index includes eight markets with "free"
indices reflecting actual investable opportunities for global investors by
taking into account local market restrictions on share ownership by foreigners.
This index is unmanaged and does not reflect sales charges, commissions,
expenses or taxes.
3 The Morgan Stanley Capital International Emerging Markets Free Index measures
26 emerging stock markets throughout the world. In determining whether a market
is an emerging market, MSCI evaluates factors such as gross domestic product
per capita; local government regulations that limit or ban foreign ownership;
the regulatory environment; perceived investment risk; or a general perception
by the investment community that the country should be classified as
"emerging." This index includes eight markets with "free" indices reflecting
actual investable opportunities for global investors by taking into account
local market restrictions on share ownership by foreigners. This index is
unmanaged and does not reflect sales charges, commissions, expenses or taxes.
New World Fund / Prospectus
[pie chart]
HOLDINGS BY INDUSTRY AS OF OCTOBER 31, 2001
Banks 7.59%
Electronic Equipment & Instruments 7.46%
Pharmaceuticals 5.77%
Oil & Gas 5.33%
Beverages 4.82%
Other Industries 49.52%
Bonds and Notes 10.49%
Cash & Equivalents 9.02%
[end chart]
New World Fund / Prospectus
LARGEST EQUITY HOLDINGS AS OF OCTOBER 31, 2001
PERCENT OF NET ASSETS
--------------------------------------------------------------
Housing Development Finance 2.57%
--------------------------------------------------------------
Samsung SDI 2.23
---------------------------------------
Petrobras 1.99
--------------------------------------------------------------
Samsung Electronics 1.86
--------------------------------------------------------------
Sappi 1.77
--------------------------------------------------------------
Aventis 1.50
--------------------------------------------------------------
Fomento Economico Mexicano 1.47
--------------------------------------------------------------
Coca-Cola 1.40
--------------------------------------------------------------
Unibanco-Uniao de Bancos Brasileiros 1.39
--------------------------------------------------------------
Samsung Electro-Mechanics 1.33
--------------------------------------------------------------
|
Because the fund is actively managed, its holdings will change over time.
For updated information on the fund's portfolio holdings, please visit us at www.americanfunds.com.
New World Fund / Prospectus
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 appears earlier in the Annual Fund Operating Expenses Table.
New World Fund / Prospectus
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 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 New World Fund are:
PORTFOLIO COUNSELOR/ PORTFOLIO COUNSELOR PRIMARY TITLE WITH INVESTMENT ADVISER
FUND TITLE (IF APPLICABLE) EXPERIENCE IN THIS FUND (OR AFFILIATE) AND INVESTMENT EXPERIENCE
--------------------------------------------------------------------------------------------------------
ROBERT W. LOVELACE 3 years President and Director, Capital Research Company
President, Principal
Executive Officer and Investment professional for 17 years, all with
Director Capital Research and Management Company or
affiliate
--------------------------------------------------------------------------------------------------------
MARK E. DENNING 3 years Director, Capital Research and Management Company
Senior Vice President
Investment professional for 20 years, all with
Capital Research and Management Company or
affiliate
--------------------------------------------------------------------------------------------------------
DAVID C. BARCLAY 3 years Senior Vice President and Director, Capital
Vice President Research and Management Company
Investment professional for 21 years in total;14
years with Capital Research and Management
Company or affiliate
--------------------------------------------------------------------------------------------------------
ALWYN HEONG 3 years Senior Vice President, Capital Research Company
Vice President
Investment professional for 13 years in total;10
years with Capital Research and Management
Company or affiliate
--------------------------------------------------------------------------------------------------------
CARL M. KAWAJA 3 years Senior Vice President and Director, Capital
Vice President Research Company
Investment professional for 14 years in total;11
years with Capital Research and Management
Company or affiliate
--------------------------------------------------------------------------------------------------------
|
New World Fund / Prospectus
Shareholder Information
SHAREHOLDER SERVICES
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 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
Access the American Funds website : www.americanfunds.com
[map of the United States]
Western Western Central Eastern Central Eastern Service Center Service Center Service Center Service Center American Funds American Funds American Funds American Funds Service Company Service Company Service Company Service Company P.O. Box 25065 P.O. Box 659522 P.O. Box 6007 P.O. Box 2280 Santa Ana, San Antonio, Texas Indianapolis, Indiana Norfolk, Virginia California 78265-9522 46206-6007 23501-2280 92799-5065 Fax: 210/474-4050 Fax: 317/735-6620 Fax: 757/670-4773 Fax: 714/671-7080 |
A MORE DETAILED DESCRIPTION OF POLICIES AND SERVICES IS INCLUDED IN THE FUND'S STATEMENT OF ADDITIONAL INFORMATION AND THE OWNER'S GUIDE SENT TO NEW AMERICAN FUNDS SHAREHOLDERS TITLED "WELCOME TO THE FAMILY." 529 CLASS SHAREHOLDERS SHOULD ALSO REFER TO THE COLLEGEAMERICA PROGRAM DESCRIPTION FOR INFORMATION ON POLICIES AND SERVICES SPECIFICALLY RELATING TO THEIR COLLEGEAMERICA ACCOUNT(S). These documents are available by writing or calling American Funds Service Company.
New World Fund / Prospectus
Choosing a Share Class
The fund offers different classes of shares through this prospectus. Class A, B, C and F shares may be purchased through various investment programs or accounts, including many types of retirement plans. The services or share classes available to you may vary depending upon how you wish to purchase shares of the fund.
Investors residing in any state may purchase Class 529-A, 529-B, 529-C, 529-E and 529-F shares through an account established with CollegeAmerica. The 529-A, 529-B, 529-C and 529-F share classes are structured similarly to the corresponding Class A, B, C and F shares. For example, the same initial sales charges apply to Class 529-A shares as they do to Class A shares. Class 529-E shares are only available to investors participating in CollegeAmerica through an eligible employer plan.
Each share class represents investments in the same portfolio of securities, but each class has its own sales charge and expense structure, allowing you to choose the class that best meets your situation. WHEN YOU PURCHASE SHARES OF THE FUND, YOU MUST CHOOSE A SHARE CLASS. IF NONE IS CHOSEN, YOUR INVESTMENT WILL BE MADE IN CLASS A SHARES OR, IN THE CASE OF A COLLEGEAMERICA INVESTMENT, CLASS 529-A SHARES.
Factors you should consider in choosing a class of shares include:
. how long you expect to own the shares;
. how much you intend to invest;
. total expenses associated with owning shares of each class;
. whether you qualify for any reduction or waiver of sales charges (for example, Class A or 529-A shares may be a less expensive option over time if you qualify for a sales charge reduction or waiver);
. whether you plan to take any distributions in the near future (for example, the contingent deferred sales charge will not be waived if you sell your Class 529-B or 529-C shares to cover higher education expenses);
. Class B and C shares are generally not available to certain retirement plans, including employer-sponsored retirement plans such as 401(k) plans, 457 plans, employer-sponsored 403(b) plans, and money purchase pension and profit sharing plans;
. Class F and 529-F shares are generally only available to fee-based programs of investment firms that have special agreements with the fund's distributor and certain registered investment advisers.
EACH INVESTOR'S FINANCIAL CONSIDERATIONS ARE DIFFERENT. YOU SHOULD SPEAK WITH YOUR FINANCIAL ADVISER TO HELP YOU DECIDE WHICH SHARE CLASS IS BEST FOR YOU.
UNLESS OTHERWISE NOTED, REFERENCES IN THE FOLLOWING PAGES TO CLASS A, B, C OR F SHARES ALSO REFER TO THE CORRESPONDING CLASS 529-A, 529-B, 529-C OR 529-F SHARES.
New World Fund / Prospectus
SUMMARY OF THE PRIMARY DIFFERENCES AMONG SHARE CLASSES
CLASS A SHARES
Initial sales charge up to 5.75% (reduced or eliminated for purchases of
$25,000 or more)
Contingent deferred none (except on certain redemptions on purchases of $1
sales charge million or more made without an initial sales charge)
12b-1 fees up to 0.30% annually (529-A may not exceed 0.50%
annually)
Dividends generally higher than other classes due to lower
annual expenses
Purchase maximum none
Conversion none
CLASS B SHARES
Initial sales charge none
Contingent deferred starts at 5.00% and declines until it reaches 0% after
sales charge six years
12b-1 fees 1.00% annually
Dividends generally lower than A and F shares due to higher
distribution fees and other expenses, but higher than
C shares due to lower other expenses
Purchase maximum $100,000
Conversion automatic conversion to A or 529-A shares after eight
years, reducing future annual expenses
CLASS C SHARES
Initial sales charge none
Contingent deferred 1.00% if shares are sold within one year after being
sales charge purchased
12b-1 fees 1.00% annually
Dividends generally lower than other classes due to higher
distribution fees and other expenses
Purchase maximum $500,000
Conversion automatic conversion to F shares after 10 years,
reducing future annual expenses (529-C shares will not
convert to 529-F shares)
CLASS F SHARES
Initial sales charge none
Contingent deferred none
sales charge
12b-1 fees currently 0.25% annually (may not exceed 0.50%
annually)
Dividends generally higher than B and C shares due to lower
distribution fees, but lower than A shares due to
higher other expenses
Purchase maximum none
Conversion none
CLASS 529-E SHARES
Initial sales charge none
Contingent deferred none
sales charge
12b-1 fees currently 0.50% annually (may not exceed 0.75%
annually)
Dividends generally higher than 529-B and 529-C shares due to
lower distribution fees, but lower than 529-A and
529-F shares due to higher distribution fees
Purchase maximum none
Conversion none
|
New World Fund / Prospectus
Purchase and Exchange of Shares
PURCHASE OF CLASS A, B AND C SHARES
You may generally open an account and purchase Class A, B and C shares by contacting any investment dealer (who may impose transaction charges in addition to those described in this prospectus) authorized to sell the fund's shares. You may purchase additional shares in various ways, including through your investment dealer and by mail, telephone, the Internet and bank wire.
PURCHASE OF CLASS F SHARES
You may generally open an account and purchase Class F shares only through fee-based programs of investment firms that have special agreements with the fund's distributor and certain registered investment advisers. These firms and advisers typically charge ongoing fees for services they provide.
PURCHASE OF CLASS 529 SHARES
Class 529 shares may be purchased only through a CollegeAmerica account. You may open a CollegeAmerica account and purchase 529 shares by contacting any investment dealer (who may impose transaction charges in addition to those described in this prospectus) authorized to sell a CollegeAmerica account. You may purchase additional shares in various ways, including through your investment dealer and by mail, telephone, the Internet and bank wire.
Class 529-E shares may only be purchased by employees participating in CollegeAmerica through an eligible employer plan.
EXCHANGE
Generally, you may exchange your shares into shares of the same class of other
funds in The American Funds Group without a sales charge. Class A, C or F shares
may generally be exchanged into the corresponding 529 share class without a
sales charge. Class B shares may not be exchanged into Class 529-B shares.
EXCHANGES FROM CLASS A, C OR F SHARES TO THE CORRESPONDING 529 SHARE CLASS,
PARTICULARLY IN THE CASE OF UNIFORM GIFTS TO MINORS ACT OR UNIFORM TRANSFER TO
MINORS ACT CUSTODIAL ACCOUNTS, MAY RESULT IN SIGNIFICANT LEGAL AND TAX
CONSEQUENCES AS DESCRIBED IN THE COLLEGEAMERICA PROGRAM DESCRIPTION. PLEASE
CONSULT YOUR FINANCIAL ADVISER PRIOR TO MAKING SUCH AN EXCHANGE.
Exchanges of shares from the money market funds in The American Funds Group initially purchased without a sales charge generally will be subject to the appropriate sales charge. For purposes of computing the contingent deferred sales charge on Class B and C shares, the length of time you have owned your shares will be measured from the date of original purchase and will not be affected by any permitted exchange.
New World Fund / Prospectus
Exchanges have the same tax consequences as ordinary sales and purchases. For example, to the extent you exchange shares held in a taxable account that are worth more now than what you paid for them, the gain will be subject to taxation. See "Transactions by Telephone, Fax or the Internet" for information regarding electronic exchanges.
THE FUND AND AMERICAN FUNDS DISTRIBUTORS, THE FUND'S DISTRIBUTOR, RESERVE THE RIGHT TO REJECT ANY PURCHASE ORDER FOR ANY REASON. THE FUND IS NOT DESIGNED TO SERVE AS A VEHICLE FOR FREQUENT TRADING IN RESPONSE TO SHORT-TERM FLUCTUATIONS IN THE STOCK MARKET. ACCORDINGLY, PURCHASES THAT ARE PART OF EXCHANGE ACTIVITY THAT THE FUND AND AMERICAN FUNDS DISTRIBUTORS HAVE DETERMINED COULD INVOLVE ACTUAL OR POTENTIAL HARM TO THE FUND MAY BE REJECTED.
PURCHASE MINIMUMS AND MAXIMUMS
PURCHASE MINIMUMS FOR ALL CLASSES OF SHARES
-------------------------------------------------------------------------
To establish an account (including retirement plan accounts) $ 250
For a retirement plan account through payroll deduction $ 25
or employer-sponsored CollegeAmerica account
To add to an account $ 50
For a retirement plan account through payroll deduction $ 25
or employer-sponsored CollegeAmerica account
-------------------------------------------------------------------------
PURCHASE MAXIMUM FOR CLASS B SHARES $100,000
-------------------------------------------------------------------------
PURCHASE MAXIMUM FOR CLASS C SHARES $500,000
|
VALUING SHARES
The fund's net asset value is the value of a single share. The fund calculates
its net asset value, each day the New York Stock Exchange is open, as of 4:00
p.m. New York time, the normal close of regular trading. Assets are valued
primarily on the basis of market quotations. However, the fund has adopted
procedures for making "fair value" determinations if market quotations are not
readily available.
Your shares will be purchased at the net asset value (plus any applicable sales charge in the case of Class A shares), or sold at the net asset value next determined after American Funds Service Company receives and accepts your request. A contingent deferred sales charge may apply at the time you sell certain Class A, B and C shares.
New World Fund / Prospectus
Sales Charges
CLASS A
The initial sales charge you pay when you buy Class A shares differs depending upon the amount you invest and may be reduced or eliminated for larger purchases as indicated below. Any applicable sales charge will be paid directly from your investment and, as a result, will reduce the amount of your investment.
SALES CHARGE AS A
PERCENTAGE OF
DEALER
NET COMMISSION
OFFERING AMOUNT AS % OF
INVESTMENT PRICE INVESTED OFFERING PRICE
---------------------------------------------------------------------------
Less than $25,000 5.75% 6.10% 5.00%
---------------------------------------------------------------------------
$25,000 but less than $50,000 5.00% 5.26% 4.25%
---------------------------------------------------------------------------
$50,000 but less than $100,000 4.50% 4.71% 3.75%
---------------------------------------------------------------------------
$100,000 but less than $250,000 3.50% 3.63% 2.75%
---------------------------------------------------------------------------
$250,000 but less than $500,000 2.50% 2.56% 2.00%
---------------------------------------------------------------------------
$500,000 but less than $750,000 2.00% 2.04% 1.60%
---------------------------------------------------------------------------
$750,000 but less than $1 million 1.50% 1.52% 1.20%
---------------------------------------------------------------------------
$1 million or more and certain other none none none
investments described below
---------------------------------------------------------------------------
|
CLASS A PURCHASES NOT SUBJECT TO SALES CHARGE
INVESTMENTS OF $1 MILLION OR MORE MAY BE SUBJECT TO A 1% CONTINGENT DEFERRED SALES CHARGE IF SHARES ARE SOLD WITHIN ONE YEAR OF PURCHASE. Employer-sponsored defined contribution-type plans investing $1 million or more, or with 100 or more eligible employees, and Individual Retirement Account rollovers involving retirement plan assets invested in the American Funds, may invest with no sales charge and are not subject to a contingent deferred sales charge. Also exempt are investments made through retirement plans, endowments or foundations with $50 million or more in assets, and investments made through accounts that purchased fund shares before March 15, 2001 and are part of certain qualified fee-based programs. The distributor may pay dealers up to 1% on investments made in Class A shares with no initial sales charge. The fund may reimburse the distributor for these payments through its Plans of Distribution (see below).
New World Fund / Prospectus
CLASS B AND C SHARES
Class B and C shares are sold without any initial sales charge. American Funds Distributors pays 4% of the amount invested to dealers who sell Class B shares and 1% to dealers who sell Class C shares.
For Class C shares, a contingent deferred sales charge of 1% applies if shares are sold within one year of purchase. For Class B shares, a contingent deferred sales charge may be applied to shares you sell within six years of purchase, as shown in the table below.
CLASS B SHARES SOLD WITHIN YEAR 1 2 3 4 5 6 ---------------------------------------------------------------- CONTINGENT DEFERRED SALES CHARGE 5% 4% 4% 3% 2% 1% |
Shares acquired through reinvestment of dividend or capital gain distributions are not subject to a contingent deferred sales charge. In addition, the contingent deferred sales charge may be waived in certain circumstances. See "Contingent Deferred Sales Charge Waivers" below. The contingent deferred sales charge is based on the original purchase cost or the current market value of the shares being sold, whichever is less. For purposes of determining the contingent deferred sales charge, if you sell only some of your shares, shares that are not subject to any contingent deferred sales charge will be sold first, followed by shares that you have owned the longest.
See "Plans of Distribution" below for ongoing compensation paid to your dealer or financial adviser for all share classes.
CONVERSION OF CLASS B AND C SHARES
Class B shares automatically convert to Class A shares in the month of the eight-year anniversary of the purchase date. Class C shares automatically convert to Class F shares in the month of the ten-year anniversary of the purchase date; however, Class 529-C shares will not convert to Class 529-F shares. The Internal Revenue Service currently takes the position that these automatic conversions are not taxable. Should its position change, the automatic conversion feature may be suspended. If this happens, you would have the option of converting your Class B, 529-B or C shares to the respective share classes at the anniversary dates described above, but you might face certain tax consequences as a result.
CLASS F AND 529-E SHARES
Class F and Class 529-E shares are sold without any initial or contingent deferred sales charge.
New World Fund / Prospectus
Sales Charge Reductions and Waivers
You must let your investment dealer or American Funds Service Company know at the time you purchase shares if you qualify for a reduction in your Class A initial sales charge or waiver of your Class B or C contingent deferred sales charge.
REDUCING YOUR CLASS A INITIAL SALES CHARGE
You and your "immediate family" (your spouse and your children under the age of 21) may combine investments to reduce your Class A sales charge.
AGGREGATING ACCOUNTS
To receive a reduced Class A sales charge, investments made by you and your immediate family (see above) may be aggregated if made for your own account(s) and/or certain other accounts, such as:
. trust accounts established by the above individuals. However, if the person(s) who established the trust is deceased, the trust account may be aggregated with accounts of the primary beneficiary of the trust;
.solely controlled business accounts;
.single-participant retirement plans.
CONCURRENT PURCHASES
You may combine simultaneous purchases of any class of shares of two or more American Funds, as well as individual holdings in various American Legacy variable annuities or variable life insurance policies, to qualify for a reduced Class A sales charge. Direct purchases of money market funds are excluded.
RIGHTS OF ACCUMULATION
You may take into account the current value (or if greater, the amount you invested less any withdrawals) of your existing holdings in any class of shares of the American Funds, as well as individual holdings in various American Legacy variable annuities or variable life insurance policies, to determine your Class A sales charge. Direct purchases of money market funds are excluded.
STATEMENT OF INTENTION
You may reduce your Class A sales charges by establishing a Statement of Intention. A Statement of Intention allows you to combine all non-money market fund purchases of all share classes you intend to make over a 13-month period, as well as individual American Legacy variable annuity and life insurance policies, to determine the applicable sales charge. At your request, purchases made during the previous 90 days may be included; however, capital appreciation and reinvested dividends and capital gains do not apply toward these combined purchases. A portion of your account may be
New World Fund / Prospectus
held in escrow to cover additional Class A sales charges that may be due if your total investments over the 13-month period do not qualify for the applicable sales charge reduction.
CONTINGENT DEFERRED SALES CHARGE WAIVERS
The contingent deferred sales charge on Class A, B and C shares may be waived in the following cases:
. when receiving payments through systematic withdrawal plans (up to 12% of the value of each fund account);
. when receiving required minimum distributions from retirement accounts upon reaching age 70 1/2;
. for redemptions due to death or post-purchase disability of the shareholder (this generally excludes trusts); or
. for redemptions due to a beneficiary's death, post-purchase disability or receipt of a scholarship (only applies to 529 share classes).
Plans of Distribution
The fund has Plans of Distribution or "12b-1 Plans" 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. The plans provide for annual expenses of up to 0.30% for Class A shares, up to 0.50% for Class 529-A shares, 1.00% for Class B, 529-B, C and 529-C shares, up to 0.75% for Class 529-E shares, and up to 0.50% for Class F and 529-F shares. For all share classes, up to 0.25% of these expenses may be used to pay service fees to qualified dealers for providing certain shareholder services. The amount remaining for each share class may be used for distribution expenses.
The 12b-1 fees paid by the fund, as a percentage of average net assets, for the previous fiscal year are indicated earlier in the Annual Fund Operating Expenses Table. Since these fees are paid out of the fund's assets or income on an ongoing basis, over time they will increase the cost and reduce the return of an investment. The higher fees for Class B and C shares may cost you more over time than paying the initial sales charge for Class A shares.
OTHER COMPENSATION TO DEALERS
American Funds Distributors may pay, or sponsor informational meetings for, dealers as described in the statement of additional information.
New World Fund / Prospectus
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 OR FINANCIAL ADVISER (CERTAIN CHARGES MAY APPLY)
. Shares held for you in your dealer's name must be sold through the dealer.
. Class F shares must be sold through your dealer or financial adviser.
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 $75,000;
-- 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 that has been changed within the last 10 days.
. American Funds Service Company reserves the right to require signature guarantee(s) on any redemptions.
. Additional documentation may be required for sales of shares held in corporate, partnership or fiduciary accounts.
TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY, OR USING THE INTERNET
. Redemptions by telephone, fax or the Internet (including American FundsLine(R) and American FundsLine OnLine(R)) are limited to $75,000 per American Funds 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 OR THE INTERNET
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 Internet 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, it and/or the fund may be liable for losses due to unauthorized or fraudulent instructions.
New World Fund / Prospectus
Distributions and Taxes
DIVIDENDS AND DISTRIBUTIONS
The fund intends to distribute dividends to you, usually in December. Capital gains, if any, are usually distributed in December. When a dividend or capital gain is distributed, the net asset value per share is reduced by the amount of the payment.
You may elect to reinvest dividend and/or capital gain distributions to purchase
additional shares of this fund or other American Funds, or you may elect to
receive them in cash. Most shareholders do not elect to take capital gain
distributions in cash because these distributions reduce principal value.
Dividend and capital gain distributions by 529 share classes will be
automatically reinvested.
TAXES ON DISTRIBUTIONS
Distributions you receive from the fund may be subject to income tax and may also be subject to state or local taxes - unless you are exempt from taxation.
For federal tax purposes, any taxable dividends and distributions of short-term capital gains are treated as ordinary income. The fund's distributions of net long-term capital gains are taxable to you as long-term 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 is the difference between the cost of your shares, including any sales charges, and the price you receive when you sell them.
PLEASE SEE YOUR TAX ADVISER FOR MORE INFORMATION. HOLDERS OF 529 SHARES SHOULD REFER TO THE COLLEGEAMERICA PROGRAM DESCRIPTION FOR MORE INFORMATION REGARDING THE TAX CONSEQUENCES OF SELLING 529 SHARES.
New World Fund / Prospectus
Financial Highlights
The financial highlights table is intended to help you understand the fund's results for the past five years and is currently only shown for Class A, B, C and F shares. A similar table will be shown for the 529 share classes beginning with the fund's 2002 fiscal year end. 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 Deloitte & Touche LLP, whose report, along with the fund's financial statements, is included in the statement of additional information, which is available upon request.
CLASS A
YEAR ENDED OCTOBER 31
June 17 to
2001 2000 October 31,
1999/1/
NET ASSET VALUE, BEGINNING OF YEAR $ 22.81 $23.67 $23.56
--------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .47/2/ .42/2/ .16
Net losses on securities (3.87 )/2/ (1.08 )/2/ (.05)
(both realized and unrealized)
--------------------------------------------------------------------------------
Total from investment operations (3.40 ) (.66 ) .11
--------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends (from net investment income) (.37 ) (.20 ) .00
NET ASSET VALUE, END OF YEAR $ 19.04 $22.81 $23.67
--------------------------------------------------------------------------------
TOTAL RETURN/3/ (15.13 )% (2.91 )% .47%
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in millions) $ 1,053 $1,279 $ 739
--------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.29 % 1.35 % 1.46%/4/
--------------------------------------------------------------------------------
Ratio of net income to average net assets 2.15 % 1.61 % 1.83%/4/
|
1 Based on operations for the period shown and, accordingly, not representative
of a full year (unless otherwise noted).
2 Based on average shares outstanding.
3 Total returns exclude all sales charges, including contingent deferred sales
charges.
4 Annualized.
New World Fund / Prospectus
CLASS B CLASS C CLASS F
Year ended March 15 to March 15 to March 15 to
October 31, October 31, October 31, October 31,
2001 2000/1/ 2001/1/ 2001/1/
NET ASSET VALUE, $ 22.71 $ 29.09 $ 21.44 $ 21.57
BEGINNING OF PERIOD
-------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS/2/:
Net investment income .28 .20 .09 .21
Net losses on
securities (3.85) (6.58) (2.77) (2.80)
(both realized and
unrealized)
-------------------------------------------------------------------------------
Total from investment (3.57) (6.38) (2.68) (2.59)
operations
-------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends (from net (.32) .00 .00 .00
investment income)
NET ASSET VALUE, END $ 18.82 $ 22.71 $ 18.76 $ 18.98
OF PERIOD
-------------------------------------------------------------------------------
TOTAL RETURN/3/ (15.91)% (21.93)% (12.50)% (12.01)%
-------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of $ 20 $ 16 $ 3 $ 3
period (in millions)
-------------------------------------------------------------------------------
Ratio of expenses to 2.13% 2.03%/4/ 2.19%/4/ 1.40%/4/
average net assets
-------------------------------------------------------------------------------
Ratio of net income to 1.32% .93%/4/ .69%/4/ 1.62%/4/
average net assets
|
1 Based on operations for the period shown and, accordingly, not representative
of a full year (unless otherwise noted).
2 Based on average shares outstanding.
3 Total returns exclude all sales charges, including contingent deferred sales
charges.
4 Annualized.
YEAR ENDED OCTOBER 31
2001 2000 1999
Portfolio turnover rate for all classes of 40.13% 30.07% .83%
shares
|
New World Fund / Prospectus
NOTES
New World Fund / Prospectus
NOTES
[logo - AMERICAN FUNDS(sm)]
The right choice for the long term/SM/
FOR SHAREHOLDER SERVICES American Funds Service Company
800/421-0180
FOR RETIREMENT PLAN SERVICES Call your employer or plan
administrator
FOR DEALER SERVICES American Funds Distributors
800 /421-9900, ext. 11
FOR COLLEGEAMERICA American Funds Service Company
800 /421-0180, ext. 529
American FundsLine(R)
FOR 24-HOUR INFORMATION 800/325-3590
American FundsLine OnLine(R)
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. If there is any inconsistency or ambiguity as to the meaning of any word or phrase in a translation, the English text will prevail.
ANNUAL/SEMI-ANNUAL REPORTS TO SHAREHOLDERS The shareholder reports contain 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).
COLLEGEAMERICA PROGRAM DESCRIPTION The Program Description contains additional information about the policies and services related to CollegeAmerica accounts.
STATEMENT OF ADDITIONAL INFORMATION (SAI) AND CODES OF ETHICS The SAI contains more detailed information on all aspects of the fund, including the fund's financial statements, and is incorporated by reference into this prospectus. The Codes of Ethics describe the personal investing policies adopted by the fund and the fund's iinvestment adviser and its affiliated companies.
The Codes of Ethics and current SAI have been filed with the Securities and Exchange Commission ("SEC"). These 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. (202/942-8090) or on the EDGAR database on the SEC's Internet Web site at http://www.sec.gov, or, after payment of a duplicating fee, via e-mail request to publicinfo@sec.gov or by writing the SEC's Public Reference Section, Washington, D.C. 20549-0102.
HOUSEHOLD MAILINGS Each year you are automatically sent an updated prospectus, annual and semi-annual report for the fund. You may also occasionally receive proxy statements for the fund. In order to reduce the volume of mail you receive, when possible, only one copy of these documents will be sent to shareholders that are part of the same family and share the same residential address.
If you would like to receive individual copies of these documents, or a free copy of the SAI, Codes of Ethics or CollegeAmerica Program Description, please call American Funds Service Company at 800/421-0180 or write to the Secretary of the fund at 333 South Hope Street, Los Angeles, California 90071.
[RECYCLED LOGO]
Printed on recycled paper Investment Company File No. 811-9105 NWF-010-0202/MC ------------------------------------------------------------------------------- THE CAPITAL GROUP COMPANIES Capital International Capital Guardian Capital Research and Management Capital Bank and Trust American Funds |
NEW WORLD FUND, INC.
Part B
Statement of Additional Information
February 15, 2002
This document is not a prospectus but should be read in conjunction with the current prospectus of New World Fund (the "fund" or "NWF") dated February 15, 2002. The prospectus may be obtained from your investment dealer or financial planner or by writing to the fund at the following address:
New World Fund, Inc. Attention: Secretary 333 South Hope StreetLos Angeles, California 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. 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. . . . . . . . . . 8 Management of the Fund . . . . . . . . . . . . . . . . . . . . . . 10 Taxes and Distributions . . . . . . . . . . . . . . . . . . . . . . 22 Purchase of Shares. . . . . . . . . . . . . . . . . . . . . . . . . 27 Sales Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Sales Charge Reductions and Waivers . . . . . . . . . . . . . . . . 33 Individual Retirement Account (IRA) Rollovers . . . . . . . . . . . 37 Price of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Selling Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Shareholder Account Services and Privileges . . . . . . . . . . . . 40 Execution of Portfolio Transactions . . . . . . . . . . . . . . . . 43 General Information . . . . . . . . . . . . . . . . . . . . . . . . 44 Class A Share Investment Results and Related Statistics . . . . . . 45 Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Financial Statements |
New World Fund - Page 1
CERTAIN INVESTMENT LIMITATIONS AND GUIDELINES
The following limitations and guidelines are considered at the time of purchase, under normal circumstances, 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.
GENERAL
. The fund will invest at least 35% of its assets in equity and debt
securities of companies based primarily in qualified countries with
developing economies and/or markets.
EQUITY SECURITIES
. The fund may invest its assets in equity securities of any company,
regardless of where it is based, if the fund's investment adviser
determines that a significant portion of its assets or revenues (generally
20% of more) are attributable to developing countries.
DEBT SECURITIES
. The fund may invest up to 25% of its assets in debt securities of issuers,
including government issuers, primarily based in qualified countries with
developing economies and/or markets, or issuers that the fund's investment
adviser determines have a significant portion of their assets or revenues
(generally 20% or more) attributable to developing countries. The fund will
generally purchase debt securities considered consistent with its objective
of long-term capital appreciation.
. The fund may invest up to 25% of its assets in straight debt securities
(not including convertible securities) rated Ba and BB or below by Moody's
Investors Services, Inc. or Standard & Poor's Corporation or unrated but
determined to be of equivalent quality.
The fund may experience difficulty liquidating certain portfolio securities during significant market declines or periods of heavy redemptions.
DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT TECHNIQUES
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. These securities may include common stocks and securities with equity conversion or purchase rights. The prices of equity securities fluctuate based on changes in the financial condition of their issuers and on market and economic conditions.
INVESTING IN SMALLER CAPITALIZATION STOCKS - The fund may invest in the stocks of smaller capitalization companies (typically companies with market capitalizations of less than $1.5 billion at the time of purchase). The Investment Adviser believes that the issuers of smaller capitalization stocks often provide attractive investment opportunities. However, investing in smaller capitalization stocks can involve greater risk than is customarily associated with investing in stocks of larger, more established companies. For example, smaller companies often have limited product lines, markets, or financial resources, may be dependent for management on one or a few key persons, and can be more susceptible to losses. Also, their securities may be thinly traded (and therefore have to be sold at a discount from current prices or sold in small lots over an extended period of time), may be followed by fewer investment research analysts, and may
New World Fund - Page 2
be subject to wider price swings, thus creating a greater chance of loss than securities of larger capitalization companies.
INVESTING IN VARIOUS COUNTRIES - Investing outside the U.S. involves special risks, caused by, among other things: currency controls and 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 Capital Research and Management Company, 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 invest in securities of issuers in developing countries only to a limited extent.
In determining where an issuer of a security is based, the Investment Adviser may consider such factors as where the company is legally organized, maintains its principal corporate offices, and/ or conduct its principal operations.
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.
CERTAIN RISK FACTORS RELATED TO DEVELOPING COUNTRIES
CURRENCY FLUCTUATIONS - The fund's investments may be valued in currencies other than the U.S. dollar. Certain developing countries' currencies have experienced and may in the future experience significant declines against the U.S. dollar. For example, if the U.S. dollar appreciates against foreign currencies, the value of the fund's securities holdings would generally depreciate and vice versa. Consistent with its investment objective, the fund can engage in certain currency transactions to hedge against currency fluctuations. See "Currency Transactions" below.
GOVERNMENT REGULATION - The political, economic and social structures of certain developing countries may be more volatile and less developed than those in the U.S. Certain developing countries lack uniform accounting, auditing and financial reporting standards, have less governmental supervision of financial markets than in the U.S., and do not honor legal rights enjoyed in the U.S. Certain governments may be more unstable and present greater risks of nationalization or restrictions on foreign ownership of local companies.
Repatriation of investment income, capital and the proceeds of sales by foreign investors may require governmental registration and/or approval in some developing market countries. While the fund will only invest in markets where these restrictions are con-
New World Fund - Page 3
sidered acceptable, a country could impose new or additional repatriation restrictions after the fund's investment. If this happened, the fund's response might include, among other things, applying to the appropriate authorities for a waiver of the restrictions or engaging in transactions in other markets designed to offset the risks of decline in that country. Such restrictions will be considered in relation to the fund's liquidity needs and all other positive and negative factors. Further, some attractive equity securities may not be available to the fund because foreign shareholders hold the maximum amount legally permissible.
While government involvement in the private sector varies in degree among developing countries, such involvement may in some cases include government ownership of companies in certain sectors, wage and price controls or imposition of trade barriers and other protectionist measures. With respect to any developing country, there is no guarantee that some future economic or political crisis will not lead to price controls, forced mergers of companies, expropriation, or creation of government monopolies to the possible detriment of the fund's investments.
LESS DEVELOPED SECURITIES MARKETS - Developing countries may have less well-developed securities markets and exchanges. They have lower trading volumes than the securities markets of more developed countries. These markets may be unable to respond effectively to increases in trading volume. Consequently, these markets may be substantially less liquid than those of more developed countries, and the securities of issuers located in these markets may have limited marketability. These factors may make prompt liquidation of substantial portfolio holdings difficult or impossible at times.
SETTLEMENT RISKS - Settlement systems in developing countries are generally less well organized than developed markets. Supervisory authorities may also be unable to apply standards comparable with those in developed markets. Thus, there may be risks that settlement may be delayed and that cash or securities belonging to the fund may be in jeopardy because of failures of or defects in the systems. In particular, market practice may require that payment be made before receipt of the security being purchased or that delivery of a security be made before payment is received. In such cases, default by a broker or bank (the "counterparty") through whom the transaction is effected might cause the fund to suffer a loss. The fund will seek, where possible, to use counterparties whose financial status is such that this risk is reduced. However, there can be no certainty that the fund will be successful in eliminating this risk, particularly as counterparties operating in developing countries frequently lack the substance or financial resources of those in developed countries. There may also be a danger that, because of uncertainties in the operation of settlement systems in individual markets, competing claims may arise with respect to securities held by or to be transferred to the fund.
INVESTOR INFORMATION - The fund may encounter problems assessing investment opportunities in certain developing securities markets in light of limitations on available information and different accounting, auditing and financial reporting standards. In such circumstances, the fund's investment adviser will seek alternative sources of information, and to the extent the investment adviser may not be satisfied with the sufficiency of the information obtained with respect to a particular market or security, the fund will not invest in such market or security.
New World Fund - Page 4
TAXATION - Taxation of dividends and capital gains received by non-residents varies among developing countries and, in some cases, is comparatively high. In addition, developing countries typically have less well-defined tax laws and procedures and such laws may permit retroactive taxation so that the fund could in the future become subject to local tax liability that it had not reasonably anticipated in conducting its investment activities or valuing its assets.
LITIGATION - The fund and its shareholders may encounter substantial difficulties in obtaining and enforcing judgments against non-U.S. resident individuals and companies.
FRAUDULENT SECURITIES - Securities purchased by the fund may subsequently be found to be fraudulent or counterfeit resulting in a loss to the fund.
LOAN PARTICIPATIONS - The fund may invest, subject to its overall limitation on debt securities, in loan participations, typically made by a syndicate of banks to governmental or corporate borrowers for a variety of purposes. The underlying loans to developing market governmental borrowers may be in default and may be subject to restructuring under the Brady Plan. The underlying loans may be secured or unsecured, and will vary in term and legal structure. When purchasing such instruments, the fund may assume the credit risks associated with the original bank lender as well as the credit risks associated with the borrower. Investment in loan participations presents the possibility that in the U.S., the fund could be held liable as a co-lender under emerging legal theories of lender liability. In addition, if the loan is foreclosed, the fund could be part owner of any collateral, and could bear the costs and liabilities of owning and disposing of the collateral. Loan participations are generally not rated by major rating agencies, may not be protected by securities laws and are often considered to be illiquid.
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 one 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 affect the extent to which the fund may enter into forward contracts. Such transactions may also affect the character and timing of income, gain or loss recognized by the fund for U.S. federal income tax purposes.
WARRANTS AND RIGHTS - The fund may purchase warrants, which may be 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. 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.
New World Fund - Page 5
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 increase when interest rates fall.
Lower rated bonds, rated Ba or below by Moody's and BB or below by S&P or unrated but considered to be of equivalent quality, are described by the rating agencies as speculative and involve greater risk of default or price changes due to changes in the issuer's creditworthiness than higher rated bonds, or they may already be in default. The market prices of these securities may fluctuate more than higher quality securities and may decline significantly in periods of general economic difficulty. It may be more difficult to dispose of, or to determine the value of, lower rated bonds.
Certain risk factors relating to lower rated bonds are discussed below.
SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES - Lower rated bonds, like other bonds, may be sensitive to adverse economic changes and political and corporate developments and may be sensitive to interest rate changes. During an economic downturn or substantial period of rising interest rates, highly leveraged issuers may experience increased 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. In addition, periods of economic uncertainty and changes can be expected to result in increased volatility of market prices and yields of lower rated bonds.
PAYMENT EXPECTATIONS - Lower rated bonds, like other bonds, may contain redemption or call provisions. If an issuer exercises 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 to investors. If the issuer of a bond defaults on its obligations to pay interest or principal or enters into bankruptcy proceedings, the fund may incur losses or expenses in seeking recovery of amounts owed to it.
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 value and liquidity of lower rated bonds.
The Investment Adviser attempts to reduce the risks described above through diversification of the portfolio and by credit analysis of each issuer, as well as by monitoring broad economic trends and corporate and legislative developments, but there can be no assurance that it will be successful in doing so.
SECURITIES WITH EQUITY AND DEBT CHARACTERISTICS - The fund may invest in securities that have a combination of equity and debt characteristics. These securities may at times behave more like equity than debt and vice versa. Some types of convertible bonds or preferred stock automatically convert into common stock. The prices and yields of non-convertible preferred stock generally move with changes in interest rates and the issuer's credit quality, similar to the factors affecting debt securities.
New World Fund - Page 6
Convertible bonds, convertible preferred stock, and other securities may sometimes be converted into common stock or other securities at a stated conversion 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, and convertible market valuations, as well as changes in interest rates, credit spreads, and the credit quality of the issuer.
U.S. TREASURY AND AGENCY SECURITIES - U.S. Treasury securities include direct obligations of the U.S. Treasury, such as Treasury bills, notes and bonds. For 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.
U.S. agency securities include those issued by certain U.S. government instrumentalities and certain federal agencies. These securities are neither direct obligations of, nor guaranteed by, the 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 Treasury; some are supported by the discretionary authority of the Treasury to purchase certain obligations of the issuer; and 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 Home Loan Bank, Federal Home Loan Mortgage Corporation, Federal National Mortgage Association, Tennessee Valley Authority, and Federal Farm Credit Bank System.
CASH AND CASH EQUIVALENTS - These securities include: (i) commercial paper (e.g., short-term notes up to 9 months in maturity issued by corporations, governmental bodies or bank/ corporation sponsored conduits (asset-backed commercial paper)), (ii) commercial bank obligations (e.g., certificates of deposit, bankers' acceptances (time drafts on a commercial bank where the bank accepts an irrevocable obligation to pay at maturity)), (iii) savings association and savings bank obligations (e.g., bank notes and certificates of deposit issued by savings banks or savings associations), (iv) securities of the U.S. government, its agencies or instrumentalities that mature, or may be redeemed, in one year or less, and (v) corporate bonds and notes that mature, or that may be redeemed, in one year or less.
INVESTMENT COMPANIES - The fund may invest up to 5% of its total assets in shares of any one investment company, but may not acquire more than 3% of the outstanding voting stock of any one investment company. In the aggregate, the fund may invest up to 10% of its total assets in securities issued by investment companies. In addition, all funds managed by the Investment Adviser may not, in the aggregate, acquire more than 10% of the total outstanding voting stock of any one registered closed-end investment company. If the fund invests in another investment company, it would pay an investment advisory fee in addition to the fee paid to the Investment Adviser.
RESTRICTED SECURITIES AND LIQUIDITY - The fund may purchase securities subject to restrictions on resale. Securities not actively traded will be considered illiquid unless they have been specifically determined to be liquid under procedures adopted by the fund's board of directors, 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.
New World Fund - Page 7
FUNDAMENTAL POLICIES AND INVESTMENT RESTRICTIONS
FUNDAMENTAL POLICIES - The fund has adopted the following fundamental policies and investment restrictions which may not be changed without approval by holders of a majority of its outstanding shares. Such majority is defined in the Investment Company Act of 1940 ("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 are considered at the time securities are purchased and are based on the fund's net assets unless otherwise indicated. None of the following investment restrictions involving a maximum percentage of assets will be considered violated unless the excess occurs immediately after, and is caused by, an acquisition by the fund.
1. The fund may not borrow money or securities, except for temporary or emergency purposes in an amount not exceeding 33(alpha)% of its total assets.
2. The fund may not make loans, if, as a result, more than 33(alpha)% of its total assets would be lent to other parties (this limitation does not apply to purchases of debt securities, repurchase agreements or loans of portfolio securities).
3. The fund may not invest 25% or more of its assets in securities of issuers in any one industry (other than securities issued or guaranteed by the U.S. government, its agencies or instrumentalities).
4. The fund may not purchase or sell real estate unless acquired as a result of ownership of securities or other instruments (this shall not prevent the fund from investing in securities or other instruments backed by real estate or securities of companies engaged in the real estate business, such as real estate investment trusts).
5. The fund may not purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments (this shall not prevent the fund from purchasing or selling options and futures contracts or from investing in securities or other instruments backed by physical commodities).
6. The fund may not engage in the business of underwriting securities of other issuers, except to the extent that the purchase or disposal of an investment position may technically constitute the fund as an underwriter as that term is defined under the Securities Act of 1933.
7. The fund may not issue senior securities, except as permitted under the Investment Company Act of 1940.
In addition, the fund will not change its subclassification from a diversified to non-diversified company except as permitted under the Investment Company Act of 1940.
1. The fund may not with respect to 75% of its total assets, invest more than 5% of its assets in securities of any one issuer or acquire more than 10% of the voting securities of any one issuer. These limitations do not apply to securities issued or guaranteed by the U.S. government, its agencies or instrumentalities.
New World Fund - Page 8
2. The fund may not invest more than 15% of its net assets in securities which are not readily marketable.
3. The fund may not purchase securities on margin, except for such short-term credits as are necessary for the clearance of transactions, and provided that the fund may make margin payments in connection with purchases or sales of futures contracts or of options on futures contracts.
4. The fund may not engage in short sales except to the extent it owns or has the right to obtain securities equivalent in kind and amount to those sold short.
5. The fund may not invest in other companies for the purpose of exercising control or management.
6. The fund may not invest more than 5% of its total assets in the securities of other managed 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.
New World Fund - Page 9
MANAGEMENT OF THE FUND
YEAR FIRST NUMBER OF BOARDS
POSITION ELECTED WITHIN THE FUND
WITH THE A DIRECTOR PRINCIPAL OCCUPATION(S) DURING COMPLEX/2/ ON WHICH OTHER DIRECTORSHIPS/3/ HELD
NAME AND AGE FUND OF THE FUND/1/ PAST 5 YEARS DIRECTOR SERVES BY DIRECTOR
-----------------------------------------------------------------------------------------------------------------------------------
"NON-INTERESTED" DIRECTORS
-----------------------------------------------------------------------------------------------------------------------------------
Elizabeth Allison Director 1999 Administrative Director, 3 None
Age: 55 ANZI, Ltd. (financial
publishing and consulting);
Publishing Consultant,
Harvard Medical School;
former Senior Vice
President, Planning and
Development, McGraw Hill,
Inc.
-----------------------------------------------------------------------------------------------------------------------------------
Robert A. Fox Director 1999 Managing General Partner, 7 Crompton Corporation
Age: 64 Fox Investments LP;
Professor and Executive in
Residence, University of
California, Davis; former
President and Chief
Executive Officer, Foster
Farms
-----------------------------------------------------------------------------------------------------------------------------------
Alan Greenway Director 1999 President, Greenway 3 None
Age: 74 Associates, Inc. (management
consulting services)
-----------------------------------------------------------------------------------------------------------------------------------
Koichi Itoh Director 1999 Managing Director, Itoh 3 None
Age: 61 Associates, Ltd.; former
President, Autosplice KK;
former President and Chief
Executive Officer, IMPAC
(management consulting
services); former Managing
Partner, VENCA Management
(venture capital)
-----------------------------------------------------------------------------------------------------------------------------------
William H. Kling Director 1999 President, Minnesota Public 6 Irwin Financial
Age: 59 Radio; President, Corporation; St. Paul
Greenspring Co.; President, Companies
American Public Media Group
-----------------------------------------------------------------------------------------------------------------------------------
John G. McDonald Director 1999 The IBJ Professor of 8 Plum Creek Timber Co.;
Age: 64 Finance, Graduate School of Scholastic Corporation;
Business, Stanford iStar Financial, Inc.;
University Varian, Inc.; Capstone
Turbine Corp.
-----------------------------------------------------------------------------------------------------------------------------------
William I. Director 1999 Chairman of the Board, Irwin 3 Cummins Engine Company,
Miller/4/ Financial Corporation Inc.; Tennant Company
Age: 45
-----------------------------------------------------------------------------------------------------------------------------------
Alessandro Ovi Director 2001 Chief Executive Officer, 2 ST Microelectronics; SEAT
Age: 58 Tecnitel (Telecom Italia); Koru &
Ferry Europe
-----------------------------------------------------------------------------------------------------------------------------------
Kirk P. Pendleton Director 1999 Chairman/Chief Executive 6 York Group, Inc.
Age: 62 Officer, Cairnwood, Inc.
(venture capital investment)
-----------------------------------------------------------------------------------------------------------------------------------
|
Board of Directors and Officers
New World Fund - Page 10
[This page is intentionally left blank for this filing.]
New World Fund - Page 11
PRINCIPAL OCCUPATION(S) DURING
YEAR FIRST PAST 5 YEARS AND NUMBER OF BOARDS
ELECTED POSITIONS HELD WITHIN THE FUND
POSITION A DIRECTOR WITH AFFILIATED ENTITIES COMPLEX/2/ ON WHICH OTHER DIRECTORSHIPS/3/
WITH THE AND/OR OFFICER OR THE PRINCIPAL UNDERWRITER DIRECTOR HELD
NAME AND AGE FUND OF THE FUND/1/ OF THE FUND OR OFFICER SERVES BY DIRECTOR OR OFFICER
-----------------------------------------------------------------------------------------------------------------------------------
"INTERESTED" DIRECTORS/5//,//6/
-----------------------------------------------------------------------------------------------------------------------------------
Gina H. Despres Chairman of 1999 Senior Vice President and 4 None
Age: 60 the Board Special Counsel, Capital
Research and Management
Company; Vice President,
Capital Strategy Research,
Inc.*
-----------------------------------------------------------------------------------------------------------------------------------
Robert W. Lovelace President 1999 Senior Vice President and 1 None
Age: 39 and Director, Capital Research
Director and Management Company;
Director, American Funds
Distributors, Inc.*
-----------------------------------------------------------------------------------------------------------------------------------
|
PRINCIPAL OCCUPATION(S) DURING
POSITION YEAR FIRST ELECTED PAST 5 YEARS AND POSITIONS HELD
WITH THE AN OFFICER WITH AFFILIATED ENTITIES
NAME AND AGE FUND OF THE FUND/1/ OR THE PRINCIPAL UNDERWRITER OF THE FUND
-----------------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS/6/
-----------------------------------------------------------------------------------------------------------------------------------
Mark E. Denning Senior Vice 1999 Director, Capital Research and Management Company; Director,
Age: 44 President The Capital Group Companies, Inc.*; Senior Vice President,
Captial Research Company*; Director, Capital International
Limited*
-----------------------------------------------------------------------------------------------------------------------------------
David C. Barclay Vice President 1999 Senior Vice President and Director, Capital Research and
Age: 45 Management Company
-----------------------------------------------------------------------------------------------------------------------------------
Alwyn Heong Vice President 1999 Senior Vice President, Capital Research Company*
Age: 42
-----------------------------------------------------------------------------------------------------------------------------------
Joseph R. Higdon Vice President 1999 Senior Vice President and Director, Capital Strategy Research,
Age: 60 Inc.*; Senior Vice President, Capital Research Company*
-----------------------------------------------------------------------------------------------------------------------------------
Carl M. Kawaja Vice President 1999 Senior Vice President and Director, Capital Research Company*
Age: 37
-----------------------------------------------------------------------------------------------------------------------------------
Vincent P. Corti Secretary 1999 Vice President - Fund Business Management Group, Capital
Age: 45 Research and Management Company
-----------------------------------------------------------------------------------------------------------------------------------
R. Marcia Gould Treasurer 1999 Vice President - Fund Business Management Group, Capital
Age: 47 Research and Management Company
-----------------------------------------------------------------------------------------------------------------------------------
Dayna Yamabe Assistant Treasurer 1999 Vice President - Fund Business Management Group, Capital
Age: 34 Research and Management Company
-----------------------------------------------------------------------------------------------------------------------------------
|
New World Fund - Page 12
* Company affiliated with Capital Research and Management Company. 1 Directors and officers of the fund serve until their resignation, removal or retirement.
2 Capital Research and Management Company manages the American Funds consisting
of 29 funds. Capital Research and Management Company also manages American
Funds Insurance Series and Anchor Pathway Fund, which serve as the underlying
investment vehicles for certain variable insurance contracts, and Endowments,
whose shareholders are limited to certain non-profit organizations.
3 This includes all directorships (other than those in the American Funds Group)
that are held by each director as a director of a public company or a
registered investment company.
4 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.
5 "Interested persons" within the meaning of the 1940 Act on the basis of their
affiliation with the fund's Investment Adviser, Capital Research and
Management Company, or its affiliated entities (including the fund's principal
underwriter).
6 All of the officers listed, with the exception of Joseph R. Higdon, are officers and/or directors/trustees of one or more of the other funds for which Capital Research and Management Company serves as Investment Adviser.
THE ADDRESS FOR ALL DIRECTORS AND OFFICERS OF THE FUND IS 333 SOUTH HOPE STREET - 55TH FLOOR, LOS ANGELES, CALIFORNIA 90071, ATTENTION: FUND SECRETARY.
New World Fund - Page 13
FUND SHARES OWNED BY DIRECTORS AS OF DECEMBER 31, 2001
AGGREGATE DOLLAR RANGE/1/
OF SHARES
OWNED IN ALL FUNDS
WITHIN AMERICAN FUNDS
DOLLAR RANGE/1/ OF FUND FAMILY OVERSEEN
NAME SHARES OWNED BY DIRECTOR
-------------------------------------------------------------------------------
"NON-INTERESTED" DIRECTORS
-------------------------------------------------------------------------------
Elizabeth Allison $10,001 - $50,000 Over $100,000
-------------------------------------------------------------------------------
Robert A. Fox $50,001 - $100,000 Over $100,000
-------------------------------------------------------------------------------
Alan Greenway $10,001 - $50,000 $50,001 - $100,000
-------------------------------------------------------------------------------
Koichi Itoh $10,001 - $50,000 Over $100,000
-------------------------------------------------------------------------------
William H. Kling $50,001 - $100,000 Over $100,000
-------------------------------------------------------------------------------
John G. McDonald Over $100,000 Over $100,000
-------------------------------------------------------------------------------
William I. Miller/2/ $50,001 - $100,000 Over $100,000
-------------------------------------------------------------------------------
Alessandro Ovi None None
-------------------------------------------------------------------------------
Kirk P. Pendleton $50,001 - $100,000 Over $100,000
-------------------------------------------------------------------------------
"INTERESTED" DIRECTORS/3/
-------------------------------------------------------------------------------
Gina H. Despres Over $100,000 Over $100,000
-------------------------------------------------------------------------------
Robert W. Lovelace Over $100,000 Over $100,000
-------------------------------------------------------------------------------
|
1 Ownership disclosure is made using the following ranges: None; $1 - $10,000;
$10,001 - $50,000; $50,001 - $100,000 and Over $100,000. The amounts listed
for "interested" directors include shares owned through The Capital Group
Companies, Inc. retirement plan and 401(k) plan.
2 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.
3 "Interested persons" within the meaning of the 1940 Act on the basis of their
affiliation with the fund's Investment Adviser, Capital Research and
Management Company, or its affiliated entities (including the fund's principal
underwriter).
DIRECTOR COMPENSATION PAID DURING THE FISCAL YEAR ENDED OCTOBER 31, 2001
No compensation is paid by the fund to any officer or Director who is a director, officer or employee of the Investment Adviser or its affiliates. The fund pays annual fees of $9,000 to Directors who are not affiliated with the Investment Adviser, plus $1,000 for each Board of Directors meeting attended, and $500 for each meeting attended as a member of a committee of the Board of Directors.
No pension or retirement benefits are accrued as part of fund expenses. The Directors may elect, on a voluntary basis, to defer all or a portion of their fees through a deferred compensation plan in effect for the fund. The fund also reimburses certain expenses of the Directors who are not affiliated with the Investment Adviser.
New World Fund - Page 14
TOTAL COMPENSATION (INCLUDING
AGGREGATE COMPENSATION VOLUNTARILY DEFERRED COMPENSATION/1/)
(INCLUDING VOLUNTARILY FROM ALL FUNDS MANAGED BY
DEFERRED COMPENSATION/1/) CAPITAL RESEARCH AND MANAGEMENT
NAME FROM THE FUND COMPANY OR ITS AFFILIATES/2/
------------------------------------------------------------------------------------------
Elizabeth Allison $14,000/3/ $ 69,500/3/
------------------------------------------------------------------------------------------
Robert A. Fox $13,000 $153,500
------------------------------------------------------------------------------------------
Alan Greenway $15,000/3/ $ 78,083/3/
------------------------------------------------------------------------------------------
Koichi Itoh $14,000 $ 70,500
------------------------------------------------------------------------------------------
William H. Kling $14,000/3/ $114,000/3/
------------------------------------------------------------------------------------------
John G. McDonald $14,000/3/ $254,000/3/
------------------------------------------------------------------------------------------
William I. Miller $12,000/3/ $ 61,000/3/
------------------------------------------------------------------------------------------
Alessandro Ovi $ 6,500 $ 16,500
------------------------------------------------------------------------------------------
Kirk P. Pendleton $15,000/3/ $138,000/3/
------------------------------------------------------------------------------------------
|
1 Amounts may be deferred by eligible Directors under a non-qualified deferred
compensation plan adopted by the fund in 1999. Deferred amounts accumulate at
an earnings rate determined by the total return of one or more funds in The
American Funds Group as designated by the Directors.
2 Capital Research and Management Company manages the American Funds consisting
of 29 funds. Capital Research and Management Company also manages American
Funds Insurance Series and Anchor Pathway Fund, which serve as the underlying
investment vehicles for certain variable insurance contracts, and Endowments,
whose shareholders are limited to certain non-profit organizations.
3 Since the deferred compensation plan's adoption, the total amount of deferred
compensation accrued by the fund (plus earnings thereon) through the 2001
fiscal year for participating Directors is as follows: Robert A. Fox
($30,006), Koichi Itoh ($31,252), William H. Kling ($29,842), John G. McDonald
($40,684), William I. Miller ($27,986), Alessandro Ovi ($5,714) and Kirk P.
Pendleton ($31,791). Amounts deferred and accumulated earnings thereon are not
funded and are general unsecured liabilities of the fund until paid to the
Directors.
As of February 15, 2001, the officers and Directors of the fund and their families, as a group, owned beneficially or of record less than 1% of the outstanding shares of the fund.
FUND ORGANIZATION AND THE BOARD OF DIRECTORS
The fund, an open-end, diversified management investment company, was organized as a Maryland corporation on November 13, 1998.
All fund operations are supervised by the fund's Board of Directors, which meets periodically and performs duties required by applicable state and federal laws. Members of the board who are not employed by Capital Research and Management Company or its affiliates are paid certain fees for services rendered to the fund as described above. They may elect to defer all or a portion of these fees through a deferred compensation plan in effect for the fund.
The fund has several different classes of shares, including classes A, B, C, F, 529-A, 529-B, 529-C, 529-E and 529-F. The 529 share classes are available only through CollegeAmerica to investors establishing qualified higher education savings accounts. The shares of each class represent an interest in the same investment portfolio. Each class has pro rata rights as to voting, redemption, dividends and liquidation, except that each class bears different distribution expenses and may bear different transfer agent fees and other expenses
New World Fund - Page 15
properly attributable to the particular class as approved by the Board of Directors and set forth in the fund's rule 18f-3 Plan. Each class' shareholders have exclusive voting rights with respect to the respective class' rule 12b-1 Plans adopted in connection with the distribution of shares and on other matters in which the interests of one class are different from interests in another class. Shares of all classes of the fund vote together on matters that affect all classes in substantially the same manner. Each class votes as a class on matters that affect that class alone. Note, CollegeAmerica account owners are technically not shareholders of the fund and accordingly, do not have the rights of a shareholder, including the right to vote any proxies relating to fund shares.
The fund does not hold annual meetings of shareholders. However, significant matters which require shareholder approval, such as certain elections of board members or a change in a fundamental investment policy, will be presented to shareholders at a meeting called for such purpose. Shareholders have one vote per share owned. At the request of the holders of at least 10% of the shares, the fund will hold a meeting at which any member of the board could be removed by a majority vote.
COMMITTEES OF THE BOARD OF DIRECTORS
The fund has an Audit Committee comprised of Elizabeth Allison, Alan Greenway, Koichi Itoh and Kirk P. Pendleton, none of whom is considered an "interested person" of the fund within the meaning of the 1940 Act. The Committee oversees the fund's accounting and financial reporting policies and practices, its internal controls and the internal controls of the fund's principal service providers. The Committee acts as a liaison between the fund's independent accountants and the full Board of Directors. There were two Audit Committee meetings held during the 2001 fiscal year.
The fund has a Contracts Committee comprised of Elizabeth Allison, Robert A. Fox, Alan Greenway, Koichi Itoh, William H. Kling, John G. McDonald, Alessandro Ovi and Kirk P. Pendleton, none of whom is considered an "interested person" of the fund within the meaning of the 1940 Act. William. I. Miller is also a member of the Committee and may technically 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. The Committee's function is to request, review and consider the information deemed necessary to evaluate the terms of certain agreements between the fund and its Investment Adviser or the Investment Adviser's affiliates, such as the investment advisory and service agreement, principal underwriting agreement, and plans of distribution under rule 12b-1, that the fund may enter into, renew or continue, and to make its recommendations to the full Board of Directors on these matters. There was one Contracts Committee meeting during the 2001 fiscal year.
The fund has a Nominating Committee comprised of Alan Greenway, William H. Kling, John G. McDonald and Kirk P. Pendleton, none of whom is considered an "interested person" of the fund within the meaning of the 1940 Act. The Committee periodically reviews such issues as the Board's composition, responsibilities, committees, compensation and other relevant issues, and recommends any appropriate changes to the full Board of Directors. The Committee also evaluates, selects and nominates candidates for independent directors to the full Board of Directors. While the Committee normally is able to identify from its own resources an ample number of qualified candidates, it will consider shareholder suggestions of persons to be considered as nominees to fill future vacancies on the Board. Such suggestions must be sent in writing to the Nominating Committee of the fund, c/o the fund's Secretary, and must be
New World Fund - Page 16
accompanied by complete biographical and occupational data on the prospective nominee, along with a written consent of the prospective nominee for consideration of his or her name by the Committee. There were two Nominating Committee meetings during the 2001 fiscal year.
INVESTMENT ADVISER - The Investment Adviser, Capital Research and Management Company, 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 significant investment experience. The Investment Adviser is located at 333 South Hope Street, Los Angeles, CA 90071, and at 135 South State College Boulevard, Brea, CA 92821. The Investment Adviser's research professionals travel several million miles a year, making more than 5,000 research visits in more than 50 countries around the world. The Investment Adviser believes that it is able to attract and retain quality personnel. The Investment Adviser is a wholly owned subsidiary of The Capital Group Companies, Inc.
The Investment Adviser is responsible for managing more than $350 billion of stocks, bonds and money market instruments and serves over 11 million shareholder accounts of all types throughout the world. These investors include privately owned businesses and large corporations as well as schools, colleges, foundations and other non-profit and tax-exempt organizations.
INVESTMENT ADVISORY AND SERVICE AGREEMENT - The Investment Advisory and Service Agreement (the "Agreement") between the fund and the Investment Adviser will continue in effect until December 31, 2002, unless sooner terminated, 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 Directors, or by the vote of a majority (as defined in the 1940 Act) of the outstanding voting securities of the fund, and (ii) the vote of a majority of Directors 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).
In determining whether to renew the Agreement each year, the Contracts Committee of the Board of Directors evaluates information provided by the Investment Adviser in accordance with Section 15(c) of the 1940 Act, and presents its recommendations to the full Board of Directors. At its most recent meeting, the Committee considered a number of factors in recommending renewal of the existing Agreement, including the quality of services provided to the fund, fees and expenses borne by the fund, and financial results of the Investment Adviser.
Members of the Committee discussed the quality of services provided to the fund since it began operations in 1999 and noted that while absolute results were negative during 2000 and the first nine months of 2001, its results versus similar funds were favorable over those periods. The Committee also considered the quality and depth of the Investment Adviser's organization in general and of the investment professionals currently providing services to the fund since its startup.
New World Fund - Page 17
The Committee observed the fund's expenses for the most recent fiscal year and earlier periods compared favorably to its peer group. The Committee also considered steps taken in recent years by the Investment Adviser to help control transfer agent expenses borne by the fund.
Based on their review, the Committee and the Board concluded that the advisory fees and other expenses of the fund are fair, both absolutely and in comparison with those of other funds in the industry, and that shareholders have received reasonable value in return for paying such fees and expenses.
The Investment Adviser, in addition to providing investment advisory services, furnishes the services and pays the compensation and travel expenses of persons to perform the executive, administrative, clerical and bookkeeping functions of the fund, and provides suitable office space, necessary small office equipment and utilities, general purpose accounting forms, supplies, and postage used at the offices of the fund. The fund pays all expenses not assumed by the Investment Adviser, including, but not limited to: custodian, stock transfer and dividend disbursing fees and expenses; shareholder recordkeeping and administrative expenses; costs of the designing, printing and mailing of reports, prospectuses, proxy statements, and notices to its shareholders; taxes; expenses of the issuance and redemption of shares of the fund (including stock certificates, registration and qualification fees and expenses); expenses pursuant to the fund's Plans of Distribution (described below); legal and auditing expenses; compensation, fees and expenses paid to directors unaffiliated with the Investment Adviser; association dues; costs of stationery and forms prepared exclusively for the fund; and costs of assembling and storing shareholder account data.
As compensation for its services, the Investment Adviser receives a monthly fee which is accrued daily, calculated at the annual rate of 0.85% on the first $500 million of the Fund's net assets, 0.77% on net assets between $500 million and $1 billion, 0.71% on net assets from $1 billion to $1.5 billion, 0.66% on net assets from $1.5 billion to $2.5 billion, and 0.62% on net assets in excess of $2.5 billion. For the fiscal period ended October 31, 2001, the Investment Adviser received an advisory fee of $9,835,000.
The Investment Adviser has agreed that in the event the Class A expenses of the fund (with the exclusion of interest, taxes, brokerage costs, extraordinary expenses such as litigation and acquisitions or other expenses excludable under applicable state securities laws or regulations) for any fiscal year ending on a date on which the Agreement is in effect, exceed the expense limitations, if any, applicable to the fund pursuant to state securities laws or any regulations thereunder, it will reduce its fee by the extent of such excess and, if required pursuant to any such laws or any regulations thereunder, will reimburse the fund in the amount of such excess. To the extent the fund's management fee must be waived due to Class A share expense ratios exceeding the above limit, management fees will be reduced similarly for all classes of shares of the fund or other Class A fees will be waived in lieu of management fees.
ADMINISTRATIVE SERVICES AGREEMENT - The Administrative Services Agreement (the "Administrative Agreement") between the fund and the Investment Adviser relating to the fund's Class C, F and 529 shares will continue in effect until December 31, 2002, unless sooner terminated, and may be renewed from year to year thereafter, provided that any such renewal has been specifically approved at least annually by the vote of a majority of Directors who are not parties to the Administrative 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 Administrative Agreement provides that the fund may terminate the agreement at any time by
New World Fund - Page 18
vote of a majority of Directors who are not interested persons of the fund. The Investment Adviser has the right to terminate the Administrative Agreement upon 60 days' written notice to the fund. The Administrative Agreement automatically terminates in the event of its assignment (as defined in the 1940 Act).
Under the Administrative Agreement, the Investment Adviser provides certain transfer agent and administrative services for shareholders of the fund's Class C and F shares, and all Class 529 shares. The Investment Adviser contracts with third parties, including American Funds Service Company, the fund's Transfer Agent, to provide these services. Services include, but are not limited to, shareholder account maintenance, transaction processing, tax information reporting, and shareholder and fund communications. In addition, the Investment Adviser monitors, coordinates and oversees the activities performed by third parties providing such services.
As compensation for its services, the Investment Adviser receives transfer agent fees for transfer agent services provided to the fund's applicable share classes. Transfer agent fees are paid monthly according to a fee schedule contained in a Shareholder Services Agreement between the fund and American Funds Service Company. The Investment Adviser also receives an administrative services fee for administrative services provided to the fund's applicable share classes. Administrative services fees are paid monthly, accrued daily and calculated at the annual rate of 0.15% of the average daily net assets of each respective applicable share class. Administrative service fees paid for Class C and F shares for the fiscal period ended 2001 were $7,000 and $4,000, respectively.
PRINCIPAL UNDERWRITER AND PLANS OF DISTRIBUTION - 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 Principal Underwriter receives revenues from sales of the fund's shares. For Class A and 529-A shares, the Principal Underwriter receives commission revenue consisting of that portion of the Class A and 529-A sales charge remaining after the allowances by the Principal Underwriter to investment dealers. For Class B and 529-B shares, the Principal Underwriter sells the rights to the 12b-1 fees paid by the fund for distribution expenses to a third party and receives the revenue remaining after compensating investment dealers for sales of Class B and 529-B shares. The fund also pays the Principal Underwriter for advancing the immediate service fees paid to qualified dealers of Class B and 529-B shares. For Class C and 529-C shares, the Principal Underwriter receives any contingent deferred sales charges that apply during the first year after purchase. The fund pays the Principal Underwriter for advancing the immediate service fees and commissions paid to qualified dealers of Class C and 529-C shares. For Class 529-E shares, the fund pays the Principal Underwriter for advancing the immediate service fees and commissions paid to qualified dealers. For Class F and 529-F shares, the fund pays the Principal Underwriter for advancing the immediate service fees paid to qualified dealers and advisers who sell Class F and 529-F shares.
New World Fund - Page 19
Commissions, revenue or service fees retained by the Principal Underwriter after allowances or compensation to dealers were:
COMMISSIONS, ALLOWANCE OR
FISCAL YEAR/PERIOD REVENUE COMPENSATION
-------------------------------------------------------------------
OR FEES RETAINED TO DEALERS
--------------------------------------
CLASS A 2001 $ 581,000 $ 2,641,000
2000 $2,137,000 $ 9,930,000
1999 $1,117,000 $18,946,000
---------------------------------------------------------------------------------------------------------
CLASS B 2001 $ 93,000 $ 402,000
2000 $ 118,000 $ 735,000
---------------------------------------------------------------------------------------------------------
|
The fund has adopted Plans of Distribution (the "Plans"), pursuant to rule 12b-1 under the 1940 Act. The Principal Underwriter receives amounts payable pursuant to the Plans (see below). As required by rule 12b-1 and the 1940 Act, the Plans (together with the Principal Underwriting Agreement) have been approved by the full Board of Directors and separately by a majority of the directors who are not "interested persons" of the fund and who have no direct or indirect financial interest in the operation of the Plans or the Principal Underwriting Agreement. Potential benefits of the Plans to the fund include: 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 directors who are not "interested persons" of the fund are committed to the discretion of the directors who are not "interested persons" during the existence of the Plans. The Plans may not be amended to increase materially the amount spent for distribution without shareholder approval. Plan expenses are reviewed quarterly and the Plans must be renewed annually by the Board of Directors.
Under the Plans, the fund may annually expend the following amounts to finance any activity primarily intended to result in the sale of fund shares, provided the fund's Board of Directors has approved the category of expenses for which payment is being made: (i) for Class A shares, up to 0.30% of its average daily net assets attributable to Class A shares; (ii) for Class 529-A shares, up to 0.50% of its average daily net assets attributable to Class 529-A shares; (iii) for Class B and 529-B shares, 1.00% of its average daily net assets attributable to Class B and 529-B shares, respectively; (iv) for Class C and 529-C shares, 1.00% of its average daily net assets attributable to Class C and 529-C shares, respectively; (v) for Class 529-E shares, up to 0.75% of its average daily net assets attributable to Class 529-E shares; and (vi) for Class F and 529-F shares, up to 0.50% of its average daily net assets attributable to Class F and 529-F shares, respectively.
For Class A and 529-A shares, (i) up to 0.25% is reimbursed to the Principal Underwriter for paying service-related expenses, including service fees paid to qualified dealers, and (ii) up to the amount allowable under the fund's Class A and 529-A 12b-1 limit is reimbursed to the Principal Underwriter for paying distribution-related expenses, including for Class A and 529-A shares dealer commissions and wholesaler compensation paid on sales of shares of $1 million or
New World Fund - Page 20
more purchased without a sales charge (including purchases by employer-sponsored defined contribution-type retirement plans investing $1 million or more or with 100 or more eligible employees, and retirement plans, endowments and foundations with $50 million or more in assets) ("no load purchases"). Commissions on no load purchases of Class A shares, in excess of the Class A and 529-A Plan limitations not reimbursed to the Principal Underwriter 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 these commissions are not recoverable.
For Class B and 529-B shares, (i) 0.25% is paid to the Principal Underwriter for paying service-related expenses, including service fees paid to qualified dealers, and (ii) 0.75% is paid to the Principal Underwriter for distribution-related expenses, including the financing of commissions paid to qualified dealers.
For Class C and 529-C shares, (i) 0.25% is paid to the Principal Underwriter for paying service-related expenses, including service fees paid to qualified dealers, and (ii) 0.75% is paid to the Principal Underwriter for paying distribution-related expenses, including commissions paid to qualified dealers.
For Class 529-E shares, (i) 0.25% is paid to the Principal Underwriter for paying service-related expenses, including service fees paid to qualified dealers, and (ii) 0.25% is paid to the Principal Underwriter for paying distribution-related expenses, including commissions paid to qualified dealers.
For Class F and 529-F shares, 0.25% is paid to the Principal Underwriter for paying service-related expenses, including service fees paid to qualified dealers or advisers. Currently, no compensation is paid under the fund's Class F and 529-F Plans for distribution-related expenses.
During the 2001 fiscal year, 12b-1 expenses accrued and paid, and if applicable, unpaid, were:
12B-1 EXPENSES 12B-1 LIABILITY
-------------------------- ACCRUED OUTSTANDING
----------------------------------------------------
CLASS A $2,555,000 $350,000
------------------------------------------------------------------------------
CLASS B $ 198,000 $ 19,000
------------------------------------------------------------------------------
CLASS C $ 11,000 $ 2,000
------------------------------------------------------------------------------
CLASS F $ 2,000 $ 1,000
------------------------------------------------------------------------------
|
OTHER COMPENSATION TO DEALERS - The Principal Underwriter, 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. Additional compensation may be paid to certain dealer firms to reimburse certain expenses associated with providing educational meetings to shareholders or prospective American Funds investors. These payments will be based principally on a pro rata share of a qualifying dealer's sales. The Principal Underwriter will, on an annual basis, determine the advisability of continuing these payments.
New World Fund - Page 21
TAXES AND DISTRIBUTIONS
FUND TAXATION - The fund has elected to be treated as a regulated investment company under Subchapter M of the Internal Revenue Code ("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 100% of 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.
To be treated as a regulated investment company under Subchapter M of the Code, the fund must also (a) derive at least 90% of its gross income from dividends, interest, payments with respect to securities loans and gains from the sale or other disposition of securities or foreign currencies, or other income (including, but not limited to, gains from options, futures or forward contracts) derived with respect to the business of investing in such securities or currencies, and (b) diversify its holdings so that, at the end of each fiscal quarter, (i) at least 50% of the market value of the fund's assets is represented by cash, U.S. government securities and securities of other regulated investment companies, and other securities (for purposes of this calculation, generally limited in respect of any one issuer, to an amount not greater than 5% of the market value of the fund's assets and 10% of the outstanding voting securities of such issuer) and (ii) not more than 25% of the value of its assets is invested in the securities of any one issuer (other than U.S. government securities or the securities of other regulated investment companies), or two or more issuers which the fund controls and which are determined to be engaged in the same or similar trades or businesses.
Under the Code, a nondeductible excise tax of 4% is imposed on the excess of a
regulated investment company's "required distribution" for the calendar year
ending within the regulated investment company's taxable year over the
"distributed amount" for such calendar year. The term "required distribution"
means the sum of (i) 98% of ordinary income (generally net investment income)
for the calendar year, (ii) 98% of capital gain (both long-term and short-term)
for the one-year period ending on October 31 (as though the one-year period
ending on October 31 were the regulated investment company's taxable year), and
(iii) the sum of any untaxed, undistributed net investment income and net
capital gains of the regulated investment company for prior periods. The term
"distributed amount" generally means the sum of (i) amounts actually distributed
by the fund from its current year's ordinary income and capital gain net income
and (ii) any amount on which the fund pays income tax during the periods
described above. Although the fund intends to distribute its net investment
income and net capital gains so as to avoid excise tax liability, the fund may
determine that it is the interest of shareholders to distribute a lesser amount.
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS - Dividends and capital gain distributions on fund shares will be reinvested in shares of the fund of the same class, unless shareholders indicate in writing that they wish to receive them in cash or in shares of the same class of other American Funds, as provided in the prospectus.
Distributions of investment company taxable income and net realized capital gains to individual shareholders will be taxable whether received in shares or in cash. Shareholders electing to
New World Fund - Page 22
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 that share on the reinvestment date. Dividend and capital gain distributions by 529 share classes will be automatically reinvested.
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. 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.
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.
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. Upon disposition of these securities, any gain recognized is treated as ordinary income and loss is treated as ordinary loss to the extent of any prior recognized gain.
Dividends from domestic corporations are expected to comprise some portion of the fund's gross income. To the extent that such dividends constitute any of the fund's gross income, a portion of the income distributions of the fund will be eligible for the deduction for dividends received by corporations. Shareholders will be informed of the portion of
New World Fund - Page 23
dividends which so qualify. The dividends-received deduction is reduced to the extent that either the fund shares, or the underlying shares of stock held by the fund, with respect to which dividends are received, are treated as debt-financed under federal income tax law and is eliminated if the shares are deemed to have been held by the shareholder or the fund, as the case may be, for less than 46 days during the 90-day period beginning on the date which is 45 days before the date on which the shares become ex-dividend. Capital gain distributions are not eligible for the dividends-received deduction.
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 taxation at the level of the fund.
In addition, some of the bonds may be purchased by a fund at a discount that exceeds the original issue discount on such bonds, if any. This additional discount represents market discount for federal income tax purposes. The gain realized on the disposition of any bond having a market discount may be treated as taxable ordinary income to the extent it does not exceed the accrued market discount on such bond or a fund may elect to include the market discount in income in tax years to which it is attributable. Generally, accrued market discount may be figured under either the ratable accrual method or constant interest method. If the fund has paid a premium over the face amount of a bond, the fund has the option of either amortizing the premium until bond maturity and reducing the fund's basis in the bond by the amortized amount, or not amortizing and treating the premium as part of the bond's basis. In the case of any debt security having a fixed maturity date of not more than one year from its date of issue, the gain realized on disposition generally will be treated as short-term capital gain. In general, any gain realized on disposition of a security held less than one year is treated as short-term capital gain.
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.
CAPITAL GAIN DISTRIBUTIONS - The fund also intends to follow the practice of distributing the entire excess of net realized long-term capital gains over net realized short-term capital losses. 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 the 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
New World Fund - Page 24
adjusted tax basis on fund shares by the difference between a pro rata share of the retained gains and such shareholder's related tax credit.
SHAREHOLDER TAXATION - In January of each year, individual shareholders of the fund will receive a statement of the federal income tax status of all distributions. Shareholders of the fund also may be subject to state and local taxes on distributions received from the fund. 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. 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 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.
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 (such 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 of foreign corporations. The foreign tax credit available to shareholders is subject to certain limitation imposed by the Code.
Redemptions of shares, including exchanges for shares of another American Fund, may result in federal, state and local tax consequences (gain or loss) to the shareholder. However, conversion from one class to another class in the same fund should not be a taxable event.
If a shareholder exchanges or otherwise disposes of shares of the fund within 90 days of having acquired such shares, and if, as a result of having acquired those shares, the shareholder subsequently pays a reduced sales charge for shares of the fund, or of a different fund, the sales charge previously incurred in acquiring the fund's shares will not be taken into account (to the extent such previous sales charges do not exceed the reduction in sales charges) for the purposes of determining the amount of gain or loss on the exchange, but will be treated as having been incurred in the acquisition of such other funds. Also, any loss realized on a redemption or exchange of shares of the fund will be disallowed to the extent substantially identical shares are reacquired within the 61-day period beginning 30 days before and ending 30 days after the shares are disposed of.
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
New World Fund - Page 25
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 a regulated investment company may be subject to withholding of federal income tax 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.
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 a lower rate under an applicable income tax treaty) on dividend income received by the shareholder.
Shareholders should consult their tax advisers about the application of federal, state and local tax law in light of their particular situation.
UNLESS OTHERWISE NOTED, ALL REFERENCES IN THE FOLLOWING PAGES TO CLASS A, B, C OR F SHARES ALSO REFER TO THE CORRESPONDING CLASS 529-A, 529-B, 529-C OR 529-F SHARES. CLASS 529 SHAREHOLDERS SHOULD ALSO REFER TO THE COLLEGEAMERICA PROGRAM DESCRIPTION FOR INFORMATION ON POLICIES AND SERVICES SPECIFICALLY RELATING TO COLLEGEAMERICA ACCOUNTS.
New World Fund - Page 26
PURCHASE OF SHARES
METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS
-------------------------------------------------------------------------------
See "Purchase $50 minimum (except where a
Minimums" for initial lower minimum is noted under
investment minimums. "Purchase Minimums").
-------------------------------------------------------------------------------
By contacting Visit any investment Mail directly to your
your investment dealer dealer who is investment dealer's address
registered in the printed on your account
state where the statement.
purchase is made, has
a sales agreement with
American Funds
Distributors and is
authorized to sell a
CollegeAmerica account
in the case of 529
shares.
-------------------------------------------------------------------------------
By mail Make your check Fill out the account additions
payable to the fund form at the bottom of a recent
and mail to the account statement, make your
address indicated on check payable to the fund,
the account write your account number on
application. Please your check, and mail the check
indicate an investment and form in the envelope
dealer on the account provided with your account
application. statement.
-------------------------------------------------------------------------------
By telephone Please contact your Complete the "Investments by
investment dealer to Phone" section on the account
open account, then application or American
follow the procedures FundsLink Authorization Form.
for additional Once you establish the
investments. 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
Internet Purchases, Redemptions
and Exchanges" below).
-------------------------------------------------------------------------------
By Internet Please contact your Complete the American FundsLink
investment dealer to Authorization Form. Once you
open account, then establish the privilege, you,
follow the procedures your financial advisor or any
for additional person with your account
investments. information may access American
FundsLine OnLine(R) on the
Internet and make investments
by computer (subject to
conditions noted in
"Shareholder Account Services
and Privileges - Telephone and
Internet Purchases, Redemptions
and Exchanges" below).
-------------------------------------------------------------------------------
By wire Call 800/421-0180 to Your bank should wire your
obtain your account additional investments in the
number(s), if same manner as described under
necessary. Please "Initial Investment."
indicate an investment
dealer on the 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 fund and the Principal Underwriter reserve the right to reject any purchase order. Generally, Class F shares are generally only available to fee-based programs of investment firms that have special agreements with the fund's distributor and certain registered investment advisers. Class B and C shares are generally not available to certain employer-sponsored retirement plans, such as 401(k) plans, 457 plans, employer-sponsored 403(b) plans, and money purchase pension and
New World Fund - Page 27
profit sharing plans. Class 529 shares may be purchased by investors only through CollegeAmerica accounts. Class 529-E shares may only be purchased by investors participating in CollegeAmerica through an eligible employer plan. In addition, the state tax-exempt funds are only offered in certain states, and tax-exempt funds in general should not serve as retirement plan investments.
PURCHASE MINIMUMS - The minimum initial investment for all funds in The American Funds Group, except the money market funds and the state tax-exempt funds, is $250. The minimum initial investment for the money market funds (The Cash Management Trust of America, The Tax-Exempt Money Fund of America, and The U.S. Treasury Money Fund of America) and the state tax-exempt funds (The Tax-Exempt Fund of California, The Tax-Exempt Fund of Maryland, and The Tax-Exempt Fund of Virginia) is $1,000. Purchase 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. The minimum is $50 for additional investments (except for retirement plan payroll deductions as noted above).
PURCHASE MAXIMUM FOR CLASS B SHARES - The maximum purchase order for Class B shares for all American Funds is $100,000. Direct purchases of Class B shares of The Cash Management Trust of America are not permitted; shares may be acquired only by exchanging from Class B shares of other American Funds. For investments above $100,000, Class A shares are generally a less expensive option over time due to sales charge reductions or waivers.
PURCHASE MAXIMUM FOR CLASS C SHARES - The maximum purchase order for Class C shares for all American Funds is $500,000. Direct purchases of Class C shares of The Cash Management Trust of America are not permitted; shares may be acquired only by exchanging from Class C shares of other American Funds.
FUND NUMBERS - Here are the fund numbers for use with our automated telephone line, American FundsLine/(R)/ (see description below):
FUND NUMBERS
----------------------------------------
FUND CLASS A CLASS B CLASS C CLASS F
--------------------------------------------------------------------------------------------------
STOCK AND STOCK/BOND FUNDS
AMCAP Fund/(R)/ . . . . . . . . . . . . . . . . . . . . 002 202 302 402
American Balanced Fund/(R)/ . . . . . . . . . . . . . . 011 211 311 411
American Mutual Fund/(R)/ . . . . . . . . . . . . . . . 003 203 303 403
Capital Income Builder/(R)/ . . . . . . . . . . . . . . 012 212 312 412
Capital World Growth and Income Fund/SM/ . . . . . . . 033 233 333 433
EuroPacific Growth Fund/(R)/ . . . . . . . . . . . . . 016 216 316 416
Fundamental Investors/SM/ . . . . . . . . . . . . . . . 010 210 310 410
The Growth Fund of America/(R)/ . . . . . . . . . . . . 005 205 305 405
The Income Fund of America/(R)/ . . . . . . . . . . . . 006 206 306 406
The Investment Company of America/(R)/ . . . . . . . . 004 204 304 404
The New Economy Fund/(R)/ . . . . . . . . . . . . . . . 014 214 314 414
New Perspective Fund/(R)/ . . . . . . . . . . . . . . . 007 207 307 407
New World Fund/SM/ . . . . . . . . . . . . . . . . . . 036 236 336 436
SMALLCAP World Fund/(R)/ . . . . . . . . . . . . . . . 035 235 335 435
Washington Mutual Investors Fund/SM/ . . . . . . . . . 001 201 301 401
BOND FUNDS
American High-Income Municipal Bond Fund/(R)/ . . . . . 040 240 340 440
American High-Income Trust/SM/ . . . . . . . . . . . . 021 221 321 421
The Bond Fund of America/SM/ . . . . . . . . . . . . . 008 208 308 408
Capital World Bond Fund/(R)/ . . . . . . . . . . . . . 031 231 331 431
Intermediate Bond Fund of America/SM/ . . . . . . . . . 023 223 323 423
Limited Term Tax-Exempt Bond Fund of America/SM/ . . . 043 243 343 443
The Tax-Exempt Bond Fund of America/(R)/ . . . . . . . 019 219 319 419
The Tax-Exempt Fund of California/(R)/* . . . . . . . . 020 220 320 420
The Tax-Exempt Fund of Maryland/(R)/* . . . . . . . . . 024 224 324 424
The Tax-Exempt Fund of Virginia/(R)/* . . . . . . . . . 025 225 325 425
U.S. Government Securities Fund/SM/ . . . . . . . . . . 022 222 322 422
MONEY MARKET FUNDS
The Cash Management Trust of America/(R)/ . . . . . . . 009 209 309 409
The Tax-Exempt Money Fund of America/SM/ . . . . . . . 039 N/A N/A N/A
The U.S. Treasury Money Fund of America/SM/ . . . . . . 049 N/A N/A N/A
___________
*Available only in certain states.
|
New World Fund - Page 28
FUND NUMBERS
---------------------------------------------
CLASS CLASS CLASS CLASS CLASS
FUND 529-A 529-B 529-C 529-E 529-F
-------------------------------------------------------------------------------
STOCK AND STOCK/BOND FUNDS
AMCAP Fund/(R)/ . . . . . . . . 1002 1202 1302 1502 1402
American Balanced Fund/(R)/ . . 1011 1211 1311 1511 1411
American Mutual Fund/(R)/ . . . 1003 1203 1303 1503 1403
Capital Income Builder/(R)/ . . 1012 1212 1312 1512 1412
Capital World Growth and Income
Fund/SM/ . . . . . . . . . . . 1033 1233 1333 1533 1433
EuroPacific Growth Fund/(R)/ . 1016 1216 1316 1516 1416
Fundamental Investors/SM/ . . . 1010 1210 1310 1510 1410
The Growth Fund of America/(R)/ 1005 1205 1305 1505 1405
The Income Fund of America/(R)/ 1006 1206 1306 1506 1406
The Investment Company of
America/(R)/. . . . . . . . . . 1004 1204 1304 1504 1404
The New Economy Fund/(R)/ . . . 1014 1214 1314 1514 1414
New Perspective Fund/(R)/ . . . 1007 1207 1307 1507 1407
New World Fund/SM/ . . . . . . 1036 1236 1336 1536 1436
SMALLCAP World Fund/(R)/ . . . 1035 1235 1335 1535 1435
Washington Mutual Investors
Fund/SM/ . . . . . . . . . . . 1001 1201 1301 1501 1401
BOND FUNDS
American High-Income Trust/SM/ 1021 1221 1321 1521 1421
The Bond Fund of America/SM/ . 1008 1208 1308 1508 1408
Capital World Bond Fund/(R)/ . 1031 1231 1331 1531 1431
Intermediate Bond Fund of
America/SM/ . . . . . . . . . . 1023 1223 1323 1523 1423
U.S. Government Securities
Fund/SM/. . . . . . . . . . . . 1022 1222 1322 1522 1422
MONEY MARKET FUND
The Cash Management Trust of
America/(R)/. . . . . . . . . . 1009 1209 1309 1509 1409
|
New World Fund - Page 29
SALES CHARGES
CLASS A SALES CHARGES - The sales charges you pay when purchasing Class A shares of 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 "Fund Numbers" above for a listing of the funds.)
DEALER
SALES CHARGE AS COMMISSION
PERCENTAGE OF THE: AS PERCENTAGE
------------------ OF THE
AMOUNT OF PURCHASE
AT THE OFFERING PRICE NET AMOUNT OFFERING OFFERING
-INVESTED- PRICE PRICE
----------------------------------------------------------------------- -------- ----- -----
STOCK AND STOCK/BOND FUNDS
Less than $25,000 . . . . . . . . . 6.10% 5.75% 5.00%
$25,000 but less than $50,000 . . . 5.26 5.00 4.25
$50,000 but less than $100,000. . 4.71 4.50 3.75
BOND FUNDS
Less than $100,000 . . . . . . . . 3.90 3.75 3.00
STOCK, STOCK/BOND, AND BOND FUNDS
$100,000 but less than $250,000 . 3.63 3.50 2.75
$250,000 but less than $500,000 . 2.56 2.50 2.00
$500,000 but less than $750,000 . 2.04 2.00 1.60
$750,000 but less than $1 million 1.52 1.50 1.20
|
$1 million or more. . . . . . . . none none (see below) ------------------------------------------------------------------------------ |
CLASS A PURCHASES NOT SUBJECT TO SALES CHARGES - Investments of $1 million or more are sold with no initial sales charge. HOWEVER, A 1% CONTINGENT DEFERRED SALES CHARGE (CDSC) MAY BE IMPOSED IF REDEMPTIONS ARE MADE WITHIN ONE YEAR OF PURCHASE. Employer-sponsored defined contribution-type plans investing $1 million or more, or with 100 or more eligible employees, and Individual Retirement Account rollovers from retirement plans with assets invested in the American Funds (see "Individual Retirement Account (IRA) Rollovers" below) may invest with no sales charge and are not subject to a CDSC. 403(b) plans may be treated as employer-sponsored plans for sales charge purposes if: (i) the American Funds are principal investment options; (ii) the employer facilitates the enrollment process by, for example, allowing for onsite group enrollment meetings held during working hours; and (iii) there is only one dealer firm assigned to the plans. 403(b) plans meeting these criteria may invest with no sales charge and are not subject to a CDSC if investing $1 million or more or having 100 or more eligible employees.
Investments made through accounts that purchased Class A shares of the fund before March 15, 2001 and are part of certain qualified fee-based programs, and retirement plans, endowments or foundations with $50 million or more in assets, may also be made with no sales charge and are not subject to a CDSC. A dealer concession of up to 1% may be paid by the fund under its Class A Plan of Distribution on investments made with no initial sales charge.
New World Fund - Page 30
In addition, Class A shares of the stock, stock/bond and bond funds may be sold at net asset value to:
(1) current or retired directors, trustees, officers and advisory board members of, and certain lawyers who provide services to, the funds managed by Capital Research and Management Company, current or retired employees of Washington Management Corporation, current or retired employees and partners of The Capital Group Companies, Inc. and its affiliated companies, certain family members and employees 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 the Principal Underwriter (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) insurance company separate accounts;
(5) accounts managed by subsidiaries of The Capital Group Companies, Inc.;
(6) The Capital Group Companies, Inc., its affiliated companies and Washington Management Corporation;
(7) an individual or entity with a substantial business relationship with The Capital Group Companies, Inc. or its affiliates, as determined by a Vice President or more senior officer of the Capital Research and Management Company Fund Administration and Compliance Unit; and
(8) wholesalers and full-time employees directly supporting wholesalers involved in the distribution of insurance company separate accounts whose underlying investments are managed by any affiliate of The Capital Group Companies, Inc.
Shares are offered at net asset value to these persons and organizations due to anticipated economies in sales effort and expense.
CONTINGENT DEFERRED SALES CHARGE ON CLASS A AND C SHARES - Except as described above, a CDSC of 1% applies to redemptions of Class A shares of the American Funds, other than the money market funds, made within 12 months following the purchase of Class A shares of $1 million or more made without an initial sales charge. A CDSC of 1% also applies to redemptions of Class C shares of the American Funds made within 12 months following the purchase of the Class C shares. 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 the longest are assumed to be redeemed first for purposes of calculating this CDSC. The CDSC may be waived in certain circumstances. See "CDSC Waivers for Class A Shares" and "CDSC Waivers for Class B and C Shares" below.
CLASS B SALES CHARGES - Class B shares are sold without any initial sales charge. However, a CDSC may be applied to shares you sell within six years of purchase, as shown in the table below:
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CONTINGENT DEFERRED SALES CHARGE ON
SHARES SOLD WITHIN YEAR AS A % OF SHARES BEING SOLD
--------------------------------------------------------------------------
1 5.00%
2 4.00
3 4.00
4 3.00
5 2.00
6 1.00
|
There is no CDSC on appreciation in share value above the initial purchase price
or on shares acquired through reinvestment of dividends or capital gain
distributions. In addition, the CDSC may be waived in certain circumstances.
See "CDSC Waivers for Class B and C shares" below. The CDSC is based on the
original purchase cost or the current market value of the shares being sold,
whichever is less. In processing redemptions of Class B shares, shares that are
not subject to any CDSC will be redeemed first followed by shares that you have
owned the longest during the six-year period.
CLASS F AND CLASS 529-E SALES CHARGE - Class F and 529-E shares are sold with no initial or contingent deferred sales charge.
DEALER COMMISSIONS AND COMPENSATION - For Class A shares, commissions (up to 1%)
are paid to dealers who initiate and are responsible for purchases of $1 million
or more, for purchases by any employer-sponsored defined contribution-type plan
investing $1 million or more or with 100 or more eligible employees, IRA
rollover accounts (as described in "Individual Retirement Account (IRA)
Rollovers" below), and for purchases made at net asset value by certain
retirement plans, endowments and foundations with assets of $50 million or more.
Commissions on investments in Class A shares are paid at the following rates:
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. Commissions are based on
cumulative investments and are not annually reset.
For Class B shares, compensation equal to 4.00% of the amount invested is paid by the Principal Underwriter to dealers who sell Class B shares.
For Class C shares, compensation equal to 1.00% of the amount invested is paid by the Principal Underwriter to dealers who sell Class C shares.
CONVERSION OF CLASS B AND C SHARES - Class B shares automatically convert to
Class A shares in the month of the eight-year anniversary of the purchase date.
Class C shares automatically convert to Class F shares in the month of the
ten-year anniversary of the purchase date. Class 529-C shares will not convert
to Class 529-F shares. The conversion of shares is subject to the Internal
Revenue Service's continued position that the conversions are not subject to
federal income tax. In the event the Internal Revenue Service no longer takes
this position, the automatic conversion feature may be suspended, in which event
no further conversions of Class B or C shares would occur while such suspension
remained in effect. In that event, at your option, Class B shares could be
exchanged for Class A shares and Class C shares for Class F shares on the basis
of the relative net asset values of the two classes, without the imposition of a
New World Fund - Page 32
sales charge or fee; however, such an exchange could constitute a taxable event for you. Absent such an exchange, Class B and C shares would continue to be subject to higher expenses for longer than eight years and ten years, respectively.
SALES CHARGE REDUCTIONS AND WAIVERS
REDUCING YOUR CLASS A SALES CHARGE - You and your "immediate family" (your spouse and your children under age 21) may combine investments to reduce your costs. You must let your investment dealer or American Funds Service Company (the "Transfer Agent") know at the time you purchase shares 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 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 future appreciation of your investment or reinvested distributions. The reduced sales charges and offering prices set forth in the Prospectus apply to purchases of $25,000 or more for equity funds and $100,000 or more for bond funds 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 use 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. The dealer assigned to the account at the end of the period will receive an appropriate commission adjustment. If the difference is not paid by the close of the Statement period, 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. Accordingly, upon your request, the sales charge paid on investments made 90 days prior to the Statement revision will be adjusted to reflect the revised Statement.
Existing holdings eligible for rights of accumulation (see below), including Class A shares held in a fee-based arrangement, other classes of shares of the American Funds, and any individual investments in American Legacy variable annuities and variable life insurance policies (American Legacy, American Legacy II and American Legacy III variable annuities, American Legacy Life, American Legacy Variable Life, and American Legacy Estate Builder) may be credited toward satisfying the Statement.
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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. The Statement will be considered completed if the shareholder dies within the 13-month Statement period. Commissions will not be adjusted or paid on the difference between the Statement amount and the amount actually invested before the shareholder's death.
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 total monthly 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 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 made by you and your immediate family (your spouse and your children under the age of 21), if all parties are purchasing shares for their own accounts and/or:
.individual-type employee benefit plan(s), such as an IRA, 403(b) plan (see exception below), or single-participant Keogh-type plan;
.business accounts solely controlled by you or your immediate family (for example, you own the entire business);
.trust accounts established by you or your immediate family. However, if the person(s) who established the trust is deceased, the trust account may be aggregated with accounts of the person who is the primary beneficiary of the trust;
.endowments or foundations established and controlled by you or your immediate family; or
.CollegeAmerica accounts. Accounts will be aggregated at the account owner level. Class 529-E accounts may only be aggregated with an eligible employer plan.
Individual purchases by a trustee(s) or other fiduciary(ies) may also be aggregated if the investments are:
.for a single trust estate or fiduciary account, including employee benefit plans other than the individual-type employee benefit plans described above;
.
made for two or more employee benefit plans of a single employer or of
affiliated employers as defined in the 1940 Act, again excluding
individual-type employee benefit plans described above;
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.for a diversified common trust fund or other diversified pooled account not specifically formed for the purpose of accumulating fund shares;
.for non-profit, charitable or educational organizations (or any employer-sponsored retirement plan for such an endowment or foundation) or any endowments or foundations established and controlled by the organization; or
.for participant accounts of a 403(b) plan that is treated as an employer-sponsored plan (see "Class A Purchases Not Subject to Sales Charges" above), or made for two or more 403(b) plans that are treated as employer-sponsored plans of a single employer or affiliated employers as defined in the 1940 Act.
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 all classes of shares of two or more funds in The American Funds Group, as well as individual holdings in American Legacy variable annuities and variable life insurance policies. Shares of money market funds purchased through an exchange, reinvestment or cross-reinvestment from a fund having a sales charge also qualify. However, direct purchases of the money market funds are excluded.
RIGHTS OF ACCUMULATION - Subject to the limitations described under the aggregation policy, you may take into account the current value (or if greater, the amount you invested less any withdrawals) of your existing holdings in all share classes of 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. When determining your sales charge, you may also take into account the value of your individual holdings, as of the end of the week prior to your investment, in various American Legacy variable annuities and variable life insurance policies. Direct purchases of the money market funds are excluded.
CDSC WAIVERS FOR CLASS A SHARES - Any CDSC on Class A shares may be waived in the following cases:
(1) Exchanges (except if shares acquired by exchange are then redeemed within 12 months of the initial purchase).
(2) Distributions due to death or post-purchase disability of a shareholder. In the case of joint tenant accounts, if one joint tenant dies, the surviving joint tenant(s), at the time they notify the Transfer Agent of the decedent's death and remove his/her name from the account, may redeem shares from the account without incurring a CDSC. Redemptions subsequent to the notification to the Transfer Agent of the death of one of the joint owners will be subject to a CDSC.
(3) Distributions from 403(b) plans or IRAs due to attainment of age 59-1/2, and required minimum distributions from retirement accounts upon the attainment of age 70-1/2. Such distributions may not exceed 12% of the value of the account annually.
New World Fund - Page 35
(4) Tax-free returns of excess contributions to IRAs.
(5) Redemptions through systematic withdrawal plans (see "Automatic Withdrawals" below), not exceeding 12% each year of the lesser of the original purchase cost or the current market value of the shares being sold that would otherwise be subject to a CDSC.
(6) For Class 529-A shareholders only, redemptions due to a beneficiary's death, post-purchase disability or receipt of a scholarship.
CDSC WAIVERS FOR CLASS B AND C SHARES - Any CDSC on Class B and C shares may be waived in the following cases:
(1) Redemptions through systematic withdrawal plans ("SWPs") (see "Automatic Withdrawals" below) not exceeding 12% each year of the lesser of the original purchase cost or the current market value of the shares being sold that would otherwise be subject to a CDSC. Shares not subject to a CDSC (such as shares representing reinvestment of distributions) will be redeemed first and will count toward the 12% limitation. If there are insufficient shares not subject to a CDSC, shares subject to the lowest CDSC will be redeemed next until the 12% limit is reached.
The 12% SWP limit is calculated on a pro rata basis at the time the first payment is made and is recalculated thereafter on a pro rata basis at the time of each SWP payment. Shareholders who establish a SWP should be aware that the amount of that payment not subject to a CDSC may vary over time depending on fluctuations in net asset value of their account. This privilege may be revised or terminated at any time.
(2) Required minimum distributions taken from retirement accounts upon the attainment of age 70-1/2. Such distributions may not exceed 12% of the value of the account annually.
(3) Distributions due to death or post-purchase disability of a shareholder. In the case of joint tenant accounts, if one joint tenant dies, the surviving joint tenant(s), at the time they notify the Transfer Agent of the decedent's death and remove his/her name from the account, may redeem shares from the account without incurring a CDSC. Redemptions subsequent to the notification to the Transfer Agent of the death of one of the joint owners will be subject to a CDSC.
(4) For Class 529-B and 529-C shareholders only, redemptions due to a beneficiary's death, post-purchase disability or receipt of a scholarship.
CDSC waivers on Class A, B and C shares are allowed only in the cases listed above. For example, CDSC waivers will not be allowed for:
.
Redemptions of dividend and capital gain distributions, redemptions of
appreciated shares, redemptions through SWPs, and required minimum
distributions, to the extent in aggregate they exceed 12% of an
account value; or
.Redemptions of Class 529-B and 529-C shares due to: termination of CollegeAmerica; a determination by the Internal Revenue Service that CollegeAmerica does not qualify as a qualified tuition program under the Code; proposal or enactment of law that eliminates or limits the tax-favored status of CollegeAmerica; or the Virginia College Savings Plan eliminating the fund as an option for additional investment within CollegeAmerica.
New World Fund - Page 36
INDIVIDUAL RETIREMENT ACCOUNT (IRA) ROLLOVERS
EFFECTIVE THROUGH MAY 14, 2002
Assets from a retirement plan (plan assets) may be invested in any class of shares of the American Funds through an IRA rollover plan. All such rollover investments will be subject to the terms and conditions for Class A, B, C and F shares contained in the fund's current prospectus and statement of additional information. An IRA rollover involving plan assets that offered an investment option managed by any affiliate of The Capital Group Companies, Inc., including any of the American Funds, may be invested in Class A shares at net asset value and will not be subject to a contingent deferred sales charge. Dealers who initiate and are responsible for such investments will be compensated pursuant to the schedule applicable to Class A share investments of $1 million or more (see "Dealer Commissions and Compensation" above).
EFFECTIVE MAY 15, 2002
Assets from a retirement plan (plan assets) may be invested in any class of shares of the American Funds through an IRA rollover plan. All such rollover investments will be subject to the terms and conditions for Class A, B, C and F shares contained in the fund's current prospectus and statement of additional information.
An IRA rollover involving plan assets that offered an investment option managed by any affiliate of The Capital Group Companies, Inc., including any of the American Funds, may be invested in: 1) Class A shares at net asset value; 2) Class A shares subject to the applicable initial sales charge; 3) Class B shares; 4) Class C shares; or 5) Class F shares. Plan assets invested in Class A shares with a sales charge, B, C or F shares are subject to the terms and conditions contained in the fund's current prospectus and statement of additional information. Advisers will be compensated according to the policies associated with each share class and described in the fund's current prospectus and statement of additional information.
Plan assets invested in Class A shares at net asset value will not be subject to a contingent deferred sales charge and will immediately begin to accrue service fees (i.e., shares do not have to age). Dealer commissions will be paid only on IRA rollovers of $1 million or more according to the schedule applicable to Class A share investments of $1 million or more (see "Dealer Commissions and Compensation" above).
IRA rollovers that do not indicate which share class plan assets should be invested in and which do not have an adviser associated with the account will be invested in Class F shares. Additional plan assets may be rolled into the account holding F shares; however, subsequent contributions will not be allowed to be invested in F shares.
PRICE OF SHARES
Shares are purchased at the offering price or sold at the net asset value price next determined after the purchase or sell order is received and accepted by the fund or the Transfer Agent; the offering or net asset value 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 or their authorized designees, accepted by the Principal Underwriter, the Transfer Agent, a dealer or any of their designees. In the case of orders sent directly to the fund or the Transfer Agent, an investment
New World Fund - Page 37
dealer MUST be indicated. The dealer is responsible for promptly transmitting purchase and sell orders to the Principal Underwriter.
Orders received by the investment dealer or authorized designee, 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 do not always indicate 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 as of approximately
4:00 p.m. New York time, which is the normal close of trading on the New York
Stock Exchange each day the Exchange is open. If, for example, the Exchange
closes at 1:00 p.m., the fund's share price would still be determined as of 4:00
p.m. New York time. 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.
Short-term securities maturing within 60 days are valued at amortized cost which approximates market value.
Assets or liabilities initially expressed in terms of non-U.S. 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 procedures adopted by authority of 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.
New World Fund - Page 38
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 Directors.
SELLING SHARES
Shares are sold at the net asset value next determined after your request is
received in good order by the Transfer Agent, dealer or any of their designees.
Sales of certain Class A, B and C shares may be subject to a CDSC. Generally,
Class F shares may only be sold through fee-based programs of investment firms
and registered investment advisers with special agreements with the fund's
distributor.
You may sell (redeem) other classes of shares in your account in any of the following ways:
THROUGH YOUR DEALER (certain charges may apply)
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 $75,000;
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. The Transfer Agent reserves the right to require a signature guarantee on any redemptions.
TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY, OR USING THE INTERNET
- Redemptions by telephone, fax or the Internet (including American FundsLine/(R)/ and American FundsLine OnLine/(R)/) are limited to $75,000 per shareholder each day.
New World Fund - Page 39
- Checks must be made payable to the registered shareholder(s).
MONEY MARKET FUNDS
- You may have redemptions of $1,000 or more wired to your bank by writing American Funds Service Company.
- 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 of registered shareholders exactly as indicated on your checking account signature card.
- Check writing is not available for any of the 529 share classes or B, C or F share classes of The Cash Management Trust of America.
If you sell Class A, B or C shares and request a specific dollar amount to be sold, we will sell sufficient shares so that the sale proceeds, after deducting any applicable CDSC, equals the dollar amount requested.
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 1940 Act), 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 in any fund in The American Funds Group within 90 days after the date of the redemption or distribution. Proceeds from a Class B share redemption where a CDSC was charged will be reinvested in Class A shares. Proceeds from any other type of redemption and all dividend and capital gain distributions will be reinvested in the same share class from which the original redemption or distribution was made. Any CDSC on Class B or C shares will be credited to your account. Redemption proceeds of Class A shares representing direct purchases in the money market funds that are reinvested in non-money market funds will be subject to a sales charge. Proceeds will be reinvested at the next calculated net asset value after your request is received and accepted by the Transfer Agent.
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES
The following services and privileges are generally available to all shareholders. However, certain services and privileges may not be available for Class 529 shareholders or if your account is held with an investment dealer.
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AUTOMATIC INVESTMENT PLAN - An automatic investment plan enables you to make monthly or quarterly investments in 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. The Transfer Agent will then invest your money into the fund you specified on or around the date you specified. If the date you specified falls on a weekend or holiday, your money will be invested on the following business day. However, if the following business day falls in the next month, your money will be invested on the business day immediately preceding the weekend or holiday. If your bank account cannot be debited due to insufficient funds, a stop-payment or the 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 of the same class and fund at net asset value 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, the Transfer Agent or your investment dealer. Dividend and capital gain distributions paid by the 529 share classes will automatically be reinvested.
If you have elected to receive dividends and/or capital gain distributions in cash, and the postal or other delivery service is unable to deliver checks to your address of record, or you do not respond to mailings from American Funds Service Company with regard to uncashed distribution checks, your distribution option will automatically be converted to having all dividends and other distributions reinvested in additional shares.
CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS - For all share classes, except the 529 classes of shares, you may cross-reinvest dividends and capital gains ("distributions") of the same share class 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 distributions 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 only exchange shares into other funds in The American Funds Group within the same class. However, exchanges from Class A shares of The Cash Management Trust of America may be made to Class B or C shares of any other American Fund for dollar cost averaging purposes. 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
New World Fund - Page 41
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. Exchanges of Class F shares generally may only be done through fee-based programs of investment firms that have special agreements with the fund's distributor and certain registered investment advisers.
Exchanges from Class A, C or F shares to the corresponding 529 share class, particularly in the case of Uniform Gifts to Minors Act or Uniform Transfer to Minors Act custodial accounts, may result in significant legal and tax consequences as described in the CollegeAmerica Program Description. Please consult your financial adviser prior to making such an exchange.
You may exchange shares of other classes by writing to the Transfer Agent (see "Selling Shares"), by contacting your investment dealer, by using American FundsLine and American FundsLine OnLine (see "American FundsLine and American FundsLine OnLine" below), or by telephoning 800/421-0180 toll-free, faxing (see "American Funds Service Company Service Areas" in the prospectus for the appropriate fax numbers) or telegraphing the Transfer Agent. (See "Telephone and Internet Purchases, Redemptions and Exchanges" below.) Shares held in corporate-type retirement plans for which Capital Bank and Trust Company serves as trustee may not be exchanged by telephone, Internet, fax or telegraph. Exchange redemptions and purchases are processed simultaneously at the share prices next determined after the exchange order is received. (See "Price of Shares" above.) THESE TRANSACTIONS HAVE THE SAME TAX CONSEQUENCES AS ORDINARY SALES AND PURCHASES.
AUTOMATIC EXCHANGES - For all share classes, except the 529 classes of shares, you may automatically exchange shares of the same class 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.
AUTOMATIC WITHDRAWALS - For all share classes, except the 529 classes of shares, you may automatically withdraw shares from any of the funds in The American Funds Group. You can make automatic withdrawals of $50 or more as often as you wish if your account is worth at least $10,000, or up to four times a year for an account worth at least $5,000. You can designate the day of each period for withdrawals and request that checks be sent to you or someone else. Withdrawals may also be electronically deposited to your bank account. The Transfer Agent will withdraw your money from the fund you specify on or around the date you specify. If the date you specified falls on a weekend or holiday, the redemption will take place on the previous business day. However, if the previous business day falls in the preceding month, the redemption will take place on the following business day after the weekend or holiday.
Withdrawal payments are not to be considered as dividends, yield or income. Automatic investments may not be made into a shareholder account from which there are automatic withdrawals. Withdrawals of amounts exceeding reinvested dividends and distributions and increases in share value would reduce the aggregate value of the shareholder's account. The Transfer Agent arranges for the redemption by the fund of sufficient shares, deposited by the shareholder with the Transfer Agent, to provide the withdrawal payment specified.
ACCOUNT STATEMENTS - Your account is opened in accordance with your registration instructions. Transactions in the account, such as additional investments, will be reflected on regular confirmation statements from the Transfer Agent. Dividend and capital gain reinvestments,
New World Fund - Page 42
purchases through automatic investment plans and certain retirement plans, as well as automatic exchanges and withdrawals will be confirmed at least quarterly.
AMERICAN FUNDSLINE AND AMERICAN FUNDSLINE ONLINE - You may check your share balance, the price of your shares, or your most recent account transaction, redeem shares (up to $75,000 per American Funds shareholder each day) from non-retirement plan accounts, or exchange shares around the clock with American FundsLine and American FundsLine OnLine. To use these services, call 800/325-3590 from a TouchTone(TM) telephone or access the American Funds website on the Internet at www.americanfunds.com. Redemptions and exchanges through American FundsLine and American FundsLine OnLine are subject to the conditions noted above and in "Telephone and Internet 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 - Fund Numbers"), personal identification number (generally the last four digits of your Social Security number or other tax identification number associated with your account) and account number.
TELEPHONE AND INTERNET PURCHASES, REDEMPTIONS AND EXCHANGES - By using the telephone (including American FundsLine) or the Internet (including American FundsLine OnLine), fax or telegraph purchase, redemption and/or exchange options, you agree to hold the fund, the Transfer Agent, 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 the Transfer Agent (you may also reinstate them at any time by writing the Transfer Agent). If the Transfer Agent does not employ reasonable procedures to confirm that the instructions received from any person with appropriate account information are genuine, it and/or 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.
REDEMPTION OF SHARES - The fund's Articles of Incorporation permit 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 of record owns 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 Directors of the fund may from time to time adopt.
SHARE CERTIFICATES - Shares are credited to your account and certificates are not issued unless you request them by writing to the Transfer Agent. Certificates are not available for the 529 share classes.
EXECUTION OF PORTFOLIO TRANSACTIONS
The Investment Adviser places orders for the fund's portfolio securities transactions. 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
New World Fund - Page 43
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 period ended October 31, 2001 amounted to $2,330,000.
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 JPMorgan Chase Bank, 270 Park Avenue, New York, NY 10017-2070, as Custodian. If the fund holds non-U.S. securities, the Custodian may hold these securities pursuant to sub-custodial arrangements in non-U.S. banks or non-U.S. 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 $1,944,000 for Class A shares and $41,000 for Class B shares for the 2001 fiscal year.
INDEPENDENT ACCOUNTANTS - Deloitte & Touche LLP, 350 South Grand Avenue, Los Angeles, CA 90071, serves as the fund's independent accountants 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 Deloitte & Touche 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 Directors.
PROSPECTUSES, REPORTS TO SHAREHOLDERS AND PROXY STATEMENTS - The fund's fiscal year ends on October 31. Shareholders are provided updated prospectuses annually and 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, Deloitte & Touche LLP. In addition, shareholders may also receive proxy statements for the fund. 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 prospectuses, shareholder reports and proxy statements. To receive additional copies of a prospectus, report or proxy statement, shareholders should contact the Transfer Agent.
New World Fund - Page 44
PERSONAL INVESTING POLICY - The fund, Capital Research and Management Company
and its affiliated companies, including the fund's principal underwriter, have
adopted codes of ethics which allow for personal investments, including
securities in which the fund may invest from time to time. 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 FOR CLASS A SHARES -- OCTOBER 31, 2001
Net asset value and redemption price per share (Net assets divided by shares outstanding) . . . . . . . . . $19.04 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). . . . . . . . . . . . . . . . . . . . . . . . $20.20 |
CLASS A SHARE INVESTMENT RESULTS AND RELATED STATISTICS
The fund's yield was 1.90% based on a 30-day (or one month) period ended October 31, 2001, 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 as required by the Securities and Exchange Commission:
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 lifetime average annual total returns at the maximum offering price ended October 31, 2001, were -20.01% and -9.94%, respectively. The fund's one-year total return and lifetime average annual total returns at net asset value for the periods ended October 31, 2001 were -15.14% and -7.66%, respectively.
New World Fund - Page 45
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.
In calculating average annual total return at the maximum offering price, the fund assumes: (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. From time to time, the fund may calculate investment results for Class B, C, and F shares, as well as the 529 share classes.
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 illustrate the benefits of tax-deferral by comparing taxable investments to investments made through tax-deferred retirement plans.
The fund may 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, fuels, transportation, and other goods and services that people buy for day-to-day living).
The fund may also calculate a distribution rate on a taxable and tax equivalent basis. The distribution rate is computed by dividing the dividends paid by the fund over the last 12 months by the sum of the month-end net asset value or maximum offering price and the capital gains paid over the last 12 months. The distribution rate may differ from the yield.
New World Fund - Page 46
APPENDIX
Description of Bond Ratings
BOND RATINGS - The ratings of Moody's Investors Service, Inc. (Moody's) and
Standard & Poor's Corporation (S&P) represent their opinions as to the quality
of the municipal bonds which they undertake to rate. It should be emphasized,
however, that ratings are general and are not absolute standards of quality.
Consequently, municipal bonds with the same maturity, coupon and rating may
have different yields, while municipal bonds of the same maturity and coupon
with different ratings may have the same yield.
"Bonds which are rated Aaa are judged to be of the best quality. They 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."
"Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, or fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present which make the long-term risks appear somewhat larger than the Aaa
securities."
"Bonds which are rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. 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."
"Bonds which are rated Baa are considered as medium grade obligations, i.e., they are neither highly protected nor poorly secured. 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."
"Bonds which are rated Ba are judged to have speculative elements; their future cannot be considered as well assured. Often 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. Uncertainty of position characterizes bonds in this class."
"Bonds which are rated 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."
New World Fund - Page 47
"Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest."
"Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings."
"Bonds which are rated C are the lowest rated class of bonds, and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing."
AAA
"An obligation rated 'AAA' has the highest rating assigned by Standard & Poor's.
The obligor's capacity to meet its financial commitment on the obligation is
extremely strong."
AA
"An obligation rated 'AA' differs from the highest rated obligations only in
small degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong."
A
"An obligation rated 'A' is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions that obligations in higher
rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong."
BBB
"An obligation rated 'BBB' exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligor to meet its financial commitment on the
obligation. Obligations rated 'BB', 'B', 'CCC', 'CC' and 'C' are regarded as
having significant speculative characteristics. 'BB' indicates the least degree
of speculation and 'C' the highest. While such obligations will likely have some
quality and protective characteristics, these may be outweighed by large
uncertainties or major exposures to adverse conditions."
BB
"An obligation rated 'BB' is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions which could lead to the
obligor's inadequate capacity to meet its financial commitment on the
obligation."
B
"An obligation rated 'B' is more vulnerable to nonpayment than obligations rated
'BB' but the obligor currently has the capacity to meet its financial commitment
on the obligation. Adverse business, financial or economic conditions will
likely impair the obligor's capacity or willingness to meet its financial
commitment on the obligation."
New World Fund - Page 48
CCC
"An obligation rated 'CCC' is currently vulnerable to nonpayment and is
dependent upon favorable business, financial and economic conditions for the
obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial or economic conditions, the obligor is not likely to
have the capacity to meet its financial commitment on the obligation."
CC
"An obligation rated 'CC' is currently highly vulnerable to nonpayment."
C
"A subordinated debt or preferred stock obligation rated 'C' is CURRENTLY HIGHLY
VULNERABLE to nonpayment. The 'C' rating may be used to cover a situation where
a bankruptcy petition has been filed or similar action taken but payments on
this obligation are being continued. A 'C' also will be assigned to a preferred
stock issue in arrears on dividends or sinking fund payments but that is
currently paying."
D
"An obligation rated 'D' is in payment default. The 'D' rating category is used
when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The 'D' rating also will be
used upon the filing of a bankruptcy petition or the taking of a similar action
if payments on an obligation are jeopardized."
New World Fund - Page 49
Industry Diversification
Percent of
Net Assets
[pie chart]
Banks
Electronic Equipment 7.59
Pharmaceuticals 7.46
Oil & Gas 5.77
Beverages 5.33
Other Industries 4.82
Bonds & Notes 49.52
Cash & Equivalents 10.49
9.02
|
[end chart]
Percent of
Ten Largest Holdings Net Assets
Housing Development Finance 2.57
Samsung SDI 2.23
Petrobras 1.99
Samsung Electronics 1.86
Sappi 1.77
Aventis 1.50
Fomento Economico Mexicano 1.47
Coca-Cola 1.40
Unibanco-Uniao de Bancos Brasileiros 1.39
Samsung Electro-Mechanics 1.33
|
New World Fund, Inc.
Investment Portfolio, October 31, 2001
Shares or
Principle
Equity Securities Amount
BANKS - 7.59%
Unibanco-Uniao de Bancos Brasileiros SA, 952,000.00
units (GDR) (Brazil)
Bank Zachodni WBK (formerly Wielkopolski 1,017,375.00
Bank Kredytowy SA) (Poland) /1/
Yapi ve Kredi Bankasi AS (Turkey) /1/ 4,659,577,500.00
Allied Irish Banks, PLC (Ireland) 870,000.00
ICICI Bank Ltd. (India) 3,913,799.00
ICICI Bank Ltd. (ADR) 27,000.00
HSBC Holdings PLC (United Kingdom) 746,800.00
ABN AMRO Holding NV (Netherlands) 525,265.00
Bank of the Philippine Islands (Philippines) 6,756,275.00
DBS Group Holdings Ltd. (Singapore) 794,408.00
Australia and New Zealand Banking Group Ltd. (Australia) 310,000.00
Shinhan Financial Group Co., Ltd. (South Korea) /1/ 250,000.00
ELECTRONIC EQUIPMENT & INSTRUMENTS - 7.46%
Samsung SDI Co., Ltd. (South Korea) 595,000.00
Samsung Electro-Mechanics Co., Ltd. (South Korea) 636,960.00
Hon Hai Precision Industry Co., Ltd. (Taiwan) 3,296,000.00
Hon Hai Precision Industry Co., Ltd. 0% 1,710,000.00
convertible debentures 2005 /2/
Hankuk Electric Glass Co., Ltd. (South Korea) 237,430.00
Orbotech Ltd. (Israel) /1/ 402,500.00
Kingboard Chemical Holdings Ltd. (Hong Kong) 8,994,000.00
Kingboard Chemical Holdings Ltd., warrants, expire 2003 899,400.00
Venture Manufacturing (Singapore) Ltd (Singapore) 651,800.00
PHARMACEUTICALS - 5.77%
Aventis SA (France) 219,000.00
AstraZeneca PLC (United Kingdom) 263,200.00
M/s. Dr. Reddy's Laboratories Ltd. (India) 365,000.00
Teva Pharmaceutical Industries Ltd. (ADR) (Israel) 114,000.00
Pfizer Inc (USA) 160,000.00
PLIVA d.d. (GDR) (Croatia) /2/ 760,000.00
Pharmacia Corp. (USA) 154,700.00
OIL & GAS - 5.33%
Petroleo Brasileiro SA - Petrobras, ordinary 1,071,000.00
nominative (ADR) (Brazil)
Sasol Ltd. (South Africa) 1,433,700.00
LUKOIL (ADR) (Russia) 215,000.00
BP Finance PLC 3.00% exchangeable bonds 2006 (Russia) /2/ 8,000,000.00
"Shell" Transport and Trading Co., PLC 60,000.00
(New York registered) (United Kingdom)
Gulf Indonesia Resources Ltd. (Indonesia) /1/ 275,000.00
BEVERAGES - 4.82%
Fomento Economico Mexicano, SA de CV (ADR) (Mexico) 510,000.00
Coca-Cola Co. (USA) 314,900.00
PepsiCo, Inc. (USA) 266,000.00
Anheuser-Busch Companies, Inc. (USA) 195,000.00
WIRELESS TELECOMMUNICATION SERVICES - 4.42%
China Unicom Ltd. (China) /1/ 11,903,300.00
GLOBE TELECOM, Inc., Class A (Philippines) /1/ 1,042,096.00
GLOBE TELECOM, Inc., Class A, (PDR) /1/ 15,800.00
America Movil SA de CV, Series L (ADR) (Mexico) 652,000.00
COSMOTE Mobile Telecommunications SA (Greece) 750,000.00
Tele Nordeste Celular Participacoes SA, 265,000.00
preferred nominative (ADR) (Brazil)
China Mobile (Hong Kong) Ltd. (China) /1/ 1,169,800.00
MEDIA - 4.00%
ABS-CBN Holdings Corp. (PDR) (Philippines) 21,585,400.00
Independent News & Media PLC (Ireland) 6,610,718.00
BEC World PCL (Thailand) 1,712,300.00
Globo Cabo SA (ADR) (Brazil) /1/ 1,931,100.00
Grupo Televisa, SA, ordinary participation certificates 157,000.00
(ADR) (Mexico) /1/
Promotora de Informaciones, SA (Spain) 295,000.00
Antenna TV SA (ADR) (Greece) /1/ 233,900.00
Benpres Holdings Corp. (Philippines) /1/ 60,400,000.00
United Pan-Europe Communications NV (Netherlands) /1/ 580,600.00
FOOD PRODUCTS - 3.94%
Orkla AS, Class A (Norway) 735,857.00
Nestle SA (Switzerland) 45,500.00
Groupe Danone (France) 65,500.00
Sara Lee Corp. (USA) 285,400.00
Unilever PLC (United Kingdom) 780,000.00
PT Indofood Sukses Makmur Tbk (Indonesia) 16,515,000.00
PAPER & FOREST PRODUCTS - 3.82%
Sappi Ltd. (South Africa) 2,051,100.00
Votorantim Celulose e Papel SA (ADR) (Brazil) 850,000.00
Kimberly-Clark de Mexico, SA de CV, Class A (Mexico) 3,550,000.00
DIVERSIFIED FINANCIALS - 3.28%
Housing Development Finance Corp. Ltd. (India) /2/ 1,100,159.00
Housing Development Finance Corp. /2/ 800,000.00
First Pacific Co. Ltd. (Hong Kong) 71,806,036.00
ICICI Ltd. (ADR) (India) 16,100.00
DIVERSIFIED TELECOMMUNICATION SERVICES - 2.46%
Telefonos de Mexico, SA de CV, Class L (ADR) (Mexico) 381,000.00
Telefonos de Mexico, SA de CV 4.25% 180,000.00
convertible debentures 2004
Videsh Sanchar Nigam Ltd. (ADR) (India) 629,603.00
Hellenic Telecommunications Organization SA (Greece) 280,000.00
Philippine Long Distance Telephone Co. (Philippines) 128,850.00
Philippine Long Distance Telephone Co. (ADR) 120,000.00
Global Light Telecommunications Inc. (Canada) /1/ /2/ 240,000.00
Global Light Telecommunications Inc. /1/ 160,000.00
AUTOMOBILES - 2.38%
Suzuki Motor Corp. (Japan) 1,147,000.00
Honda Motor Co., Ltd. (Japan) 309,000.00
Bajaj Auto Ltd. (India) 260,000.00
Nissan Motor Co., Ltd. (Japan) 227,000.00
METALS & MINING - 2.36%
Cia. Vale do Rio Doce (Brazil) 414,200.00
Pohang Iron & Steel Co., Ltd. (South Korea) 115,000.00
Freeport-McMoRan Copper & Gold Inc., Class B (USA) /1/ 368,000.00
BHP Billiton PLC (formerly Billiton PLC) (United Kingdom) 721,100.00
Anglo American PLC (United Kingdom) 130,400.00
SEMICONDUCTOR EQUIPMENT & PRODUCTS - 2.15%
Samsung Electronics Co., Ltd. (South Korea) 148,890.00
ASM Pacific Technology Ltd. (Hong Kong) 1,676,100.00
Amkor Technology, Inc. (USA) /1/ 58,600.00
MACHINERY - 1.76%
Metso Oyj (Finland) 890,000.00
Mitsubishi Heavy Industries, Ltd. (Japan) 2,360,000.00
Sandvik AB (Sweden) 110,000.00
INSURANCE - 1.76%
American International Group, Inc. (USA) 130,000.00
Samsung Fire & Marine Insurance Co., Ltd. (South Korea) 215,000.00
Old Mutual PLC (South Africa) 1,200,000.00
HOTELS, RESTAURANTS & LEISURE - 1.53%
McDonald's Corp. (USA) 355,000.00
Millennium & Copthorne Hotels PLC (United Kingdom) 1,980,000.00
Club Mediterranee SA (France) 30,000.00
PERSONAL PRODUCTS - 1.31%
Avon Products, Inc. (USA) 301,000.00
REAL ESTATE - 1.13%
SM Prime Holdings, Inc. (Philippines) 83,000,000.00
New World China Land Ltd. (Hong Kong) /1/ 11,458,200.00
Ayala Land, Inc. (Philippines) 1,870,000.00
ELECTRIC UTILITIES - 1.03%
Huaneng Power International, Inc., Class H (China) 9,000,000.00
AES Corp. (USA) /1/ 210,000.00
Shandong International Power Development Co. Ltd., 12,000,000.00
Class H (China)
HEALTH CARE EQUIPMENT & SUPPLIES - 1.01%
Lumenis Ltd. (Israel) /1/ 550,000.00
IT CONSULTING & SERVICES - 1.00%
Infosys Technologies Ltd. (India) 178,000.00
ELECTRICAL EQUIPMENT - 0.95%
Johnson Electric Holdings Ltd. (Hong Kong) 8,250,000.00
Elektrim SA 3.75% convertible debentures 2004 (Poland) 2,100,000.00
LG Cable Ltd. (South Korea) 110,000.00
AEROSPACE & DEFENSE - 0.91%
Banco Nacional de Desenvolvimento Economico e Social 6.50% 6,000,000.00
convertible debentures 2006 /2/ (Brazil)
EMBRAER - Empresa Brasileira de Aeronautica SA, preferred 285,000.00
nominative (ADR)
GAS UTILITIES - 0.90%
Gas Natural SDG, SA (Spain) 536,700.00
TRANSPORTATION INFRASTRUCTURE - 0.87%
Grupo Aeroportuario del Sureste, SA de CV, 325,000.00
Class B (ADR) (Mexico) /1/
Zhejiang Expressway Co. Ltd., Class H (China) 15,200,000.00
International Container Terminal Services, Inc. 72,683,000.00
(Philippines) /1/
LEISURE EQUIPMENT & PRODUCTS - 0.83%
Fuji Photo Film Co., Ltd. (Japan) 270,000.00
DISTRIBUTORS - 0.82%
Li & Fung Ltd. (Hong Kong) 9,255,000.00
MULTILINE RETAIL - 0.80%
Wal-Mart de Mexico, SA de CV, Class V (ADR) (Mexico) 233,000.00
Organizacion Soriana, SA de CV, Class B (Mexico) 1,450,000.00
COMMUNICATIONS EQUIPMENT - 0.79%
Nokia Corp., Class A (Finland) 168,000.00
Telefonaktiebolaget LM Ericsson, Class B (Sweden) 466,000.00
Telefonaktiebolaget LM Ericsson, Class B (ADR) 170,000.00
Motorola, Inc. (USA) 120,000.00
Datacraft Asia Ltd. (Singapore) 87,000.00
HOUSEHOLD PRODUCTS - 0.67%
Kimberly-Clark Corp. (USA) 130,400.00
CONSTRUCTION MATERIALS - 0.57%
Cheung Kong Infrastructure Holdings Ltd. (Hong Kong) 3,800,000.00
OTHER INDUSTRIES - 1.51%
Migros Turk TAS (Turkey) 79,267,000.00
Sabre Holdings Corp., Class A (USA) /1/ 105,098.00
Philip Morris Companies Inc. (USA) 50,200.00
Tubos de Acero de Mexico, SA (ADR) (Mexico) 220,000.00
Compaq Computer Corp. (USA) 205,300.00
Sony Corp. (Japan) 40,000.00
VIA NET.WORKS, Inc. (USA) /1/ 410,000.00
Rentokil Initial PLC (United Kingdom) 65,000.00
Transcom WorldWide SA, Class B (Sweden) /1/ 130,000.00
Transcom WorldWide SA, Class A /1/ 70,000.00
MISCELLANEOUS - 0.56%
Other equity securities in initial period of acquisition
TOTAL EQUITY SECURITIES: (cost: $1,082.348 million)
Principal Amount
(Millions)
Bonds & Notes
NON-U.S. GOVERNMENT OBLIGATIONS - 9.71%
Brazil (Federal Republic of):
Eligible Interest Bond 3.188% 2006 /3/ /4/ $3.110
3.25% 2009 /2/ /3/ /4/ 3.65
14.50% 2009 3.73
Bearer 8.00% 2014 /5/ 7.60
8.875% 2024 2.44
10.125% 2027 14.00
Russian Federation:
8.25% 2010 /2/ 3.85
8.25% 2010 2.00
5.00% 2030 /2/ /3/ 29.31
5.00% 2030 /3/ 1.50
United Mexican States Government Eurobonds, Global:
9.875% 2007 5.00
8.625% 2008 0.88
10.375% 2009 1.00
9.875% 2010 0.88
11.375% 2016 7.83
8.30% 2031 1.02
Panama (Republic of):
Interest Reduction Bond 4.75% 2014 /3/ /6/ 6.78
9.375% 2029 5.82
Turkey (Republic of) 11.875% 2030 8.90
Argentina (Republic of):
Series L, 3.375% Eurobonds 2005 /3/ $.788
7.00%/15.50% 2008 /6/ 2.03
12.25% 2018 /5/ 13.19
Croatian Government:
Series B, 4.563% 2006 /3/ 0.82
Series A, 4.529% 2010 /3/ 5.61
Poland (Republic of), Past Due Interest Bond, 5.17
Bearer 6.00% 2014 /3/ /4/
Philippines (Republic of) 10.625% 2025 3.70
WIRELESS TELECOMMUNICATION SERVICES - 0.78%
PTC International Finance BV 0%/10.75% 2007 /6/ 4.00
GLOBE TELECOM, Inc. 13.00% 2009 3.00
Cellco Finance NV 12.75% 2005 2.73
TOTAL BONDS AND NOTES: (cost: $119.519 million)
Principal Amount
(Millions)
Short-Term Securities
Corporate Short-Term Notes - 5.87%
Asset Securitization Corp. 2.58% due 11/19/01 /2/ 14.30
Rio Tinto PLC 3.42% due 11/19/01 /2/ 12.40
Corporate Asset Funding Co. Inc. 2.26% due 12/06/01 /2/ 11.70
Merck & Co., Inc. 2.46% due 11/09/01 10.00
Unilever Capital Corp. 2.20% due 12/20/01 /2/ 6.00
Monte Rosa Capital Corp. 2.48% due 11/07/01 /2/ 4.60
CIT Group, Inc. 2.63% due 11/01/01 4.38
Federal Agency Discount Notes - 2.93%
Federal Home Loan Banks 2.285% due 12/19/01 8.00
Federal Home Loan Banks 2.115% due 01/25/02 10.00
Tennessee Valley Authority 2.31% due 11/30/01 9.20
Fannie Mae 2.26% due 12/07/01 4.50
Non-U.S. Currency - 0.04%
New Taiwanese Dollar NT$14.502
Market
Value
New World Fund, Inc. (Millions)
Investment Portfolio, October 31, 2001
14.98
10.55
Equity Securities 8.55
8.48
BANKS - 7.59% 8.30
Unibanco-Uniao de Bancos Brasileiros SA, 0.13
units (GDR) (Brazil) 8.09
Bank Zachodni WBK (formerly Wielkopolski 8.04
Bank Kredytowy SA) (Poland) /1/ 5.28
Yapi ve Kredi Bankasi AS (Turkey) /1/ 4.53
Allied Irish Banks, PLC (Ireland) 2.78
ICICI Bank Ltd. (India) 2.17
ICICI Bank Ltd. (ADR)
HSBC Holdings PLC (United Kingdom)
ABN AMRO Holding NV (Netherlands)
Bank of the Philippine Islands (Philippines) 24.06
DBS Group Holdings Ltd. (Singapore) 14.36
Australia and New Zealand Banking Group Ltd. (Australia) 12.25
Shinhan Financial Group Co., Ltd. (South Korea) /1/ 1.70
11.91
8.68
ELECTRONIC EQUIPMENT & INSTRUMENTS - 7.46% 4.21
Samsung SDI Co., Ltd. (South Korea) 0.04
Samsung Electro-Mechanics Co., Ltd. (South Korea) 3.45
Hon Hai Precision Industry Co., Ltd. (Taiwan)
Hon Hai Precision Industry Co., Ltd. 0%
convertible debentures 2005 /2/
Hankuk Electric Glass Co., Ltd. (South Korea)
Orbotech Ltd. (Israel) /1/ 16.15
Kingboard Chemical Holdings Ltd. (Hong Kong) 11.83
Kingboard Chemical Holdings Ltd., warrants, expire 2003 7.93
Venture Manufacturing (Singapore) Ltd (Singapore) 7.05
6.70
6.35
PHARMACEUTICALS - 5.77% 6.27
Aventis SA (France)
AstraZeneca PLC (United Kingdom)
M/s. Dr. Reddy's Laboratories Ltd. (India)
Teva Pharmaceutical Industries Ltd. (ADR) (Israel) 21.42
Pfizer Inc (USA) 12.51
PLIVA d.d. (GDR) (Croatia) /2/ 9.50
Pharmacia Corp. (USA) 9.07
2.67
2.31
OIL & GAS - 5.33%
Petroleo Brasileiro SA - Petrobras, ordinary
nominative (ADR) (Brazil)
Sasol Ltd. (South Africa)
LUKOIL (ADR) (Russia) 15.81
BP Finance PLC 3.00% exchangeable bonds 2006 (Russia) /2/ 15.08
"Shell" Transport and Trading Co., PLC (New York registered) 12.96
(United Kingdom)
Gulf Indonesia Resources Ltd. (Indonesia) /1/ 8.12
BEVERAGES - 4.82%
Fomento Economico Mexicano, SA de CV (ADR) (Mexico) 11.07
Coca-Cola Co. (USA) 10.85
PepsiCo, Inc. (USA) 0.16
Anheuser-Busch Companies, Inc. (USA) 9.78
6.91
5.25
WIRELESS TELECOMMUNICATION SERVICES - 4.42% 3.55
China Unicom Ltd. (China) /1/
GLOBE TELECOM, Inc., Class A (Philippines) /1/
GLOBE TELECOM, Inc., Class A, (PDR) /1/ 10.82
America Movil SA de CV, Series L (ADR) (Mexico) 10.55
COSMOTE Mobile Telecommunications SA (Greece) 7.74
Tele Nordeste Celular Participacoes SA, 4.92
preferred nominative ) (ADR) (Brazil)
China Mobile (Hong Kong) Ltd. (China) /1/ 4.78
2.48
MEDIA - 4.00% 0.88
ABS-CBN Holdings Corp. (PDR) (Philippines) 0.70
Independent News & Media PLC (Ireland) 0.32
BEC World PCL (Thailand)
Globo Cabo SA (ADR) (Brazil) /1/
Grupo Televisa, SA, ordinary participation certificates 12.28
(ADR) (Mexico) /1/
Promotora de Informaciones, SA (Spain) 9.46
Antenna TV SA (ADR) (Greece) /1/ 7.59
Benpres Holdings Corp. (Philippines) /1/ 6.36
United Pan-Europe Communications NV (Netherlands) /1/ 5.68
1.07
FOOD PRODUCTS - 3.94%
Orkla AS, Class A (Norway)
Nestle SA (Switzerland)
Groupe Danone (France) 19.14
Sara Lee Corp. (USA) 12.33
Unilever PLC (United Kingdom) 9.79
PT Indofood Sukses Makmur Tbk (Indonesia)
PAPER & FOREST PRODUCTS - 3.82% 16.02
Sappi Ltd. (South Africa) 11.65
Votorantim Celulose e Papel SA (ADR) (Brazil) 7.55
Kimberly-Clark de Mexico, SA de CV, Class A (Mexico) 0.11
DIVERSIFIED FINANCIALS - 3.28%
Housing Development Finance Corp. Ltd. (India) /2/ 12.98
Housing Development Finance Corp. /2/ 0.23
First Pacific Co. Ltd. (Hong Kong) 6.11
ICICI Ltd. (ADR) (India) 4.55
0.94
0.87
DIVERSIFIED TELECOMMUNICATION SERVICES - 2.46% 0.52
Telefonos de Mexico, SA de CV, Class L (ADR) (Mexico) 0.35
Telefonos de Mexico, SA de CV 4.25%
convertible debentures 2004
Videsh Sanchar Nigam Ltd. (ADR) (India)
Hellenic Telecommunications Organization SA (Greece)
Philippine Long Distance Telephone Co. (Philippines) 11.78
Philippine Long Distance Telephone Co. (ADR) 11.08
Global Light Telecommunications Inc. (Canada) /1/ /2/ 1.81
Global Light Telecommunications Inc. /1/ 1.00
AUTOMOBILES - 2.38%
Suzuki Motor Corp. (Japan) 8.65
Honda Motor Co., Ltd. (Japan) 7.96
Bajaj Auto Ltd. (India) 4.09
Nissan Motor Co., Ltd. (Japan) 3.07
1.68
METALS & MINING - 2.36%
Cia. Vale do Rio Doce (Brazil)
Pohang Iron & Steel Co., Ltd. (South Korea) 20.09
Freeport-McMoRan Copper & Gold Inc., Class B (USA) /1/ 2.34
BHP Billiton PLC (formerly Billiton PLC) (United Kingdom) 0.73
Anglo American PLC (United Kingdom)
SEMICONDUCTOR EQUIPMENT & PRODUCTS - 2.15% 8.71
Samsung Electronics Co., Ltd. (South Korea) 7.94
ASM Pacific Technology Ltd. (Hong Kong) 2.32
Amkor Technology, Inc. (USA) /1/
MACHINERY - 1.76% 10.22
Metso Oyj (Finland) 6.77
Mitsubishi Heavy Industries, Ltd. (Japan) 1.90
Sandvik AB (Sweden)
INSURANCE - 1.76% 9.26
American International Group, Inc. (USA) 6.24
Samsung Fire & Marine Insurance Co., Ltd. (South Korea) 0.95
Old Mutual PLC (South Africa)
HOTELS, RESTAURANTS & LEISURE - 1.53% 14.10
McDonald's Corp. (USA)
Millennium & Copthorne Hotels PLC (United Kingdom)
Club Mediterranee SA (France)
8.96
3.16
PERSONAL PRODUCTS - 1.31% 0.16
Avon Products, Inc. (USA)
REAL ESTATE - 1.13% 5.54
SM Prime Holdings, Inc. (Philippines) 2.91
New World China Land Ltd. (Hong Kong) /1/ 2.68
Ayala Land, Inc. (Philippines)
ELECTRIC UTILITIES - 1.03% 10.95
Huaneng Power International, Inc., Class H (China)
AES Corp. (USA) /1/
Shandong International Power Development Co. Ltd.,
Class H (China) 10.83
HEALTH CARE EQUIPMENT & SUPPLIES - 1.01%
Lumenis Ltd. (Israel) /1/
7.19
1.96
IT CONSULTING & SERVICES - 1.00% 1.13
Infosys Technologies Ltd. (India)
ELECTRICAL EQUIPMENT - 0.95% 4.91
Johnson Electric Holdings Ltd. (Hong Kong) 4.89
Elektrim SA 3.75% convertible debentures 2004 (Poland)
LG Cable Ltd. (South Korea)
9.66
AEROSPACE & DEFENSE - 0.91%
Banco Nacional de Desenvolvimento Economico e Social 6.50%
convertible debentures 2006 /2/ (Brazil)
EMBRAER - Empresa Brasileira de Aeronautica SA,
preferred nominative (ADR) 4.00
3.55
GAS UTILITIES - 0.90% 1.85
Gas Natural SDG, SA (Spain)
TRANSPORTATION INFRASTRUCTURE - 0.87% 8.91
Grupo Aeroportuario del Sureste, SA de CV,
Class B (ADR) (Mexico) /1/
Zhejiang Expressway Co. Ltd., Class H (China)
International Container Terminal Services, Inc.
(Philippines) /1/ 8.84
LEISURE EQUIPMENT & PRODUCTS - 0.83%
Fuji Photo Film Co., Ltd. (Japan)
5.51
3.16
DISTRIBUTORS - 0.82%
Li & Fung Ltd. (Hong Kong)
3.52
MULTILINE RETAIL - 0.80% 2.02
Wal-Mart de Mexico, SA de CV, Class V (ADR) (Mexico) 0.73
Organizacion Soriana, SA de CV, Class B (Mexico) 1.96
0.28
COMMUNICATIONS EQUIPMENT - 0.79%
Nokia Corp., Class A (Finland)
Telefonaktiebolaget LM Ericsson, Class B (Sweden) 7.24
Telefonaktiebolaget LM Ericsson, Class B (ADR)
Motorola, Inc. (USA)
Datacraft Asia Ltd. (Singapore)
6.19
HOUSEHOLD PRODUCTS - 0.67%
Kimberly-Clark Corp. (USA)
4.97
2.76
CONSTRUCTION MATERIALS - 0.57% 2.35
Cheung Kong Infrastructure Holdings Ltd. (Hong Kong) 2.07
1.80
1.51
OTHER INDUSTRIES - 1.51% 0.37
Migros Turk TAS (Turkey) 0.23
Sabre Holdings Corp., Class A (USA) /1/ 0.14
Philip Morris Companies Inc. (USA) 0.07
Tubos de Acero de Mexico, SA (ADR) (Mexico)
Compaq Computer Corp. (USA)
Sony Corp. (Japan)
VIA NET.WORKS, Inc. (USA) /1/ 6.05
Rentokil Initial PLC (United Kingdom)
Transcom WorldWide SA, Class B (Sweden) /1/
Transcom WorldWide SA, Class A /1/ 868.23
MISCELLANEOUS - 0.56%
Other equity securities in initial period of acquisition Market Value
(Millions)
TOTAL EQUITY SECURITIES: (cost: $1,082.348 million)
2.55
2.65
3.52
Bonds & Notes 6.36
1.39
NON-U.S. GOVERNMENT OBLIGATIONS - 9.71% 8.93
Brazil (Federal Republic of):
Eligible Interest Bond 3.188% 2006 /3/ /4/ 3.03
3.25% 2009 /2/ /3/ /4/ 1.57
14.50% 2009 14.03
Bearer 8.00% 2014 /5/ 0.72
8.875% 2024
10.125% 2027 5.62
Russian Federation: 0.93
8.25% 2010 /2/ 1.14
8.25% 2010 0.97
5.00% 2030 /2/ /3/ 9.47
5.00% 2030 /3/ 0.97
United Mexican States Government Eurobonds, Global:
9.875% 2007 5.82
8.625% 2008 6.02
10.375% 2009 7.72
9.875% 2010
11.375% 2016 0.42
8.30% 2031 0.94
Panama (Republic of): 5.44
Interest Reduction Bond 4.75% 2014 /3/ /6/
9.375% 2029 0.80
Turkey (Republic of) 11.875% 2030 5.46
Argentina (Republic of): 5.12
Series L, 3.375% Eurobonds 2005 /3/ 3.15
7.00%/15.50% 2008 /6/
12.25% 2018 /5/
Croatian Government: 3.33
Series B, 4.563% 2006 /3/ 3.29
Series A, 4.529% 2010 /3/ 1.81
Poland (Republic of), Past Due Interest Bond,
Bearer 6.00% 2014 /3/ /4/
Philippines (Republic of) 10.625% 2025
113.15
WIRELESS TELECOMMUNICATION SERVICES - 0.78%
PTC International Finance BV 0%/10.75% 2007 /6/
GLOBE TELECOM, Inc. 13.00% 2009
Cellco Finance NV 12.75% 2005 Market Value
(Millions)
TOTAL BONDS AND NOTES: (cost: $119.519 million)
14.28
12.38
11.67
9.99
Short-Term Securities 5.98
4.60
Corporate Short-Term Notes - 5.87% 4.38
Asset Securitization Corp. 2.58% due 11/19/01 /2/
Rio Tinto PLC 3.42% due 11/19/01 /2/
Corporate Asset Funding Co. Inc. 2.26% due 12/06/01 /2/
Merck & Co., Inc. 2.46% due 11/09/01 7.98
Unilever Capital Corp. 2.20% due 12/20/01 /2/ 9.95
Monte Rosa Capital Corp. 2.48% due 11/07/01 /2/ 9.18
CIT Group, Inc. 2.63% due 11/01/01 4.49
Federal Agency Discount Notes - 2.93%
Federal Home Loan Banks 2.285% due 12/19/01 0.42
Federal Home Loan Banks 2.115% due 01/25/02
Tennessee Valley Authority 2.31% due 11/30/01
Fannie Mae 2.26% due 12/07/01
95.30
Non-U.S. Currency - 0.04%
New Taiwanese Dollar 1,076.68
1.94
1,078.61
New World Fund, Inc.
Investment Portfolio, October 31, 2001
Percent
of Net
Equity Securities Assets
BANKS - 7.59%
Unibanco-Uniao de Bancos Brasileiros SA, 0.01
units (GDR) (Brazil)
Bank Zachodni WBK (formerly Wielkopolski 0.98
Bank Kredytowy SA) (Poland) /1/
Yapi ve Kredi Bankasi AS (Turkey) /1/ 0.79
Allied Irish Banks, PLC (Ireland) 0.79
ICICI Bank Ltd. (India)
ICICI Bank Ltd. (ADR) 0.78
HSBC Holdings PLC (United Kingdom) 0.75
ABN AMRO Holding NV (Netherlands) 0.74
Bank of the Philippine Islands (Philippines) 0.49
DBS Group Holdings Ltd. (Singapore) 0.42
Australia and New Zealand Banking Group Ltd. (Australia) 0.26
Shinhan Financial Group Co., Ltd. (South Korea) /1/ 0.20
ELECTRONIC EQUIPMENT & INSTRUMENTS - 7.46%
Samsung SDI Co., Ltd. (South Korea) 2.23
Samsung Electro-Mechanics Co., Ltd. (South Korea) 1.33
Hon Hai Precision Industry Co., Ltd. (Taiwan)
Hon Hai Precision Industry Co., Ltd. 0% 1.29
convertible debentures 2005 /2/
Hankuk Electric Glass Co., Ltd. (South Korea) 1.10
Orbotech Ltd. (Israel) /1/ 0.80
Kingboard Chemical Holdings Ltd. (Hong Kong)
Kingboard Chemical Holdings Ltd., warrants, expire 2003 0.39
Venture Manufacturing (Singapore) Ltd (Singapore) 0.32
PHARMACEUTICALS - 5.77%
Aventis SA (France) 1.50
AstraZeneca PLC (United Kingdom) 1.10
M/s. Dr. Reddy's Laboratories Ltd. (India) 0.73
Teva Pharmaceutical Industries Ltd. (ADR) (Israel) 0.65
Pfizer Inc (USA) 0.62
PLIVA d.d. (GDR) (Croatia) /2/ 0.59
Pharmacia Corp. (USA) 0.58
OIL & GAS - 5.33%
Petroleo Brasileiro SA - Petrobras, ordinary nominative 1.99
(ADR) (Brazil)
Sasol Ltd. (South Africa) 1.16
LUKOIL (ADR) (Russia) 0.88
BP Finance PLC 3.00% exchangeable bonds 2006 (Russia) /2/ 0.84
"Shell" Transport and Trading Co., PLC 0.25
(New York registered)
(United Kingdom)
Gulf Indonesia Resources Ltd. (Indonesia) /1/ 0.21
BEVERAGES - 4.82%
Fomento Economico Mexicano, SA de CV (ADR) (Mexico) 1.47
Coca-Cola Co. (USA) 1.40
PepsiCo, Inc. (USA) 1.20
Anheuser-Busch Companies, Inc. (USA) 0.75
WIRELESS TELECOMMUNICATION SERVICES - 4.42%
China Unicom Ltd. (China) /1/ 1.03
GLOBE TELECOM, Inc., Class A (Philippines) /1/
GLOBE TELECOM, Inc., Class A, (PDR) /1/ 1.02
America Movil SA de CV, Series L (ADR) (Mexico) 0.91
COSMOTE Mobile Telecommunications SA (Greece) 0.64
Tele Nordeste Celular Participacoes SA, 0.49
preferred nominative (ADR) (Brazil)
China Mobile (Hong Kong) Ltd. (China) /1/ 0.33
MEDIA - 4.00%
ABS-CBN Holdings Corp. (PDR) (Philippines) 1.00
Independent News & Media PLC (Ireland) 0.98
BEC World PCL (Thailand) 0.72
Globo Cabo SA (ADR) (Brazil) /1/ 0.46
Grupo Televisa, SA, ordinary participation certificates 0.44
(ADR) (Mexico) /1/
Promotora de Informaciones, SA (Spain) 0.23
Antenna TV SA (ADR) (Greece) /1/ 0.08
Benpres Holdings Corp. (Philippines) /1/ 0.06
United Pan-Europe Communications NV (Netherlands) /1/ 0.03
FOOD PRODUCTS - 3.94%
Orkla AS, Class A (Norway) 1.14
Nestle SA (Switzerland) 0.88
Groupe Danone (France) 0.70
Sara Lee Corp. (USA) 0.59
Unilever PLC (United Kingdom) 0.53
PT Indofood Sukses Makmur Tbk (Indonesia) 0.10
PAPER & FOREST PRODUCTS - 3.82%
Sappi Ltd. (South Africa) 1.77
Votorantim Celulose e Papel SA (ADR) (Brazil) 1.14
Kimberly-Clark de Mexico, SA de CV, Class A (Mexico) 0.91
DIVERSIFIED FINANCIALS - 3.28%
Housing Development Finance Corp. Ltd. (India) /2/
Housing Development Finance Corp. /2/ 2.57
First Pacific Co. Ltd. (Hong Kong) 0.70
ICICI Ltd. (ADR) (India) 0.01
DIVERSIFIED TELECOMMUNICATION SERVICES - 2.46%
Telefonos de Mexico, SA de CV, Class L (ADR) (Mexico)
Telefonos de Mexico, SA de CV 4.25% convertible 1.22
debentures 2004
Videsh Sanchar Nigam Ltd. (ADR) (India) 0.57
Hellenic Telecommunications Organization SA (Greece) 0.42
Philippine Long Distance Telephone Co. (Philippines)
Philippine Long Distance Telephone Co. (ADR) 0.17
Global Light Telecommunications Inc. (Canada) /1/ /2/
Global Light Telecommunications Inc. /1/ 0.08
AUTOMOBILES - 2.38%
Suzuki Motor Corp. (Japan) 1.09
Honda Motor Co., Ltd. (Japan) 1.03
Bajaj Auto Ltd. (India) 0.17
Nissan Motor Co., Ltd. (Japan) 0.09
METALS & MINING - 2.36%
Cia. Vale do Rio Doce (Brazil) 0.80
Pohang Iron & Steel Co., Ltd. (South Korea) 0.74
Freeport-McMoRan Copper & Gold Inc., Class B (USA) /1/ 0.38
BHP Billiton PLC (formerly Billiton PLC) (United Kingdom) 0.28
Anglo American PLC (United Kingdom) 0.16
SEMICONDUCTOR EQUIPMENT & PRODUCTS - 2.15%
Samsung Electronics Co., Ltd. (South Korea) 1.86
ASM Pacific Technology Ltd. (Hong Kong) 0.22
Amkor Technology, Inc. (USA) /1/ 0.07
MACHINERY - 1.76%
Metso Oyj (Finland) 0.81
Mitsubishi Heavy Industries, Ltd. (Japan) 0.74
Sandvik AB (Sweden) 0.21
INSURANCE - 1.76%
American International Group, Inc. (USA) 0.95
Samsung Fire & Marine Insurance Co., Ltd. (South Korea) 0.63
Old Mutual PLC (South Africa) 0.18
HOTELS, RESTAURANTS & LEISURE - 1.53%
McDonald's Corp. (USA) 0.86
Millennium & Copthorne Hotels PLC (United Kingdom) 0.58
Club Mediterranee SA (France) 0.09
PERSONAL PRODUCTS - 1.31%
Avon Products, Inc. (USA) 1.31
REAL ESTATE - 1.13%
SM Prime Holdings, Inc. (Philippines) 0.83
New World China Land Ltd. (Hong Kong) /1/ 0.29
Ayala Land, Inc. (Philippines) 0.01
ELECTRIC UTILITIES - 1.03%
Huaneng Power International, Inc., Class H (China) 0.51
AES Corp. (USA) /1/ 0.27
Shandong International Power Development Co. Ltd., ) 0.25
Class H (China)
HEALTH CARE EQUIPMENT & SUPPLIES - 1.01%
Lumenis Ltd. (Israel) /1/ 1.01
IT CONSULTING & SERVICES - 1.00%
Infosys Technologies Ltd. (India) 1.00
ELECTRICAL EQUIPMENT - 0.95%
Johnson Electric Holdings Ltd. (Hong Kong) 0.67
Elektrim SA 3.75% convertible debentures 2004 (Poland) 0.18
LG Cable Ltd. (South Korea) 0.10
AEROSPACE & DEFENSE - 0.91%
Banco Nacional de Desenvolvimento Economico
e Social 6.50%
convertible debentures 2006 /2/ (Brazil)
EMBRAER - Empresa Brasileira de Aeronautica SA, 0.91
preferred nominative (ADR)
GAS UTILITIES - 0.90%
Gas Natural SDG, SA (Spain) 0.90
TRANSPORTATION INFRASTRUCTURE - 0.87%
Grupo Aeroportuario del Sureste, SA de CV, Class B (ADR) 0.37
(Mexico) /1/
Zhejiang Expressway Co. Ltd., Class H (China) 0.33
International Container Terminal Services, Inc. 0.17
(Philippines) /1/
LEISURE EQUIPMENT & PRODUCTS - 0.83%
Fuji Photo Film Co., Ltd. (Japan) 0.83
DISTRIBUTORS - 0.82%
Li & Fung Ltd. (Hong Kong) 0.82
MULTILINE RETAIL - 0.80%
Wal-Mart de Mexico, SA de CV, Class V (ADR) (Mexico) 0.51
Organizacion Soriana, SA de CV, Class B (Mexico) 0.29
COMMUNICATIONS EQUIPMENT - 0.79%
Nokia Corp., Class A (Finland) 0.33
Telefonaktiebolaget LM Ericsson, Class B (Sweden)
Telefonaktiebolaget LM Ericsson, Class B (ADR) 0.25
Motorola, Inc. (USA) 0.18
Datacraft Asia Ltd. (Singapore) 0.03
HOUSEHOLD PRODUCTS - 0.67%
Kimberly-Clark Corp. (USA) 0.67
CONSTRUCTION MATERIALS - 0.57%
Cheung Kong Infrastructure Holdings Ltd. (Hong Kong) 0.57
OTHER INDUSTRIES - 1.51%
Migros Turk TAS (Turkey) 0.46
Sabre Holdings Corp., Class A (USA) /1/ 0.26
Philip Morris Companies Inc. (USA) 0.22
Tubos de Acero de Mexico, SA (ADR) (Mexico) 0.19
Compaq Computer Corp. (USA) 0.17
Sony Corp. (Japan) 0.14
VIA NET.WORKS, Inc. (USA) /1/ 0.03
Rentokil Initial PLC (United Kingdom) 0.02
Transcom WorldWide SA, Class B (Sweden) /1/
Transcom WorldWide SA, Class A /1/ 0.02
MISCELLANEOUS - 0.56%
Other equity securities in initial period of acquisition 0.56
TOTAL EQUITY SECURITIES: (cost: $1,082.348 million) 80.49
Percent of
Net Assets
Bonds & Notes
NON-U.S. GOVERNMENT OBLIGATIONS - 9.71%
Brazil (Federal Republic of):
Eligible Interest Bond 3.188% 2006 /3/ /4/
3.25% 2009 /2/ /3/ /4/
14.50% 2009
Bearer 8.00% 2014 /5/
8.875% 2024
10.125% 2027 2.36
Russian Federation:
8.25% 2010 /2/
8.25% 2010
5.00% 2030 /2/ /3/
5.00% 2030 /3/ 1.79
United Mexican States Government Eurobonds, Global:
9.875% 2007
8.625% 2008
10.375% 2009
9.875% 2010
11.375% 2016
8.30% 2031 1.77
Panama (Republic of):
Interest Reduction Bond 4.75% 2014 /3/ /6/
9.375% 2029 1.10
Turkey (Republic of) 11.875% 2030 0.72
Argentina (Republic of):
Series L, 3.375% Eurobonds 2005 /3/
7.00%/15.50% 2008 /6/
12.25% 2018 /5/ 0.63
Croatian Government:
Series B, 4.563% 2006 /3/
Series A, 4.529% 2010 /3/ 0.58
Poland (Republic of), Past Due Interest Bond, Bearer 6.00% 0.47
2014 /3/ /4/
Philippines (Republic of) 10.625% 2025 0.29
WIRELESS TELECOMMUNICATION SERVICES - 0.78%
PTC International Finance BV 0%/10.75% 2007 /6/ 0.31
GLOBE TELECOM, Inc. 13.00% 2009 0.30
Cellco Finance NV 12.75% 2005 0.17
TOTAL BONDS AND NOTES: (cost: $119.519 million) 10.49
Percent of
Net Assets
Short-Term Securities
Corporate Short-Term Notes - 5.87%
Asset Securitization Corp. 2.58% due 11/19/01 /2/ 1.32
Rio Tinto PLC 3.42% due 11/19/01 /2/ 1.15
Corporate Asset Funding Co. Inc. 2.26% due 12/06/01 /2/ 1.08
Merck & Co., Inc. 2.46% due 11/09/01 0.93
Unilever Capital Corp. 2.20% due 12/20/01 /2/ 0.55
Monte Rosa Capital Corp. 2.48% due 11/07/01 /2/ 0.43
CIT Group, Inc. 2.63% due 11/01/01 0.41
Federal Agency Discount Notes - 2.93%
Federal Home Loan Banks 2.285% due 12/19/01
Federal Home Loan Banks 2.115% due 01/25/02 1.66
Tennessee Valley Authority 2.31% due 11/30/01 0.85
Fannie Mae 2.26% due 12/07/01 0.42
Non-U.S. Currency - 0.04%
New Taiwanese Dollar 0.04
8.84
99.82
0.18
100.00
TOTAL SHORT-TERM SECURITIES: (cost: $95.334 million)
TOTAL INVESTMENT SECURITIES: (cost: $1,297.201 million)
Excess of cash and receivables over payables
NET ASSETS
/1/ Non-income-producing security.
/2/ Purchased in a private placement transaction;
resale may be limited to qualified
institutional buyers; resale to the public
may require registration.
/3/ Coupon rate may change periodically.
/4/ Pass-through securities backed by a
pool of mortgages or other loans on
which principal payments are periodically made.
Therefore, the effective maturities are shorter
than the stated maturities.
/5/ Payment in kind; the issuer has the option
of paying additional securities in lieu of cash.
/6/ Step bond; coupon rate will increase
at a later date.
The descriptions of the companies shown
in the portfolio, which were obtained
from published reports and other sources
believed to be reliable, are supplemental
and are not covered by the Independent
Auditors' Report.
ADR = American Depositary Receipts
GDR = Global Depositary Receipts
PDR = Philippine Depositary Receipts
See Notes to Financial Statements
|
EQUITY SECURITIES APPEARING IN THE EQUITY SECURITIES ELIMINATED FROM THE
PORTFOLIO SINCE APRIL 30, 2001 PORTFOLIO SINCE APRIL 30, 2001
AES Corp Bangkok Bank
American International Group BHP
Anglo American Check Point
Software Technologies
ASM Pacific Technology China Petroleum & Chemical
Banco Nacional de Desenvolvimento Economico Cia. Anonima Nacional
Telefonos de Venezuela
BEC World Cia. De
Telecomunicaciones de Chile
C Vale do Rio Doce Coca-Cola Amatil
COSMOTE Mobile Telecommunications De Beers Consolidated Mines
Dr. Reddy's Laboratories ECI Telecom
Gas Natural FLAG Telecom Holdings
Grupo Aeroportuario del Sureste Global TeleSystems
Hellenic Telecommunications Grupo Financiero
Banamex-Accival
Johnson Electric Holdings Hindustan Lever
Lumenis Hyundai
Electronics Industries
Nissan Motor Industriforvaltnings
AB Kinnevik
Transcom Worldwide KGHM Polska Miedz
Unilever Korea Telecom
Locus
Magyar Tavkozlesi
Mahanagar Telephone Nigam
Marubeni
M-Cell
MIH
Nasionale Pers Beperk
New World Infrastructure
Nuevo Grupo Iusacell
Omni Industries
Orascom Telecom Holding
Panamerican Beverages
Shimano
Tecnomatix Technologies
Tele Celular Sul Participacoes
Telemig Celular Participacoes
TTI Team Telecom
Turkcell Iletisim Hizmetleri
Vimple-Communications
|
New World Fund
Financial statements
Statement of assets and liabilities
at October 31, 2001 (dollars in millions)
Assets:
Investment securities at market
(cost: $1,297.201) $1,076.678
Cash .054
Receivables for -
Sales of investments $2.493
Sales of fund's shares 5.067
Forward currency contracts - net -
Dividends and interest 3.512 11.072
Other - -
1,087.804
Liabilities:
Payables for -
Purchases of investments 2.768
Repurchases of fund's shares 4.443
Forward currency contracts - net -
Dividends on fund's shares -
Management services .732
Bank overdraft -
Other expenses 1.247 9.190
Net assets at October 31, 2001 $1,078.614
Total authorized capital stock - 200,000,000
shares, $.01 par value
Class A shares:
Net assets $1,052.858
Shares outstanding 55,307,028
Net asset value per share $19.04
Class B shares:
Net assets $20.252
Shares outstanding 1,075,793
Net asset value per share $18.82
Class C shares:
Net assets $2.981
Shares outstanding 158,914
Net asset value per share $18.76
Class F shares:
Net assets $2.523
Shares outstanding 132,940
Net asset value per share $18.98
Statement of operations
for the year ended October 31, 2001 (dollars in millions)
Investment income:
Income:
Interest $24.280
Dividends 18.553 $42.833
Expenses:
Management services fee 9.835
Distribution expenses - Class A 2.555
Distribution expenses - Class B .198
Distribution expenses - Class C .011
Distribution expenses - Class F .002
Transfer agent fee - Class A 1.944
Transfer agent fee - Class B .041
Administrative services fees - Class C .007
Administrative services fees - Class F .004
Reports to shareholders .167
Registration statement and prospectus .340
Postage, stationery and supplies .285
Directors' fees .154
Auditing and legal fees .056
Custodian fee .584
Taxes other than federal income tax .045
Other expenses .042 16.270
Net investment income 26.563
Realized loss and unrealized
depreciation on investments:
Net realized loss (161.411)
Net unrealized depreciation on
Investments (62.275)
Open forward currency contracts -
Net realized loss and
unrealized depreciation
on investments (223.686)
Net decrease in net assets resulting
from operations $(197.123)
Statement of changes in net assets (dollars in millions)
Year ended
October 31
2001 2000
Operations:
Net investment income $26.563 $20.204
Net realized loss on investments (161.411) (4.368)
Net unrealized depreciation
on investments (62.275) (159.425)
Net decrease in net assets
resulting from operations (197.123) (143.589)
Dividends and distributions paid to
shareholders:
Dividends from net investment income:
Class A (20.546) (6.958)
Class B (.241) -
Distributions from net realized gain on investments:
Class A - -
Class B - -
Class C - -
Class F - -
Total dividends and distributions (20.787) (6.958)
Capital share transactions:
Proceeds from shares sold 654.403 914.463
Proceeds from shares issued in reinvestment
of net investment income dividends 19.657 6.472
Cost of shares repurchased (672.320) (214.241)
Net increase in net assets resulting
from capital share transactions 1.740 706.694
Total (decrease) increase in net assets (216.170) 556.147
Net assets:
Beginning of year 1,294.784 738.637
End of year (including undistributed
net investment income: $20.214 and $17.775,
respectively) $1,078.614 $1,294.784
See notes to financial statements
|
Notes to financial statements
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - New World Fund, Inc.(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 companies with significant exposure to countries which have developing economies and/or markets.
The fund offers four classes of shares as described below:
Class A shares are sold with an initial sales charge of up to 5.75%.
Class B shares are sold without an initial sales charge but are subject to a contingent deferred sales charge ("CDSC") paid upon redemption. This charge declines from 5% to zero over a period of six years. Class B shares automatically convert to Class A shares after eight years.
Class C shares are sold without an initial sales charge but are subject to a CDSC of 1% for redemptions within one year of purchase. Class C shares automatically convert to Class F shares after ten years.
Class F shares, which are sold exclusively through fee-based programs, are sold without an initial sales charge or CDSC.
Holders of all classes of shares have equal pro rata rights to assets, dividends, liquidation and other rights. Each class has identical voting rights, except for exclusive rights to vote on matters affecting only its class. Each class of shares may have different distribution, administrative services and transfer agent fees and expenses. Differences in class-specific expenses will result in the payment of different per share dividends by each class.
SIGNIFICANT ACCOUNTING POLICIES - The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. These principles require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. 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. Short-term securities maturing within 60 days are valued at amortized cost, which approximates market value. The ability of the issuers of the debt securities held by the fund to meet their obligations may be affected by economic developments in a specific industry, state or region. Forward currency contracts are valued at the mean of their representative quoted bid and asked prices. Securities and other 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 fund's Board of Directors. If events occur that materially affect the value of securities (including non-U.S. securities) between the close of trading in those securities and the close of regular trading on the New York Stock Exchange, the securities will be valued at fair value.
NON-U.S. CURRENCY TRANSLATION - Assets and 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 and other assets and liabilities are combined with the net realized and unrealized gain or loss on investment securities for financial reporting purposes.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions are
accounted for as of the trade date. Realized gains and losses from securities
transactions are determined based on specific identified cost. In the event
securities are purchased on a delayed delivery or when-issued basis, the fund
will instruct the custodian to segregate liquid assets sufficient to meet its
payment obligations in these transactions. Dividend income is recognized on the
ex-dividend date and interest income is recognized on an accrual basis. Market
discounts, premiums and original issue discounts on fixed-income securities are
amortized daily over the expected life of the security.
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 manage 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. Purchases and sales of forward currency exchange contracts having the same settlement date and broker are offset and presented net in the Statement of Assets and Liabilities.
CLASS ALLOCATIONS - Income, expenses (other than class-specific expenses) and realized and unrealized gains and losses are allocated daily among the various share classes based on their relative net asset values. Distribution expenses, administrative services fees, certain transfer agent fees and other applicable class-specific expenses are accrued daily and charged to the respective share class.
2. NON-U.S. INVESTMENTS
INVESTMENT RISK - Investments in securities of non-U.S. issuers in certain countries involve special investment risks. These risks may include, but are not limited to, investment and repatriation restrictions, revaluation of currencies, adverse political, social and economic developments, government involvement in the private sector, limited and less reliable investor information, lack of liquidity, certain local tax law considerations, and limited regulation of the securities markets.
TAXATION - Dividend and interest income is recorded net of non-U.S. taxes paid. For the year ended October 31, 2001, non-U.S. taxes paid were $1,699,000. Realized gain of the fund derived in certain countries is subject to certain non-U.S. taxes. In addition, the fund also provides for non-U.S. taxes on unrealized gain in these countries. For the year ended October 31, 2001, non-U.S taxes paid on realized gain were $354,000, and non-U.S. taxes provided on unrealized gain were $362,000.
CURRENCY GAINS AND LOSSES - Net realized currency losses on dividends, interest, sales of non-U.S. bonds and notes, forward contracts, and other receivables and payables, on a book basis, were $3,540,000 for the year ended October 31, 2001.
3. FEDERAL INCOME TAXATION
The fund complies with the requirements of the Internal Revenue Code applicable to regulated investment companies and intends to distribute all of its net taxable income and net capital gains for the fiscal year. As a regulated investment company, the fund is not subject to income taxes if such distributions are made. Required distributions are determined on a tax basis and may differ from such amounts for financial reporting purposes. In addition, the fiscal year in which amounts are distributed may differ from the year in which the net investment income is earned and the net gains are realized by the fund.
As of October 31, 2001, the cost of investment securities for federal income tax reporting purposes was $1,304,178,000. Net unrealized depreciation on investments aggregated $227,500,000; $45,752,000 related to appreciated securities and $273,252,000 related to depreciated securities. For the year ended October 31, 2001, the fund realized tax basis net capital losses of $158,599,000. The fund had available at October 31, 2001, a net capital loss carryforward totaling $162,923,000 which may be used to offset capital gains realized during subsequent years through 2009 and thereby relieve the fund and its shareholders of any federal income tax liability with respect to the capital gains that are so offset. The fund will not make distributions from capital gains while a capital loss carryforward remains. Net losses related to non-U.S. currency and other transactions of $3,081,000 are treated as an adjustment to ordinary income for federal income tax purposes. Other previously deferred capital losses of $269,000 were recognized for federal income tax purposes.
4. FEES AND TRANSACTIONS WITH RELATED PARTIES
INVESTMENT ADVISORY FEE - The fee of $9,835,000 for management services was incurred pursuant to an agreement with Capital Research and Management Company ("CRMC") with which certain officers and Directors of the fund are affiliated.
The Investment Advisory and Service Agreement provides for monthly fees accrued daily, based on a series of rates beginning with 0.85% per annum of the first $500 million of net assets decreasing to 0.62% of such assets in excess of $2.5 billion. For the year ended October 31, 2001, the management services fee was equivalent to an annualized rate of 0.79% of average net assets.
DISTRIBUTION EXPENSES - The fund has adopted plans of distribution under which it may finance activities primarily intended to sell fund shares, provided the categories of expenses are approved in advance by the fund's Board of Directors. The plans provide for annual expenses, based on average daily net assets, of up to 0.30% for Class A shares, 1.00% for Class B and Class C shares, and up to 0.50% for Class F shares.
All share classes may use up to 0.25% of these expenses to pay service fees, or to compensate American Funds Distributors, Inc.("AFD"), the principal underwriter of the fund's shares, for paying service fees to firms that have entered into agreements with AFD for providing certain shareholder services. The balance may be used for approved distribution expenses as follows:
CLASS A SHARES - Approved categories of expense include reimbursements to AFD for commissions paid to dealers and wholesalers in respect of certain shares sold without a sales charge. Those reimbursements are permitted for amounts billed to the fund within the prior 15 months but only to the extent that the overall 0.30% annual expense limit for Class A shares is not exceeded. For the year ended October 31, 2001, aggregate distribution expenses were $2,555,000, equivalent to an annualized rate of 0.21% of average daily net assets attributable to Class A shares.
CLASS B SHARES - In addition to service fees of 0.25%, approved categories of expense include fees of 0.75% per annum of average daily net assets attributable to Class B shares payable to AFD. AFD sells the rights to receive such payments (as well as any contingent deferred sales charges payable in respect of shares sold during the period) in order to finance the payment of dealer commissions. For the year ended October 31, 2001, aggregate distribution expenses were $198,000, equivalent to an annualized rate of 1.00% of average daily net assets attributable to Class B shares.
CLASS C SHARES - In addition to service fees of 0.25%, the Board of Directors has approved the payment of 0.75% per annum of average daily net assets attributable to Class C shares to AFD to compensate firms selling Class C shares of the fund. For the period ended October 31, 2001, aggregate distribution expenses were $11,000, equivalent to an annualized rate of 1.00% of average daily net assets attributable to Class C shares.
CLASS F SHARES - The plan has an expense limit of 0.50%. However, the Board of Directors has presently approved expenses under the plan of 0.25% per annum of average daily net assets attributable to Class F shares. For the period ended October 31, 2001, aggregate distribution expenses were $2,000, equivalent to an annualized rate of 0.25% of average daily net assets attributable to Class F shares.
As of October 31, 2001, aggregate distribution expenses payable to AFD for all share classes were $372,000.
AFD received $3,222,000 (after allowances to dealers) as its portion of the sales charges paid by purchasers of the fund's Class A shares for the year ended October 31, 2001. Such sales charges are not an expense of the fund and, hence, are not reflected in the accompanying Statement of Operations.
TRANSFER AGENT FEE - A fee of $1,985,000 was incurred during the year ended October 31, 2001, pursuant to an agreement with American Funds Service Company ("AFS"), the transfer agent for the fund. As of October 31, 2001, aggregate transfer agent fees payable to AFS for Class A and Class B shares were $162,000.
ADMINISTRATIVE SERVICES FEES - The fund has an administrative services agreement with CRMC for Class C and Class F shares. Pursuant to this agreement, CRMC provides transfer agency and other related shareholder services. CRMC may contract with third parties to perform these services. Under the agreement, the fund pays CRMC a fee equal to 0.15% per annum of average daily net assets of Class C and Class F shares, plus amounts payable for certain transfer agency services according to a specified schedule. For the period ended October 31, 2001, total fees under the agreement were $11,000. As of October 31, 2001, aggregate administrative services fees payable to CRMC for Class C and Class F shares were $2,000.
DEFERRED DIRECTORS' FEES - Since the adoption of the deferred compensation plan in 1999, Directors who are unaffiliated with CRMC may elect to defer the receipt of part or all of their compensation. Deferred compensation amounts, which remain in the fund, are treated as if invested in shares of the fund or other American Funds. These amounts represent general, unsecured liabilities of the fund and vary according to the total returns of the selected funds. As of October 31, 2001, the cumulative amount of these liabilities was $203,000. Directors' fees on the Statement of Operations include the current fees (either paid in cash or deferred) and the net increase or decrease in the value of deferred compensation.
AFFILIATED DIRECTORS AND OFFICERS - CRMC is owned by The Capital Group Companies, Inc. AFS and AFD are both wholly owned subsidiaries of CRMC. Officers of the fund and certain Directors 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 $523,524,000 and $441,535,000, respectively, during the year ended October 31, 2001.
Pursuant to the custodian agreement, the fund receives credits against its custodian fee for imputed interest on certain balances with the custodian bank. For the year ended October 31, 2001, the custodian fee of $584,000 includes $26,000 that was paid by these credits rather than in cash.
For the year ended October 31, 2001, the fund reclassified $3,080,000 from undistributed net investment income to undistributed net realized gains; and reclassified $257,000 from undistributed net investment income to additional paid-in capital to reflect permanent differences between book and tax reporting.
As of October 31, 2001, net assets consisted of the following:
(dollars in millions)
Capital paid in on shares of capital stock 1,442.210
Undistributed net investment income 20.214
Accumulated net realized loss (162.923)
Net unrealized depreciation (220.887)
Net assets 1,078.614
|
Capital share transactions in the fund were as follows:
Year Ended
Amount October 31
Millions Shares
Class A Shares: 628.936 29,029,308
Sold 19.423 876,078
Reinvestment of dividends and distributions (661.254) (30,669,665)
Repurchased (12.895) (764,279)
Net (decrease) increase in Class A
Class B Shares: /1/ 13.143 605,515
Sold .234 10,580
Reinvestment of dividends and distributions (4.760) (225,653)
Repurchased 8.617 390,442
Net increase in Class B
Class C Shares: /2/ 5.040 242,189
Sold - -
Reinvestment of dividends and distributions (1.712) (83,275)
Repurchased 3.328 158,914
Net increase in Class C
Class F Shares: /2/ 7.284 359,042
Sold - -
Reinvestment of dividends and distributions (4.594) (226,102)
Repurchased 2.690 132,940
Net increase in Class F $ 1.740 (81,983)
Total net increase (decrease) in fund
/1/ Class B shares were not offered
before March 15, 2000.
/2/ Class C and Class F shares were not offered
before March 15, 2001.
Amount
Millions Shares
Class A Shares: 895.743 32,829,731
Sold 6.472 241,688
Reinvestment of dividends and distributions (213.848) (8,199,648)
Repurchased 688.367 24,871,771
Net (decrease) increase in Class A
Class B Shares: /1/ 18.720 701,108
Sold - -
Reinvestment of dividends and distributions (.393) (15,757)
Repurchased 18.327 685,351
Net increase in Class B
Class C Shares: /2/ - -
Sold - -
Reinvestment of dividends and distributions - -
Repurchased - -
Net increase in Class C
Class F Shares: /2/ - -
Sold - -
Reinvestment of dividends and distributions - -
Repurchased - -
Net increase in Class F $ 706.694 25,557,122
Total net increase (decrease) in fund
/1/ Class B shares were not offered
before March 15, 2000.
/2/ Class C and Class F shares were not offered
before March 15, 2001.
|
Per-share data and ratios
Class A
Year Ended
2001 2000
Net asset value, beginning of year $22.81 $23.67
Income from investment operations :
Net investment income .47 .42
Net losses on securities (3.87) (1.08)
(both realized and unrealized)
Total from investment operations (3.40) (.66)
Less distributions :
Dividends (from net investment income) (.37) (.20)
Net asset value, end of year $19.04 $22.81
Total return /3/ (15.14)% (2.91)%
Ratios/supplemental data:
Net assets, end of year (in millions) $1,053 $1,279
Ratio of expenses to average net assets 1.29% 1.35%
Ratio of net income to average net assets 2.15% 1.61%
Class B
Year
ended March 15 to
October 31, October 31,
2001 2000 /2/
Net asset value, beginning of period $22.71 $29.09
Income from investment operations :
Net investment income /1/ .28 .20
Net losses on securities (3.85) (6.58)
(both realized and unrealized) /1/
Total from investment operations (3.57) (6.38)
Less distributions :
Dividends (from net investment income) (.32) .00
Net asset value, end of period $18.82 $22.71
Total return /3/ (15.91)% (21.93)%
Ratios/supplemental data:
Net assets, end of period (in millions) $20 $16
Ratio of expenses to average net assets 2.13% 2.03%
Ratio of net income to average net assets 1.32% .93%
Supplemental data - all classes Ended
Year October31,
2001 2000
Portfolio turnover rate 40.13% 30.07%
1) Based on average shares outstanding.
2) Based on operations for the period shown and,
accordingly, not representative of a full year
(unless otherwise noted).
3) Total returns exclude all sales
charges, including contingent deferred
sales charges.
4) Annualized.
Per-share data and ratios June 17 to
October 31,
1999 /2/
$23.56
Net asset value, beginning of year
.16
Income from investment operations :
Net investment income (.05)
Net losses on securities .11
(both realized and unrealized)
Total from investment operations
.00
Less distributions :
Dividends (from net investment income) $23.67
Net asset value, end of year .47%
Total return /3/
Ratios/supplemental data: $739
Net assets, end of year (in millions) 1.46%
Ratio of expenses to average net assets 1.83%
Ratio of net income to average net assets Class C Class F
March 15 to March 15 to
October 31, October 31,
2001 /2/ 2001 /2/
$21.44 $21.57
Net asset value, beginning of period
.09 .21
Income from investment operations :
Net investment income /1/ (2.77) (2.80)
Net losses on securities (2.68) (2.59)
(both realized and unrealized) /1/
Total from investment operations
.00 .00
Less distributions :
Dividends (from net investment income) $18.76 $18.98
Net asset value, end of period (12.50)% (12.01)%
Total return /3/
Ratios/supplemental data: $3 $3
Net assets, end of period (in millions) 2.19% 1.40%
Ratio of expenses to average net assets .69% 1.62%
Ratio of net income to average net assets
June 17 to
1999 /2/
Supplemental data - all classes 1999
.83%
Portfolio turnover rate
1) Based on average shares outstanding.
2) Based on operations for the period shown and,
accordingly, not representative of a full year
(unless otherwise noted).
3) Total returns exclude all sales
charges, including contingent deferred
sales charges.
4) Annualized.
|
Independent Auditors' Report
To the Board of Directors and Shareholders of New World Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of New World Fund, Inc. (the "Fund"), including the investment portfolio, as of October 31, 2001, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the per-share data and ratios for the period June 17, 1999, commencement of operations, to October 31, 1999, and each of the two years in the period endedOctober 31, 2001, for Class A shares, and the period March 15, 2000 (inception) through October 31, 2000 and the year ended October 31, 2001 for Class B shares, and the period March 15, 2001 (inception) through October 31, 2001 for Class C and Class F shares. These financial statements and per-share data and ratios are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and per-share data and ratios based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and per-share data and ratios are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2001, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and per-share data and ratios referred to above present fairly, in all material respects, the financial position of New World Fund, Inc. as of October 31, 2001, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the per-share data and ratios for the period June 17, 1999, commencement of operations, to October 31, 1999, and each of the two years in the period then ended October 31, 2001 for Class A shares, and the period March 15, 2000 (inception) through October 31, 2000 and the year ended October 31, 2001 for Class B shares, and the period March 15, 2001 (inception) through October 31, 2001 for Class C and Class F shares, in conformity with accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Los Angeles, California
November 30, 2001
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 certain distributions received by shareholders during such fiscal year.
The fund makes an election under the Internal Revenue Code Section 853 to pass through certain non-U.S. taxes paid by the fund to its shareholders as a foreign tax credit. The amount of foreign tax credit passed through to shareholders for the fiscal year ended October 31, 2001 is $2,053,000. Foreign source income earned by the fund for the fiscal year ended October 31, 2001 was $40,695,000. Shareholders are entitled to a foreign tax credit or an itemized deduction, at their discretion. Generally, it is more advantageous to claim a credit 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, 5% of the dividends paid by the fund from net investment income represent 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 INFORMATION ABOVE IS REPORTED FOR THE FUND'S FISCAL YEAR AND NOT THE CALENDAR YEAR, SHAREHOLDERS SHOULD REFER TO THEIR FORM 1099-DIV OR OTHER TAX INFORMATION WHICH WILL BE MAILED IN JANUARY 2002 TO DETERMINE THE CALENDAR YEAR AMOUNTS TO BE INCLUDED ON THEIR 2001 TAX RETURNS. SHAREHOLDERS SHOULD CONSULT THEIR TAX ADVISERS.
PART C
OTHER INFORMATION
NEW WORLD FUND, INC.
ITEM 23. EXHIBITS
(a) Articles Supplementary as filed with the State of Maryland on 1/18/02
(b) Previously filed (see Pre-Effective Amendment No. 5 filed 3/12/01)
(c) Previously filed (see Pre-Effective Amendment No. 5 filed 3/12/01)
(d) Previously filed (see Post-Effective Amendment No. 2 filed 1/6/00)
(e) Form of Amended and Restated Principal Underwriting Agreement
(f) None
(g) Previously filed (see Post-Effective Amendment No. 2 filed 1/6/00)
(h) Form of Amended and Restated Administrative Services Agreement; and
Form of Amended Shareholder Services Agreement dated 7/1/01
(i) Legal opinion for Classes 529-A, 529-B, 529-C, 529-E and 529-F Shares
(j) Consent of Independent Auditors
(k) None
(l) Previously filed (see Pre-Effective Amendment No. 3 filed 4/16/99)
(m) Forms of Plans of Distribution relating to Class 529-A, 529-B, 529-C, 529-E
and 529-F Shares
(n) Form of Amended and Restated Multiple Class Plan
(o) None
(p) Code of Ethics
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND
None
ITEM 25. INDEMNIFICATION
Registrant, upon the effective date of this Registration Statement, will become a joint-insured under Investment Adviser/Mutual Fund Errors and Omissions Policies written by American International Surplus Lines Insurance Company, Chubb Custom Insurance Company, and ICI Mutual Insurance Company which will insure its officers and directors against certain liabilities. However, in no event will Registrant maintain insurance to indemnify any such person for any act for which Registrant itself is not permitted to indemnify the individual.
Subsection (b) of Section 2-418 of the General Corporation Law of Maryland empowers a corporation to indemnify any person who was or is party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against reasonable expenses (including attorneys' fees), judgments, penalties, fines and amounts paid in settlement actually incurred by him in connection with such action, suit or proceeding unless it is established that: (i) the act or omission of the person was material to the matter giving rise to the proceeding and was committed in bad faith or was the result of active and deliberate dishonesty; (ii) the person actually received an improper personal benefit of money, property or services; or (iii) with respect to any criminal action or proceeding, the person had reasonable cause to believe his act or omission was unlawful.
Indemnification under subsection (b) of Section 2-418 may not be made by a corporation unless authorized for a specific proceeding after a determination has been made that indemnification is permissible in the circumstances because the party to be indemnified has met the standard of conduct set forth in subsection (b). This determination shall be made (i) by the Board of Directors by a majority vote of a quorum consisting of directors not, at the time, parties to the proceeding, or, if such quorum cannot be obtained, then by a majority vote of a committee of the Board consisting solely of two or more directors not, at the time, parties to such proceeding and who were duly designated to act in the matter by a majority vote of the full Board in which the designated directors who are parties may participate; (ii) by special legal counsel selected by the Board of Directors of a committee of the Board by vote as set forth in subparagraph (i), or, if the requisite quorum of the full Board cannot be obtained therefor and the committee cannot be established, by a majority vote of the full Board in which any director who is a party may participate; or (iii) by the stockholders (except that shares held by any party to the specific proceeding may not be voted). A court of appropriate jurisdiction may also order indemnification if the court determines that a person seeking indemnification is entitled to reimbursement under subsection (b).
Section 2-418 further provides that indemnification provided for by Section 2-418 shall not be deemed exclusive of any rights to which the indemnified party may be entitled; that the scope of indemnification extends to directors, officers, employees or agents of a constituent corporation absorbed in a consolidation or merger and persons serving in that capacity at the request of the constituent corporation for another; and empowers the corporation to purchase and maintain insurance on behalf of a director, officer, employee or agent of the corporation against any liability asserted against or incurred by such person in any such capacity or arising out of such person's status as such whether or not the corporation would have the power to indemnify such person against such liabilities under Section 2-418.
Article VIII (h) of the Articles of Incorporation of New World Fund, Inc. (the "Fund" or the "Corporation") provides that "The Corporation shall indemnify (1) its directors and officers, whether serving the Corporation or at its request any other entity, to the full extent required or permitted by the General Laws of the State of Maryland now or hereafter in force, including the advance of expenses under the procedures and to the full extent permitted by law, and (2) its other employees and agents to such extent as shall be authorized by the Board of Directors or the Corporation's By-Laws and be permitted by law. The foregoing rights of indemnification shall not be exclusive of any other rights to which those seeking indemnification may be entitled. The Board of Directors may take such action as is necessary to carry out these indemnification provisions and is expressly empowered to adopt, approve and amend from time to time such by-laws, resolutions or contracts implementing such provisions or such further indemnification arrangements as may be permitted by law. No amendment of this Charter of the Corporation shall limit or eliminate the right to indemnification provided hereunder with respect to acts or omissions occurring prior to such amendment or repeal. Nothing contained herein shall be construed to authorize the Corporation to indemnify any director or officer of the Corporation against any liability to the Corporation or to any holders of securities of the Corporation to which he is subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his office. Any indemnification by the Corporation shall be consistent with the requirements of law, including the Investment Company Act of 1940."
Registrant will comply with the indemnification requirements contained in the Investment Company Act of 1940 (the "1940 Act") Releases No. 7221 (June 9, 1972) and No. 11330 (September 4, 1980). In addition, indemnification by the Registrant shall be consistent with the requirements of rule 484 under the Securities Act of 1933. Furthermore, Registrant undertakes to the staff of the Securities and Exchange Commission that the Fund's indemnification provisions quoted above prohibit indemnification for liabilities arising under the Securities Act of 1933 and the 1940 Act.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER
None
ITEM 27. PRINCIPAL UNDERWRITERS
(a) American Funds Distributors, Inc. is the Principal Underwriter of shares of: AMCAP Fund, Inc., American Balanced Fund, Inc., The American Funds Income Series, The American Funds Tax-Exempt Series I, The American Funds Tax-Exempt Series II, American High-Income Municipal Bond Fund, Inc., American High-Income Trust, American Mutual Fund, Inc., The Bond Fund of America, Inc., Capital Income Builder, Inc., Capital World Bond Fund, Inc., Capital World Growth and Income Fund, Inc., The Cash Management Trust of America, EuroPacific Growth Fund, Fundamental Investors, Inc., The Growth Fund of America, Inc., The Income Fund of America, Inc., The Investment Company of America, Intermediate Bond Fund of America, Limited Term Tax-Exempt Bond Fund of America, The New Economy Fund, New Perspective Fund, Inc., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of America, Inc., The Tax-Exempt Money Fund of America, U.S. Treasury Money Fund of America and Washington Mutual Investors Fund, Inc.
(B) (1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
David L. Abzug Vice President None
P.O. Box 2248
Agoura Hills, CA 91376
John A. Agar Vice President None
P.O. Box 7326
Little Rock, AR 72207
Robert B. Aprison Vice President None
2983 Bryn Wood Drive
Madison, WI 53711
L William W. Bagnard Vice President None
Steven L. Barnes Senior Vice President None
7490 Clubhouse Road
Suite 100
Boulder, CO 80301
B Carl R. Bauer Vice President None
Michelle A. Bergeron Senior Vice President None
4160 Gateswalk Drive
Smyrna, GA 30080
J. Walter Best, Jr. Regional Vice President None
9013 Brentmeade Blvd.
Brentwood, TN 37027
Joseph T. Blair Senior Vice President None
148 E. Shore Ave.
Groton Long Point, CT 06340
John A. Blanchard Vice President None
6421 Aberdeen Road
Mission Hills, KS 66208
Ian B. Bodell Senior Vice President None
P.O. Box 1665
Brentwood, TN 37024-1665
Mick L. Brethower Senior Vice President None
601 E. Whitestone Blvd.
Building 6, Suite 115
Cedar Park, TX 78613
Alan Brown Vice President None
4129 Laclede Avenue
St. Louis, MO 63108
B J. Peter Burns Vice President None
Cody Callaway Regional Vice President None
803 South Desert Palm Place
Broken Arrow, OK 74012
Matthew Carlisle Regional Vice President None
4500 Fairvista Drive
Charlotte, NC 28269
Damian Carroll Regional Vice President None
40 Ten Acre Road
New Britain, CT 06052
Brian C. Casey Vice President None
8002 Greentree Road
Bethesda, MD 20817
Victor C. Cassato Senior Vice President None
609 W. Littleton Blvd., Suite 310
Littleton, CO 80120
Christopher J. Cassin Senior Vice President None
19 North Grant Street
Hinsdale, IL 60521
Denise M. Cassin Vice President None
1301 Stoney Creek Drive
San Ramon, CA 94583
L David Charlton Senior Vice President None
L Larry P. Clemmensen Director None
L Kevin G. Clifford Director, President and Co-Chief None
Executive Officer
H Cheri Coleman Assistant Vice President None
Ruth M. Collier Senior Vice President None
29 Landsdowne Drive
Larchmont, NY 10538
S David Coolbaugh Vice President None
Carlo O. Cordasco Regional Vice President None
101 Five Forks Lane
Hampton, VA 23669
Thomas E. Cournoyer Vice President None
2333 Granada Boulevard
Coral Gables, FL 33134
Douglas A. Critchell Senior Vice President None
3521 Rittenhouse Street, N.W.
Washington, D.C. 20015
William F. Daugherty Regional Vice President None
1216 Highlander Way
Mechanicsburg, PA 17050
Guy E. Decker Regional Vice President None
2990 Topaz Lane
Carmel, IN 46032
Daniel J. Delianedis Vice President None
Edina Executive Plaza
5200 Willson Road, Suite 150
Edina, MN 55424
James A. DePerno, Jr. Regional Vice President None
91 Church Street
East Aurora, NY 14052
L Bruce DePriester Senior Vice President None
Tom Dickson Regional Vice President None
108 Wilmington Court
Southlake, TX 76092
Michael A. DiLella Vice President None
P. O. Box 661
Ramsey, NJ 07446
G. Michael Dill Senior Vice President None
505 E. Main Street
Jenks, OK 74037
Kirk D. Dodge Senior Vice President None
2627 Mission Street
San Marino, CA 91108
Peter J. Doran Director, Executive Vice None
President
100 Merrick Road, Suite 216W
Rockville Centre, NY 11570
L Michael J. Downer Secretary None
Michael J. Dullaghan Regional Vice President None
5040 Plantation Grove Lane
Roanoke, VA 24012
S J. Steven Duncan Senior Vice President None
Robert W. Durbin Vice President None
74 Sunny Lane
Tiffin, OH 44883
I Lloyd G. Edwards Senior Vice President None
Timothy L. Ellis Regional Vice President None
1441 Canton Mart Road, Suite 9
Jackson, MS 39211
John R. Fodor Senior Vice President None
15 Latisquama Road
Southborough, MA 01772
Daniel B. Frick Regional Vice President None
845 Western Avenue
Glen Ellyn, IL 60137
Clyde E. Gardner Senior Vice President None
Route 2, Box 3162
Osage Beach, MO 65065
L Linda Gardner Assistant Vice President None
B Evelyn K. Glassford Vice President None
Jack E. Goldin Regional Vice President None
7995 Northwest 20th Street
Pembroke Pines, FL 33024
Jeffrey J. Greiner Vice President None
12210 Taylor Road
Plain City, OH 43064
L Paul G. Haaga, Jr. Director None
B Mariellen Hamann Vice President None
Derek S. Hansen Regional Vice President None
13033 Ridgedale Drive, PMB 147
Minnetonka, MN 55305
David E. Harper Senior Vice President None
150 Old Franklin School Road
Pittstown, NJ 08867
H Mary Pat Harris Vice President None
Steve Hipsley Regional Vice President None
100 Kaydeross Park Road
Saratoga Springs, NY 12866
Ronald R. Hulsey Senior Vice President None
6744 Avalon
Dallas, TX 75214
Robert S. Irish Vice President None
1225 Vista Del Mar Drive
Delray Beach, FL 33483
Michael J. Johnston Director None
630 Fifth Avenue, 36th Floor
New York, NY 10111
B Damien M. Jordan Senior Vice President None
John P. Keating Regional Vice President None
2285 Eagle Harbor Parkway
Orange Park, FL 32003
Dorothy Klock Vice President None
555 Madison Avenue, 29th Floor
New York, NY 10022
H Dianne L. Koske Assistant Vice President
Andrew R. LeBlanc Regional Vice President None
78 Eton Road
Garden City, NY 11530
B Karl A. Lewis Vice President None
T. Blake Liberty Vice President None
5506 East Mineral Lane
Littleton, CO 80122
Mark J. Lien Regional Vice President None
1103 Tulip Tree Lane
West Des Moines, IA 50266
L Lorin E. Liesy Vice President None
I Kelle Lindenberg Assistant Vice President None
Louis K. Linquata Regional Vice President None
5214 Cass Street
Omaha, NE 68132
LW Robert W. Lovelace Director President/PEO and
Director
Brendan T. Mahoney Regional Vice President None
29 Harvard Drive
Sudbury, MA 01776
Stephen A. Malbasa Director, Senior Vice President None
13405 Lake Shore Blvd.
Cleveland, OH 44110
Steven M. Markel Senior Vice President None
5241 South Race Street
Greenwood Village, CO 80121
L J. Clifton Massar Director, Senior Vice President None
L E. Lee McClennahan Senior Vice President None
James R. McCrary Regional Vice President None
28812 Crestridge
Rancho Palos Verdes, CA 90275
L Scott F. McIntyre Senior Vice President None
S John V. McLaughlin Senior Vice President None
Terry W. McNabb Vice President None
2002 Barrett Station Road
St. Louis, MO 63131
Scott Meade Regional Vice President None
P.O. Box 122
Rye Beach, NH 03871
Monty Moncrief Regional Vice President None
55 Chandler Creek
The Woodlands, TX 77381
William E. Noe Vice President None
304 River Oaks Road
Brentwood, TN 37027
Peter A. Nyhus Vice President None
3084 Wilds Ridge Court
Prior Lake, MN 55372
Eric P. Olson Vice President None
62 Park Drive
Glenview, IL 60025
Jeffrey A. Olson Regional Vice President None
930 S. Cowley Street, #305
Spokane, WA 99202
Gary A. Peace Regional Vice President None
291 Kaanapali Drive
Napa, CA 94558
Samuel W. Perry Regional Vice President None
4730 East Indian School Road
Suite 120
Phoenix, AZ 85018
David K. Petzke Regional Vice President None
4016 Saint Lucia Street
Boulder, CO 80301
Fredric Phillips Senior Vice President None
175 Highland Avenue, 4th Floor
Needham, MA 02494
B Candance D. Pilgrim Assistant Vice President None
Carl S. Platou Vice President None
7455 80th Place, S.E.
Mercer Island, WA 98040
S Richard P. Prior Vice President None
Mark S. Reischmann Regional Vice President None
5485 East Mineral Lane
Littleton, CO 80122
Steven J. Reitman Senior Vice President None
212 The Lane
Hinsdale, IL 60521
Brian A. Roberts Vice President None
425 South Pitt Street
Alexandria, VA 22314
L Julie D. Roth Vice President None
L James F. Rothenberg Director None
Douglas F. Rowe Vice President None
414 Logan Ranch Road
Georgetown, TX 78628
Christopher S. Rowey Vice President None
10538 Cheviot Drive
Los Angeles, CA 90064
H Steve Rubin Assistant Vice President None
Dean B. Rydquist Senior Vice President None
1080 Bay Pointe Crossing
Alpharetta, GA 30005
Richard R. Samson Senior Vice President None
4604 Glencoe Avenue, #4
Marina del Rey, CA 90292
Paul V. Santoro Regional Vice President None
17 Willow Street
Boston, MA 02108
Joseph D. Scarpitti Vice President None
31465 St. Andrews
Westlake, OH 44145
Shannon D. Schofield Regional Vice President None
201 McIver Street
Greenville, SC 29601
L R. Michael Shanahan Director None
Brad W. Short Regional Vice President None
1601 Seal Way
Seal Beach, CA 90740
David W. Short Chairman of the Board and None
1000 RIDC Plaza, Suite 212 Co-Chief Executive Officer
Pittsburgh, PA 15238
William P. Simon Senior Vice President None
912 Castlehill Lane
Devon, PA 19333
Jerry L. Slater Regional Vice President None
4152 42nd Avenue, NE
Seattle, WA 98105
Rodney G. Smith Senior Vice President None
100 N. Central Expressway
Suite 1214
Richardson, TX 75080
S Sherrie L. Snyder-Senft Vice President None
Anthony L. Soave Regional Vice President None
8831 Morning Mist Drive
Clarkston, MI 48348
L Therese L. Soullier Assistant Vice President None
Nicholas D. Spadaccini Vice President None
855 Markley Woods Way
Cincinnati, OH 45230
L Kristen J. Spazafumo Assistant Vice President None
Daniel S. Spradling Senior Vice President None
181 Second Avenue
Suite 228
San Mateo, CA 94401
B Raymond Stein Assistant Vice President None
LW Eric H. Stern Director None
Brad Stillwagon Regional Vice President None
2438 Broadmeade Road
Louisville, KY 40205
B Max D. Stites Vice President None
Thomas A. Stout Vice President None
1004 Ditchley Road
Virginia Beach, VA 23451
Craig R. Strauser Vice President None
3 Dover Way
Lake Oswego, OR 97034
Francis N. Strazzeri Senior Vice President None
3021 Kensington Trace
Tarpon Springs, FL 34689
L Lisa F. Swaiman Vice President None
L Drew W. Taylor Assistant Vice President None
Gary J. Thoma Regional Vice President None
21 White Cloud
HCR 1 Box 172-A
Keshena, WI 54135
Cindy Thompson Regional Vice President None
23412 Pacific Park Drive, #5C
Aliso Viejo, CA 92656
L James P. Toomey Vice President None
I Christopher E. Trede Vice President None
George F. Truesdail Senior Vice President None
400 Abbotsford Court
Charlotte, NC 28270
Scott W. Ursin-Smith Vice President None
60 Reedland Woods Way
Tiburon, CA 94920
J. David Viale Regional Vice President None
39 Old Course Drive
Newport Beach, CA 92660
Gerald J. Voss Regional Vice President None
The Pines at Four Hills
3900 S. Southeastern Ave., #110
Sioux Falls, SD 57103
Thomas E. Warren Vice President None
7347 Turnstone Road
Sarasota, FL 34242
L J. Kelly Webb Senior Vice President, None
Treasurer and Controller
Gregory J. Weimer Vice President None
206 Hardwood Drive
Venetia, PA 15367
B Timothy W. Weiss Director None
SF Gregory W. Wendt Director None
George J. Wenzel Regional Vice President None
251 Barden Road
Bloomfield, MI 48304
H J. D. Wiedmaier Assistant Vice President None
SF N. Dexter Williams, Jr. Senior Vice President None
Timothy J. Wilson Vice President None
113 Farmview Place
Venetia, PA 15367
B Laura L. Wimberly Vice President None
H Marshall D. Wingo Director, Senior Vice President None
L Robert L. Winston Director, Senior Vice President None
William R. Yost Senior Vice President None
9320 Overlook Trail
Eden Prairie, MN 55347
Jonathan A. Young Regional Vice President None
329 Downing Drive
Chesapeake, VA 23322
Scott D. Zambon Regional Vice President None
2887 Player Lane
Tustin Ranch, CA 92782
|
L Business Address, 333 South Hope Street, Los Angeles, CA 90071
LW Business Address, 11100 Santa Monica Boulevard, 15th Floor, Los Angeles, CA
90025
B Business Address, 135 South State College Boulevard, Brea, CA 92821
S Business Address, 3500 Wiseman Boulevard, San Antonio, TX 78251
SF Business Address, One Market, Steuart Tower, Suite 1800, San Francisco, CA
94105-1016
H Business Address, 5300 Robin Hood Road, Norfolk, VA 23513
I Business Address, 8332 Woodfield Crossing Blvd., Indianapolis, IN 46240
(c) None
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
Accounts, books and other records required by Rules 31a-1 and 31a-2 under the Investment Company Act of 1940, as amended, are maintained and held in the offices of its investment adviser, Capital Research and Management Company, 333 South Hope Street, Los Angeles, California 90071, and/or 135 South State College Boulevard, Brea, California 92821.
Registrant's records covering shareholder accounts are maintained and kept by its transfer agent, American Funds Service Company, 135 South State College Boulevard, Brea, California 92821; 8332 Woodfield Crossing Boulevard, Indianapolis, IN 46240; 3500 Wiseman Boulevard, San Antonio, Texas 78251; and 5300 Robin Hood Road, Norfolk, VA 23513.
Registrant's records covering portfolio transactions are maintained and kept by its custodian, JPMorgan Chase Bank, 270 Park Avenue, New York, New York 10017-2070.
ITEM 29. MANAGEMENT SERVICES
None
ITEM 30. UNDERTAKINGS
None
SIGNATURE OF REGISTRANT
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this amended Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Los Angeles, and State of California, on the 12th day of February, 2002.
NEW WORLD FUND, INC.
By /s/ Gina H. Despres
(Gina H. Despres, Chairman of the Board)
Pursuant to the requirements of the Securities Act of 1933, this amendment to
Registration Statement has been signed below on February 12, 2002, by the
following persons in the capacities indicated.
|
SIGNATURE TITLE
(1) Principal Executive Officer:
/s/ Robert W. Lovelace President and Director
(Robert W. Lovelace)
(2) Principal Financial Officer and
Principal Accounting Officer:
/s/ R. Marcia Gould Treasure
(R. Marcia Gould)
(3) Directors:
Elisabeth Allison* Director
/s/ Gina H. Despres
(Gina H. Despres) Chairman of the Board
Robert A. Fox* Director
Alan Greenway* Director
Koichi Itoh* Director
William H. Kling* Director
/s/ Robert W. Lovelace
(Robert W. Lovelace) President and Director
John G. McDonald* Director
William I. Miller* Director
Alessandro Ovi* Director
Kirk P. Pendleton Director
|
*By /s/ Vincent P. Corti
(Vincent P. Corti, Attorney-in-Fact)
Counsel represents that this amendment does not contain disclosures that would
make the amendment ineligible for effectiveness under the provisions of rule
485(b).
/s/ Kristine M. Nishiyama
(Kristine M. Nishiyama)
|
NEW WORLD FUND, INC.
ARTICLES SUPPLEMENTARY
New World Fund, Inc., a Maryland corporation having its principal office in Baltimore, Maryland (the "Corporation"), hereby certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: (a) The Board of Directors of the Corporation has divided and further classified the unissued shares of the authorized common stock of the Corporation into 10 additional classes, designated "Class R-1", "Class R-2", "Class R-3", "Class R-4", "Class R-5", "Class 529-A", "Class 529-B", "Class 529-C", "Class 529-E"and "Class 529-F". The remaining shares of common stock, including the shares currently issued and outstanding, shall consist of the previously designated Class A, Class B, Class C and Class F shares. The authorized shares of each such class of common stock shall consist of the sum of (x) the outstanding shares of that class and (y) one-fourteenth (1/14) of the authorized but unissued shares of all classes of common stock; PROVIDED HOWEVER, that in the event application of the above formula would result, at the time, in fractional shares of one or more classes, the number of authorized shares of each such class shall be rounded down to the nearest whole number of shares; and PROVIDED, FURTHER, that at all times the aggregate number of authorized Class A, Class B, Class C, Class F, Class R-1, Class R-2, Class R-3, Class R-4, Class R-5, Class 529-A, Class 529-B, Class 529-C, Class 529-E and Class 529-F shares of common stock shall not exceed the authorized number of shares of common stock (I.E., 200,000,000 shares) until changed by action of the Board of Directors in accordance with Section 2-208.1 of the Maryland General Corporation Law).
(b) The preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption of the Class A, Class B, Class C and Class F shares are set forth in the Charter of the Corporation. The preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption of the Class R-1, Class R-2, Class R-3, Class R-4, Class R-5, Class 529-A, Class 529-B, Class 529-C, Class 529-E and Class 529-F shares of the Corporation are set forth below.
SECOND: Except to the extent provided otherwise by the Charter of the Corporation, all classes of shares of the Corporation shall represent an equal proportionate interest in the assets of the Corporation (subject to the liabilities of the Corporation) and each share shall have identical voting, dividend, liquidation and other rights; PROVIDED, HOWEVER, that notwithstanding anything in the Charter of the Corporation to the contrary:
(i) Each class of shares of the Corporation may be issued and sold subject to different sales loads or charges, whether initial, deferred or contingent, or any combination thereof, as may be established from time to time by the Board of Directors in accordance with the Investment Company Act of 1940 and applicable rules and regulations of self-regulatory organizations and as shall be set forth in the applicable prospectus for the shares;
(ii) Expenses, costs and charges which are determined by or under the supervision of the Board of Directors to be attributable to the shares of a particular class may be charged to that class and appropriately reflected in the net asset value of, or dividends payable on, the shares of that class;
(iii) On a business day no later than the fifteenth day of the first calendar month following the expiration of a 96-month period commencing on the first calendar month during which Class 529-B shares were purchased by a holder thereof, such shares (as well as a pro rata portion of any Class 529-B shares purchased through the reinvestment of dividends or other distributions paid on all Class 529-B shares held by such holder) shall automatically convert to Class 529-A shares on the basis of the respective net asset values of the Class 529-B shares and the Class 529-A shares on the conversion date; PROVIDED, HOWEVER, that the Board of Directors, in its sole discretion, may suspend the conversion of Class 529-B shares if any conversion of such shares would constitute a taxable event under federal income tax law (in which case the holder of such Class 529-B shares shall have the right to exchange from time to time any or all of such Class 529-B shares held by such holder for Class 529-A shares on the basis of the respective net asset values of the Class 529-B shares and the Class 529-A shares on the applicable exchange date and without the imposition of a sales charge or fee); and PROVIDED, FURTHER, that conversion (or exchange) of Class 529-B shares represented by stock certificates shall be subject to tender of such certificates; and
(iv) Subject to the foregoing paragraph and provisions in the Charter of the Corporation pertaining to the exchange rights of Class B and Class C shares, each class of shares of the Corporation may have such different exchange rights as the Board of Directors shall provide in compliance with the Investment Company Act of 1940.
THIRD: The foregoing amendment to the Charter of the Corporation does not increase the authorized capital stock of the Corporation.
FOURTH: The aforesaid shares have been duly classified by the Board of Directors pursuant to authority and power contained in the Charter of the Corporation.
IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its President and attested by its Secretary on this 10th day of January, 2002.
NEW WORLD FUND, INC.
By: /s/ Robert W. Lovelace
Robert W. Lovelace
President
ATTEST:
By: /s/ Vincent P. Corti
Vincent P. Corti
Secretary
|
The undersigned, President of New World Fund, Inc., who executed on behalf of said Corporation the foregoing Articles Supplementary of which this certificate is made a part, hereby acknowledges in the name and on behalf of the Corporation the foregoing Articles Supplementary to be the corporate act of the Corporation and hereby certifies that, to the best of his knowledge, information and belief, the matters and facts set forth therein with respect to the authorization and approval thereof are true in all material respects under the penalties of perjury.
/s/ Robert W. Lovelace Robert W. Lovelace President |
[Name of Fund]
AMENDED AND RESTATED PRINCIPAL UNDERWRITING AGREEMENT
THIS PRINCIPAL UNDERWRITING AGREEMENT, is between [name of fund], a [state]
[corporation or business trust] (the "Fund"), and AMERICAN FUNDS DISTRIBUTORS,
INC., a California corporation (the "Distributor").
W I T N E S S E T H:
WHEREAS, the Fund is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end diversified investment company which offers fourteen classes of shares of [common stock][beneficial interest], designated as Class A shares, Class B shares, Class C shares, Class F shares, Class 529-A shares, Class 529-B shares, Class 529-C shares, Class 529-E shares, Class 529-F shares, Class R-1 shares, Class R-2 shares, Class R-3 shares, Class R-4 shares, and Class R-5 shares, and it is a part of the business of the Fund, and affirmatively in the interest of the Fund, to offer shares of the Fund either from time to time or continuously as determined by the Fund's officers subject to authorization by its Board of Directors; and
WHEREAS, the Distributor is engaged in the business of promoting the distribution of shares of investment companies through securities broker-dealers; and
WHEREAS, the Fund and the Distributor wish to enter into an agreement with each other to promote the distribution of the shares of the Fund and of all series or classes of the Fund which may be established in the future;
NOW, THEREFORE, the parties agree as follows:
1. (a) The Distributor shall be the exclusive principal underwriter for the sale of the shares of the Fund and of each series or class of the Fund which may be established in the future, except as otherwise provided pursuant to the following subsection (b). The terms "shares of Fund" or "shares" as used herein shall mean shares of common stock of the Fund and each series or class which may be established in the future and become covered by this Agreement in accordance with Section 30 of this Agreement.
(b) The Fund may, upon 60 days' written notice to the Distributor, from time to time designate other principal underwriters of its shares with respect to areas other than the North American continent, Hawaii, Puerto Rico, and such countries or other jurisdictions as to which the Fund may have expressly waived in writing its right to make such designation. In the event of such designation, the right of the Distributor under this Agreement to sell shares in the areas so designated shall terminate, but this Agreement shall remain otherwise in full force and effect until terminated in accordance with the other provisions hereof.
2. In the sale of shares of the Fund, the Distributor shall act as agent of the Fund except in any transaction in which the Distributor sells such shares as a dealer to the public, in which event the Distributor shall act as principal for its own account.
3. The Fund shall sell shares only through the Distributor, except that the Fund may, to the extent permitted by the 1940 Act and the rules and regulations promulgated thereunder or pursuant thereto, at any time:
(a) issue shares to any corporation, association, trust, partnership or other organization, or its, or their, security holders, beneficiaries or members, in connection with a merger, consolidation or reorganization to which the Fund is a party, or in connection with the acquisition of all or substantially all the property and assets of such corporation, association, trust, partnership or other organization;
(b) issue shares at net asset value to the holders of shares of capital stock or beneficial interest of other investment companies served as investment adviser by any affiliated company or companies of The Capital Group Companies, Inc., to the extent of all or any portion of amounts received by such shareholders upon redemption or repurchase of their shares by the other investment companies;
(c) issue shares at net asset value to its shareholders in connection with the reinvestment of dividends paid and other distributions made by the Fund;
(d) issue shares at net asset value to persons entitled to purchase shares at net asset value without sales charge or contingent deferred sales charge as described in the Fund's current Registration Statement in effect under the Securities Act of 1933, as amended, for each series issued by the Fund at the time of such offer or sale.
4. The Distributor shall devote its best efforts to the sale of shares of the Fund and shares of any other mutual funds served as investment adviser by affiliated companies of The Capital Group Companies, Inc., and insurance contracts funded by shares of such mutual funds, for which the Distributor has been authorized to act as a principal underwriter for the sale of shares. The Distributor shall maintain a sales organization suited to the sale of shares of the Fund and shall use its best efforts to effect such sales in jurisdictions as to which the Fund shall have expressly waived in writing its right to designate another principal underwriter pursuant to subsection 1(b) hereof, and shall effect and maintain appropriate qualification to do so in all those jurisdictions in which it sells or offers shares for sale and in which qualification is required.
5. Within the United States of America, all dealers to whom the Distributor shall offer and sell shares must be duly licensed and qualified to sell shares of the Fund. Shares sold to dealers shall be for resale by such dealers only at the public offering price set forth in the current Prospectus of the Fund's Registration Statement in effect under the Securities Act of 1933, as amended ("Prospectus"). The Distributor shall not, without the consent of the Fund, sell or offer for sale any shares of a series or class issued by the Fund other than as principal underwriter pursuant to this Agreement.
6. In its sales to dealers, it shall be the responsibility of the Distributor to insure that such dealers are appropriately qualified to transact business in the shares under applicable laws, rules and regulations promulgated by such national, state, local or other governmental or quasi-governmental authorities as may in a particular instance have jurisdiction.
7. The applicable public offering price of shares shall be the price which is equal to the net asset value per share, as shall be determined by the Fund in the manner and at the time or times set forth in and subject to the provisions of the Prospectus of the Fund.
8. All orders for shares received by the Distributor shall, unless rejected by
the Distributor or the Fund, be accepted by the Distributor immediately upon
receipt and confirmed at an offering price determined in accordance with the
provisions of the Prospectus and the 1940 Act, and applicable rules in effect
thereunder. The Distributor shall not hold orders subject to acceptance nor
otherwise delay their execution. The provisions of this Section shall not be
construed to restrict the right of the Fund to withhold shares from sale under
Section 25 hereof.
9. The Fund or its transfer agent shall be promptly advised of all orders received, and shall cause shares to be issued upon payment therefor in New York or Los Angeles Clearing House Funds.
10. The Distributor shall adopt and follow procedures as approved by the officers of the Fund for the confirmation of sales to dealers, the collection of amounts payable by dealers on such sales, and the cancellation of unsettled transactions, as may be necessary to comply with the requirements of the Securities and Exchange Commission or the National Association of Securities Dealers, Inc. ("NASD"), as such requirements may from time to time exist.
11. The Distributor, as a principal underwriter under this Agreement for Class A shares, shall receive (i) that part of the sales charge which is retained by the Distributor after allowance of discounts to dealers, unless waived by the Distributor for certain qualified fee-based programs, as set forth in the Prospectus of the Fund, and (ii) amounts payable to the Distributor pursuant to the Fund's Plan of Distribution under Rule 12b-1 under the 1940 Act relating to its Class A shares.
12. The Distributor, as principal underwriter under this agreement for Class B shares shall receive (i) distribution fees as commissions for the sale of Class B shares and contingent deferred sales charges ("CDSC") (as defined below), as set forth in the Fund's Prospectus, and (ii) shareholder service fees at the rate of 0.25% per annum of the average net asset value of Class B shares pursuant to the Fund's Plan of Distribution under Rule 12b-1 under the 1940 Act relating to its Class B shares (the " Class B Plan").
(a) In accordance with the Class B Plan, and subject to the limit on asset-based sales charges set forth in NASD Conduct Rule 2830 (and any successor provision thereto), the Fund shall pay to the Distributor or, at the Distributor's direction, to a third-party, monthly in arrears on or prior to the 10th business day of the following calendar month, the Distributor's Allocable Portion (as defined below) of a fee (the "Distribution Fee") which shall accrue daily in an amount equal to the product of (A) the daily equivalent of 0.75% per annum multiplied by (B) the net asset value of the Class B shares of the Fund outstanding on such day. The Fund agrees to withhold from redemption proceeds of the Class B shares, the Distributor's Allocable Portion of any CDSCs payable with respect to the Class B shares, as provided in the Fund's Prospectus, and to pay the same over to the Distributor or, at the Distributor's direction to a third-party, at the time the redemption proceeds are payable to the holder of such shares redeemed. Payment of these CDSC amounts to the Distributor is not contingent upon the adoption or continuation of any Class B Plan.
(b) For purposes of this Agreement, the term "Allocable Portion" of Distribution Fees and CDSCs payable with respect to Class B shares shall mean the portion of such Distribution Fees and CDSC allocated to the Distributor in accordance with the Allocation Schedule attached hereto as Schedule A.
(c) The Distributor shall be considered to have completely earned the right to the payment of its Allocable Portion of the Distribution Fees and the right to payment of its Allocable Portion of the CDSCs with respect to each "Commission Share" (as defined in the Allocation Schedule attached hereto as Schedule A) upon the settlement date of such Commission Share taken into account in determining the Distributor's Allocable Portion of Distribution Fees.
(d) The provisions set forth in Section 1 of the Class B Plan (in effect on the date hereof) relating to Class B shares, together with the related definitions are hereby incorporated into this Section 12 by reference with the same force and effect as if set forth herein in their entirety.
13. The Distributor, as principal underwriter under this agreement for Class C shares shall receive (i) distribution fees as commissions for the sale of Class C shares and CDSCs, as set forth in the Fund's Prospectus, and (ii) shareholder service fees at the rate of 0.25% per annum of the average net asset value of Class C shares pursuant to the Fund's Plan of Distribution under Rule 12b-1 under the 1940 Act relating to its Class C shares (the "Class C Plan").
(a) In accordance with the Class C Plan, and subject to the limit on asset-based sales charges set forth in NASD Conduct Rule 2830 (and any successor provision thereto), the Fund shall pay to the Distributor, no more frequently than monthly in arrears within 30 days of receipt of an invoice for payment, the Distributor's Allocable Portion (as defined below) of a fee (the "Distribution Fee") which shall accrue daily in an amount equal to the daily equivalent of 0.75% per annum of the net asset value of the Class C shares outstanding on such day. The Fund agrees to withhold from redemption proceeds of the Class C shares, the Distributor's Allocable Portion of any CDSCs payable with respect to the Class C shares, as provided in the Fund's Prospectus and to pay the same over to the Distributor, or, at the Distributor's direction to a third party, at the time the redemption proceeds are payable to the holder of such shares redeemed. Payment of these CDSC amounts to the Distributor is not contingent upon the adoption or continuation of any Class C Plan.
(b) For purposes of this Agreement, the term "Allocable Portion" of Distribution Fees and CDSCs payable with respect to Class C shares shall mean the portion of such Distribution Fees and CDSC allocated to the Distributor in accordance with the Allocation Schedule attached hereto as Schedule B.
(c) The Distributor shall be considered to have completely earned the right to the payment of its Allocable Portion of the Distribution Fees and the right to payment of its Allocable Portion of the CDSCs with respect to each "Commission Share" (as defined in the Allocation Schedule attached hereto as Schedule B) upon the settlement date of such Commission Share taken into account in determining the Distributor's Allocable Portion of Distribution Fees.
(d) The provisions set forth in Section 1 of the Class C Plan (in effect on
the date hereof) relating to Class C shares, together with the related
definitions are hereby incorporated into this Section 13 by reference with the
same force and effect as if set forth herein in their entirety.
14. The Distributor, as principal underwriter under this agreement for Class F
shares, shall receive shareholder service fees at the rate of 0.25% per annum
of the average net asset value of Class F shares pursuant to the Fund's Plan of
Distribution under Rule 12b-1 under the 1940 Act relating to its Class F shares
(the "Class F Plan").
15. The Distributor, as a principal underwriter under this Agreement for Class 529-A shares, shall receive (i) that part of the sales charge which is retained by the Distributor after allowance of discounts to dealers, unless waived by the Distributor for certain qualified fee-based programs, as set forth in the Prospectus of the Fund, and (ii) amounts payable to the Distributor pursuant to the Fund's Plan of Distribution under Rule 12b-1 under the 1940 Act relating to its Class 529-A shares.
16. The Distributor, as principal underwriter under this agreement for Class
529-B shares shall receive (i) distribution fees as compensation for the sale
of Class 529-B shares and CDSCs, as set forth in the Fund's Prospectus, and
(ii) shareholder service fees at the rate of 0.25% per annum of the average net
asset value of Class 529-B shares pursuant to the Fund's Plan of Distribution
under Rule 12b-1 under the 1940 Act relating to its Class 529-B shares (the
"Class 529-B Plan").
(a) In accordance with the Class 529-B Plan, and subject to the limit on asset-based sales charges set forth in NASD Conduct Rule 2830 (and any successor provision thereto), the Fund shall pay to the Distributor or, at the Distributor's direction, to a third-party, monthly in arrears on or prior to the 10th business day of the following calendar month, the Distributor's Allocable Portion (as defined below) of a fee (the "Distribution Fee") which shall accrue daily in an amount equal to the product of (A) the daily equivalent of 0.75% per annum multiplied by (B) the net asset value of the Class 529-B shares of the Fund outstanding on such day. The Fund agrees to withhold from redemption proceeds of the Class 529-B shares, the Distributor's Allocable Portion of any CDSCs payable with respect to the Class 529-B shares, as provided in the Fund's Prospectus, and to pay the same over to the Distributor or, at the Distributor's direction to a third party, at the time the redemption proceeds are payable to the holder of such shares redeemed. Payment of these CDSC amounts to the Distributor is not contingent upon the adoption or continuation of any Class 529-B Plan.
(b) For purposes of this Agreement, the term "Allocable Portion" of Distribution Fees and CDSCs payable with respect to Class 529-B shares shall mean the portion of such Distribution Fees and CDSC allocated to the Distributor in accordance with the Allocation Schedule attached hereto as Schedule C.
(c) The Distributor shall be considered to have completely earned the right to the payment of its Allocable Portion of the Distribution Fees and the right to payment of its Allocable Portion of the CDSCs with respect to each "Commission Share" (as defined in the Allocation Schedule attached hereto as Schedule C) upon the settlement date of such Commission Share taken into account in determining the Distributor's Allocable Portion of Distribution Fees.
(d) The provisions set forth in Section 1 of the Class 529-B Plan (in effect
on the date hereof) relating to Class 529-B shares, together with the related
definitions are hereby incorporated into this Section 16 by reference with the
same force and effect as if set forth herein in their entirety.
17. The Distributor, as principal underwriter under this agreement for Class
529-C shares shall receive (i) distribution fees as compensation for the sale
of Class 529-C shares and CDSCs, as set forth in the Fund's Prospectus, and
(ii) shareholder service fees at the rate of 0.25% per annum of the average net
asset value of Class 529-C shares pursuant to the Fund's Plan of Distribution
under Rule 12b-1 under the 1940 Act relating to its Class 529-C shares (the
"Class 529-C Plan").
(a) In accordance with the Class 529-C Plan, and subject to the limit on asset-based sales charges set forth in NASD Conduct Rule 2830 (and any successor provision thereto), the Fund shall pay to the Distributor, no more frequently than monthly in arrears within 30 days of receipt of an invoice for payment, the Distributor's Allocable Portion (as defined below) of a fee (the "Distribution Fee") which shall accrue daily in an amount equal to the product of (A) the daily equivalent of 0.75% per annum multiplied by (B) the net asset value of the Class 529-C shares of the Fund outstanding on such day. The Fund agrees to withhold from redemption proceeds of the Class 529-C shares, the Distributor's Allocable Portion of any CDSCs payable with respect to the Class 529-C shares, as provided in the Fund's Prospectus, and to pay the same over to the Distributor or, at the Distributor's direction to a third party, at the time the redemption proceeds are payable to the holder of such shares redeemed. Payment of these CDSC amounts to the Distributor is not contingent upon the adoption or continuation of any Class 529-C Plan.
(b) For purposes of this Agreement, the term "Allocable Portion" of Distribution Fees and CDSCs payable with respect to Class 529-C shares shall mean the portion of such Distribution Fees and CDSC allocated to the Distributor in accordance with the Allocation Schedule attached hereto as Schedule D.
(c) The Distributor shall be considered to have completely earned the right to the payment of its Allocable Portion of the Distribution Fees and the right to payment of its Allocable Portion of the CDSCs with respect to each "Commission Share" (as defined in the Allocation Schedule attached hereto as Schedule D) upon the settlement date of such Commission Share taken into account in determining the Distributor's Allocable Portion of Distribution Fees.
(d) The provisions set forth in Section 1 of the Class 529-C Plan (in effect on the date hereof) relating to Class 529-C shares, together with the related definitions are hereby incorporated into this Section 17 by reference with the same force and effect as if set forth herein in their entirety.
18. The Distributor, as principal underwriter under this agreement for Class 529-E shares shall receive (i) distribution fees at the rate of 0.25% per annum of the average net asset value of Class 529-E shares as compensation for the sale of Class 529-E shares as set forth in the Fund's Prospectus, and (ii) shareholder service fees at the rate of 0.25% per annum of the average net asset value of Class 529-E shares. The payment of distribution and service fees is pursuant to the Fund's Plan of Distribution under Rule 12b-1 under the 1940 Act relating to its Class 529-E shares (the "Class 529-E Plan").
19. The Distributor, as principal underwriter under this agreement for Class 529-F shares, shall receive shareholder service fees at the rate of 0.25% per annum of the average net asset value of Class 529-F shares pursuant to the Fund's Plan of Distribution under Rule 12b-1 under the 1940 Act relating to its Class 529F shares (the "Class 529-F Plan").
20. The Distributor, as principal underwriter under this agreement for each of the Class R shares shall receive (i) distribution fees as compensation for the sale of Class R-1, R-2, R-3, R-4 and R-5 shares (collectively, "Class R shares"), and (ii) shareholder service fees as set forth below. The payment of distribution and service fees is pursuant to the Fund's various Plans of Distribution under Rule 12b-1 under the 1940 Act relating to each of the Class R shares (the "Class R Plans"). For purposes of the following chart the fee rates represent annual fees as a percentage of average net assets of the respective share class. Fees shall accrue daily and be paid monthly.
Share Class Distribution Fee Service Fee Class R-1 0.75% 0.25% Class R-2 0.50% 0.25% Class R-3 0.25% 0.25% Class R-4 0.00% 0.25% Class R-5 0.00% 0.00% |
21. The Fund agrees to use its best efforts to maintain its registration as a diversified open-end management investment company under the 1940 Act.
22. The Fund agrees to use its best efforts to maintain an effective Prospectus under the Securities Act of 1933, as amended, and warrants that such Prospectus will contain all statements required by and will conform with the requirements of such Securities Act of 1933 and the rules and regulations thereunder, and that no part of any such Prospectus, at the time the Registration Statement of which it is a part becomes effective, will contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein not misleading (excluding any information provided by the Distributor in writing for inclusion in the Prospectus). The Distributor agrees and warrants that it will not in the sale of shares use any Prospectus, advertising or sales literature not approved by the Fund or its officers nor make any untrue statement of a material fact nor omit the stating of a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading. The Distributor agrees to indemnify and hold the Fund harmless from any and all loss, expense, damage and liability resulting from a breach of the agreements and warranties contained in this Section, or from the use of any sales literature, information, statistics or other aid or device employed in connection with the sale of shares.
23. The expense of each printing of each Prospectus and each revision thereof or addition thereto deemed necessary by the Fund's officers to meet the requirements of applicable laws shall be divided between the Fund, the Distributor and any other principal underwriter of the shares of the Fund as follows:
(a) the Fund shall pay the typesetting and make-ready charges;
(b) the printing charges shall be prorated between the Fund, the Distributor,
and any other principal underwriter(s) in accordance with the number of copies
each receives; and
(c) expenses incurred in connection with the foregoing, other than to meet
the requirements of the Securities Act of 1933, as amended, or other applicable
laws, shall be borne by the Distributor, except in the event such incremental
expenses are incurred at the request of any other principal underwriter(s), in
which case such incremental expenses shall be borne by the principal
underwriter(s) making the request.
24. The Fund agrees to use its best efforts to qualify and maintain the qualification of an appropriate number of the shares of each series or class it offers for sale under the securities laws of such states as the Distributor and the Fund may approve. Any such qualification for any series or class may be withheld, terminated or withdrawn by the Fund at any time in its discretion. The expense of qualification and maintenance of qualification shall be borne by the Fund, but the Distributor shall furnish such information and other material relating to its affairs and activities as may be required by the Fund or its counsel in connection with such qualifications.
25. The Fund may withhold shares of any series or class from sale to any person or persons or in any jurisdiction temporarily or permanently if, in the opinion of its counsel, such offer or sale would be contrary to law or if the Directors or the President or any Vice President of the Fund determines that such offer or sale is not in the best interest of the Fund. The Fund will give prompt notice to the Distributor of any withholding and will indemnify it against any loss suffered by the Distributor as a result of such withholding by reason of nondelivery of shares of any series or class after a good faith confirmation by the Distributor of sales thereof prior to receipt of notice of such withholding.
26. (a) This Agreement may be terminated at any time, without payment of any penalty, as to the Fund or any series on sixty (60) days' written notice by the Distributor to the Fund.
(b) This Agreement may be terminated as to the Fund or any series or class by either party upon five (5) days' written notice to the other party in the event that the Securities and Exchange Commission has issued an order or obtained an injunction or other court order suspending effectiveness of the Registration
(c) This Agreement may be terminated as to the Fund or any series or class by the Fund upon five (5) days' written notice to the Distributor provided either of the following events has occurred:
(i) the NASD has expelled the Distributor or suspended its membership in that organization; or
(ii) the qualification, registration, license or right of the Distributor to sell shares of any series in a particular state has been suspended or canceled by the State of California or any other state in which sales of the shares of the Fund or such series during the most recent 12-month period exceeded 10% of all shares of such series sold by the Distributor during such period.
(d) This Agreement may be terminated as to the Fund or any series or class at any time on sixty (60) days' written notice to the Distributor without the payment of any penalty, by vote of a majority of the Independent Directors or by vote of a majority of the outstanding voting securities (as defined in the 1940 Act) of the Fund or such series or class.
27. This Agreement shall not be assignable by either party hereto and in the event of assignment shall automatically terminate forthwith. The term "assignment" shall have the meaning set forth in the 1940 Act. Notwithstanding this Section, this Agreement, with respect to the Fund's Class B and Class 529-B shares, has been approved in accordance with Section 30 in anticipation of the Distributor's transfer of its Allocable Portion of Distribution Fees and CDSCs (but not its obligations under this Agreement) to a third-party pursuant to a "Purchase and Sale Agreement" in order to raise funds to cover distribution expenditures, and such transfer will not cause a termination of this Agreement. If Distributor determines to transfer its Allocable Portion of Distribution Fees and CDSCs in respect of Class C or Class 529-C shares to a third party, such transfer shall not cause a termination of this Agreement.
28. No provision of this Agreement shall protect or purport to protect the Distributor against any liability to the Fund or holders of its shares for which the Distributor would otherwise be liable by reason of willful misfeasance, bad faith, or gross negligence.
29. This Agreement shall become effective on February 15, 2002. Unless sooner terminated in accordance with the other provisions hereof, this Agreement shall continue in effect until [date, 2002], and shall continue in effect from year to year thereafter but only so long as such continuance is specifically approved at least annually by (i) the vote of a majority of the Independent Directors of the Fund cast in person at a meeting called for the purpose of voting on such approval, and (ii) the vote of either a majority of the entire Board of Directors of the Fund or a majority (within the meaning of the 1940 Act) of the outstanding voting securities of the Fund.
30. If the Fund shall at any time issue shares in more than one series or class, this Agreement shall take effect with respect to such series or class of the Fund which may be established in the future at such time as it has been approved as to such series or class by vote of the Board of Directors and the Independent Directors in accordance with Section 27. The Agreement as approved with respect to any series or class shall specify the compensation payable to the Distributor pursuant to Sections 11 through 20, as well as any provisions which may differ from those herein with respect to such series, subject to approval in writing by the Distributor. This Agreement may be approved, amended, continued or renewed with respect to a series or class as provided herein notwithstanding such approval, amendment, continuance or renewal has not been effected with respect to any one or more other series or class of the Fund.
This Agreement shall be construed under and shall be governed by the laws of the State of California, and the parties hereto agree that proper venue of any action with respect hereto shall be Los Angeles County, California.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed in duplicate original by their officers thereunto duly authorized, as of February 1, 2002.
AMERICAN FUNDS DISTRIBUTORS, INC. [NAME OF FUND]
By:____________________________ By:____________________________ Kevin G. Clifford [name] President Chairman of the Board By:____________________________ By: __________________________ Michael J. Downer [name] Secretary Secretary |
SCHEDULE A
TO THE
AMENDED AND RESTATED PRINCIPAL UNDERWRITING AGREEMENT
ALLOCATION SCHEDULE
The following relates solely to Class B shares.
The Distributor's Allocable Portion of Distribution Fees and CDSCs in respect
of Class B shares shall be 100% until such time as the Distributor shall cease
to serve as exclusive distributor of Class B shares; thereafter, collections
that constitute CDSCs and Distribution Fees relating to Class B shares shall be
allocated among the Distributor and any successor distributor ("Successor
Distributor") in accordance with this Schedule.
Defined terms used in this Schedule and not otherwise defined herein shall have the meanings assigned to them in the Amended and Restated Principal Underwriting Agreement (the "Distribution Agreement"), of which this Schedule is a part. As used herein the following terms shall have the meanings indicated:
"Commission Share" means each B share issued under circumstances which would normally give rise to an obligation of the holder of such share to pay a CDSC upon redemption of such share (including, without limitation, any B share issued in connection with a permitted free exchange), and any such share shall continue to be a Commission Share of the applicable Fund prior to the redemption (including a redemption in connection with a permitted free exchange) or conversion of such share, even though the obligation to pay the CDSC may have expired or conditions for waivers thereof may exist.
"Date of Original Issuance" means in respect of any Commission Share, the date with reference to which the amount of the CDSC payable on redemption thereof, if any, is computed.
"Free Share" means, in respect of a Fund, each B share of the Fund, other than a Commission Share (including, without limitation, any B share issued in connection with the reinvestment of dividends or capital gains).
"Inception Date" means in respect of a Fund, the first date on which the Fund issued shares.
"Net Asset Value" means the net asset value determined as set forth in the Prospectus of each Fund.
"Omnibus Share" means, in respect of a Fund, a Commission Share or Free Share sold by one of the selling agents maintaining shares in an omnibus account. If, subsequent to the Successor Distributor becoming exclusive distributor of the Class B shares, the Distributor reasonably determines that the transfer agent is able to track all Commission Shares and Free Shares sold by any of the selling agents listed on Exhibit I in the same manner as Commission Shares and Free Shares are currently tracked in respect of selling agents not listed on Exhibit I, then Exhibit I shall be amended to delete such selling agent from Exhibit I so that Commission Shares and Free Shares sold by such selling agent will no longer be treated as Omnibus Shares.
PART I: ATTRIBUTION OF CLASS B SHARES
Class B shares that are outstanding from time to time, shall be attributed to the Distributor and each Successor Distributor in accordance with the following rules;
(1) Commission Shares other than Omnibus Shares:
(a) Commission Shares that are not Omnibus Shares ("Non-Omnibus Commission Shares") attributed to the Distributor shall be those Non-Omnibus Commission Shares the Date of Original Issuance of which occurred on or after the Inception Date of the applicable Fund and on or prior to the date the Distributor ceased to be exclusive distributor of Class B shares of the Fund.
(b) Non-Omnibus Commission Shares attributable to each Successor Distributor shall be those Non-Omnibus Commission Shares the Date of Original Issuance of which occurs after the date such Successor Distributor became the exclusive distributor of Class B shares of the Fund and on or prior to the date such Successor Distributor ceased to be the exclusive distributor of Class B shares of the Fund.
(c) A Non-Omnibus Commission Share of a Fund issued in consideration of the investment of proceeds of the redemption of a Non-Omnibus Commission Share of another fund (the "Redeeming Fund") in connection with a permitted free exchange, is deemed to have a Date of Original Issuance identical to the Date of Original Issuance of the Non-Omnibus Commission Share of the Redeeming Fund, and any such Commission Share will be attributed to the Distributor or Successor Distributor based upon such Date of Original Issuance in accordance with rules (a) and (b) above.
(2) Free Shares:
Free Shares that are not Omnibus Shares ("Non-Omnibus Free Shares") of a Fund
outstanding on any date shall be attributed to the Distributor or a Successor
Distributor, as the case may be, in the same proportion that the Non-Omnibus
Commission Shares of a Fund outstanding on such date are attributed to each on
such date; provided that if the Distributor and its transferees reasonably
determines that the transfer agent is able to produce monthly reports that
track the Date of Original Issuance for such Non-Omnibus Free Shares, then such
Free Shares shall be allocated pursuant to clause 1(a), (b) and (c)
above.
(3) Omnibus Shares:
Omnibus Shares of a Fund outstanding on any date shall be attributed to the
Distributor or a Successor Distributor, as the case may be, in the same
proportion that the Non-Omnibus Commission Shares of the applicable Fund
outstanding on such date are attributed to it on such date; provided that if
the Distributor reasonably determines that the transfer agent is able to
produce monthly reports that track the Date of Original Issuance for the
Omnibus Shares, then the Omnibus Shares shall be allocated pursuant to clause
1(a), (b) and (c) above.
PART II: ALLOCATION OF CDSCs
(1) CDSCs Related to the Redemption of Non-Omnibus Commission Shares:
CDSCs in respect of the redemption of Non-Omnibus Commission Shares shall be
allocated to the Distributor or a Successor Distributor depending upon whether
the related redeemed Commission Share is attributable to the Distributor or
such Successor Distributor, as the case may be, in accordance with Part I
above.
(2) CDSCs Related to the Redemption of Omnibus Shares:
CDSCs in respect of the redemption of Omnibus Shares shall be allocated to the
Distributor or a Successor Distributor in the same proportion that CDSCs
related to the redemption of Non-Omnibus Commission Shares are allocated to
each thereof; provided, that if the Distributor reasonably determines that the
transfer agent is able to produce monthly reports which track the Date of
Original Issuance for the Omnibus Shares, then the CDSCs in respect of the
redemption of Omnibus Shares shall be allocated among the Distributor and any
Successor Distributor depending on whether the related redeemed Omnibus Share
is attributable to the Distributor or a Successor Distributor, as the case may
be, in accordance with Part I above.
PART III: ALLOCATION OF DISTRIBUTION FEE
Assuming that the Distribution Fee remains constant over time so that Part IV
hereof does not become operative:
(1) The portion of the aggregate Distribution Fee accrued in respect of all
Class B shares of a Fund during any calendar month allocable to the Distributor
or a Successor Distributor is determined by multiplying the total of such
Distribution Fee by the following fraction:
(A + C)/2
(B + D)/2
where:
A= The aggregate Net Asset Value of all Class B shares of a Fund attributed to the Distributor or such Successor Distributor, as the case may be, and outstanding at the beginning of such calendar month
B= The aggregate Net Asset Value of all Class B shares of a Fund at the beginning of such calendar month
C= The aggregate Net Asset Value of all Class B shares of a Fund attributed to the Distributor or such Successor Distributor, as the case may be, and outstanding at the end of such calendar month
D= The aggregate Net Asset Value of all Class B shares of a Fund at the end of such calendar month
(2) If the Distributor reasonably determines that the transfer agent is able to produce automated monthly reports that allocate the average Net Asset Value of the Commission Shares (or all Class B shares if available) of a Fund among the Distributor and any Successor Distributor in a manner consistent with the methodology detailed in Part I and Part III(1) above, the portion of the Distribution Fee accrued in respect of all such Class B shares of a Fund during a particular calendar month will be allocated to the Distributor or a Successor Distributor by multiplying the total of such Distribution Fee by the following fraction:
(A)/(B)
where:
A= Average Net Asset Value of all such Class B shares of a Fund for such calendar month attributed to the Distributor or a Successor Distributor, as the case may be
B= Total average Net Asset Value of all such Class B shares of a Fund for such calendar month
PART IV: ADJUSTMENT OF THE DISTRIBUTOR'S ALLOCABLE PORTION AND EACH SUCCESSOR
DISTRIBUTOR'S ALLOCABLE PORTION
The parties to the Distribution Agreement recognize that, if the terms of any distributor's contract, any distribution plan, any prospectus, the Conduct Rules or any other applicable law change so as to disproportionately reduce, in a manner inconsistent with the intent of this Distribution Agreement, the amount of the Distributor's Allocable Portion or any Successor Distributor's Allocable Portion had no such change occurred, the definitions of the Distributor's Allocable Portion and/or the Successor Distributor's Allocable Portion in respect of the Class B shares relating to a Fund shall be adjusted by agreement among the relevant parties; provided, however, if the Distributor, the Successor Distributor and the Fund cannot agree within thirty (30) days after the date of any such change in applicable laws or in any distributor's contract, distribution plan, prospectus or the Conduct Rules, they shall submit the question to arbitration in accordance with the commercial arbitration rules of the American Arbitration Association and the decision reached by the arbitrator shall be final and binding on each of them.
SCHEDULE B
TO THE
AMENDED AND RESTATED PRINCIPAL UNDERWRITING AGREEMENT
ALLOCATION SCHEDULE
The following relates solely to Class C shares.
The Distributor's Allocable Portion of Distribution Fees and CDSCs in respect
of Class C shares shall be 100% until such time as the Distributor shall cease
to serve as exclusive distributor of Class C shares; thereafter, collections
that constitute CDSCs and Distribution Fees relating to Class C shares shall be
allocated among the Distributor and any successor distributor ("Successor
Distributor") in accordance with this Schedule. At such time as the
Distributor's Allocable Portion of the Distribution Fees equals zero, the
Successor Distributor shall become the Distributor for purposes of this
Allocation Schedule.
Defined terms used in this Schedule and not otherwise defined herein shall have the meanings assigned to them in the Amended and Restated Principal Underwriting Agreement (the "Distribution Agreement"), of which this Schedule is a part. As used herein the following terms shall have the meanings indicated:
"Commission Share" means each C share issued under circumstances which would normally give rise to an obligation of the holder of such share to pay a CDSC upon redemption of such share (including, without limitation, any C share issued in connection with a permitted free exchange), and any such share shall continue to be a Commission Share of the applicable Fund prior to the redemption (including a redemption in connection with a permitted free exchange) or conversion of such share, even though the obligation to pay the CDSC may have expired or conditions for waivers thereof may exist.
"Date of Original Issuance" means in respect of any Commission Share, the date with reference to which the amount of the CDSC payable on redemption thereof, if any, is computed.
"Free Share" means, in respect of a Fund, each C share of the Fund, other than a Commission Share (including, without limitation, any C share issued in connection with the reinvestment of dividends or capital gains).
"Inception Date" means in respect of a Fund, the first date on which the Fund issued shares.
"Net Asset Value" means the net asset value determined as set forth in the Prospectus of each Fund.
"Omnibus Share" means, in respect of a Fund, a Commission Share or Free Share sold by one of the selling agents maintaining shares in an omnibus account ("Omnibus Selling Agents"). If, subsequent to the Successor Distributor becoming exclusive distributor of the Class C shares, the Distributor reasonably determines that the transfer agent is able to track all Commission Shares and Free Shares sold by any of the Omnibus Selling Agents in the same manner as Non-Omnibus Commission Shares and Free Shares (defined below) are currently tracked, then Omnibus Shares of such Omnibus Selling Agent shall be treated as Commission Shares and Free Shares.
PART I: ATTRIBUTION OF CLASS C SHARES
Class C shares that are outstanding from time to time, shall be attributed to the Distributor and each Successor Distributor in accordance with the following rules;
(1) Commission Shares other than Omnibus Shares:
(a) Commission Shares that are not Omnibus Shares ("Non-Omnibus Commission Shares") attributed to the Distributor shall be those Non-Omnibus Commission Shares (i) the Date of Original Issuance of which occurred on or after the Inception Date of the applicable Fund and on or prior to the date the Distributor ceased to be exclusive distributor of Class C shares of the Fund and (ii) that are subject to a CDSC (without regard to any conditions for waivers thereof).
(b) Non-Omnibus Commission Shares attributable to each Successor Distributor shall be those Non-Omnibus Commission Shares (i) the Date of Original Issuance of which occurs after the date such Successor Distributor became the exclusive distributor of Class C shares of the Fund and on or prior to the date such Successor Distributor ceased to be the exclusive distributor of Class C shares of the Fund and (ii) that are subject to a CDSC (without regard to any conditions for waivers thereof).
(c) A Non-Omnibus Commission Share of a Fund issued in consideration of the investment of proceeds of the redemption of a Non-Omnibus Commission Share of another fund (the "Redeeming Fund") in connection with a permitted free exchange, is deemed to have a Date of Original Issuance identical to the Date of Original Issuance of the Non-Omnibus Commission Share of the Redeeming Fund, and any such Commission Share will be attributed to the Distributor or Successor Distributor based upon such Date of Original Issuance in accordance with rules (a) and (b) above.
(2) Free Shares:
Free Shares that are not Omnibus Shares ("Non-Omnibus Free Shares") of a Fund
outstanding on any date shall be attributed to the Distributor or a Successor
Distributor, as the case may be, in the same proportion that the Non-Omnibus
Commission Shares of a Fund outstanding on such date are attributed to each on
such date; provided that if the Distributor and its transferees reasonably
determines that the transfer agent is able to produce monthly reports that
track the Date of Original Issuance for such Non-Omnibus Free Shares, then such
Free Shares shall be allocated pursuant to clause 1(a), (b) and (c) above.
(3) Omnibus Shares:
Omnibus Shares of a Fund outstanding on any date shall be attributed to the
Distributor or a Successor Distributor, as the case may be, in the same
proportion that the Non-Omnibus Commission Shares of the applicable Fund
outstanding on such date are attributed to it on such date; provided that if
the Distributor reasonably determines that the transfer agent is able to
produce monthly reports that track the Date of Original Issuance for the
Omnibus Shares, then the Omnibus Shares shall be allocated pursuant to clause
1(a), (b) and (c) above.
PART II: ALLOCATION OF CDSCs
(1) CDSCs Related to the Redemption of Non-Omnibus Commission Shares:
CDSCs in respect of the redemption of Non-Omnibus Commission Shares shall be
allocated to the Distributor or a Successor Distributor depending upon whether
the related redeemed Commission Share is attributable to the Distributor or
such Successor Distributor, as the case may be, in accordance with Part I
above.
(2) CDSCs Related to the Redemption of Omnibus Shares:
CDSCs in respect of the redemption of Omnibus Shares shall be allocated to the
Distributor or a Successor Distributor in the same proportion that CDSCs
related to the redemption of Non-Omnibus Commission Shares are allocated to
each thereof; provided, that if the Distributor reasonably determines that the
transfer agent is able to produce monthly reports which track the Date of
Original Issuance for the Omnibus Shares, then the CDSCs in respect of the
redemption of Omnibus Shares shall be allocated among the Distributor and any
Successor Distributor depending on whether the related redeemed Omnibus Share
is attributable to the Distributor or a Successor Distributor, as the case may
be, in accordance with Part I above.
PART III: ALLOCATION OF DISTRIBUTION FEE
Assuming that the Distribution Fee remains constant over time so that Part IV hereof does not become operative:
(1) The portion of the aggregate Distribution Fee accrued in respect of all Class C shares of a Fund during any calendar month allocable to the Distributor or a Successor Distributor is determined by multiplying the total of such Distribution Fee by the following fraction:
(A + C)/2
(B + D)/2
where:
A= The aggregate Net Asset Value of all Class C shares of a Fund attributed to the Distributor or such Successor Distributor, as the case may be, and outstanding at the beginning of such calendar month
B= The aggregate Net Asset Value of all Class C shares of a Fund at the beginning of such calendar month
C= The aggregate Net Asset Value of all Class C shares of a Fund attributed to the Distributor or such Successor Distributor, as the case may be, and outstanding at the end of such calendar month
D= The aggregate Net Asset Value of all Class C shares of a Fund at the end of such calendar month
(2) If the Distributor reasonably determines that the transfer agent is able to produce automated monthly reports that allocate the average Net Asset Value of the Commission Shares (or all Class C shares if available) of a Fund among the Distributor and any Successor Distributor in a manner consistent with the methodology detailed in Part I and Part III(1) above, the portion of the Distribution Fee accrued in respect of all such Class C shares of a Fund during a particular calendar month will be allocated to the Distributor or a Successor Distributor by multiplying the total of such Distribution Fee by the following fraction:
(A)/(B)
where:
A= Average Net Asset Value of all such Class C shares of a Fund for such calendar month attributed to the Distributor or a Successor Distributor, as the case may be
B= Total average Net Asset Value of all such Class C shares of a Fund for such calendar month
PART IV: ADJUSTMENT OF THE DISTRIBUTOR'S ALLOCABLE PORTION AND EACH SUCCESSOR
DISTRIBUTOR'S ALLOCABLE PORTION
The parties to the Distribution Agreement recognize that, if the terms of any distributor's contract, any distribution plan, any prospectus, the Conduct Rules or any other applicable law change so as to disproportionately reduce, in a manner inconsistent with the intent of this Distribution Agreement, the amount of the Distributor's Allocable Portion or any Successor Distributor's Allocable Portion had no such change occurred, the definitions of the Distributor's Allocable Portion and/or the Successor Distributor's Allocable Portion in respect of the Class C shares relating to a Fund shall be adjusted by agreement among the relevant parties; provided, however, if the Distributor, the Successor Distributor and the Fund cannot agree within thirty (30) days after the date of any such change in applicable laws or in any distributor's contract, distribution plan, prospectus or the Conduct Rules, they shall submit the question to arbitration in accordance with the commercial arbitration rules of the American Arbitration Association and the decision reached by the arbitrator shall be final and binding on each of them.
SCHEDULE C
TO THE
AMENDED AND RESTATED PRINCIPAL UNDERWRITING AGREEMENT
ALLOCATION SCHEDULE
The following relates solely to Class 529-B shares.
The Distributor's Allocable Portion of Distribution Fees and CDSCs in respect of Class 529-B shares shall be 100% until such time as the Distributor shall cease to serve as exclusive distributor of Class 529-B shares; thereafter, collections that constitute CDSCs and Distribution Fees relating to Class 529-B shares shall be allocated among the Distributor and any successor distributor ("Successor Distributor") in accordance with this Schedule.
Defined terms used in this Schedule and not otherwise defined herein shall have the meanings assigned to them in the Amended and Restated Principal Underwriting Agreement (the "Distribution Agreement"), of which this Schedule is a part. As used herein the following terms shall have the meanings indicated:
"Commission Share" means each 529-B share issued under circumstances which would normally give rise to an obligation of the holder of such share to pay a CDSC upon redemption of such share (including, without limitation, any 529-B share issued in connection with a permitted free exchange), and any such share shall continue to be a Commission Share of the applicable Fund prior to the redemption (including a redemption in connection with a permitted free exchange) or conversion of such share, even though the obligation to pay the CDSC may have expired or conditions for waivers thereof may exist.
"Date of Original Issuance" means in respect of any Commission Share, the date with reference to which the amount of the CDSC payable on redemption thereof, if any, is computed.
"Free Share" means, in respect of a Fund, each 529-B share of the Fund, other than a Commission Share (including, without limitation, any 529-B share issued in connection with the reinvestment of dividends or capital gains).
"Inception Date" means in respect of a Fund, the first date on which the Fund issued shares.
"Net Asset Value" means the net asset value determined as set forth in the Prospectus of each Fund.
"Omnibus Share" means, in respect of a Fund, a Commission Share or Free Share sold by one of the selling agents maintaining shares in an omnibus account. If, subsequent to the Successor Distributor becoming exclusive distributor of the Class 529-B shares, the Distributor reasonably determines that the transfer agent is able to track all Commission Shares and Free Shares sold by any of the selling agents listed on Exhibit I in the same manner as Commission Shares and Free Shares are currently tracked in respect of selling agents not listed on Exhibit I, then Exhibit I shall be amended to delete such selling agent from Exhibit I so that Commission Shares and Free Shares sold by such selling agent will no longer be treated as Omnibus Shares.
PART I: ATTRIBUTION OF CLASS 529-B SHARES
Class 529-B shares that are outstanding from time to time, shall be attributed to the Distributor and each Successor Distributor in accordance with the following rules;
(1) Commission Shares other than Omnibus Shares:
(a) Commission Shares that are not Omnibus Shares ("Non-Omnibus Commission Shares") attributed to the Distributor shall be those Non-Omnibus Commission Shares the Date of Original Issuance of which occurred on or after the Inception Date of the applicable Fund and on or prior to the date the Distributor ceased to be exclusive distributor of Class 529-B shares of the Fund.
(b) Non-Omnibus Commission Shares attributable to each Successor Distributor shall be those Non-Omnibus Commission Shares the Date of Original Issuance of which occurs after the date such Successor Distributor became the exclusive distributor of Class 529-B shares of the Fund and on or prior to the date such Successor Distributor ceased to be the exclusive distributor of Class 529-B shares of the Fund.
(c) A Non-Omnibus Commission Share of a Fund issued in consideration of the investment of proceeds of the redemption of a Non-Omnibus Commission Share of another fund (the "Redeeming Fund") in connection with a permitted free exchange, is deemed to have a Date of Original Issuance identical to the Date of Original Issuance of the Non-Omnibus Commission Share of the Redeeming Fund, and any such Commission Share will be attributed to the Distributor or Successor Distributor based upon such Date of Original Issuance in accordance with rules (a) and (b) above.
(2) Free Shares:
Free Shares that are not Omnibus Shares ("Non-Omnibus Free Shares") of a Fund outstanding on any date shall be attributed to the Distributor or a Successor Distributor, as the case may be, in the same proportion that the Non-Omnibus Commission Shares of a Fund outstanding on such date are attributed to each on such date; provided that if the Distributor and its transferees reasonably determines that the transfer agent is able to produce monthly reports that track the Date of Original Issuance for such Non-Omnibus Free Shares, then such Free Shares shall be allocated pursuant to clause 1(a), (b) and (c) above.
(3) Omnibus Shares:
Omnibus Shares of a Fund outstanding on any date shall be attributed to the
Distributor or a Successor Distributor, as the case may be, in the same
proportion that the Non-Omnibus Commission Shares of the applicable Fund
outstanding on such date are attributed to it on such date; provided that if
the Distributor reasonably determines that the transfer agent is able to
produce monthly reports that track the Date of Original Issuance for the
Omnibus Shares, then the Omnibus Shares shall be allocated pursuant to clause
1(a), (b) and (c) above.
PART II: ALLOCATION OF CDSCs
(1) CDSCs Related to the Redemption of Non-Omnibus Commission Shares:
CDSCs in respect of the redemption of Non-Omnibus Commission Shares shall be
allocated to the Distributor or a Successor Distributor depending upon whether
the related redeemed Commission Share is attributable to the Distributor or
such Successor Distributor, as the case may be, in accordance with Part I
above.
(2) CDSCs Related to the Redemption of Omnibus Shares:
CDSCs in respect of the redemption of Omnibus Shares shall be allocated to the
Distributor or a Successor Distributor in the same proportion that CDSCs
related to the redemption of Non-Omnibus Commission Shares are allocated to
each thereof; provided, that if the Distributor reasonably determines that the
transfer agent is able to produce monthly reports which track the Date of
Original Issuance for the Omnibus Shares, then the CDSCs in respect of the
redemption of Omnibus Shares shall be allocated among the Distributor and any
Successor Distributor depending on whether the related redeemed Omnibus Share
is attributable to the Distributor or a Successor Distributor, as the case may
be, in accordance with Part I above.
PART III: ALLOCATION OF DISTRIBUTION FEE
Assuming that the Distribution Fee remains constant over time so that Part IV hereof does not become operative:
(1) The portion of the aggregate Distribution Fee accrued in respect of all Class 529B shares of a Fund during any calendar month allocable to the Distributor or a Successor Distributor is determined by multiplying the total of such Distribution Fee by the following fraction:
(A + C)/2
(B + D)/2
where:
A= The aggregate Net Asset Value of all Class 529-B shares of a Fund attributed to the Distributor or such Successor Distributor, as the case may be, and outstanding at the beginning of such calendar month
B= The aggregate Net Asset Value of all Class 529-B shares of a Fund at the beginning of such calendar month
C= The aggregate Net Asset Value of all Class 529-B shares of a Fund attributed to the Distributor or such Successor Distributor, as the case may be, and outstanding at the end of such calendar month
D= The aggregate Net Asset Value of all Class 529-B shares of a Fund at the end of such calendar month
(2) If the Distributor reasonably determines that the transfer agent is able to produce automated monthly reports that allocate the average Net Asset Value of the Commission Shares (or all Class 529-B shares if available) of a Fund among the Distributor and any Successor Distributor in a manner consistent with the methodology detailed in Part I and Part III(1) above, the portion of the Distribution Fee accrued in respect of all such Class 529-B shares of a Fund during a particular calendar month will be allocated to the Distributor or a Successor Distributor by multiplying the total of such Distribution Fee by the following fraction:
(A)/(B)
where:
A= Average Net Asset Value of all such Class 529-B shares of a Fund for such calendar month attributed to the Distributor or a Successor Distributor, as the case may be
B= Total average Net Asset Value of all such Class 529-B shares of a Fund for such calendar month
PART IV: ADJUSTMENT OF THE DISTRIBUTOR'S ALLOCABLE PORTION AND EACH SUCCESSOR
DISTRIBUTOR'S ALLOCABLE PORTION
The parties to the Distribution Agreement recognize that, if the terms of any
distributor's contract, any distribution plan, any prospectus, the Conduct
Rules or any other applicable law change so as to disproportionately reduce, in
a manner inconsistent with the intent of this Distribution Agreement, the
amount of the Distributor's Allocable Portion or any Successor Distributor's
Allocable Portion had no such change occurred, the definitions of the
Distributor's Allocable Portion and/or the Successor Distributor's Allocable
Portion in respect of the Class 529-B shares relating to a Fund shall be
adjusted by agreement among the relevant parties; provided, however, if the
Distributor, the Successor Distributor and the Fund cannot agree within thirty
(30) days after the date of any such change in applicable laws or in any
distributor's contract, distribution plan, prospectus or the Conduct Rules,
they shall submit the question to arbitration in accordance with the commercial
arbitration rules of the American Arbitration Association and the decision
reached by the arbitrator shall be final and binding on each of them.
SCHEDULE D
TO THE
AMENDED AND RESTATED PRINCIPAL UNDERWRITING AGREEMENT
ALLOCATION SCHEDULE
The following relates solely to Class 529-C shares.
The Distributor's Allocable Portion of Distribution Fees and CDSCs in respect of Class 529-C shares shall be 100% until such time as the Distributor shall cease to serve as exclusive distributor of Class 529-C shares; thereafter, collections that constitute CDSCs and Distribution Fees relating to Class 529-C shares shall be allocated among the Distributor and any successor distributor ("Successor Distributor") in accordance with this Schedule. At such time as the Distributor's Allocable Portion of the Distribution Fees equals zero, the Successor Distributor shall become the Distributor for purposes of this Allocation Schedule.
Defined terms used in this Schedule and not otherwise defined herein shall have the meanings assigned to them in the Amended and Restated Principal Underwriting Agreement (the "Distribution Agreement"), of which this Schedule is a part. As used herein the following terms shall have the meanings indicated:
"Commission Share" means each 529-C share issued under circumstances which would normally give rise to an obligation of the holder of such share to pay a CDSC upon redemption of such share (including, without limitation, any 529-C share issued in connection with a permitted free exchange), and any such share shall continue to be a Commission Share of the applicable Fund prior to the redemption (including a redemption in connection with a permitted free exchange) or conversion of such share, even though the obligation to pay the CDSC may have expired or conditions for waivers thereof may exist.
"Date of Original Issuance" means in respect of any Commission Share, the date with reference to which the amount of the CDSC payable on redemption thereof, if any, is computed.
"Free Share" means, in respect of a Fund, each 529-C share of the Fund, other than a Commission Share (including, without limitation, any 529-C share issued in connection with the reinvestment of dividends or capital gains).
"Inception Date" means in respect of a Fund, the first date on which the Fund issued shares.
"Net Asset Value" means the net asset value determined as set forth in the Prospectus of each Fund.
"Omnibus Share" means, in respect of a Fund, a Commission Share or Free Share sold by one of the selling agents maintaining shares in an omnibus account ("Omnibus Selling Agents"). If, subsequent to the Successor Distributor becoming exclusive distributor of the Class 529-C shares, the Distributor reasonably determines that the transfer agent is able to track all Commission Shares and Free Shares sold by any of the Omnibus Selling Agents in the same manner as Non-Omnibus Commission Shares and Free Shares (defined below) are currently tracked, then Omnibus Shares of such Omnibus Selling Agent shall be treated as Commission Shares and Free Shares.
Class C shares that are outstanding from time to time, shall be attributed to
the Distributor and each Successor Distributor in accordance with the following
rules;
Class 529-C shares that are outstanding from time to time, shall be attributed
to the Distributor and each Successor Distributor in accordance with the
following rules;
(1) Commission Shares other than Omnibus Shares:
(a) Commission Shares that are not Omnibus Shares ("Non-Omnibus Commission Shares") attributed to the Distributor shall be those Non-Omnibus Commission Shares (i) the Date of Original Issuance of which occurred on or after the Inception Date of the applicable Fund and on or prior to the date the Distributor ceased to be exclusive distributor of Class 529-C shares of the Fund and (ii) that are subject to a CDSC (without regard to any conditions for waivers thereof).
(b) Non-Omnibus Commission Shares attributable to each Successor Distributor shall be those Non-Omnibus Commission Shares (i) the Date of Original Issuance of which occurs after the date such Successor Distributor became the exclusive distributor of Class 529-C shares of the Fund and on or prior to the date such Successor Distributor ceased to be the exclusive distributor of Class 529-C shares of the Fund and (ii) that are subject to a CDSC (without regard to any conditions for waivers thereof).
(c) A Non-Omnibus Commission Share of a Fund issued in consideration of the investment of proceeds of the redemption of a Non-Omnibus Commission Share of another fund (the "Redeeming Fund") in connection with a permitted free exchange, is deemed to have a Date of Original Issuance identical to the Date of Original Issuance of the Non-Omnibus Commission Share of the Redeeming Fund, and any such Commission Share will be attributed to the Distributor or Successor Distributor based upon such Date of Original Issuance in accordance with rules (a) and (b) above.
(2) Free Shares:
Free Shares that are not Omnibus Shares ("Non-Omnibus Free Shares") of a Fund
outstanding on any date shall be attributed to the Distributor or a Successor
Distributor, as the case may be, in the same proportion that the Non-Omnibus
Commission Shares of a Fund outstanding on such date are attributed to each on
such date; provided that if the Distributor and its transferees reasonably
determines that the transfer agent is able to produce monthly reports that
track the Date of Original Issuance for such Non-Omnibus Free Shares, then such
Free Shares shall be allocated pursuant to clause 1(a), (b) and (c) above.
(3) Omnibus Shares:
Omnibus Shares of a Fund outstanding on any date shall be attributed to the
Distributor or a Successor Distributor, as the case may be, in the same
proportion that the Non-Omnibus Commission Shares of the applicable Fund
outstanding on such date are attributed to it on such date; provided that if
the Distributor reasonably determines that the transfer agent is able to
produce monthly reports that track the Date of Original Issuance for the
Omnibus Shares, then the Omnibus Shares shall be allocated pursuant to clause
1(a), (b) and (c) above.
PART II: ALLOCATION OF CDSCs
(1) CDSCs Related to the Redemption of Non-Omnibus Commission Shares:
CDSCs in respect of the redemption of Non-Omnibus Commission Shares shall be
allocated to the Distributor or a Successor Distributor depending upon whether
the related redeemed Commission Share is attributable to the Distributor or
such Successor Distributor, as the case may be, in accordance with Part I
above.
(2) CDSCs Related to the Redemption of Omnibus Shares:
CDSCs in respect of the redemption of Omnibus Shares shall be allocated to the
Distributor or a Successor Distributor in the same proportion that CDSCs
related to the redemption of Non-Omnibus Commission Shares are allocated to
each thereof; provided, that if the Distributor reasonably determines that the
transfer agent is able to produce monthly reports which track the Date of
Original Issuance for the Omnibus Shares, then the CDSCs in respect of the
redemption of Omnibus Shares shall be allocated among the Distributor and any
Successor Distributor depending on whether the related redeemed Omnibus Share
is attributable to the Distributor or a Successor Distributor, as the case may
be, in accordance with Part I above.
PART III: ALLOCATION OF DISTRIBUTION FEE
Assuming that the Distribution Fee remains constant over time so that Part IV hereof does not become operative:
(1) The portion of the aggregate Distribution Fee accrued in respect of all Class 529-C shares of a Fund during any calendar month allocable to the Distributor or a Successor Distributor is determined by multiplying the total of such Distribution Fee by the following fraction:
(A + C)/2
(B + D)/2
where:
A= The aggregate Net Asset Value of all Class 529-C shares of a Fund attributed to the Distributor or such Successor Distributor, as the case may be, and outstanding at the beginning of such calendar month
B= The aggregate Net Asset Value of all Class 529-C shares of a Fund at the beginning of such calendar month
C= The aggregate Net Asset Value of all Class 529-C shares of a Fund attributed to the Distributor or such Successor Distributor, as the case may be, and outstanding at the end of such calendar month
D= The aggregate Net Asset Value of all Class 529-C shares of a Fund at the end of such calendar month
(2) If the Distributor reasonably determines that the transfer agent is able to produce automated monthly reports that allocate the average Net Asset Value of the Commission Shares (or all Class 529-C shares if available) of a Fund among the Distributor and any Successor Distributor in a manner consistent with the methodology detailed in Part I and Part III(1) above, the portion of the Distribution Fee accrued in respect of all such Class 529-C shares of a Fund during a particular calendar month will be allocated to the Distributor or a Successor Distributor by multiplying the total of such Distribution Fee by the following fraction:
(A)/(B)
where:
A= Average Net Asset Value of all such Class 529-C shares of a Fund for such calendar month attributed to the Distributor or a Successor Distributor, as the case may be
B= Total average Net Asset Value of all such Class 529-C shares of a Fund for such calendar month
PART IV: ADJUSTMENT OF THE DISTRIBUTOR'S ALLOCABLE PORTION AND EACH SUCCESSOR
DISTRIBUTOR'S ALLOCABLE PORTION
The parties to the Distribution Agreement recognize that, if the terms of any
distributor's contract, any distribution plan, any prospectus, the Conduct
Rules or any other applicable law change so as to disproportionately reduce, in
a manner inconsistent with the intent of this Distribution Agreement, the
amount of the Distributor's Allocable Portion or any Successor Distributor's
Allocable Portion had no such change occurred, the definitions of the
Distributor's Allocable Portion and/or the Successor Distributor's Allocable
Portion in respect of the Class 529-C shares relating to a Fund shall be
adjusted by agreement among the relevant parties; provided, however, if the
Distributor, the Successor Distributor and the Fund cannot agree within thirty
(30) days after the date of any such change in applicable laws or in any
distributor's contract, distribution plan, prospectus or the Conduct Rules,
they shall submit the question to arbitration in accordance with the commercial
arbitration rules of the American Arbitration Association and the decision
reached by the arbitrator shall be final and binding on each of them.
FORM OF AMENDED AND RESTATED ADMINISTRATIVE SERVICES AGREEMENT
WHEREAS, [name of fund] (the "Fund"), is a [state][corporation/business trust] registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end diversified investment company that offers Class C shares; Class F shares; Class R-1 shares, Class R-2 shares, Class R-3 shares, Class R-4 shares and Class R-5 shares (collectively, the "Class R shares"); and Class 529-A shares, Class 529-B shares, Class 529-C shares, Class 529-E shares, and Class 529-F shares (collectively, the "Class 529 shares"); and
WHEREAS, Capital Research and Management Company (the "Investment Adviser"), is a Delaware corporation registered under the Investment Advisers Act of 1940, as amended, and is engaged in the business of providing investment advisory and related services to the Fund and to other investment companies; and
WHEREAS, the Fund wishes to have the Investment Adviser arrange for and coordinate and monitor the provision of transfer agent and shareholder services ("transfer agent services") and certain other administrative services (other than those provided pursuant to any other agreement with the Fund), including but not limited to recordkeeping, transactional services, tax information returns and reports, fund communication and shareholder communication (collectively "administrative services") for the Fund's Class C shares, Class F shares, Class R shares and Class 529 shares; and
WHEREAS, the Investment Adviser is willing to perform or to cause to be performed such transfer agent services and administrative services for the Fund's Class C shares, Class F shares, Class R shares and Class 529 shares on the terms and conditions set forth herein; and
WHEREAS, the Fund and the Investment Adviser wish to enter into an Administrative Services Agreement ("Agreement") whereby the Investment Adviser would perform or cause to be performed such transfer agent services and administrative services for the Fund's Class C shares, Class F shares, Class R shares and Class 529 shares;
NOW, THEREFORE, the parties agree as follows:
1. Services. During the term of this Agreement, the Investment Adviser shall
perform or cause to be performed the transfer agent services and administrative
services set forth in Exhibit A hereto, as such exhibit may be amended from
time to time by mutual consent of the parties. The Fund and Investment Adviser
acknowledge that the Investment Adviser will contract with third parties,
including American Funds Service Company ("AFS"), to perform such transfer
agent services and administrative services. In selecting third parties to
perform transfer agent and administrative services, the Investment Adviser
shall select only those third parties that the Investment Adviser reasonably
believes have adequate facilities and personnel to diligently perform such
services. The Investment Adviser shall monitor, coordinate and oversee the
activities of the third parties with which it or AFS contracts to ensure
shareholders receive high-quality service. In doing so the Investment Adviser
shall establish procedures to monitor the activities of such third parties.
These procedures may, but need not, include monitoring: (i) telephone queue
wait times; (ii) telephone abandon rates; (iii) website and voice response unit
downtimes; (iv) downtime of the third party's shareholder account recordkeeping
system; (v) the accuracy and timeliness of financial and non-financial
transactions; (vi) to ensure compliance with the Fund prospectus; and (vii)
with respect to Class 529 shares, compliance with the CollegeAmerica program
description.
2. Fees.
(a) TRANSFER AGENT FEES. In consideration of transfer agent services performed or caused to be performed by the Investment Adviser for the Fund's Class C shares, Class F shares and Class R shares, the Fund shall pay the Investment Adviser transfer agent fees according to the fee schedule contained in the Shareholder Services Agreement between the Fund and AFS (a copy of which is attached hereto). No Transfer Agent Fees shall be paid in respect of accounts that are held in other than street name or a networked environment. No fees shall be paid under this paragraph 2(a) for services provided by third parties other than AFS. All fund-specific charges from third parties-including DST charges, postage, NSCC transaction charges and similar out-of-pocket expenses-will be passed through directly to the Fund. Transfer agent fees shall be paid within 30 days after receipt of an invoice for transfer agent services performed the preceding month.
(b) ADMINISTRATIVE SERVICES FEES. In consideration of administrative
services performed or caused to be performed by the Investment Adviser for the
Fund's Class C shares, Class F shares, Class R shares and Class 529 shares, the
Fund shall pay the Investment Adviser an administrative services fee
("administrative fee"). For the Fund's Class C shares, Class F shares, Class
R-1 shares, Class R-2 shares, Class R-3 shares, Class R-4 shares and Class 529
shares, the administrative fee shall accrue daily and shall be calculated at
the annual rate of 0.15% of the average net assets of those shares. For the
Fund's Class R-5 shares, the administrative fee shall accrue daily and shall be
calculated at the annual rate of 0.10% of the average net assets of the Class
R5 shares. The administrative fee shall be paid within 30 days after receipt
of an invoice for administrative services performed in the preceding month.
3. Effective Date and Termination of Agreement. This Agreement shall become
effective on February 15, 2002, and unless terminated sooner it shall continue
in effect until [date]. It may thereafter be continued from year to year only
with the approval of a majority of those Directors of the Fund who are not
"interested persons" of the Fund (as defined in the 1940 Act) and have no
direct or indirect financial interest in the operation of this Agreement or any
agreement related to it (the "Independent Directors"). This Agreement may be
terminated as to the Fund as a whole or any class of shares individually at any
time by vote of a majority of the Independent Directors. The Investment
Adviser may terminate this agreement upon sixty (60) days' prior written notice
to the Fund.
4. Amendment. This Agreement may not be amended to increase materially the fees payable under this Agreement unless such amendment is approved by the vote of a majority of the Independent Directors.
5. Assignment. This Agreement shall not be assignable by either party hereto and in the event of assignment shall automatically terminate forthwith. The term "assignment" shall have the meaning set forth in the 1940 Act. Notwithstanding the foregoing, the Investment Adviser is specifically authorized to contract with third parties for the provision of transfer agent, shareholder services, and administrative services on behalf of the Fund.
6. Issuance of Series of Shares. If the Fund shall at any time issue shares in more than one series, this Agreement may be adopted, amended, continued or renewed with respect to a series as provided herein, notwithstanding that such adoption, amendment, continuance or renewal has not been effected with respect to any one or more other series of the Fund.
7. Choice of Law. This Agreement shall be construed under and shall be governed by the laws of the State of California, and the parties hereto agree that proper venue of any action with respect hereto shall be Los Angeles County, California.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in duplicate original by its officers thereunto duly authorized, as of February 1, 2002.
CAPITAL RESEARCH AND [NAME OF FUND] MANAGEMENT COMPANY By: By: James F. Rothenberg, President [name] Chairman of the Board By: By: Michael J. Downer, Vice President [name] Secretary and Secretary |
EXHIBIT A
TO THE
ADMINISTRATIVE SERVICES AGREEMENT
TRANSFER AGENT SERVICES
The Investment Adviser or any third party with whom it may contract, including American Funds Service Company (the Investment Adviser and any such third-party are collectively referred to as "Service Provider") shall act, as necessary, as stock transfer agent, dividend disbursing agent and redemption agent for the Fund's Class C shares, Class F shares, Class R shares and Class 529 shares, and shall provide such additional related services as the Fund's Class C shares, Class F shares, Class R shares and Class 529 shares may from time to time require, all of which services are sometimes referred to herein as "shareholder services."
ADMINISTRATIVE SERVICES
1. Record Maintenance The Service Provider shall maintain, and require any third parties with which it contracts to maintain with respect to each Fund shareholder holding the Fund's Class C shares, Class F shares, Class R shares and/or Class 529 shares in a Service Provider account ("Customers") the following records:
a. Number of Shares;
b. Date, price and amount of purchases and redemptions (including dividend reinvestments) and dates and amounts of dividends paid for at least the current year to date;
c. Name and address of the Customer, including zip codes and social security numbers or taxpayer identification numbers;
d. Records of distributions and dividend payments; and
e. Any transfers of shares.
2. Shareholder Communications Service Provider shall:
a. Provide to a shareholder mailing agent for the purpose of delivering certain Fund-related materials the names and addresses of all Customers. The Fund-related materials shall consist of updated prospectuses and any supplements and amendments thereto, annual and other periodic reports, proxy or information statements and other appropriate shareholder communications. In the alternative, the Service Provider may distribute the Fund-related materials to its Customers.
b. Deliver current Fund prospectuses and statements of additional information and annual and other periodic reports upon Customer request, and, as applicable, with confirmation statements;
c. Deliver statements to Customers on no less frequently than a quarterly basis showing, among other things, the number of Class C shares, Class F shares, Class R shares and/or Class 529 shares of the Fund owned by such Customer and the net asset value of the Class C shares, Class F shares, Class R shares and/or Class 529 shares of the Fund as of a recent date;
d. Produce and deliver to Customers confirmation statements reflecting purchases and redemptions of Class C shares, Class F shares, Class R shares and/or Class 529 shares of the Fund;
e. Respond to Customer inquiries regarding, among other things, share prices, account balances, dividend amounts and dividend payment dates;
f. With respect to Class C and/or Class F shares of the Fund purchased by Customers after the effective date of this Agreement, provide average cost basis reporting to Customers to assist them in preparation of their income tax returns; and
g. If the Service Provider accepts transactions in the Fund's Class C shares, Class F shares and Class R shares from any brokers or banks in an omnibus relationship, require each such broker or bank to provide such shareholder communications as set forth in 2(a) through 2(f) to its own Customers.
3. Transactional Services The Service Provider shall communicate to its Customers, as to Class C shares, Class F shares, Class R shares and Class 529 shares of the Fund, purchase, redemption and exchange orders reflecting the orders it receives from its Customers or from any brokers and banks for their Customers. The Service Provider shall also communicate to beneficial owners holding through it, and to any brokers or banks for beneficial owners holding through them, as to shares of Class C shares, Class F shares, Class R shares and Class 529 shares of the Fund, mergers, splits and other reorganization activities, and require any broker or bank to communicate such information to its Customers.
4. Tax Information Returns and Reports The Service Provider shall prepare and file, and require to be prepared and filed by any brokers or banks as to their Customers, with the appropriate governmental agencies, such information, returns and reports as are required to be so filed for reporting: (i) dividends and other distributions made; (ii) amounts withheld on dividends and other distributions and payments under applicable federal and state laws, rules and regulations; and (iii) gross proceeds of sales transactions as required.
5. Fund Communications The Service Provider shall, upon request by the Fund, on each business day, report the number of Class C shares, Class F shares, Class R shares and Class 529 shares on which the administrative fee is to be paid pursuant to this Agreement. The Service Provider shall also provide the Fund with a monthly invoice.
6. Monitoring of Service Providers The Investment Adviser shall coordinate and monitor the activities of the Service Providers with which it contracts to ensure that the shareholders of the Fund's Class C shares, Class F shares, Class R shares and Class 529 shares receive high-quality service. The Investment Adviser shall also ensure that Service Providers deliver to Customers account statements and all Fund-related materials, including prospectuses, shareholder reports, and proxies.
ATTACHMENT
TO
ADMINISTRATIVE SERVICES AGREEMENT
AMENDMENT OF SHAREHOLDER SERVICES AGREEMENT
This Amendment to the Shareholder Services Agreement (the "Agreement") by and between American Funds Service Company (hereinafter "AFS") and [name of fund] (hereinafter called the "Fund") is dated as of the first day of July, 2001.
WHEREAS, AFS and the Fund entered into the Agreement with regard to certain shareholder services to be performed by AFS; and
WHEREAS, AFS and the Fund desire to amend said Agreement in the manner hereinafter set forth;
NOW THEREFORE, pursuant to Section 9 of the Agreement, AFS and the Fund hereby amend the Agreement as follows:
1. Section 6 is amended to read as follows:
AFS will provide to the participating investment companies the shareholder
services referred to herein in return for the following fees:
ANNUAL ACCOUNT MAINTENANCE FEE (PAID MONTHLY):
$0.44 per month for each open account on AFS' books or in Level 0, 2 or 4
Networking ($5.28 per year).
$0.06 per month for each open account maintained in Street Name or
Level 1 or 3 Networking ($0.72 per year).
No annual fee will be charged for a participant account underlying a 401(k)
or other defined contribution plan where the plan maintains a single
account on AFS' books and responds to all participant inquiries.
TRANSACTION FEES:
$2.57 per non-automated transaction
$0.20 per automated transaction
For this purpose, "transactions" shall include all types of transactions
included in an "activity index" as reported to the Review and Advisory
Committee at least annually. AFS will bill the Fund monthly, on or shortly
after the first of each calendar month, and the Fund will pay AFS within five
business days of such billing.
Any revision of the schedule of charges set forth herein shall require the
affirmative vote of a majority of the members of the board of
directors/trustees of the Fund.
IN WITNESS THEREOF, AFS and the Fund have caused this Amendment to be executed by their duly authorized officers effective as of the date first written above.
[name of fund] AMERICAN FUNDS
SERVICE COMPANY
BY: /s/ [name] BY: /s/ Angela M. Mitchell Name:[name] Name: Angela M. Mitchell Title:Secretary Title: Secretary Date: February 1, 2002 Date: February 1, 2002 |
AMENDMENT OF SHAREHOLDER SERVICES AGREEMENT
This Amendment to the Shareholder Services Agreement (the "Agreement") by and between American Funds Service Company (hereinafter "AFS") and ______________________ (hereinafter called the "Fund") is dated as of the first day of July, 2001.
WHEREAS, AFS and the Fund entered into the Agreement with regard to certain shareholder services to be performed by AFS; and
WHEREAS, AFS and the Fund desire to amend said Agreement in the manner hereinafter set forth;
NOW THEREFORE, pursuant to Section 9 of the Agreement, AFS and the Fund hereby amend the Agreement as follows:
1. Section 6 is amended to read as follows:
AFS will provide to the participating investment companies the shareholder
services referred to herein in return for the following fees:
ANNUAL ACCOUNT MAINTENANCE FEE (PAID MONTHLY):
$0.44 per month for each open account on AFS' books or in Level 2 or 4
Networking ($5.28 per year).
$0.06 per month for each open account maintained in Street Name or
Level 1 or 3 Networking ($0.72 per year).
No annual fee will be charged for a participant account underlying a 401(k)
or other defined contribution plan where the plan maintains a single
account on AFS' books and responds to all participant inquiries.
TRANSACTION FEES:
$2.57 per non-automated transaction
$0.20 per automated transaction
For this purpose, "transactions" shall include all types of transactions
included in an "activity index" as reported to the Review and Advisory
Committee at least annually. AFS will bill the Fund monthly, on or shortly
after the first of each calendar month, and the Fund will pay AFS within five
business days of such billing.
Any revision of the schedule of charges set forth herein shall require the affirmative vote of a majority of the members of the board of directors/trustees of the Fund.
IN WITNESS THEREOF, AFS and the Fund have caused this Amendment to be executed by their duly authorized officers effective as of the date first written above.
[name of Fund] AMERICAN FUNDS SERVICE COMPANY BY: BY: Name: Name: Angela M. Mitchell |
Title:Secretary Title: Secretary Date: February 1, 2002 Date: February 1, 2002
O'MELVENY & MYERS LLP
CENTURY CITY 400 South Hope Street TYSONS CORNER
IRVINE SPECTRUM Los Angeles, California WASHINGTON,
MENLO PARK 90071-2899 D.C.
NEWPORT BEACH Telephone (213) 430-6000 HONG KONG
NEW YORK Facsimile (213) 430-6407 LONDON
SAN FRANCISCO Internet: www.omm.com SHANGHAI
TOKYO
|
February 11, 2002
New World Fund, Inc.
333 South Hope Street
Los Angeles, California 90071
Dear Ladies and Gentlemen:
At your request we have examined your Registration Statement on Form N-1A and the related Post-Effective Amendment No. 6 filed by you with the Securities and Exchange Commission in connection with the registration under the Securities Act of 1933, as amended, of an indefinite number of shares of your common stock, $0.01 par value per share, of the following Classes: 529-A, 529-B, 529-C, 529-E and 529-F (collectively, the "529 SHARES"). We are familiar with the proceedings you have taken in connection with the authorization, issuance and sale of the 529 Shares.
Based upon our examination and upon our knowledge of your activities, it is our opinion that, provided that an appropriate amendment to your Articles of Incorporation is duly effected before the issued and outstanding 529 Shares exceed the authorized number specified in the Articles of Incorporation, the 529 Shares upon issuance and sale in the manner described in the Registration Statement will constitute validly issued, fully paid and nonassessable shares of your common stock.
We consent to the filing of this opinion as an exhibit to the Registration Statement.
Respectfully submitted,
O'MELVENY & MYERS LLP
INDEPENDENT AUDITORS' CONSENT
New World Fund, Inc.:
We consent to (a) the use in this Post-Effective Amendment No. 6 to Registration Statement No. 333-67455 on Form N-1A of our report dated November 30, 2001 appearing in the Financial Statements which are included in Part B, the Statement of Additional Information of such Registration Statement, (b) the references to us under the heading "General Information" in such Statement of Additional Information and (c) the reference to us under the heading "Financial Highlights" in the Prospectus, which is a part of such Registration Statement.
DELOITTE & TOUCHE LLP
Los Angeles, California
PLAN OF DISTRIBUTION OF [NAME OF FUND]
RELATING TO ITS CLASS 529-A SHARES
WHEREAS, [name of fund] (the "Fund") is a [state][corporation][business trust] that offers fourteen classes of shares of [common stock][beneficial interest], designated as Class A shares, Class B shares, Class C shares, Class F shares, Class 529-A shares, Class 529-B shares, Class 529-C shares, Class 529-E shares, Class 529-F shares, Class R-1 shares, Class R-2 shares, Class R-3 shares, Class R-4 shares and Class R-5 shares;
WHEREAS, American Funds Distributors, Inc. ("AFD") or any successor entity designated by the Fund (AFD and any such successor collectively are referred to as "Distributor") will serve as distributor of the shares of common stock of the Fund, and the Fund and Distributor are parties to a principal underwriting agreement (the "Agreement");
WHEREAS, the purpose of this Plan of Distribution (the "Plan") is to authorize the Fund to bear expenses of distribution of its Class 529-A shares; and
WHEREAS, the Board of [Directors][Trustees] of the Fund has determined that there is a reasonable likelihood that this Plan will benefit the Fund and its shareholders;
NOW, THEREFORE, the Fund adopts this Plan as follows:
1. PAYMENTS TO DISTRIBUTOR. The Fund may expend pursuant to this Plan and as set forth below an aggregate amount not to exceed .50% per annum of the average net assets of the Fund's Class 529-A shares. The categories of expenses permitted under this Plan include service fees ("Service Fees") in an amount not to exceed .25%, and distribution fees ("Distribution Fees") in an amount not to exceed .25%, each such percentage being per annum of the average net assets of the Fund's Class 529-A shares. The actual amounts paid shall be determined by the Board of [Directors][Trustees]. The Service Fee compensates the Distributor for service-related expenses, including paying Service Fees to others in respect of Class 529-A shares of the Fund. The Distribution Fee compensates the Distributor for providing distribution services in respect of Class 529-A shares of the Fund.
2. APPROVAL BY THE BOARD. This Plan shall not take effect until it has been approved, together with any related agreement, by votes of the majority of both
(i) the Board of [Directors][Trustees] of the Fund and (ii) those
[Directors][Trustees] of the Fund who are not "interested persons" of the Fund
(as defined in the Investment Company Act of 1940) and have no direct or
indirect financial interest in the operation of this Plan or any agreement
related to it (the "Independent [Directors][Trustees]"), cast in person at a
meeting called for the purpose of voting on this Plan and/or such agreement.
3. REVIEW OF EXPENDITURES. At least quarterly, the Board of
[Directors][Trustees] shall be provided by any person authorized to direct the
disposition of monies paid or payable by the Fund pursuant to this Plan or any
related agreement, and the Board shall review, a written report of the amounts
expended pursuant to this Plan and the purposes for which such expenditures
were made.
4. TERMINATION OF PLAN. This Plan may be terminated as to the Fund's Class
529-A shares at any time by vote of a majority of the Independent
[Directors][Trustees], or by vote of a majority of the outstanding Class 529-A
shares of the Fund. Unless sooner terminated in accordance with this
provision, this Plan shall continue in effect until [date]. It may thereafter
be continued from year to year in the manner provided for in paragraph 2
hereof.
5. REQUIREMENTS OF AGREEMENT. Any Agreement related to this Plan shall be in writing, and shall provide:
a. that such Agreement may be terminated as to the Fund at any time, without
payment of any penalty by the vote of a majority of the Independent
[Directors][Trustees] or by a vote of a majority of the outstanding Class 529-A
shares of the Fund, on not more than sixty (60) days' written notice to any
other party to the Agreement; and
b. that such Agreement shall terminate automatically in the event of its assignment.
6. AMENDMENT. This Plan may not be amended to increase materially the maximum amount of fees or other distribution expenses provided for in paragraph 1 hereof with respect to the Class 529-A shares of the Fund unless such amendment is approved by vote of a majority of the outstanding voting securities of the Class 529-A shares of the Fund and as provided in paragraph 2 hereof, and no other material amendment to this Plan shall be made unless approved in the manner provided for in paragraph 2 hereof.
7. NOMINATION OF [DIRECTORS][TRUSTEES]. While this Plan is in effect, the selection and nomination of Independent [Directors][Trustees] shall be committed to the discretion of the Independent [Directors][Trustees] of the Fund.
8. ISSUANCE OF SERIES OF SHARES. If the Fund shall at any time issue shares in more than one series, this Plan may be adopted, amended, continued or renewed with respect to a series as provided herein, notwithstanding that such adoption, amendment, continuance or renewal has not been effected with respect to any one or more other series of the Fund.
9. RECORD RETENTION. The Fund shall preserve copies of this Plan and any related agreement and all reports made pursuant to paragraph 3 hereof for not less than six (6) years from the date of this Plan, or such agreement or reports, as the case may be, the first two (2) years of which such records shall be stored in an easily accessible place.
IN WITNESS WHEREOF, the Fund has caused this Plan to be executed by its officers thereunto duly authorized, as of February 1, 2002.
[NAME OF FUND]
By
[name] Chairman
By
[name] Secretary
PLAN OF DISTRIBUTION
OF [NAME OF FUND]
RELATING TO ITS CLASS 529B SHARES
WHEREAS, [name of fund] (the "Fund") is a [state] [corporation][business trust] that offers fourteen classes of shares of [common stock][beneficial interest], designated as Class A shares, Class B shares, Class C shares, Class F shares, Class 529-A shares, Class 529-B shares, Class 529-C shares, Class 529-E shares, Class 529-F shares, Class R-1 shares, Class R-2 shares, Class R-3 shares, Class R-4 shares and Class R-5 shares;
WHEREAS, American Funds Distributors, Inc. ("AFD") or any successor entity designated by the Fund (AFD and any such successor collectively are referred to as "Distributor") will serve as distributor of the shares of common stock of the Fund, and the Fund and Distributor are parties to a principal underwriting agreement (the "Agreement");
WHEREAS, the purpose of this Plan of Distribution (the "Plan") is to authorize the Fund to bear expenses of distribution of its Class 529-B shares; and
WHEREAS, the Board of [Directors][Trustees] of the Fund has determined that there is a reasonable likelihood that this Plan will benefit the Fund and its shareholders;
NOW, THEREFORE, the Fund adopts this Plan as follows:
1. PAYMENTS TO DISTRIBUTOR. The Fund may expend pursuant to this Plan and as set forth below an aggregate amount not to exceed 1.00% per annum of the average net assets of the Fund's Class 529-B shares. The categories of expenses are as follows:
A. SERVICE FEES. The Fund shall pay to the Distributor no more frequently than monthly in arrears a service fee (the "Service Fee"), which shall accrue daily in an amount equal to the daily equivalent of .25% per annum of the net asset value of the Fund's Class 529-B shares outstanding on each day. The Service Fee compensates the Distributor for paying service-related expenses, including Service Fees to others in respect of Class 529-B shares of the Fund.
B. DISTRIBUTION FEES. The Fund shall pay to the Distributor monthly in arrears its "Allocable Portion" as described in Schedule A to this Plan ("Allocation Schedule"), and until such time as the Fund designates a successor to AFD as distributor, the Allocable Portion shall equal 100% of a fee (the "Distribution Fee"), which shall accrue daily in an amount equal to the daily equivalent of .75% per annum of the net asset value of the Fund's Class 529-B shares outstanding on each day. The Distribution Fee compensates the Distributor for providing distribution and sales-related services in respect of Class 529-B shares of the Fund.
The Distributor may sell and assign its right to its Allocable Portion (but not its obligations to the Fund under the Agreement) of the Distribution Fee to a third party, and such transfer shall be free and clear of offsets or claims the Fund may have against the Distributor, it being understood that the Fund is not releasing the Distributor from any of its obligations to the Fund under the Agreement or any of the assets the Distributor continues to own. The Fund may agree, at the request of the Distributor, to pay the Allocable Portion of the Distribution Fee directly to the third party transferee.
Any Agreement between the Fund and the Distributor relating to the Fund's Class 529-B shares shall provide that:
(i) the Distributor will be deemed to have performed all services required to be performed in order to be entitled to receive its Allocable Portion of the Distribution Fee payable in respect of each "Commission Share" (as defined in the Allocation Schedule) upon the settlement date of each sale of such Commission Share taken into account in determining such Distributor's Allocable Portion of the Distribution Fee;
(ii) notwithstanding anything to the contrary in this Plan or the Agreement, the Fund's obligation to pay the Distributor its Allocable Portion of the Distribution Fee shall not be terminated or modified (including without limitation, by change in the rules applicable to the conversion of the Class 529-B shares into shares of another class) for any reason (including a termination of this Plan or the Agreement between such Distributor and the Fund) except:
(a) to the extent required by a change in the Investment Company Act of 1940 (the "1940 Act"), the rules and regulations under the 1940 Act, the Conduct Rules of the National Association of Securities Dealers, Inc. (the "NASD"), or any judicial decisions or interpretive pronouncements by the Securities and Exchange Commission, which is either binding upon the Distributor or generally complied with by similarly situated distributors of mutual fund shares, in each case enacted, promulgated, or made after February 15, 2002,
(b) on a basis which does not alter the Distributor's Allocable Portion of the Distribution Fee computed with reference to Commission Shares of the Fund, the Date of Original Issuance (as defined in the Allocation Schedule) of which occurs on or prior to the adoption of such termination or modification and with respect to Free Shares (as defined in the Allocation Schedule) which would be attributed to the Distributor under the Allocation Schedule with reference to such Commission Shares, or
(c) in connection with a Complete Termination (as defined below) of this Plan by the Fund;
(iii) the Fund will not take any action to waive or change any contingent deferred sales charge ("CDSC") in respect of the Class 529-B shares, the Date of Original Issuance of which occurs on or prior to the taking of such action except as provided in the Fund's prospectus or statement of additional information on the date such Commission Share was issued, without the consent of the Distributor or its assigns;
(iv) notwithstanding anything to the contrary in this Plan or the Agreement, none of the termination of the Distributor's role as principal underwriter of the Class 529-B shares of the Fund, the termination of the Agreement or the termination of this Plan will terminate the Distributor's right to its Allocable Portion of the CDSCs in respect of Class 529-B shares of the Fund;
(v) except as provided in (ii) above and notwithstanding anything to the contrary in this Plan or the Agreement, the Fund's obligation to pay the Distributor's Allocable Portion of the Distribution Fees and CDSCs payable in respect of the Class 529-B shares of the Fund shall be absolute and unconditional and shall not be subject to dispute, offset, counterclaim or any defense whatsoever, at law or equity, including, without limitation, any of the foregoing based on the insolvency or bankruptcy of the Distributor; and
(vi) until the Distributor has been paid its Allocable Portion of the Distribution Fees in respect of the Class 529-B shares of the Fund, the Fund will not adopt a plan of liquidation in respect of the Class 529-B shares without the consent of the Distributor and its assigns. For purposes of this Plan, the term Allocable Portion of the Distribution Fees or CDSCs payable in respect of the Class 529-B shares as applied to any Distributor shall mean the portion of such Distribution Fees or CDSCs payable in respect of such Class 529-B shares of the Fund allocated to the Distributor in accordance with the Allocation Schedule as it relates to the Class 529-B shares of the Fund, and until such time as the Fund designates a successor to AFD as distributor, the Allocable Portion shall equal 100% of the Distribution Fees and CDSCs. For purposes of this Plan, the term "Complete Termination" in respect of this Plan as it relates to the Class 529-B shares means a termination of this Plan involving the complete cessation of the payment of Distribution Fees in respect of all Class 529-B shares and all Class B shares, the termination of the distribution plans and principal underwriting agreements, and the complete cessation of the payment of any asset based sales charge (within the meaning of the Conduct Rules of the NASD) or similar fees in respect of the Fund and any successor mutual fund or any mutual fund acquiring a substantial portion of the assets of the Fund (the Fund and such other mutual funds hereinafter referred to as the "Affected Funds") and in respect of the Class 529-B shares, the Class B shares and every future class of shares (other than future classes of shares established more than eight years after the date of such termination) which has substantially similar characteristics to the Class 529-B shares or the Class B shares (all such classes of shares the "Affected Classes of Shares") of such Affected Funds taking into account the manner of payment and amount of asset based sales charge, CDSC or other similar charges borne directly or indirectly by the holders of such shares; provided that
(a) the Board of Directors/Trustees of such Affected Funds, including the Independent Directors/Trustees (as defined below) of the Affected Funds, shall have determined that such termination is in the best interest of such Affected Funds and the shareholders of such Affected Funds, and
(b) such termination does not alter the CDSC as in effect at the time of such termination applicable to Commission Shares of the Fund, the Date of Original Issuance of which occurs on or prior to such termination.
2. APPROVAL BY THE BOARD. This Plan shall not take effect until it has been approved, together with any related agreement, by votes of the majority of both
(i) the Board of [Directors][Trustees] of the Fund and (ii) those
[Directors][Trustees] of the Fund who are not "interested persons" of the Fund
(as defined in the 1940 Act) and have no direct or indirect financial interest
in the operation of this Plan or any agreement related to it (the "Independent
[Directors][Trustees]"), cast in person at a meeting called for the purpose of
voting on this Plan and/or such agreement.
3. REVIEW OF EXPENDITURES. At least quarterly, the Board of
[Directors][Trustees] shall be provided by any person authorized to direct the
disposition of monies paid or payable by the Fund pursuant to this Plan or any
related agreement, and the Board shall review, a written report of the amounts
expended pursuant to this Plan and the purposes for which such expenditures
were made.
4. TERMINATION OF PLAN. This Plan may be terminated as to the Fund's Class
529-B shares at any time by vote of a majority of the Independent
[Directors][Trustees], or by vote of a majority of the outstanding Class 529-B
shares of the Fund. Unless sooner terminated in accordance with this
provision, this Plan shall continue in effect until [date]. It may thereafter
be continued from year to year in the manner provided for in paragraph 2
hereof.
Notwithstanding the foregoing or paragraph 6, below, any amendment or termination of this Plan shall not affect the rights of the Distributor to receive its Allocable Portion of the Distribution Fee, unless the termination constitutes a Complete Termination of this Plan as described in paragraph 1 above.
5. REQUIREMENTS OF AGREEMENT. Any Agreement related to this Plan shall be in writing, and shall provide:
a. that such Agreement may be terminated as to the Fund at any time, without
payment of any penalty by the vote of a majority of the Independent
[Directors][Trustees] or by a vote of a majority of the outstanding Class 529-B
shares of the Fund, on not more than sixty (60) days' written notice to any
other party to the Agreement; and
b. that such Agreement shall terminate automatically in the event of its assignment.
6. AMENDMENT. This Plan may not be amended to increase materially the maximum amount of fees or other distribution expenses provided for in paragraph 1 hereof with respect to the Class 529-B shares of the Fund unless such amendment is approved by vote of a majority of the outstanding voting securities of the Class 529-B shares of the Fund and as provided in paragraph 2 hereof, and no other material amendment to this Plan shall be made unless approved in the manner provided for in paragraph 2 hereof.
7. NOMINATION OF [DIRECTORS][TRUSTEES]. While this Plan is in effect, the selection and nomination of Independent [Directors][Trustees] shall be committed to the discretion of the Independent [Directors][Trustees] of the Fund.
8. ISSUANCE OF SERIES OF SHARES. If the Fund shall at any time issue shares in
more than one series, this Plan may be adopted, amended, continued or renewed
with respect to a series as provided herein, notwithstanding that such
adoption, amendment, continuance or renewal has not been effected with respect
to any one or more other series of the Fund.
9. RECORD RETENTION. The Fund shall preserve copies of this Plan and any
related agreement and all reports made pursuant to paragraph 3 hereof for not
less than six (6) years from the date of this Plan, or such agreement or
reports, as the case may be, the first two (2) years of which such records
shall be stored in an easily accessible place.
IN WITNESS WHEREOF, the Fund has caused this Plan to be executed by its
officers thereunto duly authorized, as of February 1, 2002.
[NAME OF FUND]
By
[name] Chairman
By
[name] Secretary
SCHEDULE A
TO THE PLAN OF DISTRIBUTION OF
[NAME OF FUND]
ALLOCATION SCHEDULE
The following relates solely to Class 529-B shares.
The Distributor's Allocable Portion of Distribution Fees and CDSCs in respect of Class 529-B shares shall be 100% until such time as the Distributor shall cease to serve as exclusive distributor of Class 529-B shares; thereafter, collections that constitute CDSCs and Distribution Fees relating to Class 529-B shares shall be allocated among the Distributor and any successor distributor ("Successor Distributor") in accordance with this Schedule.
Defined terms used in this Schedule and not otherwise defined herein shall have the meanings assigned to them in the Amended and Restated Principal Underwriting Agreement (the "Distribution Agreement"), of which this Schedule is a part. As used herein the following terms shall have the meanings indicated:
"Commission Share" means each 529-B share issued under circumstances which would normally give rise to an obligation of the holder of such share to pay a CDSC upon redemption of such share (including, without limitation, any 529-B share issued in connection with a permitted free exchange), and any such share shall continue to be a Commission Share of the applicable Fund prior to the redemption (including a redemption in connection with a permitted free exchange) or conversion of such share, even though the obligation to pay the CDSC may have expired or conditions for waivers thereof may exist.
"Date of Original Issuance" means in respect of any Commission Share, the date with reference to which the amount of the CDSC payable on redemption thereof, if any, is computed.
"Free Share" means, in respect of a Fund, each 529-B share of the Fund, other than a Commission Share (including, without limitation, any 529-B share issued in connection with the reinvestment of dividends or capital gains).
"Inception Date" means in respect of a Fund, the first date on which the Fund issued shares.
"Net Asset Value" means the net asset value determined as set forth in the Prospectus of each Fund.
"Omnibus Share" means, in respect of a Fund, a Commission Share or Free Share sold by one of the selling agents maintaining shares in an omnibus account. If, subsequent to the Successor Distributor becoming exclusive distributor of the Class 529-B shares, the Distributor reasonably determines that the transfer agent is able to track all Commission Shares and Free Shares sold by any of the selling agents listed on Exhibit I in the same manner as Commission Shares and Free Shares are currently tracked in respect of selling agents not listed on Exhibit I, then Exhibit I shall be amended to delete such selling agent from Exhibit I so that Commission Shares and Free Shares sold by such selling agent will no longer be treated as Omnibus Shares.
PART I: ATTRIBUTION OF CLASS 529-B SHARES
Class 529-B shares that are outstanding from time to time, shall be attributed to the Distributor and each Successor Distributor in accordance with the following rules;
(1) Commission Shares other than Omnibus Shares:
(a) Commission Shares that are not Omnibus Shares ("Non-Omnibus Commission Shares") attributed to the Distributor shall be those Non-Omnibus Commission Shares the Date of Original Issuance of which occurred on or after the Inception Date of the applicable Fund and on or prior to the date the Distributor ceased to be exclusive distributor of Class 529-B shares of the Fund.
(b) Non-Omnibus Commission Shares attributable to each Successor Distributor shall be those Non-Omnibus Commission Shares the Date of Original Issuance of which occurs after the date such Successor Distributor became the exclusive distributor of Class 529-B shares of the Fund and on or prior to the date such Successor Distributor ceased to be the exclusive distributor of Class 529-B shares of the Fund.
(c) A Non-Omnibus Commission Share of a Fund issued in consideration of the investment of proceeds of the redemption of a Non-Omnibus Commission Share of another fund (the "Redeeming Fund") in connection with a permitted free exchange, is deemed to have a Date of Original Issuance identical to the Date of Original Issuance of the Non-Omnibus Commission Share of the Redeeming Fund, and any such Commission Share will be attributed to the Distributor or Successor Distributor based upon such Date of Original Issuance in accordance with rules (a) and (b) above.
(2) Free Shares:
Free Shares that are not Omnibus Shares ("Non-Omnibus Free Shares") of a Fund outstanding on any date shall be attributed to the Distributor or a Successor Distributor, as the case may be, in the same proportion that the Non-Omnibus Commission Shares of a Fund outstanding on such date are attributed to each on such date; provided that if the Distributor and its transferees reasonably determine that the transfer agent is able to produce monthly reports that track the Date of Original Issuance for such Non-Omnibus Free Shares, then such Free Shares shall be allocated pursuant to clause 1(a), (b) and (c) above.
(3) Omnibus Shares:
Omnibus Shares of a Fund outstanding on any date shall be attributed to the
Distributor or a Successor Distributor, as the case may be, in the same
proportion that the Non-Omnibus Commission Shares of the applicable Fund
outstanding on such date are attributed to it on such date; provided that if
the Distributor reasonably determines that the transfer agent is able to
produce monthly reports that track the Date of Original Issuance for the
Omnibus Shares, then the Omnibus Shares shall be allocated pursuant to clause
1(a), (b) and (c) above.
PART II: ALLOCATION OF CDSCs
(1) CDSCs Related to the Redemption of Non-Omnibus Commission Shares:
CDSCs in respect of the redemption of Non-Omnibus Commission Shares shall be
allocated to the Distributor or a Successor Distributor depending upon whether
the related redeemed Commission Share is attributable to the Distributor or
such Successor Distributor, as the case may be, in accordance with Part I
above.
(2) CDSCs Related to the Redemption of Omnibus Shares:
CDSCs in respect of the redemption of Omnibus Shares shall be allocated to the
Distributor or a Successor Distributor in the same proportion that CDSCs
related to the redemption of Non-Omnibus Commission Shares are allocated to
each thereof; provided, that if the Distributor reasonably determines that the
transfer agent is able to produce monthly reports which track the Date of
Original Issuance for the Omnibus Shares, then the CDSCs in respect of the
redemption of Omnibus Shares shall be allocated among the Distributor and any
Successor Distributor depending on whether the related redeemed Omnibus Share
is attributable to the Distributor or a Successor Distributor, as the case may
be, in accordance with Part I above.
PART III: ALLOCATION OF DISTRIBUTION FEE
Assuming that the Distribution Fee remains constant over time so that Part IV hereof does not become operative:
(1) The portion of the aggregate Distribution Fee accrued in respect of all
Class 529-B shares of a Fund during any calendar month allocable to the
Distributor or a Successor Distributor is determined by multiplying the total
of such Distribution Fee by the following fraction:
(A + C)/2
(B + D)/2
where:
A= The aggregate Net Asset Value of all Class 529-B shares of a Fund attributed to the Distributor or such Successor Distributor, as the case may be, and outstanding at the beginning of such calendar month
B= The aggregate Net Asset Value of all Class 529-B shares of a Fund at the beginning of such calendar month
C= The aggregate Net Asset Value of all Class 529-B shares of a Fund attributed to the Distributor or such Successor Distributor, as the case may be, and outstanding at the end of such calendar month
D= The aggregate Net Asset Value of all Class 529-B shares of a Fund at the end of such calendar month
(2) If the Distributor reasonably determines that the transfer agent is able to produce automated monthly reports that allocate the average Net Asset Value of the Commission Shares (or all Class 529-B shares if available) of a Fund among the Distributor and any Successor Distributor in a manner consistent with the methodology detailed in Part I and Part III(1) above, the portion of the Distribution Fee accrued in respect of all such Class 529-B shares of a Fund during a particular calendar month will be allocated to the Distributor or a Successor Distributor by multiplying the total of such Distribution Fee by the following fraction:
(A)/(B)
where:
A= Average Net Asset Value of all such Class 529-B shares of a Fund for such calendar month attributed to the Distributor or a Successor Distributor, as the case may be
B= Total average Net Asset Value of all such Class 529-B shares of a Fund for such calendar month
PART IV: ADJUSTMENT OF THE DISTRIBUTOR'S ALLOCABLE PORTION AND EACH SUCCESSOR
DISTRIBUTOR'S ALLOCABLE PORTION
The parties to the Distribution Agreement recognize that, if the terms of any
distributor's contract, any distribution plan, any prospectus, the Conduct
Rules or any other applicable law change so as to disproportionately reduce, in
a manner inconsistent with the intent of this Distribution Agreement, the
amount of the Distributor's Allocable Portion or any Successor Distributor's
Allocable Portion had no such change occurred, the definitions of the
Distributor's Allocable Portion and/or the Successor Distributor's Allocable
Portion in respect of the Class 529-B shares relating to a Fund shall be
adjusted by agreement among the relevant parties; provided, however, if the
Distributor, the Successor Distributor and the Fund cannot agree within thirty
(30) days after the date of any such change in applicable laws or in any
distributor's contract, distribution plan, prospectus or the Conduct Rules,
they shall submit the question to arbitration in accordance with the commercial
arbitration rules of the American Arbitration Association and the decision
reached by the arbitrator shall be final and binding on each of them.
PLAN OF DISTRIBUTION OF [NAME OF FUND]
RELATING TO ITS CLASS 529-C SHARES
WHEREAS, [name of funds] (the "Fund") is a [state] [corporation][business trust] that offers fourteen classes of shares of [common stock][beneficial interest], designated as Class A shares, Class B shares, Class C shares, Class F shares, Class 529-A shares, Class 529-B shares, Class 529-C shares, Class 529-E shares, Class 529-F shares, Class R-1 shares, Class R-2 shares, Class R-3 shares, Class R-4 shares and Class R-5 shares;
WHEREAS, American Funds Distributors, Inc. ("AFD") or any successor entity designated by the Fund (AFD and any such successor collectively are referred to as "Distributor") will serve as distributor of the shares of common stock of the Fund, and the Fund and Distributor are parties to a principal underwriting agreement (the "Agreement");
WHEREAS, the purpose of this Plan of Distribution (the "Plan") is to authorize the Fund to bear expenses of distribution of its Class 529-C shares; and
WHEREAS, the Board of [Directors][Trustees] of the Fund has determined that there is a reasonable likelihood that this Plan will benefit the Fund and its shareholders;
NOW, THEREFORE, the Fund adopts this Plan as follows:
1. PAYMENTS TO DISTRIBUTOR. The Fund may expend pursuant to this Plan and as set forth below an aggregate amount not to exceed 1.00% per annum of the average net assets of the Fund's Class 529-C shares. The categories of expenses are as follows:
A. SERVICE FEES. The Fund shall pay to the Distributor no more frequently than monthly in arrears a service fee (the "Service Fee"), which shall accrue daily in an amount equal to the daily equivalent of .25% per annum of the net asset value of the Fund's Class 529-C shares outstanding on each day. The Service Fee compensates the Distributor for paying service-related expenses, including Service Fees to others in respect of Class 529-C shares of the Fund.
B. DISTRIBUTION FEES. The Fund shall pay to the Distributor no more frequently than monthly in arrears its "Allocable Portion" as described in Schedule A to this Plan ("Allocation Schedule"), and until such time as the Fund designates a successor to AFD as distributor, the Allocable Portion shall equal 100% of a fee (the "Distribution Fee"), which shall accrue daily in an amount equal to the daily equivalent of .75% per annum of the net asset value of the Fund's Class 529-C shares outstanding on each day. The Distribution Fee compensates the Distributor for providing distribution and sales-related services in respect of Class 529-C shares of the Fund.
The Distributor may sell and assign its right to its Allocable Portion (but not its obligations to the Fund under the Agreement) of the Distribution Fee to a third party, and such transfer shall be free and clear of offsets or claims the Fund may have against the Distributor, it being understood that the Fund is not releasing the Distributor from any of its obligations to the Fund under the Agreement or any of the assets the Distributor continues to own. The Fund may agree, at the request of the Distributor, to pay the Allocable Portion of the Distribution Fee directly to the third party transferee.
Any Agreement between the Fund and the Distributor relating to the Fund's Class 529-C shares shall provide that:
(i) the Distributor will be deemed to have performed all services required to be performed in order to be entitled to receive its Allocable Portion of the Distribution Fee payable in respect of each "Commission Share" (as defined in the Allocation Schedule) upon the settlement date of each sale of such Commission Share taken into account in determining such Distributor's Allocable Portion of the Distribution Fee;
(ii) notwithstanding anything to the contrary in this Plan or the Agreement, the Fund's obligation to pay the Distributor its Allocable Portion of the Distribution Fee shall not be terminated or modified (including without limitation, by change in the rules applicable to the conversion of the Class 529-C shares into shares of another class) for any reason (including a termination of this Plan or the Agreement between such Distributor and the Fund) except:
(a) to the extent required by a change in the Investment Company Act of 1940 (the "1940 Act"), the rules and regulations under the 1940 Act, the Conduct Rules of the National Association of Securities Dealers, Inc. (the "NASD"), or any judicial decisions or interpretive pronouncements by the Securities and Exchange Commission, which is either binding upon the Distributor or generally complied with by similarly situated distributors of mutual fund shares, in each case enacted, promulgated, or made after February 15, 2002,
(b) on a basis which does not alter the Distributor's Allocable Portion of the Distribution Fee computed with reference to Commission Shares of the Fund, the Date of Original Issuance (as defined in the Allocation Schedule) of which occurs on or prior to the adoption of such termination or modification and with respect to Free Shares (as defined in the Allocation Schedule) which would be attributed to the Distributor under the Allocation Schedule with reference to such Commission Shares, or
(c) in connection with a Complete Termination (as defined below) of this Plan by the Fund;
(iii) the Fund will not take any action to waive or change any contingent deferred sales charge ("CDSC") in respect of the Class 529-C shares, the Date of Original Issuance of which occurs on or prior to the taking of such action except as provided in the Fund's prospectus or statement of additional information on the date such Commission Share was issued, without the consent of the Distributor or its assigns;
(iv) notwithstanding anything to the contrary in this Plan or the Agreement, none of the termination of the Distributor's role as principal underwriter of the Class 529-C shares of the Fund, the termination of the Agreement or the termination of this Plan will terminate the Distributor's right to its Allocable Portion of the CDSCs in respect of Class 529-C shares of the Fund;
(v) except as provided in (ii) above and notwithstanding anything to the contrary in this Plan or the Agreement, the Fund's obligation to pay the Distributor's Allocable Portion of the Distribution Fees and CDSCs payable in respect of the Class 529-C shares of the Fund shall be absolute and unconditional and shall not be subject to dispute, offset, counterclaim or any defense whatsoever, at law or equity, including, without limitation, any of the foregoing based on the insolvency or bankruptcy of the Distributor; and
(vi) until the Distributor has been paid its Allocable Portion of the Distribution Fees in respect of the Class 529-C shares of the Fund, the Fund will not adopt a plan of liquidation in respect of the Class 529-C shares without the consent of the Distributor and its assigns. For purposes of this Plan, the term Allocable Portion of the Distribution Fees or CDSCs payable in respect of the Class 529-C shares as applied to any Distributor shall mean the portion of such Distribution Fees or CDSCs payable in respect of such Class 529-C shares of the Fund allocated to the Distributor in accordance with the Allocation Schedule as it relates to the Class 529-C shares of the Fund, and until such time as the Fund designates a successor to AFD as distributor, the Allocable Portion shall equal 100% of the Distribution Fees and CDSCs. For purposes of this Plan, the term "Complete Termination" in respect of this Plan as it relates to the Class 529-C shares means a termination of this Plan involving the complete cessation of the payment of Distribution Fees in respect of all Class 529-C shares, the termination of the distribution plans and principal underwriting agreements, and the complete cessation of the payment of any asset based sales charge (within the meaning of the Conduct Rules of the NASD) or similar fees in respect of the Fund and any successor mutual fund or any mutual fund acquiring a substantial portion of the assets of the Fund (the Fund and such other mutual funds hereinafter referred to as the "Affected Funds") and in respect of the Class 529-C shares and every future class of shares (other than future classes of shares established more than one year after the date of such termination) which has substantially similar characteristics to the Class 529-C shares (all such classes of shares the "Affected Classes of Shares") of such Affected Funds taking into account the manner of payment and amount of asset based sales charge, CDSC or other similar charges borne directly or indirectly by the holders of such shares; provided that
(a) the Board of Directors/Trustees of such Affected Funds, including the Independent Directors/Trustees (as defined below) of the Affected Funds, shall have determined that such termination is in the best interest of such Affected Funds and the shareholders of such Affected Funds, and
(b) such termination does not alter the CDSC as in effect at the time of such termination applicable to Commission Shares of the Fund, the Date of Original Issuance of which occurs on or prior to such termination.
2. APPROVAL BY THE BOARD. This Plan shall not take effect until it has been approved, together with any related agreement, by votes of the majority of both
(i) the Board of [Directors][Trustees] of the Fund and (ii) those
[Directors][Trustees] of the Fund who are not "interested persons" of the Fund
(as defined in the 1940 Act) and have no direct or indirect financial interest
in the operation of this Plan or any agreement related to it (the "Independent
[Directors][Trustees]"), cast in person at a meeting called for the purpose of
voting on this Plan and/or such agreement.
3. REVIEW OF EXPENDITURES. At least quarterly, the Board of
[Directors][Trustees] shall be provided by any person authorized to direct the
disposition of monies paid or payable by the Fund pursuant to this Plan or any
related agreement, and the Board shall review, a written report of the amounts
expended pursuant to this Plan and the purposes for which such expenditures
were made.
4. TERMINATION OF PLAN. This Plan may be terminated as to the Fund's Class
529-C shares at any time by vote of a majority of the Independent
[Directors][Trustees], or by vote of a majority of the outstanding Class 529-C
shares of the Fund. Unless sooner terminated in accordance with this
provision, this Plan shall continue in effect until [date]. It may thereafter
be continued from year to year in the manner provided for in paragraph 2
hereof.
Notwithstanding the foregoing or paragraph 6, below, any amendment or termination of this Plan shall not affect the rights of the Distributor to receive its Allocable Portion of the Distribution Fee, unless the termination constitutes a Complete Termination of this Plan as described in paragraph 1 above.
5. REQUIREMENTS OF AGREEMENT. Any Agreement related to this Plan shall be in writing, and shall provide:
a. that such Agreement may be terminated as to the Fund at any time, without
payment of any penalty by the vote of a majority of the Independent
[Directors][Trustees] or by a vote of a majority of the outstanding Class 529-C
shares of the Fund, on not more than sixty (60) days' written notice to any
other party to the Agreement; and
b. that such Agreement shall terminate automatically in the event of its assignment.
6. AMENDMENT. This Plan may not be amended to increase materially the maximum amount of fees or other distribution expenses provided for in paragraph 1 hereof with respect to the Class 529-C shares of the Fund unless such amendment is approved by vote of a majority of the outstanding voting securities of the Class 529-C shares of the Fund and as provided in paragraph 2 hereof, and no other material amendment to this Plan shall be made unless approved in the manner provided for in paragraph 2 hereof.
7. NOMINATION OF [DIRECTORS][TRUSTEES]. While this Plan is in effect, the selection and nomination of Independent [Directors][Trustees] shall be committed to the discretion of the Independent [Directors][Trustees] of the Fund.
8. ISSUANCE OF SERIES OF SHARES. If the Fund shall at any time issue shares in more than one series, this Plan may be adopted, amended, continued or renewed with respect to a series as provided herein, notwithstanding that such adoption, amendment, continuance or renewal has not been effected with respect to any one or more other series of the Fund.
9. RECORD RETENTION. The Fund shall preserve copies of this Plan and any related agreement and all reports made pursuant to paragraph 3 hereof for not less than six (6) years from the date of this Plan, or such agreement or reports, as the case may be, the first two (2) years of which such records shall be stored in an easily accessible place.
IN WITNESS WHEREOF, the Fund has caused this Plan to be executed by its officers thereunto duly authorized, as of February 1, 2002.
[NAME OF FUND]
By
[name] Chairman
By
[name] Secretary
SCHEDULE A
TO THE PLAN OF DISTRIBUTION OF
[NAME OF FUND]
ALLOCATION SCHEDULE
The following relates solely to Class Class 529-C shares.
The Distributor's Allocable Portion of Distribution Fees and CDSCs in respect of Class 529-C shares shall be 100% until such time as the Distributor shall cease to serve as exclusive distributor of Class 529-C shares; thereafter, collections that constitute CDSCs and Distribution Fees relating to Class 529-C shares shall be allocated among the Distributor and any successor distributor ("Successor Distributor") in accordance with this Schedule.
Defined terms used in this Schedule and not otherwise defined herein shall have the meanings assigned to them in the Amended and Restated Principal Underwriting Agreement (the "Distribution Agreement"), of which this Schedule is a part. As used herein the following terms shall have the meanings indicated:
"Commission Share" means each Class 529-C share issued under circumstances which would normally give rise to an obligation of the holder of such share to pay a CDSC upon redemption of such share (including, without limitation, any Class 529-C share issued in connection with a permitted free exchange), and any such share shall continue to be a Commission Share of the applicable Fund prior to the redemption (including a redemption in connection with a permitted free exchange) or conversion of such share, even though the obligation to pay the CDSC may have expired or conditions for waivers thereof may exist.
"Date of Original Issuance" means in respect of any Commission Share, the date with reference to which the amount of the CDSC payable on redemption thereof, if any, is computed.
"Free Share" means, in respect of a Fund, each Class 529-C share of the Fund, other than a Commission Share (including, without limitation, any Class 529-C share issued in connection with the reinvestment of dividends or capital gains).
"Inception Date" means in respect of a Fund, the first date on which the Fund issued shares.
"Net Asset Value" means the net asset value determined as set forth in the Prospectus of each Fund.
"Omnibus Share" means, in respect of a Fund, a Commission Share or Free Share sold by one of the selling agents maintaining shares in an omnibus account. If, subsequent to the Successor Distributor becoming exclusive distributor of the Class 529-C shares, the Distributor reasonably determines that the transfer agent is able to track all Commission Shares and Free Shares sold by any of the selling agents listed on Exhibit I in the same manner as Commission Shares and Free Shares are currently tracked in respect of selling agents not listed on Exhibit I, then Exhibit I shall be amended to delete such selling agent from Exhibit I so that Commission Shares and Free Shares sold by such selling agent will no longer be treated as Omnibus Shares.
PART I: ATTRIBUTION OF CLASS Class 529-C SHARES
Class 529-C shares that are outstanding from time to time, shall be attributed to the Distributor and each Successor Distributor in accordance with the following rules;
(1) Commission Shares other than Omnibus Shares:
(a) Commission Shares that are not Omnibus Shares ("Non-Omnibus Commission Shares") attributed to the Distributor shall be those Non-Omnibus Commission Shares the Date of Original Issuance of which occurred on or after the Inception Date of the applicable Fund and on or prior to the date the Distributor ceased to be exclusive distributor of Class 529-C shares of the Fund.
(b) Non-Omnibus Commission Shares attributable to each Successor Distributor shall be those Non-Omnibus Commission Shares the Date of Original Issuance of which occurs after the date such Successor Distributor became the exclusive distributor of Class 529-C shares of the Fund and on or prior to the date such Successor Distributor ceased to be the exclusive distributor of Class 529-C shares of the Fund.
(c) A Non-Omnibus Commission Share of a Fund issued in consideration of the investment of proceeds of the redemption of a Non-Omnibus Commission Share of another fund (the "Redeeming Fund") in connection with a permitted free exchange, is deemed to have a Date of Original Issuance identical to the Date of Original Issuance of the Non-Omnibus Commission Share of the Redeeming Fund, and any such Commission Share will be attributed to the Distributor or Successor Distributor based upon such Date of Original Issuance in accordance with rules (a) and (b) above.
(2) Free Shares:
Free Shares that are not Omnibus Shares ("Non-Omnibus Free Shares") of a Fund
outstanding on any date shall be attributed to the Distributor or a Successor
Distributor, as the case may be, in the same proportion that the Non-Omnibus
Commission Shares of a Fund outstanding on such date are attributed to each on
such date; provided that if the Distributor and its transferees reasonably
determine that the transfer agent is able to produce monthly reports that track
the Date of Original Issuance for such Non-Omnibus Free Shares, then such Free
Shares shall be allocated pursuant to clause 1(a), (b) and (c) above.
(3) Omnibus Shares:
Omnibus Shares of a Fund outstanding on any date shall be attributed to the
Distributor or a Successor Distributor, as the case may be, in the same
proportion that the Non-Omnibus Commission Shares of the applicable Fund
outstanding on such date are attributed to it on such date; provided that if
the Distributor reasonably determines that the transfer agent is able to
produce monthly reports that track the Date of Original Issuance for the
Omnibus Shares, then the Omnibus Shares shall be allocated pursuant to clause
1(a), (b) and (c) above.
PART II: ALLOCATION OF CDSCs
(1) CDSCs Related to the Redemption of Non-Omnibus Commission Shares:
CDSCs in respect of the redemption of Non-Omnibus Commission Shares shall be
allocated to the Distributor or a Successor Distributor depending upon whether
the related redeemed Commission Share is attributable to the Distributor or
such Successor Distributor, as the case may be, in accordance with Part I
above.
(2) CDSCs Related to the Redemption of Omnibus Shares:
CDSCs in respect of the redemption of Omnibus Shares shall be allocated to the
Distributor or a Successor Distributor in the same proportion that CDSCs
related to the redemption of Non-Omnibus Commission Shares are allocated to
each thereof; provided, that if the Distributor reasonably determines that the
transfer agent is able to produce monthly reports which track the Date of
Original Issuance for the Omnibus Shares, then the CDSCs in respect of the
redemption of Omnibus Shares shall be allocated among the Distributor and any
Successor Distributor depending on whether the related redeemed Omnibus Share
is attributable to the Distributor or a Successor Distributor, as the case may
be, in accordance with Part I above.
PART III: ALLOCATION OF DISTRIBUTION FEE
Assuming that the Distribution Fee remains constant over time so that Part IV hereof does not become operative:
(1) The portion of the aggregate Distribution Fee accrued in respect of all Class 529-C shares of a Fund during any calendar month allocable to the Distributor or a Successor Distributor is determined by multiplying the total of such Distribution Fee by the following fraction:
(A + C)/2
(B + D)/2
where:
A= The aggregate Net Asset Value of all Class 529-C shares of a Fund attributed to the Distributor or such Successor Distributor, as the case may be, and outstanding at the beginning of such calendar month
B= The aggregate Net Asset Value of all Class 529-C shares of a Fund at the beginning of such calendar month
C= The aggregate Net Asset Value of all Class 529-C shares of a Fund attributed to the Distributor or such Successor Distributor, as the case may be, and outstanding at the end of such calendar month D= The aggregate Net Asset Value of all Class 529-C shares of a Fund at the end of such calendar month
(2) If the Distributor reasonably determines that the transfer agent is able to produce automated monthly reports that allocate the average Net Asset Value of the Commission Shares (or all Class 529-C shares if available) of a Fund among the Distributor and any Successor Distributor in a manner consistent with the methodology detailed in Part I and Part III(1) above, the portion of the Distribution Fee accrued in respect of all such Class 529-C shares of a Fund during a particular calendar month will be allocated to the Distributor or a Successor Distributor by multiplying the total of such Distribution Fee by the following fraction:
(A)/(B)
where:
A= Average Net Asset Value of all such Class 529-C shares of a Fund for such calendar month attributed to the Distributor or a Successor Distributor, as the case may be
B= Total average Net Asset Value of all such Class 529-C shares of a Fund for such calendar month
PART IV: ADJUSTMENT OF THE DISTRIBUTOR'S ALLOCABLE PORTION AND EACH SUCCESSOR
DISTRIBUTOR'S ALLOCABLE PORTION
The parties to the Distribution Agreement recognize that, if the terms of any
distributor's contract, any distribution plan, any prospectus, the Conduct
Rules or any other applicable law change so as to disproportionately reduce, in
a manner inconsistent with the intent of this Distribution Agreement, the
amount of the Distributor's Allocable Portion or any Successor Distributor's
Allocable Portion had no such change occurred, the definitions of the
Distributor's Allocable Portion and/or the Successor Distributor's Allocable
Portion in respect of the Class 529-C shares relating to a Fund shall be
adjusted by agreement among the relevant parties; provided, however, if the
Distributor, the Successor Distributor and the Fund cannot agree within thirty
(30) days after the date of any such change in applicable laws or in any
distributor's contract, distribution plan, prospectus or the Conduct Rules,
they shall submit the question to arbitration in accordance with the commercial
arbitration rules of the American Arbitration Association and the decision
reached by the arbitrator shall be final and binding on each of them.
PLAN OF DISTRIBUTION OF [NAME OF FUND]
RELATING TO ITS CLASS 529-E SHARES
WHEREAS, [name of fund] (the "Fund") is a [state] [corporation][business trust] that offers fourteen classes of shares of [common stock][beneficial interest], designated as Class A shares, Class B shares, Class C shares, Class F shares, Class 529-A shares, Class 529-B shares, Class 529-C shares, Class 529-E shares, Class 529-F shares, Class R-1 shares, Class R-2 shares, Class R-3 shares, Class R-4 shares and Class R-5 shares;
WHEREAS, American Funds Distributors, Inc. ("AFD") or any successor entity designated by the Fund (AFD and any such successor collectively are referred to as "Distributor") will serve as distributor of the shares of common stock of the Fund, and the Fund and Distributor are parties to a principal underwriting agreement (the "Agreement");
WHEREAS, the purpose of this Plan of Distribution (the "Plan") is to authorize the Fund to bear expenses of distribution of its Class 529-E shares; and
WHEREAS, the Board of [Directors][Trustees] of the Fund has determined that there is a reasonable likelihood that this Plan will benefit the Fund and its shareholders;
NOW, THEREFORE, the Fund adopts this Plan as follows:
1. PAYMENTS TO DISTRIBUTOR. The Fund may expend pursuant to this Plan and as set forth below an aggregate amount not to exceed .75% per annum of the average net assets of the Fund's Class 529-E shares. The categories of expenses permitted under this Plan include service fees ("Service Fees") in an amount not to exceed .25%, and distribution fees ("Distribution Fees") in an amount not to exceed .50%, each such percentage being per annum of the average net assets of the Fund's Class 529-E shares. The actual amounts paid shall be determined by the Board of [Directors][Trustees]. The Service Fee compensates the Distributor for service-related expenses, including paying Service Fees to others in respect of Class 529-E shares of the Fund. The Distribution Fee compensates the Distributor for providing distribution services in respect of Class 529-E shares of the Fund.
2. APPROVAL BY THE BOARD. This Plan shall not take effect until it has been
approved, together with any related agreement, by votes of the majority of both
(i) the Board of [Directors][Trustees] of the Fund and (ii) those
[Directors][Trustees] of the Fund who are not "interested persons" of the Fund
(as defined in the Investment Company Act of 1940) and have no direct or
indirect financial interest in the operation of this Plan or any agreement
related to it (the "Independent [Directors][Trustees]"), cast in person at a
meeting called for the purpose of voting on this Plan and/or such agreement.
3. REVIEW OF EXPENDITURES. At least quarterly, the Board of
[Directors][Trustees] shall be provided by any person authorized to direct the
disposition of monies paid or payable by the Fund pursuant to this Plan or any
related agreement, and the Board shall review, a written report of the amounts
expended pursuant to this Plan and the purposes for which such expenditures
were made.
4. TERMINATION OF PLAN. This Plan may be terminated as to the Fund's Class
529-E shares at any time by vote of a majority of the Independent
[Directors][Trustees], or by vote of a majority of the outstanding Class 529-E
shares of the Fund. Unless sooner terminated in accordance with this
provision, this Plan shall continue in effect until [date]. It may thereafter
be continued from year to year in the manner provided for in paragraph 2
hereof.
5. REQUIREMENTS OF AGREEMENT. Any Agreement related to this Plan shall be in writing, and shall provide:
a. that such Agreement may be terminated as to the Fund at any time, without
payment of any penalty by the vote of a majority of the Independent
[Directors][Trustees] or by a vote of a majority of the outstanding Class 529-E
shares of the Fund, on not more than sixty (60) days' written notice to any
other party to the Agreement; and
b. that such Agreement shall terminate automatically in the event of its assignment.
6. AMENDMENT. This Plan may not be amended to increase materially the maximum amount of fees or other distribution expenses provided for in paragraph 1 hereof with respect to the Class 529-E shares of the Fund unless such amendment is approved by vote of a majority of the outstanding voting securities of the Class 529-E shares of the Fund and as provided in paragraph 2 hereof, and no other material amendment to this Plan shall be made unless approved in the manner provided for in paragraph 2 hereof.
7. NOMINATION OF [DIRECTORS][TRUSTEES]. While this Plan is in effect, the selection and nomination of Independent [Directors][Trustees] shall be committed to the discretion of the Independent [Directors][Trustees] of the Fund.
8. ISSUANCE OF SERIES OF SHARES. If the Fund shall at any time issue shares in more than one series, this Plan may be adopted, amended, continued or renewed with respect to a series as provided herein, notwithstanding that such adoption, amendment, continuance or renewal has not been effected with respect to any one or more other series of the Fund.
9. RECORD RETENTION. The Fund shall preserve copies of this Plan and any related agreement and all reports made pursuant to paragraph 3 hereof for not less than six (6) years from the date of this Plan, or such agreement or reports, as the case may be, the first two (2) years of which such records shall be stored in an easily accessible place.
IN WITNESS WHEREOF, the Fund has caused this Plan to be executed by its officers thereunto duly authorized, as of February 1, 2002.
[NAME OF FUND]
By
[name] Chairman
By
[name] Secretary
PLAN OF DISTRIBUTION OF[NAME OF FUND]
RELATING TO ITS CLASS 529-F SHARES
WHEREAS, [name of fund] (the "Fund") is a [state] [corporation] [business trust] that offers fourteen classes of shares of [common stock][beneficial interest], designated as Class A shares, Class B shares, Class C shares, Class F shares, Class 529-A shares, Class 529-B shares, Class 529-C shares, Class 529-E shares, Class 529-F shares, Class R-1 shares, Class R-2 shares, Class R-3 shares, Class R-4 shares and Class R-5 shares;
WHEREAS, American Funds Distributors, Inc. ("AFD") or any successor entity designated by the Fund (AFD and any such successor collectively are referred to as "Distributor") will serve as distributor of the shares of common stock of the Fund, and the Fund and Distributor are parties to a principal underwriting agreement (the "Agreement");
WHEREAS, the purpose of this Plan of Distribution (the "Plan") is to authorize the Fund to bear expenses of distribution of its Class 529-F shares; and
WHEREAS, the Board of [Directors][Trustees] of the Fund has determined that there is a reasonable likelihood that this Plan will benefit the Fund and its shareholders;
NOW, THEREFORE, the Fund adopts this Plan as follows:
1. PAYMENTS TO DISTRIBUTOR. The Fund may expend pursuant to this Plan and as set forth below an aggregate amount not to exceed .50% per annum of the average net assets of the Fund's Class 529-F shares. The categories of expenses permitted under this Plan include service fees ("Service Fees") in an amount not to exceed .25%, and distribution fees ("Distribution Fees") in an amount not to exceed .25%, each such percentage being per annum of the average net assets of the Fund's Class 529-F shares. The actual amounts paid shall be determined by the Board of [Directors][Trustees]. The Service Fee compensates the Distributor for service-related expenses, including paying Service Fees to others in respect of Class 529-F shares of the Fund. The Distribution Fee compensates the Distributor for providing distribution services in respect of Class 529-F shares of the Fund.
2. APPROVAL BY THE BOARD. This Plan shall not take effect until it has been
approved, together with any related agreement, by votes of the majority of both
(i) the Board of [Directors][Trustees] of the Fund and (ii) those
[Directors][Trustees] of the Fund who are not "interested persons" of the Fund
(as defined in the Investment Company Act of 1940) and have no direct or
indirect financial interest in the operation of this Plan or any agreement
related to it (the "Independent [Directors][Trustees]"), cast in person at a
meeting called for the purpose of voting on this Plan and/or such agreement.
3. REVIEW OF EXPENDITURES. At least quarterly, the Board of
[Directors][Trustees] shall be provided by any person authorized to direct the
disposition of monies paid or payable by the Fund pursuant to this Plan or any
related agreement, and the Board shall review, a written report of the amounts
expended pursuant to this Plan and the purposes for which such expenditures
were made.
4. TERMINATION OF PLAN. This Plan may be terminated as to the Fund's Class
529-F shares at any time by vote of a majority of the Independent
[Directors][Trustees], or by vote of a majority of the outstanding Class 529-F
shares of the Fund. Unless sooner terminated in accordance with this
provision, this Plan shall continue in effect until [date]. It may thereafter
be continued from year to year in the manner provided for in paragraph 2
hereof.
5. REQUIREMENTS OF AGREEMENT. Any Agreement related to this Plan shall be in writing, and shall provide:
a. that such Agreement may be terminated as to the Fund at any time, without
payment of any penalty by the vote of a majority of the Independent
[Directors][Trustees] or by a vote of a majority of the outstanding Class 529-F
shares of the Fund, on not more than sixty (60) days' written notice to any
other party to the Agreement; and
b. that such Agreement shall terminate automatically in the event of its assignment.
6. AMENDMENT. This Plan may not be amended to increase materially the maximum amount of fees or other distribution expenses provided for in paragraph 1 hereof with respect to the Class 529-F shares of the Fund unless such amendment is approved by vote of a majority of the outstanding voting securities of the Class 529-F shares of the Fund and as provided in paragraph 2 hereof, and no other material amendment to this Plan shall be made unless approved in the manner provided for in paragraph 2 hereof.
7. NOMINATION OF [DIRECTORS][TRUSTEES]. While this Plan is in effect, the selection and nomination of Independent [Directors][Trustees] shall be committed to the discretion of the Independent [Directors][Trustees] of the Fund.
8. ISSUANCE OF SERIES OF SHARES. If the Fund shall at any time issue shares in more than one series, this Plan may be adopted, amended, continued or renewed with respect to a series as provided herein, notwithstanding that such adoption, amendment, continuance or renewal has not been effected with respect to any one or more other series of the Fund.
9. RECORD RETENTION. The Fund shall preserve copies of this Plan and any related agreement and all reports made pursuant to paragraph 3 hereof for not less than six (6) years from the date of this Plan, or such agreement or reports, as the case may be, the first two (2) years of which such records shall be stored in an easily accessible place.
IN WITNESS WHEREOF, the Fund has caused this Plan to be executed by its officers thereunto duly authorized, as of February 1, 2002.
[NAME OF FUND]
By
[name] Chairman
By
[name] Secretary
[NAME OF FUND]
AMENDED AND RESTATED MULTIPLE CLASS PLAN
WHEREAS, [name of fund] (the "Fund"), a [state] [corporation] [business trust]
is registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end management investment company that offers shares of
[common stock][beneficial interest];
WHEREAS, American Funds Distributors, Inc. (the "Distributor") serves as the principal underwriter for the Fund;
WHEREAS, the Fund has adopted Plans of Distribution (each a "12b-1 Plan") under which the Fund may bear expenses of distribution of its shares, including payments to and/or reimbursement of certain expenses incurred by the Distributor in connection with its distribution of the Fund's shares;
WHEREAS, the Fund has entered into an Administrative Services Agreement with Capital Research and Management Company under which the Fund may bear certain transfer agent and administrative expenses for certain classes of shares;
WHEREAS, the Fund is authorized to issue the following classes of shares of
[common stock][beneficial interest]: Class A shares, Class B shares, Class C
shares, Class F shares, Class R-1 shares, Class R-2 shares, Class R-3 shares,
Class R-4 shares and Class R-5 shares (collectively the "Class R shares"), as
well as Class 529-A shares, Class 529-B shares, Class 529-C shares, Class 529-E
shares and Class 529-F shares (collectively the "Class 529 shares");
WHEREAS, Rule 18f-3 under the 1940 Act permits open-end management investment companies to issue multiple classes of voting stock representing interests in the same portfolio if, among other things, an investment company adopts a written Multiple Class Plan (the "Plan") setting forth the separate arrangement and expense allocation of each class and any related conversion features or exchange privileges; and
WHEREAS, the Board of [Directors][Trustees] of the Fund adopted an Amended and Restated Multiple Class Plan on [date in 2000] (the "Plan") and has determined, that it is in the best interest of each class of shares of the Fund individually, and the Fund as a whole, to amend and restate the Plan in recognition of the Fund issuing additional classes of shares;
NOW THEREFORE, the Fund amends and restates the Plan as follows:
1. Each class of shares will represent interests in the same portfolio of investments of the Fund, and be identical in all respects to each other class, except as set forth below. The differences among the various classes of shares of the Fund will relate to: (i) distribution, service and other charges and expenses as provided for in paragraph 3 of this Plan; (ii) the exclusive right of each class of shares to vote on matters submitted to shareholders that relate solely to that class or the separate voting right of each class on matters for which the interests of one class differ from the interests of another class; and (iii) such differences relating to (a) eligible investors,
(b) the designation of each class of shares, (c) conversion features, and (d) exchange privileges each as may be set forth in the Fund's prospectus and statement of additional information ("SAI"), as the same may be amended or supplemented from time to time.
2. (a) Certain expenses may be attributable to the Fund, but not a particular class of shares thereof. All such expenses will be borne by each class on the basis of the relative aggregate net assets of the classes. Notwithstanding the foregoing, the Distributor, the investment adviser or other provider of services to the Fund may waive or reimburse the expenses of a specific class or classes to the extent permitted by Rule 18f-3 under the 1940 Act and any other applicable law.
(b) A class of shares may be permitted to bear expenses that are directly attributable to that class, including: (i) any distribution service fees associated with any rule 12b-1 Plan for a particular class and any other costs relating to implementing or amending such rule 12b-1 Plan; (ii) any administrative service fees attributable to such class; and (iii) any transfer agency, sub-transfer agency and shareholder servicing fees attributable to such class.
(c) Any additional incremental expenses not specifically identified above that are subsequently identified and determined to be applied properly to one class of shares of the Fund shall be so applied upon approval by votes of the majority of both (i) the Board of [Directors][Trustees] of the Fund; and (ii) those [Directors][Trustees] of the Fund who are not "interested persons" of the Fund (as defined in the 1940 Act) ("Independent [Directors][Trustees]").
3. Consistent with the general provisions of section 2(b), above, each class of shares of the Fund shall differ in the amount of, and the manner in which costs are borne by shareholders as follows:
(a) Class A shares
(i) Class A shares shall be sold at net asset value plus a front-end sales charge, at net asset value without a front-end sales charge but subject to a contingent deferred sales charge ("CDSC"), and at net asset value without any sales charge, as set forth in the Fund's prospectus and SAI.
(ii) Class A shares shall be subject to an annual distribution expense under the Fund's Class A Plan of Distribution of up to 0.25% of average net assets, as set forth in the Fund's prospectus, SAI, and Plan of Distribution. This expense consists of a service fee of up to 0.25% plus certain other distribution costs.
(b) Class B shares
(i) Class B shares shall be sold at net asset value without a front-end sales charge, but subject to a CDSC and maximum purchase limits as set forth in the Fund's prospectus and SAI.
(ii) Class B shares shall be subject to an annual 12b-1 expense under the Fund's Class B Plan of Distribution of 1.00% of average net assets, as set forth in the Fund's prospectus, SAI, and Class B Plan of Distribution. This expense shall consist of a distribution fee of 0.75% and a service fee of 0.25% of such net assets.
(iii) Class B shares will automatically convert to Class A shares of the Fund approximately eight years after purchase, subject to the limitations described in the Fund's prospectus and SAI. All conversions shall be effected on the basis of the relative net asset values of the two classes of shares without the imposition of any sales load or other charge.
(iv) Class B shares shall be subject to a fee (included within the transfer agency expense) for additional costs associated with tracking the age of each Class B share.
(c) Class C shares
(i) Class C shares shall be sold at net asset value without a front-end sales charge, but subject to a CDSC and maximum purchase limits as set forth in the Fund's prospectus and SAI.
(ii) Class C shares shall be subject to an annual 12b-1 expense under the Fund's Class C Plan of Distribution of 1.00% of average net assets, as set forth in the Fund's prospectus, SAI, and Class C Plan of Distribution. This expense shall consist of a distribution fee of 0.75% and a service fee of 0.25% of such net assets.
(iii) Class C shares shall be subject to an Administrative Services fee comprising transfer agent fees (according to the fee schedule contained in the Shareholder Services Agreement between the Fund and its transfer agent for its Class A and Class B shares) plus 0.15% of average net assets, as set forth in the Fund's prospectus, SAI, and its Administrative Services Agreement. In calculating transfer agent fees allocable to the Class C shares, the fees generated shall be charged to the Fund and allocated to the Class C shares based on their aggregate net assets relative to those of the Class A, Class B and Class 529 shares. No transfer agent fees shall be charged for accounts held in other than street name or a networked environment.
(iv) Class C shares will automatically convert to Class F shares of the Fund approximately ten years after purchase, subject to the limitations described in the Fund's prospectus and SAI. All conversions shall be effected on the basis of the relative net asset values of the two classes of shares without the imposition of any sales load or other charge.
(v) Class C shares shall be subject to a fee, if any, (included within the transfer agency expense) for additional costs associated with tracking the age of each Class C share.
(d) Class F shares
(i) Class F shares shall be sold at net asset value without a front-end or back-end sales charge.
(ii) Class F shares shall be subject to an annual 12b-1 expense under the Fund's Class F Plan of Distribution of up to 0.50% of average net assets, as set forth in the Fund's prospectus, SAI, and Class F Plan of Distribution. This expense shall consist of a distribution fee of 0.25% and a service fee of 0.25% of such net assets.
(iii) Class F shares shall be subject to an Administrative Services fee comprising transfer agent fees (according to the fee schedule contained in the Shareholder Services Agreement between the Fund and its transfer agent for its Class A and Class B shares) plus 0.15% of average net assets, as set forth in the Fund's prospectus, SAI, and its Administrative Services Agreement. Class F shares will pay only those transfer agent fees and third party pass-through fees (e.g., DST and NSCC fees) that are directly attributed to accounts of and activities generated by the Class F shares. No transfer agent fees shall be charged for accounts held in other than street name or a networked environment.
(e) The Class R shares consisting of Class R-1 shares, Class R-2 shares, Class R-3 shares, Class R-4 shares, and Class R-5 shares
(i) The Class R shares shall be sold at net asset value without a front-end or back-end sales charge.
(ii) Class R-1 shares shall be subject to an annual 12b-1 expense under the Fund's Class R-1 Plan of Distribution of 1.00% of average net assets, as set forth in the Fund's prospectus, SAI, and Class R-1 Plan of Distribution. This expense shall consist of a distribution fee of 0.75% and a service fee of 0.25% of such net assets.
(iii) Class R-2 shares shall be subject to an annual 12b-1 expense under the Fund's Class R-2 Plan of Distribution of up to 1.00% of average net assets, as set forth in the Fund's prospectus, SAI, and Class R-2 Plan of Distribution. This expense shall consist of a distribution fee of 0.75% and a service fee of 0.25% of such net assets.
(iv) Class R-3 shares shall be subject to an annual 12b-1 expense under the Fund's Class R-3 Plan of Distribution of up to 0.75% of average net assets, as set forth in the Fund's prospectus, SAI, and Class R-3 Plan of Distribution. This expense shall consist of a distribution fee of 0.50% and a service fee of 0.25% of such net assets.
(v) Class R-4 shares shall be subject to an annual 12b-1 expense under the Fund's Class R-4 Plan of Distribution of up to 0.50% of average net assets, as set forth in the Fund's prospectus, SAI, and Class R-4 Plan of Distribution. This expense shall consist of a distribution fee of 0.25% and a service fee of 0.25% of such net assets.
(vi) Class R-5 shares shall not be subject to an annual 12b-1 expense.
(vii) The Class R shares shall be subject to an Administrative Services fee comprising transfer agent fees (according to the fee schedule contained in the Shareholder Services Agreement between the Fund and its transfer agent for its Class A and Class B shares) plus 0.15% of average net assets for Class R-1 shares, Class R-2 shares, Class R-3 shares and Class R-4 shares, and 0.10% for Class R-5 shares, as set forth in the Fund's prospectus, SAI, and Administrative Services Agreement. Each of the Class R share classes will pay only those transfer agent fees and third party pass-through fees (E.G., DST and NSCC fees) that are directly attributed to accounts of and activities generated by its own share class.
(viii) The Class R-2 and Class R-3 shares may be subject to additional sub-transfer agent fees paid to third parties providing services to Fund shareholders in those share classes. These fees will be charged directly to the share class incurring the expense.
(f) The 529 share classes consisting of Class 529-A shares, Class 529-B shares, Class 529-C shares, Class 529-E shares and Class 529-F shares
(i) The Class 529-A shares shall be sold at net asset value plus a front-end sales charge, at net asset value without a front-end sales charge but subject to a CDSC, and at net asset value without any sales charge, as set forth in the Fund's prospectus and SAI.
(ii) The Class 529-B and Class 529-C shares shall be sold at net asset value without a front-end sales charge, but subject to a CDSC and maximum purchase limits as set forth in the Fund's prospectus and SAI.
(iii) The Class 529-E and Class 529-F shares shall be sold at net asset value
without a front-end or back-end sales charge.
(iv) Class 529-A shares shall be subject to an annual 12b-1 expense under the
Fund's Class 529-A Plan of Distribution of up to 0.50% of average net assets,
as set forth in the Fund's prospectus, SAI, and Class 529-A Plan of
Distribution. This expense shall consist of a distribution fee of 0.25% and a
service fee of 0.25% of such net assets.
(v) Cla
ss 529-B shares shall be subject to an annual 12b-1 expense under the
Fund's Class 529-B Plan of Distribution of 1.00% of average net assets, as set
forth in the Fund's prospectus, SAI, and Class 529-B Plan of Distribution. This
expense shall consist of a distribution fee of 0.75% and a service fee of 0.25%
of such net assets.
(vi) Class 529-C shares shall be subject to an annual 12b-1 expense under the Fund's Class 529-C Plan of Distribution of 1.00% of average net assets, as set forth in the Fund's prospectus, SAI, and Class 529-C Plan of Distribution. This expense shall consist of a distribution fee of 0.75% and a service fee of 0.25%% of such net assets.
(vii) Class 529-E shares shall be subject to an annual 12b-1 expense under the Fund's Class 529-E Plan of Distribution of up to 0.75% of average net assets, as set forth in the Fund's prospectus, SAI, and Class 529-E shares Plan of Distribution This expense shall consist of a distribution fee of 0.50% and a service fee of 0.25% of such net assets.
(viii) Class 529-F shares shall be subject to an annual 12b-1 expense under the Fund's Class 529-F Plan of Distribution of up to 0.50% of average net assets, as set forth in the Fund's prospectus, SAI, and Class 529-F Plan of Distribution. This expense shall consist of a distribution fee of 0.25% and a service fee of 0.25% of such net assets.
(ix) The Class 529 shares shall be subject to an Administrative Services fee of 0.15% of average net assets for all 529 shares, as set forth in the Fund's prospectus, SAI, and Administrative Services Agreement. In calculating transfer agent fees allocable to the Class 529 shares, the fees generated from maintaining these accounts (determined using the fee schedule contained in the Shareholder Services Agreement between the Fund and its transfer agent for its Class A and Class B shares) shall be allocated to the Class 529 shares based on their aggregate net assets relative to those of the Class A, Class B and Class C shares. The fee thus determined shall be paid by CRMC from the Administrative Services Fee.
(x) The Class 529 shares shall be subject to a Virginia Administrative Fee of 0.10% of average net assets payable to the Commonwealth of Virginia, as set forth in the Fund's prospectus and SAI.
All other rights and privileges of Fund shareholders are identical regardless of which class of shares are held.
4. This Plan shall not take effect until it has been approved by votes of the majority of both (i) the Board of [Directors][Trustees] of the Fund and (ii) the Independent [Directors][Trustees].
5. This Plan shall become effective with respect to any class of shares of the
Fund, other than Class A, Class B, Class C, Class F, Class R-1, Class R-2,
Class R-3, Class R-4, Class R-5, Class 529-A, Class 529-B, Class 529-C, Class
529-E or Class 529-F shares, upon the commencement of the initial public
offering thereof (provided that the Plan has previously been approved with
respect to such additional class by votes of the majority of both (i) the Board
of [Directors][Trustees] of the Fund; and (ii) Independent
[Directors][Trustees] prior to the offering of such additional class of
shares), and shall continue in effect with respect to such additional class or
classes until terminated in accordance with paragraph 7. An addendum setting
forth such specific and different terms of such additional class or classes
shall be attached to and made part of this Plan.
6. No material amendment to the Plan shall be effective unless it is approved by the votes of the majority of both (i) the Board of [Directors][Trustees] of the Fund and (ii) Independent [Directors][Trustees].
7. This Plan may be terminated at any time with respect to the Fund as a whole
or any class of shares individually, by the votes of the majority of both (i)
the Board of [Directors][Trustees] of the Fund and (ii) Independent
[Directors][Trustees]. This Plan may remain in effect with respect to a
particular class or classes of shares of the Fund even if it has been
terminated in accordance with this paragraph with respect to any other class of
shares.
IN WITNESS WHEREOF, the Fund has caused this Plan to be executed by its officers thereunto duly authorized, as of February 1, 2002.
[NAME OF FUND]
By:
[name]
Chairman of the Board
By:
[name]
Secretary
CODE OF CONDUCT
All of us within the Capital organization are responsible for maintaining the very highest ethical standards when conducting business. In keeping with these standards, we must never allow our own interests to be placed ahead of our shareholders' and clients' interests.
Over the years we have earned a reputation for the highest integrity. Regardless of lesser standards that may be followed through business or community custom, we must observe exemplary standards of honesty and integrity.
REPORTING VIOLATIONS
If you know of any violation of our Code of Conduct, you have a responsibility to report it. Deviations from controls or procedures that safeguard the company, including the assets of shareholders and clients, should also be reported.
You can report confidentially to:
- Your manager or department head
- CGC Audit Committee:
Walter P. Stern - Co-Chairman
Thomas M. Rowland - Co-Chairman
Eugene D. Barron
James M. Brown
Larry P. Clemmensen
Roberta A. Conroy
Thomas J. Hamblin
J. Dale Harvey
Lee Ann Jarrell
Solomon M. Kamm
Ida Levine
John V. McLaughlin
Donald D. O'Neal
John Smet
Antonio Vegezzi
Catherine M. Ward
J. Kelly Webb
William Hurt - Emeritus
- Mike Downer or any other lawyer in the CGC Legal Group
- Don Wolfe of Deloitte & Touche LLP (CGC's auditors)
CGC GIFTS POLICY - CONFLICTS OF INTEREST
A conflict of interest occurs when the private interests of associates interfere or could potentially interfere with their responsibilities at work. Associates must not place themselves or the company in a position of actual or potential conflict. Associates may not accept gifts worth more than $100, excessive business entertainment, loans, or anything else involving personal gain from those who conduct business with the company. In addition, a business entertainment event exceeding $200 in value should not be accepted unless the associate receives permission from the Gifts Policy Committee. Finally, in soliciting political or charitable donations from various people in the business community, associates must never allow the present or anticipated business relationships of CGC or any of its affiliates to be a factor in soliciting such contributions.
REPORTING
Although the limitations on accepting gifts applies to ALL associates as described above, some associates will be asked to fill out quarterly reports.
If you receive a reporting form, you must report any gift exceeding $50 (although it is recommended that you report ALL gifts received) and business entertainment in which an event exceeds $75.
GIFTS POLICY COMMITTEE
The Gifts Policy Committee oversees administration of and compliance with the Policy.
INSIDER TRADING
Antifraud provisions of the federal securities laws generally prohibit persons while in possession of material nonpublic information from trading on or communicating the information to others. Sanctions for violations can include civil injunctions, permanent bars from the securities industry, civil penalties up to three times the profits made or losses avoided, criminal fines and jail sentences.
While investment research analysts are most likely to come in contact with material nonpublic information, the rules (and sanctions) in this area apply to all CGC associates and extend to activities both within and outside each associate's duties.
PERSONAL INVESTING POLICY
As an associate of the Capital Group companies, you may have access to confidential information. This places you in a position of special trust. You are associated with a group of companies that is responsible for the management of many billions of dollars belonging to mutual fund shareholders and other clients. The law, ethics and our own policy place a heavy burden on all of us to ensure that the highest standards of honesty and integrity are maintained at all times.
There are several rules that must be followed to avoid possible conflicts of interest in personal securities transactions.
ALL ASSOCIATES
Information regarding proposed or partially completed plans by CGC companies to buy or sell specific securities must not be divulged to outsiders. In addition, associates who receive information about recommendations to purchase or sell securities or impending fund or client account transactions should refrain from trading personally on the information. Favors or preferential treatment from stockbrokers may not be accepted.
Associates may not subscribe to ANY initial public offering (IPO). Generally, this prohibition applies to spouses of associates and any family member residing in the same household. However, an associate may request that the Personal Investing Committee consider granting an exception under special circumstances.
COVERED PERSONS
Associates who have access to investment information in connection with their regular duties are generally considered "covered persons." If you receive a quarterly personal securities transactions report form, you are a covered person.
Covered persons must conduct their personal securities transactions in such a way that they do not conflict with the interests of the funds and client accounts. This policy also includes securities transactions of family members living in the covered person's household and any trust or custodianship for which the associate is trustee or custodian. A conflict may occur if you, a family member in the same household, a trust or custodianship for which you are trustee or custodian have a transaction in a security when the funds or client accounts are considering or concluding a transaction in the same security. Additional rules apply to "investment associates" including portfolio counselors/managers, research analysts, traders, portfolio control associates, and investment administration personnel (see below).
PRE-CLEARANCE OF SECURITIES TRANSACTIONS
Before buying or selling securities, covered persons must check with the staff of the Personal Investing Committee. You will generally receive a response within one business day. Unless a shorter period is specified, clearance is good for two trading days (including the day you check). If you have not executed your transaction within this period, you must again pre-clear your transaction. Note that investments in private placements and venture capital partnerships must be pre-cleared and reported and are subject to special review.
Covered persons must PROMPTLY submit quarterly reports of certain transactions. You will receive reporting forms each quarter that are due no later than 10 days after the end of the quarter. Transactions of securities (including fixed-income securities) or options must be pre-cleared as described above and reported except as outlined below:
REPORT ONLY (NO NEED TO PRE-CLEAR):
- gifts or bequests (either receiving or giving) of securities (note that sales
of securities received as a gift must be both pre-cleared and reported)
- debt instruments rated "A" or above by at least one national rating service
- sales pursuant to tender offers
- dividend reinvestments
- options or futures on currencies
- options or futures or purchases or sales of certain index funds. See
attached pre-approved list (Appendix A)
DO NOT PRE-CLEAR OR REPORT:
- open-end investment companies (mutual funds)
- money market instruments with maturities of one year or less
- direct obligations of the U.S. Government
- bankers' acceptances, CDs or other commercial paper
- commodities
- transactions in accounts that you have completely turned over investment
decision-making authority to a professional money manager (see "Professionally
Managed Accounts" below)
PROHIBITED TRANSACTIONS:
- IPO investments
- writing puts and calls on securities that are subject to pre-clearance
- short sales of securities that are subject to pre-clearance
PERSONAL INVESTING SHOULD BE VIEWED AS A PRIVILEGE, NOT A RIGHT. AS SUCH, LIMITATIONS MAY BE PLACED ON THE NUMBER OF PRE-CLEARANCES AND/OR TRANSACTIONS AS DEEMED APPROPRIATE BY THE PERSONAL INVESTING COMMITTEE.
SECURITIES ACCOUNTS
1. DISCLOSURE OF ACCOUNTS
The following types of accounts must be disclosed:
- accounts currently holding securities that are subject to pre-clearance or reporting
- accounts that have the ability to hold securities that are subject to pre-clearance or reporting
- accounts where you (or immediate family members residing with you) has completely turned over investment decision-making authority to a professional money manager
You do not need to disclose accounts that can only hold open-end mutual funds or cash or cash equivalents.
2. DUPLICATE ACCOUNT STATEMENTS AND TRADE CONFIRMATIONS
Covered persons should inform their investment broker-dealers that they are employed by an investment organization. U.S. broker-dealers are subject to certain rules designed to prevent favoritism toward such accounts. Associates may not accept negotiated commission rates or any other terms that they believe may be more favorable than the broker-dealer grants to accounts with similar characteristics.
In addition, covered persons must direct their broker-dealers to send copies of all trade confirmations and account statements for all new or existing accounts on a timely basis to: The Legal Group of The Capital Group Companies, Inc. ALL
DOCUMENTS RECEIVED ARE KEPT STRICTLY CONFIDENTIAL./1/
/1/ Information about particular transactions may be provided to an associate's supervisor or appropriate human resources manager by Personal Committee staff where the transactions are in violation of the Policy, may impact the associate's job performance, or raise conflict of interest-related issues.
Associates with securities accounts outside the U.S. where the broker is unable to provide duplicate statements and trade confirmations directly, should provide copies to the appropriate locations.
3. PROFESSIONALLY MANAGED ACCOUNTS
Transactions and holdings in accounts where you have COMPLETELY turned over decision making authority to a professional money manager (who is not covered by our policy) do not need to be disclosed in quarterly transaction and annual holding reporting forms. HOWEVER:
- the existence of the account and account number must be disclosed on the Securities Account Disclosure form
- you should have a signed "Professionally Managed Account Exception Memo" on file with the staff of the Personal Investing Committee (except PIM accounts)
- Investment associates should still disclose securities held in professionally managed accounts when completing the quarterly disclosure form for securities held both personally and professionally and/or securities held personally within an analyst's research responsibility
ANNUAL DISCLOSURE OF PERSONAL SECURITIES HOLDINGS
Covered persons will be required to disclose all personal securities holdings upon commencement of employment (or upon becoming a covered person) and thereafter on an annual basis. Reporting forms will be supplied for this purpose.
ANNUAL RECERTIFICATION
All covered persons will be required to certify annually that they have read and understood the Personal Investing Policy. Further, covered persons are required to certify at least annually that they have complied with the requirements of the code of ethics and that they have disclosed or reported all personal securities transactions required to be disclosed or reported pursuant to the requirements of the code.
ADDITIONAL POLICIES FOR "INVESTMENT ASSOCIATES"
1. INVESTMENT ASSOCIATES Unless otherwise specified, the term "investment associates" includes portfolio managers/counselors, research analysts, traders, associates in investment administration, and associates in portfolio control.
2. DISCLOSURE OF PERSONAL OWNERSHIP OF RECOMMENDED SECURITIES Ownership of securities that are held professionally as well as personally will be reviewed on a periodic basis by the staff of the Personal Investing Committee and may also be reviewed by the applicable Investment Sub-Committees or other appropriate CGC Committee. In addition, to the extent that disclosure has not already been made to the Personal Investing Committee (by including information on the quarterly form), any associate who is in a position to recommend the purchase or sale of securities by the fund or client accounts that s/he personally owns should FIRST disclose such ownership either in writing (in a company write-up) or orally (when discussing the company at investment meetings) prior to making a recommendation./2/ If you have any questions, you should contact the staff of the Personal Investing Committee. /2/ Note that this disclosure requirement is consistent with both AIMR standards as well as the ICI Advisory Group Guidelines.
3. BLACKOUT PERIOD
Investment associates may not buy or sell a security during a period beginning seven calendar days before and ending seven calendar days after a fund or client account that is managed by the company(ies) with which the individual has investment responsibility transacts in that security. If a fund or client account transaction takes place in the seven calendar days following a pre-cleared transaction by an investment associate, the personal transaction will be reviewed by the Personal Investing Committee to determine the appropriate action, if any. For example, the Committee may recommend that the associate be subject to a price adjustment to ensure that he or she has not received a better price than the fund or client account.
4. BAN ON SHORT-TERM TRADING PROFITS
Investment associates are generally prohibited from profiting from the purchase and sale or sale and purchase of the same (or equivalent) securities within 60 days. THIS RESTRICTION APPLIES TO THE PURCHASE OF AN OPTION AND THE EXERCISE OF THE OPTION WITHIN 60 DAYS.
5. SERVICE AS A DIRECTOR
Investment associates must obtain prior authorization of the Investment Committee or Investment Sub-Committee of the appropriate management company or CGC committee before serving on the boards of directors of publicly traded companies. Also, prior to serving on the board of a private company, investment personnel must notify the Legal Group; in certain circumstances these matters may be referred to the appropriate management or investment committee for approval.
In addition, other CGC associates should notify the Legal Group prior to serving on the board of a public or private company.
PERSONAL INVESTING COMMITTEE
Any questions or hardships that result from these policies or requests for exceptions should be referred to CGC's Personal Investing Committee by calling the staff of the Personal Investing Committee.
APPENDIX A
BROAD-BASED INDEX FUNDS
Symbol NAME DIA The Dow Industrials DIAMONDS QQQ Nasdaq-100 Index Tracking Stock SPY Standard & Poor's Depositary Receipts MDY Standard & Poor's MidCap 400 Depositary Receipts IJH iShares S&P MidCap 400 Index Fund IVV iShares S&P 500 Index Fund IWB iShares Russell 1000 Index Fund IWF iShares Russell 1000 Growth Index Fund IWD iShares Russell 1000 Value Index Fund IWM iShares Russell 2000 Index Fund IWV iShares Russell 3000 Index Fund IVW iShares S&P 500/BARRA Growth Index Fund IVE iShares S&P 500/BARRA Value Index Fund IJR iShares S&P SmallCap 600 Index Fund IYY iShares Dow Jones U.S. Total Market Index Fund IKC iShares S&P/TSE 60 Index Fund |