UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
Certified Shareholder Report of
Registered Management Investment Companies
Investment Company Act File Number: 811-3735
The New Economy Fund
(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
Date of fiscal year end: November 30, 2004
Date of reporting period: May 31, 2004
Chad L. Norton
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)
ITEM 1 - Reports to Stockholders
[logo - American Funds(R)]
The right choice for the long term(R)
THE NEW ECONOMY FUND
[front cover: woman and toddler working on a computer]
Semi-annual report for the six months ended May 31, 2004
The New Economy Fund(R) seeks to help you participate in the many investment
opportunities created as society continues to shift from producing industrial
goods to providing a wide array of information products and services. The fund
has the flexibility to invest all over the world in industries ranging from
broadcasting and publishing to banking and insurance, cellular telephones to
merchandising, and health care to computer software and the Internet.
This fund is one of the 29 American Funds, the nation's third-largest mutual
fund family. For more than seven decades, Capital Research and Management
Company,SM the American Funds adviser, has invested with a long-term focus based
on thorough research and attention to risk.
FIGURES SHOWN ARE PAST RESULTS FOR CLASS A SHARES AND ARE NOT PREDICTIVE OF
RESULTS IN FUTURE PERIODS. CURRENT AND FUTURE RESULTS MAY BE LOWER OR HIGHER
THAN THOSE SHOWN. SHARE PRICES AND RETURNS WILL VARY, SO INVESTORS MAY LOSE
MONEY. FOR THE MOST CURRENT INFORMATION AND MONTH-END RESULTS, VISIT
AMERICANFUNDS.COM. FUND RESULTS SHOWN, UNLESS OTHERWISE INDICATED, ARE AT NET
ASSET VALUE. IF A SALES CHARGE (MAXIMUM 5.75%) HAD BEEN DEDUCTED, THE RESULTS
WOULD HAVE BEEN LOWER.
Here are the average annual total returns on a $1,000 investment with all
distributions reinvested for periods ended June 30, 2004 (the most recent
calendar quarter):
CLASS A SHARES 1 YEAR 5 YEARS 10 YEARS
Reflecting 5.75% maximum sales charge + 15.44% - 2.71% + 9.22%
Results for other share classes can be found on page 28. Please see the inside
back cover for important information about other share classes.
Investing for short periods makes losses more likely. Investments are not
FDIC-insured, nor are they deposits of or guaranteed by a bank or any other
entity. Of course, investments outside the United States involve special risks
such as currency fluctuations, political instability, differing securities
regulations and periods of illiquidity. Global diversification can help reduce
these risks. Investing in small-capitalization stocks can involve additional
risks, as more fully described in the prospectus.
FELLOW SHAREHOLDERS:
We are pleased to report that The New Economy Fund posted a 6.4% return for the
six months ended May 31, 2004, helped by the continued global economic recovery.
That result surpasses the 5.3% return of the unmanaged Global Service and
Information Index, a subset of the MSCI World Index,SM which is a
market-capitalization-weighted index that measures the returns of stock markets
in 23 developed countries. This subset is 70% U.S.-weighted and consists
specifically of service and information industries that together represent
approximately 60% of the MSCI World Index.
The Lipper Multi-Cap Growth Funds Index, which measures 30 growth funds
representing a variety of market capitalizations, posted a 4.6% return for the
period.
The widely reported Standard & Poor's 500 Composite Index, an unmanaged index
that tracks relatively large companies listed primarily on U.S. exchanges,
gained 6.8% for the six months.
Over the past year, returns were even stronger. The fund gained 23.2% for the 12
months ended May 31, 2004, outpacing the 21.5% return of the Global Service and
Information Index, the 21.3% return of the Lipper Multi-Cap Growth Funds Index
and the 18.3% return of the S&P 500.
[Begin Sidebar]
RESULTS AT A GLANCE
Total returns for periods ended May 31, 2004
(with all distributions reinvested)
6 MONTHS 1 YEAR LIFETIME*
The New Economy Fund + 6.4% +23.2% +12.3%
Lipper Multi-Cap Growth Funds Index + 4.6 +21.3 +10.6
Global Service and Information Index+ + 5.3 +21.5 N/A
Standard & Poor's 500 Composite Index+ + 6.8 +18.3 +12.7
* Average annual total return since December 1, 1983.
+ Unmanaged
[End Sidebar]
THE SIX MONTHS IN PERSPECTIVE
A number of the fund's Internet holdings continued to do well this period,
particularly eBay, up 59.0%, and Yahoo!, up 42.7%, which are among the fund's
top 10 holdings. We believe they are proving to be strong long-term enterprises
with significant growth potential.
Some economically sensitive companies also enjoyed healthy returns, including
Carnival, the cruise line operator, up 21.1%, and Target, the retail store
chain, up 15.4%.
Non-U.S. stock markets also experienced a strong recovery for the period,
including Europe and especially Asia. The decline of the U.S. dollar has given
rise to currency gains in non-U.S. markets. One particular bright spot was
Japan, which has finally shown signs that it is recovering from a more than
decade-long period of economic malaise. We believe that improving fundamentals
and reasonable valuations of many non-U.S. companies will continue to offer
attractive investment opportunities.
Technology companies hurt the fund during the period. Throughout most of 2003,
technology companies enjoyed strong capital appreciation; however, valuations
rose quicker than earnings warranted, and the sector lagged the market over the
past six months. Top holdings that hurt fund results include Taiwan
Semiconductor Manufacturing, down 9.8%; Applied Materials, down 17.9%; and Cisco
Systems, down 2.3%.
[Begin Sidebar]
WHERE THE FUND'S ASSETS ARE INVESTED
[begin pie chart]
AS OF Percent of
MAY 31, 2004 net assets
o United States 68.3%
o Asia & Pacific Basin 13.7
o Europe 10.2
o Other (including Canada
& Latin America) 1.6
o Cash & equivalents 6.2
[end pie chart]
[begin pie chart]
AS OF Percent of
NOVEMBER 30, 2003 net assets
o United States 69.2%
o Asia & Pacific Basin 11.5
o Europe 10.3
o Other (including Canada
& Latin America) 2.3
o Cash & equivalents 6.7
[end pie chart]
[End Sidebar]
PROCEEDING WITH CAUTION
While we are pleased with the fund's strong returns over the past year, we are
cautiously optimistic as we enter the next period. Rising inflation worldwide
will inevitably lead to a rise in interest rates, which could negatively affect
the stock market. Other trouble spots include the hostilities in Iraq and
ongoing terrorist activity globally, which could create oil-supply problems or
other global economic shocks.
Although no one can predict the events that may cause short-term fluctuations in
the stock market, we manage the fund with a long-term perspective. The New
Economy Fund's objective is to take advantage of growth in service and
information companies worldwide, an area that we believe to be the
fastest-growing segment of the global economy. Our investment philosophy, which
is based on in-depth research and a value-oriented approach, has helped to
produce solid returns over extended periods. Since the fund's inception on
December 1, 1983, shareholders have earned an average annual total return of
12.3% as of May 31, 2004, compared with a 10.6% average annual total return for
the Lipper Multi-Cap Growth Funds Index.
As always, we thank you for your continued support.
Cordially,
/s/ Gordon Crawford /s/ Timothy D. Armour
Gordon Crawford Timothy D. Armour
Chairman of the Board President
July 14, 2004
For current information about the fund, visit americanfunds.com.
INVESTMENT PORTFOLIO, May 31, 2004 unaudited
[begin pie chart]
Percent of
Industry diversification net assets
Media 10.76 %
Semiconductors & semiconductor equipment 6.71
Commercial banks 6.56
Internet & catalog retail 5.64
Insurance 4.56
All other industries 59.62
Cash & equivalents 6.15
[end pie chart]
Percent of
Largest equity holdings net assets
Time Warner 3.95 %
InterActiveCorp 3.64
American International Group 3.07
Yahoo! 2.25
Carnival 1.79
Target 1.73
First Data 1.69
Express Scripts 1.66
eBay 1.48
Freddie Mac 1.45
SHARES OR MARKET
EQUITY SECURITIES PRINCIPAL VALUE
(COMMON AND PREFERRED STOCKS AND CONVERTIBLE DEBENTURES) - 93.85% AMOUNT (000)
MEDIA - 10.76%
Time Warner Inc. (1) 17,095,000 $ 291,299
News Corp. Ltd., preferred (ADR) (Australia) 1,480,000 50,409
News Corp. Ltd., preferred 5,204,820 44,378
Liberty Media Corp., Class A (1) 8,460,000 92,891
Comcast Corp., Class A, special nonvoting stock (1) 2,472,900 70,107
UnitedGlobalCom, Inc., Class A (1) (formerly UGC Europe) 5,772,800 42,546
Reader's Digest Assn., Inc., Class A 2,640,000 40,049
Gemstar-TV Guide International, Inc. (1) 7,000,000 31,500
Interpublic Group of Companies, Inc. (1) 2,100,000 30,198
Arbitron Inc. (1) 670,520 26,150
Viacom Inc., Class B, nonvoting 500,000 18,445
VNU NV (Netherlands) 512,000 14,929
Grupo Televisa, SA, ordinary participation certificates (ADR) (Mexico) 345,000 14,580
Torstar Corp., Class B, nonvoting (Canada) 600,000 11,822
Schibsted ASA (Norway) 525,000 9,210
SET Satellite (Singapore) Pte. Ltd. (India) (1) (2) (3) 775,461 2,323
SET India Ltd. (India) (1) (2) (3) 31,400 1,184
NTL Inc., Series A, warrants, expire 2011 52,050 403
KirchMedia GmbH & Co. KGaA, nonvoting (Germany) (1) (2) (3) 1,775,000 0
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 6.71%
Taiwan Semiconductor Manufacturing Co. Ltd. (Taiwan) (1) 60,867,042 102,206
Applied Materials, Inc. (1) 4,500,000 89,820
Texas Instruments Inc. 2,650,000 69,192
Altera Corp. (1) 1,750,000 40,057
Maxim Integrated Products, Inc. 750,000 38,122
Agere Systems Inc. 6.50% convertible notes 2009 $ 30,000,000 36,787
Rohm Co., Ltd. (Japan) 207,000 25,047
KLA-Tencor Corp. (1) 500,000 24,090
Novellus Systems, Inc. (1) 560,000 18,642
Advanced Micro Devices, Inc. (1) 1,000,000 15,550
Sunplus Technology Co., Ltd. (Taiwan) 5,000,000 10,270
Microchip Technology Inc. 300,000 9,513
STMicroelectronics NV (France) 370,000 8,278
Tokyo Electron Ltd. (Japan) 100,000 5,575
Velio Communications, Inc., Series E, convertible preferred (1) (2) (3) 219,780 629
Velio Communications, Inc., Series D, convertible preferred (1) (2) (3) 1,258,242 252
COMMERCIAL BANKS - 6.56%
Wells Fargo & Co. 1,600,000 94,080
Societe Generale (France) 881,000 74,715
City National Corp. 799,800 51,643
SMFG Finance (Cayman) Ltd. 2.25% mandatorily exchangeable preferred 2005, units (Japan) 2,076,000,000 47,788
Pusan Bank (South Korea) 5,160,000 30,743
Royal Bank of Scotland Group PLC (United Kingdom) 981,000 29,587
ABN AMRO Holding NV (Netherlands) 1,333,238 28,267
HSBC Holdings PLC (United Kingdom) 1,044,990 15,481
HSBC Holdings PLC 588,945 8,879
ICICI Bank Ltd. (India) 4,000,000 20,269
Bank of the Philippine Islands (Philippines) 16,632,000 12,379
South Financial Group, Inc. 425,000 11,713
Silicon Valley Bancshares (1) 310,000 11,585
PT Bank Rakyat Indonesia (Indonesia) (1) 55,200,000 10,283
Bayerische Hypo- und Vereinsbank AG (Germany) (1) 500,000 8,420
Mizuho Financial Group, Inc. (Japan) 1,800 7,781
Southwest Bancorporation of Texas, Inc. 170,000 7,123
Malayan Banking Bhd. (Malaysia) 2,332,600 6,261
Kookmin Bank (South Korea) 180,000 6,099
INTERNET & CATALOG RETAIL - 5.64%
InterActiveCorp (1) 8,575,000 268,055
eBay Inc. (1) 1,230,000 109,224
Amazon.com, Inc. (1) 800,000 38,632
INSURANCE - 4.56%
American International Group, Inc. 3,083,985 226,056
XL Capital Ltd., Class A 850,000 63,453
PartnerRe Holdings Ltd. (polynational) 540,000 30,175
21st Century Insurance Group 1,243,600 16,279
IT SERVICES - 4.37%
First Data Corp. (formerly Concord EFS) 2,869,000 124,199
Paychex, Inc. 1,425,000 53,452
Acxiom Corp. 1,500,000 36,150
Ceridian Corp. (1) 1,580,300 35,399
Sabre Holdings Corp., Class A 800,000 20,400
Electronic Data Systems Corp. 970,000 15,860
Automatic Data Processing, Inc. 320,000 14,218
OBIC Co., Ltd. (Japan) 60,000 12,316
Teleca AB, Class B (Sweden) (1) 1,736,734 9,823
HEALTH CARE PROVIDERS & SERVICES - 4.12%
Express Scripts, Inc. (1) 1,560,000 122,086
HCA Inc. 1,550,000 60,187
Service Corp. International (1) 6,850,000 49,320
Aetna Inc. 525,000 42,630
Caremark Rx, Inc. (1) 500,000 15,600
Henry Schein, Inc. (1) 200,000 13,432
DIVERSIFIED TELECOMMUNICATION SERVICES - 4.08%
Royal KPN NV (Netherlands) 14,213,000 102,872
Telefonica, SA (Spain) 3,987,154 57,863
Sprint Corp. - FON Group (formerly Sprint Corp. - PCS Group) 3,195,000 56,743
CenturyTel, Inc. 725,000 21,670
Telekom Austria AG (Austria) (1) 1,350,290 18,822
Portugal Telecom, SGPS, SA (Portugal) 1,625,743 16,719
Telenor ASA (Norway) 1,427,100 10,226
Telecom Italia SpA, nonvoting (Italy) 4,672,000 10,071
Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk, Class B (Indonesia) 5,776,500 4,616
Deutsche Telekom AG (Germany) (1) 44,400 744
INTERNET SOFTWARE & SERVICES - 4.05%
Yahoo! Inc. (1) 5,400,000 165,564
Yahoo Japan Corp. (Japan) (1) 6,959 73,139
T-Online International AG (Germany) (1) 4,150,000 48,039
Homestore, Inc. (1) 2,500,000 10,425
ProAct Technologies Corp., Series C, convertible preferred (1) (2) (3) 3,500,000 1,435
SPECIALTY RETAIL - 4.02%
Lowe's Companies, Inc. 1,600,000 85,712
Gap, Inc. 3,200,000 77,280
Office Depot, Inc. (1) 2,100,000 34,314
Ross Stores, Inc. 1,000,000 26,190
FAST RETAILING CO., LTD. (Japan) 310,000 22,977
Kingfisher PLC (United Kingdom) 3,860,000 20,216
Yamada Denki Co., Ltd. (Japan) 577,000 19,669
Dixons Group PLC (United Kingdom) 3,556,600 9,916
COMMERCIAL SERVICES & SUPPLIES - 3.96%
Allied Waste Industries, Inc. (1) 6,200,000 82,212
Robert Half International Inc. 2,410,000 67,432
ServiceMaster Co. 2,900,000 35,264
Monster Worldwide Inc. (1) 1,250,000 31,638
ChoicePoint Inc. (1) 640,000 27,680
Adecco SA (Switzerland) 500,000 24,085
Vedior NV (Netherlands) 1,480,700 21,867
Securitas AB, Class B (Sweden) 126,100 1,555
MULTILINE RETAIL - 3.45%
Target Corp. 2,850,000 127,395
Kohl's Corp. (1) 1,850,000 87,986
Dollar General Corp. 2,000,000 38,800
COMMUNICATIONS EQUIPMENT - 3.24%
Cisco Systems, Inc. (1) 4,629,200 102,537
Lucent Technologies Inc. 8.00% convertible subordinated notes 2031 $ 55,000,000 61,531
QUALCOMM Inc. 405,000 27,163
Corning Inc. (1) 2,100,000 26,019
CIENA Corp. (1) 6,000,000 21,600
FOOD & STAPLES RETAILING - 3.17%
Wal-Mart de Mexico, SA de CV, Series V (Mexico) 19,730,666 59,140
Walgreen Co. 1,350,000 47,264
Costco Wholesale Corp. 1,000,000 37,780
AEON CO., LTD. (Japan) 870,000 35,541
Performance Food Group Co. (1) 985,000 32,347
Koninklijke Ahold NV (Netherlands) (1) 1,690,000 13,076
Woolworths Ltd. (Australia) 1,000,365 8,372
WIRELESS TELECOMMUNICATION SERVICES - 2.71%
KDDI Corp. (Japan) 11,377 64,361
Vodafone Group PLC (United Kingdom) 21,400,000 50,258
China Unicom Ltd. (China) 50,756,900 38,750
Western Wireless Corp., Class A (1) 630,000 17,249
Maxis Communications Bhd. (Malaysia) 7,265,000 16,346
AT&T Wireless Services, Inc. (1) 900,000 12,744
HOTELS, RESTAURANTS & LEISURE - 2.69%
Carnival Corp., units 3,100,000 132,091
Outback Steakhouse, Inc. 700,000 29,715
KangwonLand Inc. (South Korea) 1,990,200 21,621
Rank Group PLC (United Kingdom) 2,500,000 14,100
Hilton Group PLC (United Kingdom) 73,800 358
ENERGY EQUIPMENT & SERVICES - 2.60%
Schlumberger Ltd. 1,725,000 98,618
Weatherford International Ltd. (1) 800,000 33,208
Baker Hughes Inc. 900,000 30,627
Noble Corp. (1) 850,000 29,291
CAPITAL MARKETS - 1.49%
J.P. Morgan Chase & Co. 1,700,000 62,628
Bank of New York Co., Inc. 750,000 22,553
Investment Technology Group, Inc. (1) 1,000,000 13,650
Deutsche Bank AG (Germany) 137,800 10,882
THRIFTS & MORTGAGE FINANCE - 1.45%
Freddie Mac 1,830,000 106,854
ELECTRONIC EQUIPMENT & INSTRUMENTS - 1.41%
Symbol Technologies, Inc. 2,500,000 36,825
Sanmina-SCI Corp. (1) 3,210,000 33,962
Jabil Circuit, Inc. (1) 537,000 15,202
Micronic Laser Systems AB (Sweden) (1) 1,555,000 11,568
Flextronics International Ltd. (1) 348,500 6,120
SOFTWARE - 1.06%
Microsoft Corp. 2,650,000 69,828
Oracle Corp. (1) 720,000 8,150
MMC AS (Norway) (1) (2) (3) 2,500,000 4
CONSUMER FINANCE - 1.05%
Capital One Financial Corp. 1,000,000 70,060
LG Card Co., Ltd., 3.00% convertible bond-warrants, expire 2009 (South Korea) KRW14,420,000,000 7,584
CHEMICALS - 0.79%
Nitto Denko Corp. (Japan) 1,077,000 58,073
AIRLINES - 0.70%
Southwest Airlines Co. 2,180,000 33,812
Qantas Airways Ltd. (Australia) 4,139,400 10,029
Ryanair Holdings PLC (ADR) (Ireland) (1) 250,000 7,673
COMPUTERS & PERIPHERALS - 0.61%
Quanta Computer Inc. (Taiwan) 5,366,820 11,908
Quanta Computer Inc. (GDR) (1) (2) 929,000 10,405
International Business Machines Corp. 135,000 11,960
Anoto Group AB (Sweden) (1) 4,934,193 10,251
Novatel Wireless, Inc., Series C, warrants, expire 2004 (2) (3) 119,904 164
AIR FREIGHT & LOGISTICS - 0.55%
FedEx Corp. 395,000 29,064
Yamato Transport Co., Ltd. (Japan) 780,000 11,548
OTHER - 3.14%
El Paso Corp. 3,840,900 27,693
Garmin Ltd. 750,000 26,040
Fisher Scientific International Inc. (1) 425,000 24,399
ING Groep NV (Netherlands) 848,965 19,138
MSC Industrial Direct Co., Inc., Class A 654,100 18,903
E.ON AG (Germany) 255,000 17,692
SIRVA, Inc. (1) 710,000 17,558
Hong Kong and China Gas Co. Ltd. (Hong Kong) 10,042,000 16,042
Mitsubishi Estate Co., Ltd. (Japan) 1,200,000 14,586
Sumitomo Realty & Development Co., Ltd. (Japan) 1,320,000 14,066
CapitalSource Inc. (1) 590,500 12,832
Transurban Group (Australia) (1) 3,558,429 11,495
Scottish Power PLC (United Kingdom) 1,500,000 10,891
MISCELLANEOUS - 4.91%
Other equity securities in initial period of acquisition 361,385
TOTAL EQUITY SECURITIES (COST: $6,595,783,000) 6,912,815
PRINCIPAL MARKET
AMOUNT VALUE
SHORT-TERM SECURITIES - 6.21% (000) (000)
CORPORATE SHORT-TERM NOTES - 4.88%
Edison Asset Securitization LLC 1.06%-1.08% due 7/8-7/22/2004 (2) $ 55,343 $ 55,269
Coca-Cola Co. 1.00%-1.06% due 6/10-7/23/2004 52,900 52,866
CAFCO, LLC 1.04%-1.10% due 6/3-7/16/2004 (2) 46,300 46,268
Clipper Receivables Co. LLC 1.03% due 6/1-6/7/2004 (2) 40,816 40,808
Triple-A One Funding Corp. LLC 1.03%-1.07% due 6/1-7/13/2004 (2) 25,500 25,475
IBM Credit Corp. 0.98% due 6/2/2004 25,000 24,999
Medtronic Inc. 1.00% due 6/28/2004 (2) 25,000 24,980
Colgate-Palmolive Co. 1.00% due 7/1/2004 (2) 25,000 24,978
DuPont (E.I.) de Nemours & Co. 0.99%-1.00% due 6/22-6/25/2004 21,200 21,187
Procter & Gamble Co. 0.99%-1.00% due 6/3-6/18/2004 (2) 20,200 20,192
Pfizer Inc 1.05% due 7/13/2004 (2) 13,500 13,483
Harvard University 1.01% due 6/1-6/25/2004 9,000 8,998
U.S. TREASURIES - 1.19%
U.S. Treasury Bills 0.915%-1.135% due 7/15-9/23/2004 87,600 87,398
FEDERAL AGENCY DISCOUNT NOTES - 0.14%
Federal Home Loan Bank 1.01% due 7/9/2004 10,344 10,333
TOTAL SHORT-TERM SECURITIES (COST: $457,229,000) 457,234
TOTAL INVESTMENT SECURITIES (COST: $7,053,012,000) 7,370,049
New Taiwanese Dollar (cost: $2,376,000) NT$79,545 2,385
OTHER ASSETS LESS LIABILITIES (6,384)
NET ASSETS $7,366,050
(1) Security did not produce income during the last 12 months.
(2) Purchased in a private placement transaction; resale may be limited to
qualified institutional buyers; resale to the public may require
registration.
(3) Valued under fair value procedures adopted by authority of the Board of
Trustees.
ADR = American Depositary Receipts
GDR = Global Depositary Receipts
See Notes to Financial Statements
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES at May 31, 2004 unaudited
(dollars and shares in thousands, except per-share amounts)
ASSETS:
Investment securities at market (cost: $7,053,012) $7,370,049
Cash denominated in non-U.S. currencies
(cost: $2,376) 2,385
Cash 1,129
Receivables for:
Sales of investments $5,223
Sales of fund's shares 5,161
Dividends and interest 9,808 20,192
7,393,755
LIABILITIES:
Payables for:
Purchases of investments 13,871
Repurchases of fund's shares 5,957
Investment advisory services 2,504
Services provided by affiliates 4,523
Deferred Trustees' compensation 646
Other fees and expenses 204 27,705
NET ASSETS AT MAY 31, 2004 $7,366,050
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $7,940,068
Undistributed net investment income 6,197
Accumulated net realized loss (897,261)
Net unrealized appreciation 317,046
NET ASSETS AT MAY 31, 2004 $7,366,050
SHARES OF BENEFICIAL INTEREST ISSUED AND OUTSTANDING - UNLIMITED SHARES
AUTHORIZED
Shares Net asset value
Net assets outstanding per share (1)
Class A $6,913,213 359,553 $19.23
Class B 162,687 8,750 18.59
Class C 68,091 3,673 18.54
Class F 56,053 2,925 19.16
Class 529-A 29,102 1,516 19.20
Class 529-B 5,852 310 18.84
Class 529-C 8,398 446 18.85
Class 529-E 1,545 81 19.10
Class 529-F 363 19 19.18
Class R-1 1,511 80 18.96
Class R-2 33,731 1,780 18.95
Class R-3 26,132 1,367 19.11
Class R-4 11,994 624 19.21
Class R-5 47,378 2,455 19.30
(1) Maximum offering price and redemption price per share were equal to the net
asset value per share for all share classes, except for classes A and
529-A, for which the maximum offering prices per share were $20.40 and
$20.37, respectively.
See Notes to Financial Statements
STATEMENT OF OPERATIONS for the six months ended May 31, 2004 unaudited
(dollars in thousands)
INVESTMENT INCOME:
Income:
Dividends (net of non-U.S. withholding tax of $2,865) $34,334
Interest 6,077 $40,411
Fees and expenses:
Investment advisory services 15,133
Distribution services 9,919
Transfer agent services 5,121
Administrative services 365
Reports to shareholders 272
Registration statement and prospectus 218
Postage, stationery and supplies 644
Trustees' compensation 120
Auditing and legal 65
Custodian 592
State and local taxes 90
Other 57
Total expenses before reimbursement 32,596
Reimbursement of expenses 68 32,528
Net investment income 7,883
NET REALIZED GAIN AND UNREALIZED DEPRECIATION
ON INVESTMENTS AND NON-U.S. CURRENCY:
Net realized gain on:
Investments 459,940
Non-U.S. currency transactions 752 460,692
Net unrealized depreciation on:
Investments (34,517)
Non-U.S. currency translations (73) (34,590)
Net realized gain and unrealized depreciation
on investments and non-U.S. currency 426,102
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $433,985
See Notes to Financial Statements
STATEMENT OF CHANGES IN NET ASSETS (dollars in thousands)
SIX MONTHS YEAR ENDED
ENDED MAY 31, NOVEMBER 30,
2004* 2003
OPERATIONS:
Net investment income $7,883 $4,244
Net realized gain (loss) on investments and
non-U.S. currency transactions 460,692 (368,130)
Net unrealized (depreciation) appreciation
on investments and non-U.S. currency translations (34,590) 1,565,197
Net increase in net assets resulting from operations 433,985 1,201,311
DIVIDENDS PAID TO SHAREHOLDERS (4,277) -
CAPITAL SHARE TRANSACTIONS (92,683) (251,032)
TOTAL INCREASE IN NET ASSETS 337,025 950,279
NET ASSETS:
Beginning of period 7,029,025 6,078,746
End of period (including undistributed
net investment income: $6,197 and $2,591, respectively) $7,366,050 $7,029,025
*Unaudited
See Notes to Financial Statements
NOTES TO FINANCIAL STATEMENTS unaudited
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - The New Economy Fund (the "fund") is registered under the
Investment Company Act of 1940 as an open-end, diversified management investment
company. The fund seeks long-term growth of capital.
The fund offers 14 share classes consisting of four retail share classes, five
CollegeAmerica savings plan share classes and five retirement plan share
classes. The CollegeAmerica savings plan share classes (529-A, 529-B, 529-C,
529-E and 529-F) are sponsored by the Commonwealth of Virginia and can be
utilized to save for college education. The five retirement plan share classes
(R-1, R-2, R-3, R-4 and R-5) are sold without any sales charges and do not carry
any conversion rights. The fund's share classes are described below:
- ------------------------------------------------------------------------------------------------------------------
Initial Contingent deferred sales
Share class sales charge charge upon redemption Conversion feature
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Classes A and 529-A Up to 5.75% None (except 1% for certain None
redemptions within one year of
purchase without an initial
sales charge)
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Classes B and 529-B None Declines from 5% to zero for Classes B and 529-B convert to
redemptions within six years classes A and 529-A,
of purchase respectively, after eight years
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Class C None 1% for redemptions within one Class C converts to Class F
year of purchase after 10 years
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Class 529-C None 1% for redemptions within one None
year of purchase
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Class 529-E None None None
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Classes F and 529-F None None None
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Classes R-1, R-2, R-3, None None None
R-4 and R-5
- ------------------------------------------------------------------------------------------------------------------
Holders of all share classes have equal pro rata rights to assets, dividends and
liquidation proceeds. Each share class has identical voting rights, except for
the exclusive right to vote on matters affecting only its class. Share classes
have different fees and expenses ("class-specific fees and expenses"), primarily
due to different arrangements for distribution, administrative and shareholder
services. Differences in class-specific fees and expenses will result in
differences in net investment income and, therefore, the payment of different
per-share dividends by each class.
SIGNIFICANT ACCOUNTING POLICIES - The financial statements have been prepared to
comply with accounting principles generally accepted in the United States of
America. These principles require management to make estimates and assumptions
that affect reported amounts and disclosures. Actual results could differ from
those estimates. The following is a summary of the significant accounting
policies followed by the fund:
SECURITY VALUATION - Equity securities are valued at the official closing
price of, or 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. Prices for each security are taken from the principal
exchange or market in which the security trades. Fixed-income securities
are valued at prices obtained from an independent pricing service, when
such prices are available. However, where the investment adviser deems it
appropriate, 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 fair valued
as determined in good faith by authority of the fund's Board of Trustees.
Various factors may be reviewed in order to make a good faith determination
of a security's fair value. These factors include, but are not limited to,
the type and cost of the security; contractual or legal restrictions on
resale of the security; relevant financial or business developments of the
issuer; actively traded similar or related securities; conversion or
exchange rights on the security; related corporate actions; significant
events occurring after the close of trading in the security; and changes in
overall market conditions.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions
are recorded by the fund as of the date the trades are executed with
brokers. Realized gains and losses from security transactions are
determined based on the specific identified cost of the securities. In the
event a security is purchased with a delayed payment date, the fund will
segregate liquid assets sufficient to meet its payment obligations.
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.
CLASS ALLOCATIONS - Income, fees and expenses (other than class-specific
fees and expenses) and realized and unrealized gains and losses are
allocated daily among the various share classes based on their relative net
assets. Class-specific fees and expenses, such as distribution,
administrative and shareholder services, are charged directly to the
respective share class.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends and distributions
paid to shareholders are recorded on the ex-dividend date.
NON-U.S. CURRENCY TRANSLATION - Assets and liabilities, including
investment securities, denominated in non-U.S. currencies are translated
into U.S. dollars at the exchange rates in effect at the end of the
reporting period. Purchases and sales of investment securities and income
and expenses are translated into U.S. dollars at the exchange rates on the
dates of such transactions. In the accompanying financial statements, the
effects of changes in non-U.S. exchange rates on investment securities are
included with the net realized gain or loss and net unrealized appreciation
or depreciation on investments. The realized gain or loss and unrealized
appreciation or depreciation resulting from all other transactions
denominated in non-U.S. currencies are disclosed separately.
FORWARD CURRENCY CONTRACTS - The fund may enter into forward currency
contracts, which represent agreements to exchange non-U.S. currencies on
specific future dates at predetermined rates. The fund enters into these
contracts to manage its exposure to changes in non-U.S. exchange rates
arising from investments denominated in non-U.S. currencies. Upon entering
into these contracts, risks may arise from the potential inability of
counterparties to meet the terms of their contracts and from possible
movements in non-U.S. exchange rates. Due to these risks, the fund could
incur losses up to the entire contract amount, which may exceed the net
unrealized value shown in the accompanying financial statements. On a daily
basis, the fund values forward currency contracts based on the applicable
exchange rates and records unrealized gains or losses. The fund records
realized gains or losses at the time the forward contract is closed or
offset by another contract with the same broker for the same settlement
date and currency.
2. NON-U.S. INVESTMENTS
INVESTMENT RISK - The risks of investing in securities of non-U.S. issuers 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.
Gains realized by the fund on the sale of securities in certain countries are
subject to non-U.S. taxes. The fund records a liability based on unrealized
gains to provide for potential non-U.S. taxes payable upon the sale of these
securities. For the six months ended May 31, 2004, there were no non-U.S. taxes
paid on realized gains. As of May 31, 2004, there were no non-U.S. taxes
provided on unrealized gains.
3. FEDERAL INCOME TAXATION AND DISTRIBUTIONS
The fund complies with the requirements under Subchapter M of the Internal
Revenue Code applicable to mutual funds and intends to distribute substantially
all of its net taxable income and net capital gains each year. The fund is not
subject to income taxes to the extent such distributions are made.
DISTRIBUTIONS - Distributions paid to shareholders are based on net investment
income and net realized gains determined on a tax basis, which may differ from
net investment income and net realized gains for financial reporting purposes.
These differences are due primarily to differing treatment for items such as
non-U.S. currency gains and losses; short-term capital gains and losses; capital
losses related to sales of securities within 30 days of purchase; deferred
expenses; cost of investments sold; and net capital losses. The fiscal year in
which amounts are distributed may differ from the year in which the net
investment income and net realized gains are recorded by the fund. As of May 31,
2004, the cost of investment securities and cash denominated in non-U.S.
currencies for federal income tax purposes was $7,056,095,000.
During the six months ended May 31, 2004, the fund reclassified $3,000 from
undistributed net investment income to additional paid-in capital to align
financial reporting with tax reporting.
As of May 31, 2004, the components of distributable earnings on a tax basis were
as follows:
(dollars in thousands)
Undistributed net investment income and currency gains $7,575
Accumulated short-term capital losses (897,289)
Gross unrealized appreciation on investment securities 1,280,724
Gross unrealized depreciation on investment securities (964,385)
The fund began the period with capital losses above include capital loss
carryforwards of $187,487,000, $769,921,000 and $399,829,000 expiring in 2009,
2010 and 2011, respectively. Net capital gains of $459,948,000 have been
realized through May 31, 2004. The capital loss carryforwards will be used to
offset any capital gains realized by the fund in the current year or in
subsequent years through the expiration dates. The fund will not make
distributions from capital gains while capital loss carryforwards remain.
For the six months ended May 31, 2004, distributions paid to shareholders from
net investment income were $4,011,000 for Class A, $58,000 for Class F, $37,000
for Class 529-A, $15,000 for Class R-4 and $156,000 for Class R-5, totaling
$4,277,000 as shown in the accompanying financial statements.
4. FEES AND TRANSACTIONS WITH RELATED PARTIES
Capital Research and Management Company ("CRMC"), the fund's investment adviser,
is the parent company of American Funds Service Company ("AFS"), the fund's
transfer agent, and American Funds Distributors, Inc. ("AFD"), the principal
underwriter of the fund's shares.
INVESTMENT ADVISORY SERVICES - The Investment Advisory and Service Agreement
with CRMC provides for monthly fees accrued daily. These fees are based on a
declining series of annual rates beginning with 0.580% on the first $500 million
of daily net assets and decreasing to 0.345% on such assets in excess of $27
billion. For the six months ended May 31, 2004, the investment advisory services
fee was $15,133,000, which was equivalent to an annualized rate of 0.409% of
average daily net assets.
CLASS-SPECIFIC FEES AND EXPENSES - Expenses that are specific to individual
share classes are accrued directly to the respective share class. The principal
class-specific fees and expenses are described below:
DISTRIBUTION SERVICES - The fund has adopted plans of distribution for all
share classes, except Class R-5. Under the plans, the Board of Trustees
approves certain categories of expenses that are used to finance activities
primarily intended to sell fund shares. The plans provide for annual
expenses, based on a percentage of average daily net assets, ranging from
0.25% to 1.00% as noted below. In some cases, the Board of Trustees has
approved expense amounts lower than plan limits. All share classes may use
up to 0.25% of average daily net assets to pay service fees, or to
compensate AFD for paying service fees, to firms that have entered into
agreements with AFD for providing certain shareholder services. Expenses in
excess of these amounts, up to approved limits, may be used to compensate
dealers and wholesalers for shares sold.
For classes A and 529-A, the Board of Trustees has also approved the
reimbursement of dealer and wholesaler commissions paid by AFD for certain
shares sold without a sales charge. Each class reimburses AFD for amounts
billed within the prior 15 months but only to the extent that the overall
annual expense limit of 0.25% is not exceeded. As of May 31, 2004, there
were no unreimbursed expenses subject to reimbursement for classes A or
529-A.
---------------------------------------------------------------------------
Share class Currently approved limits Plan limits
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Class A 0.25% 0.25%
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Class 529-A 0.25 0.50
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Classes B and 529-B 1.00 1.00
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Classes C, 529-C and R-1 1.00 1.00
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Class R-2 0.75 1.00
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Classes 529-E and R-3 0.50 0.75
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Classes F, 529-F and R-4 0.25 0.50
---------------------------------------------------------------------------
TRANSFER AGENT SERVICES - The fund has a transfer agent agreement with AFS
for classes A and B. Under this agreement, these share classes compensate
AFS for transfer agent services including shareholder recordkeeping,
communications and transaction processing. AFS is also compensated for
certain transfer agent services provided to all other share classes from
the administrative services fees paid to CRMC described below.
ADMINISTRATIVE SERVICES - The fund has an administrative services agreement
with CRMC to provide transfer agent and other related shareholder services
for all classes of shares other than classes A and B. Each relevant class
pays CRMC annual fees of 0.15% (0.10% for Class R-5) based on its
respective average daily net assets. Each relevant class also pays AFS
additional amounts for certain transfer agent services. CRMC and AFS may
use these fees to compensate third parties for performing these services.
During the six months ended for classes R-1, R-2 and R-3, CRMC voluntarily
agreed to pay a portion of these fees. Each 529 share class is subject to
an additional annual administrative services fee of 0.10% of its respective
average daily net assets; this fee is payable to the Commonwealth of
Virginia for the maintenance of the CollegeAmerica plan. Although these
amounts are included with administrative services fees in the accompanying
financial statements, the Commonwealth of Virginia is not considered a
related party. Administrative services fees are presented gross of any
payments made by CRMC
Expenses under the agreements described above for the six months ended May
31, 2004, were as follows (dollars in thousands):
--------------------------------------------------------------------------------------------------------------
Administrative services
------------------------------------------------------------
Commonwealth of
CRMC Virginia
Distribution Transfer agent administrative transfer agent administrative
Share class services services services services services
--------------------------------------------------------------------------------------------------------------
Class A $8,493 $4,995 Not applicable Not applicable Not applicable
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class B 787 126 Not applicable Not applicable Not applicable
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class C 310 Included $46 $16 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class F 64 Included 39 14 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-A 18 Included 19 3 $ 13
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-B 25 Included 4 2 2
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-C 36 Included 5 2 4
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-E 3 Included 1 -* 1
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-F -* Included -* -* -*
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-1 6 Included 1 1 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-2 106 Included 22 100 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-3 57 Included 17 19 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-4 14 Included 9 1 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-5 Not applicable Included 23 1 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Total $9,919 $5,121 $186 $159 $20
==============================================================================================================
* Amount less than one thousand.
DEFERRED TRUSTEES' COMPENSATION - Since the adoption of the deferred
compensation plan in 1993, Trustees who are unaffiliated with CRMC may
elect to defer the cash payment of part or all of their compensation. These
deferred amounts, which remain as liabilities of 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. Trustees' compensation in the
accompanying financial statements includes $85,000 in current fees (either
paid in cash or deferred) and a net increase of $35,000 in the value of the
deferred amounts.
AFFILIATED OFFICERS AND TRUSTEES - Officers and certain Trustees of the
fund are or may be considered to be affiliated with CRMC, AFS and AFD. No
affiliated officers or Trustees received any compensation directly from the
fund.
5. CAPITAL SHARE TRANSACTIONS
Capital share transactions in the fund were as follows (dollars and shares in
thousands):
Reinvestments
of dividends Net (decrease)
Sales(1) and distributions Repurchases(1) increase
Share class Amount Shares Amount Shares Amount Shares Amount Shares
SIX MONTHS ENDED MAY 31, 2004
Class A $ 373,962 19,525 $ 3,832 213 $ (544,606) (28,492) $ (166,812) (8,754)
Class B 20,397 1,102 - - (10,065) (542) 10,332 560
Class C 20,210 1,093 - - (5,643) (306) 14,567 787
Class F 24,017 1,256 55 3 (10,331) (542) 13,741 717
Class 529-A 8,141 428 37 2 (542) (28) 7,636 402
Class 529-B 1,832 97 - - (63) (4) 1,769 93
Class 529-C 2,965 159 - - (257) (13) 2,708 146
Class 529-E 412 22 - - (11) (1) 401 21
Class 529-F 147 8 - * - * (27) (2) 120 6
Class R-1 678 36 - - (25) (1) 653 35
Class R-2 15,149 795 - - (3,455) (181) 11,694 614
Class R-3 11,623 607 - - (3,363) (177) 8,260 430
Class R-4 2,511 131 15 1 (1,397) (73) 1,129 59
Class R-5 3,532 183 148 8 (2,561) (134) 1,119 57
Total net increase
(decrease) $ 485,576 25,442 $ 4,087 227 $ (582,346) (30,496) $ (92,683) (4,827)
YEAR ENDED NOVEMBER 30, 2003
Class A $ 654,297 42,661 $ - - $(1,011,106) (68,130) $ (356,809) (25,469)
Class B 32,595 2,140 - - (15,910) (1,088) 16,685 1,052
Class C 33,567 2,203 - - (15,920) (1,101) 17,647 1,102
Class F 36,523 2,317 - - (17,928) (1,135) 18,595 1,182
Class 529-A 9,660 612 - - (507) (34) 9,153 578
Class 529-B 2,084 135 - - (73) (4) 2,011 131
Class 529-C 2,758 178 - - (101) (7) 2,657 171
Class 529-E 701 46 - - (2) -* 699 46
Class 529-F 189 13 - - (8) (1) 181 12
Class R-1 794 53 - - (320) (19) 474 34
Class R-2 18,627 1,229 - - (4,155) (280) 14,472 949
Class R-3 17,193 1,117 - - (4,564) (293) 12,629 824
Class R-4 6,554 436 - - (1,677) (109) 4,877 327
Class R-5 8,958 554 - - (3,261) (213) 5,697 341
Total net increase
(decrease) $ 824,500 53,694 $ - - $(1,075,532) (72,414) $ (251,032) (18,720)
* Amount less than one thousand.
(1) Includes exchanges between share classes of the fund.
6. RESTRICTED SECURITIES
The fund has invested in certain securities for which resale may be limited to
qualified buyers or which are otherwise restricted. These securities are
identified in the investment portfolio. As of May 31, 2004, the total value of
restricted securities was $267,849,000, which represented 3.64% of the net
assets of the fund.
7. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
The fund made purchases and sales of investment securities, excluding short-term
securities, of $1,249,474,000 and $1,323,312,000, respectively, during the six
months ended May 31, 2004.
The fund receives a reduction in its custodian fee equal to the amount of
interest calculated on certain cash balances held at the custodian bank. For the
six months ended May 31, 2004, the custodian fee of $592,000 included $1,000
that was offset by this reduction, rather than paid in cash.
FINANCIAL HIGHLIGHTS (1)
Income (loss) from investment operations(2)
Net gains
Net asset (losses) on
value, Net securities Total from
beginning investment (both realized investment
of period income (loss) and unrealized) operations
CLASS A:
Six months ended 5/31/2004 (5) $18.11 $.02 $1.11 $1.13
Year ended 11/30/2003 14.94 .01 3.16 3.17
Year ended 11/30/2002 18.01 - (6) (3.07) (3.07)
Year ended 11/30/2001 24.69 .01 (3.76) (3.75)
Year ended 11/30/2000 29.90 .12 (2.01) (1.89)
Year ended 11/30/1999 23.65 .10 8.83 8.93
CLASS B:
Six months ended 5/31/2004 (5) 17.57 (.05) 1.07 1.02
Year ended 11/30/2003 14.61 (.11) 3.07 2.96
Year ended 11/30/2002 17.75 (.12) (3.02) (3.14)
Year ended 11/30/2001 24.56 (.16) (3.72) (3.88)
Period from 3/15/2000 to 11/30/2000 31.27 (.06) (6.65) (6.71)
CLASS C:
Six months ended 5/31/2004 (5) 17.52 (.05) 1.07 1.02
Year ended 11/30/2003 14.57 (.11) 3.06 2.95
Year ended 11/30/2002 17.70 (.12) (3.01) (3.13)
Period from 3/15/2001 to 11/30/2001 19.75 (.16) (1.89) (2.05)
CLASS F:
Six months ended 5/31/2004 (5) 18.07 .02 1.10 1.12
Year ended 11/30/2003 14.91 .01 3.15 3.16
Year ended 11/30/2002 17.98 - (6) (3.07) (3.07)
Period from 3/15/2001 to 11/30/2001 19.92 (.04) (1.90) (1.94)
CLASS 529-A:
Six months ended 5/31/2004 (5) 18.11 .02 1.10 1.12
Year ended 11/30/2003 14.93 .02 3.16 3.18
Period from 2/15/2002 to 11/30/2002 17.14 - (6) (2.21) (2.21)
CLASS 529-B:
Six months ended 5/31/2004 (5) 17.82 (.06) 1.08 1.02
Year ended 11/30/2003 14.83 (.13) 3.12 2.99
Period from 2/19/2002 to 11/30/2002 16.76 (.09) (1.84) (1.93)
CLASS 529-C:
Six months ended 5/31/2004 (5) 17.83 (.06) 1.08 1.02
Year ended 11/30/2003 14.84 (.13) 3.12 2.99
Period from 2/21/2002 to 11/30/2002 16.55 (.09) (1.62) (1.71)
CLASS 529-E:
Six months ended 5/31/2004 (5) 18.01 (.01) 1.10 1.09
Year ended 11/30/2003 14.91 (.05) 3.15 3.10
Period from 3/15/2002 to 11/30/2002 18.26 (.02) (3.33) (3.35)
CLASS 529-F:
Six months ended 5/31/2004 (5) 18.09 .01 1.10 1.11
Year ended 11/30/2003 14.94 (.01) 3.16 3.15
Period from 10/11/2002 to 11/30/2002 12.30 - (6) 2.64 2.64
CLASS R-1:
Six months ended 5/31/2004 (5) $17.92 $(.05) $1.09 $1.04
Year ended 11/30/2003 14.90 (.11) 3.13 3.02
Period from 6/21/2002 to 11/30/2002 15.45 (.04) (.51) (.55)
CLASS R-2:
Six months ended 5/31/2004 (5) 17.92 (.05) 1.08 1.03
Year ended 11/30/2003 14.88 (.11) 3.15 3.04
Period from 5/31/2002 to 11/30/2002 17.02 (.05) (2.09) (2.14)
CLASS R-3:
Six months ended 5/31/2004 (5) 18.03 (.01) 1.09 1.08
Year ended 11/30/2003 14.92 (.05) 3.16 3.11
Period from 6/25/2002 to 11/30/2002 15.26 (.02) (.32) (.34)
CLASS R-4:
Six months ended 5/31/2004 (5) 18.12 .02 1.10 1.12
Year ended 11/30/2003 14.94 .01 3.17 3.18
Period from 7/25/2002 to 11/30/2002 12.85 (.01) 2.10 2.09
CLASS R-5:
Six months ended 5/31/2004 (5) 18.21 .05 1.10 1.15
Year ended 11/30/2003 14.97 .06 3.18 3.24
Period from 5/15/2002 to 11/30/2002 17.58 .03 (2.64) (2.61)
Dividends and distributions
Dividends
(from net Distributions Total Net asset
investment (from capital dividends and value, end Total
income) gains) distributions of period return (3)
CLASS A:
Six months ended 5/31/2004 (5) $(.01) $ - $(.01) $19.23 6.36%
Year ended 11/30/2003 - - - 18.11 21.22
Year ended 11/30/2002 - - - 14.94 (17.05)
Year ended 11/30/2001 - (2.93) (2.93) 18.01 (17.67)
Year ended 11/30/2000 (.14) (3.18) (3.32) 24.69 (7.43)
Year ended 11/30/1999 (.14) (2.54) (2.68) 29.90 41.71
CLASS B:
Six months ended 5/31/2004 (5) - - - 18.59 5.92
Year ended 11/30/2003 - - - 17.57 20.26
Year ended 11/30/2002 - - - 14.61 (17.69)
Year ended 11/30/2001 - (2.93) (2.93) 17.75 (18.36)
Period from 3/15/2000 to 11/30/2000 - - - 24.56 (21.46)
CLASS C:
Six months ended 5/31/2004 (5) - - - 18.54 5.94
Year ended 11/30/2003 - - - 17.52 20.25
Year ended 11/30/2002 - - - 14.57 (17.68)
Period from 3/15/2001 to 11/30/2001 - - - 17.70 (10.38)
CLASS F:
Six months ended 5/31/2004 (5) (.03) - (.03) 19.16 6.29
Year ended 11/30/2003 - - - 18.07 21.19
Year ended 11/30/2002 - - - 14.91 (17.08)
Period from 3/15/2001 to 11/30/2001 - - - 17.98 (9.74)
CLASS 529-A:
Six months ended 5/31/2004 (5) (.03) - (.03) 19.20 6.32
Year ended 11/30/2003 - - - 18.11 21.30
Period from 2/15/2002 to 11/30/2002 - - - 14.93 (12.89)
CLASS 529-B:
Six months ended 5/31/2004 (5) - - - 18.84 5.84
Year ended 11/30/2003 - - - 17.82 20.16
Period from 2/19/2002 to 11/30/2002 - - - 14.83 (11.52)
CLASS 529-C:
Six months ended 5/31/2004 (5) - - - 18.85 5.83
Year ended 11/30/2003 - - - 17.83 20.15
Period from 2/21/2002 to 11/30/2002 - - - 14.84 (10.33)
CLASS 529-E:
Six months ended 5/31/2004 (5) - - - 19.10 6.16
Year ended 11/30/2003 - - - 18.01 20.79
Period from 3/15/2002 to 11/30/2002 - - - 14.91 (18.35)
CLASS 529-F:
Six months ended 5/31/2004 (5) (.02) - (.02) 19.18 6.25
Year ended 11/30/2003 - - - 18.09 21.08
Period from 10/11/2002 to 11/30/2002 - - - 14.94 21.46
CLASS R-1:
Six months ended 5/31/2004 (5) $- $- $- $18.96 5.92%
Year ended 11/30/2003 - - - 17.92 20.27
Period from 6/21/2002 to 11/30/2002 - - - 14.90 (3.56)
CLASS R-2:
Six months ended 5/31/2004 (5) - - - 18.95 5.86
Year ended 11/30/2003 - - - 17.92 20.43
Period from 5/31/2002 to 11/30/2002 - - - 14.88 (12.57)
CLASS R-3:
Six months ended 5/31/2004 (5) - - - 19.11 6.10
Year ended 11/30/2003 - - - 18.03 20.84
Period from 6/25/2002 to 11/30/2002 - - - 14.92 (2.23)
CLASS R-4:
Six months ended 5/31/2004 (5) (.03) - (.03) 19.21 6.28
Year ended 11/30/2003 - - - 18.12 21.28
Period from 7/25/2002 to 11/30/2002 - - - 14.94 16.26
CLASS R-5:
Six months ended 5/31/2004 (5) (.06) - (.06) 19.30 6.48
Year ended 11/30/2003 - - - 18.21 21.64
Period from 5/15/2002 to 11/30/2002 - - - 14.97 (14.85)
Ratio of expenses Ratio of expenses Ratio of net
Net assets, to average net to average net income (loss)
end of period assets before assets after to average
(in millions) reimbursement reimbursement (4) net assets
CLASS A:
Six months ended 5/31/2004 (5) $6,913 .85% (8) .85% (8) .24% (8)
Year ended 11/30/2003 6,671 .89 .89 .09
Year ended 11/30/2002 5,883 .89 .89 (.01)
Year ended 11/30/2001 8,086 .82 .82 .02
Year ended 11/30/2000 10,418 .81 .81 .42
Year ended 11/30/1999 9,522 .78 .78 .42
CLASS B:
Six months ended 5/31/2004 (5) 163 1.63 (8) 1.63 (8) (.53) (8)
Year ended 11/30/2003 144 1.68 1.68 (.70)
Year ended 11/30/2002 104 1.69 1.69 (.79)
Year ended 11/30/2001 111 1.63 1.63 (.81)
Period from 3/15/2000 to 11/30/2000 85 1.58 (8) 1.58 (8) (.29) (8)
CLASS C:
Six months ended 5/31/2004 (5) 68 1.67 (8) 1.67 (8) (.55) (8)
Year ended 11/30/2003 51 1.69 1.69 (.73)
Year ended 11/30/2002 26 1.70 1.70 (.77)
Period from 3/15/2001 to 11/30/2001 15 1.86 (8) 1.86 (8) (1.19) (8)
CLASS F:
Six months ended 5/31/2004 (5) 56 .91 (8) .91 (8) .23 (8)
Year ended 11/30/2003 40 .91 .91 .04
Year ended 11/30/2002 15 .95 .95 (.02)
Period from 3/15/2001 to 11/30/2001 7 1.00 (8) 1.00 (8) (.34) (8)
CLASS 529-A:
Six months ended 5/31/2004 (5) 29 .88 (8) .88 (8) .25 (8)
Year ended 11/30/2003 20 .85 .85 .11
Period from 2/15/2002 to 11/30/2002 8 1.00 (8) 1.00 (8) .02 (8)
CLASS 529-B:
Six months ended 5/31/2004 (5) 6 1.79 (8) 1.79 (8) (.66) (8)
Year ended 11/30/2003 4 1.81 1.81 (.86)
Period from 2/19/2002 to 11/30/2002 1 1.84 (8) 1.84 (8) (.82) (8)
CLASS 529-C:
Six months ended 5/31/2004 (5) 8 1.78 (8) 1.78 (8) (.65) (8)
Year ended 11/30/2003 5 1.80 1.80 (.84)
Period from 2/21/2002 to 11/30/2002 2 1.80 (8) 1.80 (8) (.78) (8)
CLASS 529-E:
Six months ended 5/31/2004 (5) 2 1.24 (8) 1.24 (8) (.11) (8)
Year ended 11/30/2003 1 1.25 1.25 (.30)
Period from 3/15/2002 to 11/30/2002 - (7) 1.25 (8) 1.25 (8) (.23) (8)
CLASS 529-F:
Six months ended 5/31/2004 (5) - (7) .99 (8) .99 (8) .15 (8)
Year ended 11/30/2003 - (7) 1.00 1.00 (.04)
Period from 10/11/2002 to 11/30/2002 - (7) .14 .14 (.03)
CLASS R-1:
Six months ended 5/31/2004 (5) $2 1.79% (8) 1.66% (8) (.50)%(8)
Year ended 11/30/2003 1 1.96 1.66 (.69)
Period from 6/21/2002 to 11/30/2002 - (7) 1.43 .73 (.28)
CLASS R-2:
Six months ended 5/31/2004 (5) 34 2.07 (8) 1.62 (8) (.48) (8)
Year ended 11/30/2003 21 2.35 1.62 (.68)
Period from 5/31/2002 to 11/30/2002 3 2.00 (8) 1.63 (8) (.78) (8)
CLASS R-3:
Six months ended 5/31/2004 (5) 26 1.28 (8) 1.24 (8) (.11) (8)
Year ended 11/30/2003 17 1.37 1.24 (.29)
Period from 6/25/2002 to 11/30/2002 2 .61 .54 (.12)
CLASS R-4:
Six months ended 5/31/2004 (5) 12 .87 (8) .87 (8) .24 (8)
Year ended 11/30/2003 10 .88 .88 .09
Period from 7/25/2002 to 11/30/2002 4 .33 .31 (.03)
CLASS R-5:
Six months ended 5/31/2004 (5) 47 .56 (8) .56 (8) .54 (8)
Year ended 11/30/2003 44 .56 .56 .41
Period from 5/15/2002 to 11/30/2002 31 .56 (8) .56 (8) .44 (8)
Six months ended May 31, Year ended November 30
2004 (5) 2003 2002 2001 2000 1999
Portfolio turnover rate for
all classes of shares 18% 38% 37% 41% 54% 48%
(1) Based on operations for the period shown (unless otherwise noted) and,
accordingly, may not be representative of a full year.
(2) Year ended 1999 is based on shares outstanding on the last day of the year;
all other periods are based on average shares outstanding.
(3) Total returns exclude all sales charges, including contingent deferred
sales charges.
(4) The ratios in this column reflect the impact, if any, of certain
reimbursements and payments from CRMC. During the start-up period for the
retirement plan share classes (except Class R-5), CRMC voluntarily agreed
to pay a portion of the fees related to transfer agent services.
(5) Unaudited.
(6) Amount less than one cent.
(7) Amount less than $1 million.
(8) Annualized.
See Notes to Financial Statements
OTHER SHARE CLASS RESULTS unaudited
CLASS B, CLASS C, CLASS F AND CLASS 529
Figures shown are past results and are not predictive of results in future
periods. Current and future results may be lower or higher than those shown.
Share prices and returns will vary, so investors may lose money. For the most
current information and month-end results, visit americanfunds.com.
Returns for periods ended June 30, 2004
(the most recent calendar quarter): 1 YEAR LIFE OF CLASS
CLASS B SHARES
Reflecting applicable contingent deferred sales charge (CDSC),
maximum of 5%, payable only if shares are sold within
six years of purchase + 16.54% - 9.01% (1)
Not reflecting CDSC + 21.54% - 8.63% (1)
CLASS C SHARES
Reflecting CDSC, maximum of 1%, payable only if shares
are sold within one year of purchase + 20.54% - 1.60% (2)
Not reflecting CDSC + 21.54% - 1.60% (2)
CLASS F SHARES (3)
Not reflecting annual asset-based fee charged by sponsoring firm + 22.44% - .79% (2)
CLASS 529-A SHARES
Reflecting 5.75% maximum sales charge + 15.46% + 2.88% (4)
Not reflecting maximum sales charge + 22.51% + 5.49% (4)
CLASS 529-B SHARES
Reflecting applicable CDSC, maximum of 5%, payable only
if shares are sold within six years of purchase + 16.37% + 3.94% (5)
Not reflecting CDSC + 21.37% + 5.53% (5)
CLASS 529-C SHARES
Reflecting CDSC, maximum of 1%, payable only if shares
are sold within one year of purchase + 20.35% + 6.14% (6)
Not reflecting CDSC + 21.35% + 6.14% (6)
CLASS 529-E SHARES (3) + 22.00% + 2.45% (7)
CLASS 529-F SHARES (3)
Not reflecting annual asset-based fee charged by sponsoring firm + 22.32% + 30.42% (8)
(1) Average annual total return from March 15, 2000, when Class B shares were
first sold.
(2) Average annual total return from March 15, 2001, when Class C and Class F
shares were first sold.
(3) These shares are sold without any initial or contingent deferred sales
charge.
(4) Average annual total return from February 15, 2002, when Class 529-A shares
were first sold.
(5) Average annual total return from February 19, 2002, when Class 529-B shares
were first sold.
(6) Average annual total return from February 21, 2002, when Class 529-C shares
were first sold.
(7) Average annual total return from March 15, 2002, when Class 529-E shares
were first sold.
(8) Average annual total return from October 11, 2002, when Class 529-F shares
were first sold.
OFFICES OF THE FUND AND OF THE INVESTMENT ADVISER
Capital Research and Management Company
333 South Hope Street
Los Angeles, CA 90071-1406
135 South State College Boulevard
Brea, CA 92821-5823
TRANSFER AGENT FOR SHAREHOLDER ACCOUNTS
American Funds Service Company
(Please write to the address nearest you.)
P.O. Box 25065 Santa Ana, CA 92799-5065
P.O. Box 659522 San Antonio, TX 78265-9522
P.O. Box 6007 Indianapolis, IN 46206-6007
P.O. Box 2280 Norfolk, VA 23501-2280
CUSTODIAN OF ASSETS
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02105-1713
COUNSEL
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, CA 90071-2899
INDEPENDENT AUDITORS
Deloitte & Touche LLP
Two California Plaza
350 South Grand Avenue
Los Angeles, CA 90071-3462
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, CA 90071-1406
There are several ways to invest in The New Economy Fund. Class A shares are
subject to a 5.75% maximum up-front sales charge that declines for accounts (and
aggregated investments) of $25,000 or more. Other share classes, which are
generally not available for certain employer-sponsored retirement plans, have no
up-front sales charges but are subject to additional annual expenses and fees.
Annualized expenses for Class B shares were 0.78 percentage points higher than
for Class A shares; Class B shares convert to Class A shares after eight years
of ownership. If redeemed within six years, Class B shares may also be subject
to a contingent deferred sales charge ("CDSC") of up to 5% that declines over
time. Class C shares were subject to annualized expenses 0.82 percentage points
higher than those for Class A shares and a 1% CDSC if redeemed within the first
year after purchase. Class C shares convert to Class F shares after 10 years.
Class F shares, which are available only through certain fee-based programs
offered by broker-dealer firms and registered investment advisers, had higher
annualized expenses (by 0.06 percentage points) than did Class A shares, and an
annual asset-based fee charged by the sponsoring firm. Expenses are deducted
from income earned by the fund. As a result, dividends and investment results
will differ for each share class.
INVESTORS SHOULD CAREFULLY CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES
AND EXPENSES OF THE AMERICAN FUNDS AND COLLEGEAMERICA. THIS AND OTHER IMPORTANT
INFORMATION IS CONTAINED IN THE FUND'S PROSPECTUS, WHICH CAN BE OBTAINED FROM
YOUR FINANCIAL ADVISER AND SHOULD BE READ CAREFULLY BEFORE INVESTING. YOU MAY
ALSO CALL AMERICAN FUNDS SERVICE COMPANY AT 800/421-0180 OR VISIT THE AMERICAN
FUNDS WEBSITE AT AMERICANFUNDS.COM.
"AMERICAN FUNDS PROXY VOTING GUIDELINES" -- WHICH DESCRIBES HOW WE VOTE PROXIES
RELATING TO PORTFOLIO SECURITIES -- IS AVAILABLE UPON REQUEST, FREE OF CHARGE,
BY CALLING AMERICAN FUNDS SERVICE COMPANY, VISITING THE AMERICAN FUNDS WEBSITE
OR ACCESSING THE U.S. SECURITIES AND EXCHANGE COMMISSION WEBSITE AT WWW.SEC.GOV.
This report is for the information of shareholders of The New Economy Fund, but
it may also be used as sales literature when preceded or accompanied by the
current prospectus, which gives details about charges, expenses, investment
objectives and operating policies of the fund. If used as sales material after
September 30, 2004, this report must be accompanied by an American Funds
statistical update for the most recently completed calendar quarter.
[logo - American Funds(R)]
The right choice for the long term(R)
WHAT MAKES AMERICAN FUNDS DIFFERENT?
For more than 70 years, we have followed a consistent philosophy that we firmly
believe is in our investors' best interests. The range of opportunities offered
by our family of just 29 carefully conceived, broadly diversified funds has
attracted over 25 million shareholder accounts.
OUR UNIQUE COMBINATION OF STRENGTHS INCLUDES THESE FIVE FACTORS:
o A LONG-TERM, VALUE-ORIENTED APPROACH
Rather than follow fads, we pursue a consistent strategy, focusing on each
investment's long-term potential.
o AN UNPARALLELED GLOBAL RESEARCH EFFORT
American Funds draws on one of the industry's most globally integrated
research networks.
o THE MULTIPLE PORTFOLIO COUNSELOR SYSTEM
Every American Fund is divided among a number of portfolio counselors. Each
takes responsibility for a portion independently, within each fund's
objectives; in most cases, research analysts manage a portion as well. Over
time this method has contributed to a consistency of results and continuity
of management.
o EXPERIENCED INVESTMENT PROFESSIONALS
The recent market decline was not the first for most of the portfolio
counselors who serve the American Funds. Nearly 70% of them were in the
investment business before the sharp market decline of 1987.
o A COMMITMENT TO LOW OPERATING EXPENSES
American Funds' operating expenses are among the lowest in the mutual fund
industry. Our portfolio turnover rates are low as well, keeping transaction
costs and tax consequences contained.
29 MUTUAL FUNDS, CONSISTENT PHILOSOPHY, CONSISTENT RESULTS
o GROWTH FUNDS
AMCAP Fund(R)
EuroPacific Growth Fund(R)
The Growth Fund of America(R)
> The New Economy Fund(R)
New Perspective Fund(R)
New World FundSM
SMALLCAP World Fund(R)
o GROWTH-AND-INCOME FUNDS
American Mutual Fund(R)
Capital World Growth and Income FundSM
Fundamental InvestorsSM
The Investment Company of America(R)
Washington Mutual Investors FundSM
o EQUITY-INCOME FUNDS
Capital Income Builder(R)
The Income Fund of America(R)
o BALANCED FUND
American Balanced Fund(R)
o BOND FUNDS
American High-Income TrustSM
The Bond Fund of AmericaSM
Capital World Bond Fund(R)
Intermediate Bond Fund of America(R)
U.S. Government Securities FundSM
o TAX-EXEMPT BOND FUNDS
American High-Income Municipal Bond Fund(R)
Limited Term Tax-Exempt Bond Fund of AmericaSM
The Tax-Exempt Bond Fund of America(R)
STATE-SPECIFIC TAX-EXEMPT FUNDS
The Tax-Exempt Fund of California(R)
The Tax-Exempt Fund of Maryland(R)
The Tax-Exempt Fund of Virginia(R)
o MONEY MARKET FUNDS
The Cash Management Trust of America(R)
The Tax-Exempt Money Fund of AmericaSM
The U.S. Treasury Money Fund of AmericaSM
THE CAPITAL GROUP COMPANIES
American Funds
Capital Research and Management
Capital International
Capital Guardian
Capital Bank and Trust
Lit. No. MFGESR-914-0704
Litho in USA BDC/L/6276-S1943
Printed on recycled paper
ITEM 2 - Code of Ethics
Not applicable for filing of Semiannual Reports to Shareholders.
ITEM 3 - Audit Committee Financial Expert
Not applicable for filing of Semiannual Reports to Shareholders.
ITEM 4 - Principal Accountant Fees and Services
Not applicable for filing of Semiannual Reports to Shareholders.
ITEM 5 - Audit Committee of Listed Registrants
Not applicable.
ITEM 6 - Reserved
ITEM 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies
Not applicable to this Registrant, insofar as the Registrant is not a closed-end
management investment company.
ITEM 8 - Reserved
ITEM 9 - Submission of Matters to a Vote of Security Holders
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrant's Board of Trustees since the registrant
last submitted a proxy statement to its shareholders. The procedures are as
follows. The registrant has a nominating committee comprised solely of persons
who are not considered "interested persons" of the registrant within the meaning
of the Investment Company Act of 1940. 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 Trustees. 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 registrant, c/o the registrant's Secretary, and must be 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 nominating committee.
ITEM 10 - Controls and Procedures
(a) The officers providing the certifications in this report in accordance with
rule 30a-2 under the Investment Company Act of 1940 have concluded, based
on their evaluation of the Registrant's disclosure controls and procedures
(as such term is defined in such rule), that such controls and procedures
are adequate and reasonably designed to achieve the purposes described in
paragraph (c) of such rule.
(b) There were no changes in the Registrant's internal controls over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act of
1940) that occurred during the Registrant's last fiscal half-year (the
Registrant's second fiscal half-year in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the
Registrant's internal control over financial reporting.
ITEM 11 - Exhibits
(a) The Code of Ethics - not applicable for filing of Semiannual Reports to
Shareholders.
(b) The certifications required by Rule 30a-2 of the Investment Company Act of
1940, as amended, and Sections 302 and 906 of the Sarbanes-Oxley Act of
2002 are attached as exhibits hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized. The New
Economy Fund
By /s/ Timothy D. Armour
- -------------------------------------------------------
Timothy D. Armour, President and PEO
Date: August 6, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/Timothy D. Armour
- ----------------------------------------------------------
Timothy D. Armour, President and PEO
Date: August 6, 2004
By /s/ David A. Pritchett
- --------------------------------------------------------
David A. Pritchett, Treasurer
Date: August 6, 2004