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Capital World Growth and Income Fund
[photo – elderly man adjusting grapevine]
Semi-annual report for the six months ended May 31, 2007
Capital World Growth and Income FundSM seeks long-term capital growth while providing current income. It invests on a global basis in a diversified portfolio consisting primarily of common stocks and other equity securities.
This fund is one of the 30 American Funds. The organization ranks among the nation’s three largest mutual fund families. For 75 years, 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. 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. For 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, 2007 (the most recent calendar quarter):
| | 1 year | 5 years | 10 years |
Class A shares | | | |
Reflecting 5.75% maximum sales charge | +20.67% | +18.02% | +12.83% |
The total annual fund operating expense ratio for Class A shares as of the most recent fiscal year-end was 0.73%. This figure does not reflect a fee waiver currently in effect; therefore, the actual expense ratio is lower.
The fund’s investment adviser waived 5% of its management fees from September 1, 2004, through March 31, 2005, and increased it to 10% on April 1, 2005. Fund results shown reflect actual expenses, with the waiver applied. Fund results would have been lower without the waiver. Please see the Financial Highlights table on pages 24 to 27 for details.
The fund’s 30-day yield for Class A shares as of June 30, 2007, reflecting the 5.75% maximum sales charge and calculated in accordance with the Securities and Exchange Commission formula, was 2.23% (2.19% without the fee waiver).
Results for other share classes can be found on page 6.
Investing outside the United States is subject to additional risks, such as currency fluctuations and political instability, which are detailed in the fund’s prospectus.
[photo – elderly man adjusting grapevine]
Fellow shareholders:
Global stock markets recorded impressive gains for the first half of the current fiscal year, overcoming a brief downturn midway through the period.
For the six months ended May 31, 2007, Capital World Growth and Income Fund recorded a total return of 14.0%. Fund results again exceeded that of its benchmark, the unmanaged MSCI World Index, which recorded a 12.6% return. In comparison, the Lipper Global Funds Index, a peer group measure, returned 12.1%. Comparative results for longer time periods are shown in the table below.
During the period, shareholders received quarterly dividends totaling 45 cents a share, as well as a capital gain distribution of approximately $1.80 a share paid in December 2006. For the six months, shareholders recorded an income return of 1.1%.
[Begin Sidebar]
| Class A share results at a glance |
| (as of May 31, 2007, with all distributions reinvested) |
| | | | | |
| | Average annual total returns |
| | | | | Lifetime |
| | 1 year | 5 years | 10 years | (since 3/26/93) |
| Capital World Growth | | | | |
| and Income Fund | +27.6% | +17.7% | +13.9% | +15.1% |
| MSCI World Index* | +25.1 | +13.3 | +8.1 | +10.3 |
Lipper Global Funds Index† | +23.6 | +12.7 | +8.3 | +10.1 |
| * The MSCI World Index is a market capitalization index that is designed to measure global developed-market equity results. The index consists of 23 developed-country indexes, including the United States. The index is unmanaged, and its results include reinvested dividends and/or distributions, but do not reflect the effect of sales charges, commissions, expenses or taxes. |
| † Lipper Global Funds Index is an equally weighted index of funds that invest at least 25% of their portfolios in securities traded outside the United States and that may own U.S. securities as well. The results of the underlying funds in the index include the reinvestment of dividends and capital gain distributions, as well as brokerage commissions paid by the funds for portfolio transactions, but do not reflect the effect of sales charges or taxes. |
[End Sidebar]
A look at global markets
Recent stock market gains were fueled by continued economic strength throughout the broader global economy — notably in Europe and the Asia/Pacific region. Economic activity helped lift the stocks of cyclical businesses, such as metals and mining companies, while private equity buyouts and mergers and acquisitions boosted share prices across a wide swath of the market. As a result, gains were widespread globally and sprinkled among most sectors of the stock market.
One glaring exception to the economic uptrend was the United States, which experienced a significant slowing of activity during the period. The ongoing slump in the housing market, large manufacturing inventories and relatively high short-term interest rates all contributed to weaker growth. U.S. stocks, however, largely overcame the economic drag and posted solid returns, bolstered by acquisitions and buyouts, good corporate earnings and investors’ expectations for lower rates in the months ahead. For the six months ended May 31, 2007, U.S. stocks rose 10.4%* and accounted for 22% of portfolio holdings.
Europe houses the largest portion of fund holdings with about 46% of portfolio assets. It also recorded some of the best returns of the period. All of its developed markets, save Italy, produced better results in local currency terms than did the United States. Results were helped by sustained economic growth, rising domestic consumption and widespread merger activity. In some instances, the fund received an additional boost from a modest strengthening of the euro and the British pound against the U.S. dollar. On a dollar-adjusted basis, Europe’s major markets recorded gains that ranged from 10.1% (Italy) to 32.4% (Finland). France, Germany and the United Kingdom, the three largest markets, posted dollar-adjusted gains of 18.1%, 27.5% and 12.2%, respectively.
Currency fluctuations played an even larger role for the Commonwealth countries of Canada and Australia. During the period, the currencies of both countries appreciated significantly against the U.S. dollar — the Canadian dollar reached a 30-year high — making good stock returns even better for U.S. investors. This translated into a 21.9% return from the Australian market and an 18.2% gain in Canada.
Major markets in Asia also delivered good results, buoyed by sustained economic growth. In contrast to most developed markets, however, some returns were dampened by a stronger U.S. dollar versus local currencies. This was the case in Japan and Taiwan, where markets returned 5.8% and 1.8%, respectively. In Hong Kong, Korea and Singapore, currency differences were less pronounced, and returns were significantly higher: up 11.5%, 18.0% and 28.3%, respectively.
| *Country returns are based on MSCI indexes, expressed in U.S. dollars (except where noted), and assume the reinvestment of gross dividends. |
[Begin Sidebar]
[begin pie chart]
Where the fund’s assets were invested
Percent of net assets by region as of May 31, 2007
| The Americas | 27.0% |
| | |
| Asia/Pacific | 19.4% |
| | |
| Bonds, short-term securities & other assets less liabilities | 6.7% |
| | |
| Europe | 45.7% |
| | |
| Other | 1.2% |
[end pie chart]
| | | Capital World Growth | MSCI |
| | | and Income Fund | World Index |
| | | | |
| • | The Americas | 27.0% | 52.0% |
| | United States | 22.0 | 48.2 |
| | Brazil | 2.2 | — |
| | Canada | 1.9 | 3.8 |
| | Mexico | .9 | — |
| | | | |
| • | Europe | 45.7% | 33.5% |
| | France | 9.5 | 5.0 |
| | Germany | 9.0 | 4.0 |
| | United Kingdom | 7.7 | 11.0 |
| | Netherlands | 3.5 | 1.7 |
| | Switzerland | 3.2 | 3.2 |
| | Spain | 2.5 | 2.0 |
| | Italy | 2.0 | 1.8 |
| | Greece | 1.3 | .3 |
| | Denmark | 1.3 | .4 |
| | Finland | 1.2 | .8 |
| | Sweden | 1.1 | 1.3 |
| | Norway | .8 | .5 |
| | Belgium | .7 | .6 |
| | Austria | .6 | .3 |
| | Other Europe | 1.3 | .6 |
| | | | |
| • | Asia/Pacific | 19.4% | 14.5% |
| | Korea | 3.8 | — |
| | Japan | 3.6 | 10.2 |
| | Taiwan | 3.0 | — |
| | Australia | 2.2 | 2.9 |
| | Hong Kong | 1.5 | .8 |
| | Singapore | 1.3 | .5 |
| | India | 1.3 | — |
| | Other Asia/Pacific | 2.7 | .1 |
| | | | |
| • | Other | 1.2% | — |
| | | | |
| • | Bonds, short-term securities | | |
| | & other assets less liabilities | 6.7% | — |
[End Sidebar]
While most of the fund’s holdings are based in developed markets of the world, the developing markets play an increasingly important role for the fund. They are home to a small but growing number of holdings, and their burgeoning economies afford growth opportunities for many of the established companies that are central to the fund’s investment focus. Developing markets have recorded strong returns in recent years, and this reporting period was no exception. The fund’s larger exposures to these markets include Brazil, India and Mexico, which returned 36.5%, 19.5% and 27.8%, respectively.
Research shaping results
Gains in global markets provided a strong tailwind for fund results, but our individual stock selection helped us deliver better relative returns for the period. Importantly, Capital World Growth and Income Fund is not a global index fund. The fund’s portfolio counselors and investment analysts invest selectively, focusing on their highest conviction ideas. These ideas are honed by the fund’s growth and income objectives, which typically steer our choices toward well-established, dividend-paying companies, wherever we may find them.
The fund’s top 10 holdings (see table below) are a good representation of our research efforts and convictions. Reflecting the fund’s current emphasis, nine of these holdings hail from Europe, though virtually all have significant operations outside their countries of origin. While returns for these holdings varied significantly, only one (RWE) produced negative results for the period. Together, these holdings account for about 15% of fund assets.
[Begin Sidebar]
| Largest equity holdings | | | |
| (as of May 31, 2007) | | | |
| | | | |
| | | Percent of | Six-month |
| Company | Country | net assets | return |
| | | | |
| E.ON | Germany | 1.8% | +28.0% |
| Royal Dutch Shell | United Kingdom | 1.6 | +5.4 |
| RWE | Germany | 1.5 | –0.1 |
| Bayer | Germany | 1.5 | +39.6 |
| Banco Santander Central Hispano | Spain | 1.5 | +5.8 |
| Microsoft | United States | 1.4 | +4.6 |
| Diageo | United Kingdom | 1.4 | +11.1 |
| Koninklijke KPN | Netherlands | 1.3 | +23.8 |
| Novo Nordisk | Denmark | 1.3 | +36.4 |
| Roche Holding | Switzerland | 1.2 | +1.6 |
[End Sidebar]
The summary portfolio, which begins on page 7, offers a more complete picture of the fund’s broad diversification, both among industries and countries. It also serves as a reminder that fund results are determined by the collective returns of our many individual holdings, not just the fortunes of a few. Altogether, the portfolio holds stocks of some 360 companies culled from 39 countries around the world. These holdings embody the best ideas of the fund’s nine portfolio counselors and the more than six dozen investment analysts who participate in the portfolio.
The next six months
The strong gains of the fiscal first half will surely be difficult to repeat. Though global growth remains solid, central banks have become increasingly concerned about inflation. During the past year, several major central banks have raised short-term rates in an effort to contain inflationary pressures, which often accompany periods of sustained economic growth. If interest rates continue to rise globally in the months ahead, that could have the effect of restraining growth and depressing valuations, thus limiting stock market gains.
With this in mind, we advise shareholders to set prudent expectations, look beyond short-term trends and maintain a long-term perspective on all their investments. We believe that the true benefits of Capital World Growth and Income Fund accrue over the long term and reward patient investors who hold the fund as an integral part of their broader financial strategy.
We thank you for making us part of your investment future and look forward to reporting to you again at the close of the fiscal year.
Cordially,
/s/ Gina H. Despres
Gina H. Despres
Vice Chairman of the Board
/s/ Stephen E. Bepler
Stephen E. Bepler
President
July 6, 2007
For current information about the fund, visit americanfunds.com.
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 current information and month-end results, visit americanfunds.com.
| Average annual total returns for periods ended June 30, 2007 | | | |
| (the most recent calendar quarter): | | | Life |
| | 1 year | 5 years | of class |
Class B shares— first sold 3/15/00 | | | |
Reflecting applicable contingent deferred sales | | | |
charge (CDSC), maximum of 5%, payable only | | | |
if shares are sold within six years of purchase | +22.01% | +18.30% | +11.36% |
Not reflecting CDSC | +27.01% | +18.51% | +11.36% |
| | | | |
Class C shares— first sold 3/15/01 | | | |
Reflecting CDSC, maximum of 1%, payable only | | | |
if shares are sold within one year of purchase | +25.96% | +18.44% | +13.63% |
Not reflecting CDSC | +26.96% | +18.44% | +13.63% |
| | | | |
Class F shares*— first sold 3/15/01 | | | |
Not reflecting annual asset-based fee charged | | | |
by sponsoring firm | +27.99% | +19.36% | +14.53% |
| | | | |
Class 529-A shares†— first sold 2/15/02 | | | |
Reflecting 5.75% maximum sales charge | +20.58% | +17.93% | +16.62% |
Not reflecting maximum sales charge | +27.95% | +19.34% | +17.91% |
| | | | |
Class 529-B shares†— first sold 2/21/02 | | | |
Reflecting applicable CDSC, maximum of 5%, | | | |
payable only if shares are sold within six | | | |
years of purchase | +21.90% | +18.11% | +17.19% |
Not reflecting CDSC | +26.90% | +18.32% | +17.28% |
| | | | |
Class 529-C shares†— first sold 2/22/02 | | | |
Reflecting CDSC, maximum of 1%, payable only | | | |
if shares are sold within one year of purchase | +25.88% | +18.34% | +17.28% |
Not reflecting CDSC | +26.88% | +18.34% | +17.28% |
| | | | |
Class 529-E shares*†— first sold 3/4/02 | +27.55% | +18.95% | +16.97% |
| | | | |
Class 529-F shares*†— first sold 9/17/02 | | | |
Not reflecting annual asset-based fee charged | | | |
by sponsoring firm | +28.16% | — | +22.88% |
| *These shares are sold without any initial or contingent deferred sales charge. |
| † Results shown do not reflect the $10 initial account setup fee and an annual $10 account maintenance fee. |
The fund’s investment adviser waived 5% of its management fees from September 1, 2004, through March 31, 2005, and increased it to 10% on April 1, 2005. Fund results shown reflect the waiver, without which they would have been lower. Please see the Financial Highlights table on pages 24 to 27 for details that include expense ratios for all share classes.
For information regarding the differences among the various share classes, please refer to the fund’s prospectus.
Summary investment portfolio, May 31, 2007
unaudited
The following summary investment portfolio is designed to streamline the report and help investors better focus on a fund’s principal holdings. For details on how to obtain a complete schedule of portfolio holdings, please see the back cover.
[begin pie chart]
Industry sector diversification (percent of net assets) | |
| Financials | 21.36 | % |
| Telecommunication services | 9.74 | |
| Consumer discretionary | 9.64 | |
| Materials | 8.89 | |
| Energy | 8.39 | |
| Other industries | 34.83 | |
| Convertible securities | 0.46 | |
| Bonds & notes | 0.34 | |
| Short-term securities and other assets less liabilities | 6.35 | |
Country diversification | (percent of net assets) |
| Euro zone* | 30.68 | % |
| United States | 22.02 | |
| United Kingdom | 7.73 | |
| Korea | 3.77 | |
| Japan | 3.60 | |
| Switzerland | 3.23 | |
| Taiwan | 2.98 | |
| Brazil | 2.24 | |
| Australia | 2.19 | |
| Other countries | 14.87 | |
| Bonds, short-term securities & other assets less liabilities | 6.69 | |
| | | |
| * Countries using the euro as a common currency; those represented in the fund's portfolio are Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal and Spain. |
| | | Market | Percent | |
| | | value | of net | |
| Common stocks - 92.85% | Shares | (000) | assets | |
| | | | | |
| Financials - 21.36% | | | | |
| Banco Santander Central Hispano, SA | 76,334,204 | $ 1,466,339 | 1.47 | % |
| Citigroup Inc. | 20,962,500 | 1,142,247 | 1.14 | |
| UniCredito Italiano SpA (Italy) | 77,740,000 | 729,626 | | |
| UniCredito Italiano SpA (Germany) | 13,500,000 | 126,213 | .86 | |
| HSBC Holdings PLC (United Kingdom) | 32,076,769 | 593,172 | | |
| HSBC Holdings PLC (Hong Kong) | 9,492,000 | 175,638 | .77 | |
| AXA SA | 17,472,722 | 763,655 | .77 | |
| Lloyds TSB Group PLC | 63,915,000 | 727,636 | .73 | |
| BNP Paribas | 5,890,370 | 714,562 | .72 | |
| Shinhan Financial Group Co., Ltd. | 10,518,500 | 649,752 | .65 | |
| ING Groep NV | 14,496,834 | 645,683 | .65 | |
| Banco Itaú Holding Financeira SA, preferred nominative | 12,607,100 | 552,908 | .55 | |
| Other securities | | 13,022,577 | 13.05 | |
| | | 21,310,008 | 21.36 | |
| | | | | |
| Telecommunication services - 9.74% | | | | |
| Koninklijke KPN NV | 78,998,700 | 1,340,053 | 1.34 | |
| AT&T Inc. | 29,565,874 | 1,222,253 | 1.23 | |
| Vodafone Group PLC | 274,022,328 | 857,208 | .86 | |
| France Télécom SA (1) | 23,209,144 | 712,774 | .72 | |
| Singapore Telecommunications Ltd. (2) | 230,970,810 | 541,344 | .54 | |
| América Móvil, SAB de CV, Series L (ADR) | 8,622,000 | 522,062 | .52 | |
| Other securities | | 4,522,397 | 4.53 | |
| | | 9,718,091 | 9.74 | |
| | | | | |
| Consumer discretionary - 9.64% | | | | |
| Vivendi SA | 26,490,100 | 1,153,845 | 1.16 | |
| Compagnie Générale des Etablissements Michelin, Class B | 7,169,000 | 938,914 | .94 | |
| Renault SA | 5,288,931 | 755,934 | .76 | |
| OPAP (Greek Organization of Football Prognostics) SA | 15,949,410 | 609,326 | .61 | |
| Continental AG | 4,164,050 | 588,772 | .59 | |
| DaimlerChrysler AG | 5,624,000 | 515,582 | .52 | |
| Other securities | | 5,051,736 | 5.06 | |
| | | 9,614,109 | 9.64 | |
| | | | | |
| Materials - 8.89% | | | | |
| Bayer AG | 20,853,500 | 1,500,508 | 1.50 | |
| China Steel Corp. | 551,485,660 | 642,816 | .65 | |
| Barrick Gold Corp. | 15,816,000 | 460,720 | | |
| Barrick Gold Corp. (CAD denominated) | 2,931,540 | 85,168 | .55 | |
| Linde AG (1) | 4,639,800 | 512,549 | .51 | |
| Other securities | | 5,664,789 | 5.68 | |
| | | 8,866,550 | 8.89 | |
| | | | | |
| Energy - 8.39% | | | | |
| Royal Dutch Shell PLC, Class B | 20,949,312 | 791,392 | | |
| Royal Dutch Shell PLC, Class A (ADR) | 5,220,000 | 387,846 | | |
| Royal Dutch Shell PLC, Class A | 7,850,000 | 292,190 | | |
| Royal Dutch Shell PLC, Class B (ADR) | 1,142,148 | 86,461 | 1.56 | |
| TOTAL SA | 9,243,000 | 696,286 | | |
| TOTAL SA (ADR) | 2,250,000 | 169,763 | .87 | |
| Chevron Corp. | 9,376,962 | 764,129 | .77 | |
| Other securities | | 5,179,406 | 5.19 | |
| | | 8,367,473 | 8.39 | |
| | | | | |
| Utilities - 6.92% | | | | |
| E.ON AG | 10,832,214 | 1,780,345 | 1.79 | |
| RWE AG | 13,603,700 | 1,540,834 | 1.54 | |
| Veolia Environnement | 8,795,000 | 735,891 | .74 | |
| Electricité de France SA | 7,321,400 | 678,874 | .68 | |
| SUEZ SA | 9,843,860 | 566,094 | .57 | |
| Other securities | | 1,598,018 | 1.60 | |
| | | 6,900,056 | 6.92 | |
| | | | | |
| Consumer staples - 6.88% | | | | |
| Diageo PLC | 63,719,000 | 1,358,714 | 1.36 | |
| Altria Group, Inc. | 12,470,000 | 886,617 | .89 | |
| Tesco PLC | 77,505,563 | 703,967 | .71 | |
| Nestlé SA | 1,524,500 | 593,816 | .59 | |
| Other securities | | 3,320,510 | 3.33 | |
| | | 6,863,624 | 6.88 | |
| | | | | |
| Information technology - 6.73% | | | | |
| Microsoft Corp. | 46,744,000 | 1,433,639 | 1.44 | |
| Nokia Corp. | 24,013,900 | 657,376 | | |
| Nokia Corp. (ADR) | 7,753,300 | 212,285 | .87 | |
| International Business Machines Corp. | 5,930,000 | 632,138 | .63 | |
| Other securities | | 3,779,268 | 3.79 | |
| | | 6,714,706 | 6.73 | |
| | | | | |
| Health care - 6.16% | | | | |
| Novo Nordisk A/S, Class B | 12,087,200 | 1,272,797 | 1.27 | |
| Roche Holding AG | 6,782,416 | 1,245,049 | 1.25 | |
| Pfizer Inc | 18,861,700 | 518,508 | .52 | |
| Other securities | | 3,112,624 | 3.12 | |
| | | 6,148,978 | 6.16 | |
| | | | | |
| Industrials - 5.47% | | | | |
| General Electric Co. | 23,505,900 | 883,352 | .89 | |
| Siemens AG | 4,121,000 | 542,937 | .54 | |
| United Parcel Service, Inc., Class B | 7,483,600 | 538,595 | .54 | |
| Other securities | | 3,492,505 | 3.50 | |
| | | 5,457,389 | 5.47 | |
| | | | | |
| MISCELLANEOUS - 2.67% | | | | |
| Other common stocks in initial period of acquisition | | 2,657,718 | 2.67 | |
| | | | | |
| | | | | |
| Total common stocks (cost: $67,113,664,000) | | 92,618,702 | 92.85 | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| Convertible securities - 0.46% | | | | |
| | | | | |
| Other - 0.46% | | | | |
| Other securities | | 456,849 | .46 | |
| | | | | |
| | | | | |
| Total convertible securities (cost: $441,768,000) | | 456,849 | .46 | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| Bonds & notes - 0.34% | | | | |
| | | | | |
| Other - 0.34% | | | | |
| Other securities | | 341,489 | .34 | |
| | | | | |
| | | | | |
| Total bonds & notes (cost: $310,662,000) | | 341,489 | .34 | |
| | | | | |
| | | | | |
| | | | | |
| | Principal | | | |
| | amount | | | |
| Short-term securities - 6.39% | (000) | | | |
| | | | | |
| Freddie Mac 5.125%-5.14% due 6/4-8/27/2007 | $ 546,700 | 543,855 | .54 | |
| Abbey National N.A. LLC 5.21%-5.22% due 7/16-9/27/2007 | 219,800 | 217,337 | .22 | |
| Other securities | | 5,619,229 | 5.63 | |
| | | | | |
| | | | | |
| | | | | |
| Total short-term securities (cost: $6,379,607,000) | | 6,380,421 | 6.39 | |
| | | | | |
| | | | | |
| Total investment securities (cost: $74,245,701,000) | | 99,797,461 | 100.04 | |
| Other assets less liabilities | | -42,733 | -.04 | |
| | | | | |
| Net assets | | $99,754,728 | 100.00% | |
| | | | | |
| | | | | |
| "Miscellaneous" securities include holdings in their initial period of acquisition that have not previously been publicly disclosed. | | |
| "Other securities" includes all issues that are not disclosed separately in the summary investment portfolio, including some securities for which resale may be limited to qualified institutional buyers or may require registration. The total value of such restricted securities was $2,749,210,000, which represented 2.76% of the net assets of the fund. |
| | | | | |
Investments in affiliates | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| A company is considered to be an affiliate of the fund under the Investment Company Act of 1940 if the fund's holdings in that company represent 5% or more of the outstanding voting shares of that company. The market value of the fund's holdings in affiliated companies is included in "Other securities" under their respective industry sectors in the preceding summary investment portfolio. Further details on these holdings and related transactions during the six months ended May 31, 2007, appear below. | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | Market value | |
| | | | | | | | | | | | | | | Dividend | | | of affiliates | |
| | | | | | | | | | | | | | | income | | | at 5/31/07 | |
Company | | Beginning shares | | | Purchases | | | Sales | | | Ending shares | | | | (000 | ) | | | (000 | ) |
| Koninklijke DSM NV | | | 10,097,356 | | | | 13,769 | | | | - | | | | 10,111,125 | | | $ | 7,785 | | | $ | 502,167 | |
| Spark Infrastructure | | | 56,535,632 | | | | - | | | | - | | | | 56,535,632 | | | | 3,308 | | | | 91,172 | |
| | | | | | | | | | | | | | | | | | | $ | 11,093 | | | $ | 593,339 | |
| | | | | |
| The following footnotes apply to either the individual securities noted or one or more of the securities aggregated and listed as a single line item. |
| (1) Security did not produce income during the last 12 months. | | | | |
| (2) Valued under fair value procedures adopted by authority of the board of directors. The total value of all such securities, including those in “Miscellaneous” and “Other securities,” was $1,950,124,000. |
| | | | | |
| | | | | |
| ADR = American Depositary Receipts | | | | |
| | | | | |
| See Notes to Financial Statements | | | | |
| | | | | |
Financial statements | | | | | | |
| | | | | | | |
Statement of assets and liabilities at May 31, 2007 | | | | | unaudited | |
(dollars and shares in thousands, except per-share amounts) | |
| | | | | | | |
| Assets: | | | | | | |
| Investment securities at market: | | | | | | |
| Unaffiliated issuers (cost: $73,785,252) | | $ | 99,204,122 | | | | |
| Affiliated issuers (cost: $460,449) | | | 593,339 | | | $ | 99,797,461 | |
| Cash denominated in non-U.S. currencies | | | | | | | | |
| (cost: $583) | | | | | | | 583 | |
| Cash | | | | | | | 2,759 | |
| Receivables for: | | | | | | | | |
| Sales of investments | | | 65,967 | | | | | |
| Sales of fund's shares | | | 235,193 | | | | | |
| Dividends and interest | | | 226,249 | | | | | |
| Other | | | 445 | | | | 527,854 | |
| | | | | | | | 100,328,657 | |
| Liabilities: | | | | | | | | |
| Payables for: | | | | | | | | |
| Purchases of investments | | | 392,987 | | | | | |
| Repurchases of fund's shares | | | 76,134 | | | | | |
| Investment advisory services | | | 27,762 | | | | | |
| Services provided by affiliates | | | 59,779 | | | | | |
| Deferred directors' compensation | | | 1,508 | | | | | |
| Other | | | 15,759 | | | | 573,929 | |
| Net assets at May 31, 2007 | | | | | | $ | 99,754,728 | |
| | | | | | | | | |
| Net assets consist of: | | | | | | | | |
| Capital paid in on shares of capital stock | | | | | | $ | 70,951,900 | |
| Undistributed net investment income | | | | | | | 997,293 | |
| Undistributed net realized gain | | | | | | | 2,268,284 | |
| Net unrealized appreciation | | | | | | | 25,537,251 | |
| Net assets at May 31, 2007 | | | | | | $ | 99,754,728 | |
| | | | | | | | | |
Total authorized capital stock - 4,000,000 shares, $.01 par value (2,158,596 total shares outstanding) | | |
| | Net assets | Shares outstanding | Net asset value per share* |
| | | | |
| Class A | $73,954,221 | 1,598,145 | $46.28 |
| Class B | 4,250,737 | 92,389 | 46.01 |
| Class C | 8,512,710 | 185,614 | 45.86 |
| Class F | 5,385,007 | 116,540 | 46.21 |
| Class 529-A | 1,495,603 | 32,381 | 46.19 |
| Class 529-B | 184,142 | 4,001 | 46.02 |
| Class 529-C | 417,902 | 9,083 | 46.01 |
| Class 529-E | 70,973 | 1,539 | 46.13 |
| Class 529-F | 32,591 | 705 | 46.22 |
| Class R-1 | 117,551 | 2,558 | 45.96 |
| Class R-2 | 1,064,133 | 23,202 | 45.86 |
| Class R-3 | 1,566,863 | 34,019 | 46.06 |
| Class R-4 | 1,193,622 | 25,834 | 46.20 |
| Class R-5 | 1,508,673 | 32,586 | 46.30 |
| (*) Maximum offering price and redemption price per share were equal to the net asset value per share for all share classes, except for Class A and 529-A, for which the maximum offering prices per share were $49.10 and $49.01, respectively. |
See Notes to Financial Statements
| Statement of operations | | | unaudited |
| for the six months ended May 31, 2007 | (dollars in thousands) |
| | | | |
| Investment income: | | | |
| Income: | | | |
| Dividends (net of non-U.S. taxes of $155,033; | | | |
| also includes $11,093 from affiliates) | | $1,471,027 | |
| Interest (net of non-U.S. taxes of $1,325) | | 186,155 | $1,657,182 |
| | | | |
| Fees and expenses(*): | | | |
| Investment advisory services | | 164,846 | |
| Distribution services | | 150,959 | |
| Transfer agent services | | 31,324 | |
| Administrative services | | 14,360 | |
| Reports to shareholders | | 1,424 | |
| Registration statement and prospectus | | 2,630 | |
| Postage, stationery and supplies | | 3,301 | |
| Directors' compensation | | 428 | |
| Auditing and legal | | 161 | |
| Custodian | | 8,672 | |
| State and local taxes | | 813 | |
| Other | | 2,430 | |
| Total fees and expenses before reimbursements/waivers | | 381,348 | |
| Less reimbursements/waivers of fees and expenses: | | | |
| Investment advisory services | | 16,485 | |
| Administrative services | | 118 | |
| Total fees and expenses after reimbursements/waivers | | | 364,745 |
| Net investment income | | | 1,292,437 |
| | | | |
| Net realized gain and unrealized appreciation on investments | | | |
| and non-U.S. currency: | | | |
| Net realized gain (loss) on: | | | |
| Investments | | 2,276,015 | |
| Non-U.S. currency transactions | | (3,141) | 2,272,874 |
| Net unrealized appreciation (depreciation) on: | | | |
| Investments | | 8,176,922 | |
| Non-U.S. currency translations | | (1,877) | 8,175,045 |
| Net realized gain and unrealized appreciation | | | |
| on investments and non-U.S. currency | | | 10,447,919 |
| Net increase in net assets resulting from operations | | | $11,740,356 |
| | | | |
| (*) Additional information related to class-specific fees and expenses is included in the Notes to Financial Statements. | | |
| | | | |
| See Notes to Financial Statements | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| Statements of changes in net assets | (dollars in thousands) |
| | | | |
| | | Six months | Year ended |
| | | ended May 31, | November 30, |
| | | 2007* | 2006 |
| Operations: | | | |
| Net investment income | | $1,292,437 | $1,523,017 |
| Net realized gain on investments and | | | |
| non-U.S. currency transactions | | 2,272,874 | 3,643,487 |
| Net unrealized appreciation on investments and | | | |
| non-U.S. currency translations | | 8,175,045 | 8,412,601 |
| Net increase in net assets resulting from operations | | 11,740,356 | 13,579,105 |
| | | | |
| Dividends and distributions paid to shareholders | | | |
| Dividends from net investment income | | (836,659) | (1,457,079) |
| Distributions from net realized gain on investments | | (3,391,655) | (2,018,554) |
| Total dividends and distributions paid to shareholders | | (4,228,314) | (3,475,633) |
| | | | |
| Net capital share transactions | | 12,278,254 | 18,681,372 |
| | | | |
| Total increase in net assets | | 19,790,296 | 28,784,844 |
| | | | |
| Net assets: | | | |
| Beginning of period | | 79,964,432 | 51,179,588 |
| End of period (including undistributed | | | |
| net investment income: $997,293 and $541,515, respectively) | | $99,754,728 | $79,964,432 |
| | | | |
| *Unaudited. | | | |
| | | | |
| See Notes to Financial Statements | | | |
| | | | |
Notes to financial statements
unaudited
| 1. | Organization and significant accounting policies |
Organization– Capital World Growth and Income 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 growth of capital while providing current income. It invests on a global basis in a diversified portfolio consisting primarily of common stocks and other equity securities.
The fund offers 14 share classes consisting of four retail share classes, five 529 college savings plan share classes and five retirement plan share classes. The 529 college savings plan share classes (529-A, 529-B, 529-C, 529-E and 529-F) 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:
Share class | | Initial sales charge | | Contingent deferred sales charge upon redemption | | Conversion feature |
| Class A and 529-A | | Up to 5.75% | | None (except 1% for certain redemptions within one year of purchase without an initial sales charge) | | None |
| Class B and 529-B | | None | | Declines from 5% to 0% for redemptions within six years of purchase | | Class B and 529-B convert to Class A and 529-A, respectively, after eight years |
| Class C | | None | | 1% for redemptions within one year of purchase | | Class C converts to Class F after 10 years |
| Class 529-C | | None | | 1% for redemptions within one year of purchase | | None |
| Class 529-E | | None | | None | | None |
| Class F and 529-F | | None | | None | | None |
| Class R-1, R-2, R-3, R-4 and R-5 | | None | | None | | None |
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, including short-term securities purchased with more than 60 days left to maturity, 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 bid prices, if asked prices are not available) or at prices for securities of comparable maturity, quality and type. Securities with both fixed-income and equity characteristics, or equity securities traded principally among fixed-income dealers, are valued in the manner described above for either equity or fixed-income securities, depending on which method is deemed most appropriate by the investment adviser. Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates market value. The value of short-term securities originally purchased with maturities greater than 60 days is determined based on an amortized value to par when they reach 60 days or less remaining to maturity. 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.
Securities and other assets for which representative market quotations are not readily available or are considered unreliable by the investment adviser are fair valued as determined in good faith under procedures adopted by authority of the fund's board of directors. Market quotations may be considered unreliable if events occur that materially affect the value of securities (particularly non-U.S. securities) between the close of trading in those securities and the close of regular trading on the New York Stock Exchange. 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. 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 on the valuation date. 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.
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, 2007, there were no non-U.S. taxes paid on realized gains. As of May 31, 2007, non-U.S. taxes provided on unrealized gains were $13,956,000.
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. Therefore, no federal income tax provision is required.
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 certain securities within 30 days of purchase; and unrealized appreciation of certain investments in non-U.S. securities. 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 for financial reporting purposes.
The components of distributable earnings on a tax basis are reported as of the fund’s most recent year-end. As of November 30, 2006, the fund had tax basis undistributed ordinary income of $554,544,000, non-U.S. currency loss deferrals (realized during the period November 1, 2006, through November 30, 2006) of $553,000 and undistributed long-term capital gain of $3,390,088,000.
As of May 31, 2007, the tax basis unrealized appreciation (depreciation) and cost of investments were as follows:
| | | | (dollars in thousands) |
| Gross unrealized appreciation on investment securities | | | $25,883,401 |
| Gross unrealized depreciation on investment securities | | | (345,528) |
| Net unrealized appreciation on investment securities | | | 25,537,873 |
| Cost of investment securities | | | 74,259,588 |
The tax character of distributions paid to shareholders was as follows (dollars in thousands):
| Share class | | Ordinary income | | | Long-term capital gains | | | Total distributions paid | |
Six months ended May 31, 2007 | | | | | | | | | |
| Class A | | $ | 663,927 | | | $ | 2,548,939 | | | $ | 3,212,866 | |
| Class B | | | 24,400 | | | | 146,715 | | | | 171,115 | |
| Class C | | | 46,366 | | | | 281,691 | | | | 328,057 | |
| Class F | | | 46,327 | | | | 177,513 | | | | 223,840 | |
| Class 529-A | | | 12,202 | | | | 46,765 | | | | 58,967 | |
| Class 529-B | | | 954 | | | | 6,071 | | | | 7,025 | |
| Class 529-C | | | 2,109 | | | | 13,108 | | | | 15,217 | |
| Class 529-E | | | 505 | | | | 2,269 | | | | 2,774 | |
| Class 529-F | | | 278 | | | | 954 | | | | 1,232 | |
| Class R-1 | | | 628 | | | | 3,715 | | | | 4,343 | |
| Class R-2 | | | 5,653 | | | | 34,264 | | | | 39,917 | |
| Class R-3 | | | 10,908 | | | | 49,179 | | | | 60,087 | |
| Class R-4 | | | 9,479 | | | | 36,915 | | | | 46,394 | |
| Class R-5 | | | 12,923 | | | | 43,557 | | | | 56,480 | |
| Total | | $ | 836,659 | | | $ | 3,391,655 | | | $ | 4,228,314 | |
| Share class | | Ordinary income | | | Long-term capital gains | | | Total distributions paid | |
Year ended November 30, 2006 | | | | | | | | | |
| Class A | | $ | 1,173,972 | | | $ | 1,566,910 | | | $ | 2,740,882 | |
| Class B | | | 44,562 | | | | 85,725 | | | | 130,287 | |
| Class C | | | 79,181 | | | | 151,292 | | | | 230,473 | |
| Class F | | | 74,253 | | | | 96,470 | | | | 170,723 | |
| Class 529-A | | | 18,835 | | | | 23,467 | | | | 42,302 | |
| Class 529-B | | | 1,627 | | | | 3,250 | | | | 4,877 | |
| Class 529-C | | | 3,386 | | | | 6,522 | | | | 9,908 | |
| Class 529-E | | | 819 | | | | 1,202 | | | | 2,021 | |
| Class 529-F | | | 411 | | | | 472 | | | | 883 | |
| Class R-1 | | | 950 | | | | 1,761 | | | | 2,711 | |
| Class R-2 | | | 9,296 | | | | 17,522 | | | | 26,818 | |
| Class R-3 | | | 16,829 | | | | 25,037 | | | | 41,866 | |
| Class R-4 | | | 14,171 | | | | 17,707 | | | | 31,878 | |
| Class R-5 | | | 18,787 | | | | 21,217 | | | | 40,004 | |
| Total | | $ | 1,457,079 | | | $ | 2,018,554 | | | $ | 3,475,633 | |
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 SM ("AFS"), the fund’s transfer agent, and American Funds Distributors, SM 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 0.600% on the first $500 million of daily net assets and decreasing to 0.352% on such assets in excess of $89 billion. CRMC is currently waiving 10% of investment advisory services fees. During the six months ended May 31, 2007, total investment advisory services fees waived by CRMC were $16,485,000. As a result, the fee shown on the accompanying financial statements of $164,846,000, which was equivalent to an annualized rate of 0.374%, was reduced to $148,361,000, or 0.336% 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 directors approves certain categories of expenses that are used to finance activities primarily intended to sell fund shares and service existing accounts. The plans provide for payments, based on an annualized percentage of average daily net assets, ranging from 0.30% to 1.00% as noted on the following page. In some cases, the board of directors has limited the amounts that may be paid to less than the maximum allowed by the plans. 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 to provide certain shareholder services. The remaining amounts available to be paid under each plan are paid to dealers to compensate them for their sales activities.
For Class A and 529-A, the board of directors has also approved the reimbursement of dealer and wholesaler commissions paid by AFD for certain shares sold without a sales charge. These classes reimburse AFD for amounts billed within the prior 15 months but only to the extent that the overall annual expense limit of 0.30% is not exceeded. As of May 31, 2007, there were no unreimbursed expenses subject to reimbursement for Class A or 529-A.
Share class | Currently approved limits | Plan limits |
| Class A | 0.30% | 0.30% |
| Class 529-A | 0.30 | 0.50 |
| Class B and 529-B | 1.00 | 1.00 |
| Class C, 529-C and R-1 | 1.00 | 1.00 |
| Class R-2 | 0.75 | 1.00 |
| Class 529-E and R-3 | 0.50 | 0.75 |
| Class F, 529-F and R-4 | 0.25 | 0.50 |
Transfer agent services– The fund has a transfer agent agreement with AFS for Class 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 share classes other than Class A and B. Each relevant share class pays CRMC annual fees up to 0.15% (0.10% for Class R-5) based on its respective average daily net assets. Each relevant share 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. CRMC has agreed to pay AFS on the fund's behalf for a portion of the transfer agent services fees for some of the retirement plan share classes. For the six months ended May 31, 2007, the total administrative services fees paid by CRMC were $1,000 and $117,000 for Class R-1 and R-2, respectively. Administrative services fees are presented gross of any payments made by CRMC. 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 529 college savings plan. Although these amounts are included with administrative services fees on the accompanying financial statements, the Commonwealth of Virginia is not considered a related party.
Expenses under the agreements described on the previous page for the six months ended May 31, 2007, were as follows (dollars in thousands):
Share class | Distribution services | Transfer agent services | Administrative services |
CRMC administrative services | Transfer agent services | Commonwealth of Virginia administrative services |
| Class A | $76,783 | $29,466 | Not applicable | Not applicable | Not applicable |
| Class B | 18,850 | 1,858 | Not applicable | Not applicable | Not applicable |
| Class C | 36,982 | Included in administrative services | $4,937 | $513 | Not applicable |
| Class F | 5,852 | 2,010 | 240 | Not applicable |
| Class 529-A | 1,274 | 547 | 71 | $636 |
| Class 529-B | 800 | 69 | 15 | 80 |
| Class 529-C | 1,772 | 152 | 29 | 177 |
| Class 529-E | 153 | 26 | 3 | 31 |
| Class 529-F | - | 11 | 2 | 13 |
| Class R-1 | 507 | 58 | 25 | Not applicable |
| Class R-2 | 3,422 | 664 | 1,335 | Not applicable |
| Class R-3 | 3,313 | 967 | 370 | Not applicable |
| Class R-4 | 1,251 | 735 | 28 | Not applicable |
| Class R-5 | Not applicable | 604 | 12 | Not applicable |
| Total | $150,959 | $31,324 | $10,780 | $2,643 | $937 |
Deferred directors’ compensation– Since the adoption of the deferred compensation plan in 1993, directors 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. Directors’ compensation of $428,000, shown on the accompanying financial statements, includes $260,000 in current fees (either paid in cash or deferred) and a net increase of $168,000 in the value of the deferred amounts.
Affiliated officers and directors – Officers and certain directors of the fund are or may be considered to be affiliated with CRMC, AFS and AFD. No affiliated officers or directors 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):
| Share class | | Sales(*) | | | Reinvestments of dividends and distributions | | | Repurchases(*) | | | Net increase | |
| | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | |
Six months ended May 31, 2007 | | | | | | | | | | | | | | | | | | | | | | | | |
| Class A | | $ | 8,157,237 | | | | 189,335 | | | $ | 3,094,772 | | | | 74,447 | | | $ | (3,149,251 | ) | | | (73,051 | ) | | $ | 8,102,758 | | | | 190,731 | |
| Class B | | | 476,517 | | | | 11,095 | | | | 164,958 | | | | 3,984 | | | | (151,900 | ) | | | (3,547 | ) | | | 489,575 | | | | 11,532 | |
| Class C | | | 1,377,386 | | | | 32,204 | | | | 313,810 | | | | 7,601 | | | | (384,357 | ) | | | (8,988 | ) | | | 1,306,839 | | | | 30,817 | |
| Class F | | | 974,014 | | | | 22,604 | | | | 202,360 | | | | 4,875 | | | | (367,941 | ) | | | (8,543 | ) | | | 808,433 | | | | 18,936 | |
| Class 529-A | | | 267,506 | | | | 6,232 | | | | 58,955 | | | | 1,421 | | | | (31,679 | ) | | | (736 | ) | | | 294,782 | | | | 6,917 | |
| Class 529-B | | | 24,783 | | | | 578 | | | | 7,022 | | | | 169 | | | | (3,087 | ) | | | (72 | ) | | | 28,718 | | | | 675 | |
| Class 529-C | | | 79,461 | | | | 1,855 | | | | 15,213 | | | | 367 | | | | (11,743 | ) | | | (274 | ) | | | 82,931 | | | | 1,948 | |
| Class 529-E | | | 11,453 | | | | 267 | | | | 2,774 | | | | 67 | | | | (1,872 | ) | | | (43 | ) | | | 12,355 | | | | 291 | |
| Class 529-F | | | 7,901 | | | | 184 | | | | 1,232 | | | | 30 | | | | (1,067 | ) | | | (25 | ) | | | 8,066 | | | | 189 | |
| Class R-1 | | | 35,402 | | | | 826 | | | | 4,265 | | | | 103 | | | | (17,261 | ) | | | (395 | ) | | | 22,406 | | | | 534 | |
| Class R-2 | | | 259,169 | | | | 6,073 | | | | 39,878 | | | | 966 | | | | (107,577 | ) | | | (2,516 | ) | | | 191,470 | | | | 4,523 | |
| Class R-3 | | | 422,713 | | | | 9,857 | | | | 60,045 | | | | 1,450 | | | | (170,376 | ) | | | (3,977 | ) | | | 312,382 | | | | 7,330 | |
| Class R-4 | | | 359,953 | | | | 8,367 | | | | 46,376 | | | | 1,117 | | | | (162,376 | ) | | | (3,769 | ) | | | 243,953 | | | | 5,715 | |
| Class R-5 | | | 380,972 | | | | 8,825 | | | | 54,170 | | | | 1,303 | | | | (61,556 | ) | | | (1,431 | ) | | | 373,586 | | | | 8,697 | |
| Total net increase | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (decrease) | | $ | 12,834,467 | | | | 298,302 | | | $ | 4,065,830 | | | | 97,900 | | | $ | (4,622,043 | ) | | | (107,367 | ) | | $ | 12,278,254 | | | | 288,835 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended November 30, 2006 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Class A | | $ | 14,421,402 | | | | 369,802 | | | $ | 2,627,089 | | | | 71,294 | | | $ | (4,325,381 | ) | | | (110,788 | ) | | $ | 12,723,110 | | | | 330,308 | |
| Class B | | | 943,607 | | | | 24,326 | | | | 125,519 | | | | 3,435 | | | | (215,465 | ) | | | (5,546 | ) | | | 853,661 | | | | 22,215 | |
| Class C | | | 2,294,884 | | | | 59,263 | | | | 220,045 | | | | 6,037 | | | | (525,031 | ) | | | (13,562 | ) | | | 1,989,898 | | | | 51,738 | |
| Class F | | | 1,570,048 | | | | 40,122 | | | | 153,458 | | | | 4,169 | | | | (500,309 | ) | | | (12,866 | ) | | | 1,223,197 | | | | 31,425 | |
| Class 529-A | | | 364,872 | | | | 9,376 | | | | 42,297 | | | | 1,148 | | | | (35,371 | ) | | | (904 | ) | | | 371,798 | | | | 9,620 | |
| Class 529-B | | | 42,008 | | | | 1,083 | | | | 4,877 | | | | 134 | | | | (3,838 | ) | | | (99 | ) | | | 43,047 | | | | 1,118 | |
| Class 529-C | | | 109,350 | | | | 2,814 | | | | 9,908 | | | | 271 | | | | (13,867 | ) | | | (356 | ) | | | 105,391 | | | | 2,729 | |
| Class 529-E | | | 17,366 | | | | 448 | | | | 2,021 | | | | 55 | | | | (2,281 | ) | | | (58 | ) | | | 17,106 | | | | 445 | |
| Class 529-F | | | 8,449 | | | | 217 | | | | 883 | | | | 24 | | | | (1,622 | ) | | | (42 | ) | | | 7,710 | | | | 199 | |
| Class R-1 | | | 40,698 | | | | 1,045 | | | | 2,653 | | | | 73 | | | | (11,512 | ) | | | (297 | ) | | | 31,839 | | | | 821 | |
| Class R-2 | | | 355,459 | | | | 9,179 | | | | 26,793 | | | | 735 | | | | (121,626 | ) | | | (3,134 | ) | | | 260,626 | | | | 6,780 | |
| Class R-3 | | | 515,578 | | | | 13,241 | | | | 41,837 | | | | 1,141 | | | | (184,147 | ) | | | (4,734 | ) | | | 373,268 | | | | 9,648 | |
| Class R-4 | | | 427,872 | | | | 10,967 | | | | 31,844 | | | | 864 | | | | (136,093 | ) | | | (3,500 | ) | | | 323,623 | | | | 8,331 | |
| Class R-5 | | | 401,305 | | | | 10,365 | | | | 37,512 | | | | 1,015 | | | | (81,719 | ) | | | (2,098 | ) | | | 357,098 | | | | 9,282 | |
| Total net increase | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (decrease) | | $ | 21,512,898 | | | | 552,248 | | | $ | 3,326,736 | | | | 90,395 | | | $ | (6,158,262 | ) | | | (157,984 | ) | | $ | 18,681,372 | | | | 484,659 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(*) Includes exchanges between share classes of the fund. | | | | | | | | | | | | | | | | | | | | | | | | | | |
6. Investment transactions
The fund made purchases and sales of investment securities, excluding short-term securities, of $19,013,984,000 and $9,473,299,000, respectively, during the six months ended May 31, 2007.
| | | | | Income (loss) from investment operations(2) | | Dividends and distributions | | | | | | | | | | | | | | | | | | | | |
| | | Net asset value, beginning of period | | Net investment income | | Net gains (losses) on securities (both realized and unrealized) | | Total from investment operations | | Dividends (from net investment income) | | | Distributions (from capital gains) | | Total dividends and distributions | | Net asset value, end of period | | Total return (3)(4) | | | Net assets, end of period (in millions) | Ratio of expenses to average net assets before reimbursements/ waivers | | | | Ratio of expenses to average net assets after reimbursements/ waivers (4) | | | | | Ratio of net income to average net assets (4) | | | |
| Class A: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six months ended 5/31/2007 (5) | | $ | 42.82 | | $ | .66 | | $ | 5.05 | | $ | 5.71 | | $ | (.45 | ) | | $ | (1.80 | ) | $ | (2.25 | ) | $ | 46.28 | | 13.95 | % | | $ | 73,954 | | .74 | % | | (6 | ) | | .70 | % | | | (6 | ) | | 3.04 | % | (6 | ) |
| Year ended 11/30/2006 | | | 36.99 | | | .96 | | | 7.26 | | | 8.22 | | | (.95 | ) | | | (1.44 | ) | | (2.39 | ) | | 42.82 | | 23.38 | | | | 60,265 | | .73 | | | | | | .69 | | | | | | | 2.44 | | | |
| Year ended 11/30/2005 | | | 33.80 | | | .84 | | | 3.95 | | | 4.79 | | | (.80 | ) | | | (.80 | ) | | (1.60 | ) | | 36.99 | | 14.78 | | | | 39,841 | | .76 | | | | | | .73 | | | | | | | 2.41 | | | |
| Year ended 11/30/2004 | | | 28.62 | | | .70 | | | 5.50 | | | 6.20 | | | (.73 | ) | | | (.29 | ) | | (1.02 | ) | | 33.80 | | 22.21 | | | | 25,137 | | .77 | | | | | | .77 | | | | | | | 2.28 | | | |
| Year ended 11/30/2003 | | | 22.80 | | | .65 | | | 5.73 | | | 6.38 | | | (.56 | ) | | | - | | | (.56 | ) | | 28.62 | | 28.52 | | | | 14,703 | | .81 | | | | | | .81 | | | | | | | 2.70 | | | |
| Year ended 11/30/2002 | | | 24.29 | | | .52 | | | (1.53 | | | (1.01 | | | (.48 | ) | | | - | | | (.48 | ) | | 22.80 | | (4.22 | ) | | | 10,016 | | .82 | | | | | | .82 | | | | | | | 2.22 | | | |
| Class B: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six months ended 5/31/2007 (5) | | | 42.58 | | | .49 | | | 5.03 | | | 5.52 | | | (.29 | ) | | | (1.80 | ) | | (2.09 | ) | | 46.01 | | 13.49 | | | | 4,251 | | 1.52 | | | (6 | ) | | 1.48 | | | | (6 | ) | | 2.27 | | (6 | ) |
| Year ended 11/30/2006 | | | 36.79 | | | .64 | | | 7.24 | | | 7.88 | | | (.65 | ) | | | (1.44 | ) | | (2.09 | ) | | 42.58 | | 22.40 | | | | 3,443 | | 1.53 | | | | | | 1.49 | | | | | | | 1.65 | | | |
| Year ended 11/30/2005 | | | 33.63 | | | .56 | | | 3.93 | | | 4.49 | | | (.53 | ) | | | (.80 | ) | | (1.33 | ) | | 36.79 | | 13.91 | | | | 2,158 | | 1.55 | | | | | | 1.52 | | | | | | | 1.62 | | | |
| Year ended 11/30/2004 | | | 28.50 | | | .46 | | | 5.47 | | | 5.93 | | | (.51 | ) | | | (.29 | ) | | (.80 | ) | | 33.63 | | 21.25 | | | | 1,265 | | 1.55 | | | | | | 1.55 | | | | | | | 1.52 | | | |
| Year ended 11/30/2003 | | | 22.72 | | | .45 | | | 5.72 | | | 6.17 | | | (.39 | ) | | | - | | | (.39 | ) | | 28.50 | | 27.52 | | | | 537 | | 1.58 | | | | | | 1.58 | | | | | | | 1.85 | | | |
| Year ended 11/30/2002 | | | 24.21 | | | .27 | | | (1.45 | | | (1.18 | | | (.31 | ) | | | - | | | (.31 | ) | | 22.72 | | (4.93 | ) | | | 219 | | 1.59 | | | | | | 1.59 | | | | | | | 1.47 | | | |
| Class C: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six months ended 5/31/2007 (5) | | | 42.46 | | | .48 | | | 5.00 | | | 5.48 | | | (.28 | ) | | | (1.80 | ) | | (2.08 | ) | | 45.86 | | 13.46 | | | | 8,513 | | 1.57 | | | (6 | ) | | 1.53 | | | | (6 | ) | | 2.25 | | (6 | ) |
| Year ended 11/30/2006 | | | 36.69 | | | .62 | | | 7.22 | | | 7.84 | | | (.63 | ) | | | (1.44 | ) | | (2.07 | ) | | 42.46 | | 22.35 | | | | 6,572 | | 1.58 | | | | | | 1.54 | | | | | | | 1.60 | | | |
| Year ended 11/30/2005 | | | 33.54 | | | .54 | | | 3.93 | | | 4.47 | | | (.52 | ) | | | (.80 | ) | | (1.32 | ) | | 36.69 | | 13.83 | | | | 3,781 | | 1.61 | | | | | | 1.57 | | | | | | | 1.56 | | | |
| Year ended 11/30/2004 | | | 28.43 | | | .45 | | | 5.45 | | | 5.90 | | | (.50 | ) | | | (.29 | ) | | (.79 | ) | | 33.54 | | 21.17 | | | | 1,836 | | 1.62 | | | | | | 1.61 | | | | | | | 1.46 | | | |
| Year ended 11/30/2003 | | | 22.68 | | | .42 | | | 5.71 | | | 6.13 | | | (.38 | ) | | | - | | | (.38 | ) | | 28.43 | | 27.40 | | | | 615 | | 1.65 | | | | | | 1.65 | | | | | | | 1.71 | | | |
| Year ended 11/30/2002 | | | 24.18 | | | .20 | | | (1.40 | | | (1.20 | | | (.30 | ) | | | - | | | (.30 | ) | | 22.68 | | (4.95 | ) | | | 179 | | 1.65 | | | | | | 1.65 | | | | | | | 1.43 | | | |
| Class F: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six months ended 5/31/2007 (5) | | | 42.76 | | | .66 | | | 5.04 | | | 5.70 | | | (.45 | ) | | | (1.80 | ) | | (2.25 | ) | | 46.21 | | 13.94 | | | | 5,385 | | .76 | | | (6 | ) | | .72 | | | | (6 | ) | | 3.05 | | (6 | ) |
| Year ended 11/30/2006 | | | 36.94 | | | .94 | | | 7.26 | | | 8.20 | | | (.94 | ) | | | (1.44 | ) | | (2.38 | ) | | 42.76 | | 23.35 | | | | 4,174 | | .76 | | | | | | .72 | | | | | | | 2.41 | | | |
| Year ended 11/30/2005 | | | 33.75 | | | .81 | | | 3.95 | | | 4.76 | | | (.77 | ) | | | (.80 | ) | | (1.57 | ) | | 36.94 | | 14.72 | | | | 2,445 | | .82 | | | | | | .78 | | | | | | | 2.35 | | | |
| Year ended 11/30/2004 | | | 28.59 | | | .68 | | | 5.48 | | | 6.16 | | | (.71 | ) | | | (.29 | ) | | (1.00 | ) | | 33.75 | | 22.09 | | | | 1,243 | | .86 | | | | | | .85 | | | | | | | 2.21 | | | |
| Year ended 11/30/2003 | | | 22.78 | | | .61 | | | 5.75 | | | 6.36 | | | (.55 | ) | | | - | | | (.55 | ) | | 28.59 | | 28.43 | | | | 470 | | .89 | | | | | | .89 | | | | | | | 2.49 | | | |
| Year ended 11/30/2002 | | | 24.27 | | | .31 | | | (1.34 | | | (1.03 | | | (.46 | ) | | | - | | | (.46 | ) | | 22.78 | | (4.29 | ) | | | 147 | | .91 | | | | | | .91 | | | | | | | 2.17 | | | |
| Class 529-A: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six months ended 5/31/2007 (5) | | | 42.75 | | | .65 | | | 5.03 | | | 5.68 | | | (.44 | ) | | | (1.80 | ) | | (2.24 | ) | | 46.19 | | 13.90 | | | | 1,496 | | .82 | | | (6 | ) | | .78 | | | | (6 | ) | | 3.03 | | (6 | ) |
| Year ended 11/30/2006 | | | 36.93 | | | .93 | | | 7.26 | | | 8.19 | | | (.93 | ) | | | (1.44 | ) | | (2.37 | ) | | 42.75 | | 23.33 | | | | 1,089 | | .79 | | | | | | .75 | | | | | | | 2.39 | | | |
| Year ended 11/30/2005 | | | 33.75 | | | .81 | | | 3.94 | | | 4.75 | | | (.77 | ) | | | (.80 | ) | | (1.57 | ) | | 36.93 | | 14.68 | | | | 585 | | .83 | | | | | | .80 | | | | | | | 2.33 | | | |
| Year ended 11/30/2004 | | | 28.59 | | | .68 | | | 5.48 | | | 6.16 | | | (.71 | ) | | | (.29 | ) | | (1.00 | ) | | 33.75 | | 22.08 | | | | 272 | | .86 | | | | | | .85 | | | | | | | 2.21 | | | |
| Year ended 11/30/2003 | | | 22.78 | | | .63 | | | 5.73 | | | 6.36 | | | (.55 | ) | | | - | | | (.55 | ) | | 28.59 | | 28.43 | | | | 93 | | .87 | | | | | | .87 | | | | | | | 2.55 | | | |
| Period from 2/15/2002 to 11/30/2002 | | | 24.29 | | | .36 | | | (1.47 | | | (1.11 | | | (.40 | ) | | | - | | | (.40 | ) | | 22.78 | | (4.61 | ) | | | 28 | | 1.03 | | | (6 | ) | | 1.03 | | | | (6 | ) | | 2.08 | | (6 | ) |
| Class 529-B: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six months ended 5/31/2007 (5) | | | 42.59 | | | .47 | | | 5.03 | | | 5.50 | | | (.27 | ) | | | (1.80 | ) | | (2.07 | ) | | 46.02 | | 13.43 | | | | 184 | | 1.62 | | | (6 | ) | | 1.59 | | | | (6 | ) | | 2.19 | | (6 | ) |
| Year ended 11/30/2006 | | | 36.80 | | | .60 | | | 7.23 | | | 7.83 | | | (.60 | ) | | | (1.44 | ) | | (2.04 | ) | | 42.59 | | 22.25 | | | | 142 | | 1.64 | | | | | | 1.60 | | | | | | | 1.53 | | | |
| Year ended 11/30/2005 | | | 33.64 | | | .51 | | | 3.93 | | | 4.44 | | | (.48 | ) | | | (.80 | ) | | (1.28 | ) | | 36.80 | | 13.71 | | | | 81 | | 1.70 | | | | | | 1.67 | | | | | | | 1.46 | | | |
| Year ended 11/30/2004 | | | 28.51 | | | .40 | | | 5.48 | | | 5.88 | | | (.46 | ) | | | (.29 | ) | | (.75 | ) | | 33.64 | | 21.02 | | | | 44 | | 1.75 | | | | | | 1.74 | | | | | | | 1.32 | | | |
| Year ended 11/30/2003 | | | 22.74 | | | .40 | | | 5.73 | | | 6.13 | | | (.36 | ) | | | - | | | (.36 | ) | | 28.51 | | 27.28 | | | | 18 | | 1.78 | | | | | | 1.78 | | | | | | | 1.64 | | | |
| Period from 2/21/2002 to 11/30/2002 | | | 23.96 | | | .23 | | | (1.13 | | | (.90 | | | (.32 | ) | | | - | | | (.32 | ) | | 22.74 | | (3.82 | ) | | | 5 | | 1.79 | | | (6 | ) | | 1.79 | | | | (6 | ) | | 1.31 | | (6 | ) |
| Class 529-C: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six months ended 5/31/2007 (5) | | | 42.59 | | | .48 | | | 5.01 | | | 5.49 | | | (.27 | ) | | | (1.80 | ) | | (2.07 | ) | | 46.01 | | 13.44 | | | | 418 | | 1.62 | | | (6 | ) | | 1.58 | | | | (6 | ) | | 2.22 | | (6 | ) |
| Year ended 11/30/2006 | | | 36.80 | | | .60 | | | 7.24 | | | 7.84 | | | (.61 | ) | | | (1.44 | ) | | (2.05 | ) | | 42.59 | | 22.27 | | | | 304 | | 1.63 | | | | | | 1.59 | | | | | | | 1.54 | | | |
| Year ended 11/30/2005 | | | 33.63 | | | .51 | | | 3.94 | | | 4.45 | | | (.48 | ) | | | (.80 | ) | | (1.28 | ) | | 36.80 | | 13.73 | | | | 162 | | 1.69 | | | | | | 1.65 | | | | | | | 1.47 | | | |
| Year ended 11/30/2004 | | | 28.50 | | | .41 | | | 5.47 | | | 5.88 | | | (.46 | ) | | | (.29 | ) | | (.75 | ) | | 33.63 | | 21.04 | | | | 80 | | 1.74 | | | | | | 1.73 | | | | | | | 1.34 | | | |
| Year ended 11/30/2003 | | | 22.74 | | | .41 | | | 5.71 | | | 6.12 | | | (.36 | ) | | | - | | | (.36 | ) | | 28.50 | | 27.25 | | | | 29 | | 1.76 | | | | | | 1.76 | | | | | | | 1.66 | | | |
| Period from 2/22/2002 to 11/30/2002 | | | 23.98 | | | .23 | | | (1.15 | | | (.92 | | | (.32 | ) | | | - | | | (.32 | ) | | 22.74 | | (3.90 | ) | | | 8 | | 1.77 | | | (6 | ) | | 1.77 | | | | (6 | ) | | 1.33 | | (6 | ) |
| Class 529-E: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six months ended 5/31/2007 (5) | | | 42.69 | | | .58 | | | 5.03 | | | 5.61 | | | (.37 | ) | | | (1.80 | ) | | (2.17 | ) | | 46.13 | | 13.72 | | | | 71 | | 1.12 | | | (6 | ) | | 1.08 | | | | (6 | ) | | 2.71 | | (6 | ) |
| Year ended 11/30/2006 | | | 36.89 | | | .81 | | | 7.23 | | | 8.04 | | | (.80 | ) | | | (1.44 | ) | | (2.24 | ) | | 42.69 | | 22.92 | | | | 53 | | 1.11 | | | | | | 1.08 | | | | | | | 2.06 | | | |
| Year ended 11/30/2005 | | | 33.71 | | | .69 | | | 3.94 | | | 4.63 | | | (.65 | ) | | | (.80 | ) | | (1.45 | ) | | 36.89 | | 14.31 | | | | 30 | | 1.17 | | | | | | 1.13 | | | | | | | 1.99 | | | |
| Year ended 11/30/2004 | | | 28.56 | | | .57 | | | 5.48 | | | 6.05 | | | (.61 | ) | | | (.29 | ) | | (.90 | ) | | 33.71 | | 21.67 | | | | 14 | | 1.21 | | | | | | 1.20 | | | | | | | 1.86 | | | |
| Year ended 11/30/2003 | | | 22.77 | | | .54 | | | 5.73 | | | 6.27 | | | (.48 | ) | | | - | | | (.48 | ) | | 28.56 | | 27.97 | | | | 5 | | 1.23 | | | | | | 1.23 | | | | | | | 2.17 | | | |
| Period from 3/4/2002 to 11/30/2002 | | | 25.12 | | | .31 | | | (2.28 | | | (1.97 | | | (.38 | ) | | | - | | | (.38 | ) | | 22.77 | | (7.88 | ) | | | 1 | | 1.23 | | | (6 | ) | | 1.23 | | | | (6 | ) | | 1.85 | | (6 | ) |
| Class 529-F: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six months ended 5/31/2007 (5) | | $ | 42.78 | | $ | .70 | | $ | 5.02 | | $ | 5.72 | | $ | (.48 | ) | | $ | (1.80 | ) | $ | (2.28 | ) | $ | 46.22 | | 13.99 | % | | $ | 32 | | .62 | % | | (6 | ) | | .58 | % | | | (6 | ) | | 3.26 | % | (6 | ) |
| Year ended 11/30/2006 | | | 36.95 | | | 1.00 | | | 7.27 | | | 8.27 | | | (1.00 | ) | | | (1.44 | ) | | (2.44 | ) | | 42.78 | | 23.55 | | | | 22 | | .61 | | | | | | .58 | | | | | | | 2.56 | | | |
| Year ended 11/30/2005 | | | 33.75 | | | .83 | | | 3.94 | | | 4.77 | | | (.77 | ) | | | (.80 | ) | | (1.57 | ) | | 36.95 | | 14.74 | | | | 12 | | .76 | | | | | | .73 | | | | | | | 2.40 | | | |
| Year ended 11/30/2004 | | | 28.59 | | | .65 | | | 5.49 | | | 6.14 | | | (.69 | ) | | | (.29 | ) | | (.98 | ) | | 33.75 | | 21.98 | | | | 6 | | .96 | | | | | | .95 | | | | | | | 2.12 | | | |
| Year ended 11/30/2003 | | | 22.80 | | | .61 | | | 5.72 | | | 6.33 | | | (.54 | ) | | | - | | | (.54 | ) | | 28.59 | | 28.31 | | | | 1 | | .98 | | | | | | .98 | | | | | | | 2.48 | | | |
| Period from 9/17/2002 to 11/30/2002 | | | 21.79 | | | .08 | | | 1.07 | | | 1.15 | | | (.14 | ) | | | - | | | (.14 | ) | | 22.80 | | 5.33 | | | | - | | .20 | | | | | | .20 | | | | | | | .39 | | | |
| Class R-1: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six months ended 5/31/2007 (5) | | | 42.55 | | | .49 | | | 5.00 | | | 5.49 | | | (.28 | ) | | | (1.80 | ) | | (2.08 | ) | | 45.96 | | 13.43 | | | | 117 | | 1.58 | | | (6 | ) | | 1.54 | | | | (6 | ) | | 2.28 | | (6 | ) |
| Year ended 11/30/2006 | | | 36.78 | | | .62 | | | 7.21 | | | 7.83 | | | (.62 | ) | | | (1.44 | ) | | (2.06 | ) | | 42.55 | | 22.31 | | | | 86 | | 1.60 | | | | | | 1.56 | | | | | | | 1.58 | | | |
| Year ended 11/30/2005 | | | 33.63 | | | .53 | | | 3.93 | | | 4.46 | | | (.51 | ) | | | (.80 | ) | | (1.31 | ) | | 36.78 | | 13.78 | | | | 44 | | 1.63 | | | | | | 1.58 | | | | | | | 1.54 | | | |
| Year ended 11/30/2004 | | | 28.50 | | | .44 | | | 5.48 | | | 5.92 | | | (.50 | ) | | | (.29 | ) | | (.79 | ) | | 33.63 | | 21.18 | | | | 17 | | 1.67 | | | | | | 1.64 | | | | | | | 1.44 | | | |
| Year ended 11/30/2003 | | | 22.75 | | | .38 | | | 5.77 | | | 6.15 | | | (.40 | ) | | | - | | | (.40 | ) | | 28.50 | | 27.43 | | | | 5 | | 1.78 | | | | | | 1.66 | | | | | | | 1.48 | | | |
| Period from 6/7/2002 to 11/30/2002 | | | 25.08 | | | .14 | | | (2.37 | | | (2.23 | | | (.10 | ) | | | - | | | (.10 | ) | | 22.75 | | (8.85 | ) | | | - | | 1.41 | | | | | | .80 | | | | | | | .66 | | | |
| Class R-2: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six months ended 5/31/2007 (5) | | | 42.46 | | | .48 | | | 5.00 | | | 5.48 | | | (.28 | ) | | | (1.80 | ) | | (2.08 | ) | | 45.86 | | 13.43 | | | | 1,064 | | 1.60 | | | (6 | ) | | 1.54 | | | | (6 | ) | | 2.26 | | (6 | ) |
| Year ended 11/30/2006 | | | 36.70 | | | .62 | | | 7.20 | | | 7.82 | | | (.62 | ) | | | (1.44 | ) | | (2.06 | ) | | 42.46 | | 22.34 | | | | 793 | | 1.70 | | | | | | 1.54 | | | | | | | 1.59 | | | |
| Year ended 11/30/2005 | | | 33.55 | | | .54 | | | 3.93 | | | 4.47 | | | (.52 | ) | | | (.80 | ) | | (1.32 | ) | | 36.70 | | 13.83 | | | | 437 | | 1.79 | | | | | | 1.57 | | | | | | | 1.56 | | | |
| Year ended 11/30/2004 | | | 28.45 | | | .45 | | | 5.45 | | | 5.90 | | | (.51 | ) | | | (.29 | ) | | (.80 | ) | | 33.55 | | 21.15 | | | | 201 | | 1.93 | | | | | | 1.60 | | | | | | | 1.47 | | | |
| Year ended 11/30/2003 | | | 22.73 | | | .43 | | | 5.71 | | | 6.14 | | | (.42 | ) | | | - | | | (.42 | ) | | 28.45 | | 27.44 | | | | 57 | | 2.23 | | | | | | 1.62 | | | | | | | 1.72 | | | |
| Period from 6/7/2002 to 11/30/2002 | | | 25.08 | | | .13 | | | (2.35 | | | (2.22 | | | (.13 | ) | | | - | | | (.13 | ) | | 22.73 | | (8.80 | ) | | | 5 | | .93 | | | | | | .79 | | | | | | | .61 | | | |
| Class R-3: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six months ended 5/31/2007 (5) | | | 42.63 | | | .59 | | | 5.01 | | | 5.60 | | | (.37 | ) | | | (1.80 | ) | | (2.17 | ) | | 46.06 | | 13.74 | | | | 1,567 | | 1.12 | | | (6 | ) | | 1.08 | | | | (6 | ) | | 2.73 | | (6 | ) |
| Year ended 11/30/2006 | | | 36.83 | | | .80 | | | 7.24 | | | 8.04 | | | (.80 | ) | | | (1.44 | ) | | (2.24 | ) | | 42.63 | | 22.86 | | | | 1,138 | | 1.13 | | | | | | 1.09 | | | | | | | 2.05 | | | |
| Year ended 11/30/2005 | | | 33.67 | | | .69 | | | 3.94 | | | 4.63 | | | (.67 | ) | | | (.80 | ) | | (1.47 | ) | | 36.83 | | 14.34 | | | | 628 | | 1.15 | | | | | | 1.12 | | | | | | | 2.00 | | | |
| Year ended 11/30/2004 | | | 28.53 | | | .57 | | | 5.47 | | | 6.04 | | | (.61 | ) | | | (.29 | ) | | (.90 | ) | | 33.67 | | 21.67 | | | | 285 | | 1.20 | | | | | | 1.19 | | | | | | | 1.87 | | | |
| Year ended 11/30/2003 | | | 22.77 | | | .50 | | | 5.75 | | | 6.25 | | | (.49 | ) | | | - | | | (.49 | ) | | 28.53 | | 27.90 | | | | 76 | | 1.29 | | | | | | 1.24 | | | | | | | 1.98 | | | |
| Period from 6/6/2002 to 11/30/2002 | | | 25.42 | | | .17 | | | (2.52 | | | (2.35 | | | (.30 | ) | | | - | | | (.30 | ) | | 22.77 | | (9.25 | ) | | | 5 | | .69 | | | | | | .60 | | | | | | | .80 | | | |
| Class R-4: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six months ended 5/31/2007 (5) | | | 42.76 | | | .66 | | | 5.02 | | | 5.68 | | | (.44 | ) | | | (1.80 | ) | | (2.24 | ) | | 46.20 | | 13.88 | | | | 1,194 | | .82 | | | (6 | ) | | .78 | | | | (6 | ) | | 3.05 | | (6 | ) |
| Year ended 11/30/2006 | | | 36.94 | | | .92 | | | 7.26 | | | 8.18 | | | (.92 | ) | | | (1.44 | ) | | (2.36 | ) | | 42.76 | | 23.28 | | | | 860 | | .82 | | | | | | .78 | | | | | | | 2.35 | | | |
| Year ended 11/30/2005 | | | 33.76 | | | .79 | | | 3.96 | | | 4.75 | | | (.77 | ) | | | (.80 | ) | | (1.57 | ) | | 36.94 | | 14.68 | | | | 435 | | .84 | | | | | | .81 | | | | | | | 2.29 | | | |
| Year ended 11/30/2004 | | | 28.60 | | | .68 | | | 5.49 | | | 6.17 | | | (.72 | ) | | | (.29 | ) | | (1.01 | ) | | 33.76 | | 22.10 | | | | 182 | | .85 | | | | | | .84 | | | | | | | 2.22 | | | |
| Year ended 11/30/2003 | | | 22.81 | | | .55 | | | 5.80 | | | 6.35 | | | (.56 | ) | | | - | | | (.56 | ) | | 28.60 | | 28.36 | | | | 25 | | .90 | | | | | | .89 | | | | | | | 2.18 | | | |
| Period from 6/27/2002 to 11/30/2002 | | | 23.78 | | | .20 | | | (1.02 | | | (.82 | | | (.15 | ) | | | - | | | (.15 | ) | | 22.81 | | (3.42 | ) | | | 2 | | .46 | | | | | | .38 | | | | | | | .92 | | | |
| Class R-5: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six months ended 5/31/2007 (5) | | | 42.84 | | | .73 | | | 5.03 | | | 5.76 | | | (.50 | ) | | | (1.80 | ) | | (2.30 | ) | | 46.30 | | 14.07 | | | | 1,509 | | .52 | | | (6 | ) | | .48 | | | | (6 | ) | | 3.40 | | (6 | ) |
| Year ended 11/30/2006 | | | 37.01 | | | 1.04 | | | 7.26 | | | 8.30 | | | (1.03 | ) | | | (1.44 | ) | | (2.47 | ) | | 42.84 | | 23.63 | | | | 1,023 | | .52 | | | | | | .48 | | | | | | | 2.64 | | | |
| Year ended 11/30/2005 | | | 33.81 | | | .91 | | | 3.96 | | | 4.87 | | | (.87 | ) | | | (.80 | ) | | (1.67 | ) | | 37.01 | | 15.06 | | | | 541 | | .54 | | | | | | .50 | | | | | | | 2.63 | | | |
| Year ended 11/30/2004 | | | 28.63 | | | .76 | | | 5.51 | | | 6.27 | | | (.80 | ) | | | (.29 | ) | | (1.09 | ) | | 33.81 | | 22.49 | | | | 287 | | .54 | | | | | | .54 | | | | | | | 2.48 | | | |
| Year ended 11/30/2003 | | | 22.81 | | | .70 | | | 5.74 | | | 6.44 | | | (.62 | ) | | | - | | | (.62 | ) | | 28.63 | | 28.82 | | | | 110 | | .56 | | | | | | .56 | | | | | | | 2.88 | | | |
| Period from 5/15/2002 to 11/30/2002 | | | 26.11 | | | .30 | | | (3.27 | | | (2.97 | | | (.33 | ) | | | - | | | (.33 | ) | | 22.81 | | (11.37 | ) | | | 53 | | .56 | | | (6 | ) | | .56 | | | | (6 | ) | | 2.48 | | (6 | ) |
| Six months ended | | | | | | | | | | |
| | May 31, | | Year ended November 30 |
| | 2007(5) | | 2006 | | 2005 | | 2004 | | 2003 | | 2002 |
| | | | | | | | | | | | |
| Portfolio turnover rate for all classes of shares | 12% | | 30% | | 26% | | 21% | | 27% | | 32% |
| | | | | | | | | | | | |
| (1) Based on operations for the periods shown (unless otherwise noted) and, accordingly, may not be representative of a full year. |
| (2) Based on average shares outstanding. |
| (3) Total returns exclude all sales charges, including contingent deferred sales charges. |
| (4) This column reflects the impact, if any, of certain reimbursements/waivers from CRMC. During some of the periods shown, CRMC reduced fees for investment advisory services for all share classes. In addition, during some of the periods shown, CRMC paid a portion of the fund's transfer agent fees for certain retirement plan share classes. |
| (5) Unaudited. |
| (6) Annualized. |
| (7) Amount less than $1 million. |
| |
| |
| See Notes to Financial Statements |
| |
As a shareholder of the fund, you incur two types of costs: (1) transaction costs such as initial sales charges on purchase payments and contingent deferred sales charges on redemptions (loads); and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund so you can compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (December 1, 2006, through May 31, 2007).
Actual expenses:
The first line of each share class in the table on the next page provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses paid during period" to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes:
The second line of each share class in the table on the next page provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for the share class and an assumed rate of return of 5.00% per year before expenses, which is not the actual return of the share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5.00% hypothetical example with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.
Notes:
There are some account fees that are charged to certain types of accounts, such as Individual Retirement Accounts and 529 college savings plan accounts (generally, a $10 fee is charged to set up the account and an additional $10 fee is charged to the account annually) that would increase the amount of expenses paid on your account. In addition, retirement plan participants may be subject to certain fees charged by the plan sponsor, and Class F and 529-F shareholders may be subject to fees charged by financial intermediaries, typically ranging from 0.75% to 1.50% of assets annually depending on services offered. You can estimate the impact of these fees by adding the amount of the fees to the total estimated expenses you paid on your account during the period as calculated above. In addition, your ending account value would also be lower by the amount of these fees.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of each share class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| | | Beginning account value 12/1/2006 | | | Ending account value 5/31/2007 | | | Expenses paid during period* | | | Annualized expense ratio | |
| | | | | | | | | | | | | |
| Class A -- actual return | | $ | 1,000.00 | | | $ | 1,139.51 | | | $ | 3.73 | | | | .70 | % |
| Class A -- assumed 5% return | | | 1,000.00 | | | | 1,021.44 | | | | 3.53 | | | | .70 | |
| Class B -- actual return | | | 1,000.00 | | | | 1,134.93 | | | | 7.88 | | | | 1.48 | |
| Class B -- assumed 5% return | | | 1,000.00 | | | | 1,017.55 | | | | 7.44 | | | | 1.48 | |
| Class C -- actual return | | | 1,000.00 | | | | 1,134.62 | | | | 8.14 | | | | 1.53 | |
| Class C -- assumed 5% return | | | 1,000.00 | | | | 1,017.30 | | | | 7.70 | | | | 1.53 | |
| Class F -- actual return | | | 1,000.00 | | | | 1,139.35 | | | | 3.84 | | | | .72 | |
| Class F -- assumed 5% return | | | 1,000.00 | | | | 1,021.34 | | | | 3.63 | | | | .72 | |
| Class 529-A -- actual return | | | 1,000.00 | | | | 1,139.00 | | | | 4.16 | | | | .78 | |
| Class 529-A -- assumed 5% return | | | 1,000.00 | | | | 1,021.04 | | | | 3.93 | | | | .78 | |
| Class 529-B -- actual return | | | 1,000.00 | | | | 1,134.30 | | | | 8.46 | | | | 1.59 | |
| Class 529-B -- assumed 5% return | | | 1,000.00 | | | | 1,017.00 | | | | 8.00 | | | | 1.59 | |
| Class 529-C -- actual return | | | 1,000.00 | | | | 1,134.42 | | | | 8.41 | | | | 1.58 | |
| Class 529-C -- assumed 5% return | | | 1,000.00 | | | | 1,017.05 | | | | 7.95 | | | | 1.58 | |
| Class 529-E -- actual return | | | 1,000.00 | | | | 1,137.15 | | | | 5.75 | | | | 1.08 | |
| Class 529-E -- assumed 5% return | | | 1,000.00 | | | | 1,019.55 | | | | 5.44 | | | | 1.08 | |
| Class 529-F -- actual return | | | 1,000.00 | | | | 1,139.92 | | | | 3.09 | | | | .58 | |
| Class 529-F -- assumed 5% return | | | 1,000.00 | | | | 1,022.04 | | | | 2.92 | | | | .58 | |
| Class R-1 -- actual return | | | 1,000.00 | | | | 1,134.34 | | | | 8.19 | | | | 1.54 | |
| Class R-1 -- assumed 5% return | | | 1,000.00 | | | | 1,017.25 | | | | 7.75 | | | | 1.54 | |
| Class R-2 -- actual return | | | 1,000.00 | | | | 1,134.35 | | | | 8.19 | | | | 1.54 | |
| Class R-2 -- assumed 5% return | | | 1,000.00 | | | | 1,017.25 | | | | 7.75 | | | | 1.54 | |
| Class R-3 -- actual return | | | 1,000.00 | | | | 1,137.36 | | | | 5.76 | | | | 1.08 | |
| Class R-3 -- assumed 5% return | | | 1,000.00 | | | | 1,019.55 | | | | 5.44 | | | | 1.08 | |
| Class R-4 -- actual return | | | 1,000.00 | | | | 1,138.83 | | | | 4.16 | | | | .78 | |
| Class R-4 -- assumed 5% return | | | 1,000.00 | | | | 1,021.04 | | | | 3.93 | | | | .78 | |
| Class R-5 -- actual return | | | 1,000.00 | | | | 1,140.74 | | | | 2.56 | | | | .48 | |
| Class R-5 -- assumed 5% return | | | 1,000.00 | | | | 1,022.54 | | | | 2.42 | | | | .48 | |
* The “expenses paid during period” are equal to the “annualized expense ratio,” multiplied by the average account value over the period, multiplied by the number of days in the period (182), and divided by 365 (to reflect the one-half year period).
[logo - American Funds®]
The right choice for the long term®
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
Principal underwriter
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, CA 90071-1406
Custodian of assets
JPMorgan Chase Bank
270 Park Avenue
New York, NY 10017-2070
Counsel
O’Melveny & Myers LLP
400 South Hope Street
Los Angeles, CA 90071-2899
Independent registered public accounting firm
PricewaterhouseCoopers LLP
350 South Grand Avenue
Los Angeles, CA 90071-2889
Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds. 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 (AFS) 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 free of charge on the U.S. Securities and Exchange Commission (SEC) website at sec.gov, on the American Funds website or upon request by calling AFS. The fund files its proxy voting record with the SEC for the 12 months ended June 30 by August 31. The report also is available on the SEC and American Funds websites.
A complete May 31, 2007, portfolio of Capital World Growth and Income Fund’s investments is available free of charge by calling AFS or visiting the SEC website (where it is part of Form N-CSR).
Capital World Growth and Income Fund files a complete list of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. This filing is available free of charge on the SEC website. You may also review or, for a fee, copy this filing at the SEC’s Public Reference Room in Washington, D.C. (800/SEC-0330). Additionally, the list of portfolio holdings also is available by calling AFS.
This report is for the information of shareholders of Capital World Growth and Income Fund, but it also may 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, 2007, this report must be accompanied by an American Funds statistical update for the most recently completed calendar quarter.
The Capital Group Companies
American Funds Capital Research and Management Capital International Capital Guardian Capital Bank and Trust
Lit. No. MFGESR-933-0707P
Litho in USA WG/CVB/6269-S10070
Printed on recycled paper
Not applicable for filing of semi-annual reports to shareholders.
Not applicable for filing of semi-annual reports to shareholders.
Not applicable for filing of semi-annual reports to shareholders.
Not applicable to this Registrant, insofar as the Registrant is not a listed issuer as defined in Rule 10A-3 under the Securities Exchange Act of 1934.
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.
Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.
ITEM 9 – Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.
There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s board of directors 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, as amended. 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. 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.
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.
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.
