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: 811-7338
Capital World Growth and Income Fund, Inc.
(Exact Name of Registrant as specified in charter)
333 South Hope Street
Los Angeles, California 90071
(Address of principal executive offices)
Registrant's telephone number, including area code: (213) 486-9200
Date of fiscal year end: November 30, 2003
Date of reporting period: May 31, 2003
Vincent P. Corti
Capital Research and Management Company
333 South Hope Street
Los Angeles, California 90071
(name and address of agent for service)
Copies to:
Michael J. Fairclough, Esq.
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, California 90071
(Counsel for the Registrant)
ITEM 1 - Reports to Stockholders
[logo - American Funds(r)]
The right choice for the long term(r)
Capital World Growth and Income Fund
[picture of two hands adjusting a violin]
Semi-annual report for the six months ended May 31, 2003
CAPITAL WORLD GROWTH AND INCOME FUND SM 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 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.
Fund results in this report were calculated for Class A shares at net asset
value (without a sales charge) unless otherwise indicated. Here are the average
annual compound returns on a $1,000 investment with all distributions reinvested
for periods ended June 30, 2003 (the most recent calendar quarter):
1 year 5 years 10 years
Class A shares
reflecting 5.75% maximum sales charge -1.89% +4.44% +11.36%
The fund's 30-day yield for Class A shares as of June 30, 2003, reflecting the
5.75% maximum sales charge and calculated in accordance with the Securities and
Exchange Commission formula, was 2.08%.
Results for other share classes can be found on page 32. Please see the inside
back cover for important information about other share classes. For the most
current investment results, please refer to americanfunds.com.
FIGURES SHOWN ARE PAST RESULTS AND ARE NOT PREDICTIVE OF FUTURE RESULTS. SHARE
PRICE AND RETURN WILL VARY, SO YOU MAY LOSE MONEY. INVESTING FOR SHORT PERIODS
MAKES LOSSES MORE LIKELY. INVESTMENTS ARE NOT FDIC-INSURED, NOR ARE THEY
DEPOSITS OF OR GUARANTEED BY A BANK OR ANY OTHER ENTITY. INVESTING OUTSIDE THE
UNITED STATES IS SUBJECT TO ADDITIONAL RISKS, SUCH AS CURRENCY FLUCTUATIONS AND
POLITICAL INSTABILITY, WHICH ARE DETAILED IN THE FUND'S PROSPECTUS.
[small black and white picture of two hands adjusting a violin]
FELLOW SHAREHOLDERS:
After a shaky start, global stock markets regained their footing in the first
half of Capital World Growth and Income Fund's fiscal year. The fund made solid
progress in this environment, largely resisting declines during the early part
of the period and participating fully in the rally that followed.
For the six months ended May 31, the fund produced a total return of 6.3%,
assuming reinvestment of dividends totaling 25 cents a share. That was ahead of
both the 4.2% total return of the unmanaged MSCI World Index and the 3.1%
average return of the 334 global funds tracked by Lipper.
The fund's emphasis on established, dividend-oriented companies contributed to
considerable resilience during the latest bear market. As the table below shows,
the fund held up substantially better than its relevant benchmarks over the past
one- and three-year periods, which coincided with steep market declines. That
relative steadiness has translated into superior growth over time.
Results at a glance (as of May 31, 2003, with all distributions reinvested)
Total returns Annualized returns
Lifetime
1 year 3 years 5 years 10 years (since 3/26/93)
Capital World Growth
and Income Fund -5.3% -1.1% +5.0% +11.6% +11.7%
MSCI World Index(1) -9.4 -12.1 -2.6 +6.0 +6.8
Standard & Poor's 500
Composite Index(1) -8.1 -10.8 -1.1 +9.9 +9.9
Lipper global funds average(2) -11.4 -10.6 -1.8 +6.7 +7.1
(1)The indexes are unmanaged and do not reflect the effects of sales charges,
commissions or expenses. The MSCI World Index measures 23 of the world's major
stock markets, including the U.S.
(2)The Lipper global funds average consists of funds that invest at least 25% of
their portfolios in securities traded outside the U.S. Lipper averages do not
reflect the effects of sales charges.
[Begin pie chart]
Where the fund's assets were invested
Percent by country as of May 31, 2003
Capital World
Growth and MSCI World
Income Fund Index*
o The Americas 38.6% 59.5%
United States 29.2 57.0
Canada 6.2 2.5
Brazil 1.9 --
Mexico 1.3 --
o Europe 30.3% 29.2%
United Kingdom 9.8 11.2
Netherlands 5.9 2.1
Germany 2.4 2.6
France 1.7 3.9
Norway 1.6 0.2
Switzerland 1.4 3.3
Spain 1.4 1.5
Denmark 1.2 0.3
Sweden 1.0 0.9
Finland 0.8 0.8
Austria 0.8 0.1
Ireland 0.7 0.3
Italy 0.6 1.7
Greece 0.6 0.1
Portugal 0.3 0.2
Luxembourg 0.1 --
o Asia/Pacific 16.5% 10.9%
Japan 5.3 7.8
Australia 3.3 2.1
Hong Kong 2.7 0.6
Korea 2.1 --
India 1.0 --
Singapore 0.9 0.3
China 0.3 --
Taiwan 0.3 --
Philippines 0.2 --
Indonesia 0.2 --
Israel 0.1 --
New Zealand 0.1 0.1
o Other 2.2% 0.4%
o Bonds, cash &
equivalents 12.4% --
*Weighted by market capitalization.
[End pie chart]
THE CLOUDS LIFT
The six-month reporting period provided a study in contrasts. The fiscal year
began in December 2002, with global stock markets in the doldrums. Lackluster
growth in the U.S. economy, rising oil prices and worries about the Iraq
conflict sapped investor confidence, sending equity prices sharply lower through
March. By early spring, however, the gloom lifted as the war entered a new phase
and as encouraging earnings reports began to trickle in. The approval in
Congress of a reduction in the tax on dividends, amid the current
low-interest-rate environment, further increased the appeal of stocks. The
turnaround late in the period was dramatic: The MSCI World Index surged 8.9% in
April and an additional 5.8% in May.
Stocks in the U.S., the fund's largest geographic concentration, returned 4.0%
for the full six months.1 Elsewhere in the Americas, stocks rose 20.5% in Canada
and 43.4% in Brazil, largely due to appreciation of local currencies relative to
the U.S. dollar.
(1)Country returns are based on MSCI indexes, in U.S. dollars with gross
dividends reinvested.
In Europe, despite a strong rally at the end of the period, stock returns were
mostly negative, reflecting generally poor economic conditions throughout the
region. However, declines were offset by a sharp rise in the value of the euro
and the British pound versus the U.S. dollar. The euro gained about 15% against
the dollar, while the pound gained 5%. As a result, Germany, France and the U.K.
all posted positive returns (6.6%, 7.0% and 4.7%, respectively) when measured in
U.S. dollars. Other notable gainers in Europe included Norway (+7.7%),
Switzerland (+5.4%) and Spain (+16.2%). At the other end of the spectrum, the
strong euro could not completely erase steep losses in the Netherlands; stocks
there fell 4.0%, even when converted to dollars.
Currency values had less of an impact on Asian markets. Stocks declined 6.5% in
Japan, which remained mired in economic and financial difficulties, while Korean
stocks fell 12.3% due to political tensions with its northern neighbor. Severe
acute respiratory syndrome (SARS) weighed on stocks in Hong Kong (-5.6%).
A FOCUS ON INDIVIDUAL COMPANIES
While market movements naturally affect short-term results, Capital World Growth
and Income Fund pursues a bottom-up strategy, focusing on the long-term
prospects of individual companies. During the period, the benefits of this
strategy were evident: Of about 245 companies held in the portfolio for the
entire six months, nearly two-thirds rose in price.
Among the 10 largest holdings, eight contributed positively to returns. J.P.
Morgan Chase recovered from earlier depressed levels to rise 30% during the six
months. Altria (formerly Philip Morris) likewise shrugged off earlier litigation
worries; the stock appreciated 9%. Scottish Power, Shell Canada, Vodafone and
ABN-AMRO each gained more than 10% in price.
Commercial bank holdings, the fund's largest industry concentration, supported
returns, providing both capital appreciation and generous dividend income.
Canadian banks were particularly strong. Measured in U.S. dollars, Bank of Nova
Scotia rose 36%, while Royal Bank of Canada and Toronto-Dominion Bank each rose
15% or more. In the case of Bank of Nova Scotia, we reduced our position by
selling into strength.
Telecommunications services providers outside the U.S. likewise did well
overall. In addition to Vodafone, noteworthy price gains were achieved by
Telekom Austria, BCE of Canada and Telekom Indonesia. Over the past year, we
have been adding substantially to our European telecommunications holdings, many
of which appear to have put the worst of their financial difficulties behind
them. New investments include Deutsche Telekom, France Telecom, NTL Europe,
Portugal Telecom and Telefonica. This last company, based in Spain, recently
reintroduced its dividend.
Not every stock appreciated, of course. AOL Time Warner, dogged by public
boardroom struggles and accounting concerns, fell 7%. Financial services and
insurance firms turned in mostly poor results. ING Groep and AEGON both suffered
from exposure to an ailing Dutch stock market and declined 15% and 39%
respectively. Chubb Corp. and Allstate also lost ground. Finally, paper and pulp
producers, which had held up relatively well through much of the bear market,
retreated during the six-month reporting period, as hopes for an economic
recovery in the U.S. and Europe were deferred.
Capital World Growth and Income Fund's company-by-company approach leads to
broad portfolio diversification. Our investments, which are based on intensive
fundamental research, currently represent more than 30 countries and an equal
number of industries. About 11% of net assets is held in a reserve of cash and
equivalents.
FOLLOWING A SEASONED PATH
The stock market has risen substantially off its lows, in the aftermath of the
steepest, most protracted correction in some 60 years. Fueling the enthusiasm
are the glimmers of a U.S. economic recovery, global interest rates that are at
historic lows and the swift conclusion of the first phase of the Iraq war, which
has removed some of the uncertainty that has hung over the market. While these
conditions could ultimately prove to be a catalyst for earnings growth,
obstacles remain -- among them precarious debt levels, geopolitical instability
and the threat of deflation. At the moment, however, the stock market is
climbing its proverbial "wall of worry," as optimistic investors look beyond
these concerns.
In this environment, we are doing what we have always done: searching the globe
for well-managed, seasoned companies that are likely to weather downturns in the
business cycle and prosper in more fortunate times. Our balanced approach of
seeking companies with good growth potential and solid current dividends has
served shareholders well. As Capital World Growth and Income Fund celebrates its
10th anniversary this year, we remain hopeful that it will continue to do so in
the years ahead.
Cordially,
/s/Gina H. Despres /s/Stephen E. Bepler
Gina H. Despres Stephen E. Bepler
Chairman of the Board President
July 11, 2003
Largest equity holdings
Percent of
Country net assets
Altria Group United States 2.8%
AstraZeneca Sweden/United Kingdom 1.7
Vale do Rio Doce Brazil 1.4
Scottish Power United Kingdom 1.2
J.P. Morgan Chase United States 1.1
Shell Canada Canada 1.1
Vodafone United Kingdom 1.0
ABN AMRO Netherlands 1.0
ING Groep Netherlands 1.0
AOL Time Warner United States 1.0
INVESTMENT PORTFOLIO, MAY 31, 2003 UNAUDITED
[begin pie chart]
Commercial banks 6.11%
Diversified telecommunication services 5.83
Beverages & tobacco 5.64
Insurance 5.64
Pharmaceuticals 5.60
Metals & mining 5.53
Other industries 53.22
Bonds & notes 1.64
Cash & equivalents 10.79%
[end pie chart]
Market
Shares or value
EQUITY SECURITIES (common and preferred stocks and convertible debentures) principal amount (000)
COMMERCIAL BANKS - 6.11%
ABN AMRO Holding NV (Netherlands) (1) 6,207,564 $ 120,448
Toronto-Dominion Bank (Canada) 2,544,700 64,996
Lloyds TSB Group PLC (United Kingdom) (1) 8,231,000 60,470
Allied Irish Banks, PLC (Ireland) (1) 3,843,725 58,441
Bank of America Corp. (USA) 700,000 51,940
HSBC Holdings PLC (United Kingdom) (1) 2,981,868 35,151
HSBC Holdings PLC (Hong Kong) (1) 672,282 7,979
SMFG Finance (Cayman) Ltd. 2.25% mandatorily exchangeable preferred 2005, units
(Japan) 6,504,000,000 40,718
Societe Generale (France) (1) 620,000 38,175
Hang Seng Bank Ltd. (Hong Kong) (1) 3,300,000 34,954
National Australia Bank Ltd. (Australia) (1) 1,509,703 32,977
Wachovia Corp. (USA) 724,000 29,090
Bank of Nova Scotia (Canada) 650,000 27,773
Westpac Banking Corp. (Australia) (1) 2,449,210 26,298
HBOS PLC (United Kingdom) (1) 2,076,556 24,273
Bank of the Philippine Islands (Philippines) (1) 32,568,480 23,069
Royal Bank of Canada (Canada) 518,400 22,279
FleetBoston Financial Corp. (USA) 500,000 14,785
Skandinaviska Enskilda Banken AB, Class A (Sweden) (1) 800,000 8,492
DIVERSIFIED TELECOMMUNICATION SERVICES - 5.83%
Telekom Austria AG (Austria) (2) 8,740,000 96,253
Swisscom AG (Switzerland) (1) 259,389 78,074
SBC Communications Inc. (USA) 2,911,700 74,132
BCE Inc. (Canada) 3,237,166 71,178
Telefonos de Mexico, SA de CV, Class L (ADR) (Mexico) 1,996,600 60,497
Telefonos de Mexico, SA de CV 4.25% convertible debentures 2004 $ 9,220,000 10,315
Telefonica, SA (Spain) (1) (2) 5,323,120 59,658
TELUS Corp., nonvoting (Canada) 2,745,147 39,465
TELUS Corp. 300,000 4,751
Portugal Telecom, SA (Portugal) (1) 4,800,000 36,747
Royal KPN NV (formerly Koninklijke PTT Nederaland NV) (Netherlands) (1)(2) 4,734,900 33,069
Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk., Class B
(Indonesia) (1) 46,400,000 26,135
Telecom Italia SpA, nonvoting savings shares (Italy) (1) 4,312,800 24,128
France Telecom, SA (France) (1) 956,000 23,656
Deutsche Telekom AG (Germany) 994,500 14,861
Telecom Corp. of New Zealand Ltd. (New Zealand) (1) 4,787,900 14,718
AT&T Corp. (USA) 700,000 13,643
Singapore Telecommunications Ltd. (Singapore) (1) 6,171,000 5,269
NTL Inc. (USA) (2) 77,003 2,098
NTL Europe, Inc., Series A, 10.00% preferred 2023 (France) (2) 129 0
BEVERAGES & TOBACCO - 5.64%
Altria Group, Inc. (formerly Philip Morris Companies Inc.) (USA) 8,100,000 334,530
Foster's Group Ltd. (Australia) (1) 30,488,405 85,517
R.J. Reynolds Tobacco Holdings, Inc. (USA) 1,900,000 64,771
Orkla AS (Norway) 2,985,714 54,416
Swedish Match AB (Sweden) 4,500,550 36,252
Imperial Tobacco Group PLC (United Kingdom) 1,791,413 32,270
Gallaher Group PLC (United Kingdom) 2,601,373 26,178
Fomento Economico Mexicano, SA de CV (ADR) (Mexico) 353,700 14,113
Coca-Cola HBC SA (Greece) 712,182 10,709
UST Inc. (USA) 200,000 7,062
Wolverhampton & Dudley Breweries, PLC (United Kingdom) 133,900 1,425
INSURANCE - 5.64%
AEGON NV (Netherlands) (1) 8,200,192 77,353
PartnerRe Holdings Ltd. (polynational) 1,339,000 71,128
Chubb Corp. (USA) 1,027,000 65,759
Allstate Corp. (USA) 1,700,000 61,183
EULER & HERMES S.A. (France) 1,851,985 60,425
XL Capital Ltd., Class A (USA) 605,000 52,665
Mitsui Sumitomo Insurance Co., Ltd. (Japan) (1) 10,964,000 49,165
QBE Insurance Group Ltd. (Australia) (1) 7,020,136 41,528
Berkshire Hathaway Inc., Class A (USA) (2) 444 31,524
Mercury General Corp. (USA) 650,000 30,797
Sompo Japan Insurance Inc. (Japan) (1) 6,000,000 27,718
Munchener Ruckversicherungs-Gesellschaft AG (Germany) (1) 175,000 18,825
Sun Life Financial Services of Canada Inc. (Canada) 726,480 14,786
Promina Group Ltd. (Australia) (2) 10,222,200 14,190
Aioi Insurance Co. Ltd. (Japan) (1) 5,561,000 13,141
NIPPONKOA Insurance Co., Ltd. (Japan) 3,725,000 12,791
Travelers Property Casualty Corp. 4.50% convertible subordinated note 2032 (USA) $ 500,000 12,475
Millea Holdings, Inc. (Japan) (1) 1,546 11,146
PHARMACEUTICALS - 5.60%
AstraZeneca PLC (Sweden) (1) 4,467,000 183,678
AstraZeneca PLC (United Kingdom) (1) 325,000 13,205
Novo Nordisk A/S, Class B (Denmark) (1) 2,471,000 86,670
Sepracor Inc. (USA) (2) 1,850,000 42,087
Sepracor Inc. 5.75% convertible notes 2006 $ 30,000,000 27,337
Sepracor Inc. 5.75% convertible notes 2006 (3) $ 10,000,000 9,112
Forest Laboratories, Inc. (USA) (2) 1,450,840 73,267
Eli Lilly and Co. (USA) 1,100,000 65,747
Shionogi & Co., Ltd. (Japan) (1) 3,841,000 54,709
Pfizer Inc (formed by the merger of Pfizer Inc and Pharmacia Corp.) (USA) 1,035,000 32,106
Bristol-Myers Squibb Co. (USA) 1,140,000 29,184
Elan Corp., PLC (ADR) (Ireland) (2) 3,055,500 18,700
Elan Finance Corp. Ltd. 0% convertible notes 2018 $ 12,000,000 7,050
Sanofi-Synthelabo (France) (1) 294,000 18,863
METALS & MINING - 5.53%
Cia. Vale do Rio Doce, Class A, preferred nominative (Brazil) 4,983,800 138,978
Cia. Vale do Rio Doce, ordinary nominative (ADR) 823,000 24,690
Barrick Gold Corp. (Canada) 6,090,000 106,453
Freeport-McMoRan Copper & Gold Inc., Class B (USA) 3,569,800 78,357
Gold Fields Ltd. (South Africa) (1) 6,500,000 73,382
Phelps Dodge Corp. (USA) (2) 1,500,000 54,675
Impala Platinum Holdings Ltd. (South Africa) (1)(3) 702,388 38,478
Anglogold Ltd. (South Africa) (1) 1,200,000 34,361
Newcrest Mining Ltd. (Australia) 6,000,000 29,522
Yanzhou Coal Mining Co. Ltd., Class H (China) (1) 50,800,000 22,643
Alumina Ltd. (formerly WMC Ltd.) (Australia) (1) 7,143,900 20,318
Xstrata PLC (United Kingdom) (1) 1,200,000 8,738
Xstrata PLC, rights, expire 2003 (1)(2) 1,800,000 3,213
POSCO (South Korea) (1) 116,010 10,478
Arcelor SA 3.875% convertible preferred 2005 (Luxembourg) 410,000 9,769
Gencor Ltd. (South Africa) 5,400,000 80
OIL & GAS - 5.32%
Shell Canada Ltd. (Canada) 3,418,100 125,070
"Shell" Transport and Trading Co., PLC (ADR) (United Kingdom) 1,325,000 52,828
Royal Dutch Petroleum Co. (Netherlands) (1) 580,000 26,185
Royal Dutch Petroleum Co. (New York registered) 460,000 20,953
Canadian Oil Sands Trust (Canada) (1) (3) 2,175,000 50,355
Canadian Oil Sands Trust 1,720,000 44,246
Petro-Canada (Canada) 2,475,000 94,174
Norsk Hydro AS (Norway) (1) 1,461,100 64,577
Petroleo Brasileiro SA - Petrobras, ordinary nominative (ADR) (Brazil) 2,150,000 41,172
Petroleo Brasileiro SA - Petrobras, preferred nominative (ADR) 1,160,000 20,532
Husky Energy Inc. (Canada) 2,000,000 24,184
ENI SpA (Italy) (1) (4) 1,500,000 24,171
Unocal Corp. (USA) 540,000 16,249
Sasol Ltd. (South Africa) (1) 1,100,000 12,852
Sunoco, Inc. (USA) 325,000 11,973
FOOD PRODUCTS - 3.50%
Nissin Food Products Co., Ltd. (Japan) 5,020,000 106,160
Koninklijke Numico NV, Class C (Netherlands) (1) 8,280,000 105,434
Nestle SA (Switzerland) 390,000 81,856
Unilever NV (New York registered) (Netherlands) 1,160,000 67,860
H.J. Heinz Co. (USA) 580,000 19,181
Unilever PLC (United Kingdom) 2,100,000 18,708
Groupe Danone (France) (1) 104,500 14,363
REAL ESTATE - 3.04%
Hongkong Land Holdings Ltd. (Hong Kong) 39,054,900 48,428
Japan Real Estate Investment Corp. (Japan) 8,950 47,973
Hang Lung Properties Ltd. (Hong Kong) (1) 47,950,000 45,123
Sun Hung Kai Properties Ltd. (Hong Kong) (1) 7,520,000 38,104
Plum Creek Timber Co., Inc. (USA) 1,027,500 27,126
Nippon Building Fund, Inc. (formerly Office Building Fund of Japan, Inc.)(Japan) 4,620 25,654
Hysan Development Co. Ltd. (Hong Kong) (1) 31,064,630 24,885
Hang Lung Group Ltd. (Hong Kong) (1) 27,537,000 23,200
Kerry Properties Ltd. (Hong Kong) 18,772,434 22,146
Kimco Realty Corp. (USA) 525,000 19,635
Developers Diversified Realty Corp. (USA) 650,000 18,350
Unibail Holding (formerly Unibail) (France) (1) 92,700 6,892
SM Prime Holdings, Inc. (Philippines) 52,885,000 4,781
Great Eagle Holdings Ltd. (Hong Kong) (1) 7,136,000 3,815
Security Capital Global Realty (Luxembourg) (1)(2)(3) 147,729 2,497
HKR International Ltd. (Hong Kong) (1)(2) 4,824,800 973
WIRELESS TELECOMMUNICATION SERVICES - 2.82%
Vodafone Group PLC (United Kingdom) (1) 56,954,642 122,518
AT&T Wireless Services, Inc. (USA) (2) 9,250,000 71,873
Nextel Communications, Inc., Series D, 13.00% exchangeable preferred 2009(USA)(5) 47,808 49,481
Panafon SA (Greece) 6,009,120 38,745
China Unicom Ltd. (China) (1) 20,409,600 12,184
America Movil SA de CV, Series L (ADR) (Mexico) 600,000 10,956
Sprint Corp. 7.125% convertible preferred 2004 (USA) 1,600,000 units 10,880
KDDI Corp. (Japan) (1) 3,000 10,427
Crown Castle International Corp. 6.25% convertible preferred 2012 (USA) (2) 158,800 5,757
Crown Castle International Corp. (2) 20,385 170
ELECTRIC UTILITIES - 2.76%
Scottish Power PLC (United Kingdom) (1) 24,740,000 146,167
E.ON AG (Germany) 1,425,000 73,437
Southern Co. (USA) 1,000,000 31,480
Korea Deposit Insurance Corp. 2.25% convertible debentures 2005 (South Korea) (3) $ 17,700,000 21,948
Dominion Resources, Inc. 9.50% PIES convertible preferred 2004 (USA) 365,400 units 21,285
American Electric Power Co., Inc. (USA) 700,000 20,328
Ameren Corp. (USA) 250,000 11,375
Pinnacle West Capital Corp. (USA) 22,500 852
PAPER & FOREST PRODUCTS - 2.29%
Norske Skogindustrier ASA, Class A (Norway) (1) 4,575,000 65,169
Stora Enso Oyj (ADR) (Finland) 2,715,750 29,004
Stora Enso Oyj, Class R (1) 1,000,000 10,451
UPM-Kymmene Corp. (Finland) 2,784,000 38,784
Sappi Ltd. (South Africa) (1) 2,859,000 34,934
Georgia-Pacific Corp., Georgia-Pacific Group (USA) 1,998,300 34,571
International Paper Co. (USA) 600,000 22,002
M-real Oyj, Class B (Finland) 2,369,500 19,237
Holmen AB, Class B (Sweden) (1) 620,000 16,762
SPECIALTY RETAIL - 2.25%
Lowe's Companies, Inc. (USA) 1,550,000 65,503
Dixons Group PLC (United Kingdom) 30,882,596 58,412
Limited Brands, Inc. (USA) 3,176,900 48,479
Kingfisher PLC (United Kingdom) (1) 9,680,330 40,327
Gap, Inc. 5.75% convertible notes 2009 (USA)(3) $ 15,000,000 19,950
Gap, Inc. 1,100,000 18,700
CarMax, Inc. (USA) (2) 650,000 15,113
ELECTRONIC EQUIPMENT & INSTRUMENTS - 2.24%
Samsung SDI Co., Ltd. (South Korea) (1) 1,645,080 106,416
Solectron Corp. (USA) (2) 6,750,000 27,000
Solectron Corp. 7.25% ACES convertible preferred 2004 800,000 units 10,016
Solectron Corp. 0% LYON convertible notes 2020 $ 16,000,000 8,940
Flextronics International Ltd. (Singapore) (2) 3,000,000 31,800
Hoya Corp. (Japan) (1) 430,000 26,922
Electrocomponents PLC (United Kingdom) 5,000,000 26,181
Orbotech Ltd. (Israel) (2) 1,035,500 16,340
Murata Manufacturing Co., Ltd. (Japan) (1) 274,000 10,562
Kyoden Co., Ltd. (Japan) (1) 200,000 496
THRIFTS & MORTGAGE FINANCE - 1.85%
Washington Mutual, Inc. (USA) 2,600,000 106,028
Housing Development Finance Corp. Ltd. (India) 10,400,000 81,692
Housing Development Finance Corp. Ltd. (3) 940,000 7,384
Freddie Mac (USA) 400,000 23,924
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 1.83%
Samsung Electronics Co., Ltd. (South Korea) (1) 287,000 77,816
Agere Systems Inc. 6.50% convertible notes 2009 (USA) $ 34,000,000 40,418
Agere Systems Inc., Class A (2) 6,465,156 15,775
ASML Holding NV 5.50% convertible notes 2010 (Netherlands) Euro 17,450,000 21,404
Taiwan Semiconductor Manufacturing Co. Ltd. (Taiwan) (1)(2) 10,934,000 17,235
Texas Instruments Inc. (USA) 750,000 15,375
Linear Technology Corp. (USA) 400,000 14,544
KLA-Tencor Corp. (USA) (2) 300,000 13,869
DIVERSIFIED FINANCIAL SERVICES - 1.82%
ING Groep NV (Netherlands) (1) 7,322,468 118,329
Investor AB, Class B (Sweden) (1) 5,333,090 36,207
Wharf (Holdings) Ltd. (Hong Kong) (1) 14,000,000 26,981
Swire Pacific Ltd., Class A (Hong Kong) (1) 4,500,000 19,375
Hong Kong Exchanges and Clearing Ltd. (Hong Kong) (1) 10,665,100 14,161
MEDIA - 1.71%
AOL Time Warner Inc. (USA) (2) 7,360,000 112,019
Viacom Inc., Class B, nonvoting (USA) (2) 735,000 33,457
Mediaset SpA (Italy) 2,500,000 22,855
News Corp. Ltd., preferred (Australia) (1) 2,274,082 14,555
Comcast Corp., Class A (USA) (2) 323,500 9,741
SCMP Group Ltd. (Hong Kong) (1) 22,480,671 8,622
Village Roadshow Ltd., Class A, 5.50% preferred (Australia) 782,800 342
Village Roadshow Ltd. (2) 296,466 228
UnitedGlobalCom, Inc., Class A (formerly United Pan-Europe Communications NV)
(USA) (1)(2)(3) 20,092 83
KirchPayTV GmbH & Co. KGaA, nonvoting (Germany) (1)(2)(3) 1,438,728 0
CAPITAL MARKETS - 1.70%
J.P. Morgan Chase & Co. (USA) 3,861,500 126,889
Allied Capital Corp. (USA) 3,192,000 74,533
AUTOMOBILES - 1.59%
Ford Motor Co. Capital Trust II 6.50% cumulative convertible trust preferred
2032 (USA) 1,172,950 52,513
Honda Motor Co., Ltd. (Japan) (1) 750,000 27,178
Fuji Heavy Industries Ltd. (Japan) (1) 6,919,000 26,211
Suzuki Motor Corp. (Japan) (1) 2,100,000 25,842
Bayerische Motoren Werke AG (Germany) (1) 617,000 21,072
General Motors Corp. (USA) 500,000 17,665
Nissan Motor Co., Ltd. (Japan) (1) 1,400,000 10,992
Hyundai Motor Co., nonvoting preferred, Series 2 (South Korea) 510,380 5,978
MULTI-UTILITIES & UNREGULATED POWER - 1.39%
National Grid Transco PLC (United Kingdom) 10,700,000 69,126
National Grid Transco PLC (ADR) 439,725 14,243
Williams Companies, Inc. 9.00% FELINE PACS convertible preferred 2005 (USA) 2,480,000 units 30,380
Williams Companies, Inc. 2,687,300 21,257
Duke Energy Corp. (USA) 986,700 19,122
United Utilities PLC (United Kingdom) (1) 1,000,000 10,055
COMPUTERS & PERIPHERALS - 1.37%
Sun Microsystems, Inc. (USA) (2) 15,000,000 64,950
International Business Machines Corp. (USA) 590,000 51,944
Hewlett-Packard Co. (USA) 1,812,500 35,344
Dell Computer Corp. (USA) (2) 309,050 9,670
CHEMICALS - 1.29%
Lyondell Chemical Co. (USA) 3,400,000 48,960
Dow Chemical Co. (USA) 1,250,000 39,750
DSM NV (Netherlands) (1) 834,828 38,450
BOC Group PLC (United Kingdom) 2,000,000 25,186
GAS UTILITIES - 1.28%
Gas Natural SDG, SA (Spain) (1) 5,219,500 106,364
Enbridge Inc. (Canada) 450,000 15,359
NiSource Inc. (USA) 700,000 13,727
NICOR Inc. (USA) 250,000 8,903
Australian Gas Light Co. (Australia) 1,000,000 7,397
INDUSTRIAL CONGLOMERATES - 1.28%
Tyco International Ltd. (USA) 5,152,900 91,206
General Electric Co. (USA) 1,900,000 54,530
Siemens AG (Germany) (1) 113,900 5,437
HEALTH CARE PROVIDERS & SERVICES - 0.95%
Fresenius Medical Care AG (Germany) 970,000 47,136
Fresenius Medical Care AG, preferred 1,300,000 46,270
HCA Inc. (USA) 570,000 18,810
AIRLINES - 0.92%
Deutsche Lufthansa AG (Germany) (2) 4,660,000 50,663
British Airways PLC (United Kingdom) (2) 21,057,100 48,535
Qantas Airways Ltd. (Australia) (1) 4,510,000 9,598
OFFICE ELECTRONICS - 0.90%
Xerox Corp. (USA) (2) 6,500,000 71,045
Xerox Capital Trust II 7.50% convertible preferred 2021 (3) 500,000 35,168
COMMERCIAL SERVICES & SUPPLIES - 0.80%
Brambles Industries PLC (United Kingdom) (1) 18,589,934 48,919
Brambles Industries Ltd. (Australia) (1) 9,594,400 28,660
Hays PLC (United Kingdom) (1) 5,502,845 7,353
Robert Half International Inc. (USA) (2) 360,000 6,102
Chubb PLC (United Kingdom) (1) 3,697,500 3,734
FOOD & STAPLES RETAILING - 0.64%
Woolworths Ltd. (Australia) (1) 4,418,307 35,470
Loblaw Companies Ltd. (Canada) 630,000 27,424
Albertson's, Inc. (USA) 600,000 12,522
COMMUNICATIONS EQUIPMENT - 0.55%
QUALCOMM Inc. (USA) 1,075,000 36,099
Motorola, Inc. 7.00% convertible preferred 2004 (USA) 400,000 units 12,020
Juniper Networks, Inc. 4.75% convertible subordinated notes 2007 (USA) $ 10,000,000 9,300
Corning Inc. 3.50% convertible debentures 2008 (USA) $ 7,000,000 7,779
HOTELS, RESTAURANTS & LEISURE - 0.53%
J D Wetherspoon PLC (United Kingdom) 6,159,424 23,805
Carnival Corp., units (USA) 700,000 21,420
Greek Organization of Football Prognostics SA (Greece) 1,475,000 15,550
Greene King PLC (United Kingdom) 104,799 1,309
OTHER - 3.61%
Kimberly-Clark de Mexico, SA de CV, Class A (Mexico) 23,396,100 58,784
Target Corp. (USA) 1,247,500 45,696
Schneider SA (France) (1) 800,000 36,745
Sonoco Products Co. (USA) 1,200,000 26,964
Capital One Financial Corp. 6.25% Upper DECS 2005 (USA) 600,000 units 24,120
Infosys Technologies Ltd. (India) 394,500 22,461
James Hardie Industries Ltd. (Australia) (1) 5,000,000 22,157
IHC Caland NV (Netherlands) 418,259 22,150
Raytheon Co. - RC Trust I 8.25% convertible preferred 2006 (USA) 380,000 units 21,447
Volvo AB, Class B (Sweden) (1) 918,650 19,500
Microsoft Corp. (USA) 600,000 14,766
Invensys PLC (United Kingdom) 53,000,000 14,755
Schlumberger Ltd. (USA) 300,000 14,586
Asahi Diamond Industrial Co., Ltd. (Japan) (6) 3,950,000 14,556
Smurfit-Stone Container Corp. (USA) (2) 974,200 14,438
BAE SYSTEMS PLC (United Kingdom) (1) 6,471,800 13,784
Sony Corp. (Japan) (1) 435,400 11,695
ABB Ltd (Switzerland) (1)(2) 2,536,611 8,113
ABB International Finance Ltd. 4.625% convertible bonds 2007 $ 2,500,000 1,878
Fluor Corp. (USA) 257,900 9,153
Li & Fung Ltd. (Hong Kong) (1) 4,150,000 5,163
Zhejiang Expressway Co. Ltd., Class H (China) 9,039,300 3,709
TI Automotive Ltd., Class A (United Kingdom) (1)(2) 1,068,000 0
Miscellaneous - 2.99%
Other equity securities in initial period of acquisition 353,860
Total equity securities (cost: $9,563,704,000) 10,353,069
Principal Market
amount value
Bonds & notes (000) (000)
WIRELESS TELECOMMUNICATION SERVICES - 0.67%
AT&T Wireless Services, Inc. 8.125% 2012 $ 40,750 $ 49,576
AT&T Wireless Services, Inc. 7.875% 2011 7,650 9,089
Nextel Communications, Inc. 0%/9.95% 2008 (7) 12,175 12,784
American Cellular Corp. 9.50% 2009 (8) 20,000 7,600
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.22%
Solectron Corp. 9.625% 2009 15,000 16,200
Flextronics International Ltd. 6.50% 2013 (3) 10,000 9,775
AIRLINES - 0.21%
British Airways PLC 8.75% 2016 (9) Lira 17,500 25,362
MULTI-UTILITIES & UNREGULATED POWER - 0.19%
El Paso Corp. 7.875% 2012 (3) $ 14,500 12,760
Southern Natural Gas Co. 8.00% 2032 3,615 3,723
AES Corp. 9.00% 2015 (3) 4,750 4,869
Northwest Pipeline Corp. 8.125% 2010 (3) 500 542
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.12%
TeleWest PLC 11.00% 2007 (8) 31,493 9,448
AT&T Corp. 7.80% 2011 (9) 4,000 4,608
FOOD & STAPLES RETAILING - 0.10%
Ahold Finance U.S.A., Inc. 6.25% 2009 6,955 6,399
Ahold Finance U.S.A., Inc. 8.25% 2010 5,035 4,909
HEALTH CARE PROVIDERS & SERVICES - 0.09%
HCA - The Healthcare Co. 8.75% 2010 9,000 10,637
ELECTRICAL EQUIPMENT - 0.04%
Elektrim Finance BV 2.00% 2005 (1) Euro 6,929 4,892
PAPER & FOREST PRODUCTS - 0.00%
APP International Finance Co. BV 11.75% 2005 (8) $ 1,150 454
Total bonds & notes (cost: $187,307,000) 193,627
Principal Market
amount value
Short-term securities (000) (000)
Corporate short-term notes - 6.28%
Toyota Motor Credit Corp. 1.20%-1.22% due 6/4-7/10/2003 (3) $ 75,000 $ 74,931
HBOS Treasury Services PLC 1.205%-1.23% due 6/5-8/27/2003 64,700 64,611
Spintab AB (Swedmortgage) 1.20%-1.22% due 7/11-8/12/2003 59,900 59,781
Stadshypotek Delaware Inc. 1.21%-1.23% due 7/8-7/15/2003 (3) 57,700 57,620
Societe Generale North America Inc. 1.185%-1.24% due 6/9-9/3/2003 55,000 54,910
Asset Securitization Cooperative Corp. 1.22%-1.24% due 6/25-7/9/2003 (3) 50,000 49,939
National Bank of New Zealand International Ltd. 1.21%-1.24% due 6/20-8/15/2003(3) 41,700 41,619
UBS Finance (Delaware) LLC 1.23%-1.245% due 6/4-7/8/2003 41,500 41,473
Credit Lyonnais N.A. Inc. 1.20%-1.22% due 7/25-8/25/2003 40,000 39,904
BNP Paribas Finance Inc. 1.23%-1.25% due 6/17-7/11/2003 39,400 39,354
Shell Finance (U.K.) PLC 1.21% due 6/12-7/18/2003 38,800 38,759
GE Capital International Funding Inc. 1.26% due 6/10-7/25/2003 32,800 32,755
CBA (Delaware) Finance Inc. 1.22%-1.23% due 6/5-7/8/2003 29,300 29,283
Dexia Delaware LLC 1.25% due 6/2/2003 29,000 28,998
Preferred Receivables Funding Corp. 1.25% due 6/2/2003 (3) 28,000 27,998
Danske Corp. 1.245% due 6/25/2003 25,000 24,978
Nestle Capital Corp. 1.21% due 7/1/2003 (3) 20,000 19,979
Johnson & Johnson 1.21% due 7/24/2003 (3) 16,000 15,971
Federal agency discount notes - 3.72%
Federal Home Loan Bank 1.13%-1.18% due 6/6-7/7/2003 153,817 153,726
Freddie Mac 1.145%-1.23% due 6/3-10/29/2003 145,100 144,834
Fannie Mae 1.13%-1.20% due 6/11-9/10/2003 140,800 140,600
U.S. Treasuries - 0.16%
U.S. Treasury Bills 1.155% due 6/19/2003 18,500 18,489
Total short-term securities (cost: $1,200,516,000) 1,200,512
Total investment securities (cost: $10,951,527,000) 11,747,208
New Taiwanese Dollar (cost: $5,505,000) NT$179,252 5,182
Other assets less liabilities 69,747
Net assets $11,822,137
(1) Valued under fair value procedures adopted by authority of the Board of Directors.
(2) Security did not produce income during the last 12 months.
(3) Purchased in a private placement transaction; resale may be
limited to qualified institutional buyers; resale to the public
may require registration.
(4) Security on loan.
(5) Payment in kind; the issuer has the option of paying additional
securities in lieu of cash.
(6) The fund owns 5.46% of the outstanding voting securities of Asahi Diamond Industrial
Co., Ltd. and thus is considered an affiliate of this company under the Investment
Company Act of 1940.
(7) Step bond; coupon rate will increase at a later date.
(8) Company not making scheduled interest payments;
bankruptcy proceedings pending.
(9) Coupon rate may change periodically.
ADR = American Depositary Receipts
See Notes to Financial Statements
EQUITY SECURITIES APPEARING IN THE PORTFOLIO SINCE NOVEMBER 30, 2002:
Albertson's
Allied Capital
Ameren
BAE SYSTEMS
Capital One Financial
Chubb Corp.
Deutsche Lufthansa
Deutsche Telekom
Developers Diversified Realty
Enbridge
FleetBoston Financial
Flextronics International
Ford Motor
France Telecom
Fuji Heavy Industries
Greene King
HCA
Hyundai Motor
Impala Platinum Holdings
Invensys
Investor AB
James Hardie Industries
Linear Technology
Motorola
NTL
NTL Europe
Pinnacle West Capital
Portugal Telecom
POSCO
Promina Group
QUALCOMM
Schneider
Siemens
Singapore Telecommunications
Sumitomo Mitsui Financial Group
Sunoco
Telecom Corp. of New Zealand
Telefonica
Unilever NV
Wolverhampton & Dudley Breweries
Yanzhou Coal Mining
EQUITY SECURITIES ELIMINATED FROM THE PORTFOLIO SINCE NOVEMBER 30, 2002:
Alliance & Leicester
Altera
Amazon.com
Aristocrat Leisure
Australia and New Zealand Banking Group
Calpine
El Paso Corp.
Hellenic Telecommunications Organization
Household International
Hubbell
ICICI Bank
Imperial Oil
JG Summit Holdings
Michael Page International
Mizuho Holdings
Newell Rubbermaid
Nokia
Resona Holdings
Sanwa International Finance (Bermuda) Trust
SFCG
Vivendi Universal
Volkswagen
WilTel Communications Group
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES UNAUDITED
at May 31, 2003 (dollars and shares in thousands, except per-share amounts)
ASSETS:
Investment securities at market:
Unaffiliated issuers - including $24,171 of securities
loaned (cost: $10,930,432) $11,732,652
Affiliated issuers (cost: $21,095) 14,556 $11,747,208
Cash denominated in non-U.S. currencies
(cost: $5,505) 5,182
Cash 151
Receivables for:
Sales of investments 27,818
Sales of fund's shares 37,670
Dividends and interest 35,535
Other 132 101,155
11,853,696
LIABILITIES:
Payables for:
Purchases of investments 9,183
Repurchases of fund's shares 10,407
Investment advisory services 4,047
Services provided by affiliates 6,199
Deferred Directors' compensation 421
Other liabilities 1,302 31,559
NET ASSETS AT MAY 31, 2003 $11,822,137
NET ASSETS CONSIST OF:
Capital paid in on shares of capital stock $11,017,600
Undistributed net investment income 98,509
Accumulated net realized loss (89,192)
Net unrealized appreciation 795,220
Net assets at May 31, 2003 $11,822,137
TOTAL AUTHORIZED CAPITAL STOCK - 1,000,000 shares, $.01 par value
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE(1)
Class A $10,825,610 451,675 $23.97
Class B 297,986 12,482 23.87
Class C 266,735 11,196 23.82
Class F 228,256 9,534 23.94
Class 529-A 48,333 2,019 23.94
Class 529-B 9,708 406 23.89
Class 529-C 15,604 653 23.89
Class 529-E 2,602 109 23.92
Class 529-F 817 34 23.94
Class R-1 1,485 62 23.88
Class R-2 26,526 1,112 23.85
Class R-3 26,430 1,106 23.91
Class R-4 5,613 234 23.96
Class R-5 66,432 2,771 23.98
(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 $25.43 and $25.40, respectively.
See Notes to Financial Statements
STATEMENT OF OPERATIONS UNAUDITED
for the six months ended May 31, 2003 (dollars in thousands)
INVESTMENT INCOME:
Income:
Dividends (net of non-U.S. withholding
tax of $16,052; also includes
$170 from affiliates) $211,352
Interest (net of non-U.S. withholding
tax of $25) 28,238 $239,590
Fees and expenses:
Investment advisory services 22,113
Distribution services 14,401
Transfer agent services 5,317
Administrative services 593
Reports to shareholders 332
Registration statement and prospectus 324
Postage, stationery and supplies 717
Directors' compensation 125
Auditing and legal 72
Custodian 1,410
State and local taxes 156
Other 91
Total expenses before reimbursement 45,651
Reimbursement of expenses 72 45,579
Net investment income 194,011
NET REALIZED LOSS AND UNREALIZED
APPRECIATION ON INVESTMENTS
AND NON-U.S. CURRENCY:
Net realized loss on:
Investments (23,353)
Non-U.S. currency transactions (1,752) (25,105)
Net unrealized appreciation on:
Investments 534,040
Non-U.S. currency translations 831 534,871
Net realized loss and
unrealized appreciation
on investments and non-U.S. currency 509,766
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $703,777
See Notes to Financial Statements
STATEMENT OF CHANGES IN NET ASSETS (dollars in thousands)
Six months Year ended
ended March 31, November 30,
2003* 2002
Operations:
Net investment income $194,011 $235,407
Net realized (loss) gain on investments and
non-U.S. currency transactions (25,105) 280,535
Net unrealized appreciation (depreciation)
on investments and non-U.S. currency translations 534,871 (1,005,895)
Net increase (decrease) in net assets
resulting from operations 703,777 (489,953)
Dividends paid to shareholders
from net investment income (117,003) (214,996)
Capital share transactions 567,488 803,023
Total increase in net assets 1,154,262 98,074
Net assets:
Beginning of period 10,667,875 10,569,801
End of period (including
undistributed net investment
income: $98,509 and $21,501,
respectively) $11,822,137 $10,667,875
*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 capital growth while
providing current income.
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:
- ---------------------------------------------------------------------------------------------------------
Share class Initial sales charge Contingent deferred sales Conversion feature
charge upon redemption
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Classes A and 529-A Up to 5.75% None (except 1% for None
certain 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
redemptions within six years convert to classes A
of purchase and 529-A, respectively,
after eight years
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Class C None 1% for redemptions within Class C converts to Class F
one year of purchase after 10 years
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Class 529-C None 1% for redemptions within None
one 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. 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
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 a pricing service. However, where the investment adviser deems it
appropriate, they 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. Securities and other assets for which
representative market quotations are not readily available are valued
at fair value as determined in good faith by authority of the fund's
Board of Directors. If events occur that materially affect the value of
securities (including non-U.S. securities) between the close of trading
in those securities and the close of regular trading on the New York
Stock Exchange, the securities will be valued at fair value.
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, 2003, there were no non-U.S. taxes
paid on realized gains. As of May 31, 2003, non-U.S. taxes provided on
unrealized gains were $804,000.
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.
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; unrealized
appreciation of certain investments in non-U.S. securities; expenses deferred
for tax purposes; 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, 2003, the cost of
investment securities and cash denominated in non-U.S. currencies for federal
income tax purposes was $10,970,136,000.
As of May 31, 2003, the components of distributable earnings on a tax basis were
as follows:
(dollars in thousands)
Undistributed net investment income and currency gains $
111,215
Undistributed short-term capital gains 5,085
Accumulated long-term capital losses (92,867)
Gross unrealized appreciation on investment securities 1,770,969
Gross unrealized depreciation on investment securities (988,715)
Undistributed short-term capital gains above include a capital loss carryforward
of $52,223,000 expiring in 2009. The capital loss carryforward will be used to
offset any capital gains realized by the fund in the current year or in
subsequent years through the expiration date. The fund will not make
distributions from capital gains while a capital loss carryforward remains.
The tax character of distributions paid to shareholders was as follows (dollars
in thousands):
Distributions from ordinary income
Distributions Total
Net investment Short-term from long-term distribution
Share class(1) income capital gains capital gains paid
Six months ended May 31, 2003
Class A $ 110,389 - - $ 110,389
Class B 1,784 - - 1,784
Class C 1,501 - - 1,501
Class F 1,825 - - 1,825
Class 529-A 371 - - 371
Class 529-B 47 - - 47
Class 529-C 77 - - 77
Class 529-E 16 - - 16
Class 529-F 4 - - 4
Class R-1 6 - - 6
Class R-2 116 - - 116
Class R-3 133 - - 133
Class R-4 42 - - 42
Class R-5 692 - - 692
Total $ 117,003 - - $ 117,003
Year ended November 30, 2002
Class A $ 208,278 - - $ 208,278
Class B 2,354 - - 2,354
Class C 1,551 - - 1,551
Class F 1,874 - - 1,874
Class 529-A 233 - - 233
Class 529-B 29 - - 29
Class 529-C 50 - - 50
Class 529-E 7 - - 7
Class 529-F -* - - -*
Class R-1 1 - - 1
Class R-2 8 - - 8
Class R-3 10 - - 10
Class R-4 1 - - 1
Class R-5 600 - - 600
Total $ 214,996 - - $ 214,996
* Amount less than one thousand.
(1) Class 529-A, 529-B, 529-C, 529-E and 529-F shares were offered beginning
February 15, 2002. Class R-1, R-2, R-3, R-4 and R-5 shares were
offered beginning May 15, 2002.
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 0.600% on the first $500 million
of daily net assets and decreasing to 0.385% on such assets in excess of $17
billion. For the six months ended May 31, 2003, the investment advisory services
fee was equivalent to an annualized rate of 0.419% 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. The plans
provide for annual expenses, based on a 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 approved expense amounts lower
than plan limits.
------------------------------------------------ ----------------------------- -----------------------------
Share class Currently approved limits Plan limits
------------------------------------------------ ----------------------------- -----------------------------
------------------------------------------------ ----------------------------- -----------------------------
Class A 0.30% 0.30%
------------------------------------------------ ----------------------------- -----------------------------
------------------------------------------------ ----------------------------- -----------------------------
Class 529-A 0.30 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
------------------------------------------------ ----------------------------- -----------------------------
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 Directors 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 0.30% is not exceeded. As of
May 31, 2003, there were no unreimbursed expenses subject to
reimbursement for classes A or 529-A.
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 start-up period for classes
R-1, R-2, R-3 and R-4, CRMC has 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 on the previous page for the
six months ended May 31, 2003, were as follows (dollars in thousands):
- ---------------------------------------------------------------------------------------------------------------
Share class Distribution Transfer agent Administrative services
services services
-------------------------------------------------------------
CRMC Transfer agent Commonwealth of
administrative services Virginia
services administrative
services
- ---------------------------------------------------------------------------------------------------------------
Class A $11,741 $5,160 Not applicable Not applicable Not applicable
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class B 1,194 157 Not applicable Not applicable Not applicable
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class C 1,024 Included $154 $42 Not applicable
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class F 217 Included 131 28 Not applicable
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class 529-A 23 Included 27 3 $18
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class 529-B 35 Included 5 3 3
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class 529-C 56 Included 9 3 6
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class 529-E 5 Included 1 -* 1
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class 529-F 1 Included -* -* -*
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class R-1 3 Included 1 2 Not applicable
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class R-2 55 Included 11 81 Not applicable
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class R-3 41 Included 12 19 Not applicable
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class R-4 6 Included 3 1 Not applicable
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class R-5 Not applicable Included 28 1 Not applicable
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Total $14,401 $5,317 $382 $183 $28
- ----------------===============================================================================================
* Amount less than one thousand.
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' fees in the accompanying financial statements include
the current fees (either paid in cash or deferred) and the net increase or
decrease 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):
Reinvestments
Share class(1) Sales(2) of dividends
Amount Shares Amount Shares
Six months ended May 31, 2003
Class A $ 1,294,715 58,730 $ 103,151 4,745
Class B 79,659 3,618 1,719 80
Class C 121,209 5,507 1,400 65
Class F 196,631 8,927 1,613 74
Class 529-A 17,946 812 371 17
Class 529-B 4,052 183 47 2
Class 529-C 6,397 290 77 4
Class 529-E 1,259 57 17 1
Class 529-F 626 28 4 -*
Class R-1 1,248 57 6 -*
Class R-2 22,127 1,004 116 6
Class R-3 23,676 1,065 133 6
Class R-4 6,103 272 42 2
Class R-5 11,083 495 507 23
Total net increase
(decrease) $ 1,786,731 81,045 $ 109,203 5,025
Share class(1) Repurchases(2) Net increase
Amount Shares Amount Shares
Six months ended May 31, 2003
Class A $ (1,119,792) (51,060) $ 278,074 12,415
Class B (18,443) (847) 62,935 2,851
Class C (49,195) (2,249) 73,414 3,323
Class F (129,436) (5,912) 68,808 3,089
Class 529-A (606) (27) 17,711 802
Class 529-B (68) (3) 4,031 182
Class 529-C (109) (6) 6,365 288
Class 529-E (12) (1) 1,264 57
Class 529-F -* -* 630 28
Class R-1 (36) (1) 1,218 56
Class R-2 (2,882) (133) 19,361 877
Class R-3 (3,945) (178) 19,864 893
Class R-4 (2,341) (108) 3,804 166
Class R-5 (1,581) (71) 10,009 447
Total net increase
(decrease) $ (1,328,446) (60,596) $ 567,488 25,474
Reinvestments
Sales(2) of dividends
Amount Shares Amount Shares
Year ended November 30, 2002
Class A $ 2,122,788 90,372 $ 194,311 8,192
Class B 130,869 5,543 2,266 97
Class C 198,372 8,536 1,464 63
Class F 202,758 8,645 1,659 71
Class 529-A 29,154 1,224 233 10
Class 529-B 5,290 225 29 1
Class 529-C 8,700 366 50 2
Class 529-E 1,210 52 7 -*
Class 529-F 127 6 -* -*
Class R-1 182 8 1 -*
Class R-2 5,622 261 8 1
Class R-3 5,069 233 10 1
Class R-4 1,571 72 1 -*
Class R-5 60,666 2,447 493 22
Total net increase
(decrease) $ 2,772,378 117,990 $ 200,532 8,460
Repurchases(2) Net increase
Amount Shares Amount Shares
Year ended November 30, 2002 $ (1,976,245) (85,210) $ 340,854 13,354
Class A (27,646) (1,229) 105,489 4,411
Class B (62,951) (2,813) 136,885 5,786
Class C (98,126) (4,212) 106,291 4,504
Class F (375) (17) 29,012 1,217
Class 529-A (40) (2) 5,279 224
Class 529-B (81) (3) 8,669 365
Class 529-C (13) (1) 1,204 51
Class 529-E - - 127 6
Class 529-F (31) (2) 152 6
Class R-1 (543) (26) 5,087 236
Class R-2 (449) (21) 4,630 213
Class R-3 (88) (4) 1,484 68
Class R-4 (3,299) (145) 57,860 2,324
Class R-5
Total net increase $ (2,169,887) (93,685) $ 803,023 32,765
(decrease)
* Amount less than one thousand.
(1) Class 529-A, 529-B, 529-C, 529-E and 529-F shares were offered beginning February 15, 2002.
Class R-1, R-2, R-3, R-4 and R-5 shares were offered beginning May 15, 2002.
(2) 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, 2003, the total value of
restricted securities was $500,978,000, which represents 4.24% 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 $1,742,068,000 and $1,170,404,000, respectively, during the six
months ended May 31, 2003.
The fund may lend portfolio securities from time to time in order to earn
additional income; however, it does not currently intend to engage in an ongoing
or regular securities lending program. On May 30, 2003, the fund entered into an
agreement to loan shares of ENI SpA. As collateral against the loaned shares,
the fund received U.S. Treasury obligations. Throughout the period of the loan,
this collateral was equal to at least 105% of the market value of the shares
loaned. The shares of ENI SpA were returned to the fund at the completion of the
loan period.
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, 2003, the custodian fee of $1,410,000 includes $9,000
that was offset by this reduction, rather than paid in cash.
Financial Highlights (1)
Income (loss) from Dividends and distributions
investment operations(3)
Net
Net asset gains(losses) Dividends
value, Net on securities Total from (from net Distributions Total
beginning investment (both realized investment investment (from capital dividends and
of period income and unrealized) operations income) gains) distributions
Class A:
Six months ended 5/31/2003 (2) $22.80 $.41 $1.01 $1.42 $(.25) $ - $(.25)
Year ended 11/30/2002 24.29 .52 (1.53) (1.01) (.48) - (.48)
Year ended 11/30/2001 28.29 .53 (.90) (.37) (.50) (3.13) (3.63)
Year ended 11/30/2000 29.03 .62 1.20 1.82 (.58) (1.98) (2.56)
Year ended 11/30/1999 27.15 .48 4.17 4.65 (.48) (2.29) (2.77)
Year ended 11/30/1998 25.89 .59 3.12 3.71 (.58) (1.87) (2.45)
Class B:
Six months ended 5/31/2003 (2) 22.72 .34 .98 1.32 (.17) - (.17)
Year ended 11/30/2002 24.21 .27 (1.45) (1.18) (.31) - (.31)
Year ended 11/30/2001 28.21 .31 (.87) (.56) (.31) (3.13) (3.44)
Period from 3/15/2000 to 11/30/2000 29.57 .32 (1.41) (1.09) (.27) - (.27)
Class C:
Six months ended 5/31/2003 (2) 22.68 .33 .98 1.31 (.17) - (.17)
Year ended 11/30/2002 24.18 .20 (1.40) (1.20) (.30) - (.30)
Period from 3/15/2001 to 11/30/2001 25.35 .12 (1.15) (1.03) (.14) - (.14)
Class F:
Six months ended 5/31/2003 (2) 22.78 .42 .98 1.40 (.24) - (.24)
Year ended 11/30/2002 24.27 .31 (1.34) (1.03) (.46) - (.46)
Period from 3/15/2001 to 11/30/2001 25.40 .27 (1.15) (.88) (.25) - (.25)
Class 529-A:
Six months ended 5/31/2003 (2) 22.78 .43 .97 1.40 (.24) - (.24)
Period from 2/15/2002 to 11/30/2002 24.29 .36 (1.47) (1.11) (.40) - (.40)
Class 529-B:
Six months ended 5/31/2003 (2) 22.74 .33 .98 1.31 (.16) - (.16)
Period from 2/21/2002 to 11/30/2002 23.96 .23 (1.13) (.90) (.32) - (.32)
Class 529-C:
Six months ended 5/31/2003 (2) 22.74 .34 .97 1.31 (.16) - (.16)
Period from 2/22/2002 to 11/30/2002 23.98 .23 (1.15) (.92) (.32) - (.32)
Class 529-E:
Six months ended 5/31/2003 (2) 22.77 .40 .96 1.36 (.21) - (.21)
Period from 3/4/2002 to 11/30/2002 25.12 .31 (2.28) (1.97) (.38) - (.38)
Class 529-F:
Six months ended 5/31/2003 (2) 22.80 .47 .92 1.39 (.25) - (.25)
Period from 9/17/2002 to 11/30/2002 21.79 .08 1.07 1.15 (.14) - (.14)
Class R-1:
Six months ended 5/31/2003 (2) 22.75 .45 .87 1.32 (.19) - (.19)
Period from 6/7/2002 to 11/30/2002 25.08 .14 (2.37) (2.23) (.10) - (.10)
Class R-2:
Six months ended 5/31/2003 (2) 22.73 .39 .93 1.32 (.20) - (.20)
Period from 6/7/2002 to 11/30/2002 25.08 .13 (2.35) (2.22) (.13) - (.13)
Class R-3:
Six months ended 5/31/2003 (2) 22.77 .42 .94 1.36 (.22) - (.22)
Period from 6/6/2002 to 11/30/2002 25.42 .17 (2.52) (2.35) (.30) - (.30)
Class R-4:
Six months ended 5/31/2003 (2) 22.81 .41 .99 1.40 (.25) - (.25)
Period from 6/27/2002 to 11/30/2002 23.78 .20 (1.02) (.82) (.15) - (.15)
Class R-5:
Six months ended 5/31/2003 (2) 22.81 .45 1.00 1.45 (.28) - (.28)
Period from 5/15/2002 to 11/30/2002 26.11 .30 (3.27) (2.97) (.33) - (.33)
Ratio of Ratio of
Net asset Net assets, expenses net income
value, end Total end of period to average to average
of period return(4) (in millions) net assets net assets
Class A:
Six months ended 5/31/2003 (2) $23.97 6.35% $10,826 .83% (6) 3.70% (6)
Year ended 11/30/2002 22.80 (4.22) 10,016 .82 2.22
Year ended 11/30/2001 24.29 (1.81) 10,346 .78 2.05
Year ended 11/30/2000 28.29 6.37 10,716 .79 2.08
Year ended 11/30/1999 29.03 19.08 10,022 .79 1.93
Year ended 11/30/1998 27.15 15.51 8,515 .78 2.25
Class B:
Six months ended 5/31/2003 (2) 23.87 5.88 298 1.61 (6) 3.05 (6)
Year ended 11/30/2002 22.72 (4.93) 219 1.59 1.47
Year ended 11/30/2001 24.21 (2.57) 126 1.56 1.21
Period from 3/15/2000 to 11/30/2000 28.21 (3.73) 55 1.55 (6) 1.45 (6)
Class C:
Six months ended 5/31/2003 (2) 23.82 5.84 267 1.67 (6) 3.04 (6)
Year ended 11/30/2002 22.68 (4.95) 179 1.65 1.43
Period from 3/15/2001 to 11/30/2001 24.18 (4.08) 50 1.78 (6) .73 (6)
Class F:
Six months ended 5/31/2003 (2) 23.94 6.27 228 .90 (6) 3.80 (6)
Year ended 11/30/2002 22.78 (4.29) 147 .91 2.17
Period from 3/15/2001 to 11/30/2001 24.27 (3.45) 47 .92 (6) 1.55 (6)
Class 529-A:
Six months ended 5/31/2003 (2) 23.94 6.26 48 .88 (6) 3.91 (6)
Period from 2/15/2002 to 11/30/2002 22.78 (4.61) 28 1.03 (6) 2.08 (6)
Class 529-B:
Six months ended 5/31/2003 (2) 23.89 5.82 10 1.81 (6) 3.03 (6)
Period from 2/21/2002 to 11/30/2002 22.74 (3.82) 5 1.79 (6) 1.31 (6)
Class 529-C:
Six months ended 5/31/2003 (2) 23.89 5.83 16 1.79 (6) 3.05 (6)
Period from 2/22/2002 to 11/30/2002 22.74 (3.90) 8 1.77 (6) 1.33 (6)
Class 529-E:
Six months ended 5/31/2003 (2) 23.92 6.09 3 1.25 (6) 3.63 (6)
Period from 3/4/2002 to 11/30/2002 22.77 (7.88) 1 1.23 (6) 1.85 (6)
Class 529-F:
Six months ended 5/31/2003 (2) 23.94 6.22 1 1.00 (6) 4.23 (6)
Period from 9/17/2002 to 11/30/2002 22.80 5.33 - .20 .39
Class R-1:
Six months ended 5/31/2003 (2) 23.88 5.88 1 1.68 (6)(7) 4.12 (6)
Period from 6/7/2002 to 11/30/2002 22.75 (8.85) - .80 (7) .66
Class R-2:
Six months ended 5/31/2003 (2) 23.85 5.90 26 1.64 (6)(7) 3.58 (6)
Period from 6/7/2002 to 11/30/2002 22.73 (8.80) 5 .79 (7) .61
Class R-3:
Six months ended 5/31/2003 (2) 23.91 6.08 26 1.26 (6)(7) 3.79 (6)
Period from 6/6/2002 to 11/30/2002 22.77 (9.25) 5 .60 (7) .80
Class R-4:
Six months ended 5/31/2003 (2) 23.96 6.26 6 .91 (6)(7) 3.72 (6)
Period from 6/27/2002 to 11/30/2002 22.81 (3.42) 2 .38 (7) .92
Class R-5:
Six months ended 5/31/2003 (2) 23.98 6.48 66 .58 (6) 4.03 (6)
Period from 5/15/2002 to 11/30/2002 22.81 (11.37) 53 .56 (6) 2.48 (6)
Six months ended
May 31, Year ended November 30
2003(2) 2002 2001 2000 1999 1998
Portfolio turnover rate for all classes of shares 12% 32% 45% 41% 34% 39%
(1) Based on operations for the period shown (unless otherwise noted)
and, accordingly, may not be representative of a full year.
(2) Unaudited.
(3) Years ended 1999 and 1998 are based on shares outstanding on the
last day of the year; all other periods are based on average
shares outstanding.
(4) Total returns exclude all sales charges, including contingent
deferred sales charges.
(5) Amount less than 1 million.
(6) Annualized.
(7) During the start-up period for this class, CRMC voluntarily agreed
to pay a portion of the fees relating to transfer agent services.
Had CRMC not paid such fees, expense ratios would have been 2.15%,
2.47%, 1.36%and .93% for classes R-1, R-2, R-3 and R-4, respectively,
during the six months ended May 31, 2003, and 1.41%, .93%, .69% and
.46% for classes R-1, R-2, R-3 and R-4, respectively, during the
period ended November 30, 2002.
OTHER SHARE CLASS RESULTS unaudited
CLASS B, CLASS C, CLASS F AND CLASS 529
Returns for periods ended June 30, 2003 (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 -1.64% -1.72%(1)
Not reflecting CDSC +3.36% -0.94%(1)
Class C shares
Reflecting CDSC, maximum of 1%, payable only if shares are
sold within one year of purchase +2.26% -0.43%(2)
Not reflecting CDSC +3.26% -0.43%(2)
Class F shares(3)
Not reflecting annual asset-based fee charged by sponsoring firm +4.06% +0.37%(2)
Class 529-A shares
Reflecting 5.75% maximum sales charge -1.97% -1.38%(4)
Not reflecting maximum sales charge +4.02% +2.97%(4)
Class 529-B shares
Reflecting applicable CDSC, maximum of 5%, payable only if
shares are sold within six years of purchase -1.87% +0.29%(5)
Not reflecting CDSC +3.13% +3.23%(5)
Class 529-C shares
Reflecting CDSC, maximum of 1%, payable only if shares
are sold within one year of purchase +2.18% +3.18%(6)
Not reflecting CDSC +3.18% +3.18%(6)
Class 529-E shares(3) +3.69% +0.24%(7)
Class 529-F shares(3)
Not reflecting annual asset-based fee charged by sponsoring firm -- +14.87%(8)
(1) Average annual compound return from March 15, 2000, when Class B shares were
first sold.
(2) Average annual compound 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 compound return from February 15, 2002, when Class 529-A
shares were first sold.
(5) Average annual compound return from February 21, 2002, when Class 529-B
shares were first sold.
(6) Average annual compound return from February 22, 2002, when Class 529-C
shares were first sold.
(7) Average annual compound return from March 4, 2002, when Class 529-E shares
were first sold.
(8) Cumulative total return from September 17, 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
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 AUDITORS
PricewaterhouseCoopers LLP
350 South Grand Avenue
Los Angeles, CA 90071-3405
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, CA 90071-1406
There are several ways to invest in Capital World Growth and Income Fund. Class
A shares are subject to a 5.75% maximum up-front sales charge that declines for
accounts 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. Annual
expenses for Class B shares were 0.77% 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 annual expenses 0.83% 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 annual expenses (by 0.09%) 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.
FOR INFORMATION ABOUT YOUR ACCOUNT OR ANY OF THE FUND'S SERVICES, OR FOR A
PROSPECTUS FOR ANY OF THE AMERICAN FUNDS, PLEASE CONTACT YOUR FINANCIAL ADVISER.
YOU MAY ALSO CALL AMERICAN FUNDS SERVICE COMPANY AT 800/421-0180 OR VISIT US AT
AMERICANFUNDS.COM. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST OR
SEND MONEY.
This report is for the information of shareholders of Capital World Growth and
Income 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, 2003, 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 20 million shareholder accounts.
OUR UNIQUE COMBINATION OF STRENGTHS INCLUDES THESE FIVE FACTORS:
o A LONG-TERM, VALUE-ORIENTED APPROACH
Rather than follow fads, we rely on our own research to find well-managed
companies.
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
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)
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
EQUITY-INCOME FUNDS
Capital Income Builder(R)
The Income Fund of America(R)
BALANCED FUND
American Balanced Fund(R)
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
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)
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. WGI-013-0703
Litho in USA CD/CG/6269
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
Form N-CSR disclosure requirement not yet effective with respect to Registrant.
ITEM 5 - Audit Committee Disclosure for Listed Companies
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 - 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 significant changes in the Registrant's internal controls or
other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.
ITEM 10 - Exhibits
(a) 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.
CAPITAL WORLD GROWTH AND INCOME FUND , INC.
By /s/ Stephen E. Bepler
- -------------------------------------------------------
Stephen E. Bepler, President and PEO
Date: August 8, 2003
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/ Stephen E. Bepler
--------------------------------------------------
Stephen E. Bepler, President and PEO
Date: August 8, 2003
By /s/ Anthony W. Hynes, Jr.
-------------------------------------------------
Anthony W. Hynes, Jr., Treasurer
Date: August 8, 2003