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, 2004
Date of reporting period: November 30, 2004
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:
Eric A.S. Richards, 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
The ingredients for total returns
[photo of small bowls filled with spices]
Annual report for the year ended November 30, 2004
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.
Contents
Letter to shareholders 1
The value of a long-term perspective 4
The ingredients for total returns 6
Summary investment portfolio 10
Financial statements 14
Directors and officers 27
The American Funds family back cover
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 THE MOST CURRENT INFORMATION AND MONTH-END RESULTS, VISIT
AMERICANFUNDS.COM FUND RESULTS SHOWN, UNLESS OTHERWISE INDICATED, ARE AT NET
ASSET VALUE. IF A SALES CHARGE (MAXIMUM 5.75%) HAD BEEN DEDUCTED, THE RESULTS
WOULD HAVE BEEN LOWER.
Here are the average annual total returns on a $1,000 investment with all
distributions reinvested for periods ended December 31, 2004 (the most recent
calendar quarter):
1 year 5 years 10 years
Class A shares
Reflecting 5.75% maximum sales charge +12.56% +6.97% +13.68%
Results for other share classes can be found on page 5. Please see the inside
back cover for important information about other share classes.
The fund's investment adviser is waiving 5% of its management fee for the period
September 1, 2004, through August 31, 2005. Over this one-year period, the fee
waiver will amount to an approximate two basis point reduction in fund expenses.
Accordingly, without the waiver the returns and distributions rates of the fund
might have been lower by a similar order of magnitude.
The fund's 30-day yield for Class A shares as of December 31, 2004, reflecting
the 5.75% maximum sales charge and calculated in accordance with the Securities
and Exchange Commission formula, was 1.79%, which reflects a fee waiver (1.77%
without the fee waiver).
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.
FELLOW SHAREHOLDERS:
[photo of small bowls filled with spices]
The recovery in global stock markets that occurred during the fund's 2003 fiscal
year continued into the 2004 fiscal year, lifting most markets in which the fund
invests. A strengthening of major currencies against the U.S. dollar late in the
year gave an additional boost to many of our non-U.S. investments.
For the 12 months ended November 30, 2004, Capital World Growth and Income Fund
produced a total return of 22.2%. That return assumes shareholders reinvested
their quarterly dividends totaling 73 cents a share, as well as the capital gain
distribution of 29.3 cents a share made December 2003. Shareholders who elected
to take dividends in cash, but reinvested capital gains, had an income return of
2.6% and saw the value of their investment rise 19.3%.
The fund's total return for the fiscal year handily topped those of its relevant
benchmarks. The unmanaged MSCI World Index, which measures 23 major stock
markets including the United States, recorded a total return of 18.0%, while the
average return of the fund's peer group, as tracked by Lipper, was 16.0%. The
table below ("Results at a glance") offers an historical snapshot of the fund's
returns plus a quick comparison with its benchmarks.
A LOOK AT GLOBAL MARKETS
U.S. stocks began the fiscal year with positive momentum, supported by rising
corporate profits and strong economic growth. But tailwinds turned to headwinds
by early spring as higher oil prices, growing insurgency in Iraq, the prospect
of rising interest rates, uncertainty about the presidential election and
renewed concerns about the pace of economic growth curbed investor enthusiasm.
As a result, stock prices slumped through the summer months. Then, in late
October, market optimism revived, sending stock prices higher through year end.
For the 12 months ended November 30, U.S. stocks, which account for 20.8% of
portfolio holdings, rose 12.5%.*
*Country returns are based on MSCI indexes, in U.S. dollars (except where noted)
and with gross dividends reinvested.
[Begin Sidebar]
RESULTS AT A GLANCE
(as of November 30, 2004, 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 +22.2% +9.5% +14.0% +13.9%
MSCI World Index(1) +18.0 -1.3 +8.2 +8.7
Lipper global funds average(2) +16.0 +0.9 +8.6 +9.0
(1) The MSCI World Index is unmanaged and does not reflect the effects of sales
charges, commissions or expenses.
(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.
[End Sidebar]
In many respects, the U.S. economy, fueled by domestic consumption, has been an
engine of global growth and a pacesetter for global markets. Consequently, major
markets in Europe largely mirrored directional trends of U.S. stocks. Market
returns for France, Germany and the United Kingdom -- the leading markets of
Europe -- were in line with the United States in local currency terms. But a
strengthening of the euro and the British pound against the U.S. dollar
magnified results for U.S. investors. When translated into U.S. dollars,
France's stock market posted a total return of +24.9%, Germany logged +23.3% and
the United Kingdom delivered +24.5%. Other European countries compiled even
better returns, which were similarly amplified by strong currencies. Here's a
sampling from countries where the fund has a presence: Austria (+72.2%), Denmark
(+35.3%), Italy (+30.0%), Netherlands (+18.2%), Norway (+64.8%), Spain (+36.9%)
and Sweden (+45.8%). Altogether, Europe accounts for 38.4% of fund holdings and
contributed significantly to this year's results.
[Begin Sidebar]
LARGEST EQUITY HOLDINGS
(as of November 30, 2004)
Company Country Percent of net assets
"Shell" Transport and Trading/
Royal Dutch Petroleum U.K./Netherlands 2.01%
Altria Group U.S. 1.91
Vodafone U.K. 1.37
HSBC Holdings U.K./Hong Kong 1.12
Unilever Netherlands 1.02
Diageo U.K. 1.01
France Telecom France .97
CVRD Brazil .87
Continental Germany .87
Lloyds TSB Group U.K. .86
[End Sidebar]
Elsewhere, the Commonwealth countries of Australia and Canada also enjoyed
strong returns that were lifted further by the strengthening of their respective
currencies against the greenback. The result was a gain of 37.3% for Australia
and 27.1% for Canada.
Like the United States, Japanese stocks began the year on a strong footing,
buoyed by indications of a strengthening economy. But as the year progressed,
economic momentum proved less hardy than investors anticipated. Returns were
nonetheless favorable -- up 17.9% for the year -- boosted by a stronger yen.
Except for Taiwan (+5.3%), strong returns prevailed for other key markets in
Asia: Hong Kong (+24.6%) and Korea (+22.9%).
STRENGTH IN PORTFOLIO HOLDINGS
While country returns sketch the backdrop for stocks in general, results for
Capital World Growth and Income Fund are largely determined by the strength or
weakness of individual companies' stocks held in the portfolio. Company by
company, the portfolio was built of carefully selected stocks that represent the
best ideas of the fund's portfolio counselors. Collectively, these ideas have
benefited shareholders by generating returns that exceed relevant benchmarks
both for the current year and over its lifetime, as can be seen in the table on
page 1.
The fund's 10 largest holdings, representing the portfolio's broad geographic
reach, are shown in the table at left. During the past year, all but one posted
gains, most running to double digits. In fact, three posted gains well in excess
of the fund's return: "Shell" Transport and Trading/ Royal Dutch Petroleum (a
multinational energy concern), CVRD (a South American mining group), and
Continental (a German tire manufacturer).
The strength of the fund's results goes much deeper than the largest holdings
listed here and includes a variety of companies, many of which are noted in the
summary investment portfolio that begins on page 10. Among the biggest gainers
for the year were industry holdings in oil and gas, chemicals, metals and
mining, non-U.S. telecommunications, as well as several banks and insurers. In
all, the portfolio holds stocks of nearly 300 companies worldwide.
SOLID GROWTH, ENDURING OBJECTIVES
During the past two years, Capital World Growth and Income Fund has enjoyed a
remarkable resurgence, following the difficult period for stocks that marked the
early years of this decade. In the past year alone, net assets of the fund have
grown 84%, reflecting, in large part, many new additions to our shareholder
family and a greater willingness among investors to diversify into global
stocks. We take this opportunity to welcome those of you who have recently
joined the fund.
While the fund's recent growth owes much to external factors, its results stem
largely from the diligent efforts of its portfolio counselors and research
analysts. Their focus remains firmly fixed on the fund's objective: finding
companies with long-term growth potential while providing shareholders with
current income. To learn more about the components of the fund's objective and
some of the investment practices we use to achieve them, we invite you to read
our special report beginning on page 6, "The ingredients for total returns."
Finally, we recognize that you have more than money invested with us; you have
placed your trust in our hands. We honor that trust and hope that Capital World
Growth and Income Fund will remain an important part of your financial future.
Cordially,
/s/ Gina H. Despres
Gina H. Despres
Chairman of the Board
/s/ Stephen E. Bepler
Stephen E. Bepler
President
January 12, 2005
For current information about the fund, visit americanfunds.com.
[Begin Sidebar]
WHERE THE FUND'S ASSETS WERE INVESTED
Percent of net assets by country as of November 30, 2004
[begin pie chart]
The Americas 26.9%
Asia/Pacific 21.5%
Bonds, cash & equivalents 11.2%
Europe 38.4%
Other 2.0%
[end pie chart]
Capital World Growth MSCI
and Income Fund World Index
o The Americas 26.9% 56.3%
United States 20.8 53.3
Canada 3.8 3.0
Brazil 1.2 --
Mexico 1.1 --
o Europe 38.4% 30.7%
United Kingdom 11.6 11.0
Netherlands 5.1 2.1
Germany 4.7 3.0
France 4.5 4.1
Spain 2.1 1.8
Norway 1.7 .3
Sweden 1.7 1.1
Austria 1.2 .1
Denmark 1.2 .3
Switzerland 1.2 3.0
Italy 1.0 1.8
Belgium .9 .6
Portugal .6 .2
Other Europe .9 1.3
o Asia/Pacific 21.5% 13.0%
Japan 7.2 9.6
South Korea 3.9 --
Australia 3.7 2.2
Taiwan 2.9 --
India 1.3 --
Hong Kong 1.1 .7
Other Asia/Pacific 1.4 .5
o Other 2.0% --
o Bonds, cash & equivalents 11.2% --
The MSCI World Index is weighted by market capitalization.
[End Sidebar]
THE VALUE OF A LONG-TERM PERSPECTIVE
How a $10,000 investment has grown since March 26, 1993
Figures shown are past results for Class A shares and are not predictive of
results in future periods. Current and future results may be lower or higher
than those shown. Share prices and returns will vary, so investors may lose
money. For the most current information and month-end results, visit
americanfunds.com. Fund figures reflect deduction of the maximum sales charge of
5.75% on the $10,000 investment.(1) Thus the net amount invested was $9,425.
[mountain chart]
DATE CAPITAL
WORLD GROWTH CAPITAL WORLD U.S.
AND INCOME MSCI GROWTH FUND CONSUMER
FUND WITH WORLD INDEX INCOME FUND PRICE
DIVIDENDS WITH DIVIDENDS WITH DIVIDENDS INDEX ORIGINAL
REINVESTED(1)(2) REINVESTED (4) EXCLUDED (3) (INFLATION) (5) INVESTMENT
<s> <c> <c> <c> <c> <c>
3/26/93 $9,425 $10,000 $9,425 $10,000 $10,000
5/31/93* $9,719 $10,837 $9,719 $10,042 $10,000
8/31/93 $10,401 $11,475 $10,313 $10,084 $10,000
11/30/93 $10,782 $10,924 $10,625 $10,153 $10,000
2/28/94 $11,615 $12,062 $11,388 $10,216 $10,000
5/31/94 $11,315 $11,936 $11,044 $10,272 $10,000
8/31/94 $12,038 $12,501 $11,656 $10,376 $10,000
11/30/94 $11,592 $11,982 $11,131 $10,425 $10,000
2/28/95 $11,860 $12,097 $11,293 $10,508 $10,000
5/31/95 $12,788 $13,242 $12,094 $10,599 $10,000
8/31/95 $13,412 $13,598 $12,557 $10,648 $10,000
11/30/95 $13,841 $14,260 $12,850 $10,696 $10,000
2/29/96 $14,700 $15,042 $13,553 $10,787 $10,000
5/31/96 $15,327 $15,673 $14,031 $10,905 $10,000
8/31/96 $15,414 $15,379 $13,947 $10,954 $10,000
11/30/96 $17,118 $17,004 $15,362 $11,045 $10,000
2/28/97 $17,849 $17,136 $15,936 $11,114 $10,000
5/31/97 $18,908 $18,427 $16,782 $11,149 $10,000
8/31/97 $19,755 $18,892 $17,380 $11,198 $10,000
11/30/97 $19,917 $19,212 $17,414 $11,247 $10,000
2/28/98 $21,881 $21,351 $19,050 $11,274 $10,000
5/31/98 $22,801 $22,198 $19,763 $11,337 $10,000
8/31/98 $19,885 $19,671 $17,104 $11,379 $10,000
11/30/98 $23,007 $23,138 $19,676 $11,421 $10,000
2/28/99 $23,904 $24,151 $20,375 $11,455 $10,000
5/31/99 $25,004 $25,203 $21,214 $11,574 $10,000
8/31/99 $26,177 $26,263 $22,063 $11,636 $10,000
11/30/99 $27,396 $28,141 $23,014 $11,720 $10,000
2/29/00 $29,908 $28,765 $25,027 $11,825 $10,000
5/31/00 $30,124 $28,718 $25,119 $11,943 $10,000
8/31/00 $31,516 $29,799 $26,121 $12,033 $10,000
11/30/00 $29,142 $26,067 $24,016 $12,124 $10,000
2/28/01 $30,810 $24,728 $25,334 $12,242 $10,000
5/31/01 $31,113 $24,514 $25,404 $12,375 $10,000
8/31/01 $29,274 $22,316 $23,786 $12,361 $10,000
11/30/01 $28,613 $21,975 $23,111 $12,354 $10,000
2/28/02 $28,826 $21,266 $23,225 $12,382 $10,000
5/31/02 $30,788 $21,514 $24,700 $12,521 $10,000
8/31/02 $26,985 $18,550 $21,503 $12,584 $10,000
11/30/02 $27,405 $18,697 $21,693 $12,625 $10,000
2/28/03 $25,681 $16,961 $20,237 $12,751 $10,000
5/31/03 $29,144 $19,487 $22,806 $12,779 $10,000
8/31/03 $31,622 $20,680 $24,576 $12,855 $10,000
11/30/03 $35,220 $22,391 $27,230 $12,848 $10,000
2/29/04 $39,110 $24,603 $30,063 $12,967 $10,000
5/31/04 $37,996 $24,197 $29,064 $13,169 $10,000
8/31/04 $38,489 $24,018 $29,275 $13,196 $10,000
11/30/04 $43,044 $26,414 $32,485 $13,301 $10,000
Year ended November 30 1993* 1994 1995 1996 1997 1998 1999
TOTAL VALUE
Dividends reinvested $144 295 421 506 488 478 440
Value at year-end(1) $10,782 11,592 13,841 17,118 19,917 23,007 27,396
WGI total return 7.8% 7.5 19.4 23.7 16.4 15.5 19.1
Year ended November 30 2000 2001 2002 2003 2004
TOTAL VALUE
Dividends reinvested 577 578 569 679 914
Value at year-end(1) 29,142 28,613 27,405 35,220 43,044
WGI total return 6.4 (1.8) (4.2) 28.5 22.2
Average annual total return for 11 1/2 years 13.3%(2)
AVERAGE ANNUAL TOTAL RETURNS
(based on a $1,000 investment with all distributions reinvested)
For periods ended 11/30/04
Class A shares (reflecting 5.75% maximum sales charge)
1 year +15.17%
5 years +8.17%
10 years +13.34%
*For the period March 26, 1993 (when the fund began operations) through
November 30, 1993.
(1) As outlined in the prospectus, the sales charge is reduced for accounts
(and aggregated investments) of $25,000 or more and is eliminated for
purchases of $1 million or more. There is no sales charge on dividends or
capital gain distributions that are reinvested in additional shares.
(2) Includes reinvested dividends of $6,088 and reinvested capital gain
distributions of $9,959.
(3) Results calculated with capital gains reinvested.
(4) The World Index is unmanaged and does not reflect the effects of sales
charges, commissions or expenses, and cannot be invested in directly.
(5) Computed from data supplied by the U.S. Department of Labor, Bureau of
Labor Statistics.
Past results are not predictive of future results. The results shown are before
taxes on fund distributions and sale of fund shares.
OTHER SHARE CLASS RESULTS (unaudited)
CLASS B, CLASS C, CLASS F AND CLASS 529
Figures shown are past results and are not predictive of results in future
periods. Current and future results may be lower or higher than those shown.
Share prices and returns will vary, so investors may lose money. For the most
current information and month-end results, visit americanfunds.com.
RETURNS FOR PERIODS ENDED DECEMBER 31, 2004 (THE MOST RECENT CALENDAR QUARTER):
1 year Life of class
CLASS B SHARES
Reflecting applicable contingent deferred sales charge
(CDSC), maximum of 5%, payable only if shares are
sold within six years of purchase +13.50% +7.40%(1)
Not reflecting CDSC +18.50% +7.71%(1)
CLASS C SHARES
Reflecting CDSC, maximum of 1%, payable only if shares
are sold within one year of purchase +17.43% +10.44%(2)
Not reflecting CDSC +18.43% +10.44%(2)
CLASS F SHARES(3)
Not reflecting annual asset-based fee charged by sponsoring firm +19.31% +11.31%(2)
CLASS 529-A SHARES
Reflecting 5.75% maximum sales charge +12.43% +14.10%(4)
Not reflecting maximum sales charge +19.29% +16.47%(4)
CLASS 529-B SHARES
Reflecting applicable CDSC, maximum of 5%, payable
only if shares are sold within six years of purchase +13.28% +15.09%(5)
Not reflecting CDSC +18.28% +16.16%(5)
CLASS 529-C SHARES
Reflecting CDSC, maximum of 1%, payable only if shares
are sold within one year of purchase +17.26% +16.15%(6)
Not reflecting CDSC +18.26% +16.15%(6)
CLASS 529-E SHARES(3) +18.86% +15.04%(7)
CLASS 529-F SHARES(3)
Not reflecting annual asset-based fee charged by sponsoring firm +19.21% +26.38%(8)
The fund's investment adviser is waiving 5% of its management fee for the period
September 1, 2004, through August 31, 2005. Over this one-year period, the fee
waiver will amount to an approximate two basis point reduction in fund expenses.
Accordingly, without the waiver the returns and distribution rates of the fund
might have been lower by a similar order of magnitude.
(1) Average annual total return from March 15, 2000, when Class B shares were
first sold.
(2) Average annual total return from March 15, 2001, when Class C and Class F
shares were first sold.
(3) These shares are sold without any initial or contingent deferred sales
charge.
(4) Average annual total return from February 15, 2002, when Class 529-A shares
were first sold.
(5) Average annual total return from February 21, 2002, when Class 529-B shares
were first sold.
(6) Average annual total return from February 22, 2002, when Class 529-C shares
were first sold.
(7) Average annual total return from March 4, 2002, when Class 529-E shares were
first sold.
(8) Average annual total return from September 17, 2002, when Class 529-F shares
were first sold.
THE INGREDIENTS FOR TOTAL RETURNS
Understanding the fund's objective
Capital World Growth and Income Fund is one of five growth-and-income funds in
the American Funds family. Its broad global mandate distinguishes it from the
other four. But what distinguishes Capital World Growth and Income Fund from
other global funds in its Lipper peer group? The answer lies in its objective
and how the fund's portfolio counselors serve that objective. Embedded in that
answer are clues to its solid track record and qualities that help make it a
core holding for many long-term investors.
In this article, we will take a closer look at the fund's dual objectives, we'll
hear from some of the people who manage the fund, and we'll attempt to identify
some of the investment practices that serve to distinguish Capital World Growth
and Income Fund from its peers. As we explore the ingredients that contribute to
the fund's identity, we hope that you will gain a better appreciation of the
fund's strengths and its potential for compiling attractive long-term results.
GROWTH AND INCOME WORKING TOGETHER
Growth and income funds are sometimes referred to as total return funds. The
concept of total return is fundamental to the investment profession, but may be
less familiar to some of our shareholders. At the most basic level, total return
combines the growth or loss of value (capital appreciation or depreciation) of
an investment with the income that it generates. For Capital World Growth and
Income shareholders, the fund's annual total return reflects the 12-month change
in net asset value of the fund plus income (dividends and any capital gain
distributions) generated by the fund. (Returns vary among share classes, and
results are lower when sales charges are included.)
For investors seeking a middle path toward attractive long-term investment
results, growth and income work in a complementary way. Growth-oriented
investments tend to boost returns when economies are thriving and markets are
rising, while income-oriented investments offer a measure of reliability and
often serve to cushion results when markets falter. Over time, income reinvested
also helps compound returns, which provides a decisive advantage for those with
long-term investment goals.
While growth and income are the two components of total return, it is selecting
the most promising stocks that is critical to producing superior returns. In
this selection process, Capital World Growth and Income Fund benefits from the
research expertise of its adviser, Capital Research and Management Company, and
from its unique method of asset management, the multiple portfolio counselor
system. In addition, the fund's global perspective expands the process, allowing
research analysts and portfolio counselors to scout the world for the most
attractive equity investments.
DISCIPLINE IN STOCK SELECTION
The vital task of stock selection is the daily business of some 70 equity
analysts of Capital Research, which has offices located around the world. The
in-depth research and recommendations made by these analysts are the building
blocks of the fund. As Gina Despres, chairman of the fund's board, points out,
"We invest in companies, not countries, so each stock is first evaluated on its
fundamental merits." Analysts and portfolio counselors must also consider
whether the stock is appropriate for the fund's objectives.
The fund's particular approach to its growth-and-income objective affords its
portfolio counselors considerable latitude when weighing investment decisions.
Some stocks may exhibit more growth characteristics, while others are more
prized for the income they offer; in many instances, analysts strive to find
elements of both in a single stock. But there is no formula, no mandate to
achieve an exact balance. In fact, the mix of stocks with these characteristics
will often vary in the fund's portfolio over the course of a market cycle in
order to optimize total returns over the long term. In the words of the fund's
president, Steve Bepler, "We seek a full cycle of above average returns by
looking at all sorts of values, within the discipline of achieving a market
equivalent yield for shareholders."
[Begin Sidebar]
THERE ARE MANY INGREDIENTS THAT CONTRIBUTE TO THE FUND'S IDENTITY.
[photo of spices in jars, in a mortar with pestle, and in various small bowls]
[End Sidebar]
The fund's income objective is central to the "discipline" Steve refers to and
is an important consideration in the selection process. He notes, "We look at
dividends as a measure of investment attractiveness." Stocks that pay dividends
are typically those of well-established companies with consistent and reliable
cash flows. Portfolio counselor Gregg Ireland explains, "Dividends are often a
meaningful expression of management's confidence in the company's earnings power
and its willingness to share profits with shareholders. Moreover, stocks that
pay dividends are typically less volatile over time than those that pay no
dividend." Portfolio counselor Carl Kawaja adds, "The long-term growth rate of a
company's dividend is usually the long-term growth rate of the company itself.
This makes companies with a history of raising dividends more appealing to the
fund." Over its lifetime, this income discipline has helped the fund achieve
lower volatility than its benchmarks, as noted in the table below.
[Begin Sidebar]
[photo of flour in a bucket, eggs in a basket and various pastas and cooking
items]
SOLID RETURNS WITH LESS VOLATILITY
Over its lifetime, Capital World Growth and Income Fund has returned more than
twice that of its benchmark index or peer group average. It has accomplished
this with a comparatively lower level of volatility.
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 will vary, so investors may lose money. For the
most current information and month-end results, visit americanfunds.com. Fund
results shown,unless otherwise indicated, are at net asset value. If a sales
charge (maximum 5.75%) had been deducted, the results would have been lower.
Cumulative
Lifetime results (3/26/93 - 11/30/04) total return Volatility(1)
MSCI World Index(2) 164.1% 14.1%
Lipper global funds average(3) 172.3 15.4
Capital World Growth and Income Fund 356.7 12.4
(1) Volatility calculated by Lipper using standard deviation, a measure of how
returns over time have varied from the mean; a lower number signifies lower
volatility.
(2) The MSCI World Index is an unmanaged measure of 23 major stock markets and
does not reflect sales charges, commissions or expenses.
3 Average for 28 global funds, calculated at net asset value by Lipper.
[End Sidebar]
THE BENEFIT OF EXPERIENCE
Like all funds in the American Funds family, Capital World Growth and Income
Fund employs the multiple portfolio counselor system to manage its portfolio.
With this system, each of the fund's five portfolio counselors independently
manages a portion of its assets. In addition, a team of global equity analysts
manages a separate portion, known as the research portfolio. Under this system,
the portfolio counselors and research analysts are free to invest based on their
strongest convictions and in accordance with the fund's objectives.
This system allows shareholders to benefit from the multiple perspectives and
varied expertise of the fund's investment professionals. While some may be more
inclined to pursue growth opportunities, others may be drawn to income
opportunities. Similarly, some analysts and counselors look far afield to
uncover investment values, while others canvass more familiar markets.
Importantly, each counselor and analyst brings to the fund a wealth of knowledge
and a depth of experience that nurtures the selection process. These multiple
perspectives not only broaden the scope of investment possibilities, but through
the daily interactions of counselors and analysts, they also develop, refine and
enrich the pool of investment ideas that serve the fund.
A WORLD OF OPPORTUNITY
The search for attractive investments is not restricted to any geographic region
or country market. Gregg Ireland observes, "The fund's global reach gives us
enormous flexibility and a lot more geography to look at. Shareholders benefit
from this because, in many cases, stock markets outside the United States offer
greater yields." The table at right shows the dividend yield for world markets
in which the fund is invested.
The tradition of paying attractive dividends is well established in many major
developed markets, notably Europe and the current and former British
Commonwealth countries. Dividend yields in the United States, for that matter,
used to be much higher than they are currently. In fact, during the first half
of the 20th century, U.S. stocks frequently yielded more than U.S. government
bonds. That relationship shifted during the latter half of the century, as more
and more corporations hoarded cash or used earnings to repurchase shares in an
effort to boost their stock's price. Although that penchant has recently begun
to change toward a more dividend-friendly policy, interesting income
opportunities remain more prevalent overseas.
The ability to invest overseas has also provided the fund with an expanded array
of growth opportunities. While globalization has helped spur economic growth in
many developing markets around the world, the pace of growth varies from region
to region. Economic cycles are not usually in sync and often are constrained by
local practices or barriers -- be they fiscal, monetary or regulatory.
Consequently, the fund's broad geographic diversification helps to smooth out
returns and lessen the effects of a single market's volatility. More
importantly, our research analysts are able to use their global perspective to
help identify individual companies poised to benefit from economic growth,
wherever it may occur. A company in Europe, where growth is sluggish, may
thrive, for example, from its operations in China, where growth is strong. In
today's world, a global viewpoint is essential.
QUALITY IN THE MIX
Capital World Growth and Income Fund is tailored for investors with a long-term
investment horizon. In a single package, the fund provides many of the
ingredients that discerning investors seek from a core holding. Its twin
objectives serve those seeking attractive total returns, and its global reach
means those objectives can be pursued wherever opportunity arises. Gina Despres
succinctly refers to the fund and its objectives as "an all-weather investment
philosophy with international diversification."
Over the long term, the fund has consistently topped its benchmark and the
average returns of its peers, as shown in the results table on page 1. While we
cannot promise that will always be the case, we can assure shareholders that we
strive for above average results with every investment decision we make.
Moreover, decades of investment experience have taught us that it takes quality
ingredients to produce consistently superior results.
[Begin Sidebar]
DIVIDEND YIELDS FOR WORLD MARKETS
As shown in the table below, dividend yields for many of the world's stock
markets are higher than that of the United States, making overseas markets
fertile ground for pursuing the fund's income objective.
[photo of vegetables on a table]
Dividend yields
MSCI WORLD INDEX 2.1%
EUROPE
Austria 1.4
Belgium 3.3
Denmark 2.2
Finland 3.4
France 3.2
Germany 2.0
Greece 2.8
Ireland 2.5
Italy 3.4
Netherlands 3.6
Norway 2.7
Portugal 2.9
Spain 3.0
Sweden 2.1
Switzerland 1.7
United Kingdom 3.3
FAR EAST
Hong Kong 2.8
Japan 1.1
Singapore 2.3
PACIFIC
Australia 3.8
New Zealand 4.2
NORTH AMERICA
Canada 1.7
United States 1.7
Source: MSCI Country Index yields as of 11/30/04
MSCI DEFINITION OF YIELD
Annualized dividend per share divided by price. Yields are gross, before
withholding tax, and take into account special tax credits when applicable. The
gross yield of French companies takes into account special tax credits. For
Singapore companies, yield is based on net dividend, after corporate tax.
[End Sidebar]
SUMMARY INVESTMENT PORTFOLIO, November 30, 2004
Beginning with this report, a summary portfolio, approved under rules adopted by
the Securities and Exchange Commission this year, will replace the complete
listing of portfolio holdings used in previous shareholder reports. This summary
portfolio is designed to streamline the report and help investors better focus
on a fund's principal holdings. The schedule includes each of the fund's 50
largest holdings and investments of any issuer for which the total value of all
holdings in that issuer exceeds 1% of the fund's net assets. A complete schedule
of portfolio holdings is available upon request, free of charge, by calling
American Funds Service Company at 800/421-0180 or accessing the U.S. Securities
and Exchange Commission website at www.sec.gov.
[begin pie chart]
PERCENT
OF NET
INDUSTRY SECTOR DIVERSIFICATION ASSETS
Financials 17.36 %
Consumer Discretionary 10.47
Consumer Staples 9.85
Telecommunication Services 9.69
Materials 8.67
Convertible securities 1.80
Bonds & notes .63
Cash & equivalents 10.60
Other industries 30.93
[end pie chart]
Shares Market Percent
value of net
COMMON STOCKS - 86.97% (000) assets
FINANCIALS - 17.36%
HSBC Holdings PLC (United Kingdom) 17,588,049 $ 299,488
HSBC Holdings PLC (Hong Kong) 2,749,236 47,028 1.12%
Lloyds TSB Group PLC 33,015,000 265,788 .86
Societe Generale 2,560,000 247,098 .80
ING Groep NV 8,771,575 241,236 .78
Fortis 9,084,100 239,452 .78
Bank Austria Creditanstalt 2,517,406 214,056 .69
J.P. Morgan Chase & Co. 5,300,000 199,545 .65
ABN AMRO Holding NV 7,058,458 173,303 .56
Shinhan Financial Group Co., Ltd. 8,155,100 170,806 .55
Other securities 3,261,516 10.57
5,359,316 17.36
CONSUMER DISCRETIONARY - 10.47%
Continental AG 4,404,650 268,315 .87
Daito Trust Construction Co., Ltd. 4,596,700 207,886 .68
Toyota Motor Corp. 4,500,000 168,575 .55
Yamada Denki Co., Ltd. 3,766,000 161,546 .52
Other securities 2,424,085 7.85
3,230,407 10.47
CONSUMER STAPLES - 9.85%
Altria Group, Inc. 10,257,000 589,675 1.91
Unilever NV 2,525,000 158,712
Unilever NV (New York registered) 2,478,000 156,114 1.02
Diageo PLC 22,350,000 312,660 1.01
Nestle SA 933,000 239,577 .78
Imperial Tobacco Group PLC 7,191,413 187,324 .61
Foster's Group Ltd. 44,635,814 186,198 .60
Other securities 1,209,076 3.92
3,039,336 9.85
TELECOMMUNICATION SERVICES - 9.69%
Vodafone Group PLC 156,000,000 423,347 1.37
France Telecom, SA 9,516,000 298,753 .97
Chunghwa Telecom Co., Ltd. 64,829,000 128,853
Chunghwa Telecom Co., Ltd. (ADR) 4,335,000 90,385 .71
Portugal Telecom, SGPS, SA 16,803,550 198,694 .65
Telekom Austria AG 8,949,197 152,191 .49
Other securities 1,698,165 5.50
2,990,388 9.69
MATERIALS - 8.67%
Barrick Gold Corp. 9,449,100 232,353 .75
Dow Chemical Co. 4,250,000 214,497 .69
Cia. Vale do Rio Doce, preferred nominative, Class A 9,854,400 202,661 .66
BASF AG 2,840,000 191,076 .62
AngloGold Ashanti Ltd. 4,650,000 187,437 .61
Other securities 1,649,434 5.34
2,677,458 8.67
ENERGY - 7.20%
"Shell" Transport and Trading Co., PLC 37,390,000 314,407
"Shell" Transport and Trading Co., PLC (ADR) (New York registered) 1,325,000 67,071
Royal Dutch Petroleum Co. (New York registered) 3,280,000 187,813
Royal Dutch Petroleum Co. 887,000 50,792 2.01
TOTAL SA 940,000 205,691 .66
ENI SpA 6,415,000 157,402 .51
Husky Energy Inc. 5,165,000 150,684 .49
Other securities 1,090,179 3.53
2,224,039 7.20
HEALTH CARE - 5.76%
Novo Nordisk A/S, Class B 4,966,000 263,823 .85
AstraZeneca PLC (Sweden) 6,399,800 251,859 .82
Sanofi-Aventis 3,204,900 241,217 .78
Fresenius Medical Care AG 2,050,000 159,877 .52
Other securities 862,408 2.79
1,779,184 5.76
INDUSTRIALS - 4.50%
Sandvik AB 6,162,500 249,397 .81
Wesfarmers Ltd. 6,435,000 189,894 .61
Other securities 950,451 3.08
1,389,742 4.50
UTILITIES - 4.31%
E.ON AG 2,970,714 249,957 .81
Scottish Power PLC 25,760,000 190,274 .62
Gas Natural SDG, SA 6,344,500 181,230 .59
Other securities 708,498 2.29
1,329,959 4.31
OTHER - 4.34% 1,339,028 4.34
MISCELLANEOUS - 4.82%
Other common stocks in initial period of acquisition 1,487,375 4.82
TOTAL COMMON STOCKS (cost: $20,669,690,000) 26,846,232 86.97
Market Percent
value of net
CONVERTIBLE SECURITIES - 1.80% (000) assets
Total convertible securities (cost: $503,271,000) 556,037 1.80
Market Percent
value of net
BONDS AND NOTES - 0.63% (000) assets
Total bonds and notes (cost: $176,061,000) 195,856 .63
Principal Market Percent
amount value of net
SHORT-TERM SECURITIES - 10.35% (000) (000) assets
Danske Corp. 1.85%-2.24% due 12/9/2004-1/31/2005 $ 150,000 149,714 .49
Sheffield Receivables Corp. 2.02%-2.17% due 12/8/2004-1/24/2005 (1) 150,000 149,695 .49
Spintab AB (Swedmortgage) 1.87%-2.27% due 12/15/2004-1/31/2005 150,000 149,657 .48
Dexia Delaware LLC 1.955%-2.205% due 12/29/2004-1/28/2005 150,000 149,589 .48
HBOS Treasury Services PLC 2.05%-2.33% due 1/10-2/28/2005 150,000 149,407 .48
Barton Capital Corp. 1.98%-2.13% due 12/10/2004-1/19/2005 (1) 100,000 99,774
Societe Generale North America Inc. 1.93% due 12/28/2004 26,100 26,060 .41
HSBC USA Inc. 1.825%-2.09% due 12/15/2004-1/10/2005 75,000 74,899 .24
Shell Finance (U.K.) PLC 2.20% due 2/2/2005 30,000 29,881 .10
Other securities 2,215,661 7.18
TOTAL SHORT-TERM SECURITIES (cost: $3,194,550,000) 3,194,337 10.35
TOTAL INVESTMENT SECURITIES (cost: $24,543,572,000) 30,792,462 99.75
Other assets less liabilities 76,486 .25
NET ASSETS $30,868,948 100.00%
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 required to be disclosed in
the summary investment portfolio.
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 year ended
November 30, 2004 appear below.
Dividend Market
Company Beginning Purchases Sales Ending income value
shares shares (000) (000)
Asahi Diamond Industrial Co., Ltd. 3,950,000 - - 3,950,000 $424 $21,429
(1) Purchased in a private placement transaction; resale may be limited to
qualified institutional buyers; resale to the public may require
registration. The total value of all such restricted securities, including
those included in "Other securities" in the summary investment portfolio,
was $1,197,610,000, which represented 3.88% of the net assets of the fund.
ADR = American Depositary Receipts
See Notes to Financial Statements
FINANCIAL STATEMENTS
Statement of assets and liabilities
at November 30, 2004 (dollars and shares in thousands,
except per-share amounts)
ASSETS:
Investment securities at market:
Unaffiliated issuers (cost: $24,522,477) $30,771,033
Affiliated issuers (cost: $21,095) 21,429 $30,792,462
Cash denominated in non-U.S. currencies
(cost: $5,522) 5,822
Cash 194
Receivables for:
Sales of investments 44,337
Sales of fund's shares 122,876
Dividends and interest 59,504
Other 466 227,183
31,025,661
LIABILITIES:
Payables for:
Purchases of investments 112,644
Repurchases of fund's shares 15,667
Investment advisory services 9,191
Services provided by affiliates 15,235
Deferred Directors' compensation 742
Other fees and expenses 3,234 156,713
NET ASSETS AT NOVEMBER 30, 2004 $30,868,948
NET ASSETS CONSIST OF:
Capital paid in on shares of capital stock $23,584,628
Undistributed net investment income 304,176
Undistributed net realized gain 732,463
Net unrealized appreciation 6,247,681
NET ASSETS AT NOVEMBER 30, 2004 $30,868,948
Total authorized capital stock - 1,000,000 shares, $.01 par value (914,107 total
shares outstanding)
Net asset value
Net assets Shares outstanding per share (1)
Class A $ 25,137,264 743,762 $ 33.80
Class B 1,264,875 37,609 33.63
Class C 1,835,859 54,730 33.54
Class F 1,242,907 36,825 33.75
Class 529-A 271,768 8,053 33.75
Class 529-B 44,274 1,316 33.64
Class 529-C 79,988 2,378 33.63
Class 529-E 14,455 429 33.71
Class 529-F 5,640 167 33.75
Class R-1 17,013 506 33.63
Class R-2 200,908 5,988 33.55
Class R-3 284,911 8,462 33.67
Class R-4 182,195 5,397 33.76
Class R-5 286,891 8,485 33.81
(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 $35.86 and $35.81,
respectively.
See Notes to Financial Statements
STATEMENT OF OPERATIONS
for the year ended November 30, 2004 (dollars in thousands)
INVESTMENT INCOME:
Income:
Dividends (net of non-U.S. withholding
tax of $47,671; also includes
$424 from affiliates) $582,278
Interest (net of non-U.S. withholding
tax of $111) 130,961 $713,239
Fees and expenses:
Investment advisory services 94,017
Distribution services 72,385
Transfer agent services 18,614
Administrative services 5,925
Reports to shareholders 701
Registration statement and prospectus 1,242
Postage, stationery and supplies 1,716
Directors' compensation 389
Auditing and legal 209
Custodian 6,025
State and local taxes 184
Other 153
Total expenses before reimbursement/waiver 201,560
Reimbursement/waiver of expenses 1,874 199,686
Net investment income 513,553
NET REALIZED GAIN AND UNREALIZED
APPRECIATION ON INVESTMENTS
AND NON-U.S. CURRENCY:
Net realized gain (loss) on:
Investments 1,005,767
Non-U.S. currency transactions (770) 1,004,997
Net unrealized appreciation on:
Investments 3,218,531
Non-U.S. currency translations 459 3,218,990
Net realized gain and
unrealized appreciation
on investments and non-U.S. currency 4,223,987
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $4,737,540
See Notes to Financial Statements
STATEMENT OF CHANGES IN NET ASSETS (dollars in thousands)
Year ended Year ended
November 30, November 30,
2004 2003
OPERATIONS:
Net investment income $513,553 $322,900
Net realized gain on investments and
non-U.S. currency transactions 1,004,997 236,987
Net unrealized appreciation
on investments and non-U.S. currency translations 3,218,990 2,768,342
Net increase in net assets
resulting from operations 4,737,540 3,328,229
DIVIDENDS AND DISTRIBUTIONS PAID TO
SHAREHOLDERS:
Dividends from net investment income and currency gains (525,779) (272,642)
Distributions from net realized gain
on investments (174,979) -
Total dividends and distributions paid
to shareholders (700,758) (272,642)
CAPITAL SHARE TRANSACTIONS 10,088,401 3,020,303
TOTAL INCREASE IN NET ASSETS 14,125,183 6,075,890
NET ASSETS:
Beginning of year 16,743,765 10,667,875
End of year (including undistributed
net investment income: $304,176 and $72,260,
respectively) $30,868,948 $16,743,765
See Notes to Financial Statements
NOTES TO FINANCIAL STATEMENTS
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(R) 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 Classes B and 529-B convert to
for redemptions within classes A and 529-A,
six years of purchase 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 proceeds. Each share class has identical voting rights, except for
the exclusive right to vote on matters affecting only its class. Share classes
have different fees and expenses ("class-specific fees and expenses"), primarily
due to different arrangements for distribution, administrative and shareholder
services. Differences in class-specific fees and expenses will result in
differences in net investment income and, therefore, the payment of different
per-share dividends by each class.
SIGNIFICANT ACCOUNTING POLICIES - The financial statements have been prepared to
comply with accounting principles generally accepted in the United States of
America. These principles require management to make estimates and assumptions
that affect reported amounts and disclosures. Actual results could differ from
those estimates. The following is a summary of the significant accounting
policies followed by the fund:
SECURITY VALUATION - Equity securities are valued at the official
closing price of, or the last reported sale price on, the exchange or
market on which such securities are traded, as of the close of
business on the day the securities are being valued or, lacking any
sales, at the last available bid price. Prices for each security are
taken from the principal exchange or market in which the security
trades. Fixed-income securities are valued at prices obtained from an
independent pricing service, when such prices are available. However,
where the investment adviser deems it appropriate, such securities
will be valued at the mean quoted bid and asked prices (or 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 purchased with greater than 60 days to
maturity with 60 days or less remaining to maturity is determined
based on the market value on the 61st day. The ability of the issuers
of the debt securities held by the fund to meet their obligations may
be affected by economic developments in a specific industry, state or
region. Forward currency contracts are valued at the mean of
representative quoted bid and asked prices. Securities and other
assets for which representative market quotations are not readily
available are fair valued as determined in good faith under procedures
adopted by authority of the fund's Board of Directors. 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; and changes in overall market conditions. 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, the
securities are fair valued.
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.
CollegeAmerica is a registered trademark of the Virginia College Savings
Plan./sm/
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 year ended November 30, 2004, non-U.S. taxes paid on
realized gains were $12,951,000. As of November 30, 2004, non-U.S. taxes
provided on unrealized gains were $2,531,000.
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 certain securities within 30 days of purchase;
unrealized appreciation of certain investments in non-U.S. securities; deferred
expenses; and amortization of premiums. 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 November 30, 2004, the cost of
investment securities for federal income tax purposes was $24,600,921,000.
During the year ended November 30, 2004, the fund reclassified $244,263,000 from
undistributed net realized gains to undistributed net investment income, and
$121,000 from net investment income and $25,691,000 from undistributed net
realized gains to additional paid-in capital to align financial reporting with
tax reporting.
As of November 30, 2004, the components of distributable earnings on a tax basis
were as follows (dollars in thousands):
Undistributed net investment income and currency gains $359,463
Undistributed long-term capital gains 735,290
Gross unrealized appreciation on investment securities 6,552,030
Gross unrealized depreciation on investment securities (360,489)
Net unrealized appreciation on investment securities 6,191,541
During the year ended November 30, 2004, the fund realized, on a tax basis, a
net capital gain of $761,671,000.
The tax character of distributions paid to shareholders was as follows (dollars
in thousands):
YEAR ENDED NOVEMBER 30, 2004
Distributions from ordinary income
Net investment income Distributions from Total
Share class currency gains Short-term capital gains long-term capital gains distributions paid
Class A $ 456,755 $ 39,669 $ 113,264 $ 609,688
Class B 14,515 1,491 4,257 20,263
Class C 19,082 1,751 4,999 25,832
Class F 18,277 1,305 3,727 23,309
Class 529-A 3,920 256 731 4,907
Class 529-B 443 48 139 630
Class 529-C 797 82 236 1,115
Class 529-E 183 14 40 237
Class 529-F 73 4 11 88
Class R-1 164 14 39 217
Class R-2 1,979 160 456 2,595
Class R-3 3,248 220 627 4,095
Class R-4 1,911 72 204 2,187
Class R-5 4,432 302 861 5,595
Total $ 525,779 $ 45,388 $ 129,591 $ 700,758
YEAR ENDED NOVEMBER 30, 2003
Distributions from ordinary income
Net investment income Distributions from Total
Share class and currency gains Short-term capital gains long-term capital gains distributions paid
Class A $ 254,064 $ - $ - $ 254,064
Class B 4,808 - - 4,808
Class C 4,321 - - 4,321
Class F 5,139 - - 5,139
Class 529-A 1,080 - - 1,080
Class 529-B 138 - - 138
Class 529-C 225 - - 225
Class 529-E 49 - - 49
Class 529-F 16 - - 16
Class R-1 27 - - 27
Class R-2 421 - - 421
Class R-3 512 - - 512
Class R-4 146 - - 146
Class R-5 1,696 - - 1,696
Total $ 272,642 $ - $ - $ 272,642
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 provided for monthly fees accrued daily. At the beginning of the
period, these fees were 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. The Board of Directors approved
an amended agreement effective November 1, 2004, continuing the series of rates
to include additional annual rates of 0.380% on daily net assets in excess of
$21 billion but not exceeding $27 billion, 0.375% on such assets in excess of
$27 billion but not exceeding $34 billion, 0.370% on such assets in excess of
$34 billion but not exceeding $44 billion and 0.365% on such assets in excess of
$44 billion. Effective February 1, 2004, CRMC reduced investment advisory
services fees to the rates provided by the amended agreement. CRMC also reduced
investment advisory services fees by an additional $1,367,000. As a result, for
the year ended November 30, 2004, the fee shown on the accompanying financial
statements of $94,017,000, which was equivalent to an annualized rate of 0.402%,
was reduced by $1,474,000 to $92,543,000, or 0.395% 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 below. In some cases,
the Board of Directors has approved expense amounts lower than plan
limits. All share classes may use up to 0.25% of average daily net
assets to pay service fees, or to compensate AFD for paying service
fees, to firms that have entered into agreements with AFD for
providing certain shareholder services. Expenses in excess of these
amounts, up to approved limits, may be used to compensate dealers and
wholesalers.
For 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
November 30, 2004, there were no unreimbursed expenses subject to
reimbursement for classes A or 529-A.
------------------------------------------------ ----------------------------- -----------------------------
Share class Currently approved limits Plan limits
------------------------------------------------ ----------------------------- -----------------------------
------------------------------------------------ ----------------------------- -----------------------------
Class A 0.30% 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
------------------------------------------------ ----------------------------- -----------------------------
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 year ended November
30, 2004, CRMC agreed to pay a portion of these fees for classes R-1,
R-2 and R-3. For the year ended November 30, 2004, the total fees paid
by CRMC were $2,000, $397,000 and $1,000 for Class R-1, Class R-2 and
Class R-3, 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 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.
Expenses under the agreements described on the previous page for the
year ended November 30, 2004, 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 $45,982 $17,649 Not applicable Not applicable Not applicable
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class B 8,936 965 Not applicable Not applicable Not applicable
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class C 12,121 Included $1,818 $285 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class F 2,063 Included 1,238 135 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-A 262 Included 267 25 $ 178
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-B 305 Included 46 16 31
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-C 544 Included 82 21 54
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-E 48 Included 14 1 10
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-F 9 Included 5 1 3
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-1 104 Included 16 8 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-2 926 Included 185 726 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-3 853 Included 256 177 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-4 232 Included 139 8 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-5 Not applicable Included 175 5 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Total $72,385 $18,614 $4,241 $1,408 $276
--------------------------------------------------------------------------------------------------------------
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 share 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 in the accompanying financial
statements includes $269,000 in current fees (either paid in cash or
deferred) and a net increase of $120,000 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):
Reinvestments of
Share class Sales(1) dividends and distributions
Amount Shares Amount Shares
Year ended November 30, 2004
Class A $ 8,021,373 260,909 $ 577,069 19,368
Class B 610,421 19,944 19,572 659
Class C 1,089,541 35,628 24,563 827
Class F 726,908 23,572 20,887 700
Class 529-A 148,325 4,838 4,906 164
Class 529-B 21,250 696 630 21
Class 529-C 42,859 1,403 1,115 38
Class 529-E 7,786 253 236 8
Class 529-F 3,713 121 88 3
Class R-1 11,722 381 217 8
Class R-2 139,249 4,560 2,593 87
Class R-3 208,769 6,826 4,023 135
Class R-4 157,343 5,119 2,187 72
Class R-5 163,934 5,299 4,798 161
Total net increase
(decrease) $ 11,353,193 369,549 $ 662,884 22,251
Year ended November 30, 2003
Class A $ 3,476,313 140,934 $ 237,800 10,000
Class B 259,243 10,380 4,639 194
Class C 418,374 16,667 4,056 169
Class F 433,428 17,892 4,586 190
Class 529-A 50,028 2,023 1,080 45
Class 529-B 9,652 396 138 6
Class 529-C 16,305 665 225 9
Class 529-E 3,123 128 49 2
Class 529-F 1,100 46 16 1
Class R-1 4,397 180 27 1
Class R-2 49,218 2,044 421 17
Class R-3 69,964 2,827 511 21
Class R-4 24,692 964 145 6
Class R-5 41,012 1,628 1,282 53
Total net increase
(decrease) $ 4,856,849 196,774 $ 254,975 10,714
Share class Repurchases(1) Net increase
Amount Shares Amount Shares
Year ended November 30, 2004
Class A $ (1,538,478) (50,257) $ 7,059,964 230,020
Class B (55,630) (1,824) 574,363 18,779
Class C (101,576) (3,337) 1,012,528 33,118
Class F (118,713) (3,881) 629,082 20,391
Class 529-A (5,639) (183) 147,592 4,819
Class 529-B (601) (20) 21,279 697
Class 529-C (2,680) (88) 41,294 1,353
Class 529-E (308) (10) 7,714 251
Class 529-F (270) (9) 3,531 115
Class R-1 (1,721) (57) 10,218 332
Class R-2 (20,563) (674) 121,279 3,973
Class R-3 (35,973) (1,178) 176,819 5,783
Class R-4 (20,264) (657) 139,266 4,534
Class R-5 (25,260) (828) 143,472 4,632
Total net increase
(decrease) $ (1,927,676) (63,003) $ 10,088,401 328,797
Year ended November 30, 2003
Class A $ (1,776,963) (76,452) $ 1,937,150 74,482
Class B (32,120) (1,375) 231,762 9,199
Class C (71,149) (3,097) 351,281 13,739
Class F (185,371) (8,093) 252,643 9,989
Class 529-A (1,204) (51) 49,904 2,017
Class 529-B (166) (7) 9,624 395
Class 529-C (336) (14) 16,194 660
Class 529-E (92) (4) 3,080 126
Class 529-F -* (1) 1,116 46
Class R-1 (341) (13) 4,083 168
Class R-2 (6,714) (281) 42,925 1,780
Class R-3 (9,216) (382) 61,259 2,466
Class R-4 (4,158) (175) 20,679 795
Class R-5 (3,691) (152) 38,603 1,529
Total net increase
(decrease) $ (2,091,521) (90,097) $ 3,020,303 117,391
* Amount less than one thousand.
(1) Includes exchanges between share classes of the fund.
6. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
The fund made purchases and sales of investment securities, excluding short-term
securities, of $13,207,918,000 and $4,453,132,000, respectively, during the year
ended November 30, 2004.
The fund receives a reduction in its custodian fee equal to the amount of
interest calculated on certain cash balances held at the custodian bank. For the
year ended November 30, 2004, the custodian fee of $6,025,000 included $20,000
that was offset by this reduction, rather than paid in cash.
FINANCIAL HIGHLIGHTS (1)
Income (loss) from investment operations(2)
Net
Net asset gains (losses)
value, Net on securities Total from
beginning investment (both realized investment
of period income and unrealized) operations
Class A:
Year ended 11/30/2004 $28.62 $.70 $5.50 $6.20
Year ended 11/30/2003 22.80 .65 5.73 6.38
Year ended 11/30/2002 24.29 .52 (1.53) (1.01)
Year ended 11/30/2001 28.29 .53 (.90) (.37)
Year ended 11/30/2000 29.03 .62 1.20 1.82
Class B:
Year ended 11/30/2004 28.50 .46 5.47 5.93
Year ended 11/30/2003 22.72 .45 5.72 6.17
Year ended 11/30/2002 24.21 .27 (1.45) (1.18)
Year ended 11/30/2001 28.21 .31 (.87) (.56)
Period from 3/15/2000 to 11/30/2000 29.57 .32 (1.41) (1.09)
Class C:
Year ended 11/30/2004 28.43 .45 5.45 5.90
Year ended 11/30/2003 22.68 .42 5.71 6.13
Year ended 11/30/2002 24.18 .20 (1.40) (1.20)
Period from 3/15/2001 to 11/30/2001 25.35 .12 (1.15) (1.03)
Class F:
Year ended 11/30/2004 28.59 .68 5.48 6.16
Year ended 11/30/2003 22.78 .61 5.75 6.36
Year ended 11/30/2002 24.27 .31 (1.34) (1.03)
Period from 3/15/2001 to 11/30/2001 25.40 .27 (1.15) (.88)
Class 529-A:
Year ended 11/30/2004 28.59 .68 5.48 6.16
Year ended 11/30/2003 22.78 .63 5.73 6.36
Period from 2/15/2002 to 11/30/2002 24.29 .36 (1.47) (1.11)
Class 529-B:
Year ended 11/30/2004 28.51 .40 5.48 5.88
Year ended 11/30/2003 22.74 .40 5.73 6.13
Period from 2/21/2002 to 11/30/2002 23.96 .23 (1.13) (.90)
Class 529-C:
Year ended 11/30/2004 28.50 .41 5.47 5.88
Year ended 11/30/2003 22.74 .41 5.71 6.12
Period from 2/22/2002 to 11/30/2002 23.98 .23 (1.15) (.92)
Class 529-E:
Year ended 11/30/2004 28.56 .57 5.48 6.05
Year ended 11/30/2003 22.77 .54 5.73 6.27
Period from 3/4/2002 to 11/30/2002 25.12 .31 (2.28) (1.97)
Class 529-F:
Year ended 11/30/2004 28.59 .65 5.49 6.14
Year ended 11/30/2003 22.80 .61 5.72 6.33
Period from 9/17/2002 to 11/30/2002 21.79 .08 1.07 1.15
FINANCIAL HIGHLIGHTS (1) (continued)
Income (loss) from investment operations(2)
Net
Net asset gains(losses)
value, Net on securities Total from
beginning investment (both realized investment
of period income and unrealized) operations
Class R-1:
Year ended 11/30/2004 $28.50 $.44 $5.48 $5.92
Year ended 11/30/2003 22.75 .38 5.77 6.15
Period from 6/7/2002 to 11/30/2002 25.08 .14 (2.37) (2.23)
Class R-2:
Year ended 11/30/2004 28.45 .45 5.45 5.90
Year ended 11/30/2003 22.73 .43 5.71 6.14
Period from 6/7/2002 to 11/30/2002 25.08 .13 (2.35) (2.22)
Class R-3:
Year ended 11/30/2004 28.53 .57 5.47 6.04
Year ended 11/30/2003 22.77 .50 5.75 6.25
Period from 6/6/2002 to 11/30/2002 25.42 .17 (2.52) (2.35)
Class R-4:
Year ended 11/30/2004 28.60 .68 5.49 6.17
Year ended 11/30/2003 22.81 .55 5.80 6.35
Period from 6/27/2002 to 11/30/2002 23.78 .20 (1.02) (.82)
Class R-5:
Year ended 11/30/2004 28.63 .76 5.51 6.27
Year ended 11/30/2003 22.81 .70 5.74 6.44
Period from 5/15/2002 to 11/30/2002 26.11 .30 (3.27) (2.97)
FINANCIAL HIGHLIGHTS (1)
Dividends and distributions
Dividends
(from net Distributions Total Net asset
investment (from capital dividends and value, end
income) gains) distributions of period
Class A:
Year ended 11/30/2004 $(.73) $(.29) $(1.02) $33.80
Year ended 11/30/2003 (.56) - (.56) 28.62
Year ended 11/30/2002 (.48) - (.48) 22.80
Year ended 11/30/2001 (.50) (3.13) (3.63) 24.29
Year ended 11/30/2000 (.58) (1.98) (2.56) 28.29
Class B:
Year ended 11/30/2004 (.51) (.29) (.80) 33.63
Year ended 11/30/2003 (.39) - (.39) 28.50
Year ended 11/30/2002 (.31) - (.31) 22.72
Year ended 11/30/2001 (.31) (3.13) (3.44) 24.21
Period from 3/15/2000 to 11/30/2000 (.27) - (.27) 28.21
Class C:
Year ended 11/30/2004 (.50) (.29) (.79) 33.54
Year ended 11/30/2003 (.38) - (.38) 28.43
Year ended 11/30/2002 (.30) - (.30) 22.68
Period from 3/15/2001 to 11/30/2001 (.14) - (.14) 24.18
Class F:
Year ended 11/30/2004 (.71) (.29) (1.00) 33.75
Year ended 11/30/2003 (.55) - (.55) 28.59
Year ended 11/30/2002 (.46) - (.46) 22.78
Period from 3/15/2001 to 11/30/2001 (.25) - (.25) 24.27
Class 529-A:
Year ended 11/30/2004 (.71) (.29) (1.00) 33.75
Year ended 11/30/2003 (.55) - (.55) 28.59
Period from 2/15/2002 to 11/30/2002 (.40) - (.40) 22.78
Class 529-B:
Year ended 11/30/2004 (.46) (.29) (.75) 33.64
Year ended 11/30/2003 (.36) - (.36) 28.51
Period from 2/21/2002 to 11/30/2002 (.32) - (.32) 22.74
Class 529-C:
Year ended 11/30/2004 (.46) (.29) (.75) 33.63
Year ended 11/30/2003 (.36) - (.36) 28.50
Period from 2/22/2002 to 11/30/2002 (.32) - (.32) 22.74
Class 529-E:
Year ended 11/30/2004 (.61) (.29) (.90) 33.71
Year ended 11/30/2003 (.48) - (.48) 28.56
Period from 3/4/2002 to 11/30/2002 (.38) - (.38) 22.77
Class 529-F:
Year ended 11/30/2004 (.69) (.29) (.98) 33.75
Year ended 11/30/2003 (.54) - (.54) 28.59
Period from 9/17/2002 to 11/30/2002 (.14) - (.14) 22.80
FINANCIAL HIGHLIGHTS (1) (continued)
Dividends and distributions
Dividends
(from net Distributions Total Net asset
investment (from capital dividends and value, end
income) gains) distributions of period
Class R-1:
Year ended 11/30/2004 $(.50) $(.29) $(.79) $33.63
Year ended 11/30/2003 (.40) - (.40) 28.50
Period from 6/7/2002 to 11/30/2002 (.10) - (.10) 22.75
Class R-2:
Year ended 11/30/2004 (.51) (.29) (.80) 33.55
Year ended 11/30/2003 (.42) - (.42) 28.45
Period from 6/7/2002 to 11/30/2002 (.13) - (.13) 22.73
Class R-3:
Year ended 11/30/2004 (.61) (.29) (.90) 33.67
Year ended 11/30/2003 (.49) - (.49) 28.53
Period from 6/6/2002 to 11/30/2002 (.30) - (.30) 22.77
Class R-4:
Year ended 11/30/2004 (.72) (.29) (1.01) 33.76
Year ended 11/30/2003 (.56) - (.56) 28.60
Period from 6/27/2002 to 11/30/2002 (.15) - (.15) 22.81
Class R-5:
Year ended 11/30/2004 (.80) (.29) (1.09) 33.81
Year ended 11/30/2003 (.62) - (.62) 28.63
Period from 5/15/2002 to 11/30/2002 (.33) - (.33) 22.81
FINANCIAL HIGHLIGHTS (1)
Ratio of expenses Ratio of expenses
to average net to average net Ratio of
Net assets, assets before assets after net income
Total end of period waiver/ waiver/ to average
return (3) (in millions) reimbursement reimbursement (4) net assets
Class A:
Year ended 11/30/2004 22.21% $25,137 .77% .77% 2.28%
Year ended 11/30/2003 28.52 14,703 .81 .81 2.70
Year ended 11/30/2002 (4.22) 10,016 .82 .82 2.22
Year ended 11/30/2001 (1.81) 10,346 .78 .78 2.05
Year ended 11/30/2000 6.37 10,716 .79 .79 2.08
Class B:
Year ended 11/30/2004 21.25 1,265 1.55 1.55 1.52
Year ended 11/30/2003 27.52 537 1.58 1.58 1.85
Year ended 11/30/2002 (4.93) 219 1.59 1.59 1.47
Year ended 11/30/2001 (2.57) 126 1.56 1.56 1.21
Period from 3/15/2000 to 11/30/2000 (3.73) 55 1.55 (5) 1.55 (5) 1.45 (5)
Class C:
Year ended 11/30/2004 21.17 1,836 1.62 1.61 1.46
Year ended 11/30/2003 27.40 615 1.65 1.65 1.71
Year ended 11/30/2002 (4.95) 179 1.65 1.65 1.43
Period from 3/15/2001 to 11/30/2001 (4.08) 50 1.78 (5) 1.78 (5) .73 (5)
Class F:
Year ended 11/30/2004 22.09 1,243 .86 .85 2.21
Year ended 11/30/2003 28.43 470 .89 .89 2.49
Year ended 11/30/2002 (4.29) 147 .91 .91 2.17
Period from 3/15/2001 to 11/30/2001 (3.45) 47 .92 (5) .92 (5) 1.55 (5)
Class 529-A:
Year ended 11/30/2004 22.08 272 .86 .85 2.21
Year ended 11/30/2003 28.43 93 .87 .87 2.55
Period from 2/15/2002 to 11/30/2002 (4.61) 28 1.03 (5) 1.03 (5) 2.08 (5)
Class 529-B:
Year ended 11/30/2004 21.02 44 1.75 1.74 1.32
Year ended 11/30/2003 27.28 18 1.78 1.78 1.64
Period from 2/21/2002 to 11/30/2002 (3.82) 5 1.79 (5) 1.79 (5) 1.31 (5)
Class 529-C:
Year ended 11/30/2004 21.04 80 1.74 1.73 1.34
Year ended 11/30/2003 27.25 29 1.76 1.76 1.66
Period from 2/22/2002 to 11/30/2002 (3.90) 8 1.77 (5) 1.77 (5) 1.33 (5)
Class 529-E:
Year ended 11/30/2004 21.67 14 1.21 1.20 1.86
Year ended 11/30/2003 27.97 5 1.23 1.23 2.17
Period from 3/4/2002 to 11/30/2002 (7.88) 1 1.23 (5) 1.23 (5) 1.85 (5)
Class 529-F:
Year ended 11/30/2004 21.98 6 .96 .95 2.12
Year ended 11/30/2003 28.31 1 .98 .98 2.48
Period from 9/17/2002 to 11/30/2002 5.33 - (6) .20 .20 .39
Financial highlights (1) (continued)
Ratio of expenses Ratio of expenses
to average net to average net Ratio of
Net assets, assets before assets after net income
Total end of period waiver/ waiver/ to average
return (in millions) reimbursement reimbursement (4) net assets
Class R-1:
Year ended 11/30/2004 21.18% $17 1.67% 1.64% 1.44%
Year ended 11/30/2003 27.43 5 1.78 1.66 1.48
Period from 6/7/2002 to 11/30/2002 (8.85) - (6) 1.41 .80 .66
Class R-2:
Year ended 11/30/2004 21.15 201 1.93 1.60 1.47
Year ended 11/30/2003 27.44 57 2.23 1.62 1.72
Period from 6/7/2002 to 11/30/2002 (8.80) 5 .93 .79 .61
Class R-3:
Year ended 11/30/2004 21.67 285 1.20 1.19 1.87
Year ended 11/30/2003 27.90 76 1.29 1.24 1.98
Period from 6/6/2002 to 11/30/2002 (9.25) 5 .69 .60 .80
Class R-4:
Year ended 11/30/2004 22.10 182 .85 .84 2.22
Year ended 11/30/2003 28.36 25 .90 .89 2.18
Period from 6/27/2002 to 11/30/2002 (3.42) 2 .46 .38 .92
Class R-5:
Year ended 11/30/2004 22.49 287 .54 .54 2.48
Year ended 11/30/2003 28.82 110 .56 .56 2.88
Period from 5/15/2002 to 11/30/2002 (11.37) 53 .56 (5) .56 (5) 2.48 (5)
Year ended November 30
2004 2003 2002 2001 2000
Portfolio turnover rate for all classes of shares 21% 27% 32% 45% 41%
(1) Based on operations for the period 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) The ratios in this column reflect the impact, if any, of certain
reimbursements/waivers from CRMC. During the year ended 11/30/2004, CRMC
reduced fees for investment advisory services for all share classes. In
addition, during the start-up period for the retirement plan share classes
(except Class R-5), CRMC agreed to pay a portion of the fees related to
transfer agent services.
(5) Annualized.
(6) Amount less than $1 million.
See Notes to Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF CAPITAL WORLD GROWTH AND INCOME
FUND, INC.:
In our opinion, the accompanying statement of assets and liabilities, including
the summary investment portfolio, and the related statements of operations and
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Capital World Growth and Income
Fund, Inc. (the "Fund") at November 30, 2004, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended and the financial highlights for each of the periods
presented in conformity with accounting principles generally accepted in the
United States of America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of securities at November 30, 2004 by correspondence with the custodian and
brokers, provide a reasonable basis for our opinion.
PriceWaterhouseCoopers LLP
Los Angeles, California
January 3, 2005
TAX INFORMATION (unaudited)
We are required to advise you within 60 days of the fund's fiscal year-end
regarding the federal tax status of certain distributions received by
shareholders during such fiscal year. The information below is provided for the
fund's fiscal year ending November 30, 2004.
During the fiscal year ended, the fund paid a long-term capital gain
distribution of $129,591,000. The fund also designated as a capital gain
distribution a portion of earnings and profits paid to shareholders in
redemption of their shares.
The fund makes an election under the Internal Revenue Code Section 853 to pass
through certain non-U.S. taxes paid by the fund to its shareholders as a foreign
tax credit. The amount of foreign tax credit passed through to shareholders for
the fiscal year is $60,379,000. Foreign source income earned by the fund for the
fiscal year was $513,210,000. Shareholders are entitled to a foreign tax credit
or an itemized deduction, at their discretion. Generally, it is more
advantageous to claim a credit than to take a deduction.
Individual shareholders are eligible for reduced tax rates on qualified dividend
income. For purposes of computing the dividends eligible for reduced tax rates,
$605,965,000 of the dividends paid by the fund from ordinary income earned
during the fiscal year are considered qualified dividend income.
Corporate shareholders may exclude up to 70% of qualifying dividends. For
purposes of computing this exclusion, $146,383,000 of the dividends paid by the
fund from ordinary income earned during the fiscal year represents qualifying
dividends.
Certain states may exempt from income taxation that portion of dividends paid by
the fund from ordinary income that was derived from direct U.S. government
obligations. For purposes of computing this exclusion, $924,000 of the dividends
paid by the fund from ordinary income earned during the fiscal year was derived
from interest on direct U.S. government obligations.
Dividends and distributions received by retirement plans such as IRAs,
Keogh-type plans and 403(b) plans need not be reported as taxable income.
However, many retirement plan trusts may need this information for their annual
information reporting.
SINCE THE INFORMATION ABOVE IS REPORTED FOR THE FUND'S FISCAL YEAR AND NOT THE
CALENDAR YEAR, SHAREHOLDERS SHOULD REFER TO THEIR FORM 1099-DIV OR OTHER TAX
INFORMATION WHICH WILL BE MAILED IN JANUARY 2005 TO DETERMINE THE CALENDAR YEAR
AMOUNTS TO BE INCLUDED ON THEIR 2004 TAX RETURNS. SHAREHOLDERS SHOULD CONSULT
THEIR TAX ADVISERS.
EXPENSE EXAMPLE (unaudited)
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 (June 1,
2004 through November 30, 2004).
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. There are some account fees that are charged to certain
types of accounts, such as Individual Retirement Accounts and CollegeAmerica
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 Class 529-F shareholders may be subject to fees charged by financial
intermediaries, typically ranging from 0.50% to 3.00% 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.
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.
There are some account fees that are charged to certain shareholders, such as
Individual Retirement Accounts and CollegeAmerica 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 Class 529-F shareholders may
be subject to fees charged by financial intermediaries, typically ranging from
0.50% to 3.00% 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 Ending account Expenses paid Annualized
value 6/1/2004 value 11/30/2004 during period(1) expense ratio
Class A -- actual return $ 1,000.00 $1,132.87 $3.89 .73%
Class A -- assumed 5% return 1,000.00 1,021.35 3.69 .73
Class B -- actual return 1,000.00 1,128.29 8.19 1.54
Class B -- assumed 5% return 1,000.00 1,017.30 7.77 1.54
Class C -- actual return 1,000.00 1,127.68 8.51 1.60
Class C -- assumed 5% return 1,000.00 1,017.00 8.07 1.60
Class F -- actual return 1,000.00 1,132.25 4.42 .83
Class F -- assumed 5% return 1,000.00 1,020.85 4.19 .83
Class 529-A -- actual return 1,000.00 1,132.35 4.37 .82
Class 529-A -- assumed 5% return 1,000.00 1,020.90 4.14 .82
Class 529-B -- actual return 1,000.00 1,127.28 9.20 1.73
Class 529-B -- assumed 5% return 1,000.00 1,016.35 8.72 1.73
Class 529-C -- actual return 1,000.00 1,127.41 9.15 1.72
Class 529-C -- assumed 5% return 1,000.00 1,016.40 8.67 1.72
Class 529-E -- actual return 1,000.00 1,130.23 6.34 1.19
Class 529-E -- assumed 5% return 1,000.00 1,019.05 6.01 1.19
Class 529-F -- actual return 1,000.00 1,131.77 5.01 .94
Class 529-F -- assumed 5% return 1,000.00 1,020.30 4.75 .94
Class R-1 -- actual return 1,000.00 1,127.75 8.67 1.63
Class R-1 -- assumed 5% return 1,000.00 1,016.85 8.22 1.63
Class R-2 -- actual return 1,000.00 1,127.88 8.46 1.59
Class R-2 -- assumed 5% return 1,000.00 1,017.05 8.02 1.59
Class R-3 -- actual return 1,000.00 1,130.44 6.18 1.16
Class R-3 -- assumed 5% return 1,000.00 1,019.20 5.86 1.16
Class R-4 -- actual return 1,000.00 1,131.97 4.42 .83
Class R-4 -- assumed 5% return 1,000.00 1,020.85 4.19 .83
Class R-5 -- actual return 1,000.00 1,133.99 2.83 .53
Class R-5 -- assumed 5% return 1,000.00 1,022.35 2.68 .53
(1) Expenses 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 (183), and divided by 366 (to reflect the one-half year period).
BOARD OF DIRECTORS AND OTHER OFFICERS
"NON-INTERESTED" DIRECTORS
YEAR FIRST
ELECTED
A DIRECTOR
NAME AND AGE OF THE FUND(1) PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
H. Frederick Christie, 71 1993 Private investor; former President and CEO, The Mission Group
(non-utility holding company, subsidiary of Southern California Edison
Company)
Merit E. Janow, 46 2001 Professor, Columbia University, School of International and Public
Affairs
Mary Myers Kauppila, 50 1993 Private investor; Chairman of the Board and CEO, Ladera Management
Company (venture capital and agriculture); former owner and President,
Energy Investment, Inc.
Gail L. Neale, 69 1993 President, The Lovejoy Consulting Group, Inc. (a pro bono consulting
group advising nonprofit organizations)
Robert J. O'Neill, Ph.D., 68 1993 Deputy Chairman of the Council and Chairman of the International
Advisory Panel, Graduate School of Government, University of Sydney,
Australia; Member of the Board of Directors, The Lowy Institute for
International Policy Studies, Sydney, Australia; Chairman of the
Council, Australian Strategic Policy Institute; former Chichele
Professor of the History of War and Fellow, All Souls College,
University of Oxford; former Chairman of the Council, International
Institute for Strategic Studies
Donald E. Petersen, 78 1993 Retired; former Chairman of the Board and CEO, Ford Motor Company
Stefanie Powers, 62 1993-1996 Actor, Producer; Co-founder and President of The
1997 William Holden Wildlife Foundation; conservation consultant to Land
Rover and Jaguar North America; author of The Jaguar Conservation
Trust
Steadman Upham, 55 2001 President and Professor of Anthropology, The University of Tulsa;
former President and Professor of Archaeology, Claremont Graduate
University
Charles Wolf, Jr., Ph.D., 80 1993 Senior Economic Adviser and Corporate Fellow in International
Economics, The RAND Corporation; former Dean, The RAND Graduate School
"NON-INTERESTED" DIRECTORS
NUMBER OF
PORTFOLIOS
IN FUND
COMPLEX(2)
OVERSEEN BY
NAME AND AGE DIRECTOR OTHER DIRECTORSHIPS(3) HELD BY DIRECTOR
H. Frederick Christie, 71 19 Ducommun Incorporated; IHOP Corporation; Southwest Water Company;
Valero L.P.
Merit E. Janow, 46 2 None
Mary Myers Kauppila, 50 5 None
Gail L. Neale, 69 5 None
Robert J. O'Neill, Ph.D., 68 3 None
Donald E. Petersen, 78 2 None
Stefanie Powers, 62 2 None
Steadman Upham, 55 2 None
Charles Wolf, Jr., Ph.D., 80 2 None
"INTERESTED" DIRECTORS(4)
YEAR FIRST
ELECTED A
DIRECTOR OR PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS AND
NAME, AGE AND OFFICER OF POSITIONS HELD WITH AFFILIATED ENTITIES OR THE PRINCIPAL
POSITION WITH FUND THE FUND(1) UNDERWRITER OF THE FUND
Gina H. Despres, 63 1999 Senior Vice President, Capital Research and
Chairman of the Board Management Company; Vice President, Capital Strategy Research, Inc.(5)
Paul G. Haaga, Jr., 56 1993 Executive Vice President and Director, Capital Research and Management
Vice Chairman of the Board Company; Director, The Capital Group Companies, Inc.(5)
"INTERESTED" DIRECTORS(4)
NUMBER OF
PORTFOLIOS
IN FUND
COMPLEX(2)
NAME, AGE AND OVERSEEN BY
POSITION WITH FUND DIRECTOR OTHER DIRECTORSHIPS(3) HELD BY DIRECTOR
Gina H. Despres, 63 4 None
Chairman of the Board
Paul G. Haaga, Jr., 56 17 None
Vice Chairman of the Board
FOUNDING DIRECTOR EMERITUS
Frank Stanton, 96 Retired; former President, CBS Inc. (1946-1973)
THE STATEMENT OF ADDITIONAL INFORMATION INCLUDES ADDITIONAL INFORMATION ABOUT
FUND DIRECTORS AND IS AVAILABLE WITHOUT CHARGE UPON REQUEST BY CALLING AMERICAN
FUNDS SERVICE COMPANY AT 800/421-0180. THE ADDRESS FOR ALL DIRECTORS AND
OFFICERS OF THE FUND IS 333 SOUTH HOPE STREET, LOS ANGELES, CA 90071, ATTENTION:
FUND SECRETARY.
OTHER OFFICERS
YEAR FIRST
ELECTED AN PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS AND
NAME, AGE AND OFFICER OF POSITIONS HELD WITH AFFILIATED ENTITIES OR THE PRINCIPAL
POSITION WITH FUND THE FUND(1) UNDERWRITER OF THE FUND
Stephen E. Bepler, 62 1993 Senior Vice President, Capital Research Company(5)
President
Gregg E. Ireland, 55 1999 Senior Vice President, Capital Research and
Executive Vice President Management Company
Mark E. Denning, 47 1993 Director, Capital Research and Management
Senior Vice President Company; Director, The Capital Group Companies, Inc.;(5) Senior Vice
President, Capital Research Company(5)
Jeanne K. Carroll, 56 2001 Senior Vice President, Capital Research Company(5)
Vice President
Carl M. Kawaja, 40 1997 Senior Vice President, Capital Research Company;(5)
Vice President Director, Capital International, Inc.(5)
Andrew B. Suzman, 37 2003 Executive Vice President and Director, Capital
Vice President Research Company;(5) Director, Capital International Research, Inc.(5)
Steven T. Watson, 49 2001 Senior Vice President and Director, Capital
Vice President Research Company(5)
Vincent P. Corti, 48 1993 Vice President -- Fund Business Management
Secretary Group, Capital Research and Management Company
Jeffrey P. Regal, 33 2003 Vice President -- Fund Business Management
Treasurer Group, Capital Research and Management Company
Sheryl F. Johnson, 36 2003 Vice President -- Fund Business Management
Assistant Treasurer Group, Capital Research and Management Company
(1) Directors and officers of the fund serve until their resignation, removal
or retirement.
(2) Capital Research and Management Company manages the American Funds,
consisting of 29 funds. Capital Research and Management Company also manages
American Funds Insurance Series,(R) which serves as the underlying
investment vehicle for certain variable insurance contracts, and Endowments,
whose shareholders are limited to certain nonprofit organizations.
(3) This includes all directorships (other than those in the American Funds)
that are held by each Director as a director of a public company or a
registered investment company.
(4) "Interested persons" within the meaning of the 1940 Act, on the basis of
their affiliation with the fund's investment adviser, Capital Research and
Management Company, or affiliated entities (including the fund's principal
underwriter).
(5) Company affiliated with Capital Research and Management Company.
OFFICES
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 REGISTERED PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers LLP
350 South Grand Avenue
Los Angeles, CA 90071-2889
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 (and aggregated investments) of $25,000 or more and is eliminated for
purchases of $1 million 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 0.78 percentage points higher than for Class A
shares; Class B shares convert to Class A shares after eight years of ownership.
If redeemed within six years, Class B shares may also be subject to a contingent
deferred sales charge ("CDSC") of up to 5% that declines over time. Class C
shares were subject to annual expenses 0.84 percentage points higher than those
for Class A shares and a 1% CDSC if redeemed within the first year after
purchase. Class C shares convert to Class F shares after 10 years. Class F
shares, which are available only through certain fee-based programs offered by
broker-dealer firms and registered investment advisers, had higher annual
expenses (by 0.08 percentage points) than did Class A shares, and an annual
asset-based fee charged by the sponsoring firm. Expenses are deducted from
income earned by the fund. As a result, dividends and investment results will
differ for each share class.
INVESTORS SHOULD CAREFULLY CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES
AND EXPENSES OF THE AMERICAN FUNDS AND COLLEGEAMERICA. THIS AND OTHER IMPORTANT
INFORMATION IS CONTAINED IN THE FUND'S PROSPECTUS AND THE COLLEGEAMERICA PROGRAM
DESCRIPTION, 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 WWW.SEC.GOV, ON THE AMERICAN
FUNDS WEBSITE OR UPON REQUEST BY CALLING AFS. THE FUND'S PROXY VOTING RECORD FOR
THE 12 MONTHS ENDED JUNE 30, 2004, IS ALSO AVAILABLE ON THE SEC AND AMERICAN
FUNDS WEBSITES.
A complete portfolio of Capital World Growth and Income Fund's investments is
available free of charge on the SEC website or upon request by calling AFS.
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. Forms N-Q are available free of charge on the SEC website or upon
request by calling AFS. You may also review or, for a fee, copy the forms at the
SEC's Public Reference Room in Washington, D.C. (800/SEC-0330).
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 March 31, 2005, this report must be accompanied by an
American Funds statistical update for the most recently completed calendar
quarter.
[logo - American Funds(R)]
The right choice for the long term(R)
WHAT MAKES AMERICAN FUNDS DIFFERENT?
For more than 70 years, we have followed a consistent philosophy that we firmly
believe is in our investors' best interests. The range of opportunities offered
by our family of just 29 carefully conceived, broadly diversified funds has
attracted over 25 million shareholder accounts.
OUR UNIQUE COMBINATION OF STRENGTHS INCLUDES THESE FIVE FACTORS:
o A LONG-TERM, VALUE-ORIENTED APPROACH
Rather than follow fads, we pursue a consistent strategy, focusing on each
investment's long-term potential.
o AN UNPARALLELED GLOBAL RESEARCH EFFORT
American Funds draws on one of the industry's most globally integrated
research networks.
o THE MULTIPLE PORTFOLIO COUNSELOR SYSTEM
Every American Fund is divided among a number of portfolio counselors. Each
takes responsibility for a portion independently, within each fund's
objectives; in most cases, research analysts manage a portion as well. Over
time this method has contributed to a consistency of results and continuity
of management.
o EXPERIENCED INVESTMENT PROFESSIONALS
The recent market decline was not the first for most of the portfolio
counselors who serve the American Funds. More than half of them were in the
investment business before the sharp market decline of 1987.
o A COMMITMENT TO LOW OPERATING EXPENSES
American Funds' operating expenses are among the lowest in the mutual fund
industry. Our portfolio turnover rates are low as well, keeping transaction
costs and tax consequences contained.
29 MUTUAL FUNDS, CONSISTENT PHILOSOPHY, CONSISTENT RESULTS
o GROWTH FUNDS
Emphasis on long-term growth through stocks
AMCAP Fund(R)
EuroPacific Growth Fund(R)
The Growth Fund of America(R)
The New Economy Fund(R)
New Perspective Fund(R)
New World Fund(SM)
SMALLCAP World Fund(R)
o GROWTH-AND-INCOME FUNDS
Emphasis on long-term growth and dividends through stocks
American Mutual Fund(R)
> Capital World Growth and Income Fund(SM)
Fundamental Investors(SM)
The Investment Company of America(R)
Washington Mutual Investors Fund(SM)
o EQUITY-INCOME FUNDS
Emphasis on above-average income and growth through stocks and/or bonds
Capital Income Builder(R)
The Income Fund of America(R)
o BALANCED FUND
Emphasis on long-term growth and current income through stocks and bonds
American Balanced Fund(R)
o BOND FUNDS
Emphasis on current income through bonds
American High-Income Trust(SM)
The Bond Fund of America(SM)
Capital World Bond Fund(R)
Intermediate Bond Fund of America(R)
U.S. Government Securities Fund(SM)
o TAX-EXEMPT BOND FUNDS
Emphasis on tax-free current income through municipal bonds
American High-Income Municipal Bond Fund(R)
Limited Term Tax-Exempt Bond Fund of America(SM)
The Tax-Exempt Bond Fund of America(R)
STATE-SPECIFIC TAX-EXEMPT FUNDS
The Tax-Exempt Fund of California(R)
The Tax-Exempt Fund of Maryland(R)
The Tax-Exempt Fund of Virginia(R)
o MONEY MARKET FUNDS
The Cash Management Trust of America(R)
The Tax-Exempt Money Fund of America(SM)
The U.S. Treasury Money Fund of America(SM)
THE CAPITAL GROUP COMPANIES
American Funds
Capital Research and Management
Capital International
Capital Guardian
Capital Bank and Trust
Lit. No. MFGEAR-933-0105P
Litho in USA WG/CG/8072-S1924
Printed on recycled paper
ITEM 2 - Code of Ethics
The Registrant has adopted a Code of Ethics that applies to its Principal
Executive Officer and Principal Financial Officer. The Registrant undertakes to
provide to any person without charge, upon request, a copy of the Code of
Ethics. Such request can be made to American Funds Service Company at
800/421-0180 or to the Secretary of the Registrant, 333 South Hope Street, Los
Angeles, California 90071.
ITEM 3 - Audit Committee Financial Expert
The Registrant's Board has determined that Steadman Upham, a member of the
Registrant's Audit Committee, is an "audit committee financial expert" and
"independent," as such terms are defined in this Item. This designation will not
increase the designee's duties, obligations or liability as compared to his
duties, obligations and liability as a member of the Audit Committee and of the
Board; nor will it reduce the responsibility of the other Audit Committee
members. There may be other individuals who, through education or experience,
would qualify as "audit committee financial experts" if the Board had designated
them as such. Most importantly, the Board believes each member of the Audit
Committee contributes significantly to the effective oversight of the
Registrant's financial statements and condition.
ITEM 4 - Principal Accountant Fees and Services
Fees billed by the Registrant's auditors for each of the last two fiscal years,
including fees for non-audit services billed to the adviser and affiliates for
engagements that relate directly to the operations and financial reporting of
the Registrant, and a description of the nature of the services comprising the
fees, are listed below:
Registrant:
a) Audit Fees:
2003 $65,000
2004 $73,000
b) Audit- Related Fees:
2003 none
2004 none
c) Tax Fees:
2003 $10,000
2004 $10,000
The tax fees consist of professional
services relating to the preparation of the
Registrant's tax returns including returns
relating to the registrant's investments in
non-U.S. jurisdictions.
d) All Other Fees:
2003 none
2004 none
Adviser and affiliates (includes only fees for non-audit
services billed to the adviser and affiliates for engagements
that relate directly to the operations and financial reporting
of the Registrant and were subject to the pre-approval
policies described below):
b) Audit- Related Fees:
2003 none
2004 none
c) Tax Fees:
2003 none
2004 none
d) All Other Fees:
2003 none
2004 none
The Registrant's Audit Committee will pre-approve all audit and permissible
non-audit services that the Committee considers compatible with maintaining the
auditors' independence. The pre-approval requirement will extend to all
non-audit services provided to the Registrant, the investment adviser, and any
entity controlling, controlled by, or under common control with the investment
adviser that provides ongoing services to the Registrant, if the engagement
relates directly to the operations and financial reporting of the registrant.
The Committee will not delegate its responsibility to pre-approve these services
to the investment adviser. The Committee may delegate to one or more Committee
members the authority to review and pre-approve audit and permissible non-audit
services. Actions taken under any such delegation will be reported to the full
Committee at its next meeting. The pre-approval requirement is waived with
respect to non-audit services if certain conditions are met. The pre-approval
requirement was not waived for any of the services listed above under paragraphs
b, c and d.
Aggregate non-audit fees paid to the Registrant's auditors, including fees for
all services billed to the Registrant and the adviser and affiliates that
provide ongoing services to the Registrant were $10,000 for fiscal year 2003 and
$10,000 for fiscal year 2004. The non-audit services represented by these
amounts were brought to the attention of the Committee and considered to be
compatible with maintaining the auditors' independence.
ITEM 5 - Audit Committee of Listed Registrants
Not applicable.
ITEM 6 - Schedule of Investments
[logo - American Funds (r)]
CAPITAL WORLD GROWTH AND INCOME FUND
INVESTMENT PORTFOLIO
November 30, 2004
Market value
COMMON STOCKS -- 86.97% Shares (000)
FINANCIALS -- 17.36%
HSBC Holdings PLC (United Kingdom) 17,588,049 $299,488
HSBC Holdings PLC (Hong Kong) 2,749,236 47,028
Lloyds TSB Group PLC 33,015,000 265,788
Societe Generale 2,560,000 247,098
ING Groep NV 8,771,575 241,236
Fortis 9,084,100 239,452
Bank Austria Creditanstalt 2,517,406 214,056
J.P. Morgan Chase & Co. 5,300,000 199,545
ABN AMRO Holding NV 7,058,458 173,303
Shinhan Financial Group Co., Ltd. 8,155,100 170,806
Royal Bank of Scotland Group PLC 4,655,000 143,050
Bank of America Corp. 2,955,300 136,742
Fubon Financial Holding Co., Ltd. 136,046,000 136,468
Mitsui Sumitomo Insurance Co., Ltd. 14,509,000 127,855
PartnerRe Holdings Ltd. 2,070,000 126,725
Washington Mutual, Inc. 3,030,000 123,351
UFJ Holdings, Inc.(1) 23,000 121,875
Allied Capital Corp. 3,798,000 104,901
Willis Group Holdings Ltd. 2,750,000 104,087
Sompo Japan Insurance Inc. 10,744,000 102,810
DnB NOR ASA 10,680,600 100,663
National Savings and Commercial Bank Ltd. (GDR) 1,550,000 89,125
Allstate Corp. 1,700,000 85,850
Deutsche Borse AG 1,350,000 79,905
Cathay Financial Holding Co., Ltd. 39,000,000 75,093
St. George Bank Ltd. 3,502,460 65,314
Hongkong Land Holdings Ltd. 25,421,800 64,826
NIPPONKOA Insurance Co., Ltd. 10,072,000 60,800
Berkshire Hathaway Inc., Class A(1) 718 60,097
Credit Agricole SA 2,000,000 59,202
Fannie Mae 840,000 57,708
Marsh & McLennan Companies, Inc. 2,000,000 57,180
Chubb Corp. 750,000 57,157
Swire Pacific Ltd., Class A 7,000,000 56,269
Hang Lung Group Ltd. 27,537,000 51,709
Westpac Banking Corp. 3,595,111 51,490
ICICI Bank Ltd. 6,569,700 50,170
Hang Lung Properties Ltd. 30,762,000 48,071
Unibail Holding 304,000 43,136
Skandinaviska Enskilda Banken AB, Class A 2,180,000 41,518
Freddie Mac 600,000 40,956
ForeningsSparbanken AB, Class A 1,600,000 39,399
Millea Holdings, Inc. 2,766 38,924
Developers Diversified Realty Corp. 900,000 38,745
Bank of Nova Scotia 1,200,000 37,787
Wachovia Corp. 724,000 37,467
U.S. Bancorp 1,200,000 35,556
Hysan Development Co. Ltd. 16,918,847 34,381
Nippon Building Fund, Inc. 3,850 33,590
QBE Insurance Group Ltd. 2,950,970 31,801
Wells Fargo & Co. 500,000 30,885
Chinatrust Financial Holding Co. Ltd. 26,331,099 30,093
Kimco Realty Corp. 525,000 29,862
Brascan Corp., Class A 785,000 28,064
Royal Bank of Canada 518,400 27,236
XL Capital Ltd., Class A 355,000 26,753
Genworth Financial, Inc., Class A 1,000,000 26,300
Aioi Insurance Co. Ltd. 5,561,000 24,556
Malayan Banking Bhd. 7,535,300 23,796
American International Group, Inc. 370,000 23,439
Sun Life Financial Inc. 726,480 23,329
National Australia Bank Ltd. 1,000,000 21,676
Erste Bank der oesterreichischen Sparkassen AG 380,000 19,331
Japan Real Estate Investment Corp. 2,241 18,617
Fairfax Financial Holdings Ltd. 111,000 18,477
HBOS PLC 1,087,214 15,220
Bank of the Philippine Islands 14,403,696 13,092
Deutsche Bank AG 60,000 5,082
HKR International Ltd. 4,824,800 2,560
Security Capital European Realty(1),(2),(3) 82,516 1,395
5,359,316
CONSUMER DISCRETIONARY -- 10.47%
Continental AG 4,404,650 268,315
Daito Trust Construction Co., Ltd. 4,596,700 207,886
Toyota Motor Corp. 4,500,000 168,575
Yamada Denki Co., Ltd. 3,766,000 161,546
Lowe's Companies, Inc. 2,575,000 142,475
Publishing & Broadcasting Ltd. 10,565,000 127,727
InterContinental Hotels Group PLC 9,823,267 125,124
Target Corp. 2,327,500 119,215
Daimaru, Inc. 13,518,000 113,087
Time Warner Inc.(1) 6,180,000 109,448
Reuters Group PLC 13,736,600 100,808
Harrah's Entertainment, Inc. 1,620,000 99,468
Bayerische Motoren Werke AG 2,355,000 99,435
Kingfisher PLC 17,280,197 95,110
Carnival Corp., units 1,760,000 93,298
Dixons Group PLC 32,882,596 91,592
News Corp. Inc., Class A 2,960,191 52,366
News Corp. Inc., Class B 1,755,003 31,748
Pearson PLC 6,954,000 81,599
Volkswagen AG, nonvoting preferred 2,000,000 65,473
Kesa Electricals PLC 15,105,010 78,086
Limited Brands, Inc. 3,107,517 75,948
Rank Group PLC 12,500,000 72,502
Fairmont Hotels & Resorts Inc. 1,750,000 54,285
TJX Companies, Inc. 2,200,000 51,788
Suzuki Motor Corp. 2,865,000 51,689
Makita Corp. 3,335,000 51,494
Hyundai Motor Co., nonvoting preferred, Series (2) 1,757,190 50,301
Fuji Heavy Industries Ltd. 10,869,000 50,210
John Fairfax Holdings Ltd. 15,223,960 50,100
Honda Motor Co., Ltd. 1,005,000 48,085
Li & Fung Ltd. 22,026,000 36,828
DaimlerChrysler AG 784,200 35,060
Best Buy Co., Inc. 500,000 28,190
Gap, Inc. 1,100,000 24,035
CarMax, Inc.(1) 850,000 23,672
Comcast Corp., Class A(1) 700,000 21,028
LG Electronics Inc. 340,000 20,536
Mediaset SpA 1,400,000 16,943
Metropole Television 615,000 15,933
General Motors Corp. 375,000 14,471
Sony Corp. 135,400 4,928
TI Automotive Ltd., Class A(1),(3) 1,068,000 --
3,230,407
CONSUMER STAPLES -- 9.85%
Altria Group, Inc. 10,257,000 589,675
Unilever NV 2,525,000 158,712
Unilever NV (New York registered) 2,478,000 156,114
Diageo PLC 22,350,000 312,660
Nestle SA 933,000 239,577
Imperial Tobacco Group PLC 7,191,413 187,324
Foster's Group Ltd. 44,635,814 186,198
Reynolds American Inc. 1,900,000 143,697
Nissin Food Products Co., Ltd. 4,986,500 123,888
Gallaher Group PLC 7,650,000 106,214
Kimberly-Clark de Mexico, SA de CV, Class A, ordinary participation certificates 28,746,100 95,935
Orkla AS 2,985,714 92,094
Altadis, SA 2,240,000 91,425
Loblaw Companies Ltd. 1,440,000 82,651
Woolworths Ltd. 5,591,041 64,786
Swedish Match AB 5,500,550 62,404
Uni-Charm Corp. 1,305,000 60,412
Groupe Danone 593,000 52,826
Fomento Economico Mexicano, SA de CV (ADR) 1,053,700 50,346
Coca-Cola Co. 1,150,000 45,206
UST Inc. 655,900 28,879
Koninklijke Ahold NV(1) 3,590,000 26,424
Unilever PLC 2,100,000 19,224
SABMiller PLC 850,716 14,315
Procter & Gamble Co. 225,000 12,033
Royal Numico NV(1) 310,000 11,038
KT&G Corp. 330,980 10,548
Coca-Cola HBC SA 352,182 8,684
AEON CO., LTD. 188,200 3,176
Wolverhampton & Dudley Breweries, PLC 164,256 2,871
3,039,336
TELECOMMUNICATION SERVICES -- 9.69%
Vodafone Group PLC 156,000,000 423,347
France Telecom, SA 9,516,000 298,753
Chunghwa Telecom Co., Ltd. 64,829,000 128,853
Chunghwa Telecom Co., Ltd. (ADR) 4,335,000 90,385
Portugal Telecom, SGPS, SA 16,803,550 198,694
KT Corp. (ADR) 6,865,120 148,630
KT Corp. 859,940 34,709
Telekom Austria AG 8,949,197 152,191
Telefonica, SA 7,498,120 131,698
Telecom Italia SpA, nonvoting 44,856,571 123,722
Royal KPN NV 14,194,600 123,149
TDC A/S 2,661,165 109,127
Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk, Class B 196,175,000 108,708
Swisscom AG 259,389 101,845
SBC Communications Inc. 4,000,000 100,680
Telefonos de Mexico, SA de CV, Class L (ADR) 2,741,737 95,988
America Movil SA de CV, Series L (ADR) 1,998,400 93,345
Advanced Info Service PCL 36,520,100 90,883
Verizon Communications Inc. 2,150,000 88,644
BT Group PLC 15,000,000 55,756
COSMOTE Mobile Telecommunications SA 2,729,270 49,388
China Unicom Ltd. 54,134,600 41,775
BellSouth Corp. 1,554,000 41,678
Sprint Corp. -- FON Group 1,800,000 41,058
Eircom Group PLC(1) 16,149,984 36,477
KDDI Corp. 7,200 35,497
Deutsche Telekom AG(1) 1,265,000 26,857
Telecom Corp. of New Zealand Ltd. 2,400,000 10,368
BCE Inc. 336,865 8,183
2,990,388
MATERIALS -- 8.67%
Cia. Vale do Rio Doce, Class A, preferred nominative 9,854,400 202,661
Cia. Vale do Rio Doce, ordinary nominative (ADR) 2,671,000 66,294
Barrick Gold Corp. 9,449,100 232,353
Dow Chemical Co. 4,250,000 214,497
BASF AG 2,840,000 191,076
AngloGold Ashanti Ltd. 4,650,000 187,437
Phelps Dodge Corp. 1,500,000 145,695
Freeport-McMoRan Copper & Gold Inc., Class B 3,569,800 139,686
Potash Corp. of Saskatchewan Inc. 1,600,000 122,528
Norske Skogindustrier ASA, Class A 4,870,000 103,323
L'Air Liquide 554,500 95,846
Gold Fields Ltd. 6,500,000 92,256
Formosa Chemicals & Fibre Corp. 48,200,000 89,814
Newcrest Mining Ltd. 6,000,000 81,020
James Hardie Industries Ltd. 17,450,000 78,050
Formosa Plastics Corp. 47,400,000 75,811
Georgia-Pacific Corp., Georgia-Pacific Group 1,998,300 73,158
UPM-Kymmene Corp. 2,784,000 62,695
Impala Platinum Holdings Ltd. 702,389 60,155
Lyondell Chemical Co.(1) 1,820,500 51,083
DSM NV 834,828 50,200
POSCO 256,730 47,892
Nan Ya Plastics Corp. 26,200,000 37,673
Weyerhaeuser Co. 540,000 35,640
Sonoco Products Co. 1,200,000 34,128
International Paper Co. 600,000 24,912
Smurfit-Stone Container Corp.(1) 974,200 17,497
Stora Enso Oyj (ADR) 1,086,300 17,261
Sappi Ltd. 1,239,000 16,845
M-real Oyj, Class B 2,369,500 15,426
Yara International ASA(1) 1,131,800 14,546
2,677,458
ENERGY -- 7.20%
"Shell" Transport and Trading Co., PLC 37,390,000 314,407
Royal Dutch Petroleum Co. (New York registered) 3,280,000 187,813
"Shell" Transport and Trading Co., PLC (ADR) (New York registered) 1,325,000 67,071
Royal Dutch Petroleum Co. 887,000 50,792
TOTAL SA 940,000 205,691
TOTAL SA (ADR) 250,000 27,400
ENI SpA 6,415,000 157,402
Husky Energy Inc. 5,165,000 150,684
Norsk Hydro ASA 1,665,900 136,346
SK Corp. 1,810,400 114,186
Petroleo Brasileiro SA -- Petrobras, ordinary nominative (ADR) 1,550,000 59,148
Petroleo Brasileiro SA -- Petrobras, preferred nominative (ADR) 1,560,000 53,789
Oil & Natural Gas Corp. Ltd. 5,858,000 107,298
Shell Canada Ltd. 1,425,300 95,092
Petro-Canada 1,533,000 87,499
Canadian Oil Sands Trust(2) 1,100,000 59,413
Canadian Oil Sands Trust 30,041 1,623
Sunoco, Inc. 658,900 54,399
Reliance Industries Ltd. 4,367,000 50,752
Williams Companies, Inc. 2,815,000 46,926
Exxon Mobil Corp. 800,000 41,000
Kinder Morgan, Inc. 516,590 35,800
Marathon Oil Corp. 670,000 26,425
IHC Caland NV 418,259 25,579
Sasol Ltd. 1,100,000 21,947
Schlumberger Ltd. 300,000 19,689
Unocal Corp. 320,000 14,733
Enbridge Inc. 230,000 11,135
2,224,039
HEALTH CARE -- 5.76%
Novo Nordisk A/S, Class B 4,966,000 263,823
AstraZeneca PLC (Sweden) 6,399,800 251,859
Sanofi-Aventis 3,204,900 241,217
Fresenius Medical Care AG 2,050,000 159,877
Fresenius Medical Care AG, preferred 1,300,000 72,386
Bristol-Myers Squibb Co. 4,540,000 106,690
Merck KGaA 1,791,000 103,723
Eli Lilly and Co. 1,550,000 82,661
Kuraya Sanseido Inc. 8,397,600 77,831
Forest Laboratories, Inc.(1) 1,865,000 72,679
CIGNA Corp. 900,000 63,018
Pfizer Inc 2,235,000 62,066
Shionogi & Co., Ltd. 4,494,000 60,536
HCA Inc. 1,180,000 46,516
Sepracor Inc.(1) 1,000,000 44,510
Ranbaxy Laboratories Ltd. 1,665,000 41,979
ALTANA AG 508,600 27,813
1,779,184
INDUSTRIALS -- 4.50%
Sandvik AB 6,162,500 249,397
Wesfarmers Ltd. 6,435,000 189,894
General Electric Co. 3,800,000 134,368
Singapore Technologies Engineering Ltd. 92,500,000 119,734
Qantas Airways Ltd. 39,605,128 109,530
Atlas Copco AB, Class A 2,240,000 98,652
Tyco International Ltd. 2,500,000 84,925
3M Co. 975,000 77,600
Multiplex Group 15,241,585 53,101
Furukawa Electric Co., Ltd.(1) 9,900,000 49,096
Brambles Industries Ltd. 6,600,000 35,944
United Parcel Service, Inc., Class B 410,000 34,502
Vedior NV 2,000,000 33,534
FANUC LTD 400,000 24,961
Tostem Inax Holding Corp. 1,300,000 22,899
Asahi Diamond Industrial Co., Ltd.(4) 3,950,000 21,429
Brambles Industries PLC 4,000,000 19,952
Singapore Post Private Ltd. 32,160,000 16,789
Fluor Corp. 257,900 13,385
Ainax AB(1) 1,251 50
1,389,742
INFORMATION TECHNOLOGY -- 4.34%
ASML Holding NV (New York registered)(1) 5,105,000 77,851
ASML Holding NV(1) 4,868,000 74,636
Sun Microsystems, Inc.(1) 20,500,000 113,775
Murata Manufacturing Co., Ltd. 2,116,000 110,482
Taiwan Semiconductor Manufacturing Co. Ltd. 69,976,131 102,791
Hewlett-Packard Co. 5,130,000 102,600
Xerox Corp.(1) 6,500,000 99,580
Microsoft Corp. 3,450,000 92,495
Intersil Corp., Class A 5,250,000 84,525
Samsung SDI Co., Ltd. 765,000 78,471
Samsung Electronics Co., Ltd. 148,600 61,609
International Business Machines Corp. 590,000 55,602
Solectron Corp.(1) 8,788,720 54,930
Delta Electronics, Inc. 24,122,700 37,458
Compuware Corp.(1) 6,050,600 34,912
Hoya Corp. 300,000 31,211
STMicroelectronics NV 1,450,000 29,128
Texas Instruments Inc. 1,000,000 24,180
Analog Devices, Inc. 600,000 22,170
Agilent Technologies, Inc.(1) 950,000 21,746
Motorola, Inc. 578,040 11,133
Agere Systems Inc., Class A(1) 6,465,156 8,857
Quanta Computer Inc. 4,635,516 7,558
Kyoden Co., Ltd. 200,000 1,328
1,339,028
UTILITIES -- 4.31%
E.ON AG 2,970,714 249,957
Scottish Power PLC 25,760,000 190,274
Gas Natural SDG, SA 6,344,500 181,230
National Grid Transco PLC 13,745,000 125,758
National Grid Transco PLC (ADR) 439,725 20,219
Korea Electric Power Corp. 5,343,280 133,582
GAIL (India) Ltd. 15,440,000 75,656
Southern Co. 1,450,000 47,546
Dominion Resources, Inc. 698,531 45,733
Hong Kong and China Gas Co. Ltd. 19,118,000 39,465
Exelon Corp. 875,000 36,496
FirstEnergy Corp. 780,000 32,939
Equitable Resources, Inc. 525,000 31,238
American Electric Power Co., Inc. 700,000 23,919
FPL Group, Inc. 300,000 21,099
NiSource Inc. 900,000 19,611
Xcel Energy Inc. 925,000 16,706
United Utilities PLC 1,000,000 10,759
United Utilities PLC, Class A 555,555 3,952
Ameren Corp. 250,000 12,105
Consolidated Edison, Inc. 180,000 7,893
DTE Energy Co. 87,100 3,822
1,329,959
MISCELLANEOUS -- 4.82%
Other common stocks in initial period of acquisition 1,487,375
TOTAL COMMON STOCKS (cost: $20,669,690,000) 26,846,232
Shares or
CONVERTIBLE SECURITIES -- 1.80% principal amount
INFORMATION TECHNOLOGY -- 0.61%
ASML Holding NV 5.50% convertible notes 2010 Euro 38,000,000 61,014
Xerox Capital Trust II 7.50% convertible preferred 2021(2) 500,000 42,370
Nortel Networks Corp. 4.25% convertible notes 2008 $40,000,000 38,550
Agere Systems Inc. 6.50% convertible notes 2009 $34,000,000 35,955
Corning Inc. 3.50% convertible debentures 2008 $7,000,000 9,161
187,050
CONSUMER DISCRETIONARY -- 0.49%
Ford Motor Co. Capital Trust II 6.50% cumulative convertible trust preferred
2032 2,496,050 130,918
Gap, Inc. 5.75% convertible notes 2009(2) $15,000,000 20,737
151,655
FINANCIALS -- 0.26%
Capital One Financial Corp. 6.25% Upper DECS 2005, units 600,000 units 32,340
LG Card Co., Ltd., 3.00% convertible bond-warrants, expire 2009(1) KRW 29,463,900,000 25,106
Travelers Property Casualty Corp. 4.50% convertible subordinated note 2032 $500,000 11,550
SMFG Finance (Cayman) Ltd. 2.25% mandatorily exchangeable preferred 2005, units 510,000,000 11,304
80,300
TELECOMMUNICATION SERVICES -- 0.14%
Crown Castle International Corp. 6.25% convertible preferred 2012(1) 571,200 27,852
Deutsche Telekom International Finance BV 6.50% convertible bonds 2006 Euro 10,000,000 15,893
43,745
MATERIALS -- 0.08%
Freeport-McMoRan Copper & Gold Inc. 5.50% convertible preferred(2) 20,000 19,550
Arcelor SA 3.875% convertible preferred 2005 210,000 6,130
25,680
INDUSTRIALS -- 0.08%
Tyco International Group SA, Series B, 3.125% convertible debentures 2023 $15,000,000 $ 24,431
UTILITIES -- 0.07%
Korea Deposit Insurance Corp. 2.25% convertible debentures 2005(2) $17,700,000 21,948
HEALTH CARE -- 0.07%
Baxter International Inc. 7.00% convertible preferred 2006 400,000 units 21,228
TOTAL CONVERTIBLE SECURITIES (cost: $503,271,000) 556,037
Principal amount
BONDS AND NOTES -- 0.63% (000)
GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS -- 0.19%
United Mexican States Government, Series MI1, 8.00% 2013 MXP 400,916 31,008
United Mexican States Government, Series M20, 8.00% 2023 399,084 27,638
58,646
INFORMATION TECHNOLOGY -- 0.17%
Solectron Corp. 9.625% 2009 $40,000 44,300
Flextronics International Ltd. 6.50% 2013 10,000 10,150
54,450
CONSUMER STAPLES -- 0.08%
Ahold Finance U.S.A., Inc. 6.25% 2009 9,065 9,450
Ahold Finance U.S.A., Inc. 8.25% 2010 12,990 14,744
24,194
TELECOMMUNICATION SERVICES -- 0.08%
AT&T Wireless Services, Inc. 8.125% 2012 20,000 23,978
ENERGY -- 0.08%
El Paso Corp. 7.875% 2012 14,500 15,007
Premcor Refining Group Inc. 7.50% 2015 8,000 8,760
23,767
HEALTH CARE -- 0.03%
HCA -- The Healthcare Co. 8.75% 2010 9,000 10,240
MATERIALS -- 0.00%
APP International Finance Co. BV 11.75% 2005(5) 1,150 581
TOTAL BONDS AND NOTES (cost: $176,061,000) 195,856
Principal amount Market value
SHORT-TERM SECURITIES -- 10.35% (000) (000)
Danske Corp. 1.85%-2.24% due 12/9/2004-1/31/2005 150,000 149,714
Sheffield Receivables Corp. 2.02%-2.17% due 12/8/2004-1/24/2005(2) 115,000 114,814
Barclays U.S. Funding Corp. 2.22% due 1/24/2005 35,000 34,881
Spintab AB (Swedmortgage) 1.87%-2.27% due 12/15/2004-1/31/2005 150,000 149,657
Dexia Delaware LLC 1.955%-2.205% due 12/29/2004-1/28/2005 150,000 149,589
HBOS Treasury Services PLC 2.05%-2.33% due 1/10-2/28/2005 150,000 149,407
IXIS Commercial Paper Corp. 2.20%-2.23% due 1/27-2/10/2005(2) 150,000 149,356
Barton Capital Corp. 1.98%-2.13% due 12/10/2004-1/19/2005(2) 100,000 99,774
Societe Generale North America Inc. 1.93% due 12/28/2004 26,100 26,060
ANZ (Delaware) Inc. 2.00%-2.215% due 12/17/2004-2/14/2005 125,000 124,643
Stadshypotek Delaware Inc. 2.165% due 1/18-1/20/2005(2) 100,000 99,692
Svenska Handelsbanken Inc. 2.26% due 2/2/2005 25,000 24,899
Amersterdam Funding Corp. 1.88%-2.05% due 12/3/2004-1/5/2005(2) 115,000 114,873
Bank of Ireland 1.97%-2.24% due 12/17/2004-2/11/2005(2) 114,900 114,455
Calyon North America Inc. 1.93%-2.185% due 12/22/2004-1/21/2005 100,000 99,998
BNP Paribas Finance Inc. 1.82%-2.18% due 12/2/2004-1/21/2005 100,000 99,839
CBA (Delaware) Finance Inc. 2.02%-2.25% due 1/5-2/22/2005 100,000 99,588
Toyota Motor Credit Corp. 2.04%-2.05% due 1/11-1/19/2005 91,800 91,545
Westpac Capital Corp. 2.00%-2.01% due 1/6-1/18/2005 63,350 63,183
Westpac Trust Securities NZ Ltd. 2.115% due 1/27/2005 22,300 22,220
KfW International Finance Inc. 2.01%-2.22% due 12/14/2004-2/18/2005(2) 85,000 84,747
DaimlerChrysler Revolving Auto Conduit LLC II 2.00%-2.25% due
12/20/2004-1/19/2005 83,114 82,974
HSBC USA Inc. 1.825%-2.09% due 12/15/2004-1/10/2005 75,000 74,899
Ciesco LLC 2.00%-2.13% due 1/6/2005(2) 75,000 74,839
Bank of Nova Scotia 1.89%-2.17% due 12/20/2004-1/20/2005 75,000 74,816
American Honda Finance Corp. 2.05%-2.14% due 1/5-1/12/2005 60,000 59,860
Royal Bank of Scotland PLC 1.86%-2.05% due 12/14/2004-1/14/2005 57,000 56,909
Toronto-Dominion Bank 1.87%-2.205% due 12/13/2004-1/24/2005 50,000 49,999
Rabobank USA Financial Corp. 1.80%-1.84% due 12/1-12/7/2004 50,000 49,990
Siemens Capital Co. LLC 2.02% due 12/16/2004 50,000 49,955
Canadian Imperial Holdings Inc. 2.11% due 1/12/2005 50,000 49,872
Allied Irish Banks N.A. Inc. 1.93%-2.245% due 12/22/2004-2/15/2005(2) 50,000 49,848
GlaxoSmithKline Finance PLC 2.03%-2.19% due 1/20-1/27/2005 50,000 49,833
Freddie Mac 2.15% due 1/26/2005 50,000 49,822
U.S. Treasury Bills 2.03% due 2/3/2005 50,000 49,818
Caisse d'Amortissement de la Dette Sociale 1.92%-1.97% due 12/6-12/13/2004 49,400 49,374
Wells Fargo & Co. 2.03%-2.20% due 1/11-2/4/2005 44,500 44,495
Edison Asset Securitization LLC 2.25% due 1/28/2005(2) 40,000 39,852
Total Capital SA 2.01%-2.04% due 12/30/2004(2) 39,500 39,433
Shell Finance (U.K.) PLC 2.20% due 2/2/2005 30,000 29,881
Thunder Bay Funding, LLC 2.00%-2.20% due 1/7-1/13/2005(2) 25,600 25,535
Nestle Capital Corp. 1.85% due 12/16/2004(2) 25,000 24,979
European Investment Bank 2.00% due 1/4/2005 25,000 24,950
Gaz de France 2.01% due 12/13/2004 21,800 21,784
Telstra Corp. Ltd. 1.95% due 12/30/2004 7,700 7,686
TOTAL SHORT-TERM SECURITIES (cost: $3,194,550,000) 3,194,337
TOTAL INVESTMENT SECURITIES (cost: $24,543,572,000) 30,792,462
Other assets less liabilities 76,486
NET ASSETS $30,868,948
Miscellaneous securities include holdings in their initial period of acquisition
that have not previously been publicly disclosed.
(1) Security did not produce income during the last 12 months.
(2) Purchased in a private placement transaction; resale may be limited to
qualified institutional buyers; resale to the public may require
registration. The total value of all such restricted securities was
$1,197,610,000, which represented 3.88% of the net assets of the fund.
(3) Valued under fair value procedures adopted by authority of the Board of
Directors.
(4) Represents an affiliated company as defined under the Investment Company
Act of 1940.
(5) Company not making scheduled interest payments; bankruptcy proceedings
pending.
ADR = American Depositary Receipts
GDR = Global Depositary Receipts
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of
Capital World Growth and Income, Inc.:
We have audited, in accordance with standards of the Public Company Accounting
Oversight Board (United States), the financial statements of Capital World
Growth and Income, Inc. (the "Fund") as of November 30, 2004, and for the year
then ended and have issued our unqualified report thereon dated January 3, 2005
(which report and financial statements are included in Item 1 of this Certified
Shareholder Report on Form N-CSR). Our audit included an audit of the Fund's
investment portfolio (the "Portfolio") as of November 30, 2004 appearing in Item
6 of this Form N-CSR. This Portfolio is the responsibility of the Fund's
management. Our responsibility is to express an opinion on this portfolio based
on our audit.
In our opinion, the Portfolio referred to above, when read in conjunction with
the financial statements of the Fund referred to above, presents fairly, in all
material respects, the information set forth therein.
PricewaterhouseCoopers LLP
Los Angeles, California
January 3, 2005
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 - 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.
ITEM 9 - Submission of Matters to a Vote of Security Holders
There have been no material changes to the procedures by which shareholders may
recommend nominees to the Registrant's Board of 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.
ITEM 10 - Controls and Procedures
The Registrant's Principal Executive Officer and Principal Financial Officer
have concluded, based on their evaluation of the Registrant's disclosure
controls and procedures (as such term is defined in Rule 30a-3 under the
Investment Company Act of 1940), that such controls and procedures are adequate
and reasonably designed to achieve the purposes described in paragraph (c) of
such rule.
There were no changes in the Registrant's internal controls over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940)
that occurred during the Registrant's second fiscal quarter of the period
covered by this report that has materially affected, or is reasonably likely to
materially affect, the Registrant's internal control over financial reporting.
ITEM 11 - Exhibits
(a) The Code of Ethics that is the subject of the disclosure required by Item 2
is attached as an exhibit hereto.
(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: February 7, 2005
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
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Stephen E. Bepler, President and PEO
Date: February 7, 2005
By /s/ Jeffrey P. Regal
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Jeffrey P. Regal, Treasurer and PFO
Date: February 7, 2005