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, 2005
Date of reporting period: May 31, 2005
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
[photo of small bowls filled with spices]
Semi-annual report for the six months ended May 31, 2005
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 organization ranks among the
nation's three largest mutual fund families. For more than seven decades,
Capital Research and Management Company,(SM) the American Funds adviser, has
invested with a long-term focus based on thorough research and attention to
risk.
FIGURES SHOWN ARE PAST RESULTS FOR CLASS A SHARES AND ARE NOT PREDICTIVE OF
RESULTS IN FUTURE PERIODS. CURRENT AND FUTURE RESULTS MAY BE LOWER OR HIGHER
THAN THOSE SHOWN. SHARE PRICES AND RETURNS WILL VARY, SO INVESTORS MAY LOSE
MONEY. 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 June 30, 2005 (the most recent
calendar quarter):
1 year 5 years 10 years
Class A shares
Reflecting 5.75% maximum sales charge +9.58% +6.43% +12.69%
The fund's investment adviser waived 5% of its management fees from September 1,
2004, through March 31, 2005, and increased the waiver to 10% on April 1, 2005.
Fund results shown reflect the waiver, without which they would have been lower.
Please see the Financial Highlights table on page 22 for details.
The fund's 30-day yield for Class A shares as of June 30, 2005, reflecting the
5.75% maximum sales charge and calculated in accordance with the Securities and
Exchange Commission formula, was 2.18%, which reflects a fee waiver (2.14%
without the fee waiver).
Results for other share classes can be found on page 28. Please see the inside
back cover for important information about other share classes.
Investing 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]
For the six months ended May 31, 2005, Capital World Growth and Income Fund
recorded a total return of 2.5%. During this time, many overseas stock markets
produced better results in local currency terms than did the U.S. stock market.
However, the fund's returns from non-U.S. markets were broadly reduced by a
stronger U.S. dollar. Consequently, results for the period were modest overall.
This was evidenced in the return for the fund's benchmark, the unmanaged MSCI
World Index, which also totaled 2.5%. In comparison, the global funds tracked by
Lipper produced an average return of 1.9%. Over longer, more meaningful periods,
the fund has consistently done better than either of these references, as can be
seen in the table below.
[Begin Sidebar]
RESULTS AT A GLANCE
(as of May 31, 2005, 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 +16.1% +7.9% +13.2% +13.5%
MSCI World Index(1) +11.9 -1.2 +7.4 +8.5
Lipper global funds average(2) +10.7 -0.6 +7.8 +8.4
(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 United States and that
may own U.S. securities as well. Lipper averages do not reflect the effects
of sales charges.
[End Sidebar]
During the recent six-month period, shareholders received dividends totaling 45
cents a share (including the 20 cents-a-share special dividend paid in December)
and a capital gain distribution of nearly 80 cents a share. The dividends amount
to an income return of 1.35% for those who reinvested them.
A LOOK AT GLOBAL MARKETS
Beginning in 2003, global stock markets rallied in anticipation of stronger
economic growth among the world's leading economies. But during the first half
of the current fiscal year, prospects for continued growth dimmed somewhat in
several major countries, and that has had a restraining effect on stock markets
in general.
The foremost example is the United States, where stocks returned 2.8%* for the
reporting period, the result of three positive and three negative months of
returns. The sluggish gains are partly a result of expectations for moderating
economic growth and corporate profits over the year ahead. In addition,
investors remain concerned about higher interest rates going forward and the
dampening effect of continued high oil and gasoline prices. The United States is
home to 20.8% of the fund's holdings, the largest country representation in the
portfolio.
*Country returns are based on MSCI indexes for the six months ended May 31,
2005, assume reinvestment of dividends, and are expressed in U.S. dollar terms,
except where noted.
To our north, Canada's economy benefited from sustained consumer demand in the
United States, its largest trading partner. Canadian stocks rose 7.8% in local
currency terms, but a stronger U.S. dollar reduced that gain to 2.2% for U.S.
investors.
In Europe, the economic picture varied widely. Countries as diverse as Spain,
the United Kingdom and Norway have posted solid growth recently, while Europe's
two largest economies, France and Germany, appear mired in sluggish growth
patterns. At the same time, Italy and the Netherlands are verging on recessions.
Nonetheless, returns from most European stock markets bested U.S. returns for
the period, many reaching double digits when measured in local currencies.
Unfortunately, those returns were diminished by a strengthening U.S. dollar,
which rose 8% against the euro, 5% against the British pound and 10% against the
Swiss franc. The fund's largest European exposures, as detailed in the chart at
right, posted the following returns in U.S. dollars: United Kingdom, 2.6%;
France, 3.9%; Germany, 0.7%; Netherlands, 3.0%; and Switzerland, 4.6%.
Altogether, European stocks represent 37.3% of the fund's holdings.
Returns for developed markets in the Asia-Pacific region were similarly
restrained by a rising U.S. dollar and lower expectations for economic activity.
Japanese stocks, which are the fund's largest exposure in the region, declined
marginally (0.9%), while Australian stocks rose 4.8%.
[Begin Sidebar]
WHERE THE FUND'S ASSETS WERE INVESTED
Percent of net assets by country as of May 31, 2005
[begin pie chart]
The Americas 27.1%
Asia/Pacific 22.4%
Bonds, cash & equivalents 11.7%
Europe 37.3%
Other 1.5%
[end pie chart]
Capital World Growth MSCI
and Income Fund World Index
o THE AMERICAS 27.1% 56.4%
United States 20.8 53.4
Brazil 2.8 --
Canada 2.4 3.0
Mexico 1.1 --
o EUROPE 37.3% 30.7%
United Kingdom 10.4 11.0
France 5.5 4.2
Germany 4.5 3.0
Netherlands 4.4 2.1
Switzerland 2.5 3.0
Spain 1.9 1.7
Austria 1.4 .2
Italy 1.4 1.8
Sweden 1.2 1.1
Denmark 1.1 .3
Norway 1.0 .3
Belgium 1.0 .6
Portugal .4 .1
Other Europe .6 1.3
o ASIA/PACIFIC 22.4% 12.9%
Japan 7.8 9.4
Korea 3.9 --
Australia 2.9 2.3
Taiwan 2.8 --
Hong Kong 1.6 .7
India 1.5 --
Other Asia/Pacific 1.9 .5
o OTHER 1.5% --
o BONDS, CASH & EQUIVALENTS 11.7% --
The MSCI World Index is weighted by market capitalization.
[End Sidebar]
Bucking the trends of major markets, a handful of developing markets represented
in the fund posted some of the best returns for the period. These included
Brazil, Korea and Taiwan, which delivered dollar-adjusted returns of 18.8%,
15.0% and 6.0%, respectively. In each instance, local currencies strengthened
against the U.S. dollar, boosting returns for U.S. shareholders.
HOW FUND HOLDINGS FARED
Country returns represent the range of environments for fund holdings. But the
stocks that compose the portfolio of Capital World Growth and Income Fund are
not culled from the "top down," that is, allocated according to a country
weighting. Rather, each stock is selected from the "bottom up," on the
fundamental merits of the company itself, regardless of where it is domiciled.
This individual selection is a key component of the fund's long-term success.
During the recent period, nine of the fund's 10 largest holdings recorded
positive returns. Three of these holdings -- Altria Group, Roche Holding and
Sanofi-Aventis -- posted double-digit gains that helped bolster returns in this
difficult market environment. On the other side of the ledger, only one of the
top holdings (Vodafone) registered a negative return. (A summary portfolio of
the fund's major holdings begins on page 6.) As always, we take a long-term view
on all the fund's holdings and believe each of our major positions has the
potential to deliver favorable results for our shareholders over longer time
periods.
From a sector perspective, key holdings in utilities, health care, consumer
staples and energy helped lift returns during the period. Conversely, holdings
in materials, telecommunication services and industrials generally lagged the
market. Yet within these sectors, exceptions to prevailing trends could be
found: Potash Corp., a Canadian fertilizer company, rose more than 18%, for
example, while the Spanish utility, Gas Natural, slipped nearly 2%. Such
discrepancies within sectors are common in any stock market; this is why we
evaluate each company separately with a view to its long-term prospects.
OPPORTUNITIES FROM CHANGING MARKETS
In a world of uncertainties, change is a constant. Experienced professionals
recognize that a change in market conditions is not always negative; it can
foster opportunities for new growth paths and improved income possibilities.
Identifying those opportunities is the chief priority of the more than 100
research analysts who serve the fund's adviser, Capital Research and Management
Company.
Despite recent sluggishness in major markets, the investment professionals of
Capital World Growth and Income Fund remain optimistic about the prospects for
global stocks. Growth in the United States, though down from the high levels of
2004, remains healthy. Weaker economies in Europe and Japan may get a lift in
exports from more favorable currency valuations. On the corporate level,
revenues continue to grow in many cases, and as balance sheets have
strengthened, companies have become more shareholder-friendly by repurchasing
stock and raising dividends.
In the 12 years since its inception, Capital World Growth and Income Fund has
demonstrated the ability to uncover value on a global basis. In the process, it
has rewarded its long-term shareholders with exceptional returns. With this in
mind, we encourage our shareholders to look beyond the short-term gyrations of
markets and not lose sight of their long-term investment plans.
We are pleased that so many have chosen Capital World Growth and Income Fund to
be a part of their plans. We welcome those who have recently joined the fund,
and we invite all our shareholders to learn more about the fund in our annual
report, due in six months, at the close of the current fiscal year.
Cordially,
/s/ Gina H. Despres
Gina H. Despres
Chairman of the Board
/s/ Stephen E. Bepler
Stephen E. Bepler
President
July 12, 2005
For current information about the fund, visit americanfunds.com.
<page>
SUMMARY INVESTMENT PORTFOLIO, May 31, 2005
unaudited
[begin pie chart]
Percent
of net
Industry sector diversification assets
Financials 19.38 %
Telecommunication services 10.07
Consumer discretionary 9.97
Consumer staples 8.85
Materials 8.73
Convertible securities .81
Bonds & notes 1.22
Other industries 30.49
Cash & equivalents 10.48
[end pie chart]
Market Percent
value of net
Common stocks - 87.46% Shares (000) assets
Financials - 19.38%
Lloyds TSB Group PLC (1) 49,357,000 $ 406,313 1.03%
Societe Generale (1) 3,509,500 345,020 .88
Fortis (1) 9,884,100 268,455 .68
HSBC Holdings PLC (United Kingdom) (1) 16,587,003 261,327 .66
Banco Itau Holding Financeira SA, preferred nominative 1,455,700 256,532 .65
Banco Santander Central Hispano, SA (1) 22,426,504 255,469 .65
Shinhan Financial Group Co., Ltd. (1) 8,675,100 221,516 .56
J.P. Morgan Chase & Co. 6,150,000 219,862 .56
ABN AMRO Holding NV (1) 9,325,944 215,716 .55
ING Groep NV (1) 7,677,261 212,187 .54
Citigroup Inc. 4,095,000 192,915 .49
Other securities 4,780,857 12.13
7,636,169 19.38
Telecommunication services - 10.07%
Vodafone Group PLC (1) 206,100,000 519,667 1.32
Telekom Austria AG (1) 18,412,750 343,137 .87
France Telecom, SA (1) (2) 10,916,000 312,089 .79
Chunghwa Telecom Co., Ltd. (1) 65,829,000 129,632
Chunghwa Telecom Co., Ltd. (ADR) 4,335,000 90,255 .56
Telefonica, SA (1) 12,733,120 212,918 .54
TDC A/S (1) 4,411,165 194,170 .50
Other securities 2,164,843 5.49
3,966,711 10.07
Consumer discretionary - 9.97%
Toyota Motor Corp. (1) 8,270,300 292,687 .74
Hyundai Motor Co. (1) 4,130,000 231,763 .59
Continental AG (1) 3,032,050 214,842 .54
Yamada Denki Co., Ltd. (1) 3,766,000 204,408 .52
Accor SA (1) 4,400,000 203,177 .52
Other securities 2,781,967 7.06
3,928,844 9.97
Consumer staples - 8.85%
Altria Group, Inc. 10,257,000 688,655 1.75
Diageo PLC (1) 25,850,000 372,143 .94
Nestle SA (1) 1,098,000 289,059 .73
Tesco PLC (1) 45,442,500 258,476 .66
Unilever NV (1) 2,478,000 164,296
Unilever NV (New York registered) 1,265,000 84,173 .63
Other securities 1,629,896 4.14
3,486,698 8.85
Materials - 8.73%
Dow Chemical Co. 5,664,000 256,522 .65
Barrick Gold Corp. 9,750,000 224,152 .57
Cia. Vale do Rio Doce, preferred nominative, Class A 9,000,400 222,579 .56
BASF AG (1) 3,040,000 201,391 .51
Potash Corp. of Saskatchewan Inc. 2,180,000 197,094 .50
AngloGold Ashanti Ltd. (1) 5,650,000 193,090 .49
Other securities 2,144,394 5.45
3,439,222 8.73
Energy - 6.81%
"Shell" Transport and Trading Co., PLC (1) 51,290,000 444,836
"Shell" Transport and Trading Co., PLC (ADR) (New York registered) 1,325,000 69,496
Royal Dutch Petroleum Co. (New York registered) 3,435,000 201,222
Royal Dutch Petroleum Co. (1) 2,527,000 146,880 2.19
ENI SpA (1) 16,147,600 413,360 1.05
TOTAL SA (1) 1,065,000 234,899
TOTAL SA (ADR) 250,000 27,798 .67
Other securities 1,147,195 2.90
2,685,686 6.81
Health care - 6.46%
Roche Holding AG (1) 3,039,832 383,445 .97
Sanofi-Aventis (1) 4,219,900 380,036 .97
AstraZeneca PLC (Sweden) (1) 6,129,800 260,422 .66
Novo Nordisk A/S, Class B (1) 4,966,000 254,894 .65
Other securities 1,265,513 3.21
2,544,310 6.46
Information technology - 5.37%
Hewlett-Packard Co. 10,500,000 236,355 .60
Taiwan Semiconductor Manufacturing Co. Ltd. (1) 95,976,131 173,621
Taiwan Semiconductor Manufacturing Co. Ltd. (ADR) 5,260,000 48,445 .56
Other securities 1,656,789 4.21
2,115,210 5.37
Industrials - 5.20%
United Parcel Service, Inc., Class B 2,771,700 204,136 .52
Sandvik AB (1) 4,936,000 194,581 .49
Other securities 1,651,308 4.19
2,050,025 5.20
Utilities - 4.90%
Veolia Environnement (1) 8,142,300 307,107 .78
E.ON AG (1) 3,179,214 275,308 .70
National Thermal Power Corp. Ltd. (1) 108,865,000 208,559 .53
Scottish Power PLC (1) 23,590,000 198,697 .50
Other securities 940,001 2.39
1,929,672 4.90
Miscellaneous - 1.72%
Other common stocks in initial period of acquisition 677,972 1.72
Total common stocks (cost: $28,714,721,000) 34,460,519 87.46
Preferred stocks - 0.03%
Total preferred stocks (cost: $13,321,000) 13,355 .03
Rights - 0.00%
Total rights (cost: $0) 58 .00
Convertible securities - 0.81%
Total convertible securities (cost: $355,069,000) 320,200 .81
Bonds & notes - 1.22%
Total bonds & notes (cost: $466,373,000) 481,357 1.22
Principal amount
Short-term securities - 10.05% (000)
Freddie Mac 2.85%-3.07% due 6/7-8/10/2005 $ 289,800 289,142 .73
Toyota Motor Credit Corp. 2.97%-3.09% due 6/20-7/21/2005 147,300 146,880
Toyota Credit Corp. Puerto Rico 3.04% due 7/7/2005 17,000 16,949 .42
Barton Capital LLC 3.025% due 6/16/2005 (3) 50,000 49,933 .13
Other securities 3,455,337 8.77
Total short-term securities (cost: $3,958,098,000) 3,958,241 10.05
Total investment securities (cost: $33,507,582,000) 39,233,730 99.57
Other assets less liabilities 169,839 .43
Net assets $39,403,569 100.00%
"Miscellaneous" securities include holdings in their initial period of
acquisition that have not previously been publicly disclosed.
"Other securities" includes all issues that are not disclosed separately in the
summary investment portfolio.
INVESTMENTS IN AFFILIATES
A company is considered to be an affiliate of the fund under the Investment
Company Act of 1940 if the fund's holdings in that company represent 5% or more
of the outstanding voting shares of that company. The market value of the fund's
holdings in affiliated companies is included in "Other securities" under their
respective industry sectors in the preceding summary investment portfolio.
Further details on these holdings and related transactions during the six months
ended May 31, 2005, appear below.
Dividend Market
Company Beginning Purchases Sales Ending income value
shares shares (000) (000)
Mediceo Holdings Co. Ltd. 8,397,600 2,723,400 - 11,121,000 $584 $148,795
Asahi Diamond Industrial Co., Ltd. 3,950,000 - - 3,950,000 216 24,740
$800 $173,535
(1) Valued under fair value procedures adopted by authority of the Board of
Directors. At May 31, 2005, 224 securities, including those in "Other
securities" and "Miscellaneous" securities in the summary investment
portfolio (with aggregate value of $22,974,495,000), were fair valued under
procedures that took into account significant price changes that occurred
between the close of trading in those securities and the close of regular
trading on the New York Stock Exchange.
(2) Security did not produce income during the last 12 months.
(3) Purchased in a private placement transaction; resale may be limited to
qualified institutional buyers; resale to the public may require
registration. The total value of all such restricted securities, including
those included in "Other securities" in the summary investment portfolio,
was $1,358,915,000, which represented 3.45% of the net assets of the fund.
ADR = American Depositary Receipts
See Notes to Financial Statements
FINANCIAL STATEMENTS
Statement of assets and liabilities unaudited
at May 31, 2005 (dollars and shares in thousands,
except per-share amounts)
Assets:
Investment securities at market:
Unaffiliated issuers (cost: $33,348,703) $39,060,195
Affiliated issuers (cost: $158,879) 173,535 $39,233,730
Cash denominated in non-U.S. currencies
(cost: $5,273) 5,713
Cash 30,155
Receivables for:
Sales of investments $46,704
Sales of fund's shares 160,318
Dividends and interest 120,567
Other 1,803 329,392
39,598,990
Liabilities:
Payables for:
Purchases of investments 131,197
Repurchases of fund's shares 25,706
Investment advisory services 11,601
Services provided by affiliates 22,508
Deferred Directors' compensation 799
Other fees and expenses 3,610 195,421
Net assets at May 31, 2005 $39,403,569
Net assets consist of:
Capital paid in on shares of capital stock $32,565,082
Undistributed net investment income 383,081
Undistributed net realized gain 733,358
Net unrealized appreciation 5,722,048
Net assets at May 31, 2005 $39,403,569
Total authorized capital stock - 2,000,000 shares, $.01 par value (1,181,794
total shares outstanding)
Net assets Shares outstanding Net asset value per share
(1)
Class A $31,185,769 934,412 $33.37
Class B 1,667,096 50,209 33.20
Class C 2,731,668 82,498 33.11
Class F 1,770,894 53,131 33.33
Class 529-A 409,687 12,295 33.32
Class 529-B 60,318 1,816 33.21
Class 529-C 115,712 3,485 33.20
Class 529-E 21,495 646 33.28
Class 529-F 8,250 248 33.33
Class R-1 30,377 915 33.20
Class R-2 305,370 9,220 33.12
Class R-3 429,881 12,930 33.25
Class R-4 267,553 8,026 33.33
Class R-5 399,499 11,963 33.39
(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 $35.41 and $35.35,
respectively.
See Notes to Financial Statements
STATEMENT OF OPERATIONS unaudited
for the six months ended May 31, 2005 (dollars in thousands)
Investment income:
Income:
Dividends (net of non-U.S. withholding
tax of $49,657; also includes
$800 from affiliates) $581,853
Interest (net of non-U.S. withholding
tax of $1) 74,492 $656,345
Fees and expenses:
Investment advisory services 69,919
Distribution services 58,610
Transfer agent services 14,051
Administrative services 5,561
Reports to shareholders 795
Registration statement and prospectus 2,575
Postage, stationery and supplies 1,784
Directors' compensation 223
Auditing and legal 64
Custodian 4,823
State and local taxes 354
Other 141
Total expenses before reimbursements/waivers 158,900
Reimbursement/waiver of expenses 5,022 153,878
Net investment income 502,467
Net realized gain and unrealized
depreciation on investments
and non-U.S. currency:
Net realized gain (loss) on:
Investments 746,373
Non-U.S. currency transactions (9,418) 736,955
Net unrealized depreciation on:
Investments (522,764)
Non-U.S. currency translations (2,869) (525,633)
Net realized gain and
unrealized depreciation
on investments and non-U.S. currency 211,322
Net increase in net assets resulting
from operations $713,789
See Notes to Financial Statements
Statement of changes in net assets (dollars in thousands)
Six months Year ended
ended May 31, November 30,
2005* 2004
Operations:
Net investment income $502,467 $513,553
Net realized gain on investments and
non-U.S. currency transactions 736,955 1,004,997
Net unrealized (depreciation) appreciation
on investments and non-U.S. currency translations (525,633) 3,218,990
Net increase in net assets
resulting from operations 713,789 4,737,540
Dividends and distributions paid to
shareholders:
Dividends from net investment income and currency gains (423,562) (525,779)
Distributions from net realized gain
on investments (736,060) (174,979)
Total dividends and distributions paid
to shareholders (1,159,622) (700,758)
Capital share transactions 8,980,454 10,088,401
Total increase in net assets 8,534,621 14,125,183
Net assets:
Beginning of period 30,868,948 16,743,765
End of period (including
undistributed
net investment income: $383,081 and $304,176, respectively) $39,403,569 $30,868,948
*Unaudited
See Notes to Financial Statements
NOTES TO FINANCIAL STATEMENTS unaudited
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - Capital World Growth and Income Fund, Inc. (the "fund") is
registered under the Investment Company Act of 1940 as an open-end, diversified
management investment company. The fund seeks long-term capital growth while
providing current income.
The fund offers 14 share classes consisting of four retail share classes, five
CollegeAmerica(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.
CollegeAmerica is a registered trademark of the Virginia College Savings
Plan.(sm)
SIGNIFICANT ACCOUNTING POLICIES - The financial statements have been prepared to
comply with accounting principles generally accepted in the United States of
America. These principles require management to make estimates and assumptions
that affect reported amounts and disclosures. Actual results could differ from
those estimates. The following is a summary of the significant accounting
policies followed by the fund:
SECURITY VALUATION - Equity securities are valued at the official
closing price of, or the last reported sale price on, the exchange or
market on which such securities are traded, as of the close of
business on the day the securities are being valued or, lacking any
sales, at the last available bid price. Prices for each security are
taken from the principal exchange or market in which the security
trades. Fixed-income securities, including short-term securities
purchased with more than 60 days left to maturity are valued at prices
obtained from an independent pricing service, when such prices are
available. However, where the investment adviser deems it appropriate,
such securities will be valued at the mean quoted bid and asked prices
(or bid prices, if asked prices are not available) or at prices for
securities of comparable maturity, quality and type. Securities with
both fixed-income and equity characteristics, or equity securities
traded principally among fixed-income dealers, are valued in the
manner described above for either equity or fixed-income securities,
depending on which method is deemed most appropriate by the investment
adviser. Short-term securities purchased within 60 days to maturity
are valued at amortized cost, which approximates market value.
Short-term securities originally purchased with maturities greater
than 60 days but that now have 60 days or less remaining to maturity,
are valued based on the amortized difference between the par value and
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.
CLASS ALLOCATIONS - Income, fees and expenses (other than
class-specific fees and expenses) and realized and unrealized gains
and losses are allocated daily among the various share classes based
on their relative net assets. Class-specific fees and expenses, such
as distribution, administrative and shareholder services, are charged
directly to the respective share class.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends and
distributions paid to shareholders are recorded on the ex-dividend
date.
NON-U.S. CURRENCY TRANSLATION - Assets and liabilities, including
investment securities, denominated in non-U.S. currencies are
translated into U.S. dollars at the exchange rates in effect at the
end of the reporting period. Purchases and sales of investment
securities and income and expenses are translated into U.S. dollars at
the exchange rates on the dates of such transactions. In the
accompanying financial statements, the effects of changes in non-U.S.
exchange rates on investment securities are included with the net
realized gain or loss and net unrealized appreciation or depreciation
on investments. The realized gain or loss and unrealized appreciation
or depreciation resulting from all other transactions denominated in
non-U.S. currencies are disclosed separately.
FORWARD CURRENCY CONTRACTS - The fund may enter into forward currency
contracts, which represent agreements to exchange non-U.S. currencies
on specific future dates at predetermined rates. The fund enters into
these contracts to manage its exposure to changes in non-U.S. exchange
rates arising from investments denominated in non-U.S. currencies.
Upon entering into these contracts, risks may arise from the potential
inability of counterparties to meet the terms of their contracts and
from possible movements in non-U.S. exchange rates. Due to these
risks, the fund could incur losses up to the entire contract amount,
which may exceed the net unrealized value shown in the accompanying
financial statements. On a daily basis, the fund values forward
currency contracts based on the applicable exchange rates and records
unrealized gains or losses. The fund records realized gains or losses
at the time the forward contract is closed or offset by another
contract with the same broker for the same settlement date and
currency.
2. NON-U.S. INVESTMENTS
INVESTMENT RISK - The risks of investing in securities of non-U.S. issuers may
include, but are not limited to, investment and repatriation restrictions;
revaluation of currencies; adverse political, social and economic developments;
government involvement in the private sector; limited and less reliable investor
information; lack of liquidity; certain local tax law considerations; and
limited regulation of the securities markets.
TAXATION - Dividend and interest income is recorded net of non-U.S. taxes paid.
Gains realized by the fund on the sale of securities in certain countries are
subject to non-U.S. taxes. The fund records a liability based on unrealized
gains to provide for potential non-U.S. taxes payable upon the sale of these
securities. For the six months ended May 31, 2005, there were no non-U.S. taxes
paid on realized gains. As of May 31, 2005, non-U.S. taxes accrued for
unrealized gains were $2,693,000.
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; and
deferred expenses. The fiscal year in which amounts are distributed may differ
from the year in which the net investment income and net realized gains are
recorded by the fund. As of May 31, 2005, the cost of investment securities for
federal income tax purposes was $33,558,057,000.
As of May 31, 2005, the components of distributable earnings on a tax basis were
as follows (dollars in thousands):
Undistributed net investment income and currency gains $434,144
Undistributed short-term capital gains 7,166
Undistributed long-term capital gains 726,424
Gross unrealized appreciation on investment securities 6,271,882
Gross unrealized depreciation on investment securities (596,209)
Net unrealized appreciation on investment securities 5,675,673
During the six months ended May 31, 2005, the fund realized, on a tax basis, a
net capital gain of $734,360,000.
The tax character of distributions paid to shareholders was as follows (dollars
in thousands):
Six months ended May 31, 2005
Distributions from ordinary income
Net investment income Distributions from Total distributions
Share class and currency gains Short-term capital gains long-term capital gains paid
Class A $ 355,479 - $ 597,793 $ 953,272
Class B 12,934 - 30,412 43,346
Class C 18,874 - 44,526 63,400
Class F 17,739 - 29,844 47,583
Class 529-A 3,935 - 6,540 10,475
Class 529-B 411 - 1,066 1,477
Class 529-C 757 - 1,924 2,681
Class 529-E 180 - 348 528
Class 529-F 79 - 137 216
Class R-1 180 - 417 597
Class R-2 2,084 - 4,875 6,959
Class R-3 3,654 - 6,848 10,502
Class R-4 2,707 - 4,494 7,201
Class R-5 4,549 - 6,836 11,385
Total $ 423,562 - $ 736,060 $ 1,159,622
Year ended November 30, 2004
Distributions from ordinary income
Net ivestment income Distributions from Total distributions
Share class and currency gains Short-term capital gains long-term capital gains 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
4. FEES AND TRANSACTIONS WITH RELATED PARTIES
Capital Research and Management Company ("CRMC"), the fund's investment adviser,
is the parent company of American Funds Service Company ("AFS"), the fund's
transfer agent, and American Funds Distributors, Inc. ("AFD"), the principal
underwriter of the fund's shares.
INVESTMENT ADVISORY SERVICES - The Investment Advisory and Service Agreement
with CRMC provides for monthly fees accrued daily. These fees are based on a
declining series of annual rates beginning with 0.600% on the first $500 million
of daily net assets and decreasing to 0.365% on such assets in excess of $44
billion. CRMC is currently waiving a portion of these fees. At the beginning of
the period CRMC was waiving 5% of these fees and increased the waiver to 10% on
April 1, 2005. As a result, the fee shown on the accompanying financial
statements of $69,919,000, which was equivalent to an annualized rate of 0.392%,
was reduced to $65,172,000, or 0.366% of average daily net assets.
CLASS-SPECIFIC FEES AND EXPENSES - Expenses that are specific to individual
share classes are accrued directly to the respective share class. The principal
class-specific fees and expenses are described below:
DISTRIBUTION SERVICES - The fund has adopted plans of distribution for
all share classes, except Class R-5. Under the plans, the Board of
Directors approves certain categories of expenses that are used to
finance activities primarily intended to sell fund shares. The plans
provide for annual expenses, based on a percentage of average daily
net assets, ranging from 0.30% to 1.00% as noted on the following
page. In some cases, the Board of Directors has approved expense
amounts lower than plan limits. All share classes may use up to 0.25%
of average daily net assets to pay service fees, or to compensate AFD
for paying service fees, to firms that have entered into agreements
with AFD for providing certain shareholder services. Expenses in
excess of these amounts, up to approved limits, may be used to
compensate dealers and wholesalers for shares sold. AFD is currently
waiving a portion of these fees to the extent the amounts paid to
qualified dealers or advisers were less than the approved limit.
During the six months ended May 31, 2005, the total fees waived by AFD
were $1,000, which related to Class 529-F.
For classes A and 529-A, the Board of Directors has also approved the
reimbursement of dealer and wholesaler commissions paid by AFD for
certain shares sold without a sales charge. Each class reimburses AFD
for amounts billed within the prior 15 months but only to the extent
that the overall annual expense limit of 0.30% is not exceeded. As of
May 31, 2005, 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 six months ended May
31, 2005, CRMC agreed to pay a portion of these fees for classes R-1
and R-2. For the six months ended May 31, 2005, the total fees paid by
CRMC were $2,000 and $272,000 for classes R-1 and R-2, respectively.
Administrative services fees are presented gross of any payments made
by CRMC. Each 529 share class is subject to an additional annual
administrative services fee of 0.10% of its respective average daily
net assets; this fee is payable to the Commonwealth of Virginia for
the maintenance of the 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
six months ended May 31, 2005, 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 $34,302 $13,232 Not applicable Not applicable Not applicable
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class B 7,421 819 Not applicable Not applicable Not applicable
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class C 11,572 Included $1,736 $255 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class F 1,908 Included 1,145 126 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-A 303 Included 261 24 $174
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-B 266 Included 40 13 27
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-C 498 Included 75 18 50
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-E 46 Included 14 1 9
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-F 9 Included 5 1 3
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-1 117 Included 18 8 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-2 962 Included 192 614 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-3 914 Included 274 113 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-4 292 Included 175 9 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-5 Not applicable Included 175 6 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Total $58,610 $14,051 $4,110 $1,188 $263
--------------------------------------------------------------------------------------------------------------
DEFERRED DIRECTORS' COMPENSATION - Since the adoption of the deferred
compensation plan in 1993, Directors who are unaffiliated with CRMC may elect to
defer the cash payment of part or all of their compensation. These deferred
amounts, which remain as liabilities of the fund, are treated as if invested in
shares of the fund or other American Funds. These amounts represent general,
unsecured liabilities of the fund and vary according to the total returns of the
selected funds. Directors' compensation of $223,000, shown on the accompanying
financial statements, includes $175,000 in current fees (either paid in cash or
deferred) and a net increase of $48,000 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 dividends
Share class Sales(1) and distributions
Amount Shares Amount Shares
Six months ended May 31, 2005
Class A $ 6,566,472 194,874 $ 912,183 27,853
Class B 426,869 12,722 41,926 1,288
Class C 981,081 29,315 60,784 1,872
Class F 616,982 18,322 43,424 1,327
Class 529-A 139,110 4,136 10,474 320
Class 529-B 15,942 475 1,477 45
Class 529-C 36,769 1,097 2,681 83
Class 529-E 7,051 210 528 16
Class 529-F 2,826 84 215 7
Class R-1 14,790 441 593 18
Class R-2 123,035 3,676 6,954 214
Class R-3 178,553 5,319 10,497 322
Class R-4 109,506 3,248 7,201 220
Class R-5 124,694 3,695 10,470 319
Total net increase
(decrease) $ 9,343,680 277,614 $ 1,109,407 33,904
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
Share class Repurchases(1) Net increase
Amount Shares Amount Shares
Six months ended May 31, 2005
Class A $ (1,078,831) (32,077) $ 6,399,824 190,650
Class B (47,210) (1,410) 421,585 12,600
Class C (114,238) (3,419) 927,627 27,768
Class F (112,088) (3,343) 548,318 16,306
Class 529-A (7,194) (214) 142,390 4,242
Class 529-B (679) (20) 16,740 500
Class 529-C (2,437) (73) 37,013 1,107
Class 529-E (310) (9) 7,269 217
Class 529-F (336) (10) 2,705 81
Class R-1 (1,679) (50) 13,704 409
Class R-2 (21,993) (658) 107,996 3,232
Class R-3 (39,405) (1,173) 149,645 4,468
Class R-4 (28,203) (839) 88,504 2,629
Class R-5 (18,030) (536) 117,134 3,478
Total net increase
(decrease) $ (1,472,633) (43,831) $ 8,980,454 267,687
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
(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 $10,555,370,000 and $3,133,536,000, respectively, during the six
months ended May 31, 2005.
The fund receives a reduction in its custodian fee equal to the amount of
interest calculated on certain cash balances held at the custodian bank. For the
six months ended May 31, 2005, the custodian fee of $4,823,000, shown on the
accompanying financial statements, includes $43,000 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:
Six months ended 5/31/2005 (5) $33.80 $.49 $.33 $.82
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:
Six months ended 5/31/2005 (5) 33.63 .36 .33 .69
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:
Six months ended 5/31/2005 (5) 33.54 .35 .33 .68
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:
Six months ended 5/31/2005 (5) 33.75 .49 .33 .82
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:
Six months ended 5/31/2005 (5) 33.75 .48 .32 .80
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:
Six months ended 5/31/2005 (5) 33.64 .33 .33 .66
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:
Six months ended 5/31/2005 (5) 33.63 .33 .33 .66
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:
Six months ended 5/31/2005 (5) 33.71 .43 .32 .75
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:
Six months ended 5/31/2005 (5) 33.75 .48 .32 .80
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:
Six months ended 5/31/2005 (5) $33.63 $.36 $.32 $.68
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:
Six months ended 5/31/2005 (5) 33.55 .36 .32 .68
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:
Six months ended 5/31/2005 (5) 33.67 .43 .33 .76
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:
Six months ended 5/31/2005 (5) 33.76 .49 .32 .81
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:
Six months ended 5/31/2005 (5) 33.81 .54 .33 .87
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:
Six months ended 5/31/2005 (5) $(.45) $(.80) $(1.25) $33.37
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:
Six months ended 5/31/2005 (5) (.32) (.80) (1.12) 33.20
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:
Six months ended 5/31/2005 (5) (.31) (.80) (1.11) 33.11
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:
Six months ended 5/31/2005 (5) (.44) (.80) (1.24) 33.33
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:
Six months ended 5/31/2005 (5) (.43) (.80) (1.23) 33.32
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:
Six months ended 5/31/2005 (5) (.29) (.80) (1.09) 33.21
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:
Six months ended 5/31/2005 (5) (.29) (.80) (1.09) 33.20
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:
Six months ended 5/31/2005 (5) (.38) (.80) (1.18) 33.28
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:
Six months ended 5/31/2005 (5) (.42) (.80) (1.22) 33.33
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:
Six months ended 5/31/2005 (5) $(.31) $(.80) $(1.11) $33.20
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:
Six months ended 5/31/2005 (5) (.31) (.80) (1.11) 33.12
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:
Six months ended 5/31/2005 (5) (.38) (.80) (1.18) 33.25
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:
Six months ended 5/31/2005 (5) (.44) (.80) (1.24) 33.33
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:
Six months ended 5/31/2005 (5) (.49) (.80) (1.29) 33.39
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 reimbursements/ reimbursements/ to average
return (3) (in millions) waivers waivers (4) net assets
Class A:
Six months ended 5/31/2005 (5) 2.50% $31,186 .79% (6) .76% (6) 2.92% (6)
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:
Six months ended 5/31/2005 (5) 2.12 1,667 1.56 (6) 1.54 (6) 2.16 (6)
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 (6) 1.55 (6) 1.45 (6)
Class C:
Six months ended 5/31/2005 (5) 2.10 2,732 1.63 (6) 1.60 (6) 2.13 (6)
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 (6) 1.78 (6) .73 (6)
Class F:
Six months ended 5/31/2005 (5) 2.49 1,771 .86 (6) .84 (6) 2.88 (6)
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 (6) .92 (6) 1.55 (6)
Class 529-A:
Six months ended 5/31/2005 (5) 2.46 410 .89 (6) .86 (6) 2.86 (6)
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 (6) 1.03 (6) 2.08 (6)
Class 529-B:
Six months ended 5/31/2005 (5) 2.03 60 1.75 (6) 1.72 (6) 1.97 (6)
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 (6) 1.79 (6) 1.31 (6)
Class 529-C:
Six months ended 5/31/2005 (5) 2.04 116 1.74 (6) 1.71 (6) 2.00 (6)
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 (6) 1.77 (6) 1.33 (6)
Class 529-E:
Six months ended 5/31/2005 (5) 2.29 21 1.22 (6) 1.19 (6) 2.53 (6)
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 (6) 1.23 (6) 1.85 (6)
Class 529-F:
Six months ended 5/31/2005 (5) 2.44 8 .97 (6) .80 (6) 2.92 (6)
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 - (7) .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 reimbursements/ reimbursements/ to average
return (in millions) waivers waivers (4) net assets
Class R-1:
Six months ended 5/31/2005 (5) 2.09% $30 1.67% (6) 1.62% (6) 2.17% (6)
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) - (7) 1.41 .80 .66
Class R-2:
Six months ended 5/31/2005 (5) 2.10 305 1.82 (6) 1.59 (6) 2.15 (6)
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:
Six months ended 5/31/2005 (5) 2.34 430 1.16 (6) 1.13 (6) 2.60 (6)
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:
Six months ended 5/31/2005 (5) 2.47 268 .85 (6) .83 (6) 2.89 (6)
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:
Six months ended 5/31/2005 (5) 2.64 400 .55 (6) .52 (6) 3.19 (6)
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 (6) .56 (6) 2.48 (6)
Six months ended
May 31, Year ended November 30
2005(5) 2004 2003 2002 2001 2000
Portfolio turnover rate for all classes of shares 10% 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. During some of the periods shown, CRMC reduced
fees for investment advisory services for all share classes. 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.
In addition, during the six months ended May 31, 2005, AFD agreed to waive
a portion of the fees related to distribution services for Class 529-F.
(5) Unaudited.
(6) Annualized.
(7) Amount less than $1 million.
See Notes to Financial Statements
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 (December
1, 2004 through May 31, 2005).
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 0.75% to 1.50% of assets annually
depending on services offered. You can estimate the impact of these fees by
adding the amount of the fees to the total estimated expenses you paid on your
account during the period as calculated above. In addition, your ending account
value would also be lower by the amount of these fees.
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
0.75% to 1.50% of assets annually depending on services offered. You can
estimate the impact of these fees by adding the amount of the fees to the total
estimated expenses you paid on your account during the period as calculated
above. In addition, your ending account value would also be lower by the amount
of these fees.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads). Therefore, the second line of each share class in the table is
useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these
transactional costs were included, your costs would have been higher.
Beginning account Ending account Expenses paid Annualized
value 12/1/2004 value 5/31/2005 during period(1) expense ratio
Class A -- actual return $1,000.00 $1,025.03 $3.84 .76%
Class A -- assumed 5% return 1,000.00 1,021.14 3.83 .76
Class B -- actual return 1,000.00 1,021.23 7.76 1.54
Class B -- assumed 5% return 1,000.00 1,017.25 7.75 1.54
Class C -- actual return 1,000.00 1,021.05 8.06 1.60
Class C -- assumed 5% return 1,000.00 1,016.95 8.05 1.60
Class F -- actual return 1,000.00 1,024.93 4.24 .84
Class F -- assumed 5% return 1,000.00 1,020.74 4.23 .84
Class 529-A -- actual return 1,000.00 1,024.62 4.34 .86
Class 529-A -- assumed 5% return 1,000.00 1,020.64 4.33 .86
Class 529-B -- actual return 1,000.00 1,020.28 8.66 1.72
Class 529-B -- assumed 5% return 1,000.00 1,016.36 8.65 1.72
Class 529-C -- actual return 1,000.00 1,020.37 8.61 1.71
Class 529-C -- assumed 5% return 1,000.00 1,016.40 8.60 1.71
Class 529-E -- actual return 1,000.00 1,022.89 6.00 1.19
Class 529-E -- assumed 5% return 1,000.00 1,019.00 5.99 1.19
Class 529-F -- actual return 1,000.00 1,024.36 4.04 .80
Class 529-F -- assumed 5% return 1,000.00 1,020.94 4.03 .80
Class R-1 -- actual return 1,000.00 1,020.90 8.16 1.62
Class R-1 -- assumed 5% return 1,000.00 1,016.85 8.15 1.62
Class R-2 -- actual return 1,000.00 1,021.02 8.01 1.59
Class R-2 -- assumed 5% return 1,000.00 1,017.00 8.00 1.59
Class R-3 -- actual return 1,000.00 1,023.44 5.70 1.13
Class R-3 -- assumed 5% return 1,000.00 1,019.30 5.69 1.13
Class R-4 -- actual return 1,000.00 1,024.66 4.19 .83
Class R-4 -- assumed 5% return 1,000.00 1,020.79 4.18 .83
Class R-5 -- actual return 1,000.00 1,026.41 2.63 .52
Class R-5 -- assumed 5% return 1,000.00 1,022.34 2.62 .52
(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 (182), and divided by 365 (to reflect the one-half year period).
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.
Average annual total returns for periods ended June 30, 2005
(the most recent calendar quarter):
1 year 5 years 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 +10.35% +6.56% +6.87%(1)
Not reflecting CDSC +15.35% +6.87% +7.01%(1)
Class C shares
Reflecting CDSC, maximum of 1%, payable only
if shares are sold within one year of purchase +14.29% -- +9.23%(2)
Not reflecting CDSC +15.29% -- +9.23%(2)
Class F shares(3)
Not reflecting annual asset-based fee charged by
sponsoring firm +16.17% -- +10.09%(2)
Class 529-A shares(4)
Reflecting 5.75% maximum sales charge +9.46% -- +12.10%(5)
Not reflecting maximum sales charge +16.13% -- +14.08%(5)
Class 529-B shares(4)
Reflecting applicable CDSC, maximum of 5%, payable
only if shares are sold within six years of purchase +10.13% -- +12.99%(6)
Not reflecting CDSC +15.13% -- +13.66%(6)
Class 529-C shares(4)
Reflecting CDSC, maximum of 1%, payable only
if shares are sold within one year of purchase +14.15% -- +13.65%(7)
Not reflecting CDSC +15.15% -- +13.65%(7)
Class 529-E shares(3,4) +15.75% -- +12.80%(8)
Class 529-F shares(3,4)
Not reflecting annual asset-based fee charged by
sponsoring firm +16.06% -- +21.45%(9)
The fund's investment adviser waived 5% of its management fees from September 1,
2004, through March 31, 2005, and increased the waiver to 10% on April 1, 2005.
In addition, the fund's principal underwriter also waived fees related to
distribution services for Class 529-F. Fund results shown reflect these waivers,
without which they would have been lower. Please see the Financial Highlights
table on page 22 for details.
(1) From March 15, 2000, when Class B shares were first sold.
(2) 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) Results shown do not reflect the $10 initial account set up fee and an
annual $10 account maintenance fee.
(5) From February 15, 2002, when Class 529-A shares were first sold.
(6) From February 21, 2002, when Class 529-B shares were first sold.
(7) From February 22, 2002, when Class 529-C shares were first sold.
(8) From March 4, 2002, when Class 529-E shares were first sold.
(9) From September 17, 2002, when Class 529-F shares were first sold.
OFFICES OF THE FUND AND OF THE
INVESTMENT ADVISER
Capital Research and
Management Company
333 South Hope Street
Los Angeles, CA 90071-1406
135 South State College
Boulevard
Brea, CA 92821-5823
TRANSFER AGENT FOR SHAREHOLDER ACCOUNTS
American Funds Service Company
(Please write to the address
nearest you.)
P.O. Box 25065
Santa Ana, CA 92799-5065
P.O. Box 659522
San Antonio, TX 78265-9522
P.O. Box 6007
Indianapolis, IN 46206-6007
P.O. Box 2280
Norfolk, VA 23501-2280
CUSTODIAN OF ASSETS
JPMorgan Chase Bank
270 Park Avenue
New York, NY 10017-2070
COUNSEL
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, CA 90071-2899
INDEPENDENT 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. Annualized
expenses for Class B shares were 0.78 percentage points higher than for Class A
shares; Class B shares convert to Class A shares after eight years of ownership.
If redeemed within six years, Class B shares may also be subject to a contingent
deferred sales charge ("CDSC") of up to 5% that declines over time. Class C
shares were subject to annualized expenses 0.84 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 annualized
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.
If you reside in a state other than Virginia, there may be an in-state plan that
offers additional tax benefits not available in CollegeAmerica. Talk to your tax
adviser. Interests in CollegeAmerica are sold through unaffiliated
intermediaries.
"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 files its proxy voting
record with the SEC for the 12 months ended June 30 by August 31. The report
also is available on the SEC and American Funds websites.
A complete May 31, 2005, 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. This form is available free of charge on the SEC website or upon
request by calling AFS. You may also review or, for a fee, copy the form 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 September 30, 2005, this report must be accompanied by an
American Funds statistical update for the most recently completed calendar
quarter.
[logo - American Funds(R)]
CollegeAmerica is sponsored by
Virginia College Savings Plan(SM)
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 30 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
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
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
Capital Income Builder(R)
The Income Fund of America(R)
o BALANCED FUND
American Balanced Fund(R)
o BOND FUNDS
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
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. MFGESR-933-0705P
Litho in USA WG/LPT/6269-S4070
Printed on recycled paper
ITEM 2 - Code of Ethics
Not applicable for filing of Semiannual Reports to Shareholders.
ITEM 3 - Audit Committee Financial Expert
Not applicable for filing of Semiannual Reports to Shareholders.
ITEM 4 - Principal Accountant Fees and Services
Not applicable for filing of Semiannual Reports to Shareholders.
ITEM 5 - Audit Committee of Listed Registrants
Not applicable.
ITEM 6 - Schedule of Investments
[logo - American Funds (r)]
CAPITAL WORLD GROWTH AND INCOME FUND
Investment portfolio
May 31, 2005 unaudited
Market value
Common stocks -- 87.46% Shares (000)
FINANCIALS -- 19.38%
Lloyds TSB Group PLC(1) 49,357,000 $406,313
Societe Generale(1) 3,509,500 345,020
Fortis(1) 9,884,100 268,455
HSBC Holdings PLC (United Kingdom)(1) 16,587,003 261,327
Banco Itau Holding Financeira SA, preferred nominative 1,455,700 256,532
Banco Santander Central Hispano, SA(1) 22,426,504 255,469
Shinhan Financial Group Co., Ltd.(1) 8,675,100 221,516
J.P. Morgan Chase & Co. 6,150,000 219,862
ABN AMRO Holding NV(1) 9,325,944 215,716
ING Groep NV(1) 7,677,261 212,187
Citigroup Inc. 4,095,000 192,915
Mitsui Trust Holdings, Inc.(1) 19,542,000 191,174
Royal Bank of Scotland Group PLC(1) 5,344,132 156,940
Bank Austria Creditanstalt(1) 1,502,406 147,378
Washington Mutual, Inc. 3,530,000 145,789
Fubon Financial Holding Co., Ltd.(1) 144,046,000 135,921
UFJ Holdings, Inc.(1,2) 26,600 134,946
UBS AG(1) 1,719,211 132,423
PartnerRe Holdings Ltd. 1,860,000 122,890
Woori Finance Holdings Co., Ltd.(1) 12,951,950 121,907
NIPPONKOA Insurance Co., Ltd.(1) 16,911,000 117,686
ICICI Bank Ltd.(1) 13,088,403 116,954
ICICI Bank Ltd. (ADR) 4,000 78
Swire Pacific Ltd., Class A(1) 13,750,000 116,905
Sompo Japan Insurance Inc.(1) 10,744,000 108,652
Deutsche Borse AG(1) 1,466,000 107,748
Bank of America Corp. 2,308,300 106,920
Mitsui Sumitomo Insurance Co., Ltd.(1) 11,564,000 105,282
Allied Capital Corp. 3,798,000 104,255
DnB NOR ASA(1) 10,936,100 103,568
Allstate Corp. 1,700,000 98,940
NTT Urban Development Corp.(1) 22,112 98,532
National Savings and Commercial Bank Ltd. (GDR)(1) 1,550,000 95,213
Willis Group Holdings Ltd. 2,750,000 94,243
Mizuho Financial Group, Inc.(1) 18,000 85,392
Credit Suisse Group(1) 1,985,000 79,412
Hang Lung Properties Ltd.(1) 54,852,000 79,208
Westpac Banking Corp.(1) 5,309,177 78,827
Cathay Financial Holding Co., Ltd.(1) 39,000,000 74,423
St. George Bank Ltd.(1) 3,702,460 72,708
Hongkong Land Holdings Ltd.(1) 25,421,800 71,510
Kookmin Bank(1) 1,600,000 70,271
Fannie Mae 1,140,000 67,534
Chubb Corp. 750,000 63,172
Grupo Financiero Banorte, SA de CV 9,212,063 61,377
Sumitomo Mitsui Financial Group, Inc.(1) 9,300 60,113
Marsh & McLennan Companies, Inc. 2,000,000 58,080
Allianz AG(1) 460,000 54,119
QBE Insurance Group Ltd.(1) 4,830,970 53,599
Freddie Mac 800,000 52,032
Credit Agricole SA(1) 2,000,000 51,857
Wells Fargo & Co. 826,000 49,899
ForeningsSparbanken AB, Class A(1) 2,000,000 46,003
U.S. Bancorp 1,530,000 44,875
Montpelier Re Holdings Ltd. 1,305,000 44,827
Genworth Financial, Inc., Class A 1,500,000 43,485
Developers Diversified Realty Corp. 900,000 41,040
Unibail Holding(1) 304,000 38,681
Bank Hapoalim Ltd.(1) 10,873,500 38,186
Singapore Exchange Ltd.(1) 33,153,000 37,703
Wachovia Corp. 724,000 36,743
Millea Holdings, Inc.(1) 2,766 36,518
American International Group, Inc. 650,000 36,107
Nippon Building Fund, Inc.(1) 3,850 35,075
Hysan Development Co. Ltd.(1) 16,918,847 34,032
Skandinaviska Enskilda Banken AB, Class A(1) 1,971,500 33,842
Capital One Financial Corp. 418,020 31,519
Kimco Realty Corp. 525,000 30,324
Brascan Corp., Class A 785,000 30,322
Chinatrust Financial Holding Co., Ltd.(1) 26,331,099 29,571
Aioi Insurance Co. Ltd.(1) 5,561,000 27,283
DBS Group Holdings Ltd.(1) 3,120,000 25,894
Wharf (Holdings) Ltd.(1) 7,800,000 25,368
Sun Life Financial Inc. 726,480 22,931
Multiplex Group(1) 11,270,904 21,829
Malayan Banking Bhd.(1) 7,535,300 21,688
AMP Ltd.(1) 3,985,202 19,752
Erste Bank der oesterreichischen Sparkassen AG(1) 380,000 18,748
Fairfax Financial Holdings Ltd. 111,000 18,018
Hang Lung Group Ltd.(1) 8,767,000 14,923
XL Capital Ltd., Class A 180,000 13,550
HBOS PLC(1) 907,214 13,197
Bank of the Philippine Islands(1) 14,403,696 12,836
Deutsche Bank AG(1) 60,000 4,658
HKR International Ltd.(1) 4,824,800 3,184
Security Capital European Realty(1,2,3) 15,843 268
7,636,169
TELECOMMUNICATION SERVICES -- 10.07%
Vodafone Group PLC(1) 206,100,000 519,667
Telekom Austria AG(1) 18,412,750 343,137
France Telecom, SA(1,2) 10,916,000 312,089
Chunghwa Telecom Co., Ltd.(1) 65,829,000 129,632
Chunghwa Telecom Co., Ltd. (ADR) 4,335,000 90,255
Telefonica, SA(1) 12,733,120 212,918
TDC A/S(1) 4,411,165 194,170
KT Corp. (ADR) 6,865,120 143,687
KT Corp.(1) 859,940 34,633
Portugal Telecom, SGPS, SA(1) 16,803,550 171,560
America Movil SA de CV, Series L (ADR) 2,423,200 137,347
Tele Norte Leste Participacoes SA, preferred nominative 7,444,930 113,314
Tele Norte Leste Participacoes SA, ordinary nominative 762,130 15,775
Tele Norte Leste Participacoes SA, preferred nominative (ADR) 70,000 1,067
Royal KPN NV(1) 15,009,620 119,017
Telecom Italia SpA, nonvoting(1) 44,499,271 117,734
Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk, Class B(1) 231,021,000 114,504
Advanced Info Service PCL(1) 49,704,900 114,084
Belgacom SA(1) 3,067,500 105,073
SBC Communications Inc. 4,300,000 100,534
Verizon Communications Inc. 2,725,000 96,410
Swisscom AG(1) 259,389 86,856
BT Group PLC(1) 20,000,000 77,567
Telenor ASA(1) 9,490,000 75,569
AT&T Corp. 3,900,000 73,281
Telefonos de Mexico, SA de CV, Class L (ADR) 3,623,474 67,614
BellSouth Corp. 2,354,000 62,993
O2 PLC(1,2) 20,521,400 47,520
China Unicom Ltd.(1) 54,134,600 43,335
Eircom Group PLC(1) 16,149,984 36,730
Bouygues SA(1) 935,143 35,934
COSMOTE Mobile Telecommunications SA(1) 1,650,000 29,609
KDDI Corp.(1) 5,931 27,108
Sprint Corp. 1,100,000 26,059
Maxis Communications Bhd.(1) 10,000,000 25,947
Singapore Telecommunications Ltd.(1) 16,012,000 24,968
Deutsche Telekom AG(1) 1,265,000 23,485
BCE Inc. 336,865 7,735
Telecomunicacoes de Sao Paulo SA, preferred nominative 380,480,000 7,235
Crown Castle International Corp.(2) 31,459 559
3,966,711
CONSUMER DISCRETIONARY -- 9.97%
Hyundai Motor Co.(1) 4,130,000 231,763
Hyundai Motor Co., nonvoting preferred, Series 2(1) 1,877,550 68,985
Toyota Motor Corp.(1) 8,270,300 292,687
Continental AG(1) 3,032,050 214,842
Yamada Denki Co., Ltd.(1) 3,766,000 204,408
Accor SA(1) 4,400,000 203,177
Target Corp. 3,217,500 172,780
Daito Trust Construction Co., Ltd.(1) 4,596,700 172,550
Lowe's Companies, Inc. 2,575,000 147,316
Best Buy Co., Inc. 2,432,000 132,374
Kingfisher PLC(1) 26,680,197 124,656
Publishing & Broadcasting Ltd.(1) 10,565,000 121,077
Harrah's Entertainment, Inc. 1,620,000 116,332
Daimaru, Inc.(1) 13,518,000 116,298
General Motors Corp. 3,555,000 112,089
Kia Motors Corp.(1) 7,500,000 106,890
Bayerische Motoren Werke AG(1) 2,455,000 106,192
Reuters Group PLC(1) 13,736,600 96,356
Dixons Group PLC(1) 34,882,596 95,775
Time Warner Inc.(2) 5,000,000 87,000
Volkswagen AG, nonvoting preferred(1) 2,565,000 82,679
Pearson PLC(1) 5,954,000 71,344
Makita Corp.(1) 3,335,000 65,194
Honda Motor Co., Ltd.(1) 1,320,000 64,627
Limited Brands, Inc. 3,107,517 63,922
Li & Fung Ltd.(1) 32,000,000 61,021
Ford Motor Co. 6,100,000 60,878
Rank Group PLC(1) 12,500,000 60,842
Canon Sales Co., Inc.(1) 2,950,000 52,574
Kesa Electricals PLC(1) 10,295,196 50,110
Fairmont Hotels & Resorts Inc. 1,375,000 47,424
Gap, Inc. 2,030,521 42,641
Clear Channel Communications, Inc. 1,438,800 42,056
LG Electronics Inc.(1) 528,080 38,182
Fuji Heavy Industries Ltd.(1) 8,900,000 37,340
Carnival Corp., units 680,000 35,972
Koninklijke Philips Electronics NV(1) 1,200,000 30,610
Swatch Group Ltd(1) 415,000 25,240
Comcast Corp., Class A(2) 700,000 22,540
News Corp. Inc. 1,219,458 19,670
Mediaset SpA(1) 1,400,000 16,480
Metropole Television(1) 310,000 7,744
Suzuki Motor Corp.(1) 380,000 6,207
TI Automotive Ltd., Class A(1,2) 1,068,000 --
3,928,844
CONSUMER STAPLES -- 8.85%
Altria Group, Inc. 10,257,000 688,655
Diageo PLC(1) 25,850,000 372,143
Nestle SA(1) 1,098,000 289,059
Tesco PLC(1) 45,442,500 258,476
Unilever NV(1) 2,478,000 164,296
Unilever NV (New York registered) 1,265,000 84,173
Foster's Group Ltd.(1) 44,635,814 181,704
Reynolds American Inc. 1,900,000 157,529
Imperial Tobacco Group PLC(1) 5,641,413 152,485
Gallaher Group PLC(1) 7,650,000 117,957
Altadis, SA(1) 2,240,000 91,763
Loblaw Companies Ltd. 1,440,000 83,332
Coca-Cola West Japan Co. Ltd.(1) 3,535,200 79,376
Koninklijke Ahold NV(1,2) 10,335,000 77,884
Kimberly-Clark de Mexico, SA de CV, Class A, ordinary participation certificates 22,846,100 72,497
METRO AG(1) 1,410,000 70,395
Fomento Economico Mexicano, SA de CV (ADR) 1,053,700 57,690
Groupe Danone(1) 593,000 54,622
Uni-Charm Corp.(1) 1,305,000 53,051
Nissin Food Products Co., Ltd.(1) 1,960,000 51,870
Coca-Cola Co. 1,150,000 51,325
PepsiCo, Inc. 700,000 39,410
Procter & Gamble Co. 700,000 38,605
Wal-Mart Stores, Inc. 750,000 35,423
UST Inc. 655,900 29,227
Woolworths Ltd.(1) 2,340,334 28,405
Avon Products, Inc. 660,000 26,228
L'Oreal SA(1) 320,000 23,245
Cia. de Bebidas das Americas -- AmBev, preferred nominative (ADR) 590,000 17,812
SABMiller PLC(1) 850,716 13,063
Royal Numico NV(1,2) 310,000 12,380
Coca-Cola HBC SA(1) 352,182 9,313
Wolverhampton & Dudley Breweries, PLC(1) 164,256 3,305
3,486,698
MATERIALS -- 8.73%
Cia. Vale do Rio Doce, preferred nominative, Class A 9,000,400 222,579
Cia. Vale do Rio Doce, ordinary nominative (ADR) 1,797,600 52,184
Dow Chemical Co. 5,664,000 256,522
Barrick Gold Corp. 9,750,000 224,152
BASF AG(1) 3,040,000 201,391
Potash Corp. of Saskatchewan Inc. 2,180,000 197,094
AngloGold Ashanti Ltd.(1) 5,650,000 193,090
Akzo Nobel NV(1) 3,675,000 144,251
L'Air Liquide(1) 812,500 141,054
Phelps Dodge Corp. 1,500,000 131,100
Freeport-McMoRan Copper & Gold Inc., Class B 3,569,800 126,014
Newcrest Mining Ltd.(1) 11,466,000 114,718
James Hardie Industries Ltd.(1) 21,986,900 111,592
LG Chem, Ltd.(1) 3,013,000 106,065
Formosa Chemicals & Fibre Corp.(1) 53,202,000 96,173
Formosa Plastics Corp.(1) 55,600,000 94,419
Norske Skogindustrier ASA, Class A(1) 4,870,000 74,228
Gold Fields Ltd.(1) 6,500,000 71,276
International Paper Co. 2,100,000 67,641
Weyerhaeuser Co. 1,040,000 66,716
Georgia-Pacific Corp., Georgia-Pacific Group 1,998,300 66,224
Bayer AG(1) 1,805,000 60,722
Eastman Chemical Co. 1,000,000 58,780
Impala Platinum Holdings Ltd.(1) 702,389 58,700
DSM NV(1) 834,828 55,938
UPM-Kymmene Corp.(1) 2,784,000 53,700
Ivanhoe Mines Ltd.(2) 7,000,000 52,123
POSCO(1) 256,730 45,425
Nan Ya Plastics Corp.(1) 32,500,000 44,167
Nitto Denko Corp.(1) 750,000 42,130
Placer Dome Inc. 2,600,000 34,777
Sonoco Products Co. 1,200,000 31,956
Sumitomo Chemical Co., Ltd.(1) 6,443,000 29,799
Cemex, SA de CV, ordinary participation certificates, units (ADR) 556,200 21,247
Lyondell Chemical Co. 700,000 16,618
Yara International ASA(1) 1,131,800 16,599
Stora Enso Oyj (ADR) 1,086,300 14,361
M-real Oyj, Class B(1) 2,369,500 12,762
Sappi Ltd.(1) 1,239,000 11,810
Smurfit-Stone Container Corp.(2) 974,200 10,589
Alcoa Inc. 315,000 8,536
3,439,222
ENERGY -- 6.81%
"Shell" Transport and Trading Co., PLC(1) 51,290,000 $ 444,836
"Shell" Transport and Trading Co., PLC (ADR) (New York registered) 1,325,000 69,496
Royal Dutch Petroleum Co. (New York registered) 3,435,000 201,222
Royal Dutch Petroleum Co.(1) 2,527,000 146,880
ENI SpA(1) 16,147,600 413,360
TOTAL SA(1) 1,065,000 234,899
TOTAL SA (ADR) 250,000 27,798
Petroleo Brasileiro SA -- Petrobras, preferred nominative (ADR) 3,120,000 130,728
Petroleo Brasileiro SA -- Petrobras, ordinary nominative (ADR) 2,000,000 94,400
Husky Energy Inc. 4,165,000 138,778
Norsk Hydro ASA(1) 1,665,900 134,895
Oil & Natural Gas Corp. Ltd.(1) 5,858,000 123,462
Canadian Oil Sands Trust(3) 1,100,000 70,240
Canadian Oil Sands Trust 30,041 1,918
Reliance Industries Ltd.(1) 5,867,000 72,015
Sunoco, Inc. 658,900 67,584
Schlumberger Ltd. 720,000 49,227
Williams Companies, Inc. 1,935,000 35,623
Exxon Mobil Corp. 600,000 33,720
ChevronTexaco Corp. 620,000 33,344
Marathon Oil Corp. 670,000 32,488
Sasol Ltd.(1) 1,100,000 27,090
SBM Offshore NV(1) 418,259 26,773
Kinder Morgan, Inc. 300,000 23,313
SK Corp.(1) 406,820 21,098
Unocal Corp. 320,000 18,237
Enbridge Inc. 460,000 12,262
2,685,686
HEALTH CARE -- 6.46%
Roche Holding AG(1) 3,039,832 383,445
Sanofi-Aventis(1) 4,219,900 380,036
AstraZeneca PLC (Sweden)(1) 6,129,800 260,422
Novo Nordisk A/S, Class B(1) 4,966,000 254,894
Fresenius Medical Care AG(1) 2,050,000 160,772
Fresenius Medical Care AG, preferred(1) 1,300,000 79,653
Bristol-Myers Squibb Co. 6,290,000 159,514
Merck KGaA(1) 2,041,000 157,906
Mediceo Holdings Co. Ltd.(1,4) 11,121,000 148,795
Eli Lilly and Co. 2,200,000 128,260
Pfizer Inc 3,000,000 83,700
Johnson & Johnson 1,130,000 75,823
Abbott Laboratories 1,541,300 74,352
Forest Laboratories, Inc.(2) 1,865,000 71,952
Shionogi & Co., Ltd.(1) 4,050,000 55,650
Astellas Pharmaceutical Inc.(1) 1,460,000 51,991
CSL Ltd.(1) 790,000 17,145
2,544,310
INFORMATION TECHNOLOGY -- 5.37%
Hewlett-Packard Co. 10,500,000 236,355
Taiwan Semiconductor Manufacturing Co. Ltd.(1) 95,976,131 173,621
Taiwan Semiconductor Manufacturing Co., Ltd. (ADR) 5,260,000 48,445
Microsoft Corp. 7,348,700 189,596
ASML Holding NV(1,2) 5,746,000 92,446
ASML Holding NV (New York registered)(2) 5,105,000 82,293
Murata Manufacturing Co., Ltd.(1) 2,182,000 110,831
Xerox Corp.(2) 8,000,000 108,560
Mediatek Incorporation(1) 12,559,969 108,215
Samsung Electronics Co., Ltd.(1) 214,118 103,336
Intersil Corp., Class A 5,250,000 98,490
Cisco Systems, Inc.(2) 5,041,500 97,704
International Business Machines Corp. 1,145,000 86,505
Sun Microsystems, Inc.(2) 20,500,000 78,105
Telefonaktiebolaget LM Ericsson, Class B(1) 12,095,000 38,051
Telefonaktiebolaget LM Ericsson, Class B (ADR) 895,000 28,130
livedoor Co., Ltd.(1,2) 22,083,000 62,353
Samsung SDI Co., Ltd.(1) 585,000 55,848
Delta Electronics, Inc.(1) 30,870,700 49,970
First Data Corp. 1,250,000 47,287
Hoya Corp.(1) 387,000 43,200
Intel Corp. 1,400,000 37,702
Rohm Co., Ltd.(1) 350,000 32,667
Texas Instruments Inc. 1,000,000 27,640
Agilent Technologies, Inc.(2) 950,000 22,810
Analog Devices, Inc. 600,000 22,248
Chi Mei Optoelectronics Corp.(1) 12,000,000 18,908
Corning Inc.(2) 723,513 11,345
Kyoden Co., Ltd.(1) 200,000 1,960
Premier Farnell PLC(1) 200,000 589
2,115,210
INDUSTRIALS -- 5.20%
United Parcel Service, Inc., Class B 2,771,700 204,136
Sandvik AB(1) 4,936,000 194,581
Wesfarmers Ltd.(1) 6,030,000 166,919
General Electric Co. 4,300,000 156,864
Singapore Technologies Engineering Ltd.(1) 98,500,000 141,912
Tyco International Ltd. 4,830,000 139,732
Atlas Copco AB, Class A(1) 6,720,000 102,452
Atlas Copco AB, Class B(1) 1,800,000 25,266
Qantas Airways Ltd.(1) 50,615,409 122,393
Siemens AG(1) 1,500,000 109,398
3M Co. 1,225,000 93,896
Marubeni Corp.(1) 24,500,000 77,749
United Technologies Corp. 665,000 70,955
American Standard Inc. 1,227,700 52,546
Deere & Co. 750,000 49,612
Manpower Inc. 1,150,000 45,805
Brambles Industries Ltd.(1) 6,600,000 39,555
FANUC LTD(1) 550,000 34,098
Mitsubishi Corp.(1) 2,400,000 31,776
Deutsche Post AG(1) 1,250,000 29,361
Vedior NV(1) 2,000,000 28,403
Asahi Diamond Industrial Co., Ltd.(1,4) 3,950,000 24,740
Rentokil Initial PLC(1) 9,090,000 24,406
JS Group Corp.(1) 1,300,000 22,131
Brambles Industries PLC(1) 4,000,000 21,917
Cooper Industries, Ltd., Class A 315,000 21,716
Singapore Post Private Ltd.(1) 32,160,000 17,706
2,050,025
UTILITIES -- 4.90%
Veolia Environnement(1) 8,142,300 $ 307,107
E.ON AG(1) 3,179,214 275,308
National Thermal Power Corp. Ltd.(1) 108,865,000 208,559
Scottish Power PLC(1) 23,590,000 198,697
Gas Natural SDG, SA(1) 6,869,500 192,745
National Grid Transco PLC(1) 13,745,000 134,312
National Grid Transco PLC (ADR) 439,725 21,687
Korea Electric Power Corp.(1) 3,823,280 112,762
GAIL (India) Ltd.(1) 15,440,000 75,425
Southern Co. 1,450,000 49,228
Exelon Corp. 875,000 40,994
Dominion Resources, Inc. 567,811 39,923
PG&E Corp. 1,080,000 38,632
Hong Kong and China Gas Co. Ltd.(1) 19,118,000 38,291
Cia. Energetica de Minas Gerais -- CEMIG, preferred nominative 1,260,000,000 38,229
FirstEnergy Corp. 780,000 34,554
Equitable Resources, Inc. 525,000 33,369
American Electric Power Co., Inc. 700,000 24,983
FPL Group, Inc. 594,000 24,146
Xcel Energy Inc. 925,000 17,048
Progress Energy, Inc. 350,000 15,481
Consolidated Edison, Inc. 180,000 8,192
1,929,672
MISCELLANEOUS -- 1.72%
Other common stocks in initial period of acquisition 677,972
Total common stocks (cost: $28,714,721,000) 34,460,519
Preferred stocks -- 0.03%
FINANCIALS -- 0.03%
Unibanco-Uniao de Bancos Brasileiros SA, units (GDR) 372,000 13,355
Total preferred stocks (cost: $13,321,000) 13,355
Rights -- 0.00%
INDUSTRIALS -- 0.00%
Sandvik AB, rights, expire 2005(2) 97,800 58
Total rights (cost: $0) 58
Shares or Market value
Convertible securities -- 0.81% principal amount (000)
CONSUMER DISCRETIONARY -- 0.26%
Ford Motor Co. Capital Trust II 6.50% cumulative convertible trust preferred 2032 2,496,050 $101,340
INFORMATION TECHNOLOGY -- 0.20%
Nortel Networks Corp. 4.25% convertible notes 2008 $40,000,000 36,750
Agere Systems Inc. 6.50% convertible notes 2009 $25,500,000 25,404
ASML Holding NV 5.50% convertible notes 2010 Euro 12,700,000 18,776
80,930
TELECOMMUNICATION SERVICES -- 0.11%
Crown Castle International Corp. 6.25% convertible preferred 2012(2) 635,200 30,013
Deutsche Telekom International Finance BV 6.50% convertible bonds 2006 Euro 10,000,000 14,065
44,078
HEALTH CARE -- 0.06%
Baxter International Inc. 7.00% convertible preferred 2006 400,000 units 22,200
UTILITIES -- 0.06%
Korea Deposit Insurance Corp. 2.25% convertible debentures 2005(3) $17,700,000 22,081
INDUSTRIALS -- 0.05%
Tyco International Group SA, Series B, 3.125% convertible debentures 2023 $15,000,000 20,606
MATERIALS -- 0.04%
Freeport-McMoRan Copper & Gold Inc. 5.50% convertible preferred(3) 20,000 17,915
FINANCIALS -- 0.03%
Travelers Property Casualty Corp. 4.50% convertible subordinated note 2032 $500,000 11,050
Total convertible securities (cost: $355,069,000) 320,200
Principal amount
Bonds & notes -- 1.22% (000)
GOVERNMENT & GOVERNMENT AGENCY BONDS & NOTES -- 0.54%
Brazilian Treasury Bill 0% 2006 R$370 132,779
United Mexican States Government, Series MI10, 8.00% 2013 MXP4,409 36,844
United Mexican States Government, Series M20, 8.00% 2023 4,436 34,359
United Mexican States Government 9.50% 2014 805 7,355
211,337
CONSUMER DISCRETIONARY -- 0.50%
General Motors Corp. 8.375% 2033 $192,348 147,680
General Motors Corp. 8.25% 2023 24,529 18,693
General Motors Corp. 7.20% 2011 7,290 6,275
General Motors Corp. 7.125% 2013 2,300 1,917
General Motors Acceptance Corp. 6.875% 2011 10,820 9,448
General Motors Acceptance Corp. 7.25% 2011 5,995 5,350
General Motors Acceptance Corp. 7.00% 2012 5,920 5,136
General Motors Acceptance Corp. 6.875% 2012 2,995 2,582
197,081
TELECOMMUNICATION SERVICES -- 0.06%
AT&T Wireless Services, Inc. 8.125% 2012 20,000 23,961
CONSUMER STAPLES -- 0.06%
Ahold Finance U.S.A., Inc. 8.25% 2010 $ 12,990 $ 14,224
Ahold Finance U.S.A., Inc. 6.25% 2009 9,065 9,292
23,516
ENERGY -- 0.04%
El Paso Corp. 7.875% 2012 14,500 14,645
INFORMATION TECHNOLOGY -- 0.02%
Flextronics International Ltd. 6.50% 2013 10,000 10,225
MATERIALS -- 0.00%
APP International Finance Co. BV 11.75% 2005(5) 1,150 592
Total bonds & notes (cost: $466,373,000) 481,357
Short-term securities -- 10.05%
Freddie Mac 2.85%-3.07% due 6/7-8/10/2005 289,800 289,142
Toyota Motor Credit Corp. 2.97%-3.09% due 6/20-7/21/2005 147,300 146,880
Toyota Credit Corp. Puerto Rico 3.04% due 7/7/2005 17,000 16,949
Dexia Delaware LLC 2.99%-3.13% due 6/23-8/9/2005 154,000 153,473
Barclays U.S. Funding Corp. 2.96%-3.105% due 6/17-7/21/2005 149,485 149,157
Danske Bank A/S, Series A 3.10%-3.13% due 7/20-8/3/2005 145,000 144,296
BNP Paribas Finance Inc. 2.93%-2.96% due 6/9-6/22/2005 142,900 142,721
HBOS Treasury Services PLC 2.93%-3.14% due 6/2-8/11/2005 140,000 139,542
Stadshypotek Delaware Inc. 2.94%-3.175% due 6/8-8/15/2005(3) 138,300 138,000
American Honda Finance Corp. 3.01%-3.10% due 7/6-7/27/2005 130,300 129,856
Royal Bank of Scotland PLC 2.88%-2.96% due 6/1-6/14/2005 125,000 124,919
Bank of Ireland 2.85%-3.175% due 6/3-8/22/2005(3) 125,000 124,446
KfW International Finance Inc. 2.92%-3.10% due 6/15-8/1/2005(3) 123,700 123,251
ANZ National (International) Ltd. 3.14%-3.21% due 8/10-8/24/2005(3) 122,300 121,456
Allied Irish Banks N.A. Inc. 2.93%-3.15% due 6/1-8/9/2005(3) 121,200 120,876
Canadian Imperial Bank of Commerce 2.96%-3.09% due 6/13-7/14/2005 64,700 64,698
Canadian Imperial Holdings Inc. 3.08% due 7/19/2005 50,000 49,791
Federal Home Loan Bank 2.81%-2.95% due 6/8-6/30/2005 109,100 108,939
Amsterdam Funding Corp. 3.07%-3.13% due 7/11-7/22/2005(3) 74,150 73,865
ABN-AMRO North America Finance Inc. 3.06% due 7/11/2005 35,000 34,879
Siemens Capital Co. LLC 2.91%-2.93% due 6/6-6/14/2005 100,000 99,919
HSBC USA Inc. 2.975%-3.03% due 6/9-6/28/2005 97,300 97,156
Calyon North America Inc. 3.025%-3.085% due 7/5-7/20/2005 91,300 90,978
Old Line Funding LLC 3.07% due 7/7/2005(3) 50,000 49,842
Thunder Bay Funding, LLC 3.02% due 6/16/2005(3) 40,000 39,946
Bank of Montreal 2.96% due 6/15/2005 89,700 89,698
CBA (Delaware) Finance Inc. 3.01%-3.10% due 6/6-7/25/2005 87,835 87,601
BMW U.S. Capital Corp. 2.90%-2.93% due 6/15-6/17/2005(3) 85,000 84,891
Shell Finance (U.K.) PLC 3.01%-3.05% due 7/1-7/14/2005 81,200 80,933
Mont Blanc Capital Corp. 3.10% due 7/18/2005(3) 43,800 43,623
ING (U.S.) Funding LLC 2.935% due 6/7/2005 36,000 35,980
Westpac Trust Securities N.Z. Ltd. 3.14%-3.15% due 8/9/2005 53,900 53,574
Westpac Capital Corp. 3.18% due 8/22/2005 23,475 23,304
IXIS Commerical Paper Corp. 2.94%-3.14% due 6/17-8/2/2005(3) 70,300 70,086
Spintab AB (Swedmortgage) 3.14%-3.17% due 8/5-8/17/2005 60,200 59,826
GlaxoSmithKline Finance PLC 2.82% due 6/3/2005 50,000 49,989
Barton Capital LLC 3.025% due 6/16/2005(3) 50,000 49,933
Edison Asset Securitization LLC 3.05% due 7/18/2005(3) 50,000 49,795
UBS Finance (Delaware) LLC 3.085% due 7/19/2005 50,000 49,790
Rabobank USA Financial Corp. 3.09% due 7/28/2005 50,000 49,765
Alcon Capital Corp 3.03%-3.06% due 7/11/2005(3) 45,000 44,844
DuPont (E.I.) de Nemours & Co. 2.86% due 6/2/2005 44,400 44,393
CAFCO, LLC 3.13% due 8/4/2005(3) 40,000 39,773
Bank of America Corp. 3.10% due 7/26/2005 37,600 37,419
International Lease Finance Corp. 2.94% due 6/6/2005 25,000 24,988
Tennessee Valley Authority 2.84% due 6/16/2005 25,000 24,969
Total Capital S.A. 3.06% due 7/22/2005(3) 25,000 24,894
Variable Funding Capital Corp. 3.10% due 7/27/2005(3) 25,000 24,882
National Australia Funding (DE) Inc. 3.06% due 7/15/2005(3) 24,100 24,008
DaimlerChrysler Revolving Auto Conduit LLC I 3.20% due 8/24/2005 14,415 14,306
Total short-term securities (cost: $3,958,098,000) 3,958,241
Total investment securities (cost: $33,507,582,000) 39,233,730
Other assets less liabilities 169,839
Net assets $39,403,569
"Miscellaneous" securities include holdings in their initial period of
acquisition that have not previously been publicly disclosed.
(1) Valued under fair value procedures adopted by authority of the Board of
Directors. At May 31, 2005, 224 of the fund's securities, including those
in "Miscellaneous" securities (with aggregate value of $22,974,495,000),
were fair valued under procedures that took into account significant price
changes that occurred between the close of trading in those securities and
the close of regular trading on the New York Stock Exchange.
(2) Security did not produce income during the last 12 months.
(3) Purchased in a private placement transaction; resale may be limited to
qualified insititutional buyers; resale to the public may require
registration. The total value of all such restricted securities was
$1,358,915,000, which represented 3.45% of the net assets of the fund.
(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
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 - Portfolio Managers of Closed-End Management Investment Companies
Not applicable to this Registrant, insofar as the Registrant is not a closed-end
management investment company.
ITEM 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers
Not applicable to this Registrant, insofar as the Registrant is not a closed-end
management investment company.
ITEM 10 - 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 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 11 - Controls and Procedures
(a) 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.
(b) There were no changes in the Registrant's internal controls over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act of
1940) that occurred during the Registrant's 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 12 - Exhibits
(a) (1) The Code of Ethics - not applicable for filing of Semiannual Reports to
Shareholders.
(a) (2) The certifications required by Rule 30a-2 of the Investment Company Act
of 1940, as amended, and Sections 302 and 906 of the Sarbanes-Oxley Act of
2002 are attached as exhibits hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
CAPITAL WORLD GROWTH AND INCOME FUND, INC.
By /s/ Stephen E. Bepler
- ------------------------------------
Stephen E. Bepler, President and PEO
Date: August 8, 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
- ------------------------------------
Stephen E. Bepler, President and PEO
Date: August 8, 2005
By /s/ Jeffrey P. Regal
- -----------------------------------
Jeffrey P. Regal, Treasurer and PFO
Date: August 8, 2005