[The American Funds Group(r)]
NEW WORLD FUND
SEEING NEW WORLDS THROUGH EXPERIENCED EYES
FIRST REPORT TO SHAREHOLDERS, FOR THE PERIOD ENDED OCTOBER 31, 1999
[photo: person sitting on boat, while working on laptop computer]
New World Fund(SM) seeks long-term growth of capital by investing in stocks and
bonds with significant exposure to countries that have developing economies
and/or markets.
New World Fund is one of the 29 mutual funds in The American Funds Group,(r)
the nation's third-largest mutual fund family. For more than six decades,
Capital Research and Management Company, the American Funds adviser, has
invested with a long-term focus based on thorough research and attention to
risk.
Lifetime total return
(from June 17, 1999, through October 31, 1999) +0.5%
Fund results in this report were computed without a sales charge, unless
otherwise indicated. Here is the fund's total return, with all distributions
reinvested, for the period ended October 31, 1999, assuming payment of the
5.75% maximum sales charge: Lifetime (since 6/17/99): -5.32%. Sales charges are
lower for amounts over $50,000.
FIGURES SHOWN ARE PAST RESULTS AND ARE NOT PREDICTIVE OF FUTURE RESULTS. SHARE
PRICE AND RETURN WILL VARY, SO YOU MAY LOSE MONEY. INVESTING FOR SHORT PERIODS
MAKES LOSSES MORE LIKELY. INVESTMENTS ARE NOT FDIC-INSURED, NOR ARE THEY
DEPOSITS OF, OR GUARANTEED BY, A BANK OR ANY OTHER ENTITY. INVESTING OUTSIDE
THE UNITED STATES (ESPECIALLY IN DEVELOPING COUNTRIES) ENTAILS ADDITIONAL
RISKS, SUCH AS CURRENCY FLUCTUATIONS, AS MORE FULLY DESCRIBED IN THE
PROSPECTUS. HIGH-YIELD BONDS ARE SUBJECT TO GREATER FLUCTUATIONS IN VALUE AND
RISK OF LOSS OF INCOME AND PRINCIPAL.
FELLOW SHAREHOLDERS:
WE ARE PLEASED to have this opportunity to welcome you as a shareholder of New
World Fund, the newest member of The American Funds Group.
Your fund has a unique strategy for participating in the growth of the
developing world: It may invest directly in the companies and debt securities
of developing countries; it can also seek indirect exposure to these countries
by investing in developed-world companies with significant assets or revenues
in the developing world. This mix of assets and exposures should provide the
fund with diversification and liquidity, which may lessen the volatility
historically associated with investing in developing markets.
By the close of the initial offering period on June 17, the fund had received
more than $600 million in assets, surpassing our most optimistic expectations.
We closed the fund for 90 days to allow time to invest those assets in a
deliberate manner, and then reopened the fund on September 15. By October 31,
the end of the fiscal period covered in this report, assets had grown to more
than $730 million, mostly as a result of new investments by shareholders.
INVESTMENT RESULTS
New World Fund began life in what proved to be a turbulent period for
developing markets. After rising together for the first half of the year, world
stock markets took different directions after June. Most developed markets
continued to rise, while developing markets declined somewhat.
Between June 17 and October 31, New World Fund's net asset value increased from
$23.56 per share to $23.67, for a modest total return of 0.5%. Reflecting the
divergence in world markets, the unmanaged Morgan Stanley Capital International
(MSCI) World Index, a measure of 23 major stock markets around the world,
posted a gain of 3.7% over this same brief period, while the unmanaged MSCI
Emerging Markets Free (EMF) Index, which measures 25 developing country stock
markets, fell 3.1%. Because the fund invests in both developed and developing
markets, neither index perfectly captures the fund's investment universe. A
more comprehensive measure of the portfolio's equity component is the MSCI All
Country World Free Index, which blends the World and EMF indexes, weighted by
market capitalization. It rose 3.4% over the period.
Your fund also holds fixed-income securities for their total return potential.
In a rough year for bonds in general, emerging markets debt was one of the few
bright spots. Over the period, the JP Morgan Emerging Markets Bond Index Plus
rose 4.9%.
The softness in developing markets can be attributed to a number of events,
ranging from earthquakes in Turkey, Greece and Taiwan to uncertainty over
political elections in Indonesia and several Latin American countries.
Elections, even in developed countries, often have a volatile effect on stock
markets.
For the fund, this has meant opportunity: lower prices for what were already
attractively valued companies. The fund's cash position of approximately 19% on
October 31 is allowing us to take selective advantage of the situation.
[Begin Caption]
Prague, Czech Republic
[End Caption]
[Begin Sidebar]
WHERE THE FUND'S ASSETS WERE INVESTED
By percent of net assets on October 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
DEVELOPED MARKET EQUITIES 34.1%
ASIA
Japan 7.7%
Singapore 3.4
Hong Kong 2.4
Australia 1.4
Taiwan 1.3
THE AMERICAS
United States 8.9
EUROPE
United Kingdom 2.8
Sweden 1.8
Netherlands 1.7
France 1.0
Finland .8
Norway .7
Switzerland .2
DEVELOPING MARKET EQUITIES 35.7%
ASIA
South Korea 8.6
Philippines 1.9
China 1.3
India 1.0
Thailand .6
Indonesia .3
THE AMERICAS
Mexico 4.6
Brazil 4.5
Argentina 1.1
Venezuela .5
Chile .4
EUROPE
Hungary 2.9
Poland 1.6
Croatia .6
Greece .3
AFRICA/MIDDLE EAST
Israel 3.2
South Africa 1.4
OTHER
Supranational .9
DEVELOPING MARKET BONDS 11.5%
ASIA
Philippines 2.6
India .3
THE AMERICAS
Brazil 3.5
Argentina 2.1
Mexico 1.6
Panama .6
Venezuela .3
EUROPE
Turkey .5
CASH & EQUIVALENTS 18.7%
TOTAL 100.0%
</TABLE>
[End Sidebar]
[Begin Caption]
Mexico City, Mexico
[End Caption]
THE FUND'S PORTFOLIO
Your fund's investment adviser, Capital Research and Management Company,
invests with a long-term focus based on thorough research into individual
companies. We have found that this company-by-company approach is more
effective over the long run than an approach based on geographic or industry
weightings. Among the benefits of this company focus is broad diversification.
Thus far, the portfolio includes holdings in 94 companies based in 32
countries, representing a broad range of industries.
At times, this emphasis on individual companies may result in sizable holdings
in a particular country or sector; where it does so, as with the
telecommunications holdings currently in the fund's portfolio, it is because
that is where our analysts have found attractively valued companies with solid
long-term prospects.
Here is a brief look, arranged by region, at some of the companies in which you
are part owner.
ASIA AND THE PACIFIC BASIN
Asia continued to improve almost everywhere. In Japan, a second consecutive
quarter of positive economic growth lent credence to the continuing economic
recovery there. Buoyed by investor confidence, the yen rose strongly against
both the dollar and the euro, helping to bolster equity returns. At 7.7% of
assets, Japan is the fund's fourth-largest geographic concentration. Many of
the fund's Japanese holdings are stocks of companies in the process of
restructuring to remain globally competitive. Some companies are closing
unprofitable divisions and, for the first time in Japan, rethinking the concept
of lifetime employment. Sony, the consumer electronics giant and one of the
fund's ten largest holdings, represents this new resolve among Japanese
management teams. Also among the fund's larger holdings were two Japanese
automakers, Honda and Suzuki.
Australia was a slightly different matter. It weathered the Asian financial
crisis better than other economies in the region, but growth is sluggish and
likely to remain so until recovery has reinvigorated its neighbors and trading
partners. That said, we have found attractive opportunities in Australia. One
example is Coca-Cola Amatil. The Coke/(r)/ bottler has operations in Australia,
Indonesia, South Korea and the Philippines, with nearly half its earnings
coming from its domestic market. The financial crisis in the region hit the
company with a double punch: not only lower sales at home, but increased
competition in its other markets from local bottlers who discounted their
products steeply. While recovery may take time, we remain impressed by the
company's long-term prospects. Bottling has historically been a profitable
business, and the company serves a territory with ample room for growth. The
stock is down 23% for the period, and we have been adding to our position.
Among Asia's developing economies, South Korea continued to lead the way. The
dismantling of the debt-ridden Daewoo conglomerate gave proof of the
government's commitment to business and financial restructuring. South Korea is
the fund's second-largest geographic concentration, and three of our ten
largest holdings are Korean firms, including Samsung Electronics and Samsung
Electro-Mechanics. The first Samsung is a consumer electronics manufacturer
whose products are sold around the world; the other Samsung makes components
for cellular telephones, supplying leading developed world telecommunications
companies such as Ericsson.
THE AMERICAS
Despite stronger-than-expected earnings, U.S. large-capitalization stocks
posted only modest gains, with Standard & Poor's 500 Composite Index rising
2.4% over the fund's reporting period. Small-cap and cyclical stocks, which had
benefited from a broadening of the market earlier in the year, dropped sharply.
Investors were rattled by rising interest rates and hints of inflation in the
prices of raw materials and crude oil.
At nearly 9% of assets, the United States is the fund's largest geographic
concentration. Holdings include a number of familiar multinational companies,
such as Colgate-Palmolive and Sara Lee. In this country, Sara Lee is best-known
for its frozen baked-goods business, but it is also one of the leading
suppliers of hosiery in Latin America.
Brazil is the fund's third-largest geographic concentration, accounting for 8%
of net assets. Following a devaluation of the currency earlier in the year, the
Brazilian government is continuing to take steps to stimulate growth. A tight
rein on the budget should lead to lower interest rates, which may, in turn,
lead the country out of recession. Meanwhile, Brazilian companies should
benefit from a weakening U.S. dollar and the recent rise in commodities prices.
[Begin Caption]
Budapest, Hungary
[End Caption]
Several cellular phone companies are among our Brazilian holdings. Cellular
providers have phenomenal growth prospects in developing countries, where
people frequently forego the phone in the home and go straight to cellular. The
fund's other Latin American telecommunications holdings include Telefonos de
Mexico, Telecom Argentina and Telecomunicaciones de Chile.
We have also found attractive bond investments in Latin America. Bonds
accounted for just under 12% of the portfolio; more than half of these were
issued in Latin America. The fund owns both corporate issues, including
Televisa, the Mexican media company, and government bonds. The fund held 3.5%
of assets in Brazilian C-bonds, which offer a very attractive current yield. We
would expect ongoing economic and political reforms to generate some capital
appreciation as well.
[photo: Woman in kimono, standing next to bullet trains]
EUROPE
European stocks continued to climb after midyear as the region's economic
recovery, which had energized only a handful of industries until then, finally
took hold across the continent. Consumer confidence and spending rose in
France, along with the stock market. German exporters benefited from a
weakening of the euro and improving conditions in Asia. Throughout Europe,
mergers and acquisitions continued at a rapid pace, as companies seek to become
globally competitive in size and scope. The only damper on European recovery
was intentional: To forestall a possibly overheating domestic economy and
relieve a tight labor market, the Bank of England raised short-term interest
rates in September.
One of the fund's larger holdings is Ericsson, the Swedish telecommunications
equipment manufacturer whose products are sold in more than 100 countries.
Other European holdings with a presence in developing markets included
Carrefour, a food retailer based in France, and AstraZeneca, a pharmaceutical
conglomerate based in the United Kingdom.
Greece and Turkey led developing markets in Europe, up 26.4% and
14.7%,/1/respectively, despite earthquakes in both countries that temporarily
depressed stock prices. Our largest concentration of assets in developing
Europe, however, was in Hungary. Magyar Tavkozlesi is the country's dominant
telecommunications provider. MOL Magyar is an oil refiner that saw its business
disrupted by the nearby conflict in Serbia. The disruption also required the
company to forge new relationships, which has created new opportunities. Now
that peace has been restored, we expect business for the company to improve
dramatically.
/1/Based on MSCI country indexes for the period June 30, 1999, through October
31, 1999, expressed in dollar terms with reinvestment of dividends.
We are happy with the progress we have made thus far, and encouraged by the
number of attractive investment opportunities we have found on your behalf. We
are also most gratified by the reception to the fund and its unique investment
strategy, specifically designed for long-term individual shareholders such as
yourself. As we embark on this endeavor together, we look forward to a long and
successful relationship, and to reporting to you again in six months.
Cordially,
/s/Gina H. Despres
Gina H. Despres
Chairman of the Board
/s/Robert W. Lovelace
Robert W. Lovelace
President
December 9, 1999
SEEING NEW WORLDS THROUGH EXPERIENCED EYES
[Begin Caption]
Santiago, Chile
[End Caption]
In the early 1950s, it took 24 hours - and three stops - to fly from New York
to Tokyo. The Berlin Wall hadn't even been built yet, let alone torn down. It
was a time when few U.S. citizens ventured abroad and virtually none of their
investments did. But investment professionals from Capital Research and
Management Company were already crisscrossing the globe.
EVOLUTION OF A GLOBAL PERSPECTIVE
When Capital Research and Management Company, investment adviser to New World
Fund and the 28 other American Funds, first extended its research beyond our
borders, the focus was on the overseas subsidiaries of U.S. companies.
Portfolio counselors and research analysts met, not just with the management
teams of these companies, but also called on their competitors and suppliers,
regulators, bankers and government officials.
In the process, long before global investing became commonplace, Capital
Research developed a global understanding of entire industries - and a reasoned
appreciation for the opportunities to be found around the world.
Capital Research opened its first overseas investment office, in Geneva, in
1962. A London office followed in 1979. Over the next 10 years, offices were
also established in Tokyo, Hong Kong and Singapore.
SETTING THE STANDARD
As in any new endeavor, there were challenges. Capital Research's first
investment analysts abroad uncovered obstacles along with the opportunities. So
Capital Research set out to overcome them.
An immediately apparent problem was that measuring investment results outside
the United States was difficult. Indexes, which are useful as benchmarks,
didn't exist for many industries - and even entire countries. Needing a
solution, Capital Research created authoritative gauges of the world's stock
markets. Capital International Indexes/1/ - such as the Europe, Australasia and
Far East (EAFE) and Emerging Markets Free (EMF) - are the standards the
financial world still relies on today.
/1/Commercial rights were sold to Morgan Stanley in 1986.
Another obstacle was the lack of reliable, comprehensive information. At first,
countries and companies weren't accustomed to providing it. Capital Research
was often the first U.S. investment manager ever to call on some overseas
companies. For the first time, an interested U.S. investor was asking about
business growth, sales forecasts, profits, costs, labor and a range of other
factors bearing on a company's prospects. As a result, many companies started
keeping and reporting the types of information that potential investors
require.
In many ways, Capital Research laid the groundwork for investment managers who
followed, and along the way, built an unparalleled base of information.
[Begin Sidebar]
CAPITAL RESEARCH AND MANAGEMENT COMPANY WAS ONE OF THE FIRST U.S. INVESTORS TO
RECOGNIZE THE POTENTIAL OF GLOBAL INVESTING.
[End Sidebar]
UNPARALLELED GLOBAL RESEARCH
Capital Research's pioneering commitment to global research has paid a growing
dividend, so to speak. Early research into overseas subsidiaries of U.S.
companies had also uncovered promising non-U.S. companies. Likewise, growing
familiarity with non-U.S. companies uncovered even further opportunities. Many
non-U.S. companies served - and still serve - developing markets where U.S.
companies are not active. What's more, companies both in the U.S. and around
the world had begun to shift components of their business, such as assembly and
testing, to developing countries. As a result, Capital Research soon had
analysts researching companies in countries that did not yet have stock
exchanges.
By 1986, Capital Research's long-time global presence and unique perspective on
developing markets were among the reasons that an affiliate of the World Bank
selected it to manage an institutional emerging markets fund - the first of its
kind./2/ In 1999, Capital Research created New World Fund, another first of its
kind. The identification of "Qualified Developing Countries," along with the
fund's flexible mix of assets and emphasis on liquidity, make it unique among
mutual funds that seek to participate in the growth of developing markets.
/2/In 1988, management of the fund was assumed by Capital International, Inc.,
a newly created affiliate of the Capital organization.
CAPITAL RESEARCH: A TRUSTED GUIDE TO NEW WORLDS
As a shareholder in New World Fund, you've acquired the benefit of knowledge
gained from more than 45 years of global investing, and the resources and
expertise of more than 100 investment professionals based in 9 offices around
the world. On your behalf, Capital Research's portfolio counselors and research
analysts made more than 9,000 research visits in 47 countries last year. And it
is not hyperbole to say that this endeavor has just one aim: to best serve the
interests of shareholders in New World Fund and the other American Funds.
New World Fund benefits not only from this comprehensive global research effort
but also from Capital Research's presence in developing markets. The research
analysts behind your fund made more than 130 visits to companies in Latin
America last year and 34 visits in Africa and the Middle East. Analysts were
also on the ground, kicking tires and asking tough questions, on hundreds of
visits to Eastern Europe, Asia and the Pacific Basin.
Developing countries should account for more than 50% of the world's estimated
incremental economic growth over the next decade, according to Capital
International. There is excitement in those numbers, and there is opportunity.
The investment professionals of Capital Research and Management Company are
honored by your trust in them and committed to bringing the best of those
opportunities to you.
[photo: man speaking on cellular phone]
WHAT MAKES THE AMERICAN FUNDS DIFFERENT?
[photos: American flag, globe, map]
AS A SHAREHOLDER in New World Fund you are also a member of The American Funds
Group,(r) the nation's third-largest mutual fund family. You won't find us
advertised, yet thousands of financial advisers recommend the American Funds
for their clients' serious money - money set aside for education, a home,
retirement and other important dreams.
What the 29 funds in our group have in common is a commitment to your best
interests and the proven approach of our investment adviser, Capital Research
and Management Company. In business since 1931, Capital's calling cards
include:
* A LONG-TERM, VALUE-ORIENTED APPROACH: Rather than follow short-term fads, we
rely on our own intensive research to find well-managed companies with
reasonably priced shares and solid, long-term potential. Despite our size, we
offer relatively few funds compared with many large fund families, allowing us
to maintain a careful focus on our objectives and enabling you to benefit from
economies of scale.
* A GLOBAL PERSPECTIVE: We opened our first overseas office in 1962, well
before most mutual funds began investing internationally. Today, the American
Funds draw on one of the industry's most globally integrated research networks.
We spend substantial resources getting to know companies and industries around
the world.
* A MULTIPLE PORTFOLIO COUNSELOR SYSTEM: More than 40 years ago, we developed a
unique strategy for managing investments that blends teamwork with individual
accountability. Every American Fund is divided among a number of portfolio
counselors, each of whom manages his or her portion independently, within each
fund's objectives; in most cases, research analysts manage a portion as well.
Over time, this method has contributed to consistency of results and continuity
of management.
* EXPERIENCED INVESTMENT PROFESSIONALS: Nearly 90% of the portfolio counselors
who serve the American Funds were in the investment business before the stock
market decline in October 1987. Long tenure and experience through a variety of
market conditions mean we aren't "practicing" with your money.
* A COMMITMENT TO LOW OPERATING EXPENSES: You can't control market returns, but
you can control what you invest in and how much you pay to own it. American
Funds provide exceptional value for shareholders, with operating expenses that
are among the lowest in the mutual fund industry. Our portfolio turnover rates
are low as well, keeping transaction costs and tax consequences contained.
A PORTFOLIO FOR EVERY INVESTOR
Most financial advisers suggest that investors balance their portfolios by
investing across several types of investments. Which mix is right for you? That
depends on a number of things - including your risk tolerance, investment time
horizon and financial goals. The American Funds Group offers 29 funds with an
array of investment objectives to help you and your financial adviser build a
portfolio specifically tailored to your needs.
GROWTH FUNDS
Emphasis on long-term growth through stocks
AMCAP Fund(r)
EuroPacific Growth Fund(r)
The Growth Fund of America(r)
The New Economy Fund(r)
New Perspective Fund(r)
New World Fund(SM)
SMALLCAP World Fund(r)
GROWTH-AND-INCOME FUNDS
Emphasis on long-term growth and dividends through stocks
American Mutual Fund(r)
Capital World Growth and Income Fund(SM)
Fundamental Investors(SM)
The Investment Company of America(r)
Washington Mutual Investors Fund(SM)
EQUITY-INCOME FUNDS
Emphasis on above-average income and growth through stocks and/or bonds
Capital Income Builder(r)
The Income Fund of America(r)
BALANCED FUND
Emphasis on long-term growth and current income through stocks and bonds
American Balanced Fund(r)
INCOME FUNDS
Emphasis on current income through bonds
American High-Income Trust(SM)
The Bond Fund of America(SM)
Capital World Bond Fund(r)
Intermediate Bond Fund of America(r)
U.S. Government Securities Fund(SM)
TAX-EXEMPT INCOME FUNDS
Emphasis on tax-free current income through municipal bonds
American High-Income Municipal Bond Fund(r)
Limited Term Tax-Exempt Bond Fund of America(SM)
The Tax-Exempt Bond Fund of America(r)
State-specific tax-exempt funds
The Tax-Exempt Fund of California(r)
The Tax-Exempt Fund of Maryland(r)
The Tax-Exempt Fund of Virginia(r)
MONEY MARKET FUNDS
Emphasis on stable monthly income through money market instruments
The Cash Management Trust of America(r)
The Tax-Exempt Money Fund of America(SM)
The U.S. Treasury Money Fund of America(SM)
FOR MORE COMPLETE INFORMATION ABOUT ANY OF THE FUNDS, INCLUDING CHARGES AND
EXPENSES, PLEASE OBTAIN A PROSPECTUS FROM YOUR FINANCIAL ADVISER, DOWNLOAD ONE
FROM OUR WEB SITE AT WWW.AMERICANFUNDS.COM, OR PHONE THE FUND'S TRANSFER AGENT,
AMERICAN FUNDS SERVICE COMPANY, AT 800/421-0180. PLEASE READ THE PROSPECTUS
CAREFULLY BEFORE YOU INVEST OR SEND MONEY. FOR MORE INFORMATION, ASK YOUR
FINANCIAL ADVISER FOR A COPY OF A PORTFOLIO FOR EVERY INVESTOR.
<TABLE>
New World Fund, Inc.
Investment Portfolio, October 31, 1999
<S> <C> <C> <C>
Industry Diversification
Percent of Net Assets
8.60% Diversified Telecommunication Services
7.71% Electronic Components
6.93% Banking
4.45% Electrical & Electronics
3.81% Beverages & Tobacco
38.26% Other Industries
11.51% Bonds & Notes
18.73% Cash & Equivalents
Largest Percent
Individual of Net
Holdings Assets
Samsung Electro-Mechanics 2.79
Samsung Electronics 2.19
Sony 1.99
Telefonos de Mexico 1.96
Magyar Tavkozlesi 1.79
Unibanco-Uniao de Bancos Brasileiros 1.69
Trigem Computer 1.65
DBS Group Holdings 1.64
Honda Motor 1.52
First Pacific 1.46
Shares/ Market Percent
Principal Value of Net
EQUITY SECURITIES (common and preferred Amount (Million Assets
stocks and convertible debentures)
- -------------------------------------------- -------- ----------------
DIVERSIFIED TELECOMMUNICATION SERVICES - 8.60%
Telefonos de Mexico, SA de CV, Class L (ADR) (Mexico 167,000 14.279
Telefonos de Mexico, SA de CV 4.25% convertible $180,000 .189 1.96
debentures 2004
Magyar Tavkozlesi Rt. (ADR) (Hungary) 460,000 13.254 1.79
Korea Telecom Corp. (South Korea) 65,000 4.375
Korea Telecom Corp. (ADR)(1) 105,000 3.701 1.09
Nortel Inversora SA, preferred, Class B (ADR) 348,000 5.264 .71
(Argentina)
Global TeleSystems Group, Inc. (USA)(1) 168,700 4.038 .55
Mahanagar Telephone Nigam Ltd. (GDR) (India) 485,000 4.038 .55
Videsh Sanchar Nigam Ltd. (GDR) (India) 212,800 3.399 .46
Compania Anonima Nacional Telefonos de Venezuela - 130,000 3.356 .46
CANTV, Class D (ADR) (Venezuela)
Compania de Telecomunicaciones de Chile SA 170,000 2.837 .38
(ADR) (Chile)
Telecom Argentina STET-France Telecom SA, 100,000 2.750 .37
Class B (ADR) (Argentina)
Koninklijke PTT Nederland NV (Netherlands) 40,322 2.070 .28
ELECTRONIC COMPONENTS - 7.71%
Samsung Electro-Mechanics Co. (South Korea) 426,000 20.607 2.79
Samsung Electronics Co., Ltd. (South Korea) 96,900 16.163 2.19
Hon Hai Precision Industry Co. Ltd. (Taiwan)(1) 1,150,000 7.893 1.07
NatSteel Electronics Ltd. 1.50% convertible $5,180,00 5.115 .69
debentures 2004
Venture Manufacturing (Singapore) Ltd. (Singapore) 526,800 4.690 .63
Varitronix International Ltd. (Hong Kong) 1,161,000 2.503 .34
BANKING - 6.93%
Unibanco-Uniao de Bancos Brasileiros SA, units 539,500 12.476 1.69
(GDR) (Brazil)
DBS Group Holdings Ltd. (Singapore) 1,070,779 12.109 1.64
ABN AMRO Holding NV (Netherlands) 441,746 10.687 1.45
Wielkopolski Bank Kredytowy SA (Poland) 1,095,924 6.445 .87
Bangkok Bank PCL (Thailand)(1) 1,962,500 4.578 .62
Hanvit Bank (South Korea)(1) 833,650 3.094 .42
Kookmin Bank (South Korea) 110,000 1.716
Kookmin Bank, rights, expire 11/4/1999(1) 11,048 .067 .24
ELECTRICAL & ELECTRONICS - 4.45%
Trigem Computer Inc. (South Korea) 164,000 12.215 1.65
Telefonaktiebolaget LM Ericsson, Class B (Sweden) 216,500 9.019
Telefonaktiebolaget LM Ericsson, Class B (ADR) 35,000 1.496 1.42
ECI Telecom Ltd. (Israel) 300,000 8.738 1.19
LG Electronics Inc. (South Korea) 43,000 1.409 .19
BEVERAGES & TOBACCO - 3.81%
Coca-Cola Amatil Ltd. (Australia) 2,365,196 7.296 .99
Fomento Economico Mexicano, SA de CV (ADR) (Mexico) 186,000 6.103 .83
Coca-Cola Co. (USA) 87,000 5.133 .69
South African Breweries PLC (United Kingdom)(1) 517,000 4.530 .61
PepsiCo, Inc. (USA) 85,000 2.948 .40
Coca-Cola Beverages PLC (United Kingdom)(1) 1,100,000 2.114 .29
HEALTH & PERSONAL CARE - 3.69%
Avon Products, Inc. (USA) 241,800 7.798 1.06
Kimberly-Clark Corp. (USA) 105,000 6.628 .90
AstraZeneca PLC (United Kingdom) 143,300 6.484 .88
PLIVA d.d. (GDR) (Croatia) 425,000 4.633 .63
Novartis AG (Switzerland) 1,100 1.645 .22
AUTOMOBILES - 3.40%
Honda Motor Co., Ltd. (Japan) 266,000 11.240 1.52
Suzuki Motor Corp. (Japan) 669,000 10.177 1.38
Nissan Motor Co., Ltd. (Japan) 615,000 3.691 .50
WIRELESS TELECOMMUNICATION SERVICES - 3.13%
Telesp Celular SA, preferred nominative (Brazil) 135,357,3 7.059 .96
Tele Sudeste Celular Participacoes SA, preferred 201,500 4.030 .55
nominative (ADR) (Brazil)
Nuevo Grupo Iusacell, SA de CV (ADR) (Mexico)(1) 264,000 3.135 .42
China Telecom (Hong Kong) Ltd. (China)(1) 812,000 2.780 .38
Tele Nordeste Celular Participacoes SA, preferred 85,000 2.157 .29
nominative (ADR) (Brazil)
Tele Celular Sul Participacoes SA, preferred 115,000 2.013 .27
nominative (ADR) (Brazil)
Telemig Celular Participacoes SA, preferred 44,400 1.218 .16
nominative (ADR) (Brazil)
Partner Communications Co. (ADR) (Israel)(1) 47,600 .750 .10
BUSINESS SERVICES - 2.84%
Check Point Software Technologies Ltd. (Israel)(1) 45,000 5.206 .70
Seminis, Inc. (USA)(1) 554,000 4.328 .59
International Container Terminal Services, Inc. 44,500,00 4.283 .58
(Philippines)(1)
Sabre Group Holdings, Inc. (USA)(1) 70,200 3.120 .42
Zhejiang Expressway Co. Ltd. (China) 18,200,00 2.764 .37
Rentokil Initial PLC (United Kingdom) 395,000 1.309 .18
MULTI-INDUSTRY - 2.74%
First Pacific Co. Ltd. (Hong Kong) 18,572,00 10.758 1.46
Orkla AS, Class A (Norway) 335,000 4.678
Orkla AS, Class A, rights, expire 11/22/1999 (1) 335,000 .630 .72
Industriforvaltnings AB Kinnevik, Class B (Sweden) 133,000 2.640 .36
Benpres Holdings Corp. (Philippines)(1) 8,400,000 1.470 .20
BROADCASTING & PUBLISHING - 2.66%
MIH Ltd. (South Africa)(1) 148,000 6.623 .90
Grupo Televisa, SA, ordinary participation 132,000 5.610 .76
certificates (ADR) (Mexico)(1)
Nasionale Pers Beperk (South Africa) 473,000 2.946 .40
Matav-Cable Systems Media Ltd. (Israel) 100,000 2.311 .31
Antenna TV SA (ADR) (Greece)(1) 234,000 2.106 .29
METALS: NONFERROUS - 2.29%
Alcoa Inc. (USA) 109,000 6.622 .90
KGHM Polska Miedz SA (GDR) (Poland) 400,000 5.040 .68
Freeport-McMoRan Copper & Gold Inc., Class B (USA) 268,000 4.472 .61
Billiton PLC (United Kingdom) 178,000 .775 .10
FOOD & HOUSEHOLD PRODUCTS - 2.26%
Sara Lee Corp. (USA) 249,400 6.750 .91
Colgate-Palmolive Co. (USA) 52,300 3.164 .43
Reckitt & Colman PLC (United Kingdom) 253,500 3.009 .41
PT Indofood Sukses Makmur Tbk (Indonesia) 1,803,000 2.143 .29
Uni-President Enterprises Co. (Taiwan) 2,398,000 1.600 .22
APPLIANCES & HOUSEHOLD DURABLES - 1.99%
Sony Corp. (Japan) 94,200 14.709 1.99
ENERGY SOURCES - 1.96%
MOL Magyar Olaj- es Gazipari Rt. (Hungary) 395,000 7.966 1.08
Sasol Ltd. (South Africa) 500,000 3.420 .46
Broken Hill Proprietary Co. Ltd. (Australia) 300,000 3.099 .42
MACHINERY & ENGINEERING - 1.69%
Mitsubishi Heavy Industries, Ltd. (Japan) 1,750,000 6.874 .93
Metso Oyj (Finland)(1) 497,000 5.622 .76
RECREATION & OTHER CONSUMER PRODUCTS - 1.39%
Fuji Photo Film Co., Ltd. (Japan) 173,000 5.566 .75
Shimano Inc. (Japan) 189,000 4.719 .64
REAL ESTATE - 1.34%
Ayala Land, Inc. (Philippines) 17,050,00 4.369 .59
SM Prime Holdings, Inc. (Philippines) 22,800,00 4.047 .55
New World China Land Ltd. (China - Incorporated 3,141,800 1.456 .20
in the Cayman Islands)(1)
MERCHANDISING - 1.25%
Carrefour SA (France) 40,425 7.487 1.02
Organizacion Soriana, SA de CV, Class B (Mexico) 462,000 1.715 .23
CHEMICALS - 1.19%
Monsanto Co. (USA) 147,700 5.686 .77
Omni Industries Ltd. (Singapore) 3,250,000 3.089 .42
UTILITIES: ELECTRIC & GAS - 1.13%
Huaneng Power International, Inc. (China) 14,532,00 4.349 .59
Eletropaulo Metropolitana - Electricidade de Sao 87,100,00 3.963 .54
Paulo SA, preferred nominative (Brazil)
ELECTRONIC INSTRUMENTS - 0.90%
Orbotech Ltd. (Israel)(1) 85,000 6.641 .90
MISCELLANEOUS MATERIALS & COMMODITIES - 0.53%
De Beers Consolidated Mines Ltd. (South Africa) 144,000 3.935 .53
TRANSPORTATION: AIRLINES - 0.50%
AMR Corp. (USA)(1) 58,600 3.721 .50
OTHER INDUSTRIES - 1.21%
Kimberly-Clark de Mexico, SA de CV (Mexico) 1,023,000 3.276 .44
Li & Fung Ltd. (Hong Kong) 1,656,000 2.824 .38
Old Mutual PLC (United Kingdom)(1) 1,200,000 2.533 .34
Primax Electronics Ltd. (Taiwan)(1) 580,000 .404 .05
MISCELLANEOUS - 0.17%
Other equity securities in initial period of acquisition 1.264 .17
------------------
TOTAL EQUITY SECURITIES (cost: $517.328 million) 515.223 69.76
------------------
Principal Market Percent
Amount Value of Net
BONDS & NOTES (Millions(Million Assets
- -------------------------------------------- -------- ----------------
NON U.S. GOVERNMENT OBLIGATIONS - 9.22%
Brazil (Federal Republic of):
Bearer 8.00% 2014(2) $26.023 17.500
Global 10.125% 2027 10.500 8.256 3.49
Argentina (Republic of) 11.75% 2009 16.000 15.780 2.13
United Mexican States Government Eurobonds, Global:
10.375% 2009 2.000 2.037
11.375% 2016 1.750 1.875
11.50% 2026 5.400 6.052 1.35
Philippines (Republic of) 9.875% 2019 6.500 6.321 .86
Panama (Republic of) Past Due Interest Eurobond 5.577 4.197 .57
6.50% 2016(3)
Turkey (Republic of) 12.375% 2009 4.000 4.025 .54
Venezuela (Republic of), Global 9.25% 2027 3.100 2.093 .28
WIRELESS TELECOMMUNICATION SERVICES - 1.73%
Globe Telecom, Inc. 13.00% 2009 12.150 12.773 1.73
BROADCASTING, AVERTISING & PUBLISHING - 0.29%
Grupo Televisa, SA 0%/13.25% 2008(4) 2.500 2.141 .29
MULTI-INDUSTRY - 0.27%
Reliance Industries Ltd. 10.25% 2097 2.500 2.018 .27
------------------
TOTAL BONDS & NOTES (cost: $82.140 million) 85.068 11.51
------------------
Amount Value of Net
SHORT-TERM SECURITIES (Millions(Million Assets
- -------------------------------------------- -------- ----------------
CORPORATE SHORT-TERM NOTES - 15.79%
Ford Motor Credit Co. 5.32% due 12/13/1999 11.300 11.228 1.52
Siemens Capital Corp. 5.32% due 11/30/1999 10.000 9.956 1.35
Halifax PLC 5.33% due 12/6/1999 10.000 9.948 1.35
Svenska Handelsbanken Group 5.34% due 12/29/1999 10.000 9.913 1.34
Rio Tinto America, Inc. 6.00% due 1/10/2000 10.000 9.878 1.34
Asset Securitization Cooperation Corp. 6.00% 10.000 9.859 1.33
due 1/19/2000
Procter & Gamble Co. 5.30% due 12/14/1999 9.900 9.836 1.33
Eksportfinans ASA 5.30% due 11/29/1999 9.700 9.659 1.31
Associates Corp. of North America 5.32% due 9.410 9.409 1.27
11/1/1999
Arco British Ltd. 5.33% due 12/2/1999 8.400 8.360 1.13
Gillette Co. 5.28% due 11/18/1999 8.000 7.979 1.08
PACCAR Financial Corp. 5.32% due 12/20/1999 7.000 6.948 .94
National Rural Utilities Cooperative Finance Corp. 3.700 3.694 .50
5.28% due 11/10/1999
FEDERAL AGENCY DISCOUNT NOTES - 3.52%
Fannie Mae 5.22%-5.27% due 11/16-12/2/1999 13.600 13.551 1.84
Freddie Mac 5.13%-5.26% due 12/9-12/10/1999 12.500 12.427 1.68
NON-U.S. CURRENCY - 0.04%
New Taiwanese Dollar NT$9.528 .301 .04
------------------
TOTAL SHORT-TERM SECURITIES (cost: $142.956 million) 142.946 19.35
------------------
TOTAL INVESTMENT SECURITIES (cost: $742.424 million) 743.237 100.62
Excess of payables over cash and receivables 4.600 .62
------------------
NET ASSETS 738.637 100.00
------------------
(1) Non-income-producing securities.
(2) Payment in kind; the issuer has the option of
paying additional securities in lieu of cash.
(3) Coupon rate may change periodically.
(4) Step bond; coupon will increase at a later date.
ADR = American Depository Receipts
GDR = Global Depository Receipts
The descriptions of the companies shown in the
portfolio, which were obtained from published
reports and other sources believed to be reliable,
are supplemental and are not covered by the
Independent Auditors Report.
See Notes to Financial Statements
</TABLE>
<TABLE>
New World Fund
Financial Statements
<S> <C> <C>
- ---------------------------------------------- ---------------- ----------------
Statement of Assets and Liabilities (dollars in
at October 31, 1999 millions)
- ---------------------------------------------- ---------------- ----------------
Assets:
Investment securities at market
(cost: $599.468) $600.291
Short-term securities
(cost: $142.956) 142.946
Cash .066
Receivables for-
Sales of investments $ 1.282
Sales of fund's shares 4.829
Dividends and accrued interest 2.352 8.463
---------------- ----------------
751.766
Liabilities:
Payables for-
Purchases of investments 11.232
Repurchases of fund's shares 1.332
Management services .461
Accrued expenses .104 13.129
---------------- ----------------
Net Assets at October 31, 1999-
Equivalent to $23.67 per share on
31,199,536 shares of $.01 par value
capital stock outstanding (authorized
capital stock-- 200,000,000 shares) $738.637
================
Statement of Operations
for the period June 17, 1999* to October 31, 1999 Unaudited
(dollars in
millions)
- ---------------------------------------------- ---------------- ----------------
Investment Income:
Income:
Dividends $ 1.262
Interest 6.995 $ 8.257
----------------
Expenses:
Management services fee 1.978
Distribution expenses .712
Transfer agent fee .411
Registration statement and prospectus .018
Postage, stationery and supplies .015
Directors' fees .072
Auditing and legal fees .007
Custodian fee .088
Taxes other than federal income tax .001
Other expenses .079 3.381
---------------- ----------------
Net investment income 4.876
----------------
Realized Loss and Unrealized
Appreciation on Investments:
Net realized loss (.513)
Net unrealized appreciation on
investments .813
----------------
Net realized loss and unrealized appreciation
on investments .300
----------------
Net Increase in Net Assets Resulting
from Operations $ 5.176
================
- ---------------------------------------------- ---------------- ----------------
Statement of Changes in Net Assets (dollars in millions)
for the period
June 17, 1999* to
October 31, 1999
- ---------------------------------------------- ----------------
Operations:
Net investment income $ 4.876
Net realized loss on investments (.513)
Net unrealized appreciation
on investments .813
----------------
Net increase in net assets
resulting from operations 5.176
----------------
Capital Share Transactions:
Proceeds from shares sold:
31,700,839 shares 745.141
Cost of shares repurchased:
508,731 shares (11.844)
----------------
Increase in net assets resulting from
capital share transactions 733.297
----------------
Total Increase in Net Assets 738.473
Net Assets:
Beginning of period (representing initial
capitalization from sales of 7,428 shares
of capital stock of the fund, less expenses)
of $,011) .164
----------------
End of period (including undistributed
net investment income of $4.933) $738.637
================
*Commencement of operations
See Notes to Financial Statements
</TABLE>
Notes to Financial Statements
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - New World Fund, Inc. (the "fund") was organized on November 13,
1998 as a Maryland corporation. On April 19, 1999, the fund obtained its
initial capitalization of $175,000 from the sale of 7,428 shares of its capital
stock at $23.56 per share to Capital Research and Management Company (CRMC),
the investment adviser. Operations commenced on June 17, 1999 upon the initial
purchase of investment securities. The fund's fiscal year ends October 31. 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
appreciation by investing in companies with significant exposure to countries
which have developing economies and/or markets.
SIGNIFICANT ACCOUNTING POLICIES - The financial statements have been prepared
in conformity with generally accepted accounting principles which require
management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from
those estimates. The following is a summary of the significant accounting
policies consistently followed by the fund in the preparation of its financial
statements:
SECURITY VALUATION - Equity securities, including depositary receipts, are
valued at 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. In
cases where equity securities are traded on more than one exchange, the
securities are valued on the exchange or market determined by the investment
adviser to be the broadest and most representative market, which may be either
a securities exchange or the over-the-counter market. Fixed-income securities
are valued at prices obtained from a pricing service, when such prices are
available; however, in circumstances where the investment adviser deems it
appropriate to do so, such securities will be valued at the mean quoted bid and
asked prices or at prices for securities of comparable maturity, quality and
type. 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. Short-term securities maturing within 60 days are
valued at amortized cost, which approximates market value. Securities and
assets for which representative market quotations are not readily available are
valued at fair value as determined in good faith by a committee appointed by
the Board of Directors.
NON-U.S. CURRENCY TRANSLATION - Assets and liabilities initially expressed in
terms of non-U.S. currencies are translated into U.S. dollars at the prevailing
market rates at the end of the reporting period. Purchases and sales of
securities and income and expenses are translated into U.S. dollars at the
prevailing market rates on the dates of such transactions. The effects of
changes in non-U.S. currency exchange rates on investment securities and other
assets and liabilities are included with the net realized and unrealized gain
or loss on investment securities.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions are
accounted for as of the trade date. Realized gains and losses from securities
transactions are determined based on specific identified cost. In the event
securities are purchased on a delayed delivery or "when-issued" basis, the fund
will instruct the custodian to segregate liquid assets sufficient to meet its
payment obligations in these transactions. Dividend income is recognized on the
ex-dividend date and interest income is recognized on an accrual basis. Market
discounts and premiums and original issue discounts on securities purchased are
amortized daily over the expected life of the security.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends and distributions paid
to shareholders are recorded on the ex-dividend date.
2. NON-U.S. INVESTMENTS
INVESTMENT RISK - Investments in securities of non-U.S. issuers in certain
countries involve special investment risks. These risks 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.
For the period June 17, 1999 to October 31, 1999, such non-U.S. taxes were
$71,000.
CURRENCY GAINS AND LOSSES - Net realized currency gains on dividends, interest,
sales of non-U.S. bonds and notes, and other receivables and payables, on a
book basis, were $68,000 for the period June 17, 1999 to October 31, 1999.
3. FEDERAL INCOME TAXATION
The fund complies with the requirements of the Internal Revenue Code applicable
to regulated investment companies and intends to distribute all of its net
taxable income and net capital gains for the fiscal year. As a regulated
investment company, the fund is not subject to income taxes if such
distributions are made. Required distributions are determined on a tax basis
and may differ from net investment income and net realized gains for financial
reporting purposes. In addition, 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 October 31, 1999, net unrealized appreciation on investments for
federal income tax purposes aggregated $813,000 of which $40,099,000 related to
appreciated securities and $39,286,000 related to depreciated securities.
During the period June 17, 1999 to October 31, 1999, the fund realized, on a
tax basis, a net capital loss of $581,000 on securities transactions. Net gains
related to non-U.S. currency transactions of $68,000 were treated as ordinary
income for federal income tax purposes. The fund has available at October 31,
1999 a net capital loss carryforward totaling $581,000 which may be used to
offset capital gains realized during subsequent years through 2007 and thereby
relieve the fund and its shareholders of any federal income tax liability with
respect to the capital gains that are so offset. The fund will not make
distributions from capital gains while a capital loss carryforward remains.
The cost of portfolio securities for book and federal income tax purposes was
$742,424,000 at October 31, 1999.
4. FEES AND TRANSACTIONS WITH RELATED PARTIES
INVESTMENT ADVISORY FEE - The fee of $1,978,000 for management services was
incurred pursuant to an agreement with Capital Research and Management Company
(CRMC) with which certain officers and Directors of the fund are affiliated.
The Investment Advisory and Service Agreement provides for monthly fees,
accrued daily, based on an annual rate of 0.85% of average net assets.
The Board of Directors approved an amended agreement effective December 2,
1999, reducing the fees to $1,978,000. The amended agreement provides for
monthly fees, accrued daily, based on an annual rate of 0.85% of the first $500
million of average net assets; 0.77% of such assets in excess of $500 million
but not exceeding $1 billion; 0.71% of such assets in excess of $1 billion but
not exceeding $1.5 billion; 0.66% of such assets in excess of $1.5 billion but
not exceeding $2.5 billion; and 0.62% of such assets in excess of $2.5 billion.
Beginning June 17, 1999 CRMC voluntarily agreed to reduce its management fees
provided by the amended agreement. As a result, the management fee was reduced
by $40,000.
DISTRIBUTION EXPENSES - Pursuant to a Plan of Distribution, the fund may expend
up to .30% of its average net assets annually for any activities primarily
intended to result in sales of fund shares, provided the categories of expenses
for which reimbursement is made are approved by the fund's Board of Directors.
Fund expenses under the Plan include payments to dealers to compensate them for
their selling and servicing efforts. During the period June 17, 1999 to October
31, 1999, distribution expenses under the Plan were limited to $712,000. Had no
limitation been in effect, the fund would have paid $1,448,000 in distribution
expenses under the Plan. As of October 31, 1999, accrued and unpaid
distribution expenses were $11,000.
American Funds Distributors, Inc. (AFD), the principal underwriter of the
fund's shares, received $1,117,000 (after allowances to dealers) as its portion
of the sales charges paid by purchasers of the fund's shares. Such sales
charges are not an expense of the fund and, hence, are not reflected in the
accompanying statement of operations.
TRANSFER AGENT FEE - American Funds Service Company (AFS), the transfer agent
for the fund, was paid a fee of $411,000.
DEFERRED DIRECTORS' FEES - Directors who are unaffiliated with CRMC may elect
to defer part or all of the fees earned for services as members of the Board.
Amounts deferred are not funded and are general unsecured liabilities of the
fund. As of October 31, 1999 aggregate deferred amounts and earnings thereon
since the deferred compensation plan's adoption (1999) net of any payments to
Directors, were $51,000.
CRMC is owned by The Capital Group Companies, Inc. AFS and AFD are both
wholly owned subsidiaries of CRMC. Certain Directors and officers of the fund
are or may be considered to be affiliated with CRMC, AFS and AFD. No such
persons received any remuneration directly from the fund.
5. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
The fund made purchases and sales of investment securities, excluding
short-term securities, of $603,000,000 and $3,275,000, respectively, during the
period June 17, 1999 to October 31, 1999.
As of October 31, 1999, accumulated undistributed net realized loss on
investments was $581,000 and additional paid-in capital was $733,160,000.
Pursuant to the custodian agreement, the fund receives credits against its
custodian fee for imputed interest on certain balances with the custodian bank.
The custodian fee of $88,000 includes $44,000 that was paid by these credits
rather than in cash.
<TABLE>
Per-Share Data and Ratios
for the period June 17, 1999(1) to October 31, 1999
<S> <C>
Net Asset Value, Beginning of Period $23.56
------------
Income From Investment Operations:
Net investment income .16
Net losses on securities (both
realized and unrealized) (.05)
------------
Total from investment operations .11
-----------
Net Asset Value, End of Period $23.67
==========
Total Return (2) 0.47%(3)
Ratios/Supplemental Data:
Net assets, end of period (in millions) 739
Ratio of expenses to average net assets 0.52%(3)
Ratio of net income to average net assets 0.75%(3)
Portfolio turnover rate .83%(3)
(1) Commencement of operations.
(2) Excludes maximum sales charge of 5.75%.
(3) Based on operations for the period shown
and, accordingly, not representative of a full year.
</TABLE>
Independent Auditors' Report
To the Board of Directors and Shareholders of
New World Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of
New World Fund, Inc. (the "fund"), including the investment portfolio as of
October 31, 1999, and the related statement of operations, changes in net
assets and the per-share data and ratios for the period June 17, 1999,
commencement of operations, to October 31, 1999. These financial statements and
per-share data and ratios are the responsibility of the fund's management. Our
responsibility is to express an opinion on these financial statements and
per-share data and ratios based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and per-share data
and ratios are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at October
31, 1999, by correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other auditing procedures. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements and per-share data and ratios
referred to above present fairly, in all material respects, the financial
position of New World Fund, Inc. as of October 31, 1999, the results of its
operations, changes in its net assets, and the per-share data and ratios for
the period June 17, 1999, commencement of operations, to October 31, 1999, in
conformity with generally accepted accounting principles.
/s/Deloitte & Touche LLP
Deloitte & Touche LLP
Los Angeles, California
December 2, 1999
1999 TAX INFORMATION (unaudited)
We are required to advise you within 60 days of the fund's fiscal year-end
regarding the federal tax status of distributions.
Corporate shareholders may exclude up to 70% of qualifying dividends
received during the year. For purposes of computing this exclusion, 3% of the
dividends paid by the fund from net investment income represents qualifying
dividends.
Certain states may exempt from income taxation a portion of the dividends
paid from net investment income that was derived from direct U.S. Treasury
obligations. For purposes of computing this exclusion, none of the dividends
paid by the fund from net investment income was derived from interest on direct
U.S. Treasury obligations.
Dividends and distributions received by retirement plans such as IRAs,
Keogh-type plans, and 403(b) plans need not be reported as taxable income.
However, many plan retirement trusts may need this information for their annual
information reporting.
SINCE THE AMOUNTS ABOVE ARE REPORTED FOR THE FISCAL YEAR AND NOT THE
CALENDAR YEAR, SHAREHOLDERS SHOULD REFER TO THEIR FORM 1099-DIV WHICH WILL BE
MAILED IN JANUARY 2000 TO DETERMINE THE CALENDAR YEAR AMOUNTS TO BE INCLUDED ON
THEIR 1999 TAX RETURNS. SHAREHOLDERS SHOULD CONSULT THEIR TAX ADVISERS.
[The American Funds Group(r)]
NEW WORLD FUND
BOARD OF DIRECTORS
ELISABETH ALLISON
Cambridge, Massachusetts
Administrative Director, ANZI, Ltd.
(financial publishing and consulting);
publishing consultant,
Harvard Medical School
GINA H. DESPRES
Washington, D.C.
Chairman of the Board of the fund
Senior Vice President,
Capital Research and
Management Company
ROBERT A. FOX
Livingston, California
President and Chief Executive Officer,
Foster Farms Inc.
ALAN GREENWAY
La Jolla, California
Private investor; President,
Greenway Associates, Inc.
(management consulting services)
KOICHI ITOH
Tokyo, Japan
Group Vice President-
Asia/Pacific, Autosplice, Inc.;
former President and Chief Executive Officer,
IMPAC (management consulting
services); former managing partner,
VENCA Management (venture capital)
WILLIAM H. KLING
St. Paul, Minnesota
President, Minnesota Public Radio;
President, Greenspring Company;
former President, American Public Radio
(now Public Radio International)
ROBERT W. LOVELACE
Los Angeles, California
President of the fund
Vice President, Capital Research
and Management Company
JOHN G. MCDONALD
Stanford, California
The IBJ Professor of Finance,
Graduate School of Business,
Stanford University
WILLIAM I. MILLER
Columbus, Indiana
Chairman of the Board,
Irwin Financial Corporation
KIRK P. PENDLETON
Huntingdon, Pennsylvania
Chairman of the Board and
Chief Executive Officer,
Cairnwood, Inc.
(venture capital investment)
DONALD E. PETERSEN
Birmingham, Michigan
Retired; former Chairman of the Board
and Chief Executive Officer,
Ford Motor Company
OTHER OFFICERS
MARK E. DENNING
London, England
Senior Vice President of the fund
Director, Capital Research
and Management Company
DAVID C. BARCLAY
Los Angeles, California
Vice President of the fund
Vice President, Capital Research
and Management Company
ALWYN HEONG
New York, New York
Vice President of the fund
Vice President,
Capital Research Company
JOSEPH R. HIGDON
Washington, D.C.
Vice President of the fund
Senior Vice President and Director,
Capital Research Company
CARL M. KAWAJA
San Francisco, California
Vice President of the fund
Vice President,
Capital Research Company
VINCENT P. CORTI
Los Angeles, California
Secretary of the fund
Vice President - Fund Business
Management Group, Capital Research
and Management Company
R. MARCIA GOULD
Brea, California
Treasurer of the fund
Vice President - Fund Business
Management Group, Capital Research
and Management Company
DAYNA YAMABE
Brea, California
Assistant Treasurer of the fund
Assistant Vice President - Fund Business
Management Group, Capital Research
and Management Company
OFFICES OF THE FUND
AND OF THE INVESTMENT ADVISER,
CAPITAL RESEARCH AND MANAGEMENT COMPANY
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92821-5823
TRANSFER AGENT FOR
SHAREHOLDER ACCOUNTS
American Funds Service Company
(Please write to the address nearest you.)
P.O. Box 2205
Brea, California 92822-2205
P.O. Box 659522
San Antonio, Texas 78265-9522
P.O. Box 6007
Indianapolis, Indiana 46206-6007
P.O. Box 2280
Norfolk, Virginia 23501-2280
CUSTODIAN OF ASSETS
The Chase Manhattan Bank
One Chase Manhattan Plaza
New York, New York 10081-0001
COUNSEL
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, California 90071-2899
INDEPENDENT AUDITORS
Deloitte & Touche LLP
1000 Wilshire Boulevard
Los Angeles, California 90017-2472
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
FOR INFORMATION ABOUT YOUR ACCOUNT
OR ANY OF THE FUND'S SERVICES, PLEASE
CONTACT YOUR FINANCIAL ADVISER. YOU MAY
ALSO CALL AMERICAN FUNDS SERVICE COMPANY,
TOLL-FREE, AT 800/421-0180 OR VISIT
WWW.AMERICANFUNDS.COM ON THE WORLD
WIDE WEB.
This report is for the information of shareholders of New World 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
December 31, 1999, this report must be accompanied by an American Funds Group
Statistical Update for the most recently completed calendar quarter.
Printed on recycled paper
Litho in USA KBD/INS/4407
Lit. No. NWF-011-1299
