[The America Funds Group(R)]
New World Fund
Seeing New Worlds Through Experienced Eyes
Semi-Annual Report to Shareholders, for the six months ended April 30, 2000
[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 nearly seven 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.
Fund results in this report were calculated for Class A shares at net asset
value (without a sales charge) unless otherwise indicated. Here is the total
return on a $1,000 investment for the period ended March 31, 2000 (the most
recent calendar quarter):
Lifetime (since 6/17/99)
Class A Shares +18.68%
reflecting the maximum 5.75% sales charge
Results for Class B shares are not shown because of the brief time between
their introduction on March 15 and the end of the quarter.
Please see the back cover for important information about Class A and B shares.
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:
Since we last reported to you, the number of shareholders in New World Fund has
nearly doubled to more than 92,000 and the fund's assets have surpassed $1
billion. As the fund approaches its first anniversary, we must once again
express our gratitude for the confidence that you have placed in us.
Investment Results
For the six-month period from October 31, 1999, through April 30, 2000, New
World Fund's net asset value increased from $23.67 per share to $26.85,
representing a return of 14.3% if, like most shareholders, you reinvested the
income dividend of $.20 a share that was paid in December, 1999.
As you can see in the "Results at a Glance" table below, your fund handily
outpaced its most relevant benchmark, the unmanaged Morgan Stanley Capital
International (MSCI) All Country World Free Index. Your fund's strategy of
blending three distinct asset classes - stocks of companies based in the
developed world, stocks of companies based in the developing world, and
government and corporate bonds of developing country issuers - also produced a
better return than both the developed and developing country equity indexes.
[Begin Sidebar]
Results at a Glance
Total returns (with all distributions reinvested)
Six months Lifetime
(10/31/99-4/30/00) (6/17/99-4/30/00)
New World Fund 14.28% 14.82%
Morgan Stanley Capital International
(MSCI) All Country World Free Index 7.93 11.58
MSCI World Index 7.64 12.44
MSCI Emerging Markets Free
(EMF) Index 13.87 10.31
JP Morgan Emerging Markets Bond
Index Plus 14.43 20.02
Because New World Fund invests in companies based in both the developed and
developing worlds, its most appropriate benchmark is the MSCI All Country World
Free Index, which blends the MSCI World and EMF indexes, weighted by market
capitalization. The MSCI World Index measures 22 developed country stock
markets, while the MSCI EMF Index measures 25 developing country stock markets.
New World Fund also invests in developing country government and corporate
bonds. The JP Morgan Emerging Markets Bond Index Plus measures total returns
for developing country bonds. The indexes are unmanaged and do not reflect the
effects of sales charges, commissions or expenses.
[End Sidebar]
[Begin Sidebar]
Where the Fund's Assets Are Invested
Geographical distribution of net assets on April 30, 2000
Developed Market Equities 34.5%
Asia
Japan 6.4%
Hong Kong 3.6
Singapore 2.8
Taiwan 2.3
Australia .7
The Americas
United States 9.7
Canada .7
Europe
United Kingdom 2.7
Sweden 2.1
Netherlands 1.0
Finland .9
Norway .5
Switzerland .5
France .3
Ireland .2
Spain .1
Developing Market Equities 42.4%
Asia
South Korea 10.9
India 1.7
China 1.6
Philippines 1.3
Thailand .4
Indonesia .3
The Americas
Brazil 6.7
Mexico 4.6
Argentina 1.5
Chile .5
Venezuela .4
Europe
Turkey 2.3
Poland 2.1
Hungary 1.9
Croatia .6
Greece .3
Africa/Middle East
Israel 3.4
South Africa 1.2
Other
Supranational .7
Developed Market Bonds .2%
Netherlands .2
Developing Market Bonds 8.7%
Asia
Philippines .5
India .2
The Americas
Brazil 2.7
Argentina 1.5
Mexico 1.4
Panama .7
Europe
Turkey .5
Russia .5
Poland .5
Croatia .2
Cash & Equivalents 14.2%
Total 100.0%
[End Sidebar]
The Investment Environment
New World Fund's brief lifetime has coincided with an increasingly volatile
period for global financial markets. After a steep rise in the prices of
technology stocks over the past year, concern that valuations were overly
optimistic took its toll on "new economy" stocks worldwide in March. The
decline in technology stocks spread to other areas of the market in April. But
even as economists and analysts differ over the longer term impact - whether
the decline was a healthy, much-needed correction or a signal of a more
difficult investment environment ahead - the fundamentals of the global economy
still appear positive. Inflation is expected to remain low, and virtually every
region of the globe is experiencing economic growth.
This has been a good environment for highlighting your fund's unique investment
strategy. New World Fund may invest in the companies and debt securities of
"qualified developing countries." The fund can also provide indirect exposure
to these and other developing countries by investing in multinational companies
based in the developed world with significant assets in or revenues from the
developing world.
This approach should provide the fund with diversification and increased
liquidity, which may reduce the volatility historically associated with
investing solely in developing markets. The fund's resilience during the recent
market volatility affirmed for us the validity of our overall global strategy.
The Fund's Portfolio
New World Fund's investment adviser, Capital Research and Management Company,
invests with a long-term focus based on thorough research into individual
companies. This company-by-company approach has helped to achieve wide
geographic and industry diversification. As of April 30, you were part-owner
through the fund of 145 companies located in 36 countries, representing a broad
range of industries.
As we built the portfolio following the fund's introduction last year, our
focus on individual companies led us to a number of attractively valued
businesses with solid long-term prospects in the areas of telecommunications,
media and technology. These securities represent 32% of the fund's portfolio.
Given the recent concern about the lofty valuations of such stocks in the
United States, it may seem unusual to talk about finding value in these areas.
But that is exactly what we are seeing in developing markets right now.
Consider the differing situations faced by telecommunications companies in the
developed and developing worlds.
In the developed world, telecommunications is a fairly mature business, with
growth coming primarily from cellular and wireless service providers. The
Internet offers potential avenues of growth, but there are many competitors and
stock valuations remain high, even after the recent decline.
In the developing world, much of the growth in telecommunications will come
simply from providing people with their first phones - in many cases, a mobile
phone instead of a fixed line. Internet usage is significantly lower than in
the developed world, and goods and services bought over the Internet are quite
a small part of overall consumer spending. As a result, many developing world
telecommunications stocks have much lower valuations, even as their growth
projections appear more achievable.
Here is a brief look, arranged by region, at some of the investments and recent
developments that are contributing to your fund's success.
Asia and the Pacific Basin
Japan is the fund's fourth-largest geographic concentration, accounting for a
little more than 6% of assets. The Japanese economy continues to seesaw -
growing one quarter, retreating the next - with no clear indication of when
recovery will finally take hold. By focusing instead on the long-term prospects
for individual Japanese companies, our analysts identified a number of
promising investments, including a new holding for the fund, Marubeni, one of
Japan's largest general trading companies, with operations in some 80 countries
in the developed and developing worlds.
The developing economies in the region have made a rapid recovery from the
fiscal crisis of 1997. For those that have committed themselves to free-market
policies, the recovery seems sustainable. For those that have not - including
Indonesia and Malaysia - recovery may prove fragile. We see Asian markets
sorting into two groups: those with transparent investor policies and those
without. As foreign capital returns to the region, it will likely flow to those
countries with a regulatory environment favorable to investment.
South Korea in particular has demonstrated solid growth and low inflation. Even
so, many Korean companies still appear undervalued. Attractive stock prices and
a favorable outlook for the Korean economy have made some stocks downright
irresistible. Three of the fund's ten largest holdings are Korean companies,
including Shinhan Bank, a new addition to the portfolio. The bank has an
impressive market share and a large Internet presence, but its stock was
trading at a very low price-to-earnings ratio. The sheer number of value
opportunities like this have made South Korea, at almost 11% of assets, the
fund's largest geographic concentration.
The Americas
The United States is the fund's second-largest geographic concentration,
representing nearly 10% of assets. The fund's largest U.S. holding is Avon
Products, one of the most widely recognized names in beauty products. Avon has
been a global company for more than 50 years, has a strong presence in Brazil
and Mexico, and is currently equipping its sales force with Internet
capabilities.
Brazil and Mexico are the fund's third- and fifth-largest geographic
concentrations, representing roughly 9% and 6% of assets, respectively. Mexican
government bonds were elevated to investment-grade status in March. This had a
positive effect on the Mexican equity market as well, and created enough good
feeling to lift investor sentiment for all of Latin America. In Brazil, stocks
and bonds benefited from the government's commitment to continuing a largely
successful program of fiscal reforms. The fund held about 3% of its assets in
Brazilian bonds.
Europe
Recovery is now firmly rooted in the developed economies of Europe. Despite
high unemployment in some areas, the outlook for the region is generally
optimistic. Inflation has remained low and production has risen nicely, with
France and the United Kingdom showing particular strength. With British
companies representing nearly 3% of assets, the U.K. continued to be the fund's
largest geographic concentration in developed Europe.
As the fundamentals for developed Europe continue to improve, so does the
outlook for its developing neighbors. The fund's largest geographic
concentrations in developing Europe are Turkey and Poland, each representing a
little less than 3% of assets. Two of the fund's new holdings, indicative of
the growth opportunities we are discovering in developing Europe, are a Turkish
bank, Yapi ve Kredi (one of the fund's ten largest holdings), and Elektrim, a
diversified trading company with a stake in Poland's leading telecommunications
provider.
Perhaps the most notable resurrection was Russia. The government defaulted on
its debt in August 1998, an action that effectively removed Russia from the
global economy. Since that time, the Russian economy has benefited from higher
commodity prices (especially oil) and the successful restructuring of the
defaulted debt. By no means least among the positive developments in Russia was
the peaceful transition that brought Vladimir Putin to the presidency.
The situation in Russia is far from perfect, of course - in the words of your
fund's fixed-income portfolio counselor, the Russian economy has improved "from
awful to merely bad" - but the trend is encouraging. For these reasons, we have
made a small purchase of some of that restructured Russian debt. Government
bonds have typically been one of the first ways to benefit from a generally
positive trend, since they usually are highly liquid and can quickly reflect
improvements in the government's fiscal situation.
Looking Ahead
Over the next six months, we think developing economies will continue to
benefit from the economic health of the developed world. Given our long-term
perspective, we more eagerly anticipate the next ten years, during which
developing countries should account for more than 50% of the world's estimated
economic growth, according to Capital International, an affiliate of your
fund's investment adviser.
We appreciate your continued support and look forward 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
June 6, 2000
<TABLE>
New World Fund, Inc.
Investment Portfolio, April 30, 2000
INDUSTRY DIVERSIFICATION
<S> <C> <C> <C>
9.28% Banking
9.22% Electronic Components
7.44% Diversified Telecommunication Services
5.76% Wireless Telecommunication Services
5.12% Electrical & Electronics
40.11% Other Industries
8.85% Bonds & Notes
14.22% Cash & Equivalents
LARGEST INDIVIDUAL
EQUITY HOLDINGS
Samsung Electronics 2.76%
Samsung Electro-Mechanics 2.62
Hon Hai Precision 2.10
Telesp Celular Participacoes 1.73
Yapi ve Kredi Bankasi 1.60
Sony 1.59
Shinhan Bank 1.58
Unibanco-Uniao de Bancos Brasileiros 1.49
Telefonos de Mexico 1.47
Telefonaktiebolaget LM Ericsson 1.40
Shares or Market Percent
Principal Value of Net
EQUITY SECURITIES (common and preferred stocks and Amount (Millions) Assets
convertible debentures)
-------------------------------------------- -------- -------- --------
BANKING - 9.28%
Yapi ve Kredi Bankasi AS (Turkey) 701,500,000 22.405 1.60
Shinhan Bank (South Korea) 2,304,000 22.116 1.58
Unibanco-Uniao de Bancos Brasileiros SA, units (GDR) (Brazil) 836,000 20.848 1.49
DBS Group Holdings Ltd. (Singapore) 1,295,779 17.843 1.28
ABN AMRO Holding NV (Netherlands) 506,746 10.450 .75
Wielkopolski Bank Kredytowy SA (Poland) 1,749,886 10.031 .72
ICICI Bank Ltd. (India) 1,209,200 6.565
ICICI Bank Ltd. (ADR) (1) 27,000 .466 .50
Bangkok Bank PCL (Thailand) (1) 3,310,300 5.613 .40
Standard Chartered Bank (United Kingdom) 390,000 5.225 .37
Kookmin Bank (South Korea) 362,048 3.916 .28
KorAM Bank (South Korea) 500,000 2.744 .20
Hanvit Bank (South Korea) (1) 1,050,000 1.595 .11
ELECTRONIC COMPONENTS - 9.22%
Samsung Electronics Co., Ltd. (South Korea) 142,800 38.612 2.76
Samsung Electro-Mechanics Co. (South Korea) 539,000 36.678 2.62
Hon Hai Precision Industry Co. Ltd. (Taiwan) (1) 3,045,000 29.432 2.10
Omni Industries Ltd. (Singapore) 3,850,000 7.537 .54
NatSteel Electronics Ltd 1.50% convertible debentures $5,600,000 7.483 .53
2004 (Singapore)
Venture Manufacturing (Singapore) Ltd. (Singapore) 571,800 6.703 .48
Varitronix International Ltd. (Honk Kong-- 1,161,000 2.609 .19
Incorporated in Bermuda)
DIVERSIFIED TELECOMMUNICATION SERVICES - 7.44%
Telefonos de Mexico, SA de CV, Class L (ADR) (Mexico) 345,000 20.290
Telefonos de Mexico, S.A. de C.V. 4.25% convertible $180,000 .247 1.47
debentures 2004
Magyar Tavkozlesi Rt. (ADR) (Hungary) 469,000 16.327 1.17
FirstCom Corp. (USA) (1) 635,000 13.176 .94
Global Light Telecommunication Inc. (Canada) (1) (2) 577,500 6.627 .47
Korea Telecom Corp. (South Korea) 65,000 4.441
Korea Telecom Corp. (ADR) 60,000 2.070 .47
Nortel Inversora SA, preferred, Class B (ADR) (Argentina) 348,000 6.438 .46
Compania Anonima Nacional Telefonos de Venezuela (CANTV), 200,000 5.800 .42
Class D (ADR) (Venezuela)
Telecom Argentina STET-France Telecom SA, Class B 165,000 4.610 .33
(ADR) (Argentina)
Mahanagar Telephone Nigam Ltd. (GDR) (India) 350,000 4.550 .33
Koninklijke PTT Nederland NV (Netherlands) 40,322 4.070 .29
Videsh Sanchar Nigam Ltd. (GDR) (India) 212,800 4.022 .29
Compania de Telecomunicaciones de Chile SA (ADR) (Chile) 170,000 3.145 .22
Telefonica de Argentina SA, Class B (ADR) (Argentina) 85,000 2.986 .21
Global TeleSystems Group, Inc. (USA) (1) 195,500 2.847 .20
Bell Canada International Inc. (Canada) (1) 102,000 2.419 .17
WIRELESS TELECOMMUNICATION SERVICES - 5.76%
Telesp Celular Participacoes SA, preferred nominative (Brazil) 696,093,028 12.488
Telesp Celular Participacoes SA, ordinary nominative 741,827,848 11.731 1.73
Tele Sudeste Celular Participacoes SA, preferred nominative 330,000 14.108
(ADR) (Brazil)
Tele Sudeste Celular Participacoes SA, ordinary nominative 624,710,000 2.629 1.20
Tele Nordeste Celular Participacoes SA, preferred 235,000 12.220 .87
nominative (ADR) (Brazil)
Nuevo Grupo Iusacell, SA de CV (ADR) (Mexico) (1) 625,000 9.961 .71
Tele Celular Sul Participacoes SA, preferred nominative 185,000 7.146 .51
(ADR) (Brazil)
China Telecom (Hong Kong) Ltd. (China) (1) 812,000 5.864 .42
Telemig Celular Participacoes SA, preferred nominative 76,700 4.487 .32
(ADR) (Brazil)
ELECTRICAL & ELECTRONICS - 5.12%
Telefonaktiebolaget LM Ericsson, Class B (Sweden) 176,500 15.746
Telefonaktiebolaget LM Ericsson, Class B (ADR) 42,500 3.759 1.40
Trigem Computer Inc. (South Korea) 239,550 13.840 .99
ECI Telecom Ltd. (Israel) 415,000 11.542 .82
Elektrim SA (Poland) (1) 420,000 5.268
Elektrim SA 3.75% convertible debentures 2004 $2,100,000 1.912 .51
Lucent Technologies Inc. (USA) 110,000 6.841 .49
Locus Co., Ltd. (South Korea) (1) 54,500 6.631 .47
Nokia Corp., Class A (Finland) 88,000 5.056 .36
LG Electronics Inc. (South Korea) 43,000 1.147 .08
HEALTH & PERSONAL CARE - 4.56%
Avon Products, Inc. (USA) 456,400 18.941 1.35
Kimberly-Clark Corp. (USA) 180,000 10.451 .75
PLIVA d.d. (GDR) (Croatia) 675,000 8.438 .60
AstraZeneca PLC (United Kingdom) 193,500 8.111 .58
Monsanto Co. (USA) 154,700 7.725 .55
Pfizer Inc (USA) 160,000 6.740 .48
Teva Pharmaceutical Industries Ltd. (ADR) (Israel) 80,000 3.520 .25
BEVERAGES & TOBACCO - 2.87%
Fomento Economico Mexicano, SA de CV (Mexico) 325,000 13.406 .96
Coca-Cola Co. (USA) 184,000 8.660 .62
PepsiCo, Inc. (USA) 176,000 6.457 .46
South African Breweries PLC (United Kingdom) 574,000 4.241 .31
Coca-Cola Amatil Ltd. (Australia) 1,429,236 3.419 .24
Coca-Cola Beverages PLC (United Kingdom) (1) 1,515,000 2.758 .20
Philip Morris Companies Inc. (USA) 50,200 1.098 .08
WHOLESALE & INTERNATIONAL TRADE - 2.66%
Li & Fung Ltd. (Hong Kong) 4,406,000 17.027 1.22
Marubeni Corp. (Japan) 5,105,600 14.778 1.06
Samsung Co., Ltd. (South Korea) 470,000 5.338 .38
BROADCASTING & PUBLISHING - 2.21%
MIH Ltd., Class A (South Africa) (1) 207,000 9.729 .70
Grupo Televisa, SA, ordinary participation 100,000 6.344 .45
certificates (ADR) (Mexico) (1)
Nasionale Pers Beperk (South Africa) 522,000 5.399 .39
Antenna TV SA (ADR) (Greece) (1) 236,000 4.558 .33
Independent Newspapers, PLC (Ireland) 340,000 2.718 .19
Matav-Cable Systems Media Ltd. (Israel) 100,000 2.161 .15
AUTOMOBILES - 2.15%
Suzuki Motor Corp. (Japan) 947,000 14.090 1.01
Honda Motor Co., Ltd. (Japan) 309,000 13.801 .99
Nissan Motor Co., Ltd. (Japan) (1) 462,000 2.098 .15
BUSINESS SERVICES - 2.04%
New World Infrastructure Ltd. (Hong Kong) (1) 5,150,000 5.488 .39
Sabre Group Holdings, Inc. (USA) (1) 145,098 5.069 .36
Zhejiang Expressway Co. Ltd. (China) 27,700,000 3.201 .23
TTI Team Telecom International Ltd. (Israel) (1) 118,500 3.185 .23
Seminis, Inc. (USA) (1) 670,000 3.015 .22
VIA NET.WORKS, Inc. (USA) (1) 160,000 2.885 .21
International Container Terminal Services, Inc. 64,500,000 2.376 .17
(Philippines) (1)
Terra Networks, SA (Spain) (1) 22,700 1.407 .10
Rentokil Initial PLC (United Kingdom) 475,000 1.299 .09
Korea Thrunet Co., Ltd. (South Korea) (1) 23,900 .618 .04
FOOD & HOUSEHOLD PRODUCTS - 1.88%
Nestle SA (Switzerland) 3,800 6.719 .48
Sara Lee Corp. (USA) 380,400 5.706 .41
Groupe Danone (France) 18,000 3.942 .28
Santa Isabel SA (ADR) (Chile) (1) 430,000 3.655 .26
PT Indofood Sukses Makmur Tbk (Indonesia) (1) 3,303,000 2.265 .16
Uni-President Enterprises Co. (Taiwan) (1) 3,000,000 2.143 .15
Dole Food Co., Inc. (USA) 81,200 1.426 .10
Reckitt Benckiser PLC (formerly Reckitt & Colman PLC) 53,500 .546 .04
(United Kingdom)
METALS: NONFERROUS - 1.85%
KGHM Polska Miedz SA (Poland) 842,000 12.293 .88
Alcoa Inc. (USA) 159,000 10.315 .74
Freeport-McMoRan Copper & Gold Inc., Class B (USA) (1) 268,000 2.580 .18
Billiton PLC (United Kingdom) 201,500 .748 .05
MULTI-INDUSTRY - 1.84%
Industriforvaltnings AB Kinnevik, Class B (Sweden) 263,753 9.152 .65
First Pacific Co. Ltd. (Hong Kong) 22,770,000 8.040 .57
Orkla AS, Class A (Norway) 422,857 6.558 .47
Benpres Holdings Corp. (Philippines) (1) 8,400,000 1.181 .08
China Merchants Holdings Co. (Honk Kong) 1,500,000 .934 .07
REAL ESTATE - 1.78%
SM Prime Holdings, Inc. (Philippines) 65,800,000 8.612 .62
IRSA Inversiones y Representaciones SA (Argentina) 1,229,257 3.629
IRSA Inversiones y Representaciones SA (GDR) 120,330 3.550 .51
China Resources Enterprise, Ltd. (Hong Kong) 3,950,000 4.970 .36
Ayala Land, Inc. (Philippines) 17,850,000 2.812 .20
New World China Land Ltd. (China - Incorporated in 4,705,800 1.202 .09
the Cayman Islands) (1)
ENERGY SOURCES - 1.69%
MOL Magyar Olaj- es Gazipari Rt. (Hungary) 550,000 9.712 .69
Broken Hill Proprietary Co. Ltd. (Australia) 620,201 6.683 .48
Sasol Ltd. (South Africa) 900,000 5.293 .38
Gulf Indonesia Resources Ltd. (Indonesia) (1) 275,000 1.925 .14
APPLIANCES & HOUSEHOLD DURABLES - 1.59%
Sony Corp. (Japan) 193,400 22.275 1.59
RECREATION & OTHER CONSUMER PRODUCTS - 1.28%
Fuji Photo Film Co., Ltd. (Japan) 270,000 10.811 .77
Shimano Inc. (Japan) 269,000 5.000 .36
Bajaj Auto Ltd. (India) 260,000 2.123 .15
MERCHANDISING - 1.19%
Migros Turk TAS (Turkey) 15,050,000 10.230 .73
Giordano International Ltd. (Hong Kong) 2,800,000 4.584 .33
Organizacion Soriana, SA de CV, Class B (Mexico) (1) 462,000 1.835 .13
MACHINERY & ENGINEERING - 1.04%
Mitsubishi Heavy Industries, Ltd. (Japan) 2,360,000 7.333 .52
Metso Oyj (Finland) 550,000 7.262 .52
LEISURE & TOURISM - 0.91%
Millennium & Copthorne Hotels PLC (United Kingdom) 1,980,000 12.690 .91
IT CONSULTING & SERVICES - 0.80%
Check Point Software Technologies Ltd. (Israel) (1) 44,000 7.612 .54
Dimension Data Holdings Ltd. (South Africa) (1) 550,000 3.617 .26
ELECTRONIC INSTRUMENTS - 0.78%
Orbotech Ltd. (Israel) (1) 127,500 10.869 .78
DATA PROCESSING & REPRODUCTION - 0.66%
Great Wall Technology Co. Ltd. (China) (1) 10,174,000 8.491 .61
Primax Electronics Ltd. (Taiwan) (1) 580,000 .764 .05
FINANCIAL SERVICES - 0.64%
Housing Development Finance Corp. Ltd (India) 377,450 4.069 .29
Old Mutual PLC (United Kingdom) 1,200,000 2.707 .19
ICICI Ltd. (ADR) (India) 92,100 2.232 .16
UTILITIES: ELECTRIC & GAS - 0.62%
Huaneng Power International, Inc. (China) (1) 20,240,000 4.626 .33
Eletropaulo Metropolitana - Electricidade de Sao Paulo 71,000,000 4.089 .29
SA, preferred nominative (Brazil)
FOREST PRODUCTS & PAPER - 0.56%
Votorantim Celulose e Papel SA (ADR) (Brazil) 280,000 4.130 .30
Kimberly-Clark de Mexico, SA de CV (Mexico) 1,130,000 3.653 .26
OTHER INDUSTRIES - 0.84%
Cheung Kong Infrastructure Holdings Ltd. (Hong Kong) 3,800,000 6.001 .43
De Beers Consolidated Mines Ltd. (South Africa) 153,900 3.161 .23
AMR Corp. (USA) (1) 75,000 2.555 .18
MISCELLANEOUS - 3.67%
Other equity securities in initial period of acquisition 51.384 3.67
---------- ----------
Total Equity Securities (cost: $1,038.809 million) 1,076.555 76.93
Market Percent
Principal Value of Net
BONDS & NOTES Amount (Millions) Assets
-------------------------------------------- -------- -------- --------
NON-U.S. GOVERNMENT OBLIGATIONS - 7.87%
Brazil (Federal Republic of):
Global 14.50% 2009 $ 5.000 5.280
Bearer 8.00% 2014 (3) 30.305 21.820
Global 10.125% 2027 13.250 10.368 2.68
Argentina (Republic of):
11.75% 2009 19.500 19.198
12.00% 2020 2.000 1.979 1.52
United Mexican States Government Eurobonds, Global:
9.875% 2007 5.000 5.150
11.375% 2016 4.400 4.990
11.50% 2026 5.400 6.399 1.18
Panama (Republic of), Past Due Interest Eurobond 7.0625% 11.662 9.417 .67
2016 (3) (4)
Turkey (Republic of) 11.875% 2030 7.000 7.586 .54
Russia Principal Loan 6.90625% 2020 (4) 26.500 7.321 .52
Philippines (Republic of) 9.875% 2019 5.000 4.438 .32
Poland (Republic of), Past Due Interest Bond, 3.875 3.498 .25
Bearer 6.00% 2014 (4)
Croatian Government:
Series B 7.0625% 2006 (4) 1.032 .962
Series A 7.0325% 2010 (4) 1.957 1.738 .19
WIRELESS TELECOMMUNICATION SERVICES - 0.63%
Globe Telecom, Inc. 13.00% 2009 3.000 3.223 .23
PTC International Finance BV 0%/10.75% 2007 (5) 4.000 2.850 .20
Cellco Finance NV 12.75% 2005 2.725 2.800 .20
BROADCASTING, ADVERTISING & PUBLISHING - 0.18%
Grupo Televisa, SA 0%/13.25% 2008 (5) 2.500 2.469 .18
MULTI-INDUSTRY - 0.17%
Reliance Industries Ltd. 10.25% 2097 2.500 2.314 .17
---------- ----------
Total Bonds & Notes (cost: $119.544 million) 123.800 8.85
Market Percent
Principal Value of Net
SHORT-TERM SECURITIES Amount (Millions) Assets
-------------------------------------------- -------- -------- --------
CORPORATE SHORT-TERM NOTES - 13.45%
Rio Tinto America, Inc. 5.91%-6.09% due 5/9-6/26/2000 28.500 28.305 2.02
Associates First Capital Corp. 6.07% due 5/5/2000 18.900 18.884 1.35
Halifax PLC 6.13% due 7/11/2000 16.480 16.267 1.17
American Honda Finance Corp. 5.89% due 5/1/2000 15.000 14.998 1.07
Reed Elsevier Inc. 6.02%-6.03% due 5/3-5/4/2000 12.800 12.792 .91
International Nederlanden (U.S.) Funding Corp. 6.055% 12.000 11.948 .86
due 5/26/2000
CDC Commercial Paper Corp. 6.03% due 5/26/2000 10.600 10.554 .75
France Telecom 5.92%-6.05% due 5/8-6/5/2000 10.520 10.496 .75
Motiva Enterprises LLC 6.04% due 6/9/2000 10.000 9.933 .71
Deutsche Bank Financial Inc. 6.18%-6.25% due 5/30-6/6/2000 8.800 8.748 .63
Westpac Banking Corp. 6.01% due 6/6/2000 8.800 8.746 .62
BMW U.S. Capital Corp. 6.04% due 6/12/2000 8.780 8.717 .62
KFW International Finance Inc. 6.00% due 5/18/2000 8.100 8.076 .58
SBC Communications Inc. 5.87% due 5/18/2000 8.000 7.976 .57
Harvard University 6.02% due 6/5/2000 7.900 7.852 .56
Abbey National North America 6.05% due 6/13/2000 4.000 3.970 .28
FEDERAL AGENCY DISCOUNT NOTES - 0.26%
Fannie Mae 5.98% due 05/25/2000 3.700 3.685 .26
NON-U.S. CURRENCY - 0.02%
New Taiwanese Dollar NT$9.592 .314 .02
---------- ----------
Total Short-Term Securities (cost: $192.261 million) 192.261 13.73
---------- ----------
Total Investment Securities (cost: $1,350.614 million) 1,392.616 99.51
Excess of cash and receivables over payables 6.793 .49
---------- ----------
NET ASSETS $1,399.409 100.00
---------- ----------
(1)Non-income-producing securities.
(2)Purchased in a private placement transaction; resale
to the public may require registration or sale
only to qualified institutional buyers.
(3)Payment in kind; the issuer has the option of paying
additional securities in lieu of cash.
(4)Coupon rate may change periodically.
(5)Step bond; coupon rate will increase at a later date.
ADR = American Depositary Receipts
GDR = Global Depositary Receipts
See Notes to Financial Statements
</TABLE>
<TABLE>
Companies Added to the Portfolio
Since October 31, 1999
<S> <C>
Bajaj Auto Marubeni
Bell Canada International Migros Turk
Cheung Kong Infrastructure Holdings Millennium & Copthorne Hotels
China Merchants Holdings Nestle
China Resources Enterprise New World Infrastructure
Dimension Data Holdings Nokia
Dole Food Pfizer
Elektrim Samsung
FirstCom Santa Isabel
Giordano International Shinhan Bank
Global Light Telecommunications Standard Chartered Bank
Great Wall Technology TTI Team Telecom International
Groupe Danone Tele Sudeste Celular Participacoes
Gulf Indonesia Resources Telefonica de Argentina
Housing Development Finance Terra Networks
ICICI Bank Teva Pharmaceutical Industries
IRSA Inversiones y Representaciones VIA NET.WORKS
Independent Newspapers Votorantim Celulose e Papel
KorAM Bank Yapi ve Kredi Bankasi
Korea Thrunet
Locus
Lucent Technologies
Companies Eliminated from the Portfolio
Since October 31, 1999
Carrefour
Colgate-Palmolive
Novartis
Partner Communications
</TABLE>
<TABLE>
NEW WORLD FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES Unaudited
at April 30, 2000 (dollars in million)
<S> <C> <C>
Assets:
Investment securities at market
(cost: $1,158.353) $1,200.355
Short-term securities
(cost: $192.261) 192.261
Cash .169
Receivables for--
Sales of investments $9.318
Sales of fund's shares 6.648
Dividends and accrued interest 4.496 20.462
------ ------
1,413.247
Liabilities:
Payables for--
Purchases of investments 11.826
Repurchases of fund's shares .758
Management services .904
Accrued expenses .350 13.838
------ ------
Net Assets at April 30, 2000 (authorized
capital stock -- 200,000,000 shares) -- $1,399.409
=====
Class A shares, $.01 par value
Net assets $1,392.132
Shares outstanding 51,844,777
Net asset value per share $26.85
Class B shares, $.01 par value
Net assets $7.277
Shares outstanding 271,281
Net asset value per share $26.82
STATEMENT OF OPERATIONS Unaudited
for the six months ended April 30, 2000 (dollars in millions)
Investment Income:
Income:
Dividends $5.027
Interest 11.800 $16.827
------ ------
Expenses:
Management services fee 4.596
Distribution expenses - Class A 1.728
Distribution expenses - Class B .005
Transfer agent fee - Class A .764
Transfer agent fee - Class B .001
Reports to shareholders .074
Registration statement and prospectus .472
Postage, stationery and supplies .136
Directors' and Advisory Board fees .081
Auditing and legal fees .026
Custodian fee .296
Taxes other than federal income tax .029
Other expenses .052 8.260
------ ------
Net investment income 8.567
------
Realized Gain and Increase in Unrealized
Appreciation on Investments:
Net realized gain 31.286
Net increase in unrealized
appreciation on investments 41.176
------
Net realized gain and increase in
unrealized appreciation
on investments 72.462
------
Net Increase in Net Assets Resulting
from Operations $81.029
=====
STATEMENT OF CHANGES IN NET ASSETS (dollars in millions)
Six months ended For the period
April 30, June 17, 1999(2) to
2000(1) October 31, 1999
------ ------
Operations:
Net investment income $ 8.567 $ 4.876
Net realized gain on investments 31.286 (.513)
Net increase in unrealized appreciation
on investments 41.176 .813
------ ------
Net increase in net assets
resulting from operations 81.029 5.176
------ ------
Dividends and Distributions Paid
to Shareholders:
Dividends from net investment income,
Class A (6.959) .000
------ ------
Total dividends and distributions (6.959) .000
------ ------
Capital Share Transactions:
Proceeds from shares sold 653.037 745.141
Proceeds from shares issued in reinvestment
of net investment income dividends 6.470 -
Cost of shares repurchased (72.805) (11.844)
------ ------
Net increase in net assets resulting from
capital share transactions 586.702 733.297
------ ------
Total Increase in Net Assets 660.772 738.473
Net Assets:
Beginning of period 738.637 .164
------ ------
End of period (including
undistributed net investment
income: $6.541 and $4.933
respectively) $1,399.409 $738.637
===== =====
(1) Unaudited
(2) 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") 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. The fund offers Class A and Class B shares. Class A
shares are sold with an initial sales charge of up to 5.75%. Class B shares
are sold without an initial sales charge but subject to a contingent deferred
sales charge paid upon redemption. This change declines from 5% to zero over a
period of six years. Class B shares have higher distribution expenses and
transfer agent fees than Class A shares. Class B shares are automatically
converted to Class A shares eight years after the date of purchase. Holders of
both classes of shares have equal pro rata rights to assets and identical
voting, dividend, liquidation and other rights, except that each class bears
different distribution and transfer agent expenses, and each class shall have
exclusive rights to vote on matters affecting only that class.
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, 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.
COMMON EXPENSES - Income, expenses other than class-specific expenses and
realized and unrealized gains and losses are allocated daily between the
classes based on their relative net asset values. Distribution expenses,
transfer agent fees, and any other class-specific expenses, are accrued daily
and charged to the applicable share class.
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 six months ended April 30, 2000, such non-U.S. taxes were $395,000.
Net realized gain and net unrealized gain of the fund derived in certain
countries are subject to certain non-U.S. taxes. The fund provides for such
non-U.S. taxes on investment income, net realized gain and net unrealized gain.
CURRENCY GAINS AND LOSSES - Net realized currency losses on dividends,
interest, sales of non-U.S. bonds and notes, forward contracts, and other
receivables and payables, on a book basis, were $292,000 for the six months
ended April 30, 2000.
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 April 30, 2000, net unrealized appreciation on investments for federal
income tax purposes aggregated $42,002,000; $171,283,000 related to appreciated
securities and $129,281,000 related to depreciated securities. During the six
months ended April 30, 2000, the fund realized, on a tax basis, a net capital
gain of $31,578,000 on securities transactions. The fund had available at April
30, 2000 a net capital loss carryforward totaling $581,000, which may be used
to offset capital gains realized and thereby relieve the fund and its
shareholders of any federal income tax liability with respect to the capital
gains that are so offset. Net losses related to non-U.S. currency transactions
of $292,000 are treated as an adjustment to ordinary income for federal income
tax purposes. The cost of portfolio securities for book and federal income tax
purposes was $1,350,614,000 at April 30, 2000.
4. FEES AND TRANSACTIONS WITH RELATED PARTIES
INVESTMENT ADVISORY FEE - The fee of $4,596,000 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 the following rates and average net asset levels:
<TABLE>
<CAPTION>
<S> <C> <C>
Average Net Asset Level
Rate In Excess Of Up To
0.85% $0 $500 million
0.77% $500 million $1.0 billion
0.71% $1.0 billion $1.5 billion
0.66% $1.5 billion $2.5 billion
0.62% $2.5 billion
</TABLE>
DISTRIBUTION EXPENSES - Pursuant to a Plan of Distribution for Class A shares,
the fund may expend up to 0.30% of Class A average daily 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. Pursuant to a Plan of Distribution
for Class B shares, the fund may expend up to 1.00% of Class B average daily
net assets annually to compensate dealers for their selling and servicing
efforts. During the six months ended April 30, 2000, distribution expenses
under the Plan of Distribution for Class A were limited to $1,728,000. Had no
limitation been in effect, the fund would have paid $1,814,000 for Class A.
During the six months ended April 30, 2000, distribution expense under the Plan
of Distribution for Class B were $5,000. As of April 30, 2000, accrued and
unpaid distribution expense for Class A and Class B shares were $94,000 and
$4,000, respectively.
American Funds Distributors, Inc. (AFD), the principal underwriter of the
fund's shares, received $1,524,000 (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 $765,000.
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 April 30, 2000, aggregate deferred amounts and earnings thereon
since the deferred compensation plan's adoption (1999), net of any payments to
Directors, were $127,000.
AFFILIATED DIRECTORS' AND OFFICERS - 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 $648,214,000 and $90,053,000, respectively, during
the six months ended April 30, 2000.
As of April 30, 2000, net assets consist of the following:
<TABLE>
<CAPTION>
<S> <C>
Capital paid in on shares of beneficial $1,320,174,000
interest
Undistributed net investment income 6,541,000
Accumulated net realized gain 30,705,000
Net unrealized appreciation 41,989,000
Net Assets $1,399,409,000
</TABLE>
Capital share transactions in the fund were as follows:
<TABLE>
Six months ended April 30, 2000
For the period June 17, 1999
to October 31, 2000
Amount Shares Amount Shares
<S> <C> <C> <C> <C>
Class A Shares:
Sold $645.278 22,990,284 $ 745.141 31,700,839
Reinvestment of dividends and 6.470 241,718 - -
distributions
Repurchased (72.778) (2,586,761) (11.844) (508,731)
Net increase in Class A 578.970 20,645,241 733.297 31,192,108
Class B Shares: (1) - -
Sold 7.759 272,294 - -
Reinvestment of dividends and - - - -
distributions
Repurchased (.027) (1,013) - -
Net increase in Class B 7.732 271,281 - -
Total net increase in fund 586.702 20,916,522 $ 733.297 31,192,108
(1) Class B shares offered for sale
commencing March 15, 2000.
</TABLE>
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 $296,000 includes $18,000 that was paid by these credits
rather than in cash.
<TABLE>
PER-SHARE DATA AND RATIOS
Net
Net asset gains (losses)
value, Net on securities Total from
beginning investment (both realized investment
Period ended (1) of period income and unrealized) operations
<S> <C> <C> <C> <C>
Class A:
2000 $23.67 $.21 (4) 3.17 (4) $3.38
1999 23.56 .16 (.05) .11
Class B (6):
2000 29.09 0.06 (4) -2.33 (4) (2.27)
Net asset Net assets,
Total value, end Total end of period
Period ended (1) Distributions of period return (2),(3) (in millions)
Class A:
2000 $(.20) $26.85 14.28% $1,392
1999 - 23.67 .47 739
Class B (6):
2000 - 26.82 (7.80) 7
Ratio of
income Portfolio
to average turnover
Period ended (1) net assets rate
Class A:
2000 0.75% (5) 9.41% (3)
1999 .75 0.83 (3)
Class B (6):
2000 0.06 (5) 9.41 (7)
(1) The period ended 1999
represents the period June 17,
commencement of operations,
to October 31 (audited); the
period ended 2000 represents
the six months ended
April 30 (unaudited).
(2) Excludes sales charges
on Class A shares or contingent
deferred sales charge on
Class B shares.
(3) Based on operations
for the period shown and,
accordingly, not
representative of a full
year.
(4) Based on average shares
outstanding.
(5) Annualized.
(6) Class B shares offered
for sale commencing
March 15, 2000.
(7) Represents portfolio
turnover rate for the six
months ended April 30, 2000.
</TABLE>
[The American Funds Group(R)]
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
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, or for a
prospectus for any of the American Funds, 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. Please read
the prospectus carefully before you invest or send money.
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
June 30, 2000, this report must be accompanied by an American Funds Group
Statistical Update for the most recently completed calendar quarter.
There are two ways to invest in New World Fund. Class A shares are subject to a
5.75% maximum up-front sales charge that declines for accounts of $25,000 or
more. Class B shares, which are not available for certain employer-sponsored
retirement plans, have no up-front sales charge. They are, however, subject to
additional expenses of approximately 0.75% a year over the first eight years of
ownership. If redeemed within six years, they may also be subject to a
contingent deferred sales charge (5% maximum) that declines over time. Because
expenses are first deducted from income, dividends for Class B share accounts
will be lower.
Printed on recycled paper
Litho in USA KBD/INS/4608
Lit. No. NWF-013-0600
