CAPITAL WORLD GROWTH AND INCOME FUND
Annual report for the year ended November 30, 1995
The American Funds Group(R)
CAPITAL WORLD GROWTH AND INCOME FUND(SM) seeks long-term capital growth while
providing current income. It invests on a global basis in a diversified
portfolio of common stocks and other equity-type securities, bonds and money
market instruments.
ABOUT OUR COVER:
The global portfolio of Capital World Growth and Income Fund is composed of
growth-oriented and income-producing securities from a wide range of companies
domiciled in many countries and representing a large number of industries,
including banking, telecommunications and health care.
RESULTS AT A GLANCE
(with dividends reinvested)
<TABLE>
<CAPTION>
12 Months Lifetime Total Return
through 11/30/95 (3/26/93 - 11/30/95)
<S> <C> <C>
CAPITAL WORLD GROWTH
AND INCOME FUND +19.4% +46.9%
Morgan Stanley Capital
International World Index +19.0 +42.6
Standard & Poor's 500
Composite Index +37.0 +44.8
</TABLE>
The MSCI World Index measures all of the world's major stock markets, including
the U.S. market. The S&P 500 measures the U.S. market only. All market indexes
are unmanaged.
Fund results in this report were computed without a sales charge unless
otherwise indicated. Here are returns, with all distributions reinvested,
through December 31, 1995 (the most recent calendar quarter), assuming payment
of the 5.75% maximum sales charge at the beginning of the stated periods.
AVERAGE ANNUAL
TOTAL RETURN COMPOUND RETURN
Lifetime +41.54% +13.38%
(since 3/26/93)
One Year +14.39 -
Sales charges are lower for accounts of $50,000 or more. The fund's 30-day
yield as of December 31, 1995, calculated in accordance with the Securities and
Exchange Commission formula, was 2.85%.
THE FIGURES IN THIS REPORT REFLECT PAST RESULTS. SHARE PRICE AND RETURN WILL
VARY, SO YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE SHORTER THE TIME
PERIOD OF YOUR INVESTMENT, THE GREATER THE POSSIBILITY OF LOSS. FUND SHARES ARE
NOT DEPOSITS OR OBLIGATIONS OF, OR INSURED OR GUARANTEED BY, THE U.S.
GOVERNMENT, ANY FINANCIAL INSTITUTION, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, OR ANY OTHER AGENCY, ENTITY OR PERSON.
FELLOW SHAREHOLDERS:
Fiscal 1995 was a year of solid progress for Capital World Growth and Income
Fund. Your fund recorded a total return of 19.4% for the 12 months ended
November 30, assuming reinvestment of the December 1994 capital gain
distribution of 29 cents a share and the four dividends totaling 63 cents a
share paid during the year. If you took those dividends in cash, your
investment gained 15.4% and you earned an income return of 3.6%.
By comparison, the unmanaged Morgan Stanley Capital International (MSCI) World
Index <UNDEF> which tabulates the returns on 22 major stock markets, including
the U.S. - gained 19.0% for the year with dividends reinvested. The U.S. equity
market, fueled by low inflation and falling interest rates, was among the
world's strongest during the 12-month period. It surged 37.0% with dividends
reinvested, as measured by the unmanaged Standard & Poor's 500 Composite Index.
In launching Capital World Growth and Income Fund 33 months ago, we believed
that a professionally managed growth-and-income portfolio with global
flexibility could provide solid returns over time. Indeed, over its relatively
brief lifetime, the fund has recorded an average annual compound return of
15.4% with dividends reinvested. This has outpaced the average compound returns
of 14.1% a year for the MSCI World Index and 14.8% for the S&P 500 during the
same period. In addition, your fund's return compares favorably with the 12.5%
a year average return of the 58 global stock funds in existence since your
fund's inception, according to Lipper Analytical Services, a leading mutual
fund tracking service.
A LONG-TERM GLOBAL PERSPECTIVE
We did very little shifting of assets from one market to another during the
course of the year. Your fund's approach is to invest in solid companies - not
countries or regions - over relatively long periods of time.
Our commitment to this long-term investment philosophy is exemplified by the
large positions we have held in the same companies over time, as shown in the
table below.
The following companies were among the fund's 30 largest holdings on both
11/30/93 and 11/30/95:
<TABLE>
<CAPTION>
Rank on Rank on
11/30/95 11/30/93
<S> <C> <C>
Internationale Nederlanden 1 2
Groep
Telecom Corp. of New Zealand 2 1
Advance Bank Australia 3 26
THORN EMI 4 3
Eli Lilly 8 24
Hutchison Whampoa 11 4
Philip Morris 13 25
ABN AMRO Holding 15 9
Reckitt & Colman 17 18
American Home Products 19 12
Tesco 24 7
North West Water Group 28 13
BAT Industries 30 19
</TABLE>
LARGEST HOLDINGS HELPED RESULTS
Strong price rises by the fund's largest stock positions this year certainly
helped its results: Nine out of the ten largest holdings appreciated over the
past 12 months. Two (Eli Lilly and THORN EMI) were up more than 50%; four
(Australia and New Zealand Banking Group, Internationale Nederlanden Groep, AB
Astra and First Union Corp.) gained 37% to 47%; one (Telecom Corp. of New
Zealand) rose 23%; and two (Advance Bank Australia and Koninklijke PTT
Nederland) increased almost 15%. National Power, our tenth-largest holding,
declined 9% primarily due to fears of adverse government regulatory decisions
in the U.K. concerning the electric utilities industry.
The fund's three largest industry concentrations - banking (13.6% of the
portfolio), telecommunications (7.8%) and health & personal care (5.7%) -
showed particular strength this year. Banking stocks in diverse markets did
well for different reasons. U.S. banks benefited from mergers, cost-cutting,
declining interest rates and lower loan losses; Australian banks reduced the
number of their problem loans; and in the Netherlands, banking stocks were
buoyed by expectations of better earnings.
Growth in the telecommunications area was fueled by regulatory decisions
offering the potential for market expansion as well as by increasing demand for
cellular and mobile phone services and aggressive cost reduction.
In health care, particularly the pharmaceutical industry, stocks rose as a
result of mergers, eased fears of punitive regulation and higher estimates of
long-term earnings growth. A feature article following this letter describes
the roles banking, telecommunications and health care stocks currently play in
the construction of this global growth and income fund.
A BRIEF WORD ON DIVIDEND GROWTH
Since its initial year, Capital World Growth and Income Fund has generated
successively higher annual dividends. We are pleased with this outcome, but
want to point out that the past year's increase of 37% ($0.63 vs. $0.46) was
unusually large. While sound, seasoned companies do tend to increase dividends
regularly, this rate of increase is clearly exceptional, and stemmed more from
changes in the fund's portfolio mix than from the underlying growth in
individual company dividends.
While we view income as an important component of total long-term returns,
there are periods when dividend growth slows or when it appears that the most
attractive values lie in lower yielding stocks. While we do seek to increase
the fund's dividend over time, it is not the fund's goal to increase it in each
and every year or to regularly produce gains as large as that in 1995.
WHERE CAPITAL WORLD GROWTH AND INCOME FUND'S ASSETS ARE INVESTED
(percent invested by country as of 11/30/95)
<TABLE>
<CAPTION>
<S> <C>
EQUITY-TYPE SECURITIES 87.0%
EUROPE 37.6%
United Kingdom 14.1%
Netherlands 6.4
Sweden 3.9
France 3.6
Germany 2.5
Italy 1.5
Spain 1.2
Denmark .8
Finland .8
Belgium .8
Switzerland .6
Norway .6
Luxembourg .3
Ireland .3
Austria .2
THE AMERICAS 32.1%
United States 27.3%
Canada 2.8
Argentina .7
Mexico .7
Brazil .6
ASIA/PACIFIC RIM 16.4%
Australia 6.4%
New Zealand 3.9
Hong Kong 3.9
Japan 1.8
Thailand .3
India .1
OTHER .9%
Supranational .9%
BONDS & NOTES 2.5%
CASH EQUIVALENTS 10.5%
100.0%
</TABLE>
We welcome the fund's many new shareholders and look forward to reporting to
you again in six months.
Cordially,
Thierry Vandeventer Paul G. Haaga, Jr.
Chairman of the Board President
January 9, 1996
HOW A $10,000 INVESTMENT HAS GROWN
Here's how a $10,000 investment in the fund grew between March 26, 1993, when
the fund began operations, and November 30, 1995, the end of its latest fiscal
year. As you can see, that $10,000, with all distributions reinvested, would
have grown to $13,841, an average increase of 12.9% a year.
AVERAGE ANNUAL COMPOUND RETURNS*
(for periods ended November 30, 1995)
Lifetime +12.88%
(since 3/26/93)
One Year +12.52%
*Assumes reinvestment of all distributions and payment of the 5.75% maximum
sales charge at the beginning of the stated periods.
$14,477/1/
Standard & Poor's 500 Composite Index
$14,259/1/
Morgan Stanley Capital International World Index
$13,841 /1/ /2/
Capital World Growth and Income Fund
$10,696
U.S. Consumer Price Index (Inflation)
/1/ With dividends reinvested.
/2/ These figures, unlike those shown earlier in this report, reflect payment
of the maximum sales charge of 5.75% on the original investment. Thus, the net
amount invested was $9,425. As outlined in the prospectus, the sales charge is
reduced for largest investments.
The indexes are unmanaged and do not reflect sales charges, commissions or
expenses. Past results are not predictive of future results.
BUILDING A GLOBAL PORTFOLIO THAT SEEKS A BALANCE OF GROWTH AND INCOME
Capital World Growth and Income Fund's equity-type holdings - comprising 87% of
net assets as of November 30 - encompass 269 companies in 26 countries
representing 35 industry groups. This reflects the fact that the world's
investment opportunities have become increasingly global in scope.
To understand how your fund invests today, it is important to remember the
investment approach on which it was conceived. Where most funds investing
outside the U.S. have focused on growth, we took the time-tested principle of
investing for growth as well as reasonable current income and applied it to
global investing.
We believe that this investment approach can accomplish two important goals.
First, its global diversification can soften the impact of fluctuating prices
in individual markets. Second, its more conservative mix of growth and
income-producing securities can be an effective way to earn an attractive total
return over the long haul. Of course, the fund's income component can limit the
portfolio's appreciation potential but it can also support the fund's holdings
during periods of declining prices.
The fund's approach has enabled its portfolio counselors to build a portfolio -
stock by stock - from a spectrum of global investment possibilities. The fund's
search for growth-oriented and income-producing opportunities ranges from large
multinationals to more regional companies, and from rapidly expanding
enterprises with minimal dividend distributions to more established
corporations whose dividends have grown each year.
RIGOROUS RESEARCH
Stock selection is based on in-depth research provided by Capital World Growth
and Income Fund's adviser, Capital Research and Management Company. CRMC and
its affiliates maintain one of the industry's most extensive global research
networks; it is made up of more than 180 investment professionals who travel
millions of miles each year, calling on companies that are part of or
candidates for the fund's portfolio.
Before investing, the research analysts and portfolio counselors typically meet
face-to-face with a firm's executives, suppliers and bankers as well as with
its customers and competitors. They also hold discussions with industry and
regional experts, economists and government officials. In 1994, these
investment professionals made a total of over 9,000 research visits in more
than 50 countries.
MULTIPLE PORTFOLIO COUNSELOR SYSTEM
Capital World Growth and Income Fund - in contrast to mutual funds managed by
one person or a committee - employs a "multiple portfolio counselor system"
that is designed to combine the merits of both of the other systems. The fund's
assets are divided among several portfolio counselors, who then diversify their
segments as each of them sees fit.
One counselor may include more high-yielding utilities. Another may hold the
fund's largest portion of U.S.-based multinationals. A third may be more
heavily positioned in the stocks of European businesses. In effect, each
counselor builds his or her own portfolio within the objectives of Capital
World Growth and Income Fund. The fund's overall portfolio is the result of the
aggregate decisions of the individual portfolio counselors.
CRMC's investment committee ensures that each counselor's selections are
consistent with the fund's objectives and guidelines. The process is designed
to enable each portfolio counselor to act on his or her strongest convictions,
while maintaining orderly procedures and controls.
The multiple portfolio counselor system also helps maintain continuity in
management. If one counselor were to leave, only a portion of portfolio
responsibility would change hands. Smooth, gradual transitions help the fund's
investment approach remain consistent.
LONG-TERM OUTLOOK
Before a security can become a holding in your fund, its investment merits are
examined carefully. The issuing company's business prospects are analyzed to
determine its probability of higher earnings down the line. The stock's
estimated value is compared to its current share price. In light of the fund's
long-term perspective, the potential portfolio addition must be one the
portfolio counselor can feel highly confident about holding over time. Once the
stock is added to the fund's portfolio, its investment merits are reassessed
continuously.
On the following pages, we look at some of the holdings among the portfolio's
three largest industry concentrations - banking, telecommunications and health
care - and discuss how they currently fit into Capital World Growth and Income
Fund.
THE BANKING INDUSTRY
MERGERS, ACQUISITIONS AND EXPANDED SERVICES
Merger and acquisition activity had a positive effect on the fund's U.S. bank
stocks. When two banks merge, cost savings can be achieved over several years
by eliminating duplicate jobs and services.
CHEMICAL BANKING's acquisition of Chase Manhattan was perceived so positively
that the shares of both companies increased while merger formalities were being
worked out.
BANC ONE recently completed a series of internal consolidation efforts after
undergoing difficulties with rising interest rates a year ago. We believe that
the benefits of these cost-saving measures are about to be realized.
BANK OF NEW YORK is following another course. Rather than continuing to
purchase big retail franchises where prices have risen dramatically, the bank
has been buying smaller processing and fee-type businesses and running them
more efficiently.
Outside the U.S., some banks in the portfolio are involved with acquisitions.
Others, however, are providing expanded services to their existing customer
bases, as well as to others outside their home base.
Although it is categorized in this report as an insurance company,
INTERNATIONALE NEDERLANDEN GROEP, the fund's largest holding, is a product of
the merger of the largest insurer and second-largest bank in the Netherlands.
Last year ING acquired the assets of Barings Bank, the failed U.K.-based
investment bank, and broadened the international reach of its financial
services.
ABN AMRO HOLDING, which benefits from a strong market share in its domestic
Dutch market, is making selective acquisitions throughout Europe.
SAFRA REPUBLIC HOLDINGS, incorporated in Luxembourg, is capitalizing on its
strong franchise in private banking in Switzerland. It is also expanding its
customer base elsewhere in Europe and in Latin America.
STADSHYPOTEK is a low-cost provider of financial products to its Swedish retail
customer base.
The strategy of BANCO DE SANTANDER, which acquired the second-largest Spanish
bank in 1994, is to continue offering reasonably priced and innovative products
to its domestic customers in Spain while expanding its operations in a number
of Latin American countries.
THE TELECOMMUNICATIONS INDUSTRY
WIRED FOR GROWTH AND INCOME WORLDWIDE
Many investment opportunities in the telecommunications industry are based
outside the U.S. A number of these international companies were previously
owned by their governments. Since being privatized, many of these companies
have reduced their work forces and shown significant improvement in operating
efficiency. Holdings such as TELE DANMARK, TELECOM CORP. OF NEW ZEALAND,
TELECOM ITALIA and KONINKLIJKE PTT NEDERLAND - all formerly government-owned -
are currently providing attractive dividend yields as well as growth
opportunities.
Also in the fund for its growth and income potential is CABLE AND WIRELESS, a
U.K.-based global telecommunications group that owns a large part of Hong Kong
Telecom. The world's first telecommunications com-pany to be privatized (in
1981), Cable and Wireless currently provides a solid dividend and long-term
capital growth potential.
Another integrated telecommunications group, Italy's STET-SOCIETA FINANZIARIA
TELEFONICA, is benefiting from strength in the mobile telephone business. The
company also owns an equipment manufacturer and a network installation company.
Several companies are held by the fund primarily for the yields they provide.
Some regional U.S. telephone businesses, such as PACIFIC TELESIS Group and U S
WEST, operate in more mature markets with less growth potential than their
non-U.S. counterparts. However, by holding down costs they have been able to
offer attractive earnings and dividends even without robust earnings growth.
On the other hand, there are telecom holdings in the portfolio that generally
provide more long-term capital growth potential and lower current yield. Some
of these companies are monopolies in their own countries. They have not yet
faced the competitive pressures that deregulation has already brought to
similar operations in the U.S., nor are they limited in their expansion plans.
For example, TELECOMUNICACOES BRASILEIRAS, the Brazilian phone company, offers
the potential for long-term growth because Brazil is currently underserved by
its existing telephone network.
Although TELEFONICA DE ARGENTINA - one of the country's two telephone companies
- - provides a modest yield, the stock is in the fund's portfolio because it too
should benefit from a rapidly expanding network.
Finally, two additional fund holdings - both substantial positions in
non-telecom categories in this report - should also be mentioned. HUTCHISON
WHAMPOA, our 11th-largest holding, is a diversified company that owns Hong
Kong's largest cellular telephone system and the second-largest personal
communications network (PCN) in the U.K. MANNESMANN, the fund's 12th-largest
holding, is the owner of Germany's second- largest mobile telephone network.
Both companies provide the fund with reasonable growth potential.
THE HEALTH CARE INDUSTRY
THE GLOBALIZATION OF PHARMACEUTICAL COMPANIES
Few industries illustrate the growing globalization of the world's economy as
well as pharmaceutical companies. From their headquarters in the U.S., the U.K.
and Sweden, for example, the pharmaceutical companies in the fund's portfolio
distribute their products around the world.
The risks taken by these companies are high and their initial investments in
developing products are difficult to recover. That's because only one out of
every 11 products that are tested on people in clinical trials is eventually
approved for actual sale. Should the approval come through, the pharmaceutical
company then needs to gear up for a major marketing, sales and distribution
campaign. For individual drug companies, the expenses can be prohibitive.
That is why some of the companies held by your fund have recently joined forces
with other similar companies. For example, Glaxo, based in the U.K., engaged in
an aggressive takeover of Wellcome. GLAXO WELLCOME has since benefited by
realizing cost reductions and efficiencies, while gaining expertise in areas in
which it had been lacking.
Two other pharmaceutical companies in the fund have met mutual success by
uniting their efforts. Sweden's AB ASTRA recently reached an agreement with the
U.S.-based MERCK & CO. to create Astra Merck Inc. to promote their
antipeptic-ulcer product in the U.S. As the sales force of this new venture
knocks on doctors' doors throughout the country, sales are accelerating and the
product is now a bestseller in the U.S., the world's most important
pharmaceutical market.
Capital World Growth and Income Fund is built on a stock-by-stock basis. Each
holding in its global portfolio is selected as a solid long-term investment
that can provide the potential for growth, income or both. The companies
mentioned in the preceding article, however, are not meant to be investment
recommendations. Rather, they represent current stock positions that are
reassessed on a continuous basis and may be sold at any time.
CAPITAL WORLD GROWTH AND INCOME FUND
INVESTMENT PORTFOLIO, NOVEMBER 30, 1995
LARGEST INDUSTRY HOLDINGS
EQUITY-TYPE SECURITIES 87.00%
Banking 13.62%
Telecommunications 7.82%
Health & Personal Care 5.71%
Business & Public Services 4.46%
Insurance 3.87%
Other Industries 51.52%
BONDS & NOTES 2.55%
CASH EQUIVALENTS 10.45%
Percent of
LARGEST INDIVIDUAL HOLDINGS Net Assets
Internationale Nederlanden Groep (Netherlands) 2.52%
Telecom Corp. of New Zealand (New Zealand) 2.05
Advance Bank Australia (Australia) 1.80
THORN EMI (United Kingdom) 1.54
Koninklijke PTT Nederland (Netherlands) 1.49
AB Astra (Sweden) 1.18
First Union (USA) 1.17
Eli Lilly (USA) 1.05
Australia and New Zealand
Banking Group (Australia) 1.04
National Power (United Kingdom) 1.01
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Shares or Market Percen
t
Equity-Type Securities Principal Value of Net
(common and preferred stocks and Amount (Millions) Assets
convertibledebentures)
- ------------------------------------- ---------- ---------- ------
BANKING- 13.62%
Advance Bank Australia Ltd. (Australia) 8,675,130 $64.972 1.80%
First Union Corp. (USA) 775,000 42.334 1.17
Australia and New Zealand Banking (Australia) 8,413,000 37.505 1.04
Group Ltd.
ABN AMRO Holding NV (Netherlands) 711,279 31.637 .88
National Australia Bank Ltd. (Australia) 3,550,826 30.973 .86
Bank of New York Co., Inc. (USA) 600,000 28.275 .78
Chemical Banking Corp. (USA) 450,000 27.000 .75
First Chicago Corp. (USA) 250,000 17.375 .48
Banc One Corp. (USA) 400,000 15.250 .42
Banco de Santander, SA (Spain) 211,800 9.866
Banco de Santander, SA (American
Depositary Receipts) 88,200 4.068 .39
National City Corp. (USA) 400,000 12.950 .36
Stadshypotek AB, Class A (Sweden) 500,000 10.060 .28
Bangkok Bank Ltd., 3.25% convertible (Thailand)
debentures 2004 $10,000,000 10.050 .28
Christiania Bank (Norway) 4,350,000 9.758 .27
Safra Republic Holdings SA (Luxembourg) 110,000 9.735 .27
Boatmen's Bancshares, Inc. (USA) 250,000 9.687 .27
Wilmington Trust Corp. (USA) 300,000 9.638 .27
Challenge Bank Ltd. (Australia) 2,456,046 9.507 .26
Allied Irish Banks, PLC (Ireland) 1,730,000 9.428 .26
Credit local de France (France) 125,000 9.422 .26
Westpac Banking Corp. (Australia) 2,075,164 8.604 .24
Istituto Mobiliare Italiano SpA (Italy)
(American Depositary Receipts) 500,000 8.563 .24
National Bank of Canada (Canada) 1,000,000 8.186 .23
Banca Popolare di Bergamo-Credito (Italy)
Varesino S.C.r.l. 400,000 5.239
Banca Popolare di Bergamo-Credito
Varesino S.C.r.l., 9.00% convertible
debentures 2000 LIT2,277,775,00 1.391
0
Banca Popolare di Bergamo-Credito
Varesino S.C.r.l., 7.50% convertible
debentures 1999 LIT1,000,000,00 .681
0
Banca Popolare di Bergamo-Credito
Varesino S.C.r.l., warrants, expire 455,555 .108 .21
2000 /1/
Svenska Handelsbanken Group, Class A (Sweden) 325,000 6.564
Svenska Handelsbanken Group, Class B 21,900 .427 .19
Banco Popular Espanol, SA (Spain) 40,000 6.708 .19
J.P. Morgan & Co. Inc. (USA) 80,000 6.280 .17
Compagnie de Suez (France) 150,000 5.623 .16
Grupo Financiero Banamex Accival, SA (Mexico)
de CV, Class B 2,993,000 4.607 .13
National Westminster Bank PLC (United 438,906 4.492 .12
Kingdom)
Sumitomo Bank, Ltd. (Japan) 200,000 3.843 .11
CS Holding Group (Switzerland) 32,500 3.081 .09
Kansallis-Yhtymae (formerly (Finland)
Kansallis-Osake-
Pankki) /1/ 3,434,100 2.874 .08
Bank of Montreal (Canada) 110,000 2.489 .07
Credit Foncier de France (France) 83,406 1.626 .04
TELECOMMUNICATIONS- 7.82%
Telecom Corp. of New Zealand Ltd. (New Zealand) 8,380,000 35.050
Telecom Corp. of New Zealand Ltd.
(American Depositary Receipts) 331,000 22.177
Telecom Corp. of New Zealand Ltd. /2/ 4,048,000 16.931 2.05
Koninklijke PTT Nederland NV (Netherlands) 1,512,800 53.848 1.49
Tele Danmark AS, Class B (American (Denmark)
Depositary Receipts) 924,100 25.759
Tele Danmark AS, Class B 82,500 4.487 .84
Telecomunicacoes Brasileiras SA, (Brazil)
preferred nominative (American 427,630 20.526 .57
Depositary Receipts)
Telefonos de Mexico, SA de CV, Class (Mexico)
L
(American Depositary Receipts) 582,300 19.216 .53
International CableTel Inc., 7.25% (USA)
convertible debentures 2005 /2/ $11,000,000 12.430 .34
STET-Societa Finanziaria Telefonica (Italy)
p.a.,nonconvertible savings 4,775,000 9.371
shares
STET-Societa Finanziaria Telefonica 890,000 2.424 .33
p.a.
Pacific Telesis Group (USA) 352,455 10.574 .29
Vodafone Group PLC (American (United
DepositaryReceipts) Kingdom) 240,000 8.670 .24
Telefonica de Argentina SA, Class B (Argentina)
(American Depositary Receipts) 277,300 6.794
Telefonica de Argentina SA, Class B 600,000 1.495 .23
Telecom Italia SpA /1/ (Italy) 4,264,200 6.915
Telecom Italia Mobile SpA, ordinary 357,800 .483 .20
shares
MFS Communications Co., Inc., DECS (USA)
convertible preferred shares 130,000 5.558
MFS Communications Co., Inc. /1/ 4,940 .225 .16
Bell Atlantic Corp. (USA) 75,000 4.725 .13
AirTouch Communications /1/ (USA) 117,820 3.432 .09
Ameritech Corp. (USA) 60,000 3.300 .09
Cable and Wireless PLC (United 460,252 3.195 .09
Kingdom)
ALLTEL Corp. (USA) 100,000 2.950 .08
U S WEST, Inc. (USA) 80,000 2.500 .07
MULTI-INDUSTRY- 7.58%
Hutchison Whampoa Ltd. (Hong Kong) 5,990,000 33.846 .94
Brierley Investments Ltd. (New Zealand) 37,474,549 28.364
Brierley Investments Ltd.,
convertible
preferred shares 5,530,000 3.933 .89
B A T Industries PLC (United 3,011,000 25.697 .71
Kingdom)
Harsco Corp. (USA) 345,000 20.355 .56
Incentive AB, Class B (Sweden) 400,000 18.292 .51
Hanson PLC (United 5,156,780 15.413 .43
Kingdom)
Industriforvaltnings AB Kinnevik, (Sweden)
Series 3, 10.50% convertible SKR50,250,000 12.638 .35
debentures 1997
Orkla AS, Class B (Norway) 175,000 8.428
Orkla AS, Class A 71,000 3.620 .33
U.S. Industries, Inc. /1/ (USA) 623,157 10.126 .28
AB Industrivarden, Class A (Sweden) 300,000 9.832 .27
Jardine Strategic Holdings Ltd. (Singapore) 3,375,000 8.876
Jardine Strategic Holdings Ltd.,
7.50%
convertible debentures 2049 $181,000 .169
Jardine Strategic Holdings Ltd.,
warrants, expire 1998 /1/ 375,000 .099 .25
Textron Inc. (USA) 115,000 8.812 .24
Groupe Bruxelles Lambert SA (Belgium) 63,000 8.192 .23
Canadian Pacific Ltd. /1/ (Canada) 400,000 7.300 .20
Lend Lease Corp. Ltd. (Australia) 523,632 7.252 .20
LTV Corp. /1/ (USA) 500,000 7.250 .20
Tenneco Inc. (USA) 150,000 7.200 .20
Minnesota Mining and Manufacturing (USA) 100,000 6.550 .18
Co.
Compagnie Nationale a Portefeuille (Belgium) 100,000 5.981
Compagnie Nationale a Portefeuille,
warrants, expire 1999 /1/ 150,000 .348 .18
Pearson PLC (United 600,000 5.961 .16
Kingdom)
Investor AB, Class B (Sweden) 160,000 5.158 .14
Swire Pacific Ltd., Class A (Hong Kong) 350,000 2.647 .07
Preussag AG (Germany) 8,000 2.299 .06
HEALTH & PERSONAL CARE- 5.71%
AB Astra, Class A (Sweden) 800,000 29.815
AB Astra, Class B 350,000 12.857 1.18
Eli Lilly and Co. (USA) 380,000 37.810 1.05
American Home Products Corp. (USA) 321,000 29.291 .81
Glaxo Wellcome PLC (United 2,150,000 28.683 .79
Kingdom)
Merck & Co., Inc. (USA) 385,000 23.822 .66
Bausch & Lomb Inc. (USA) 550,000 19.869 .55
Bristol-Myers Squibb Co. (USA) 175,000 14.044 .39
Warner-Lambert Co. (USA) 75,000 6.694 .19
Abbott Laboratories (USA) 50,000 2.031 .06
Baxter International Inc. (USA) 30,000 1.260 .03
BUSINESS & PUBLIC SERVICES- 4.46%
PacifiCare Health Systems, Inc., (USA) 200,000 17.000
Class A /1/
PacifiCare Health Systems, Inc., 125,000 10.844 .77
Class B /1/
North West Water Group PLC (United 2,886,428 26.357 .73
Kingdom)
General Motors Corp., Class E (USA) 300,000 15.150 .42
Southern Water PLC (United 1,088,444 11.122 .31
Kingdom)
Autopistas, Concesionaria (Spain) 927,360 10.180 .28
Espanola, SA
American Water Works Co., Inc. (USA) 300,000 9.637 .27
Autopistas del Mare Nostrum, SA (Spain)
Concesionaria del Estado 720,000 9.245 .26
True North Communications Inc. (USA) 391,000 8.016 .22
Deluxe Corp. (USA) 267,200 7.381 .20
Alco Standard Corp. (USA) 160,000 6.960 .19
Hutchison Delta Finance Ltd., 7.00% (Hong Kong -
convertible debentures 2001 incorporated
in Cayman
Islands) $6,000,000 6.638 .18
WMX Technologies, Inc. (USA) 225,000 6.638 .18
Welsh Water PLC (United 625,000 6.587 .18
Kingdom)
Thames Water PLC (United 441,994 3.738 .10
Kingdom)
Omnicom Group Inc. (USA) 50,000 3.338 .09
Havas SA (France) 40,000 2.934 .08
INSURANCE- 3.87%
Internationale Nederlanden Groep NV (Netherlands) 1,286,728 84.141
Internationale Nederlanden Groep NV,
warrants, expire 2001 /1/ 2,000,000 6.749 2.52
National Mutual Asia Ltd. (Hong Kong) 21,708,000 16.701 .46
GIO Australia Holdings Ltd. (Australia) 5,851,530 13.087 .36
Aetna Life and Casualty Co. (USA) 100,000 7.337 .20
Allstate Corp. (USA) 150,000 6.150 .17
Yasuda Fire and Marine Insurance (Japan) 470,000 3.096 .09
Co., Ltd.
Prudential Corp. PLC (United 406,576 2.679 .07
Kingdom)
UTILITIES: ELECTRIC & GAS- 3.80%
National Power PLC (United 5,160,000 36.493 1.01
Kingdom)
Southern Electric PLC (United 2,070,000 29.121 .81
Kingdom)
Hongkong Electric Holdings Ltd. (Hong Kong) 4,073,500 13.668 .38
General Public Utilities Corp. (USA) 392,000 12.397 .34
Scottish Power PLC (United 1,875,000 10.792 .30
Kingdom)
British Gas PLC (American Depositary (United
Kingdom)
Receipts) 150,000 5.588
British Gas PLC 900,000 3.355 .25
Entergy Corp. (USA) 300,000 8.363 .23
Hong Kong and China Gas Co. Ltd. (Hong Kong) 3,575,120 5.848 .16
China Light & Power Co., Ltd. (Hong Kong) 932,000 4.386 .12
Australian Gas Light Co. (Australia) 1,104,192 3.881 .11
Detroit Edison Co. (USA) 100,000 3.262 .09
ENERGY SOURCES- 3.53%
Royal Dutch Petroleum Co. (New York (Netherlands)
Registered Shares) 90,000 11.554
Royal Dutch Petroleum Co. 85,000 10.923
'Shell' Transport and Trading Co., (United
PLC Kingdom)
(New York Registered Shares) 80,000 5.970 .79
Phillips Petroleum Co. (USA) 775,000 25.769 .71
ENI SpA (American Depositary Shares) (Italy) 580,000 19.067 .53
/1/
TOTAL, Class B (France) 234,454 14.421 .40
YPF SA, Class D (American Depositary (Argentina)
Receipts) 700,000 13.650 .38
Petrofina SA (Belgium) 35,700 10.568 .29
Occidental Petroleum Corp. (USA) 250,000 5.532 .15
Unocal Corp. (USA) 200,000 5.375 .15
Burmah Castrol PLC (United 206,343 3.053 .08
Kingdom)
Esso SA Francaise (France) 20,000 1.935 .05
FOREST PRODUCTS & PAPER- 2.95%
James River Corp. of Virginia, DECS (USA)
convertible preferred shares 450,000 13.500
James River Corp. of Virginia 250,000 7.875 .59
Champion International Corp. (USA) 430,000 20.264 .56
Sonoco Products Co. (USA) 735,000 18.375 .51
Jefferson Smurfit Corp. /1/ (USA) 1,332,300 14.988 .41
Kymmene Corp. (Finland) 231,500 6.296
Kymmene Corp., 8.25% convertible
debentures 2043 $18,000,000 4.331 .29
MAYR-MELNHOF Karton AG (Austria) 145,000 7.514 .21
Fletcher Challenge Ltd. (New Zealand) 1,920,000 4.761
Fletcher Challenge Forests Division
(American Depositary Receipts) 21,600 .302
Fletcher Challenge Forests Division 130,535 .184 .15
Bowater Inc. (USA) 100,000 3.975 .11
Federal Paper Board Co., Inc. (USA) 56,700 2.948 .08
Carter Holt Harvey Ltd. (New Zealand) 616,770 1.300 .04
BEVERAGES & TOBACCO- 2.86%
Philip Morris Companies Inc. (USA) 370,000 32.467 .90
Seagram Co. Ltd. (Canada) 570,000 20.805 .58
RJR Nabisco Holdings Corp. (USA) 400,000 11.650 .32
Lion Nathan Ltd. (New Zealand) 5,000,000 11.484 .32
American Brands, Inc. (USA) 200,000 8.350 .23
Coca-Cola Amatil Ltd. (Australia) 980,011 7.937 .22
UST Inc. (USA) 200,000 6.525 .18
Heineken Holding NV, Class A (Netherlands) 25,000 4.056 .11
MACHINERY & ENGINEERING- 2.70%
Mannesmann AG (Germany) 105,075 33.789 .94
Bombardier Inc., Class B (Canada) 1,400,000 17.899 .50
Caterpillar Inc. (USA) 270,000 16.571 .46
Bremer Vulkan Verbund AG /1/ (Germany) 425,000 12.414 .34
Atlas Copco AB, Class A (Sweden) 568,900 8.585 .24
Triplex Lloyd PLC (United 2,358,946 4.947 .14
Kingdom)
Zardoya Otis, S.A. (Spain) 21,574 2.237 .06
Sandvik AB, Class B (Sweden) 35,900 .659 .02
FOOD & HOUSEHOLD PRODUCTS- 2.60%
Reckitt & Colman PLC (United 2,978,125 30.522 .84
Kingdom)
Cadbury Schweppes PLC (United 2,121,225 18.038 .50
Kingdom)
Groupe Danone (France) 75,000 11.706 .32
Nestle SA (Switzerland) 8,452 9.005 .25
Colgate-Palmolive Co. (USA) 100,000 7.325 .20
McCormick & Co. (USA) 205,000 4.843 .13
Hazlewood Foods PLC (United 3,000,000 4.684 .13
Kingdom)
Uni-Charm Corp. (Japan) 189,000 4.317 .12
Unilever NV (Netherlands) 30,000 3.925 .11
AUTOMOBILES- 2.46%
Ford Motor Co., Class A (USA) 950,000 26.837 .74
Regie Nationale des Usines Renault, (France) 715,400 20.440 .57
SA
Bayerische Motoren Werke AG (Germany) 22,000 11.834
Bayerische Motoren Werke AG,
preferred shares 10,254 3.820 .43
Porsche AG /1/ (Germany) 20,000 9.363 .26
Toyota Motor Corp. (Japan) 435,000 8.572 .24
Daimler-Benz AG (Germany) 6,600 3.243
Daimler-Benz AG (American Depositary
Receipts) 55,000 2.723 .17
Peugeot SA (France) 13,500 1.745 .05
MERCHANDISING- 2.29%
Tesco PLC (United 6,394,844 28.242 .78
Kingdom)
Wal-Mart Stores, Inc. (USA) 625,000 15.000 .42
WHSmith Group PLC, Class A (United 1,150,000 7.623 .21
Kingdom)
Duty Free International, Inc. (USA) 470,000 6.345 .18
Staples, Inc. 4.50% convertible (USA)
debentures 2000 /2/ $6,000,000 6.060 .17
Home Depot, Inc. (USA) 120,000 5.325 .15
Giant Food Inc., Class A (USA) 150,000 4.837 .13
Toys 'R' Us, Inc. /1/ (USA) 150,000 3.488 .10
Amway Japan Ltd. (Japan) 79,000 3.214 .09
Delhaize 'Le Lion' SA (Belgium) 50,000 2.087 .06
CHEMICALS- 2.16%
Praxair, Inc. (USA) 992,500 28.907 .80
Sherwin-Williams Co. (USA) 436,000 17.276 .48
Airgas, Inc. /1/ (USA) 277,000 7.756 .21
L'Air Liquide (France) 45,827 7.373 .20
Akzo NV (Netherlands) 48,000 5.419 .15
AGA AB (Sweden) 300,000 4.161 .12
European Vinyls Corp. (Netherlands) 120,000 3.235 .09
DSM NV (Netherlands) 30,000 2.387 .07
BASF AG (Germany) 6,250 1.368 .04
RECREATION & OTHER CONSUMER
PRODUCTS- 1.77%
THORN EMI PLC (United 2,329,295 55.536 1.54
Kingdom)
Fuji Photo Film Co., Ltd. (Japan) 200,000 4.941 .14
Hasbro, Inc. (USA) 103,200 3.148 .09
INDUSTRIAL COMPONENTS- 1.68%
Goodyear Tire & Rubber Co. (USA) 400,000 16.950 .47
Morgan Crucible Co. PLC (United 2,081,383 12.904 .36
Kingdom)
Federal-Mogul Corp. (USA) 572,500 10.949 .30
Compagnie Generale des Etablissements (France)
Michelin, Class B 250,000 10.158
Compagnie Generale des Etablissements
Michelin, convertible 8,333 .445 .29
preferred shares
BICC PLC (United 750,000 3.255 .09
Kingdom)
Continental AG (Germany) 158,000 2.313 .06
AB SKF, Class B (Sweden) 100,000 2.058 .06
Magna International Inc., Class A (Canada) 38,000 1.653 .05
METALS: NONFERROUS- 1.57%
Inco Ltd. (Canada) 425,000 15.141 .42
Noranda Inc. (Canada) 625,000 13.222 .37
Teck Corp., 3.75% convertible (Canada)
debentures 2006 $12,950,000 12.659 .35
Pechiney (France) 272,000 11.118 .31
Phelps Dodge Corp. (USA) 40,200 2.729 .08
Indian Aluminum Co. Ltd. (Global (India)
Depositary Receipts) /2/ 225,000 1.350 .04
BROADCASTING & PUBLISHING- 1.41%
Time Warner Inc., preferred equity (USA)
redemption cumulative stock 285,000 9.298
Time Warner Inc., 0% convertible
debentures 2012 /3/ $12,500,000 4.359 .38
CANAL+ (France) 60,003 10.916 .30
Carlton Communications PLC (United 600,000 8.960 .25
Kingdom)
Elsevier NV (Netherlands) 575,000 7.839 .22
News International PLC (United 1,000,000 4.700 .13
Kingdom)
TeleWest Communications PLC (American (United
Kingdom)
Depositary Receipts) /1/ 71,000 1.810 .05
Tele-Communications, Inc., Class A /1/ (USA) 60,000 1.110
Tele-Communications, Inc. Series A
Liberty Media Group /1/ 15,000 .420 .04
U S West Media Group /1/ (USA) 80,000 1.440 .04
MISCELLANEOUS MATERIALS &
COMMODITIES-1.08%
English China Clays PLC (United 3,330,000 16.745 .46
Kingdom)
Compagnie de Saint-Gobain (France) 106,622 12.305 .34
Pilkington PLC (United 2,000,000 5.894 .16
Kingdom)
TRINOVA Corp. (USA) 146,700 4.511 .12
REAL ESTATE- 0.97%
Sun Hung Kai Properties Ltd. (Hong Kong) 1,400,000 11.268 .31
Land Securities PLC (United 600,000 5.474 .15
Kingdom)
Westfield Trust (Australia) 3,135,000 5.474 .15
Tai Cheung Holdings Ltd. (Hong Kong - 6,459,570 5.304 .15
incorporated
in Bermuda)
Hysan Development Co. Ltd. (Hong Kong) 1,474,000 3.840 .11
St Lukes Group Ltd., convertible (New Zealand)
preferred shares 5,059,500 3.797 .10
LEISURE & TOURISM- 0.96%
Forte PLC (United 3,534,242 18.530 .51
Kingdom)
Shangri-La Asia Ltd., 2.875% (Hong Kong -
convertible debentures 2000 incorporated $7,124,000 5.664 .16
in Bermuda)
Euro Disney SCA, 6.75% convertible (France)
debentures 2001 $30,002,000 5.279 .15
PolyGram NV (New York Registered ) (Netherlands) 84,000 5.040 .14
Shares
APPLIANCES & HOUSEHOLD DURABLES-
0.92%
Whirlpool Corp. (USA) 240,000 13.320 .37
AB Electrolux, Class B (Sweden) 300,000 12.873 .36
Sony Corp. (Japan) 75,000 3.971 .11
SANYO Electric Co., Ltd. (Japan) 534,000 2.775 .08
TRANSPORTATION: SHIPPING- 0.75%
Navix Line, Ltd. /1/ (Japan) 4,250,000 11.583 .32
Teekay Shipping Corp. (Bahamas) 416,700 10.001 .28
Shun Tak Holdings Ltd. (Hong Kong) 7,908,471 5.368 .15
FINANCIAL SERVICES- 0.60%
Household International, Inc. (USA) 225,000 14.062 .39
Federal National Mortgage Assn. (USA) 50,000 5.475 .15
Beneficial Corp. (USA) 40,000 2.030 .06
ELECTRICAL & ELECTRONIC- 0.54%
Siemens AG (Germany) 15,000 7.825 .22
Hitachi, Ltd. (Japan) 400,000 4.039 .11
BBC Brown Boveri Ltd, Class A (Switzerland) 3,500 4.018 .11
Telefonaktiebolaget LM Ericsson, (Sweden) 147,400 3.471 .10
Class B
TRANSPORTATION: RAIL & ROAD- 0.53%
TNT Ltd., convertible preferred (Australia) 9,043,900 13.170
shares
TNT Ltd. /1/ 524,862 .733 .38
CSX Corp. (USA) 60,000 5.257 .15
TRANSPORTATION: AIRLINES- 0.45%
Air New Zealand Ltd., Class B (New Zealand) 3,630,000 12.672 .35
British Airways PLC (United 500,000 3.521 .10
Kingdom)
TEXTILES & APPAREL- 0.42%
Courtaulds Textiles PLC (United 2,391,500 15.248 .42
Kingdom)
Delta Woodside Industries, Inc. (USA) 26,400 .172 .00
DATA PROCESSING & REPRODUCTION- 0.37%
Danka Business Systems PLC, 6.75% (United
Kingdom)
convertible debentures 2002 $10,000,000 13.400 .37
ENERGY EQUIPMENT- 0.36%
Schlumberger Ltd. (Netherlands 205,000 13.018 .36
Antilles)
METALS: STEEL- 0.25%
Inland Steel Industries, Inc. (USA) 150,000 3.919 .11
Usinor Sacilor /1/ (France) 250,000 3.601 .10
Nippon Denro Ispat Ltd., 3.00% (India)
convertible debentures 2001 $2,800,000 1.428 .04
WHOLESALE & INTERNATIONAL TRADE-
0.12%
Sime Darby Hong Kong Ltd. (Hong Kong) 4,294,000 4.414 .12
BUILDING MATERIALS & COMPONENTS-
0.09%
Southdown, Inc., Series D, (USA)
convertible
preferred shares 75,000 3.300 .09
ELECTRONIC COMPONENTS- 0.03%
Motorola, Inc. (USA) 15,000 .919 .03
MISCELLANEOUS- 3.72%
Other equity-type securities in
initial period of acquisition 134.138 3.72
-------- -----
TOTAL EQUITY-TYPE SECURITIES (cost:
$2,644.685 million) 3,141.661 87.00
-------- -----
- --------------------------------- -------------
Principal
Amount
Bonds and Notes (Millions)
- --------------------------------- -------------
INDUSTRIALS- 0.82%
Container Corp. of America 11.25% $6.000 $6.150
May 2004
Container Corp. of America 9.75% 1.000 .983 .20
April 2003
Fort Howard Corp. 8.25% February 2002 4.500 4.365
Fort Howard Corp. 10.00% March 2003 1.500 1.530 .16
Venezolana de Cementos, SACA Eurobond
9.25% November 1996 6.000 5.835 .16
Telecom Argentina STET-France Telecom
SA 12.00% November 2002 5.500 5.754 .16
CEMEX, SA 8.875% June 1998 3.000 2.790 .08
AB SKF 7.625% July 2003 2.000 2.108 .06
NEW ZEALAND GOVERNMENT- 0.61%
New Zealand 8.00% July 1998 NZ$33.250 21.997 .61
ARGENTINIAN GOVERNMENT- 0.54%
Argentina Eurobond 7.312% March 2005 $30.250 19.738 .54
/4/
CANADIAN GOVERNMENT- 0.54%
Canada 6.25% February 1998 C$13.200 9.726 .27
Canada 9.00% June 2025 6.200 5.301 .15
Canada 7.50% July 1997 6.000 4.524 .12
SUPRANATIONAL- 0.04%
International Bank for Reconstruction
and Development 12.50% July 1997 NZ$2.000 1.401 .04
-------- -----
TOTAL BONDS AND NOTES (cost:
$86.101 million) 92.202 2.55
-------- -----
- ----------------------------------- ------------- -------- -----
Principal Market Percen
t
Amount Value of Net
Short-Term Securities (Millions) (Millions) Assets
- ----------------------------------- ------------- -------- ------
CORPORATE SHORT-TERM NOTES- 8.61%
J.C. Penney Funding Corp. 5.68%-5.70%
due 12/18/95-1/22/96 48.700 48.460 1.34
Toyota Motor Credit Corp. 5.70%-5.72%
due 12/12-12/15/95 45.000 44.905 1.24
National Australia Funding (Delaware)
Inc. 5.68%-5.745% due 1/8-1/16/96 30.400 30.187 .83
ABN AMRO North America Finance Inc.
5.69%-5.70% due 12/6/95-1/30/96 30.000 29.883 .83
PepsiCo, Inc. 5.68%-5.70%
due 12/8/95-1/22/96 24.000 23.877 .66
AT&T Corp. 5.59%-5.70% due 21.400 21.216 .59
1/8-2/27/96
Siemens Corp. 5.68%-5.70% due 20.280 20.236 .56
12/14-12/15/95
Wal-Mart Stores, Inc. 5.67%-5.70%
due 12/7-12/20/95 18.400 18.357 .51
Ford Credit Europe PLC 5.71% 16.600 16.474 .46
due 1/17/96
H.J. Heinz Co. 5.70%-5.73%
due 12/12-12/13/95 15.200 15.170 .42
Abbey National North America 5.72%
due 1/29/96 15.000 14.857 .41
General Electric Capital Corp. 5.88%
due 12/1/95 13.800 13.798 .38
Procter & Gamble Co. 5.67% due 12.300 12.195 .34
1/23/96
UBS Finance (Delaware) Inc. 5.74%
due 12/5/95 1.300 1.299 .04
FEDERAL AGENCY DISCOUNT NOTES- 1.73%
Federal National Mortgage Assn.
5.57%-5.65%
due 12/28/95-2/14/96 37.000 36.705 1.02
Federal Home Loan Mortgage Corp.
5.67%
due 12/20/95 25.600 25.519 .71
CERTIFICATES OF DEPOSIT- 0.41%
National Westminster Bank PLC 5.78%
due 1/16/96 15.000 14.999 .41
-------- ------
TOTAL SHORT-TERM SECURITIES (cost:
$388.149 million) 388.137 10.75
-------- ------
TOTAL INVESTMENT SECURITIES (cost:
$3,118.935 million) 3,622.000 100.30
Excess of payables over cash and receivables 10.769 0.30
-------- ------
NET ASSETS $3,611.231 100.00
==================================== ========== ========== ========== ======
</TABLE>
/1/Non-income-producing securities.
/2/Purchased in a private placement transaction; resale to the public may
require registration or may extend only to qualified institutional buyers.
/3/Represents a zero coupon bond which will convert to an interest-bearing
security at a later date.
/4/Coupon rates may change periodically.
See Notes to Financial Statements
Companies Added to the Portfolio
Since May 31, 1995
Aetna Life and Casualty
AGA
Allied Irish Banks
ALLTEL
Boatmen's Bancshares
Bowater
Colgate-Palmolive
Compagnie de Suez
ENI
Fuji Photo Film
Groupe Danone
Hitachi
Home Depot
Inland Steel
McCormick & Co.
MFS Communications
Minnesota Mining and Manufacturing
Navix Line
Orkla
PacifiCare Health Systems
SANYO Electric
Siemens
Sony
Sumitomo Bank
Teekay Shipping
Time Warner
Uni-Charm Corp.
Unocal
Usinor Sacilor
Wal-Mart Stores
Wilmington Trust
Companies Eliminated from the Portfolio
Since May 31, 1995
ADVANTA
Allegheny Ludlum
American Express
Amoco
Apple Computer
Banco Bilbao Vizcaya
BankAmerica
Bank of Ayudhya
Bayer
BTP
Canadian Imperial Bank of Commerce
Cathay Pacific Airways
Celsius Industries
Clorox
Cross-Harbour Tunnel
Eastern Group
Eurotunnel
General Motors
Hoechst
Iberdrola
Mandarin Oriental
Monsanto
NorAm Energy
ShopKo Stores
Siu-Fung Ceramics
Societe Centrale Union des Assurances de Paris
Swiss Bank
Thyssen
TJX Companies
Union Electrica Fenosa
United Friendly Group
Upjohn
Volkswagen
CAPITAL WORLD GROWTH AND INCOME FUND, INC.
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
Statement of Assets and Liabilities
at November 30, 1995 (dollars in millions)
- ----------------------------------------- --------------- -----------
ASSETS:
Investment securities at market
(cost: $3,118.935) $3,622.000
Cash .416
Receivables for--
Sales of investments $9.151
Sales of fund's shares 5.370
Dividends and accrued interest 15.022 29.543
--------------- -----------
3,651.959
LIABILITIES:
Payables for--
Purchases of investments 34.990
Repurchases of fund's shares 2.316
Management services 1.350
Accrued expenses 2.072 40.728
--------------- -----------
NET ASSETS AT NOVEMBER 30, 1995--
Equivalent to $20.22 per share on
178,630,987 shares of $0.01 par value
capital stock outstanding (authorized
capital stock - 400,000,000 shares) $3,611.231
===========
STATEMENT OF OPERATIONS
for the year ended November 30, 1995 (dollars in millions)
- --------------------------------------------- --------------- -----------
INVESTMENT INCOME:
Income:
Dividends $96.347
Interest 34.622 $130.969
---------------
Expenses:
Management services fee 14.847
Distribution expenses 6.808
Transfer agent fee 3.114
Reports to shareholders .425
Registration statement and prospectus .588
Postage, stationery and supplies .587
Directors' fees .129
Auditing and legal fees .044
Custodian fee 1.418
Taxes other than federal income tax .050
Other expenses .045 28.055
-------------- -----------
Net investment income 102.914
-----------
REALIZED GAIN AND UNREALIZED
APPRECIATION ON INVESTMENTS:
Net realized gain 63.160
Net increase in unrealized appreciation on
investments 396.914
-----------
Net realized gain and increase in unrealized
appreciation on investments 460.074
-----------
NET INCREASE IN NET ASSETS RESULTING $562.988
FROM OPERATIONS ===========
- ---------------------------------------------- --------------- -----------
Statement of Changes in Net Assets
(dollars in millions)
- ---------------------------------------------- --------------- -----------
Year ended Year ended
11/30/95 11/30/94
- ---------------------------------------------- --------------- -----------
OPERATIONS:
Net investment income $102.914 $72.772
Net realized gain on investments 63.160 44.965
Net increase in unrealized appreciation
on investments 396.914 .284
--------------- -----------
Net increase in net assets
resulting from operations 562.988 118.021
--------------- -----------
DIVIDENDS AND DISTRIBUTIONS PAID TO SHAREHOLDERS:
Dividends from net investment income (104.776) (59.675)
Distributions from net realized gain on investments (45.496) --
--------------- -----------
Total dividends and distributions (150.272) (59.675)
--------------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold: 34,635,645
and 71,171,194 shares, respectively 647.812 1,389.345
Proceeds from shares issued in reinvestment
of net investment income dividends and distributions
of net realized gain on investments:
7,787,809 and 3,077,212 shares, respectively 141.079 54.546
Cost of shares repurchased: 20,156,313
and 13,345,775 shares, respectively (374.730) (238.871)
--------------- -----------
Net increase in net assets
resulting from capital share
transactions 414.161 1,205.020
--------------- -----------
TOTAL INCREASE IN NET ASSETS 826.877 1,263.366
NET ASSETS:
Beginning of year 2,784.354 1,520.988
--------------- -----------
End of year (including undistributed
net investment income: $16.988
and $18.654, respectively) $3,611.231 $2,784.354
=============== ===========
</TABLE>
See Notes to Financial Statements
NOTES TO FINANCIAL STATEMENTS
1. Capital World Growth and Income Fund, Inc. (the "fund") is registered under
the Investment Company Act of 1940 as an open-end, diversified management
investment company. The following paragraphs summarize the significant
accounting policies consistently followed by the fund in the preparation of its
financial statements:
Equity-type securities traded on a national securities exchange (or reported
on the NASDAQ national market) and securities traded in the over-the-counter
market are stated at the last reported sales price on the day of valuation;
other securities, and securities for which no sale was reported on that date,
are stated at the last quoted bid price.
Bonds and notes are valued at prices obtained from a bond pricing service
provided by a major dealer in bonds, 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 of their representative quoted bid
and asked prices or, if such prices are not available, at prices for securities
of comparable maturity, quality, and type. Securities denominated in non-U.S.
currencies are generally valued on the basis of bid quotations
Short-term securities with original or remaining maturities in excess of 60
days are valued at the mean of their quoted bid and asked prices. Short-term
securities with 60 days or less to maturity are valued at amortized cost, which
approximates market value. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by the
Valuation Committee of the Board of Directors.
As is customary in the mutual fund industry, securities transactions are
accounted for on the date the securities are purchased or sold. Realized gains
and losses from securities transactions are reported on an identified cost
basis. Dividend and interest income is reported on the accrual basis. Discounts
on securities purchased are amortized over the life of the respective
securities. The fund does not amortize premiums on securities purchased.
Dividends and distributions paid to shareholders are recorded on the
ex-dividend date.
Investment securities and other assets and liabilities denominated in
non-U.S. currencies are recorded in the financial statements after translation
into U.S. dollars utilizing rates of exchange on the last business day of the
year. Purchases and sales of investment securities, income, and expenses are
calculated using the prevailing exchange rate as accrued. The fund does not
identify the portion of each amount shown in the fund's statement of operations
under the caption "Realized Gain and Unrealized Appreciation on Investments"
that arises from changes in non-U.S. currency exchange rates.
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 $1,418,000 includes $71,000 that was paid by these credits
rather than in cash.
2. It is the fund's policy to continue to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its net taxable income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision is
required.
As of November 30, 1995, net unrealized appreciation on investments for
federal income tax purposes aggregated $499,425,000, of which $612,385,000
related to appreciated securities and $112,960,000 related to depreciated
securities. During the year ended November 30, 1995, the fund realized, on a
tax basis, a net capital gain of $57,729,000 on securities transactions. Net
gains related to non-U.S. currency transactions of $595,000 and other tax
adjustments of $196,000 were treated as adjustments to ordinary income for
federal income tax purposes. The cost of portfolio securities for federal
income tax purposes was $3,122,575,000 at November 30, 1995.
3. The fee of $14,847,000 for management services was paid 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 0.60% of the first $500 million of average net assets;
0.50% of such assets in excess of $500 million but not exceeding $1.0 billion;
0.46% of such assets in excess of $1.0 billion but not exceeding $1.5 billion;
0.43% of such assets in excess of $1.5 billion but not exceeding $2.5 billion;
0.41% of such assets in excess of $2.5 billion but not exceeding $4.0 billion;
0.40% of such assets in excess of $4.0 billion but not exceeding $6.5 billion;
and 0.395% of such assets in excess of $6.5 billion.
Pursuant to a Plan of Distribution, the fund may expend up to 0.30% 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 year ended November 30, 1995,
distribution expenses under the Plan were $6,808,000. As of November 30, 1995,
accrued and unpaid distribution expenses were $1,738,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $3,114,000. American Funds Distributors, Inc. (AFD), the
principal underwriter of the fund's shares, received $2,990,000 (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.
Directors of the fund 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 November 30, 1995, aggregate amounts deferred were $78,000.
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.
4. As of November 30, 1995, accumulated undistributed net realized gain on
investments was $61,621,000 and additional paid-in capital was $3,027,271,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $1,072,300,000 and $723,192,000, respectively, during
the year ended November 30, 1995.
Dividend and interest income is recorded net of non-U.S. taxes paid. For the
year ended November 30, 1995, such non-U.S. taxes were $8,832,000. Net realized
currency gains on dividends, interest, withholding taxes reclaimable, and sales
of non-U.S. bonds and notes were $700,000 for the year ended November 30, 1995.
The fund reclassified $105,000 to undistributed net investment income from
undistributed net realized gains for the year ended November 30, 1995.
PER-SHARE DATA AND RATIOS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Year Year Period
Ended Ended 3/26/93 /1/
11/30/95 11/30/94 to 11/30/93
---------- ---------- ----------
Net Asset Value, Beginning of Year $17.81 $17.00 $15.08
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .61 .52 .29
Net realized and unrealized gain on investments 2.72 .75 1.86
---------- ---------- ----------
Total income from investment operations 3.33 1.27 2.15
---------- ---------- ----------
LESS DISTRIBUTIONS:
Dividends from net investment income (.63) (.46) (.23)
Distributions from net realized gains (.29) -- --
---------- ---------- ----------
Total distributions (.92) (.46) (.23)
---------- ---------- ----------
Net Asset Value, End of Period $20.22 $17.81 $17.00
========== ========== ==========
Total Return /2/ 19.41% 7.51% 14.39%/3/
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in millions) $3,611 $2,784 $1,521
Ratio of expenses to average net assets .88% .87% .62%/3/
Ratio of net income to average net assets 3.24% 3.11% 2.01%/3/
Portfolio turnover rate 25.50% 18.66% 2.71%/3/
</TABLE>
/1/ Commencement of operations
/2/ This was calculated without deducting a sales charge. The maximum sales
charge is 5.75% of the fund's offering price.
/3/ Based on operations for the period shown and, accordingly, not
representative of a full year's operations.
Report of Independent Accountants
To the Board of Directors and Shareholders of Capital World Growth and Income
Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the per-share data and ratios present fairly, in all
material respects, the financial position of Capital World Growth and Income
Fund, Inc. (the "Fund") at November 30, 1995, the results of its operations,
the changes in its net assets and the per-share data and ratios for the periods
indicated in conformity with generally accepted accounting principles. These
financial statements and per-share data and ratios (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation of
securities at November 30, 1995 by correspondence with the custodian and
brokers and the application of alternative auditing procedures where
confirmations from brokers were not received, provide a reasonable basis for
the opinion expressed above.
PRICE WATERHOUSE LLP
Los Angeles, California
December 29, 1995
U.S. 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 received by shareholders
during such fiscal year. The distributions made during the fiscal year by the
fund were earned from the following sources:
<TABLE>
<CAPTION>
Dividends and Distributions Per Share
To Shareholders of Payment Date From Net From Net From Net
Record Investment Realized Realized
Income Short-term Long-term Gains
Gains
<S> <C> <C> <C> <C>
December 16, 1994 December 19, 1994 $0.15 $0.20 $0.09
March 17,1995 March 20,1995 0.12 - -
June 2, 1995 June 5, 1995 0.19 - -
September 22, 1995 September 25, 1995 0.17 - -
</TABLE>
The fund makes an election under the Internal Revenue Code Section 853 to pass
through non-U.S. taxes paid by the fund to its shareholders. The amount of
non-U.S. taxes for the fiscal year ended November 30, 1995 is $0.05031 on a per
share basis. Shareholders are entitled to a foreign tax credit or an itemized
deduction, at their option. Generally, it is more advantageous to claim a
credit rather than to take a deduction.
Corporate shareholders may exclude up to 70% of qualifying dividends received
during the year. For purposes of computing this exclusion, 24% of the dividends
paid by the fund from net investment income represent qualifying dividends.
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 FUND'S FISCAL YEAR AND NOT THE
CALENDAR YEAR, SHAREHOLDERS SHOULD REFER TO THEIR FORM 1099-DIV OR OTHER
INFORMATION WHICH WILL BE MAILED IN JANUARY 1996 TO DETERMINE THE CALENDAR YEAR
AMOUNTS TO BE INCLUDED ON THEIR 1995 TAX RETURNS. SHAREHOLDERS SHOULD CONSULT
THEIR TAX ADVISERS.
BOARD OF DIRECTORS
H. FREDERICK CHRISTIE, Rolling Hills Estates, California
Private investor; former President and Chief
Executive Officer, The Mission Group; former
President, Southern California Edison Company
PAUL G. HAAGA, Jr., Los Angeles, California
President of the fund
Senior Vice President and Director, Capital
Research and Management Company
MARY MYERS KAUPPILA, Boston, Massachusetts
Founder and President, Energy Investment, Inc.
GAIL L. NEALE, Middlebury, Vermont
Executive Vice President of the Salzburg Seminar;
former Director of Development and of the
Capital Campaign, Hampshire College
ROBERT J. O'NEILL, Ph.D., Oxford, England
Professor and Fellow, All Souls College,
University of Oxford
DONALD E. PETERSEN, Birmingham, Michigan
Retired; former Chairman of the Board and Chief
Executive Officer, Ford Motor Company
STEFANIE POWERS, Beverly Hills, California
Actor; Founder and President,
The William Holden Wildlife Foundation
FRANK STANTON, New York, New York
President Emeritus, CBS Inc.
THIERRY VANDEVENTER, Geneva, Switzerland
Chairman of the Board of the fund
Chairman of the Board,
Capital Research Company
CHARLES WOLF, JR., PH.D., Santa Monica, California
Dean, The RAND Graduate School; Senior
Economic Adviser, The RAND Corporation
OTHER OFFICERS
STEPHEN E. BEPLER, New York, New York
Senior Vice President of the fund
Senior Vice President and Director,
Capital Research Company
LARRY P. CLEMMENSEN, Los Angeles, California
Senior Vice President of the fund
Senior Vice President and Director,
Capital Research and Management Company
MARK E. DENNING, London, England
Vice President of the fund
Senior Vice President,
Capital Research Company
JANET A. MCKINLEY, New York, New York
Vice President of the fund
Senior 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
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 92621-5804
TRANSFER AGENT FOR SHAREHOLDER ACCOUNTS
American Funds Service Company
P.O. Box 2205
Brea, California 92622-2205
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, N.A.
One Chase Manhattan Plaza
New York, New York 10081-0001
COUNSEL
O'Melveny & Myers
400 South Hope Street
Los Angeles, California 90071-2899
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
400 South Hope Street
Los Angeles, California 90071-2889
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 securities dealer or financial planner, or call the fund's
transfer agent, toll-free, at 800/421-0180.
This report is for the information of shareholders of Capital World Growth and
Income Fund, but it may also be used as sales literature when preceded or
accompanied by the current prospectus, which gives details about charges,
expenses, investment objectives and operating policies of the fund. If used as
sales material after March 31, 1996, this report must be accompanied by an
American Funds Group Statistical Update for the most recently completed
calendar quarter.
Litho in USA W/FS/2868
Lit. No. WGI-011-0196
Printed on recycled paper
The American Funds Group (R)
