SEC. File Nos. 33-54444
811-7338
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
Registration Statement Under the Securities Act of 1933 [X]
Post-Effective Amendment No. 5
and
Registration Statement Under The Investment Company Act of 1940 [X]
Amendment No. 7
CAPITAL WORLD GROWTH AND INCOME FUND, INC.
(Exact Name of Registrant as specified in charter)
333 South Hope Street, Los Angeles, California 90071
(Address of principal executive offices)
Registrant's telephone number, including area code:
(213) 486-9200
VINCENT P. CORTI
CAPITAL RESEARCH AND MANAGEMENT COMPANY
333 South Hope Street
Los Angeles, California 90071
(name and address of agent for service)
Copies to:
MICHAEL J. FAIRCLOUGH, ESQ.
O'MELVENY & MYERS
400 South Hope Street
Los Angeles, California 90071
(Counsel for the Registrant)
The Registrant has filed a declaration pursuant to rule 24f-2
registering an indefinite number of shares under the Securities Act of 1933.
On January 23, 1996 the Registrant filed its 24f-2 notice for fiscal 1995.
Approximate date of proposed public offering:
It is proposed that this filing become effective on February 1, 1996, pursuant
to paragraph (b) of rule 485.
CAPITAL WORLD GROWTH AND INCOME FUND, INC.
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
ITEM NUMBER OF PART "A" OF FORM N-1A CAPTIONS IN PROSPECTUS (PART "A")
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Summary of Expenses
3. Condensed Financial Information Financial Highlights; Investment Results
4. General Description of Registrant Investment Objective and Policies; Investing Around
the World; Multiple Portfolio Counselor System; Fund
Organization and Management
5. Management of the Fund Fund Organization and Management; Investing Around
the World; Multiple Portfolio Counselor System
6. Capital Stock and Other Securities Investment Objective and Policies; Investing Around
the World; Fund Organization and Management;
Dividends, Distributions and Taxes
7. Purchase of Securities Being Offered Purchasing Shares; Fund Organization and Management
8. Redemption or Repurchase Redeeming Shares
9. Legal Proceedings N/A
</TABLE>
<TABLE>
<CAPTION>
ITEM NUMBER OF PART "B" OF FORM N-1A CAPTIONS IN STATEMENT OF ADDITIONAL
INFORMATION (PART "B")
<S> <C> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Fund Organization and Management (Part "A")
13. Investment Objectives and Policies Investment Policies; Description of Certain
Securities; Investment Restrictions
14. Management of the Registrant Fund Directors and Officers; Management
15. Control Persons and Principal Holder of Securities Fund Directors and Officers
16. Investment Advisory and Other Services Management
17. Brokerage Allocation and Other Practices Execution of Portfolio Transactions
18. Capital Stock and Other Securities Part "A"
19. Purchase, Redemption and Pricing of Securities Being Offered Purchase of Shares; Shareholder Account Services and
Privileges; Redemption of Shares
20. Tax Status Dividends, Distributions and Federal Taxes
21. Underwriter Management -- Principal Underwriter
22. Calculation of Performance Data Investment Results
23. Financial Statements Financial Statements
</TABLE>
<TABLE>
<CAPTION>
ITEM IN PART "C"
<S> <C>
24. Financial Statements and Exhibits
25. Persons Controlled by or Under Common Control with Registrant
26. Number of Holders of Securities
27. Indemnification
28. Business and Other Connections of Investment Adviser
29. Principal Underwriters
30. Location of Accounts and Records
31. Management Services
32. Undertakings
Signature Page
</TABLE>
<PAGE>
Prospectus
CAPITAL WORLD GROWTH AND INCOME FUND(SM)
February 1, 1996
AN OPPORTUNITY FOR LONG-TERM
GROWTH OF CAPITAL AND CURRENT
INCOME PRIMARILY THROUGH INVESTMENTS
IN EQUITY-TYPE SECURITIES OF
COMPANIES BASED AROUND THE WORLD
[LOGO OF THE AMERICAN FUNDS GROUP(R)]
CAPITAL WORLD GROWTH AND INCOME FUND, INC.
333 South Hope Street
Los Angeles, California 90071
The fund's investment objective is to seek long-term capital growth while
providing current income. The fund invests, on a global basis, in a
diversified portfolio of common stocks and other equity-type securities,
bonds, and money market instruments that are denominated in U.S. dollars or
other currencies.
This prospectus presents information you should know before investing in the
fund. It should be retained for future reference.
You may obtain the statement of additional information dated February 1, 1996,
which contains the fund's financial statements, without charge, by writing to
the Secretary of the fund at the above address or telephoning 800/421-0180.
These requests will be honored within three business days of receipt.
SHARES OF THE FUND 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. THE
PURCHASE OF FUND SHARES INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS
OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
33-010-0296
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SUMMARY OF This table is designed to help you understand the costs
EXPENSES of investing in the fund. These are historical ex-
penses; your actual expenses may vary.
Average annual
expenses paid over SHAREHOLDER TRANSACTION EXPENSES
a 10-year period Maximum sales charge on purchase................ 5.75%/1/
would be (as a percentage of offering price)
approximately $16
per year, assuming The fund has no sales charge on reinvested dividends,
a $1,000 deferred sales charge,/2/ redemption fees or exchange
investment and a fees.
5% annual return
with the maximum ANNUAL FUND OPERATING EXPENSES
sales charge. (as a percentage of average net assets)
Management fees................................. 0.47%
12b-1 expenses.................................. 0.21%/3/
Other expenses (including audit, legal,
shareholder services, transfer agent and
custodian expenses)............................ 0.20%
Total fund operating expenses................... 0.88%
TABLE OF CONTENTS
Summary of Expenses......................... 2
Financial Highlights........................ 3
Investment Objective and Policies........... 3
Investing Around the World.................. 4
Multiple Portfolio Counselor System ........ 7
Investment Results.......................... 8
Dividends, Distributions and Taxes.......... 8
Fund Organization and Management............ 9
The American Funds Shareholder Guide........ 12-20
Purchasing Shares.......................... 12
Reducing Your Sales Charge................. 15
Shareholder Services....................... 16
Redeeming Shares........................... 18
Retirement Plans........................... 20
IMPORTANT PHONE NUMBERS
Shareholder Services:
800/421-0180 ext. 1
Dealer Services:
800/421-9900 ext. 11
American FundsLine(R):
800/325-3590
(24-hour information)
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following
cumulative expenses on a $1,000 $66 $84 $103 $160
investment assuming a 5% annual
return./4/
</TABLE>
/1/ Sales charges are reduced for certain large purchases. (See "The American
Funds Shareholder Guide: Purchasing Shares--Sales Charges.")
/2/ Any employer sponsored 403 (b) plan or defined contribution plan qualified
under Section 401(a) of the Internal Revenue Code including a "401(k)" plan
with 200 or more eligible employees or any other purchaser investing at
least $1 million in shares of the fund (or in combination with shares of
other funds in The American Funds Group other than the money market funds)
may purchase shares at net asset value; however, a contingent deferred sales
charge of 1% applies on certain redemptions made within 12 months following
such purchases. (See "The American Funds Shareholder Guide: Redeeming
Shares--Contingent Deferred Sales Charge.")
/3/ These expenses may not exceed 0.30% of the fund's average net assets
annually. (See "Fund Organization and Management--Plan of Distribution.")
Due to these distribution expenses, long-term shareholders may pay more than
the economic equivalent of the maximum front-end sales charge permitted by
the National Association of Securities Dealers.
/4/ Use of this assumed 5% return is required by the Securities and Exchange
Commission; it is not an illustration of past or future investment results.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES; ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.
2
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FINANCIAL The following information has been audited by Price
HIGHLIGHTS Waterhouse LLP, independent accountants, whose unquali-
(For a share fied report is included in the statement of additional
outstanding information. This information should be read in con-
throughout the junction with the financial statements and accompanying
period) notes which appear in the statement of additional in-
formation.
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30
----------------------
1995 1994 1993/1/
------- ------- -------
<S> <C> <C> <C>
Net asset value, beginning of period.......... $17.81 $17.00 $15.08
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income....................... .61 .52 .29
Net realized and unrealized gain on invest-
ments...................................... 2.72 .75 1.86
------- ------- -------
Total 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/ Period from March 26, 1993 (commencement of operations) to November
30, 1993.
/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.
INVESTMENT The fund has the investment objective of seeking long-
OBJECTIVE AND term capital growth while providing current income. The
POLICIES fund invests, on a global basis, in a diversified port-
folio that can include common stocks and other equity-
The fund invests type securities (such as convertible bonds and pre-
globally and aims ferred stocks), bonds (and other fixed-income securi-
to provide you ties), and money market instruments that are denomi-
with long-term nated in U.S. dollars or other currencies.
capital growth and
current income. The fund's investment adviser, Capital Research and
Management Company, determines the relative mix of
equity-type securities, fixed-income securities and
money market instruments for the fund's portfolio as
well as the countries and currencies in which the fund
invests. It will do so based on its view of long-term
economic and market trends, taking the relative risks
and opportunities into account. Capital Research and
Management Company does not intend to make frequent
shifts among equity-type securities, fixed-income
securities and money market instruments. Under normal
market conditions, Capital Research and Management
Company expects that the fund will invest principally
in
3
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equity-type securities and that no more than 40% of its
assets will be invested in securities of issuers
domiciled in any one country.
The fund's investment restrictions (which are described
in the statement of additional information) and objec-
tive cannot be changed without shareholder approval. All
other investment practices may be changed by the board
of directors.
ACHIEVEMENT OF THE FUND'S INVESTMENT OBJECTIVE CANNOT,
OF COURSE, BE ASSURED DUE TO THE RISKS OF LOSS OF CAPI-
TAL OR INCOME INHERENT IN ANY INVESTMENT IN SECURITIES
AND THE SPECIAL RISKS ASSOCIATED WITH GLOBAL INVESTING
DESCRIBED BELOW.
INVESTING OPPORTUNITIES, RISKS AND COSTS The fund's assets are in-
AROUND THE WORLD vested globally which, in the opinion of Capital Re-
search and Management Company, enhances the fund's abil-
Global investing ity to meet its objective--long-term growth of capital
involves expanded and current income.
opportunities,
special risks and Of course, investing globally involves special risks,
increased costs. particularly in certain developing countries, caused by,
among other things: fluctuating currency values; differ-
ent accounting, auditing, and financial reporting regu-
lations and practices in some countries; changing local
and regional economic, political, and social conditions;
differing securities market structures; and various ad-
ministrative difficulties such as delays in clearing and
settling portfolio transactions or in receiving payment
of dividends.
However, in the opinion of Capital Research and Manage-
ment Company, global investing also can reduce certain
portfolio risks due to greater diversification
opportunities.
Additional costs could be incurred in connection with
the fund's investment activities outside the U.S. Bro-
kerage commissions are generally higher outside the
U.S., and the fund will bear certain expenses in connec-
tion with its currency transactions. Furthermore, in-
creased custodian costs may be associated with the main-
tenance of assets in certain jurisdictions.
The fund does not intend to emphasize any particular
country or region in making its investments. Under
normal market conditions, the fund will invest in
securities of issuers determined by Capital Research and
Management Company to be domiciled in at least three
countries, with no more than 40% of its assets invested
in issuers domiciled in any one country. (In determining
the domicile of an issuer, Capital Research and
Management Company takes into account such factors as
where the company is legally organized and/or maintains
principal corporate offices
4
<PAGE>
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and/or conducts its principal operations.) For
temporary defensive purposes, the fund may invest
principally or entirely in securities that are
denominated in U.S. dollars or whose issuers are
domiciled in the United States. Securities denominated
in U.S. dollars include American Depositary Receipts
and European Depositary Receipts. Generally ADRs, in
registered form, are dollar denominated securities
designed for use in the U.S. securities markets, which
represent and may be converted into the underlying
foreign security. EDRs, in bearer form, are designed
for use in the European securities markets.
CURRENCY TRANSACTIONS In connection with its non-U.S.
investments, the fund has the ability to hold curren-
cies other than the U.S. dollar and to enter into for-
ward currency contracts to facilitate settlements and
to protect against certain changes in exchange rates.
However, there is no assurance that such strategies
will be successful. Moreover, due to the expenses in-
volved, the fund will not generally attempt to protect
against all potential changes in exchange rates.
INVESTING IN FIXED-INCOME SECURITIES While the fund,
under normal conditions will invest principally in eq-
uity securities, the fund also expects to invest in
fixed-income securities on a regular basis in pursuit
of its investment objective. For temporary defensive
purposes the fund may invest substantially in fixed-in-
come securities and/or money market instruments of is-
suers based around the world.
Bonds and other fixed-income securities (not including
money market instruments--see below) in which the fund
invests primarily will be rated in the top three rating
categories by Standard & Poor's Corporation or Moody's
Investors Service, Inc., or if unrated be determined to
be of equivalent quality by Capital Research and Man-
agement Company; however, up to 10% of the fund's as-
sets may be invested in lower rated fixed-income secu-
rities and convertible bonds or in unrated securities
that are determined to be of equivalent quality. These
securities may be rated as low as CC by Standard &
Poor's Corporation or Ca by Moody's Investors Service,
Inc. or unrated but determined to be of equivalent
quality. Bonds rated Ca and CC are described by the
rating agencies as "speculative in a high degree, often
in default or [having] other marked shortcomings." (See
the statement of additional information for a complete
description of the bond ratings.) The fund does not
currently intend (at least for the next 12 months) to
hold more than 5% of its net assets in bonds rated BB
and Ba or below, or in unrated bonds determined to be
of equivalent quality ("junk bonds" or "high-yield,
high-risk bonds"). (If, as a result of a downgrade or
otherwise, the fund holds more than 5% of its net as-
sets in high-yield, high-risk bonds, the fund will dis-
pose of the excess as expeditiously as possible.)
5
<PAGE>
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While the fund may purchase debt obligations of corpo-
rations and financial institutions domiciled around the
world, it currently anticipates that most of its inter-
mediate- or long-term investments outside the U.S.
principally will be in governmental or quasi-governmen-
tal issues.
The market values of fixed-income securities generally
vary inversely with the level of interest rates--when
interest rates rise, their values will generally
decline and vice versa. The values of high-yield, high-
risk securities are subject to greater fluctuations
than are higher rated securities. In addition to
ratings, Capital Research and Management Company will
consider factors such as term, yield, and liquidity in
selecting fixed-income securities.
MONEY MARKET INSTRUMENTS The fund invests in various
high quality money market instruments that mature, or
may be redeemed or resold, in 13 months or less (25
months or less in the case of U.S. Government
securities). These include: (1) commercial paper (notes
issued by corporations or governmental bodies), (2)
certificates of deposit and bankers' acceptances (time
drafts on a commercial bank where the bank accepts an
irrevocable obligation to pay at maturity), (3) savings
association and state chartered savings bank
obligations, (4) securities of the U.S. Government, its
agencies or instrumentalities, and (5) corporate bonds
and notes.
6
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MULTIPLE PORTFOLIO The basic investment philosophy of Capital Research and
COUNSELOR SYSTEM Management Company is to seek fundamental values at
reasonable prices, using a system of multiple portfolio
Capital Research counselors in managing mutual fund assets. Under this
and Management system the portfolio of the fund is divided into seg-
Company, the ments which are managed by individual counselors. Each
fund's investment counselor decides how their segment will be invested
adviser, uses a (within the limits provided by the fund's objective and
system of multiple policies and by Capital Research and Management
portfolio Company's investment committee). In addition, Capital
counselors to Research and Management Company's research profession-
manage fund als make investment decisions with respect to a portion
assets. of the fund's portfolio. The primary individual portfo-
lio counselors for the fund are listed below.
<TABLE>
<CAPTION>
YEARS OF EXPERIENCE YEARS OF EXPERIENCE
PORTFOLIO AS PORTFOLIO AS INVESTMENT
COUNSELORS FOR COUNSELOR PROFESSIONAL
CAPITAL WORLD PRIMARY TITLE(S) FOR (APPROXIMATE)
GROWTH AND INCOME CAPITAL WORLD
FUND GROWTH AND INCOME WITH CAPITAL
FUND RESEARCH AND
MANAGEMENT
COMPANY OR ITS TOTAL
AFFILIATES YEARS
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<S> <C> <C> <C> <C>
Thierry Vandeventer Chairman of the Board and Since the fund 33 years 33 years
Principal Executive began operations
Officer of the fund.
Chairman of the Board and
Chief Executive Officer,
Capital Research Company*
- ---------------------------------------------------------------------------------------------------
Stephen E. Bepler Senior Vice President of Since the fund 23 years 30 years
the fund. Senior Vice began operations
President and Director,
Capital Research Company*
- ---------------------------------------------------------------------------------------------------
Mark E. Denning Vice President of the Since the fund 14 years 14 years
fund. Senior Vice began operations
President, Capital
Research Company*
- ---------------------------------------------------------------------------------------------------
Janet A. McKinley Vice President of the Since the fund 14 years 20 years
fund. Senior Vice began operations
President, Capital
Research Company*
- ---------------------------------------------------------------------------------------------------
William R. Grimsley Senior Vice President and Since the fund 26 years 33 years
Director, Capital Research began operations
and Management Company
- ---------------------------------------------------------------------------------------------------
</TABLE>
THE FUND BEGAN OPERATIONS ON MARCH 26, 1993.
* COMPANY AFFILIATED WITH CAPITAL RESEARCH AND MANAGEMENT COMPANY.
7
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INVESTMENT RESULTS The fund may from time to time compare its investment
results to various unmanaged indices or other mutual
The fund has funds in reports to shareholders, sales literature and
averaged a total advertisements. The results may be calculated on a to-
return of 13.38% a tal return, yield and/or distribution rate basis for
year (assuming the various periods, with or without sales charges. Results
maximum sales calculated without a sales charge will be higher. Total
charge was paid) returns assume the reinvestment of all dividends and
over its lifetime. capital gain distributions.
(March 26, 1993 As of December 31, 1995 the fund's one-year total
through December return and average annualized lifetime total return
31, 1995) were 14.39% and 13.38%, respectively. These results
were calculated in accordance with Securities and
Exchange Commission rules which require that the
maximum sales charge be deducted. The fund's
distribution rate is calculated by dividing the
dividends paid by the fund over the last 12 months by
the sum of the month-end price and the capital gains
paid over the last 12 months. For the 30-day period
ended December 31, 1995, the fund's yield was 2.85% and
the distribution rate was 2.85% at maximum offering
price. The yield reflects income earned by the fund,
while the distribution rate reflects dividends paid by
the fund. Of course, past results are not an indication
of future results. Further information regarding the
fund's investment results is contained in the fund's
annual report which may be obtained without charge by
writing to the Secretary of the fund at the address
indicated on the cover of this prospectus.
DIVIDENDS, DIVIDENDS AND DISTRIBUTIONS The fund distributes divi-
DISTRIBUTIONS AND dends from its net investment income to shareholders
TAXES each quarter. Capital gains, if any, are usually dis-
tributed in December. When a dividend or capital gain
Dividends are is distributed, the net asset value per share is re-
usually paid in duced by the amount of the payment.
March, June,
September and FEDERAL TAXES The fund intends to operate as a "regu-
December. lated investment company" under the Internal Revenue
Code. In any fiscal year in which the fund so qualifies
and distributes to shareholders all of its net invest-
ment income and net capital gains, the fund itself is
relieved of federal income tax.
All dividends and capital gains are taxable whether
they are reinvested or received in cash--unless you are
exempt from taxation or entitled to tax deferral. Early
each year, you will be notified as to the amount and
federal tax status of all dividends and capital gains
paid during the prior year. Such dividends and capital
gains may also be subject to state or local taxes.
IF YOU HAVE NOT FURNISHED A CERTIFIED CORRECT TAXPAYER
IDENTIFICATION NUMBER (GENERALLY YOUR SOCIAL SECURITY
NUMBER) AND HAVE NOT CERTIFIED THAT WITHHOLDING DOES
NOT APPLY, OR IF THE INTERNAL REVENUE SERVICE HAS NOTI-
FIED THE FUND THAT THE TAXPAYER IDENTIFICATION NUMBER
LISTED ON YOUR ACCOUNT IS INCORRECT ACCORDING TO ITS
RECORDS OR THAT
8
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YOU ARE SUBJECT TO BACKUP WITHHOLDING, FEDERAL LAW GEN-
ERALLY REQUIRES THE FUND TO WITHHOLD 31% FROM ANY DIVI-
DENDS AND/OR REDEMPTIONS (INCLUDING EXCHANGE REDEMP-
TIONS). Amounts withheld are applied to your federal
tax liability; a refund may be obtained from the Serv-
ice if withholding results in overpayment of taxes.
Federal law also requires the fund to withhold 30% or
the applicable tax treaty rate from dividends paid to
certain nonresident alien, non-U.S. partnership and
non-U.S. corporation shareholder accounts.
The fund may be subject to withholding and other taxes
imposed by various countries, generally at rates from
10% to 40%, which would reduce the fund's investment
income. If more than 50% in value of the fund's total
assets at the close of its taxable year consists of se-
curities of foreign issuers, the fund will be eligible
to file elections with the Internal Revenue Service
pursuant to which shareholders of the fund will be re-
quired to include their respective pro rata portions of
such withholding taxes in their federal income tax re-
turns as gross income, treat such amounts as foreign
taxes paid by them, and deduct such amounts in comput-
ing their taxable incomes or, alternatively, use them
as foreign tax credits against their federal income
taxes. In any year the fund makes such an election,
shareholders will be notified as to the amount of for-
eign withholding and other taxes paid by the fund. It
is the current intention of the fund to make this elec-
tion in each year it is eligible to do so.
This is a brief summary of some of the tax laws that
affect your investment in the fund. Please see the
statement of additional information and your tax ad-
viser for further information.
FUND ORGANIZATION FUND ORGANIZATION AND VOTING RIGHTS The fund, an open-
AND MANAGEMENT end diversified management investment company, was or-
ganized as a Maryland corporation in 1992. The fund's
The fund is a board supervises fund operations and performs duties
member of The required by applicable state and federal law. Members
American Funds of the board who are not employed by Capital Research
Group, which is and Management Company or its affiliates are paid cer-
managed by one of tain fees for services rendered to the fund as de-
the largest and scribed in the statement of additional information.
most experienced They may elect to defer all or a portion of these fees
investment through a deferred compensation plan in effect for the
advisers. fund. Shareholders have one vote per share owned and,
at the request of the holders of at least 10% of the
shares, the fund will hold a meeting at which any mem-
ber of the board could be removed by a majority vote.
There will not usually be a shareholder meeting in any
year except, for example, when the election of direc-
tors is required to be acted upon by shareholders under
the Investment Company Act of 1940.
THE INVESTMENT ADVISER Capital Research and Management
Company, a large and experienced investment management
organization founded in 1931, is the investment adviser
to the fund and other funds, including those in The
American Funds Group. Capital Research and Management
Company is located at 333 South Hope Street, Los Ange-
les, CA 90071 and at 135 South State College Boulevard,
Brea, CA 92621.
9
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(See "The American Funds Shareholder Guide: Purchasing
Shares--Investment Minimums and Fund Numbers" for a
listing of funds in The American Funds Group.) Capital
Research and Management Company manages the investment
portfolio and business affairs of the fund and receives
a fee at the annual rate of 0.60% on the first $500
million of average net assets, 0.50% for such assets
over $500 million to $1 billion, 0.46% for such assets
over $1 billion to $1.5 billion, 0.43% for such assets
over $1.5 billion to $2.5 billion, 0.41% for such as-
sets over $2.5 billion to $4 billion, 0.40% for such
assets over $4 billion to $6.5 billion, and 0.395% for
such assets over $6.5 billion.
Capital Research and Management Company is a wholly
owned subsidiary of The Capital Group Companies, Inc.,
(formerly "The Capital Group, Inc."), which is located
at 333 South Hope Street, Los Angeles, CA 90071. The
research activities of Capital Research and Management
Company are conducted by affiliated companies which
have offices in Los Angeles, San Francisco, New York,
Washington, D.C., London, Geneva, Singapore, Hong Kong
and Tokyo.
Capital Research and Management Company and its affili-
ated companies have adopted a personal investing policy
that is consistent with the recommendations contained
in the report dated May 9, 1994 issued by the Invest-
ment Company Institute's Advisory Group on Personal In-
vesting. (See the statement of additional information.)
PORTFOLIO TRANSACTIONS Orders for the fund's portfolio
securities transactions are placed by Capital Research
and Management Company, which strives to obtain the
best available prices, taking into account the costs
and quality of executions. In the over-the-counter mar-
ket, purchases and sales are transacted directly with
principal market-makers except in those circumstances
where it appears better prices and executions are
available elsewhere.
Subject to the above policy, when two or more brokers
are in a position to offer comparable prices and
executions, preference may be given to brokers that
have sold shares of the fund or have provided
investment research, statistical, and other related
services for the benefit of the fund and/or of other
funds served by Capital Research and Management
Company.
PRINCIPAL UNDERWRITER American Funds Distributors,
Inc., a wholly owned subsidiary of Capital Research and
Management Company, is the principal underwriter of the
fund's shares. American Funds Distributors is located
at 333 South Hope Street, Los Angeles, CA 90071, 135
South State College Boulevard, Brea, CA 92621, 8000 IH-
10 West, San Antonio, TX 78230, 8332 Woodfield Crossing
Boulevard, Indianapolis, IN 46240, and 5300 Robin Hood
Road, Norfolk, VA 23513. Telephone conversations with
American Funds Distributors may be recorded or
monitored for verification, recordkeeping and quality
assurance purposes.
10
<PAGE>
- --------------------------------------------------------------------------------
PLAN OF DISTRIBUTION The fund has a plan of distribu-
tion or "12b-1 Plan" under which it may finance activi-
ties primarily intended to sell shares, provided the
categories of expenses are approved in advance by the
board and the expenses paid under the plan were in-
curred within the last 12 months and accrued while the
plan is in effect. Expenditures by the fund under the
plan may not exceed 0.30% of its average net assets an-
nually (0.25% of which may be for service fees). See
"Purchasing Shares--Sales Charges" below.
TRANSFER AGENT American Funds Service Company, a wholly
owned subsidiary of Capital Research and Management
Company, is the transfer agent and performs shareholder
service functions. It was paid a fee of $3,114,000 for
the fiscal year ended November 30, 1995. Telephone
conversations with American Funds Service Company may
be recorded or monitored for verification,
recordkeeping and quality assurance purposes.
AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS
SERVICE
AREA ADDRESS AREAS SERVED
-------------------------------------------------------------
WEST P.O. Box 2205 AK, AZ, CA, HI, ID,
Brea, CA 92622-2205 MT, NV, OR, UT, WA and
Fax: 714/671-7080 outside the U.S.
-------------------------------------------------------------
CENTRAL- P.O. Box 659522 AR, CIA, KS, LA,
WEST San Antonio, TX 78265-9522 MN, MO, ND, NE, NM,
Fax: 210/530-4050 OK, SD, TX, and WY
-------------------------------------------------------------
CENTRAL- P.O. Box 6007 AL, IL, IN, KY, MI,
EAST Indianapolis, IN 46206-600 MS, OH, TNand WI
Fax: 317/735-6620
-------------------------------------------------------------
EAST P.O. Box 2280 CT, DE, FL, GA, MA,
Norfolk, VA 23501-2280 MD, ME, NC, NH, NJ,
Fax:804/670-4773 NY, PA, RI, SC, VA,
VT, WV and Washington,
D.C.
-------------------------------------------------------------
ALL SHAREHOLDERS MAY CALL AMERICAN FUNDS SERVICE
COMPANY AT 800/421-0180 FOR SERVICE.
-------------------------------------------------------------
[LOGO OF UNITED STATES' MAP]
-------------------------------------------------------------
West (light grey); Central-West (white); Central-East
(dark grey), East (orange)
11
<PAGE>
THE AMERICAN FUNDS SHAREHOLDER GUIDE
PURCHASING SHARES ---------------------------------------------------------
METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS
Your investment ---------------------------------------------------------
dealer can help See "Investment $50 minimum (except
you establish your Minimums and Fund where a lower
account--and help Numbers" for minimum is noted
you add to it initial invest- under "Investment
whenever you like. ment minimums. Minimums and Fund
Numbers").
---------------------------------------------------------
By Visit any Mail directly to
contact- investment dealer your investment
ing your who is registered dealer's address
invest- in the state printed on your
ment where the account statement.
dealer purchase is made
and who has a
sales agreement
with American Funds
Distributors.
---------------------------------------------------------
By mail Make your check Fill out the account
payable to the additions form at the
fund and mail bottom of a recent
to the address account statement,
indicated on make your check
the account payable to the fund,
application. write your account
Please indicate number on your check,
an investment and mail the check
dealer on the and form in the
account envelope provided
application. with your account
statement.
---------------------------------------------------------
By wire Call 800/421-0180 Your bank should wire
to obtain your your additional
account num- investments in the
ber(s), if neces- same manner as
sary. Please described under
indicate an "Initial Investment."
investment dealer
on the account.
Instruct your
bank to wire
funds to:
Wells Fargo Bank
155 Fifth Street
Sixth Floor
San Francisco,
CA 94106
(ABA #121000248)
For credit to the
account of:
American Funds
Service Company
a/c #4600-076178
(fund name)
(your fund acct.
no.)
---------------------------------------------------------
THE FUNDS AND AMERICAN FUNDS DISTRIBUTORS RESERVE
THE RIGHT TO REJECT ANY PURCHASE ORDER.
SHARE PRICE Shares are purchased at the offering price
next determined after the order is received by the fund
or American Funds Service Company. In the case of orders
sent directly to the fund or American Funds Service
Company, an investment dealer MUST be indicated. This
price is the net asset value plus a sales charge, if
applicable. Dealers are responsible for promptly
transmitting orders. (See the statement of additional
information under "Purchase of Shares--Price of
Shares.")
The net asset value per share is determined as of the
close of trading (currently 4:00 p.m., New York time) on
each day the New York Stock Exchange is open. The
current value of the fund's total assets, less all
liabilities, is divided by the total number of shares
outstanding and the result, rounded to the nearer cent,
is the net asset value per share. The net asset value
per share of the money market funds normally will remain
constant at $1.00 based on the funds' current practice
of valuing their shares using the penny-rounding method
in accordance with rules of the Securities and Exchange
Commission.
SHARE CERTIFICATES Shares are credited to your account
and certificates are not issued unless specifically
requested. This eliminates the costly problem of lost or
destroyed certificates.
12
<PAGE>
- -------------------------------------------------------------------------------
If you would like certificates issued, please request
them by writing to American Funds Service Company.
There is usually no charge for issuing certificates in
reasonable denominations. CERTIFICATES ARE NOT AVAIL-
ABLE FOR THE MONEY MARKET FUNDS.
INVESTMENT MINIMUMS AND FUND NUMBERS Here are the
minimum initial investments required by the funds in
The American Funds Group along with fund numbers for
use with our automated phone line, American
FundsLine(R) (see description below):
<TABLE>
<CAPTION>
MINIMUM
INITIAL FUND
FUND INVESTMENT NUMBER
- ---- ---------- ------
<S> <C> <C>
STOCK AND STOCK/BOND FUNDS
AMCAP Fund(R)...................................... $1,000 02
American Balanced Fund(R).......................... 500 11
American Mutual Fund(R)............................ 250 03
Capital Income Builder(R).......................... 1,000 12
Capital World Growth and Income Fund(SM)........... 1,000 33
EuroPacific Growth Fund(R)......................... 250 16
Fundamental Investors(SM).......................... 250 10
The Growth Fund of America(R)...................... 1,000 05
The Income Fund of America(R)...................... 1,000 06
The Investment Company of America(R)............... 250 04
The New Economy Fund(R)............................ 1,000 14
New Perspective Fund(R)............................ 250 07
SMALLCAP World Fund(SM)............................ 1,000 35
Washington Mutual Investors Fund(SM)............... 250 01
</TABLE>
<TABLE>
<CAPTION>
MINIMUM
INITIAL FUND
FUND INVESTMENT NUMBER
- ---- ---------- ------
<S> <C> <C>
BOND FUNDS
American High-Income Municipal Bond Fund(SM)....... $1,000 40
American High-Income Trust(R)...................... 1,000 21
The Bond Fund of America(SM)....................... 1,000 08
Capital World Bond Fund(R)......................... 1,000 31
Intermediate Bond Fund of America(R)............... 1,000 23
Limited Term Tax-Exempt Bond Fund of America(SM)... 1,000 43
The Tax-Exempt Bond Fund of America(SM)............ 1,000 19
The Tax-Exempt Fund of California(R)*.............. 1,000 20
The Tax-Exempt Fund of Maryland(R)*................ 1,000 24
The Tax-Exempt Fund of Virginia(R)*................ 1,000 25
U.S. Government Securities Fund(SM)................ 1,000 22
MONEY MARKET FUNDS
The Cash Management Trust of America(R)............ 2,500 09
The Tax-Exempt Money Fund of America(SM)........... 2,500 39
The U.S. Treasury Money Fund of America(SM)........ 2,500 49
</TABLE>
- --------
*Available only in certain states.
For retirement plan investments, the minimum is $250,
except that the money market funds have a minimum of
$1,000 for individual retirement accounts (IRAs). Mini-
mums are reduced to $50 for purchases through "Auto-
matic Investment Plans" (except for the money market
funds) or to $25 for purchases by retirement plans
through payroll deductions and may be reduced or waived
for shareholders of other funds in The American Funds
Group. TAX-EXEMPT FUNDS SHOULD NOT SERVE AS RETIREMENT
PLAN INVESTMENTS. The minimum is $50 for additional in-
vestments (except as noted above).
SALES CHARGES The sales charges you pay when purchasing
the stock, stock/bond, and bond funds of The American
Funds Group are set forth below. The money market funds
of The American Funds Group are offered at net asset
value. (See "Investment Minimums and Fund Numbers" for
a listing of the funds.)
13
<PAGE>
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DEALER
SALES CHARGE AS CONCESSION
PERCENTAGE OF THE: AS PERCENTAGE
------------------ OF THE
AMOUNT OF PURCHASE NET AMOUNT OFFERING OFFERING
AT THE OFFERING PRICE INVESTED PRICE PRICE
--------------------- ---------- -------- -------------
<S> <C> <C> <C>
STOCK AND STOCK/BOND FUNDS
Less than $50,000................. 6.10% 5.75% 5.00%
$50,000 but less than $100,000.... 4.71 4.50 3.75
BOND FUNDS
Less than $25,000................. 4.99 4.75 4.00
$25,000 but less than $50,000..... 4.71 4.50 3.75
$50,000 but less than $100,000.... 4.17 4.00 3.25
STOCK, STOCK/BOND, AND BOND FUNDS
$100,000 but less than $250,000... 3.63 3.50 2.75
$250,000 but less than $500,000... 2.56 2.50 2.00
$500,000 but less than $1,000,000. 2.04 2.00 1.60
$1,000,000 or more................ none none (see below)
</TABLE>
Commissions of up to 1% will be paid to dealers who
initiate and are responsible for purchases of $1
million or more, for purchases by any employer-
sponsored 403(b) plan or defined contribution plan
qualified under Section 401(a) of the Internal Revenue
Code including a "401(k)" plan with 200 or more
eligible employees (paid pursuant to the fund's plan of
distribution), and for purchases made at net asset
value by certain retirement plans of organizations with
collective retirement plan assets of $100 million or
more as set forth in the statement of additional
information (paid by American Funds Distributors).
American Funds Distributors, at its expense (from a
designated percentage of its income), will, during
calendar year 1996, provide additional compensation to
dealers. Currently these payments are limited to the
top one hundred dealers who have sold shares of the
fund or other funds in The American Funds Group. These
payments will be based on a pro rata share of a
qualifying dealer's sales. American Funds Distributors
will, on an annual basis, determine the advisability of
continuing these payments.
Any employer-sponsored 403(b) plan or defined
contribution plan qualified under Section 401(a) of the
Internal Revenue Code including a "401(k)" plan with
200 or more eligible employees or any other purchaser
investing at least $1 million in shares of the fund (or
in combination with shares of other funds in The
American Funds Group other than the money market funds)
may purchase shares at net asset value; however, a
contingent deferred sales charge of 1% is imposed on
certain redemptions made within one year of the
purchase. (See "Redeeming Shares--Contingent Deferred
Sales Charge.")
Qualified dealers currently are paid a continuing
service fee not to exceed 0.25% of average net assets
(0.15% in the case of the money market funds) annually
in order to promote selling efforts and to
14
<PAGE>
- -------------------------------------------------------------------------------
compensate them for providing certain services. (See
"Fund Organization and Management--Plan of
Distribution.") These services include processing
purchase and redemption transactions, establishing
shareholder accounts and providing certain information
and assistance with respect to the fund.
NET ASSET VALUE PURCHASES The stock, stock/bond and
bond funds may sell shares at net asset value to: (1)
current or retired directors, trustees, officers and
advisory board members of the funds managed by Capital
Research and Management Company, employees of
Washington Management Corporation, employees and
partners of The Capital Group Companies, Inc. and its
affiliated companies, certain family members of the
above persons, and trusts or plans primarily for such
persons; (2) current registered representatives,
retired registered representatives with respect to
accounts established while active, or full-time
employees (and their spouses, parents, and children) of
dealers who have sales agreements with American Funds
Distributors (or who clear transactions through such
dealers) and plans for such persons or the dealers; (3)
companies exchanging securities with the fund through a
merger, acquisition or exchange offer; (4) trustees or
other fiduciaries purchasing shares for certain
retirement plans of organizations with retirement plan
assets of $100 million or more; (5) insurance company
separate accounts; (6) accounts managed by subsidiaries
of The Capital Group Companies, Inc.; and (7) The
Capital Group Companies, Inc., its affiliated companies
and Washington Management Corporation. Shares are
offered at net asset value to these persons and
organizations due to anticipated economies in sales
effort and expense.
REDUCING AGGREGATION Sales charge discounts are available for
YOUR SALES certain aggregated investments. Qualifying investments
CHARGE include those by you, your spouse and your children
under the age of 21, if all parties are purchasing
You and your shares for their own account(s), which may include
immediate family purchases through employee benefit plan(s) such as an
may combine IRA, individual-type 403(b) plan or single-participant
investments to Keogh-type plan or by a business solely controlled by
reduce your costs. these individuals (for example, the individuals own the
entire business) or by a trust (or other fiduciary
arrangement) solely for the benefit of these
individuals. Individual purchases by a trustee(s) or
other fiduciary(ies) may also be aggregated if the
investments are (1) for a single trust estate or
fiduciary account, including an employee benefit plan
other than those described above or (2) made for two or
more employee benefit plans of a single employer or of
affiliated employers as defined in the Investment
Company Act of 1940, again excluding employee benefit
plans described above, or (3) for a diversified common
trust fund or other diversified pooled account not
specifically formed for the purpose of accumulating
fund shares. Purchases made for nominee or street name
accounts (securities held in the name of an investment
dealer or another nominee such as a bank trust
department instead of the customer) may not be
aggregated with those made for
15
<PAGE>
- -------------------------------------------------------------------------------
other accounts and may not be aggregated with other
nominee or street name accounts unless otherwise
qualified as described above.
CONCURRENT PURCHASES To qualify for a reduced sales
charge, you may combine concurrent purchases of two or
more funds in The American Funds Group, except direct
purchases of the money market funds. (Shares of the
money market funds purchased through an exchange,
reinvestment or cross-reinvestment from a fund having a
sales charge do qualify.) For example, if you
concurrently invest $25,000 in one fund and $25,000 in
another, the sales charge would be reduced to reflect a
$50,000 purchase.
RIGHT OF ACCUMULATION The sales charge for your invest-
ment may also be reduced by taking into account the
current value of your existing holdings in The American
Funds Group. Direct purchases of the money market funds
are excluded. (See account application.)
STATEMENT OF INTENTION You may reduce sales charges on
all investments by meeting the terms of a statement of
intention, a non-binding commitment to invest a certain
amount in fund shares subject to a commission within a
13-month period. Five percent of the statement amount
will be held in escrow to cover additional sales
charges which may be due if your total investments over
the statement period are insufficient to qualify for a
sales charge reduction. (See account application and
the statement of additional information under "Purchase
of Shares--Statement of Intention.")
YOU MUST LET YOUR INVESTMENT DEALER OR AMERICAN FUNDS
SERVICE COMPANY KNOW IF YOU QUALIFY FOR A REDUCTION IN
YOUR SALES CHARGE USING ONE OR ANY COMBINATION OF THE
METHODS DESCRIBED ABOVE.
SHAREHOLDER AUTOMATIC INVESTMENT PLAN You may make regular monthly
SERVICES or quarterly investments through automatic charges to
your bank account. Once a plan is established, your ac-
The fund offers count will normally be charged by the 10th day of the
you a valuable month during which an investment is made (or by the
array of services 15th day of the month in the case of any retirement
designed to plan for which Capital Guardian Trust Company--another
increase the affiliate of The Capital Group Companies, Inc.--acts as
convenience and trustee or custodian).
flexibility of
your investment-- AUTOMATIC REINVESTMENT Dividends and capital gain dis-
services you can tributions are reinvested in additional shares at no
use to alter your sales charge unless you indicate otherwise on the
investment program account application. You also may elect to have divi-
as your needs and dends and/or capital gain distributions paid in cash by
circumstances informing the fund, American Funds Service Company or
change. your investment dealer.
CROSS-REINVESTMENT You may cross-reinvest dividends or
dividends and capital gain distributions paid by one
fund into another fund in The American Funds Group,
subject to conditions outlined in the statement of ad-
ditional information. Generally, to use this service
the value of your account in the paying fund must equal
at least $5,000.
16
<PAGE>
- -------------------------------------------------------------------------------
EXCHANGE PRIVILEGE You may exchange shares into other
funds in The American Funds Group. Exchange purchases
are subject to the minimum investment requirements of
the fund purchased and no sales charge generally
applies. However, exchanges of shares from the money
market funds are subject to applicable sales charges on
the fund being purchased, unless the money market fund
shares were acquired by an exchange from a fund having
a sales charge, or by reinvestment or cross-
reinvestment of dividends or capital gain
distributions.
You may exchange shares by writing to American Funds
Service Company (see "Redeeming Shares"), by contacting
your investment dealer, by using American FundsLine(R)
(see "Shareholder Services--American FundsLine(R)" be-
low), or by telephoning 800/421-0180 toll-free, faxing
(see "Transfer Agent" above for the appropriate fax
numbers) or telegraphing American Funds Service Compa-
ny. (See "Telephone Redemptions and Exchanges" below.)
Shares held in corporate-type retirement plans for
which Capital Guardian Trust Company serves as trustee
may not be exchanged by telephone, fax or telegraph.
Exchange redemptions and purchases are processed simul-
taneously at the share prices next determined after the
exchange order is received. (See "Purchasing Shares--
Share Price.") THESE TRANSACTIONS HAVE THE SAME TAX
CONSEQUENCES AS ORDINARY SALES AND PURCHASES.
AUTOMATIC EXCHANGES You may automatically exchange
shares (in amounts of $50 or more) among any of the
funds in The American Funds Group on any day (or pre-
ceding business day if the day falls on a non-business
day) of each month you designate. You must either meet
the minimum initial investment requirement for the re-
ceiving fund OR the originating fund's balance must be
at least $5,000 and the receiving fund's minimum must
be met within one year.
AUTOMATIC WITHDRAWALS You may make automatic
withdrawals of $50 or more as follows: five or more
times per year if you have an account of $10,000 or
more, or four or fewer times per year if you have an
account of $5,000 or more. Withdrawals are made on or
about the 15th day of each month you designate, and
checks will be sent within seven days. (See "Other
Important Things to Remember.") Additional investments
in a withdrawal account must not be less than one
year's scheduled withdrawals or $1,200, whichever is
greater. However, additional investments in a
withdrawal account may be inadvisable due to sales
charges and tax liabilities.
THESE SERVICES ARE AVAILABLE ONLY IN STATES WHERE THE
FUND TO BE PURCHASED MAY BE LEGALLY OFFERED AND MAY BE
TERMINATED OR MODIFIED AT ANY TIME UPON 60 DAYS'
WRITTEN NOTICE.
ACCOUNT STATEMENTS Your account is opened in accordance
with your registration instructions. Transactions in
the account, such as additional investments and
dividend reinvestments, will be reflected on regular
confirmation statements from American Funds Service
Company. Purchases through automatic investment plans
will be confirmed at least quarterly.
17
<PAGE>
- -------------------------------------------------------------------------------
AMERICAN FUNDSLINE(R) You may check your share balance,
the price of your shares, or your most recent account
transaction, redeem shares (up to $10,000 per fund, per
account each day), or exchange shares around the clock
with American FundsLine(R). To use this service, call
800/325-3590 from a TouchTone(TM) telephone.
Redemptions and exchanges through American FundsLine(R)
are subject to the conditions noted above and in
"Redeeming Shares--Telephone Redemptions and Exchanges"
below. You will need your fund number (see the list of
funds in The American Funds Group under "Purchasing
Shares--Investment Minimums and Fund Numbers"),
personal identification number (the last four digits of
your Social Security number or other tax identification
number associated with your account) and account
number.
REDEEMING By writing to Send a letter of instruction
SHARES American specifying the name of the fund, the
Funds Service number of shares or dollar amount to
You may take money Company (at be sold, your name and account
out of your the number. You should also enclose any
account whenever appropriate share certificates you wish to
you please. address redeem. For redemptions over $50,000
indicated and for certain redemptions of
under "Fund $50,000 or less (see below), your
Organization signature must be guaranteed by a
and bank, savings association, credit
Management-- union, or member firm of a domestic
Transfer stock exchange or the National
Agent") Association of Securities Dealers,
Inc., that is an eligible guarantor
institution. You should verify with
the institution that it is an
eligible guarantor prior to signing.
Additional documentation may be
required for redemption of shares
held in corporate, partnership or
fiduciary accounts. Notarization by a
Notary Public is not an acceptable
signature guarantee.
--------------------------------------------------------
By contacting If you redeem shares through your
your investment dealer, you may be charged
investment for this service. SHARES HELD FOR YOU
dealer IN YOUR INVESTMENT DEALER'S STREET
NAME MUST BE REDEEMED THROUGH THE
DEALER.
--------------------------------------------------------
You may have You may use this option, provided the
a redemption account is registered in the name of
check sent to an individual(s), a UGMA/UTMA
you by using custodian, or a non-retirement plan
American trust. These redemptions may not
FundsLine(R) exceed $10,000 per day, per fund
or by account and the check must be made
telephoning, payable to the shareholder(s) of
faxing, or record and be sent to the address of
telegraphing record provided the address has been
American used with the account for at least 10
Funds Service days. See "Transfer Agent" and
Company "Exchange Privilege" above for the
(subject to appropriate telephone or fax number.
the
conditions
noted in this
section and
in "Telephone
Redemptions
and
Exchanges"
below)
--------------------------------------------------------
In the case Upon request (use the account
of the money application for the money market
market funds, funds) you may establish telephone
you may have redemption privileges (which will
redemptions enable you to have a redemption sent
wired to your to your bank account) and/or check
bank by writing privileges. If you request
telephoning check writing privileges, you will be
American provided with checks that you may use
Funds Service to draw against your account. These
Company checks may be made payable to anyone
($1,000 or you designate and must be signed by
more) or by the authorized number of registered
writing a shareholders exactly as indicated on
check ($250 your checking account signature card.
or more)
--------------------------------------------------------
A SIGNATURE GUARANTEE IS NOT CURRENTLY REQUIRED FOR ANY
REDEMPTION OF $50,000 OR LESS PROVIDED THE REDEMPTION
CHECK IS MADE PAYABLE TO THE REGISTERED SHAREHOLDER(S)
AND IS MAILED TO THE ADDRESS OF RECORD, PROVIDED THE
ADDRESS HAS BEEN USED WITH THE ACCOUNT FOR AT LEAST 10
DAYS.
18
<PAGE>
- -------------------------------------------------------------------------------
THE PRICE YOU RECEIVE FOR THE SHARES YOU REDEEM IS THE
NET ASSET VALUE NEXT DETERMINED AFTER YOUR ORDER AND
ALL REQUIRED DOCUMENTATION ARE RECEIVED BY THE FUND OR
AMERICAN FUNDS SERVICE COMPANY. (SEE "PURCHASING
SHARES--SHARE PRICE.")
TELEPHONE REDEMPTIONS AND EXCHANGES By using the
telephone (including American FundsLine(R)), fax or
telegraph redemption and/or exchange options, you agree
to hold the fund, American Funds Service Company, any
of its affiliates or mutual funds managed by such
affiliates, and each of their respective directors,
trustees, officers, employees and agents harmless from
any losses, expenses, costs or liability (including
attorney fees) which may be incurred in connection with
the exercise of these privileges. Generally, all
shareholders are automatically eligible to use these
options. However, you may elect to opt out of these
options by writing American Funds Service Company (you
may reinstate them at any time also by writing American
Funds Service Company). If American Funds Service
Company does not employ reasonable procedures to
confirm that the instructions received from any person
with appropriate account information are genuine, the
fund may be liable for losses due to unauthorized or
fraudulent instructions. In the event that shareholders
are unable to reach the fund by telephone because of
technical difficulties, market conditions, or a natural
disaster, redemption and exchange requests may be made
in writing only.
CONTINGENT DEFERRED SALES CHARGE A contingent deferred
sales charge of 1% applies to certain redemptions made
within twelve months of purchase on investments of $1
million or more and on any investment made with no
initial sales charge by any employer-sponsored 403(b)
plan or defined contribution plan qualified under
Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees. The
charge is 1% of the lesser of the value of the shares
redeemed (exclusive of reinvested dividends and capital
gain distributions) or the total cost of such shares.
Shares held for the longest period are assumed to be
redeemed first for purposes of calculating this charge.
The charge is waived for exchanges (except if shares
acquired by exchange were then redeemed within 12
months of the initial purchase); for distributions from
qualified retirement plans and other employee benefit
plans; for redemptions resulting from participant-
directed switches among investment options within a
participant-directed employer-sponsored retirement
plan; for distributions from 403(b) plans or IRAs due
to death, disability or attainment of age 59 1/2; for
tax-free returns of excess contributions to IRAs; for
redemptions through certain automatic withdrawals not
exceeding 10% of the amount that would otherwise be
subject to the charge; and for redemptions in
connection with loans made by qualified retirement
plans.
REINSTATEMENT PRIVILEGE You may reinvest proceeds from
a redemption or a dividend or capital gain distribution
without a sales charge (any contingent deferred sales
charge paid will be credited to your
19
<PAGE>
- -------------------------------------------------------------------------------
account) in any fund in The American Funds Group. Send
a written request and a check to American Funds Service
Company within 90 days after the date of the redemption
or distribution. Reinvestment will be at the next
calculated net asset value after receipt. The tax
status of a gain realized on a redemption will not be
affected by exercise of the reinstatement privilege,
but a loss may be nullified if you reinvest in the same
fund within 30 days. If you redeem your shares within
90 days after purchase and the sales charge on the
purchase of other shares is waived under the
reinstatement privilege, the sales charge you
previously paid for the shares may not be taken into
account when you calculate your gain or loss on that
redemption.
OTHER IMPORTANT THINGS TO REMEMBER The net asset value
for redemptions is determined as indicated under
"Purchasing Shares--Share Price." Because each stock,
stock/bond and bond fund's net asset value fluctuates,
reflecting the market value of the fund's portfolio,
the amount a shareholder receives for shares redeemed
may be more or less than the amount paid for them.
Redemption proceeds will not be mailed until sufficient
time has passed to provide reasonable assurance that
checks or drafts (including certified or cashier's
checks) for shares purchased have cleared (which may
take up to 15 calendar days from the purchase date).
Except for delays relating to clearance of checks for
share purchases or in extraordinary circumstances (and
as permissible under the Investment Company Act of
1940), redemption proceeds will be paid on or before
the seventh day following receipt of a proper
redemption request.
A fund may, with 60 days' written notice, close your
account if, due to a redemption, the account has a
value of less than the minimum required initial
investment. (For example, a fund may close an account
if a redemption is made shortly after a minimum initial
investment is made.)
You may invest in the funds through various retirement
RETIREMENT plans including the following plans for which Capital
PLANS Guardian Trust Company acts as trustee or custodian:
IRAs, Simplified Employee Pension plans, 403(b) plans
and Keogh- and corporate-type business retirement
plans. For further information about any of the plans,
agreements, applications and annual fees, contact
American Funds Distributors or your investment dealer.
To determine which retirement plan is appropriate for
you, please consult your tax adviser. TAX-EXEMPT FUNDS
SHOULD NOT SERVE AS INVESTMENTS FOR RETIREMENT PLANS.
FOR MORE INFORMATION, PLEASE REFER TO THE ACCOUNT
APPLICATION OR THE STATEMENT OF ADDITIONAL INFORMATION.
IF YOU HAVE ANY QUESTIONS ABOUT ANY OF THE SHAREHOLDER
SERVICES DESCRIBED HEREIN OR YOUR ACCOUNT, PLEASE
CONTACT YOUR INVESTMENT DEALER OR AMERICAN FUNDS
SERVICE COMPANY.
[LOGO of RECYCLED This prospectus has been printed on
PAPER] recycled paper that meets the
guidelines of the United States
Environmental Protection Agency
20
<PAGE>
PROSPECTUS
for Eligible Retirement Plans
CAPITAL WORLD GROWTH AND INCOME
FUND, INC.
333 South Hope Street
Los Angeles, California 90071
CAPITAL WORLD The fund's investment objective is
GROWTH AND INCOME FUND(SM) to seek long-term capital growth
while providing current income.
The fund invests, on a global
basis, in a diversified portfolio
of common stocks and other equity-
type securities, bonds, and money
market instruments that are
denominated in U.S. dollars or
other currencies.
This prospectus relates only to
shares of the fund offered without
a sales charge to eligible
retirement plans. For a prospectus
regarding shares of the fund to be
acquired otherwise, contact the
Secretary of the fund at the
address indicated above.
This prospectus presents
information you should know before
investing in the fund. It should
be retained for future reference.
You may obtain the statement of
additional information dated
February 1, 1996, which contains
the fund's financial statements,
without charge, by writing to the
Secretary of the fund at the above
address or telephoning 800/421-
0180. These requests will be
honored within three business days
of receipt.
SHARES OF THE FUND 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.
THE PURCHASE OF FUND SHARES
INVOLVES INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN
An opportunity for long-term APPROVED OR DISAPPROVED BY THE
growth of capital and current SECURITIES AND EXCHANGE COMMIS-
income primarily through SION OR ANY STATE SECURITIES
investments in equity-type COMMISSION NOR HAS THE SECURITIES
securities of companies AND EXCHANGE COMMISSION PASSED
based around the world UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTA-
[LOGO OF THE AMERICAN FUNDS GROUP(R)] TION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
February 1, 1996
33-010-0296
<PAGE>
- -------------------------------------------------------------------------------
SUMMARY OF This table is designed to help you understand the costs
EXPENSES of investing in the fund. These are historical ex-
penses; your actual expenses may vary.
Average annual SHAREHOLDER TRANSACTION EXPENSES
expenses paid over a
10-year period would Certain retirement plans may purchase shares of the fund
be approximately with no sales charge./1/ The fund has no sales charge on
$11 per year, reinvested dividends, deferred sales charge, redemption
assuming a $1,000 fees or exchange fees.
investment and a 5%
annual return with
no sales charge.
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management fees......................................... 0.47%
12b-1 expenses.......................................... 0.21%/2/
Other expenses (including audit, legal, shareholder
services, transfer agent and custodian expenses)....... 0.20%
Total fund operating expenses........................... 0.88%
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following
cumulative expenses on a
$1,000 investment assuming a 5% $9 $28 $49 $108
annual return./3/
</TABLE>
/1/ Retirement plans of organizations with $100 million
or more in collective retirement plan assets may
purchase shares of the fund with no sales charge. In
addition, any employer-sponsored 403(b) plan or
defined contribution plan qualified under Section
401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees or
any other plan that invests at least $1 million in
shares of the fund (or in combination with shares of
other funds in The American Funds Group other than the
money market funds) may purchase shares at net asset
value; however, a contingent deferred sales charge of
1% applies on certain redemptions made within 12
months following such purchases. (See "Redeeming
Shares--Contingent Deferred Sales Charge.")
/2/ These expenses may not exceed 0.30% of the fund's
average net assets annually. (See "Fund Organization
and Management--Plan of Distribution.") Due to these
distribution expenses, long-term shareholders may pay
more than the economic equivalent of the maximum
front-end sales charge permitted by the National
Association of Securities Dealers.
/3/ Use of this assumed 5% return is required by the
Securities and Exchange Commission; it is not an
illustration of past or future investment results.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION
OF PAST OR FUTURE EXPENSES; ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN.
TABLE OF CONTENTS
Summary of Expenses ............ 2
Financial Highlights ........... 3
Investment Objective and
Policies ...................... 3
Investing Around the World...... 4
Multiple Portfolio Counselor
System......................... 7
Investment Results.............. 8
Dividends, Distributions
and Taxes...................... 8
Fund Organization and
Management..................... 9
Purchasing Shares............... 11
Shareholder Services............ 12
Redeeming Shares................ 13
2
<PAGE>
- -------------------------------------------------------------------------------
FINANCIAL The following information has been audited by Price
HIGHLIGHTS Waterhouse LLP, independent accountants, whose unquali-
(For a share fied report is included in the statement of additional
outstanding information. This information should be read in con-
throughout the junction with the financial statements and accompanying
period) notes which appear in the statement of additional in-
formation.
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30
---------------------------
1995 1994 1993/1/
------- ------- ---------
<S> <C> <C> <C>
Net asset value, beginning of period.......... $17.81 $17.00 $15.08
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income....................... .61 .52 .29
Net realized and unrealized gain on invest-
ments...................................... 2.72 .75 1.86
------- ------- -------
Total 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/ Period from March 26, 1993 (commencement of operations) to November
30, 1993.
/2/ Calculated with no sales charge.
/3/ Based on operations for the period shown and, accordingly, not
representative of a full year's operations.
INVESTMENT The fund has the investment objective of seeking long-
OBJECTIVE AND term capital growth while providing current income. The
POLICIES fund invests, on a global basis, in a diversified port-
folio that can include common stocks and other equity-
type securities (such as convertible bonds and pre-
ferred stocks), bonds (and other fixed-income securi-
ties), and money market instruments that are denomi-
nated in U.S. dollars or other currencies.
The fund invests The fund's investment adviser, Capital Research and
globally and aims Management Company, determines the relative mix of
to provide you equity-type securities, fixed-income securities and
with long-term money market instruments for the fund's portfolio as
capital growth and well as the countries and currencies in which the fund
current income. invests. It will do so based on its view of long-term
economic and market trends, taking the relative risks
and opportunities into account. Capital Research and
Management Company does not intend to make frequent
shifts among equity-type securities, fixed-income
securities and money market instruments. Under normal
market conditions, Capital Research and Management
Company expects that the fund will invest principally
in
3
<PAGE>
- -------------------------------------------------------------------------------
equity-type securities and that no more than 40% of its
assets will be invested in securities of issuers
domiciled in any one country.
The fund's investment restrictions (which are described
in the statement of additional information) and objec-
tive cannot be changed without shareholder approval.
All other investment practices may be changed by the
board of directors.
ACHIEVEMENT OF THE FUND'S INVESTMENT OBJECTIVE CANNOT,
OF COURSE, BE ASSURED DUE TO THE RISKS OF LOSS OF CAPI-
TAL OR INCOME INHERENT IN ANY INVESTMENT IN SECURITIES
AND THE SPECIAL RISKS ASSOCIATED WITH GLOBAL INVESTING
DESCRIBED BELOW.
INVESTING AROUND OPPORTUNITIES, RISKS AND COSTS The fund's assets are
THE WORLD invested globally which, in the opinion of Capital Re-
search and Management Company, enhances the fund's
ability to meet its objective--long-term growth of cap-
ital and current income.
Global investing Of course, investing globally involves special risks,
involves expanded particularly in certain developing countries, caused
opportunities, by, among other things: fluctuating currency values;
special risks and different accounting, auditing, and financial reporting
increased costs. regulations and practices in some countries; changing
local and regional economic, political, and social
conditions; differing securities market structures; and
various administrative difficulties such as delays in
clearing and settling portfolio transactions or in
receiving payment of dividends.
However, in the opinion of Capital Research and Manage-
ment Company, global investing also can reduce certain
portfolio risks due to greater diversification
opportunities.
Additional costs could be incurred in connection with
the fund's investment activities outside the U.S.
Brokerage commissions are generally higher outside the
U.S., and the fund will bear certain expenses in
connection with its currency transactions. Furthermore,
increased custodian costs may be associated with the
maintenance of assets in certain jurisdictions.
The fund does not intend to emphasize any particular
country or region in making its investments. Under
normal market conditions, the fund will invest in
securities of issuers determined by Capital Research
and Management Company to be domiciled in at least
three countries, with no more than 40% of its assets
invested in issuers domiciled in any one country. (In
determining the domicile of an issuer, Capital Research
and Management Company takes into account such factors
as where the company is legally organized and/or
maintains principal corporate offices
4
<PAGE>
- -------------------------------------------------------------------------------
and/or conducts its principal operations.) For
temporary defensive purposes, the fund may invest
principally or entirely in securities that are
denominated in U.S. dollars or whose issuers are
domiciled in the United States. Securities denominated
in U.S. dollars include American Depositary Receipts
and European Depositary Receipts. Generally ADRs, in
registered form, are dollar denominated securities
designed for use in the U.S. securities markets, which
represent and may be converted into the underlying
foreign security. EDRs, in bearer form, are designed
for use in the European securities markets.
CURRENCY TRANSACTIONS In connection with its non-U.S.
investments, the fund has the ability to hold
currencies other than the U.S. dollar and to enter into
forward currency contracts to facilitate settlements
and to protect against certain changes in exchange
rates. However, there is no assurance that such
strategies will be successful. Moreover, due to the
expenses involved, the fund will not generally attempt
to protect against all potential changes in exchange
rates.
INVESTING IN FIXED-INCOME SECURITIES While the fund,
under normal conditions will invest principally in eq-
uity securities, the fund also expects to invest in
fixed-income securities on a regular basis in pursuit
of its investment objective. For temporary defensive
purposes the fund may invest substantially in fixed-in-
come securities and/or money market instruments of is-
suers based around the world.
Bonds and other fixed-income securities (not including
money market instruments--see below) in which the fund
invests primarily will be rated in the top three rating
categories by Standard & Poor's Corporation or Moody's
Investors Service, Inc., or if unrated be determined to
be of equivalent quality by Capital Research and Man-
agement Company; however, up to 10% of the fund's as-
sets may be invested in lower rated fixed-income secu-
rities and convertible bonds or in unrated securities
that are determined to be of equivalent quality. These
securities may be rated as low as CC by Standard &
Poor's Corporation or Ca by Moody's Investors Service,
Inc. or unrated but determined to be of equivalent
quality. Bonds rated Ca and CC are described by the
rating agencies as "speculative in a high degree, often
in default or [having] other marked shortcomings." (See
the statement of additional information for a complete
description of the bond ratings.) The fund does not
currently intend (at least for the next 12 months) to
hold more than 5% of its net assets in bonds rated BB
and Ba or below, or in unrated bonds determined to be
of equivalent quality ("junk bonds" or "high-yield,
high-risk bonds"). (If, as a result of a downgrade or
otherwise, the fund holds more than 5% of its net as-
sets in high-yield, high-risk bonds, the fund will dis-
pose of the excess as expeditiously as possible.)
5
<PAGE>
- -------------------------------------------------------------------------------
While the fund may purchase debt obligations of corpo-
rations and financial institutions domiciled around the
world, it currently anticipates that most of its inter-
mediate- or long-term investments outside the U.S.
principally will be in governmental or quasi-governmen-
tal issues.
The market values of fixed-income securities generally
vary inversely with the level of interest rates--when
interest rates rise, their values will generally de-
cline and vice versa. The values of high-yield, high-
risk securities are subject to greater fluctuations
than are higher rated securities. In addition to rat-
ings, Capital Research and Management Company will con-
sider factors such as term, yield, and liquidity in se-
lecting fixed-income securities.
MONEY MARKET INSTRUMENTS The fund invests in various
high quality money market instruments that mature, or
may be redeemed or resold, in 13 months or less (25
months or less in the case of U.S. Government securi-
ties). These include: (1) commercial paper (notes is-
sued by corporations or governmental bodies), (2) cer-
tificates of deposit and bankers' acceptances (time
drafts on a commercial bank where the bank accepts an
irrevocable obligation to pay at maturity), (3) savings
association and state chartered savings bank obliga-
tions, (4) securities of the U.S. Government, its agen-
cies or instrumentalities, and (5) corporate bonds and
notes.
6
<PAGE>
- -------------------------------------------------------------------------------
MULTIPLE The basic investment philosophy of Capital Research and
PORTFOLIO Management Company is to seek fundamental values at
COUNSELOR reasonable prices, using a system of multiple portfolio
SYSTEM counselors in managing mutual fund assets. Under this
system the portfolio of the fund is divided into seg-
Capital Research ments which are managed by individual counselors. Each
and Management counselor decides how their segment will be invested
Company, the (within the limits provided by the fund's objective and
fund's investment policies and by Capital Research and Management
adviser, uses a Company's investment committee). In addition, Capital
system of multiple Research and Management Company's research profession-
portfolio als make investment decisions with respect to a portion
counselors to of the fund's portfolio. The primary individual portfo-
manage fund lio counselors for the fund are listed below.
assets.
<TABLE>
<CAPTION>
YEARS OF EXPERIENCE
AS INVESTMENT
PROFESSIONAL
(APPROXIMATE)
YEARS OF EXPERIENCE AS WITH CAPITAL
PORTFOLIO COUNSELORS PORTFOLIO COUNSELOR RESEARCH AND
FOR FOR MANAGEMENT
CAPITAL WORLD GROWTH CAPITAL WORLD GROWTH COMPANY OR ITS TOTAL
AND INCOME FUND PRIMARY TITLE(S) AND INCOME FUND AFFILIATES YEARS
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thierry Vandeventer Chairman of the Board and Since the fund 33 years 33 years
Principal Executive began operations
Officer of the fund.
Chairman of the Board and
Chief Executive Officer,
Capital Research Company*
Stephen E. Bepler Senior Vice President of Since the fund 23 years 30 years
the fund. Senior Vice began operations
President and Director,
Capital Research Company*
Mark E. Denning Vice President of the Since the fund 14 years 14 years
fund. Senior Vice began operations
President, Capital
Research Company*
Janet A. McKinley Vice President of the Since the fund 14 years 20 years
fund. Senior Vice began operations
President, Capital
Research Company*
William R. Grimsley Senior Vice President and Since the fund 26 years 33 years
Director, Capital Research began operations
and Management Company
</TABLE>
THE FUND BEGAN OPERATIONS ON MARCH 26, 1993.
* COMPANY AFFILIATED WITH CAPITAL RESEARCH AND MANAGEMENT COMPANY.
7
<PAGE>
- -------------------------------------------------------------------------------
INVESTMENT RESULTS The fund may from time to time compare its investment
results to various unmanaged indices or other mutual
The fund has funds in reports to shareholders, sales literature and
averaged a total advertisements. The results may be calculated on a to-
return (at no tal return, yield and/or distribution rate basis for
sales charge) of various periods, with or without sales charges. Results
15.83% a year over calculated without a sales charge will be higher. Total
its lifetime. returns assume the reinvestment of all dividends and
capital gain distributions.
(March 26, 1993
through December As of December 31, 1995 the fund's one-year total
31, 1995) return and average annualized lifetime total return
were 21.40% and 15.83%, respectively. These results
were calculated with no sales charge in accordance with
Securities and Exchange Commission requirements. The
fund's distribution rate is calculated by dividing the
dividends paid by the fund over the last 12 months by
the sum of the month-end price and the capital gains
paid over the last 12 months. For the 30-day period
ended December 31, 1995, the fund's yield was 3.02% and
the distribution rate was 3.02% at no sales charge. The
yield reflects income earned by the fund, while the
distribution rate reflects dividends paid by the fund.
Of course, past results are not an indication of future
results. Further information regarding the fund's
investment results is contained in the fund's annual
report which may be obtained without charge by writing
to the Secretary of the fund at the address indicated
on the cover of this prospectus.
DIVIDENDS, DIVIDENDS AND DISTRIBUTIONS The fund distributes divi-
DISTRIBUTIONS AND dends from its net investment income to shareholders
TAXES each quarter. Capital gains, if any, are usually dis-
tributed in December. When a dividend or capital gain
Dividends are is distributed, the net asset value per share is re-
usually paid in duced by the amount of the payment.
March, June,
September and FEDERAL TAXES The fund intends to operate as a "regu-
December. lated investment company" under the Internal Revenue
Code. In any fiscal year in which the fund so qualifies
and distributes to shareholders all of its net invest-
ment income and net capital gains, the fund itself is
relieved of federal income tax. The tax treatment of
redemptions from a retirement plan may differ from re-
demptions from an ordinary shareholder account.
PLEASE SEE THE STATEMENT OF ADDITIONAL INFORMATION AND
YOUR TAX ADVISER FOR FURTHER INFORMATION.
8
<PAGE>
- -------------------------------------------------------------------------------
FUND ORGANIZATION FUND ORGANIZATION AND VOTING RIGHTS The fund, an open-
AND MANAGEMENT end diversified management investment company, was
organized as a Maryland corporation in 1992. The fund's
The fund is a board supervises fund operations and performs duties
member of The required by applicable state and federal law. Members
American Funds of the board who are not employed by Capital Research
Group, which is and Management Company or its affiliates are paid
managed by one of certain fees for services rendered to the fund as
the largest and described in the statement of additional information.
most experienced They may elect to defer all or a portion of these fees
investment through a deferred compensation plan in effect for the
advisers. fund. Shareholders have one vote per share owned and,
at the request of the holders of at least 10% of the
shares, the fund will hold a meeting at which any
member of the board could be removed by a majority
vote. There will not usually be a shareholder meeting
in any year except, for example, when the election of
directors is required to be acted upon by shareholders
under the Investment Company Act of 1940.
THE INVESTMENT ADVISER Capital Research and Management
Company, a large and experienced investment management
organization founded in 1931, is the investment adviser
to the fund and other funds, including those in The
American Funds Group. Capital Research and Management
Company is located at 333 South Hope Street, Los Ange-
les, CA 90071 and at 135 South State College Boulevard,
Brea, CA 92621. (See "The American Funds Shareholder
Guide: Purchasing Shares--Investment Minimums and Fund
Numbers" for a listing of funds in The American Funds
Group.) Capital Research and Management Company manages
the investment portfolio and business affairs of the
fund and receives a fee at the annual rate of 0.60% on
the first $500 million of average net assets, 0.50% for
such assets over $500 million to $1 billion, 0.46% for
such assets over $1 billion to $1.5 billion, 0.43% for
such assets over $1.5 billion to $2.5 billion, 0.41%
for such assets over $2.5 billion to $4 billion, 0.40%
for such assets over $4 billion to $6.5 billion, and
0.395% for such assets over $6.5 billion.
Capital Research and Management Company is a wholly
owned subsidiary of The Capital Group Companies, Inc.
(formerly "The Capital Group, Inc."), which is located
at 333 South Hope Street, Los Angeles, CA 90071. The
research activities of Capital Research and Management
Company are conducted by affiliated companies which
have offices in Los Angeles, San Francisco, New York,
Washington, D.C., London, Geneva, Singapore, Hong Kong
and Tokyo.
Capital Research and Management Company and its
affiliated companies have adopted a personal investing
policy that is consistent with the recommendations
contained in the report dated May 9, 1994 issued by the
Investment Company Institute's Advisory Group on
Personal Investing. (See the statement of additional
information.)
9
<PAGE>
- -------------------------------------------------------------------------------
PORTFOLIO TRANSACTIONS Orders for the fund's portfolio
securities transactions are placed by Capital Research
and Management Company, which strives to obtain the
best available prices, taking into account the costs
and quality of executions. In the over-the-counter mar-
ket, purchases and sales are transacted directly with
principal market-makers except in those circumstances
where it appears better prices and executions are
available elsewhere.
Subject to the above policy, when two or more brokers
are in a position to offer comparable prices and
executions, preference may be given to brokers that
have sold shares of the fund or have provided
investment research, statistical, and other related
services for the benefit of the fund and/or of other
funds served by Capital Research and Management
Company.
PRINCIPAL UNDERWRITER American Funds Distributors,
Inc., a wholly owned subsidiary of Capital Research and
Management Company, is the principal underwriter of the
fund's shares. American Funds Distributors is located
at 333 South Hope Street, Los Angeles, CA 90071, 135
South State College Boulevard, Brea, CA 92621, 8000 IH-
10 West, San Antonio, TX 78230, 8332 Woodfield Crossing
Boulevard, Indianapolis, IN 46240, and 5300 Robin Hood
Road, Norfolk, VA 23513. Telephone conversations with
American Funds Distributors may be recorded or
monitored for verification, recordkeeping and quality
assurance purposes.
PLAN OF DISTRIBUTION The fund has a plan of distribu-
tion or "12b-1 Plan" under which it may finance activi-
ties primarily intended to sell shares, provided the
categories of expenses are approved in advance by the
board and the expenses paid under the plan were in-
curred within the last 12 months and accrued while the
plan is in effect. Expenditures by the fund under the
plan may not exceed 0.30% of its average net assets an-
nually (0.25% of which may be for service fees).
TRANSFER AGENT American Funds Service Company, 800/421-
0180, a wholly owned subsidiary of Capital Research and
Management Company, is the transfer agent and performs
shareholder service functions. American Funds Service
Company is located at 333 South Hope Street, Los
Angeles, CA 90071, 135 South State College Boulevard,
Brea, CA 92621, 8000 IH-10 West, San Antonio, TX 78230,
8332 Woodfield Crossing Boulevard, Indianapolis, IN
46240, and 5300 Robin Hood Road, Norfolk, VA 23513. It
was paid a fee of $3,114,000 for the fiscal year ended
November 30, 1995. Telephone conversations with
American Funds Service Company may be recorded or
monitored for verification, recordkeeping and quality
assurance purposes.
10
<PAGE>
- -------------------------------------------------------------------------------
PURCHASING SHARES ALL ORDERS TO PURCHASE SHARES MUST BE MADE THROUGH YOUR
RETIREMENT PLAN. FOR MORE INFORMATION ABOUT HOW TO
PURCHASE SHARES OF THE FUND THROUGH YOUR PLAN OR
LIMITATIONS ON THE AMOUNT THAT MAY BE PURCHASED, PLEASE
CONSULT WITH YOUR EMPLOYER. Shares are sold to eligible
retirement plans at the net asset value per share next
determined after receipt of an order by the fund or
American Funds Service Company. Orders must be received
before the close of regular trading on the New York
Stock Exchange in order to receive that day's net asset
value. Plans of organizations with collective
retirement plan assets of $100 million or more may
purchase shares at net asset value. In addition, any
employer-sponsored 403(b) plan or defined contribution
plan qualified under Section 401(a) of the Internal
Revenue Code including a "401(k)" plan with 200 or more
eligible employees or any other plan that invests at
least $1 million in shares of the fund (or in
combination with shares of other funds in The American
Funds Group other than the money market funds) may
purchase shares at net asset value; however, a
contingent deferred sales charge of 1% is imposed on
certain redemptions within twelve months of such
purchase. (See "Redeeming Shares--Contingent Deferred
Sales Charge.") Plans may also qualify to purchase
shares at net asset value by completing a statement of
intention to purchase $1 million in fund shares subject
to a commission over a maximum of 13 consecutive
months. Certain redemptions of such shares may also be
subject to a contingent deferred sales charge as
described above. (See the statement of additional
information.)
The minimum initial investment is $250, except that the
money market funds have a minimum of $1,000 for
individual retirement accounts (IRAs). Minimums are
reduced to $50 for purchases through "Automatic
Investment Plans" (except for the money market funds)
or to $25 for purchases by retirement plans through
payroll deductions and may be reduced or waived for
shareholders of other funds in The American Funds
Group.
American Funds Distributors, at its expense (from a
designated percentage of its income), will, during
calendar year 1996, provide additional promotional
incentives to dealers. Currently these incentives are
limited to the top one hundred dealers who have sold
shares of the fund or other funds in The American Funds
Group. Such incentive payments will be based on a pro
rata share of a qualifying dealer's sales. American
Funds Distributors will, on an annual basis, determine
the advisabilty of continuing these promotional
incentives.
11
<PAGE>
- -------------------------------------------------------------------------------
Qualified dealers currently are paid a continuing
service fee not to exceed 0.25% of average net assets
(0.15% in the case of the money market funds) annually
in order to promote selling efforts and to compensate
them for providing certain services. (See "Fund
Organization and Management--Plan of Distribution.")
These services include processing purchase and
redemption transactions, establishing shareholder
accounts and providing certain information and
assistance with respect to the fund.
Shares of the fund are offered to other shareholders
pursuant to another prospectus at public offering
prices that may include an initial sales charge.
SHARE PRICE Shares are offered to eligible retirement
plans at the net asset value next determined after the
order is received by the fund or American Funds Service
Company. In the case of orders sent directly to the
fund or American Funds Service Company, an investment
dealer must be indicated. Dealers are responsible for
promptly transmitting orders. (See the statement of
additional information under "Purchase of Shares--Price
of Shares.")
The fund's net asset value per share is determined as
of the close of trading (currently 4:00 p.m., New York
time) on each day the New York Stock Exchange is open.
The current value of the fund's total assets, less all
liabilities, is divided by the total number of shares
outstanding and the result, rounded to the nearer cent,
is the net asset value per share.
SHAREHOLDER Subject to any restrictions contained in your plan, you
SERVICES can exchange your shares for shares of other funds in
The American Funds Group which are offered through the
plan at net asset value. In addition, again depending
on your plan, you may be able to exchange shares
automatically or cross-reinvest dividends in shares of
other funds. Contact your plan administrator/trustee
regarding how to use these services. Also, see the
fund's statement of additional information for a
description of these and other services that may be
available through your plan. These services are
available only in states where the fund to be purchased
may be legally offered and may be terminated or
modified at any time upon 60 days' written notice.
12
<PAGE>
- -------------------------------------------------------------------------------
REDEEMING SHARES Subject to any restrictions imposed by your plan, you
can sell your shares through the plan any day the New
York Stock Exchange is open. For more information about
how to sell shares of the fund through your retirement
plan, including any charges that may be imposed by the
plan, please consult with your employer.
By contacting Your plan administrator/trustee must
your plan send a letter of instruction
administrator/ specifying the name of the fund, the
trustee number of shares or dollar amount to
be sold, and, if applicable, your
name and account number. For your
protection, if you redeem more than
$50,000, the signatures of the
registered owners or their legal
representatives must be guaranteed by
a bank, savings association, credit
union, or member firm of a domestic
stock exchange or the National
Association of Securities Dealers,
Inc., that is an eligible guarantor
institution. Your plan
administrator/trustee should verify
with the institution that it is an
eligible guarantor prior to signing.
Additional documentation may be
required to redeem shares from
certain accounts. Notarization by a
Notary Public is not an acceptable
signature guarantee.
--------------------------------------------------------
By contacting Shares may also be redeemed through
an investment an investment dealer; however, you or
dealer your plan may be charged for this
service. SHARES HELD FOR YOU IN AN
INVESTMENT DEALER'S STREET NAME MUST
BE REDEEMED THROUGH THE DEALER.
THE PRICE YOU RECEIVE FOR THE SHARES YOU REDEEM IS THE
NET ASSET VALUE NEXT DETERMINED AFTER YOUR ORDER AND ALL
REQUIRED DOCUMENTATION ARE RECEIVED BY THE FUND OR
AMERICAN FUNDS SERVICE COMPANY. (SEE "PURCHASING
SHARES--SHARE PRICE.")
CONTINGENT DEFERRED SALES CHARGE A contingent deferred
sales charge of 1% applies to certain redemptions
within twelve months of purchase on investments of $1
million or more and on any investment made with no
initial sales charge by any employer-sponsored 403(b)
plan or defined contribution plan qualified under
Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees. The
charge is 1% of the lesser of the value of the shares
redeemed (exclusive of reinvested dividends and capital
gain distributions) or the total cost of such shares.
Shares held for the longest period are assumed to be
redeemed first for purposes of calculating this charge.
The charge is waived for exchanges (except if shares
acquired by exchange were then redeemed within 12
months of the initial purchase); for distributions from
qualified retirement plans and other employee benefit
plans; for redemptions resulting from participant-
directed switches among investment options within a
participant-directed employer-sponsored retirement
plan; and for redemptions in connection with loans made
by qualified retirement plans.
13
<PAGE>
- -------------------------------------------------------------------------------
OTHER IMPORTANT THINGS TO REMEMBER The net asset value
for redemptions is determined as indicated under
"Purchasing Shares--Share Price." Because the fund's
net asset value fluctuates, reflecting the market value
of the portfolio, the amount you receive for shares
redeemed may be more or less than the amount paid for
them.
Redemption proceeds will not be mailed until sufficient
time has passed to provide reasonable assurance that
checks or drafts (including certified or cashier's
checks) for shares purchased have cleared (which may
take up to 15 calendar days from the purchase date).
Except for delays relating to clearance of checks for
share purchases or in extraordinary circumstances (and
as permissible under the Investment Company Act of
1940), redemption proceeds will be paid on or before
the seventh day following receipt of a proper
redemption request.
[LOGO OF RECYCLED This prospectus has been printed on
PAPER] recycled paper that meets the
guidelines of the United States
Environmental Protection Agency
14
<PAGE>
THIS PROSPECTUS RELATES ONLY TO SHARES OF THE FUND
OFFERED WITHOUT A SALES CHARGE TO ELIGIBLE RETIREMENT
PLANS. FOR A PROSPECTUS REGARDING SHARES OF THE FUND
TO BE ACQUIRED OTHERWISE, CONTACT THE SECRETARY OF
THE FUND AT THE ADDRESS INDICATED ON THE FRONT.
CAPITAL WORLD GROWTH AND INCONE FUND (R)
February 1, 1996
CAPITAL WORLD GROWTH AND INCOME FUND(R)
Profile
333 South Hope Street February 1, 1996
Los Angeles, CA 90071
1. Goal
The fund primarily seeks to make your money grow over time while providing
current income through investments in stocks and bonds of companies around the
world.
2. Investment Strategies
The fund invests on a global basis primarily in stocks. The fund may also hold
other types of securities, such as bonds, when appropriate.
3. Risks
Stock and bond prices rise and fall. Investing outside the U.S. involves
special risks, such as currency fluctuations.
YOU CAN LOSE MONEY BY INVESTING IN THE FUND; YOUR INVESTMENT IS NOT GUARANTEED.
THE LIKELIHOOD OF LOSS IS GREATER IF YOU INTEND TO INVEST FOR A SHORTER PERIOD
OF TIME.
4. Appropriateness
If you are not a long-term investor seeking capital growth and current income
through global diversification, this fund may not be appropriate for you.
Please consult your investment dealer.
5. Fees and Expenses
Shareholder transaction expenses are charges you pay when you buy or sell
shares of a fund. Annual fund operating expenses are paid out of the fund's
assets. The fund's expenses are factored into its share price and
distributions and are not charged directly to shareholder accounts.
Shareholder Transaction Expenses
<TABLE>
<CAPTION>
<S> <C>
Maximum sales charge
on purchases
(as a percentage of offering price) 5.75%*
</TABLE>
SALES CHARGES ARE REDUCED OR ELIMINATED FOR LARGER PURCHASES. The fund has no
sales charge on reinvested dividends, and no deferred sales charge or
redemption or exchange fees. A contingent deferred sales charge of 1% applies
on certain redemptions within 12 months following purchases without a sales
charge.
Annual Fund Operating Expenses
(as a percentage of average net assets)
<TABLE>
<CAPTION>
<S> <C>
Management fees 0.47%
12b-1 expenses 0.21%
Other expenses 0.20%
Total fund operating expenses 0.88%
</TABLE>
Example
You would pay the following cumulative expenses on a $1,000 investment,
assuming a 5% annual return. This example should not be considered a
representation of past or future expenses.
<TABLE>
<CAPTION>
<S> <C>
One year $66
Three years 84
Five years 103
Ten years 160
</TABLE>
6. Past Results
Here are the fund's annual total returns for each calendar year over the fund's
lifetime:
[CHART]
<TABLE>
<CAPTION>
<S> <C>
1994 1.23%
1995 21.40%
</TABLE>
[END CHART]
Sales charges have not been deducted from results shown above.
The fund's average annual total return* is +13.38% over its lifetime (March 26,
1993 through December 31, 1995). PAST RESULTS ARE NOT A GUARANTEE OF FUTURE
RESULTS.
<TABLE>
<CAPTION>
<S> <C>
Average Annual
Total Returns*
One year + 14.39%
Lifetime + 13.38%
30-Day Yield*
+ 2.85%
</TABLE>
* These results were calculated for periods ended December 31, 1995 in
accordance with Securities and Exchange Commission rules which require that the
maximum sales charge be deducted.
7. Investment Adviser
Capital Research and Management Company, one of the world's largest and most
experienced investment advisers, manages the fund, which is a member of The
American Funds Group. Capital Research and Management Company manages this
diversified mutual fund using the multiple portfolio counselor system. Under
this system, the fund's assets are divided into several portions. Each portion
is independently managed by a portfolio counselor or a group of research
professionals, subject to oversight by the investment adviser's investment
committee.
8. Purchases
The fund's shares are sold through investment dealers. Your investment dealer
can help you with your account, or you may call American Funds Service Company
at 800/421-0180 with questions about your account. Generally, the minimum
initial investment is $1000.
9. Redemptions
You may redeem shares at no cost at any time through your investment dealer or
by calling American FundsLineR at 800/325-3590. (You will need the fund's
number - 33 - if you use this service.) Transactions will be processed as of
the next close of the New York Stock Exchange.
10. Distributions
Dividends and capital gain distributions are automatically reinvested unless
you notify American Funds Service Company that you would like to invest them in
another of the American Funds or receive payment in cash. Income distributions
are usually made in March, June, September and December. Capital gains, if
any, are usually distributed in December.
11. Other Services
You may exchange your shares for any of the other American Funds or obtain
information about your investment any time by calling American FundsLineR. If
you purchase shares at net asset value through a retirement plan, some or all
of the services or features described may not be available. Contact your
employer for details.
THIS PROFILE CONTAINS KEY INFORMATION ABOUT THE FUND. MORE DETAILS APPEAR IN
THE FUND'S ACCOMPANYING PROSPECTUS.
This profile has been printed on recycled paper that meets the guidelines of
the United States Environmental Protection Agency.
CAPITAL WORLD GROWTH AND INCOME FUND, INC.
Part B
Statement of Additional Information
FEBRUARY 1, 1996
This document is not a prospectus but should be read in conjunction with
the current Prospectus of Capital World Growth and Income Fund, Inc. (the
fund) dated February 1, 1996. The Prospectus may be obtained from your
investment dealer or financial planner or by writing to the fund at the
following address:
Capital World Growth and Income Fund, Inc.
Attention: Secretary
333 South Hope Street
Los Angeles, CA 90071
(213) 486-9200
The fund has two forms of prospectuses. Each reference to the prospectus
in the Statement of Additional Information includes all the fund's
prospectuses. Shareholders who purchase shares at net asset value through
eligible retirement plans should note that not all of the services or features
described below may be available to them, and they should contact their
employer for details.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Item Page No.
<S> <C>
Description of Certain Securities and Investment Techniques 1
Investment Restrictions 4
Fund Directors and Officers 7
Management 12
Dividends, Distributions and Federal Taxes 14
Purchase of Shares 16
Shareholder Account Services and Privileges 18
Execution of Portfolio Transactions 19
General Information 20
Investment Results 21
Description of Ratings for Debt Securities 23
Financial Statements Attached
</TABLE>
DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT TECHNIQUES
INVESTMENT POLICIES -- The fund may invest up to 10% of its assets in debt
securities which are rated below the top three quality categories by Standard &
Poor's Corporation ("S&P") or Moody's Investors Service, Inc. ("Moody's") or
securities that are determined equivalent by the fund's investment adviser,
Capital Research and Management Company (the "Investment Adviser") including
bonds rated BB and Ba or below ("junk bonds or high-yield, high-risk" bonds).
(See "Description of Ratings for Debt Securities" below.)
CERTAIN RISK FACTORS RELATING TO HIGH-YIELD, HIGH-RISK BONDS
SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES - High-yield, high-risk
bonds are very sensitive to adverse economic changes and corporate
developments. During an economic downturn or substantial period of rising
interest rates, highly-leveraged issuers may experience financial stress that
would adversely affect their ability to service their principal and interest
payment obligations, to meet projected business goals, and to obtain additional
financing. If the issuer of a bond defaults on its obligations to pay interest
or principal or enters into bankruptcy proceedings, the fund may incur losses
or expenses in seeking recovery of amounts owed to it. In addition, periods of
economic uncertainty and changes can be expected to result in increased
volatility of market prices and yields of high-yield, high-risk bonds.
PAYMENT EXPECTATIONS - High-yield, high-risk bonds may contain redemption
or call provisions. If an issuer exercised these provisions in a declining
interest rate market, the fund may have to replace the security with a lower
yielding security, resulting in a decreased return for investors. Conversely,
a high-yield, high-risk bond is likely to decrease in a rising interest rate
market, as is generally true with all bonds.
LIQUIDITY AND VALUATION - There may be little trading in the secondary
market for particular bonds, which may affect adversely the fund's ability to
value accurately or dispose of such bonds. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of high-yield, high-risk bonds, especially in a thin
market.
Subsequent to its purchase by the fund, certain bonds or notes may cease
to be rated or their ratings may be reduced below the minimum rating required
for purchase by the fund. Neither event requires the elimination of such
obligations from the fund's portfolio, but the Investment Adviser will consider
such an event in its determination of whether the fund should continue to hold
such obligations in its portfolio. If, however, as a result of a downgrade or
otherwise, the fund holds more than 5% of its net assets in high-yield,
high-risk bonds, the fund will dispose of the excess as expeditiously as
possible.
REPURCHASE AGREEMENTS -- The fund may enter into repurchase agreements, under
which the fund buys a security and obtains a simultaneous commitment from the
seller to repurchase the security at a specified time and price. Repurchase
agreements permit the fund to maintain liquidity and earn income over periods
of time as short as overnight. The seller must maintain with the fund's
custodian collateral equal to at least 100% of the repurchase price, including
accrued interest, as monitored daily by the Investment Adviser. (See
"Management" below.) The fund will only enter into repurchase agreements
involving securities in which it could otherwise invest and with selected banks
and securities dealers whose financial condition is monitored by the Investment
Adviser. If the seller under the repurchase agreement defaults, the fund may
incur a loss if the value of the collateral securing the repurchase agreement
has declined and may incur disposition costs in connection with liquidating the
collateral. If bankruptcy proceedings are commenced with respect to the
seller, realization upon the collateral by the fund may be delayed or limited.
For purposes of Investment Restriction number five, below, repurchase
agreements maturing in excess of seven days are considered not readily
marketable. The fund does not currently intend (at least for the next 12
months) to invest more than 5% of its net assets in repurchase agreements.
CURRENCY TRANSACTIONS -- The fund has the ability to hold a portion of its
assets in U.S. dollars and other currencies and to enter into certain currency
contracts (on either a spot or forward basis) in connection with investing in
non-U.S. dollar denominated securities including foreign currency exchange and
forward currency contracts. A foreign exchange contract is used to facilitate
settlement of trades. For example, the fund might purchase a currency or enter
into a foreign exchange contract to preserve the U.S. dollar price of
securities it has contracted to purchase.
A forward currency contract is an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days from
the date of the contract agreed upon by the parties, at a price set at the time
of the contract. For example, the fund might enter into a forward currency
contract to protect against an anticipated decline in value of a foreign
currency against the U.S. dollar when it holds securities denominated in that
foreign currency. To avoid having an amount greater than its net assets
subject to market risk in connection with currency contract transactions, the
fund will segregate cash, cash equivalents, or high quality debt instruments to
the extent required by the Securities and Exchange Commission.
At the maturity of a forward contract, the fund may either accept or
make delivery of the currency specified in the contract or, prior to maturity,
enter into a closing transaction involving the purchase or sale of an
offsetting contract. Closing transactions with respect to forward contracts
are usually effected with the currency trader who is a party to the original
contract. The fund will only enter into such a forward contract if it is
expected that the fund will be able to readily close out such contract. There
can be, however, no assurance that it will be able in any particular case to do
so, in which case the fund may suffer a loss.
Certain provisions of the Internal Revenue Code may affect the extent
to which the fund may enter into forward contracts. Such transactions may
also affect, for U.S. federal income tax purposes, the character and timing of
income, gain or loss recognized by the fund.
U.S. GOVERNMENT SECURITIES -- From time to time, the fund may invest in U.S.
Government securities. Securities guaranteed by the U.S. Government include:
(1) direct obligations of the U.S. Treasury (such as Treasury bills, notes and
bonds) and (2) federal agency obligations guaranteed as to principal and
interest by the U.S. Treasury. In these securities, the payment of principal
and interest is unconditionally guaranteed by the U.S. Government, and thus
they are of the highest possible credit quality. Such securities are subject
to variations in market value due to fluctuations in interest rates, but, if
held to maturity, will be paid in full.
Securities issued by U.S. Government instrumentalities and certain federal
agencies are neither direct obligations of, nor guaranteed by, the Treasury.
However, such securities generally involve federal sponsorship in one way or
another: some are backed by specific types of collateral; some are supported by
the issuer's right to borrow from the Treasury; some are supported by the
discretionary authority of the Treasury to purchase certain obligations of the
issuer (in other words, no assurance can be given that the U.S. Government will
provide financial support since it is not lawfully obligated to do so;) others
are supported only by the credit of the issuing government agency or
instrumentality. These agencies and instrumentalities include, but are not
limited to, Federal Land Banks, Farmers Home Administration, Central Bank
Cooperatives, and Federal Intermediate Credit Banks.
CASH EQUIVALENTS -- These securities include: (1) commercial paper (short-term
notes up to nine months in maturity issued by corporations or governmental
bodies); (2) commercial bank obligations such as certificates of deposit
(interest-bearing time deposits), banker's acceptances (time drafts on a
commercial bank where the bank accepts an irrevocable obligation to pay at
maturity), and documented discount notes (corporate promissory discount notes
accompanied by a commercial bank guarantee to pay at maturity), (3) savings
association obligations (certificates of deposit issued by mutual savings banks
or savings and loan associations); (4) securities of the U.S. Government, its
agencies or instrumentalities that mature, or may be redeemed, in one year or
less; and (5) corporate bonds and notes (corporate obligations that mature, or
that may be redeemed, in one year or less).
INVESTMENT RESTRICTIONS
FUNDAMENTAL POLICIES -- The fund has adopted the following fundamental policies
and investment restrictions which may not be changed without a majority vote of
its outstanding shares. Such majority is defined by law as the vote of the
lesser of (i) 67% or more of the outstanding voting securities present at a
meeting, if the holders of more than 50% of the outstanding voting securities
are present in person or by proxy, or (ii) more than 50% of the outstanding
voting securities. All percentage limitations expressed in the following
investment restrictions are measured immediately after and giving effect to the
relevant transaction. The fund may not:
1. With respect to 75% of the fund's total assets, purchase the securities of
any issuer (other than securities issued or guaranteed by the U.S. Government
or any of its agencies or instrumentalities) if, as a result, (a) more than 5%
of the fund's total assets would be invested in the securities of that issuer,
or (b) the fund would hold more than 10% of the outstanding voting securities
of that issuer;
2. Purchase or sell real estate unless acquired as a result of ownership of
securities or other instruments (but this shall not prevent the fund from
investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
3. Purchase or sell commodities unless acquired as a result of ownership of
securities or other instruments (but this shall not prevent the fund from
engaging in currency-related options and forward or futures contracts);
4. Invest 25% or more of the fund's total assets in the securities of issuers
in the same industry. Obligations of the U.S. Government, its agencies and
instrumentalities are not subject to this 25% limitation on industry
concentration;
5. Invest more than 15% of the value of its net assets in securities which
are not readily marketable (including repurchase agreements maturing in more
than seven days or securities traded outside the U.S. for which there is no
recognized exchange or active and substantial over-the-counter market) or
engage in the business of underwriting securities of other issuers, except to
the extent that the purchase or disposal of an investment position may
technically constitute the fund as an underwriter as that term is defined under
the Securities Act of 1933;
6. Invest in companies for the purpose of exercising control or management;
7. Make loans to others except for (a) purchasing debt securities; (b)
entering into repurchase agreements; and (c) loaning portfolio securities;
8. Issue senior securities, except as permitted under the Investment Company
Act of 1940;
9. Borrow money, except from banks for temporary purposes in an amount not to
exceed one-third of the value of the fund's total assets. Moreover, in the
event that the asset coverage for such borrowing falls below 300%, the fund
will reduce, within three days, the amount of its borrowing in order to provide
for 300% asset coverage;
10. Pledge or hypothecate assets in excess of one-third of the fund's total
assets; or
11. Purchase or sell puts, calls, straddles, or spreads, or combinations
thereof (except for currency options);
The fund does not currently intend (at least for the next 12 months) to loan
portfolio securities or invest in securities or other instruments backed by
real estate.
NON-FUNDAMENTAL POLICIES -- The following policies may be changed by action of
the Board of Directors without shareholder approval.
1. The fund does not currently intend (at least for the next 12 months) to
sell securities short, except to the extent that the fund contemporaneously
owns, or has the right to acquire at no additional cost, securities identical
to those sold short.
2. The fund does not currently intend (at least for the next 12 months) to
purchase securities on margin, except that margin payments in connection with
currency-related transactions shall not constitute purchasing securities on
margin.
3. The fund does not currently intend (at least for the next 12 months) to
purchase the securities of any issuer (other than securities issued or
guaranteed by the governments of any country or political subdivisions thereof)
if, as a result, more than 5% of its total assets would be invested in the
securities of business enterprises that, including predecessors, have a record
of less than three years of continuous operation.
4. The fund does not currently intend (at least for the next 12 months) to
invest in oil, gas, or other mineral exploration or development programs or
leases.
5. The fund does not currently intend (at least for the next 12 months) to
purchase the securities of any issuer if those officers and Directors of the
fund, its Investment Adviser or principal underwriter who individually own more
than 1/2 of 1% of the securities of such issuer together own more than 5% of
such issuer's securities.
6. The fund does not currently intend (at least for the next 12 months) to
invest more than 5% of its net assets, valued at the lower of cost or market at
the time of purchase, in warrants, including not more than 2% of such net
assets in warrants that are not listed on a major stock exchange. However,
warrants acquired in units or attached to securities may be deemed to be
without value for the purpose of this restriction.
7. Although the fund has no current intention of investing in securities of
other investment companies (at least for the next 12 months), it has the
ability to invest up to 5% of its total assets in shares of closed-end
investment companies. Additionally, the fund would not acquire more than 3% of
the outstanding voting securities of any one closed-end investment company.
(To the extent that the fund invests in another investment company, it would
pay an investment advisory fee in addition to the fee paid to the Investment
Adviser.) Notwithstanding this restriction, the fund may invest in securities
of other managed investment companies if deemed advisable by its officers in
connection with the administration of a deferred compensation plan adopted by
Directors and to the extent such investments are allowed by an exemptive order
granted by the U.S. Securities and Exchange Commission.
8. The fund does not currently intend (at least for the next 12 months) to
invest more than 5% of its net assets in restricted securities (excluding Rule
144A securities).
9. The fund does not currently intend (at least for the next 12 months) to
purchase securities in the event its borrowings exceed 5%.
FUND DIRECTORS AND OFFICERS
DIRECTORS AND DIRECTOR COMPENSATION
(with their principal occupations during the past five years)#
<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE POSITION WITH PRINCIPAL OCCUPATION(S) AGGREGATE COMPENSATION TOTAL COMPENSATION FROM TOTAL NUMBER
REGISTRANT DURING PAST 5 YEARS (INCLUDING VOLUNTARILY ALL FUNDS MANAGED BY OF FUND BOARDS
(POSITIONS WITHIN THE DEFERRED COMPENSATION/1/) CAPITAL RESEARCH AND ON WHICH
ORGANIZATIONS LISTED MAY FROM THE FUND MANAGEMENT COMPANY/2/ DIRECTOR SERVES
HAVE CHANGED DURING THIS DURING FISCAL YEAR ENDED
PERIOD) 11/30/95
<S> <C> <C> <C> <C> <C>
++H. Frederick Christie Director Private Investor; former $ 15,558 /4/ $140,200 18
P.O. Box 144 President and Chief Executive
Palos Verdes Estates, Officer, The Mission
CA 90274 Group (non-utility
Age: 62 holding company,
subsidiary of Southern
California Edison Company);
former President, Southern
California Edison Company.
+Paul G. Haaga, Jr. President of the fund. Senior Vice President and None /3/ None /3/ 14
333 South Hope Street Director, Capital Research
Los Angeles, CA 90071 and Management Company.
Age: 47
Mary Myers Kauppila Director President and Founder, $15,650 /4/ $ 78,150 4
One Winthrop Square Energy Investment, Inc.
Boston, MA 02110-1097
Age: 41
Gail L. Neale Director Executive Vice President, $ 16,050 /4/ $56,950 4
Salzburg Seminar, Salzburg Seminar; former
P.O. Box 886 Director of Development
The Marbleworks and the Capital Campaign,
Middlebury, VT, 05753 Hampshire College; former
Age: 60 Special Advisor, The
Commonwealth Fund and
Mount Holyoke College.
Robert J. O'Neill Director Chichele Professor of the $15,900 $41,250 3
St. Mary's Close History of War and Fellow
27 Church Green of All Souls College,
Whitney, OXON, U.K. University of Oxford.
Age: 59
Donald E. Petersen Director Retired; former Chairman of $ 15,600 /4/ $ 59,900 4
255 East Brown the board and Chief Executive
Birmingham, MI 48009 Officer, Ford Motor Company.
Age: 69
Stefanie Powers Director Actor; founder and President, $15,100 $31,650 2
10866 Wilshire Blvd., The William Holden Wildlife
Suite 1000 Foundation.
Los Angeles, CA 90024
Age: 53
Frank Stanton Director President Emeritus, CBS Inc.; $ 17,100 $ 35,350 2
25 West 52nd Street Chairman Emeritus, The
New York, NY 10019 American Red Cross.
Age: 87
+Thierry Vandeventer Chairman of the Board and Principal Executive Officer of the fund. Chairman of the Board None /3/
None /3/ 2
3 Place des Bergues and Chief Executive Officer,
1201 Geneva, Switzerland Capital Research Company.
Age: 60
Charles Wolf, Jr. Director Dean, The RAND Graduate $16,450 $56,950 4
1700 Main Street School; Director, International
Santa Monica, CA 90406 Economic Studies, The RAND
Age: 71 Corporation.
</TABLE>
# Positions within the organizations may have changed during this period.
+ Directors who are considered "interested persons as defined in the
Investment Company Act of 1940, as amended (the "1940 Act"), on the basis of
their affiliation with the fund's Investment Adviser, Capital Research and
Management Company.
++ May be deemed an "interested person" of the fund within the meaning of the
1940 Act due to membership on the board of directors of the parent company of a
registered broker-dealer.
/1/ Amounts may be deferred by eligible directors under a non-qualified
deferred compensation plan adopted by the fund in 1993. Deferred amounts
accumulate at an earnings rate determined by the total return of one or more of
the funds in The American Funds Group as designated by the director.
/2/ Capital Research and Management Company manages The American Funds Group
consisting of 28 funds: AMCAP Fund, American Balanced Fund, Inc., American
High-Income Municipal Bond Fund, Inc., American High-Income Trust, American
Mutual Fund, Inc., The Bond Fund of America, Inc., The Cash Management Trust of
America, Capital Income Builder, Inc., Capital World Growth and Income Fund,
Inc., Capital World Bond Fund, Inc., EuroPacific Growth Fund, Fundamental
Investors, Inc., The Growth Fund of America, Inc., The Income Fund of America.
Inc., Intermediate Bond Fund of America, The Investment Company of America,
Limited Term Tax-Exempt Bond Fund of America, The New Economy Fund, New
Perspective Fund, Inc., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of
America, Inc., The Tax-Exempt Fund of California, The Tax-Exempt Fund of
Maryland, The Tax-Exempt Fund of Virginia, The Tax-Exempt Money Fund of
America, The U.S. Treasury Money Fund of America, U.S. Government Securities
Fund and Washington Mutual Investors Fund, Inc. Capital Research and
Management Company also manages American Variable Insurance Series and Anchor
Pathway Fund which serve as the underlying investment vehicles for certain
variable insurance contracts, and Endowments, Inc. and Bond Portfolio for
Endowments, Inc.
/3/ Paul G. Haaga, Jr. and Thierry Vandeventer are affiliated with the
Investment Adviser and, accordingly, receive no remuneration from the fund.
/4/ Since the plan's adoption, the total amount of deferred compensation
accrued by the fund (plus earnings thereon) for participating Directors is as
follows: H. Frederick Christie ($10,858); Mary Myers Kauppila ($24,550); Gail
L. Neale ($19,350); Donald E. Petersen ($ 23,100). Amounts deferred and
accumulated earnings thereon are not funded and are general unsecured
liabilities of the fund until paid to the Directors.
OFFICERS
THIERRY VANDEVENTER, Chairman of the Board and Principal Executive Officer
(see above).
PAUL G. HAAGA, JR., President (see above).
* LARRY P. CLEMMENSEN, Senior Vice President .
Senior Vice President and Director, Capital Research and Management
Company. President, The Capital Group Companies, Inc.
** STEPHEN E. BEPLER, Senior Vice President.
Senior Vice President and Director, Capital Research Company.
**** MARK E. DENNING, Vice President.
Senior Vice President, Capital Research Company.
** JANET A. MCKINLEY , Vice President.
Senior Vice President, Capital Research Company.
* VINCENT P. CORTI, Secretary.
Vice President - Fund Business Management Group, Capital Research and
Management Company.
*** R. MARCIA GOULD, Treasurer
Vice President - Fund Business Management Group, Capital Research and
Management Company. Former Senior Tax Manager, Price Waterhouse LLP .
__________________________________
# Positions within the organizations listed may have changed during this
period.
* Address is 333 South Hope Street, Los Angeles, CA 90071.
** Address is 630 Fifth Avenue, New York, NY 10111.
*** Address is 135 South State College Boulevard, Brea, CA 92621.
**** Address is 25 Bedford Street, London, England.
All of the Directors and Officers are also officers and/or directors
and/or trustees of one or more of the other funds for which Capital Research
and Management Company serves as Investment Adviser. No compensation is paid
by the fund to any Officer or Director who is a director, officer or employee
of the Investment Adviser or affiliated companies. The fund pays fees of
$8,000 per annum, plus $700 for each Board of Directors meeting attended, plus
$400 for each meeting attended as a member of a committee of the Board of
Directors. No pension or retirement benefits are accrued as part of fund
expenses. The Directors may elect, on a voluntary basis, to defer all or a
portion of these fees through a deferred compensation plan in effect for the
fund. The fund also reimburses certain expenses of the directors who are not
affiliated with the Investment Adviser. As of December 31, 1995 the officers
and Directors of the fund and their families as a group owned beneficially or
of record less than 1% of the outstanding shares of the fund.
MANAGEMENT
INVESTMENT ADVISER - The Investment Adviser, founded in 1931, maintains
research facilities in the U.S. and abroad, with a staff of professionals, many
of whom have a number of years of investment experience. The Investment
Adviser's research professionals travel several million miles a year, making
more than 5,000 research visits in more than 50 countries around the world.
The Investment Adviser believes that it is able to attract and retain quality
personnel.
An affiliate of the Investment Adviser compiles indices for major stock
markets around the world and compiles and edits the Morgan Stanley Capital
International Perspective, providing financial and market information on more
than 2,400 companies around the world.
The Investment Adviser is responsible for more than $100 billion of
stocks, bonds and money market instruments and serves over five million
investors of all types. These investors include privately owned businesses and
large corporations as well as schools, colleges, foundations and other
non-profit and tax-exempt organizations.
INVESTMENT ADVISORY AND SERVICE AGREEMENT - The Investment Advisory and
Service Agreement (the "Agreement") between the fund and the Investment
Adviser, dated February 1, 1993, will continue in effect until October 31,
1996, unless sooner terminated, and may be renewed from year to year
thereafter, provided that any such renewal has been specifically approved at
least annually by (i) the Board of Directors, or by the vote of a majority (as
defined in the 1940 Act) of the outstanding voting securities of the fund, and
(ii) the vote of a majority of Directors who are not parties to the Agreement
or interested persons (as defined in the 1940 Act) of any such party, cast in
person at a meeting called for the purpose of voting on such approval. The
Agreement provides that the Investment Adviser has no liability to the fund for
its acts or omissions in the performance of its obligations to the fund not
involving willful misconduct, bad faith, gross negligence or reckless disregard
of its obligations under the Agreement. The Agreement also provides that
either party has the right to terminate, without penalty, upon 60 days' written
notice to the other party and that the Agreement automatically terminates in
the event of its assignment (as defined in the 1940 Act).
The Investment Adviser, in addition to providing investment advisory
services, furnishes the services and pays the compensation and travel expenses
of qualified persons to perform the executive and related administrative
functions of the fund, provides suitable office space, necessary small office
equipment and telephone facilities and utilities, and general purpose forms,
supplies, stationery and postage used at the office of the fund relating to the
services furnished by the Investment Adviser.
The Investment Adviser agrees that in the event the expenses of the fund
(with the exclusion of interest, taxes, brokerage costs, extraordinary expenses
such as litigation and acquisitions or other expenses excludable under
applicable state securities laws or regulations) for any fiscal year ending on
a date on which the Agreement is in effect, exceed the expense limitations, if
any, applicable to the fund pursuant to state securities laws or any
regulations thereunder, it will reduce its fee by the extent of such excess
and, if required pursuant to any such laws or regulations, will reimburse the
fund in the amount of such excess.
During the fiscal years ended November 30, 1995 and 1994 and the
period from March 26, 1993 (commencement of operations) to November 30, 1993 ,
the Investment Adviser's total fee amounted to $14,847,000, $11,438,000 and
$3,377,000 respectively.
PRINCIPAL UNDERWRITER - American Funds Distributors, Inc. (the "Principal
Underwriter") is the principal underwriter of the fund's shares. The fund has
adopted a Plan of Distribution (the Plan), pursuant to rule 12b-1 under the
1940 Act (see "Principal Underwriter" in the Prospectus). The Principal
Underwriter receives amounts payable pursuant to the Plan (see below) and
commissions consisting of that portion of the sales charge remaining after the
discounts which it allows to investment dealers. Commissions retained by the
Principal Underwriter on sales of fund shares during the fiscal year ended
November 30, 1995 amounted to $ $2,990,000 after allowance of $ $15,545,000
to dealers. During the fiscal year ended November 30, 1994 and the period from
March 26, 1993 (commencement of operations) to November 30, 1993, the Principal
Underwriter received $6,306,000 and $4,277,000, respectively.
As required by rule 12b-1, the Plan (together with the Principal
Underwriting Agreement) has been approved by the full Board of Directors and
separately by a majority of the Directors who are not interested persons of the
fund and who have no direct or indirect financial interest in the operation of
the Plan or the Principal Underwriting Agreement, and the Plan has been
approved by the vote of a majority of the outstanding voting securities of the
fund. The officers and Directors who are interested persons of the fund may be
considered to have a direct or indirect financial interest in the operation of
the Plan due to present or past affiliations with the Investment Adviser and
related companies. Potential benefits of the Plan to the fund are improved
shareholder services, savings to the fund in transfer agency costs, savings to
the fund in advisory fees and other expenses, benefits to the investment
process from growth or stability of assets and maintenance of a financially
healthy management organization. The selection and nomination of Directors who
are not interested persons of the fund is committed to the discretion of the
Directors who are not interested persons during the existence of the Plan. The
Plan is reviewed quarterly and must be renewed annually by the Board of
Directors.
Under the Plan the fund may expend up to 0.30% of its average net
assets annually to finance any activity which is primarily intended to result
in the sale of fund shares, provided the fund's Board of Directors has approved
the category of expenses for which payment is being made. These include
service fees for qualified dealers and dealer commissions and wholesaler
compensation on sales of shares exceeding $1 million (including purchases by
any employer-sponsored 403(b) plan or purchases by any defined contribution
plan qualified under section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees). Only expenses incurred
during the preceding 12 months and accrued while the Plan is in effect may be
paid by the fund. During the fiscal year ended November 30, 1995, the fund
paid $ $6,808,000 under the Plan.
The Glass-Stegall Act and other applicable laws, among other things,
generally prohibit commercial banks from engaging in the business of
underwriting, selling or distributing securities, but permit banks to make
shares of mutual funds available to their customers and to perform
administrative and shareholder servicing functions. However, judicial or
administrative decisions or interpretations of such laws, as well as changes in
either federal or state statutes or regulations relating to the permissible
activities of banks or their subsidiaries of affiliates, could prevent a bank
from continuing to perform all or a part of its servicing activities. If a
bank were prohibited from so acting, shareholder clients of such bank would be
permitted to remain shareholders of the fund and alternate means for continuing
the servicing of such shareholders would be sought. In such event, changes in
the operation of the fund might occur and shareholders serviced by such bank
might no longer be able to avail themselves of any automatic investment or
other services then being provided by such bank. It is not expected that
shareholders would suffer with adverse financial consequences as a result of
any of these occurrences.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and certain banks and financial
institutions may be required to be registered as dealers pursuant to state law.
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES
The fund intends to meet all the requirements and has elected the tax
status of a "regulated investment company" under the provisions of Subchapter M
of the Internal Revenue Code of 1986, (the Code). Under Subchapter M, if the
fund distributes within specified times at least 90% of the sum of its
investment company taxable income it will be taxed only on that portion, if
any, of the investment company taxable income which it retains.
To qualify, the fund must (a) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans and
gains from the sale or other disposition of stock, securities, currencies or
other income derived with respect to its business of investing in such stock,
securities or currencies; (b) derive less than 30% of its gross income from the
sale or other disposition of stock or securities held for less than three
months; and (c) diversify its holdings so that at the end of each fiscal
quarter, (i) at least 50% of the market value of the fund's assets is
represented by cash, U.S. Government securities and other securities which must
be limited, in respect of any one issuer, to an amount not greater than 5% of
the fund's assets and 10% of the outstanding voting securities of such issuer,
and (ii) not more than 25% of the value of its assets is invested in the
securities of any one issuer (other than U.S. Government securities or the
securities of other regulated investment companies), or in two or more issuers
which the fund controls and which are engaged in the same or similar trades or
businesses or related trades or businesses.
Under the Code, a nondeductible excise tax of 4% is imposed on the excess
of a regulated investment company's "required distribution" for the calendar
year ending within the regulated investment company's taxable year over the
"distributed amount" for such calendar year. The term "required distribution"
means the sum of (i) 98% of ordinary income (generally net investment income)
for the calendar year, (ii) 98% of capital gains (both long-term and
short-term) for the one-year period ending on October 31 (as though the
one-year period ending on October 31 were the regulated investment company's
taxable year), and (iii) the sum of any untaxed, undistributed net investment
income and net capital gains of the regulated investment company for prior
periods. The term "distributed amount" generally means the sum of (i) amounts
actually distributed by the fund from its current year's ordinary income and
capital gain net income and (ii) any amount on which the fund pays income tax
for the year. The fund intends to the extent practicable, to meet these
distribution requirements to minimize or avoid the excise tax liability.
Distributions of investment company taxable income, including
short-term capital gains, generally are taxable to the shareholder as ordinary
income, regardless of whether such distributions are paid in cash or reinvested
in additional shares of the fund. The fund also intends to continue
distributing to shareholders all of the excess of net long-term capital gain
over net short-term capital loss on sales of securities. A capital gain
distribution, whether paid in cash or reinvested in shares, is taxable to
shareholders as long-term capital gains, regardless of the length of time a
shareholder has held the shares or whether such gain was realized by the fund
before the shareholder acquired such shares and was reflected in the price paid
for the shares.
Except for transactions the fund has identified as hedging
transactions, the fund is required for federal income tax purposes to recognize
as income for each taxable year its net unrealized gains and losses on forward
currency contracts as of the end of the year as well as those actually realized
during the year.
Sales of forward currency contracts which are intended to hedge against a
change in the value of securities or currencies held by the fund may affect the
holding period of such securities or currencies and, consequently, the nature
of the gain or loss on such securities or currencies upon disposition.
It is anticipated that any net gain realized from the closing out of
forward currency contracts will be considered gain from the sale of securities
or currencies and therefore be qualifying income for purposes of the 90% of
gross income from qualified sources requirement, as discussed above. In order
to avoid realizing excessive gains on securities or currencies held less than
three months, the fund may be required to defer the closing out of forward
currency contracts beyond the time when it would otherwise be advantageous to
do so. It is anticipated that unrealized gains on forward currency contracts,
which have been open for less than three months as of the end of the fund's
fiscal year and which are recognized for tax purposes, will not be considered
gains on securities or currencies held less than three months for purposes of
the 30% test, as discussed above.
The amount of any realized gain or loss on closing out forward currency
contracts such as a forward commitment for the purchase or sale of foreign
currency will generally result in a realized capital gain or loss for tax
purposes. Under Code Section 1256, forward currency contracts held by the fund
at the end of each fiscal year will be required to be "marked to market" for
federal income tax purposes, that is, deemed to have been sold at market value.
Code Section 988 may also apply to forward currency contracts. Under Section
988, each foreign currency gain or loss is generally computed separately and
treated as ordinary income or loss. In the case of overlap between Sections
1256 and 988, special provisions determine the character and timing of any
income, gain or loss. The fund will attempt to monitor Section 988
transactions to avoid an adverse tax impact.
The fund will distribute to shareholders annually any net long-term
capital gains which have been recognized for federal income tax purposes
(including unrealized gains at the end of the fund's fiscal year) on forward
currency contract transactions. Such distributions will be combined with
distributions of capital gains realized on the fund's other investments.
Under the Code, if within 90 days after fund shares are purchased, such
shares are exchanged for the shares of any other fund in The American Funds
Group and the otherwise applicable sales charge is waived, then the amount of
the sales charge previously incurred in purchasing fund shares shall not be
taken into account for purposes of determining the amount of any gain or loss
on the exchange, but will be treated as having been incurred in the purchase of
the fund shares acquired in the exchange.
Under the Code, the fund's taxable income for each year will be computed
without regard to any net foreign currency loss attributable to transactions
after October 31, and any such net foreign currency loss will be treated as
arising on the first day of the following taxable year.
The fund's dividends will be based on its income for federal tax purposes.
Because some gains and losses from currency fluctuation are deemed to be income
or loss for federal tax purposes, the fund's dividends may be more or less than
interest and dividends earned by the fund.
Dividends generally are taxable to shareholders at the time they are paid.
However, dividends declared in October, November and December and made payable
to shareholders of record in such a month are treated as paid and are therefore
taxable in the current calendar year even if the fund pays the dividend after
December 31 but during January of the following year.
As of the date of this statement of additional information, the
maximum federal individual stated tax rate applicable to ordinary income is
39.6% (effective tax rates may be higher for some individuals due to phase out
of exemptions and elimination of deductions); the maximum individual tax rate
applicable to net capital gain is 28%; and the maximum corporate tax applicable
to ordinary income and net capital gain is 35% ( However, to eliminate the
benefit of lower marginal corporate income tax rates, corporations which have
income in excess of $100,000 for a taxable year will be required to pay an
additional amount of tax of up to $11,750 and corporations which have taxable
income in excess of $15,000,000 for a taxable year will be required to pay an
additional amount of tax of up to $100,000). Naturally, the amount of tax
payable by an individual will be affected by a combination of tax law rules
covering, E.G., deductions, credits, deferrals, exemptions, sources of income
and other matters. Under the Code, an individual is entitled to establish an
IRA each year (prior to the tax return filing deadline for that year) whereby
earnings on investments are tax-deferred. In addition, in some cases, the IRA
contribution itself may be deductible.
The foregoing is limited to a summary of federal taxation and should not
be viewed as a comprehensive discussion of all provisions of the Code relevant
to investors. Dividends and capital gain distributions may also be subject to
state or local taxes. Shareholders should consult their own tax advisers for
additional details as to their particular tax status.
PURCHASE OF SHARES
PRICE OF SHARES - Purchases of shares are made at the offering price next
determined after the purchase order is received by the fund or American Funds
Service Company; this offering price is effective for orders received prior to
the time of determination of the net asset value and, in the case of orders
placed with dealers, accepted by the Principal Underwriter prior to its close
of business. The dealer is responsible for promptly transmitting purchase
orders to the Principal Underwriter. Orders received by the investment dealer,
the Transfer Agent, or the fund after the time of the determination of the net
asset value will be entered at the next calculated offering price. Prices
which appear in the newspaper are not always indicative of prices at which you
will be purchasing and redeeming shares of the fund, since such prices
generally reflect the previous day's closing price whereas purchases and
redemptions are made at the next calculated price.
The price you pay for shares, the offering price, is based on the net
asset value per share which is calculated once daily at the close of trading
(currently 4:00 p.m., New York time) each day the New York Stock Exchange is
open. The New York Stock Exchange is currently closed on weekends and on the
following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving and Christmas Day. The net
asset value per share is determined as follows:
1. Portfolio securities, including ADRs and EDRs, which are traded on stock
exchanges, are valued at the last sale price on the exchange 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 securities are traded on more than one exchange, the securities are
valued on the exchange designated by or under the authority of the Board of
Directors as the primary market. Securities traded in the over-the-counter
market are valued at the last reported sale price in the over-the-counter
market prior to the time of valuation or, lacking any sales, at the last
reported bid price. Securities and assets for which market quotations are not
readily available (including restricted securities which are subject to
limitations as to their sale) are valued at fair value as determined in good
faith by or under the direction of the Board of Directors. U.S. Treasury bills
and other short-term obligations issued or guaranteed by the U.S. Government,
its agencies or instrumentalities, with original or remaining maturities in
excess of 60 days are valued at the mean or representative quoted bid and asked
prices for such securities or, if such prices are not available, are valued at
the mean of representative quoted bid and asked prices for securities of
comparable maturity, quality and type. Short-term securities with 60 days or
less to maturity are amortized to maturity based on their cost if acquired
within 60 days of maturity or, if already held on the 60th day, based on the
value determined on the 61st day. Trading in securities on European and Far
Eastern securities exchanges and over-the-counter markets is normally completed
well before the close of the business day in New York. In addition, European
or Far Eastern securities trading may not take place on all business days in
New York. Furthermore, trading takes place in various non-U.S. markets on days
which are not business days in New York and on which the fund's net asset value
is not calculated. The calculation of net asset value may not take place
contemporaneously with the determination of the prices of portfolio securities
used in such calculation. Events affecting the values of portfolio securities
that occur between the time their prices are determined and the close of the
New York Stock Exchange will not be reflected in the fund's calculation of net
asset value unless the Board of Directors deems that the particular event would
materially affect net asset value, in which case an adjustment will be made.
Assets or liabilities initially expressed in terms of foreign currencies are
translated prior to the next determination of the net asset value of the fund's
shares, into U.S. dollars at the prevailing market rates. The fair value of
all other assets is added to the value of securities to arrive at the total
assets;
2. There are deducted from the total assets, thus determined, the
liabilities, including accruals of taxes and other expense items; and
3. The net assets so obtained are then divided by the total number of shares
outstanding (excluding treasury shares) and the result, rounded to the nearer
cent, is the net asset value per share.
Any purchase order may be rejected by the Principal Underwriter or the
fund.
STATEMENT OF INTENTION - The reduced sales charges and offering prices set
forth in the Prospectus apply to purchases of $50,000 or more made within a
13-month period subject to the following statement of intention (the
"Statement") terms. . The Statement is not a binding obligation to purchase
the indicated amount. When a shareholder elects to utilize the Statement in
order to qualify for a reduced sales charges, shares equal to 5% of the dollar
amount specified in the Statement will be held in escrow in the shareholder's
account out of the initial purchase (or subsequent purchases, if necessary) by
the Transfer Agent. All dividends and any capital gains distributions on
shares held in escrow will be credited to the shareholder's account in shares
(or paid in cash, if requested). If the intended investment is not completed
within the specified 13-month period, the purchaser will remit to the Principal
Underwriter the difference between the sales charge actually paid and the sales
charge which would have been paid if the total of such purchases had been made
at a single time. If the difference is not paid within 45 days after written
request by the Principal Underwriter or the securities dealer, the appropriate
number of shares held in escrow will be redeemed to pay such difference. If
the proceeds from this redemption are inadequate, the purchaser will be liable
to the Principal Underwriter for the balance still outstanding. The Statement
may be revised upward at any time during the 13-month period, and such a
revision will be treated as a new Statement, except that the 13-month period
during which the purchase must be made will remain unchanged and there will be
no retroactive reduction of the sales charges paid on prior purchases.
Existing holdings eligible for rights of accumulation (see the prospectus and
account application) may be credited toward satisfying the Statement. During
the Statement period reinvested dividends and capital gain distributions,
investments in money market funds, and investments made under a right of
reinstatement will not be credited toward satisfying the Statement.
In the case of purchase orders by the trustees of certain retirement
plans by payroll deduction, the sales charge for the investments made during
the 13-month period will be handled as follows: The regular monthly payroll
deduction investment will be multiplied by 13 and then multiplied by 1.5. The
current value of existing American Funds investments (other than money market
fund investments) and any rollovers or transfers reasonably anticipated to be
invested in non-money market American Funds during the 13-month period are
added to the figure determined above. The sum is the Statement amount and
applicable breakpoint level. On the first investment and all other investments
made pursuant to the Statement, a sales charge will be assessed according to
the sales charge breakpoint thus determined. There will be no retroactive
adjustments in sales charges on investments previously made during the 13-month
period.
Shareholders purchasing shares at a reduced sales charge under a
Statement indicate their acceptance of these terms with their first
purchase.
DEALER COMMISSIONS - The following commissions will be paid to dealers who
initiate and are responsible for purchases of $1 million or more, for purchases
by any employer-sponsored 403(b) plan or purchases by any defined contribution
plan qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees, and for purchases made at
net asset value by certain retirement plans of organizations with collective
retirement plan assets of $100 million or more: 1.00% on amounts of $1 million
to $2 million, 0.80% on amounts over $2 million to $3 million, 0.50% on amounts
over $3 million to $50 million, 0.25% on amounts over $50 million to $100
million, and 0.15% on amounts over $100 million. The level of dealer
commissions will be determined based on sales made over a 12-month period
commencing from the date of the first sale at net asset value. See "The
American Funds Shareholder Guide" in the fund's prospectus for more
information.
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES
AUTOMATIC INVESTMENT PLAN - The automatic investment plan enables
shareholders to make regular monthly or quarterly investments in shares through
automatic charges to their bank accounts. With shareholder authorization and
bank approval, the Transfer Agent will automatically charge the bank account
for the amount specified ($50 minimum), which will be automatically invested in
shares at the offering price on or about the 10th day of the month (or on or
about the 15th day of the month in the case of accounts for retirement plans
for which Capital Guardian Trust Company serves as custodian or trustee). Bank
accounts will be charged on the day or a few days before investments are
credited, depending on the bank's capabilities, and shareholders will receive a
confirmation statement at least quarterly. Participation in the plan will
begin within 30 days after receipt of the account application. If the
shareholder's bank account cannot be charged due to insufficient funds, a
stop-payment order or the closing of the account, the plan may be terminated
and the related investment reversed. The shareholder may change the amount of
the investment or discontinue the plan at any time by writing to the Transfer
Agent.
AUTOMATIC WITHDRAWALS - Withdrawal payments are not to be considered as
dividends, yield or income. Automatic investments may not be made into a
shareholder account from which there are automatic withdrawals. Withdrawals of
amounts exceeding reinvested dividends and distributions and increases in share
value would reduce the aggregate value of the shareholder's account. The
Transfer Agent arranges for the redemption by the fund of sufficient shares,
deposited by the shareholder with the Transfer Agent, to provide the withdrawal
payment specified.
CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS - A shareholder in one fund
may elect to cross-reinvest dividends or dividends and capital gain
distributions paid by that fund (the paying fund) into any other fund in The
American Funds Group (the "receiving fund") subject to the following
conditions: (i) the aggregate value of the shareholder's account(s) in the
paying fund(s) must equal or exceed $5,000 (this condition is waived if the
value of the account in the receiving fund equals or exceeds that fund's
minimum initial investment requirement); (ii) as long as the value of the
account in the receiving fund is below that fund's minimum initial investment
requirement, dividends and capital gain distributions paid by the receiving
fund must be automatically reinvested in the receiving fund; and (iii) if this
privilege is discontinued with respect to a particular receiving fund, the
value of the account in that fund must equal or exceed the fund's minimum
initial investment requirement or the fund shall have the right, if the
shareholder fails to increase the value of the account to such minimum within
90 days after being notified of the deficiency, automatically to redeem the
account and send the proceeds to the shareholder. These cross-reinvestments of
dividends and capital gain distributions will be at net asset value (without
sales charge).
EXECUTION OF PORTFOLIO TRANSACTIONS
Orders for the fund's portfolio securities transactions are placed by the
Investment Adviser. The Investment Adviser strives to obtain the best
available prices in its portfolio transactions taking into account the costs
and promptness of executions. When circumstances relating to a proposed
transaction indicate that a particular broker is in a position to obtain the
best price and execution, the order is placed with that broker. This may or may
not be a broker who has provided investment research, statistical, or other
related services to the Investment Adviser or has sold shares of the fund or
other funds served by the Investment Adviser. The fund does not consider that
it has an obligation to obtain the lowest available commission rate to the
exclusion of price, service and qualitative considerations.
There are occasions on which portfolio transactions for the fund may be
executed as part of concurrent authorizations to purchase or sell the same
security for other of the funds served by the Investment Adviser, or for trusts
or other accounts served by affiliated companies of the Investment Adviser.
Although such concurrent authorizations potentially could be either
advantageous or disadvantageous to the fund, they are effected only when the
Investment Adviser believes that to do so is in the interest of the fund. When
such concurrent authorizations occur, the objective is to allocate the
executions in an equitable manner. The fund will not pay a mark-up for
research in principal transactions.
As of the end of the fund's most recent fiscal year, amounts held in
certain equity and debt securities of some of its regular brokers and dealers
were as follows: J.P. Morgan & Co, Inc. ($6,280,000) and Ford Motor Credit Co.
($26,837,000).
Brokerage commissions paid on portfolio transactions, including dealer
concessions on underwritings, for the fiscal years ended November 30, 1995 and
1994 and for the period March 26, 1993 (commencement of operations) to November
30, 1993 amounted to $5,660,000, $6,015,000 and $2,581,000 respectively.
GENERAL INFORMATION
CUSTODIAN OF ASSETS - Securities and cash owned by the fund, including proceeds
from the sale of shares of the fund and of securities in the fund's portfolio,
are held by The Chase Manhattan Bank, N.A., One Chase Manhattan Plaza, New
York, NY 10081, as Custodian. Non-U.S. securities may be held by the
Custodian pursuant to subcustodial arrangements in non-U.S. banks or foreign
branches of U.S. banks.
INDEPENDENT ACCOUNTANTS - Price Waterhouse LLP, 400 South Hope Street, Los
Angeles, CA 90071, provides audit services, preparation of tax returns and
review of certain documents to be filed with the Securities and Exchange
Commission. The financial statements included in this Statement of Additional
Information have been so included in reliance on the report of Price Waterhouse
LLP given on the authority of said firm as experts in accounting and auditing.
REPORTS TO SHAREHOLDERS - The fund's fiscal year ends on November 30.
Shareholders are provided at least semi-annually with reports showing the
investment portfolio and financial statements audited annually by the fund's
independent auditors, Price Waterhouse LLP, whose selection is determined
annually by the Directors.
PERSONAL INVESTING POLICY - Capital Research and Management Company and its
affiliated companies have adopted a personal investing policy consistent with
Investment Company Institute guidelines. This policy includes: a ban on
acquisitions of securities pursuant to an initial public offering; restrictions
on acquisitions of private placement securities; pre-clearance and reporting
requirements; review of duplicate confirmation statements; annual
recertification of compliance with codes of ethics; disclosure of personal
holdings by certain investment personnel prior to recommendation for purchase
for the fund; blackout periods on personal investing for certain investment
personnel; ban on short-term trading profits for investment personnel;
limitations on service as a director of publicly traded companies; and
disclosure of personal securities transactions.
The financial statements including the investment portfolio and the report
of Independent Auditors contained in the Annual Report are included in this
Statement of Additional Information. The following information is not included
in the Annual Report:
DETERMINATION OF NET ASSET VALUE, REDEMPTION PRICE AND
MAXIMUM OFFERING PRICE PER SHARE -- NOVEMBER 30, 1995
<TABLE>
<CAPTION>
<S> <C>
Net asset value and redemption price per share
(net assets divided by shares outstanding) $ 20.22
Maximum offering price per share
(100/94.25 of net asset value per share, which takes
into account the fund's current maximum sales load) $ 21.45
</TABLE>
REMOVAL OF DIRECTORS BY SHAREHOLDERS - At any meeting of shareholders, duly
called and at which a quorum is present, the shareholders may, by the
affirmative vote of the holders of a majority of the votes entitled to be cast
thereon, remove any director or directors from office and may elect a successor
or successors to fill any resulting vacancies for the unexpired terms of
removed directors. The fund has made an undertaking, at the request of the
staff of the Securities and Exchange Commission, to apply the provisions of
section 16(c) of the 1940 Act with respect to the removal of directors, as
though the fund were a common-law trust. Accordingly, the directors of the
fund shall promptly call a meeting of shareholders for the purpose of voting
upon the question of removal of any director when requested in writing to do so
by the record holders of not less than 10% of the outstanding shares.
INVESTMENT RESULTS
The fund's yield is 2.95% based on a 30-day (or one month) period
ended November 30, 1995, computed by dividing the net investment income per
share earned during the period by the maximum offering price per share on the
last day of the period, according to the following formula:
YIELD = 2[(a-b/cd+1)/6/-1]
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period that were
entitled to receive dividends.
d = the maximum offering price per share on the last day of the period.
The fund's one year total return and average annualized lifetime
return ending on November 30, 1995 was 12.52% and 12.88% respectively. Total
return (T) is computed by equating the value at the end of the period (ending
redeemable value or ERV) of a hypothetical initial investment of $1,000 (P)
over a period of years (n) according to the following formula as required by
the Securities and Exchange Commission: P(1+T)/n/ = ERV.
To calculate total return, an initial investment is divided by the
offering price (which includes the sales charge) as of the first day of the
period in order to determine the initial number of shares purchased. Subsequent
dividends and capital gain distributions are then reinvested at net asset value
on the reinvestment date determined by the Board of Directors. The sum of the
initial shares purchased and shares acquired through reinvestment is multiplied
by the net asset value per share as of the end of the period in order to
determine ending value. The difference between the ending value and the
initial investment divided by the initial investment converted to a percentage
equals total return. The resulting percentage indicates the positive or
negative investment results that an investor would have experienced from
reinvested dividends and capital gain distributions and changes in share price
during the period. Total return may be calculated for one year, five years,
ten years and for other periods of years. The average annual total return over
periods greater than one year may also be computed by utilizing ending values
as determined above.
The following assumptions will be reflected in computations made in
accordance with the formula stated above: (1) deduction of the maximum sales
load of 5.75% from the $1,000 initial investment; (2) reinvestment of dividends
and distributions at net asset value on the reinvestment date determined by the
Board; and (3) a complete redemption at the end of any period illustrated. The
fund may also calculate a distribution rate on a taxable and tax equivalent
basis. The distribution rate is computed by dividing the dividends paid by the
fund over the last 12 months by the sum of the month-end net asset value or
maximum offering price and the capital gains paid over the last 12 months. The
distribution rate may differ from the yield.
The fund may include information on its investment results and/or
comparisons of its investment results to various unmanaged indices (such as The
Dow Jones Average of 30 Industrial Stocks and The Standard and Poor's 500
Composite Stock Index) or results of other mutual funds or investment or
savings vehicles in advertisements or in reports furnished to present or
prospective shareholders.
The fund may refer to results compiled by organizations such as CDA
Investment Technologies, Ibbottson Associates, Lipper Analytical Services,
Morningstar, Inc. and Wiesenberger Investment Companies Services and by the
U.S. Department of Commerce. Additionally, the fund may, from time to time,
refer to results published in various newspapers or periodicals, including
BARRONS, FORBES, FORTUNE, INSTITUTIONAL INVESTOR, KIPLINGER'S PERSONAL FINANCE
MAGAZINE, MONEY, U.S. NEWS AND WORLD REPORT and THE WALL STREET JOURNAL.
The fund may, from time to time, illustrate the benefits of tax-deferral
by comparing taxable investments to investments made through tax-deferred
retirement plans.
The fund may from time to time compare its investment results with the
Consumer Price Index, which is a measure of the average change in prices over
time in a fixed market basket of goods and services (e.g. food, clothing,
fuels, transportation, and other goods and services that people buy for
day-to-day living).
EXPERIENCE OF INVESTMENT ADVISER - Capital Research and Management Company
manages nine common stock funds that are at least 10 years old. In the
10-year periods since January 1, 1966 ( 121 in all), those funds have had
better total returns than the Standard and Poor's 500 Stock Composite Index in
94 of the 121 periods.
Note that past results are not an indication of future investment results.
Also, the fund has different investment policies than the funds mentioned
above. These results are included solely for the purpose of informing
investors about the experience and history of Capital Research and Management
Company.
DESCRIPTION OF RATINGS FOR DEBT SECURITIES
BOND RATINGS --
The ratings of Moody's Investors Service, Inc. and Standard & Poor's
Corporation represent their opinions as to the quality of the municipal bonds
which they undertake to rate. It should be emphasized, however, that ratings
are general and are not absolute standards of quality. Consequently, municipal
bonds with the same maturity, coupon and rating may have different yields,
while municipal bonds of the same maturity and coupon with different ratings
may have the same yield.
Moody's Investors Service, Inc. rates the long-term debt securities issued by
various entities from "Aaa" to "C." Moody's applies the numerical modifiers 1,
2, and 3 in each generic rating classification from Aa through B in its
corporate bond rating system. The modifier 1 indicates that the security ranks
in the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the issue ranks in the
lower end of its generic rating category. Ratings are described as follows:
"Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as 'gilt
edge.' Interest payments are protected by a large or by an exceptionally
stable margin, and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues."
"Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, or fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present which make the long-term risks appear somewhat larger than the Aaa
securities."
"Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future."
"Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well."
"Bonds which are rated Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class."
"Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small."
"Bonds which are rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest."
"Bonds which are rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings."
"Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing."
Standard & Poor's Corporation rates the long-term securities debt of various
entities in categories ranging from "AAA" to "D" according to quality. The
ratings from "AA" to "CCC" may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within the major rating categories.
Ratings are described as follows:
"Debt rated 'AAA' has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong."
"Debt rated 'AA' has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree."
"Debt rated 'A' has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories."
"Debt rated 'BBB' is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories."
"Debt rated 'BB' has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The 'BB'
rating category is also used for debt subordinated to senior debt that is
assigned an actual or impled 'BBB-' rating.
"Debt rated 'B' has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The 'B' rating category is also used for
debt subordinated to senior debt that is assigned an actual or implied 'BB' or
'BB-' rating."
"The rating 'CC' is typically applied to debt subordinated to senior debt that
is assigned an actual or implied 'CCC' rating."
"The rating 'C' is typically applied to debt subordinated to senior debt which
is assigned an actual or implied 'CCC-' debt rating. The 'C' rating may be
used to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued."
"The rating 'C1' is reserved for income bonds on which no interest is being
paid."
"Debt rated 'D' is in payment default. The 'D' rating category is used when
interest payments or principal payments are not made on the date due even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. The 'D' rating also will be
used upon the filing of a bankruptcy petition if debt service payments are
jeopardized."
COMMERCIAL PAPER RATINGS --
STANDARD & POOR'S CORPORATION: "A-1" and "A-2" are the two highest commercial
paper rating categories and are described as follows:
"A-1 This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong."
"A-2 Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues designated
'A-1'."
MOODY'S INVESTORS SERVICE, INC.: "Prime-1" and "Prime-2" are the two highest
commercial paper rating categories and are described as follows:
"ISSUERS RATED PRIME-1 (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations. Prime-1 repayment
capacity will normally be evidenced by the following characteristics:
- Leading market positions in well established industries.
- High rates of return on funds employed.
- Conservative capitalization structures with moderate reliance on debt and
ample asset protection.
- Broad margins in earning coverage of fixed financial charges and high
internal cash generation.
- Well established access to a range of financial markets and assured sources
of alternate liquidity."
"ISSUERS RATED PRIME-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternative liquidity is
maintained."
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 Percent
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 LIT2,277,775,000 1.391
Banca Popolare di Bergamo-Credito
Varesino S.C.r.l., 7.50% convertible
debentures 1999 LIT1,000,000,000 .681
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 L (Mexico)
(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 Percent
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.
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
Included in Prospectus - Part A
Financial Highlights
Included in Statement of Additional Information - Part B
As of November 30, 1995:
Investment Portfolio
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Notes to Financial Statements
Per-Share Data and Ratios
Report of Independent Accountants
(b) Exhibits:
1. On file (see SEC file numbers 811-7338 and 33-54444).
2. On file (see SEC file numbers 811-7338 and 33-54444).
3. None.
4. On file (see SEC file numbers 811-7338 and 33-54444).
5. On file (see SEC file numbers 811-7338 and 33-54444).
6. On file (see SEC file numbers 811-7338 and 33-54444).
7. None.
8. On file (see SEC file numbers 811-7338 and 33-54444).
9. Form of Shareholder Services Agreement between Registrant and American
Funds Service Company, as amended January 1, 1995.
10. Not applicable to this filing.
11. Consent of Independent Accountants.
12. None.
13. On file (see SEC file numbers 811-7338 and 33-54444).
14. On file (see SEC file numbers 811-7338 and 33-54444).
15. On file (see SEC file numbers 811-7338 and 33-54444).
16. Update to previously filed schedule for computation of each
performance quotation provided in the Registration Statement in response to
Item 22.
17. Financial data schedule (EDGAR).
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
As of December 31, 1995:
<TABLE>
<CAPTION>
Number of
Title of Class Record-Holders
<S> <C>
Shares of capital stock 319,041
($.01 par value)
</TABLE>
ITEM 27. INDEMNIFICATION.
Registrant is a joint-insured under an Investment Advisor/Mutual fund
Errors and Omissions Policy written by American International Surplus Lines
Insurance Company, Chubb Custom Insurance Company, and ICI Mutual Insurance
Company which insures its officers and directors against certain liabilities.
However, in no event will Registrant maintain insurance to indemnify any such
person for any act for which the Registrant itself is not permitted to
indemnify the individual.
Subsection (b) of Section 2-418 of the General Corporation Law of Maryland
empowers a corporation to indemnify any person who was or is party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise,
against reasonable expenses (including attorneys' fees), judgments, penalties,
fines and amounts paid in settlement actually incurred by him in connection
with such action, suit or proceeding unless it is established that: (i) the
act or omission of the person was material to the matter giving rise to the
proceeding and was committed in bad faith or was the result of active and
deliberate dishonesty; (ii) the person actually received an improper personal
benefit of money, property or services; or (iii) with respect to any criminal
action or proceeding, the person had reasonable cause to believe his act or
omission was unlawful.
Indemnification under subsection (b) of Section 2-418 may not be made by a
corporation unless authorized for a specific proceeding after a determination
has been made that indemnification is permissible in the circumstances because
the party to be indemnified has met the standard of conduct set forth in
subsection (b). This determination shall be made (i) by the Board of Directors
by a majority vote of a quorum consisting of directors not, at the time,
parties to the proceeding, or, if such quorum cannot be obtained, then by a
majority vote of a committee of the Board consisting solely of two or more
directors not, at the time, parties to such proceeding and who were duly
designated to act in the matter by a majority vote of the full Board in which
the designated directors who are parties may participate; (ii) by special legal
counsel selected by the Board of Directors of a committee of the Board by vote
as set forth in subparagraph (i), or, if the requisite quorum of the full Board
cannot be obtained therefor and the committee cannot be established, by a
majority vote of the full Board in which any director who is a party may
participate; or (iii) by the stockholders (except that shares held by any party
to the specific proceeding may not be voted). A court of appropriate
jurisdiction may also order indemnification if the court determines that a
person seeking indemnification is entitled to reimbursement under subsection
(b).
Section 2-418 further provides that indemnification provided for by
Section 2-418 shall not be deemed exclusive of any rights to which the
indemnified party may be entitled; that the scope of indemnification extends to
directors, officers, employees or agents of a constituent corporation absorbed
in a consolidation or merger and persons serving in that capacity at the
request of the constituent corporation for another; and empowers the
corporation to purchase and maintain insurance on behalf of a director,
officer, employee or agent of the corporation against any liability asserted
against or incurred by such person in any such capacity or arising out of such
person's status as such whether or not the corporation would have the power to
indemnify such person against such liabilities under Section 2-418.
Article VIII (h) of the Articles of Incorporation of the Fund provides
that "The Corporation shall indemnify (1) its directors and officers, whether
serving the Corporation or at its request any other entity, to the full extent
required or permitted by the General Laws of the State of Maryland now or
hereafter in force, including the advance of expenses under the procedures and
to the full extent permitted by law, and (2) its other employees and agents to
such extent as shall be authorized by the Board of Directors or the
Corporation's By-Laws and be permitted by law. The foregoing rights of
indemnification shall not be exclusive of any other rights to which those
seeking indemnification may be entitled. The Board of Directors may take such
action as is necessary to carry out these indemnification provisions and is
expressly empowered to adopt, approve and amend from time to time such by-laws,
resolutions or contracts implementing such provisions or such further
indemnification arrangements as may be permitted by law. No amendment of this
Charter of the Corporation shall limit or eliminate the right to
indemnification provided hereunder with respect to acts or omissions occurring
prior to such amendment or repeal. Nothing contained herein shall be construed
to authorize the Corporation to indemnify any director or officer of the
Corporation against any liability to the Corporation or to any holders of
securities of the Corporation to which he is subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office. Any indemnification by the Corporation
shall be consistent with the requirements of law, including the Investment
Company Act of 1940."
The fund will comply with the indemnification requirements contained in
the 1940 Act Releases No. 7221 (June 9, 1972) and No. 11330 (September 4,
1980). In addition, indemnification by the Corporation shall be consistent
with the requirements of rule 484 under the Securities Act of 1933.
Furthermore, the fund has undertaken to the staff of the Securities and
Exchange Commission that the fund's indemnification provisions quoted above
prohibit indemnification for liabilities arising under the Securities Act of
1933 and the Investment Company Act of 1940.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
None.
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) American Funds Distributors, Inc. is also the Principal Underwriter of
shares of: AMCAP Fund, Inc., American Balanced Fund, Inc., The American Funds
Income Series, The American Funds Tax-Exempt Series I, The American Funds
Tax-Exempt Series II, American High-Income Municipal Bond Fund, Inc., American
High-Income Trust, American Mutual Fund, Inc., The Bond Fund of America, Inc.,
Capital Income Builder, Inc., Capital World Bond Fund, Inc., The Cash
Management Trust of America, EuroPacific Growth Fund, Fundamental Investors,
Inc., The Growth Fund of America, Inc., The Income Fund of America, Inc.,
Intermediate Bond Fund of America, The Investment Company of America, Limited
Term Tax-Exempt Bond Fund of America, The New Economy Fund, New Perspective
Fund, Inc., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of America,
Inc., The Tax-Exempt Money Fund of America, The U.S. Treasury Money Fund of
America and Washington Mutual Investors Fund, Inc.
ITEM 29. PRINCIPAL UNDERWRITERS (CONT.)
(b)
<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
<S> <C> <C> <C>
# David A. Abzug Assistant Vice President None
John A. Agar Regional Vice President None
1501 N. University Drive
Little Rock, AR 72207
Robert B. Aprison Regional Vice President None
2983 Bryn Wood Drive
Madison, WI 53711
& Richard Armstrong Assistant Vice President None
* William W. Bagnard Vice President None
Steven L. Barnes Vice President None
8000 Town Line Ave. South
Suite 204
Minneapolis, MN 55438
Michelle A. Bergeron Regional Vice President None
1190 Rockmart Circle
Kennesaw, GA 30144
Joseph T. Blair Vice President None
27 Drumlin Road
West Simsbury, CT 06092
Ian B. Bodell Vice President None
3100 West End Avenue
Suite 870
Nashville, TN 37215
Michael L. Brethower Vice President None
108 Hagen Court
Georgetown, TX 78628
C. Alan Brown Regional Vice President None
4916 McPherson Avenue
St. Louis, MO 63108
* Daniel C. Brown Senior Vice President and None
Director
@ J. Peter Burns Vice President None
Brian C. Casey Regional Vice President None
9508 Cable Drive
Kensington, MD 20895
Victor C. Cassato Vice President None
999 Green Oaks Drive
Littleton, CO 80121
Christopher J. Cassin Regional Vice President None
231 Burlington
Clarendon Hills, IL 60514
Denise M. Cassin Regional Vice President None
1425 Vallejo, #203
San Francisco, CA 94109
* Larry P. Clemmensen Treasurer and Director Senior Vice President
* Kevin G. Clifford Senior Vice President None
Ruth M. Collier Vice President None
145 West 67th Street, #12K
New York, NY 10023
Thomas E. Cournoyer Vice President None
2333 Granada Blvd.
Coral Gables, FL 33134
Douglas A. Critchell Vice President None
4116 Woodbine St.
Chevy Chase, MD 20815
* Carl D. Cutting Vice President None
Michael A. Dilella Vice President None
P.O. Box 661
Ramsey, NJ 07446
G. Michael Dill Senior Vice President None
3622 E. 87th Street
Tulsa, OK 74137
Kirk D. Dodge RegionalVice President None
2617 Salisbury Road
Ann Arbor, MI 48103
Peter J. Doran Senior Vice President None
1205 Franklin Avenue
Garden City, NY 11530
* Michael J. Downer Secretary None
Robert W. Durbin Vice President None
74 Sunny Lane
Tiffin, OH 44883
% Lloyd G. Edwards Vice President None
@ Richard A. Eychner Vice President None
* Paul H. Fieberg Senior Vice President None
John R. Fodor Regional Vice President None
15 Latisquama Road
Southborough, MA 01772
* Mark P. Freeman, Jr. President and Director None
Clyde E. Gardner Vice President None
Route. 2, Box 3162
Osage Beach, MO 65065
# Evelyn K. Glassford Vice President None
Jeffrey J. Greiner Regional Vice President None
5898 Heather Glen Court
Dublin, OH 43017
* Paul G. Haaga, Jr Director President and Director
David E. Harper Vice President None
R.D. 1, Box 210, Rte 519
Frenchtown , NJ 08825
Ronald R. Hulsey Regional Vice President None
6744 Avalon
Dallas, TX 75214
* Robert L. Johansen Vice President and Controller None
Michael J. Johnston Chairman of the Board None
630 Fifth Ave., 36th Fl.
New York, NY 10111-0121
Victor J. Kriss, Jr. Senior Vice President None
P.O. Box 274
Surfside, CA 90743
Arthur J. Levine Vice President None
12558 Highlands Place
Fishers, IN 46038
# Karl A. Lewis Assistant Vice President None
T. Blake Liberty Regional Vice President None
12585-E E. Tennessee Cir.
Aurora, CO 80012
* Susan G. Lindgren Vice President - Institutional None
Investment Services Division
Steve A. Malbasa Regional Vice President None
13405 Lake Shore Blvd.
Cleveland, OH 44110
Steven M. Markel Senior Vice President None
5241 South Race Street
Littleton, CO 80121
* John C. Massar Senior Vice President None
* E. Lee McClennahan Senior Vice President None
Laurie B. McCurdy Regional Vice Presdient None
6008 E. Anderson Drive
Scottsdale, AZ 85255
& John V. McLaughlin Senior Vice President None
Terry W. McNabb Vice President None
2002 Barrett Station Road
St. Louis, MO 63131
* R. William Melinat Vice President, Institutional None
Investment Services Division
David R. Murray Regional Vice President None
25701 SE 32nd Place
Issaquah, WA 98027
Stephen S. Nelson Vice President None
7215 Trevor Road
Charlotte, NC 28226
* Barbara G. Nicolich Assistant Vice President, None
Institutional Investment
Services Division
William E. Noe Regional Vice President None
304 River Oaks Road
Brentwood, TN 37027
Peter A. Nyhus Regional Vice President None
3084 Wilds Ridge Court
Prior Lake, MN 55372
Eric P. Olson Regional Vice President None
62 Park Drive
Glenview, IL 60025
Fredric Phillips Regional Vice President None
32 Ridge Avenue
Newton Centre, MA 02159
# Candance Pilgram Assistant Vice President None
Carl S. Platou Regional Vice President None
4021 96th Avenue, SE
Mercer Island, WA 98040
* John O. Post, Jr. Vice President None
Steven J. Reitman Vice President None
212 The Lane
Hinsdale, IL 60521
Brian A. Roberts Regional Vice President None
12025 Delmahoy Drive
Charlotte, NC 28277
George S. Ross Vice President None
55 Madison Avenue
Morristown, NJ 07960
* Julie D. Roth Vice President None
* James F. Rothenberg Director None
Douglas F. Rowe Regional Vice President None
30309 Oak Tree Drive
Georgetown, TX 78628
Christopher Rowey Regional Vice President None
9417 Beverlywood Street
Los Angeles, CA 90034
Dean B. Rydquist Vice President None
1080 Bay Pointe Crossing
Alpharetta, GA 30202
Richard R. Samson Vice President None
4604 Glencoe, Ave., # 4
Marina del Rey, CA 90292
Joe D. Scarpitti Regional Vice President None
25760 Kensington Drive
Westlake, OH 44145
* R. Michael Shanahan Director None
David W. Short Senior Vice President None
1000 RIDC Plaza, Ste. 212
Pittsburgh, PA 15238
* Victor S. Sidhu Vice President, Institutional None
Investment Services Division
William P. Simon, Jr. Vice President None
554 Canterbury Lane
Berwyn, PA 19312
* John C. Smith Vice President, Institutional None
Investment Services Division
* Mary E. Smith Assistant Vice President, None
Institutional Investment
Services Division
Rodney G. Smith Regional Vice President None
2350 Lakeside Blvd., #850
Richardson, TX 75082
Nicholas D. Spadaccini Regional Vice President None
855 Markley Woods Way
Cincinnati, OH 45230
Daniel S. Spradling Senior Vice President None
4 West 4th Avenue, Ste. 406
San Mateo, CA 94402
Thomas A. Stout Regional Vice President None
2603 Kresson Place
Bowie, MD 20715
Craig R. Strauser Regional Vice President None
17040 Summer Place
Lake Oswego, OR 97035
Francis N. Strazzeri Regional Vice President None
31641 Saddletree Drive
Westlake Village, CA 91361
& James P. Toomey Assistant Vice President None
% Christopher E. Trede Assistant Vice President None
George F. Truesdail Vice President None
400 Abbotsford Court
Charlotte, NC 28270
Scott W. Ursin-Smith Regional Vice President None
606 Glenwood Avenue
Mill Valley, CA 94941
@ Andrew J. Ward Vice President None
* David M. Ward Assistant Vice President, None
Institutional Investment Services Division
Thomas E. Warren Regional Vice President None
4001 Crockers Lake Blvd. #1012
Sarasota, FL 34238
# J. Kelly Webb Senior Vice President None
Gregory J. Weimer Regional Vice President None
125 Surrey Drive
Canonsburg, PA 15317
# Timothy W. Weiss Director None
** N. Dexter Williams Vice President None
Timothy J. Wilson Regional Vice President None
113 Farmview Place
Venetia, PA 15367
@ Marshall D. Wingo Senior Vice President None
* Robert L. Winston Senior Vice President and None
Director
William R. Yost Regional Vice President None
9320 Overlook Trail
Eden Prairie, MN 55437
Janet M. Young Regional Vice President None
1616 Vermont
Houston, TX 77006
</TABLE>
______________________
* Business Address, 333 South Hope Street, Los Angeles, CA 90071
** Business Address, Four Embarcadero, Suite 1800, San Francisco, CA 94111
# Business Address, 135 South State College Blvd., Brea, CA 92621
& Business Address, 8000 IH-10, Suite 1400, San Antonio, TX 78230
@ Business Address, 5300 Robin Hood Road, Norfolk, VA 23513
% Business Address, 8332 Woodfield Crossing Blvd., Indianapolis, IN 46240
(c) None.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
Accounts, books and other records required by Rules 31a-1 and 31a-2 under
the Investment Company Act of 1940, are maintained and held in the offices of
the Fund and its investment adviser, Capital Research and Management Company,
333 South Hope Street, Los Angeles, CA 90071. Certain accounting records are
maintained and kept in the offices of the Fund's accounting department, 135
South State College Blvd., Brea, CA 92621.
Records covering shareholder accounts are maintained and kept by the
Fund's transfer agent, American Funds Service Company, 135 South State College
Blvd., Brea, CA 92621, 8000 IH-10, Suite 1400, San Antonio, TX 78230, 5300
Robin Hood Road, Norfolk, VA 23513 and 8332 Woodfield Crossing Blvd.,
Indianapolis, IN 46240.
Records covering portfolio transactions are also maintained and kept by
the Custodian, The Chase Manhattan Bank, N.A.
ITEM 31. MANAGEMENT SERVICES.
None.
ITEM 32. UNDERTAKINGS.
As reflected in the prospectus, the fund undertakes to provide each person
to whom a prospectus is delivered with a copy of the fund's latest annual
report to shareholders, upon request and without charge.
SIGNATURE OF REGISTRANT
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) and has duly caused this Post-Effective Amendment to its
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Los Angeles, and State of California, on the
29th day of January, 1996.
CAPITAL WORLD GROWTH AND INCOME FUND, INC.
By /s/ Thierry Vandeventer
Thierry Vandeventer, Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this amendment
to Registration Statement has been signed below on January 29, 1996, by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C> <C>
(1) Principal Executive Officer: Chairman of the Board
/s/ Thierry Vandeventer
(Thierry Vandeventer)
(2) Principal Financial Officer and
Principal Accounting Officer:
/s/ R. Marcia Gould Treasurer
(R. Marcia Gould)
(3) Directors:
H. Frederick Christie* Director
/s/ Paul G. Haaga, Jr. President and Director
(Paul G. Haaga, Jr.)
Mary Myers Kauppila* Director
Gail L. Neale* Director
Robert J. O'Neill Director
Donald E. Petersen* Director
Stefanie Powers Director
Frank Stanton* Director
/s/ Thierry Vandeventer Director
(Thierry Vandeventer)
Charles Wolf, Jr.* Director
</TABLE>
*By /s/ Vincent P. Corti
(Vincent P. Corti, Attorney-in-Fact)
Counsel represents that the amendment does not contain disclosures that
would make the amendment ineligible for effectiveness under the provisions of
rule 485(b).
/s/ Michele Y. Yang
(Michele Y. Yang)
C-13
SHAREHOLDER SERVICES AGREEMENT
1. The parties to this Agreement, which is effective as of January 1, 1995,
are Capital World Growth and Income Fund, Inc. (hereinafter called "the Fund")
and American Funds Service Company, a California corporation (hereinafter
called "AFS"). AFS is a wholly owned subsidiary of Capital Research and
Management Company (hereinafter called "CRMC"). This Agreement will continue in
effect until amended or terminated in accordance with its terms.
2. The Fund hereby employs AFS, and AFS hereby accepts such employment by the
Fund, as its transfer agent. In such capacity AFS will provide the services of
stock transfer agent, dividend disbursing agent, redemption agent, and such
additional related services as the Fund may from time to time require, all of
which services are sometimes referred to herein as "shareholder services."
3. AFS has entered into substantially identical agreements with other
investment companies for which CRMC serves as investment adviser. (For the
purposes of this Agreement, such investment companies, including the Fund, are
called "participating investment companies.")
4. AFS has entered into an agreement with DST Systems, Inc. (hereinafter
called "DST"), to provide AFS with electronic data processing services
sufficient for the performance of the shareholder services referred to in
paragraph 2.
5. The Fund, together with the other participating companies, will maintain a
Review and Advisory Committee, which Committee will review and may make
recommendations to the boards of the participating investment companies
regarding all fees and charges provided for in this Agreement, as well as
review the level and quality of the shareholder services rendered to the
participating investment companies and their shareholders. Each participating
investment company may select one director or trustee who is not affiliated
with CRMC, or any of its affiliated companies, or with Washington Management
Corporation or any of its affiliated companies, to serve on the Review and
Advisory Committee.
6. AFS will provide to the participating investment companies the shareholder
services referred to herein in return for the following fees:
ANNUAL ACCOUNT MAINTENANCE FEE (PAID MONTHLY):
$.67 per month for each open account on AFS books or in Level 2 or 4
Networking ($8.04 per year)
$.09 per month for each open account maintained in Street Name or Level 1 or
3 Networking ($1.08 per year)
No annual fee will be charged for a participant account underlying a 401(k)
or other defined contribution plan where the plan maintains a single account
on AFS books and responds to all participant inquiries
TRANSACTION FEES:
$2.00 per non-automated transaction
$0.50 per automated transaction
For this purpose, "transactions" shall include all types of transactions
included in an "activity index" as reported to the Review and Advisory
Committee at least annually. AFS will bill the Fund monthly, on or shortly
after the first of each calendar month, and the Fund will pay to AFS within
five business days of such billing.
Any revision of the schedule of charges set forth herein shall require the
affirmative vote of a majority of the members of the board of
directors/trustees of the Fund.
7. All fund-specific charges from third parties -- including DST charges,
payments described in the next sentence, postage, NSCC transaction charges and
similar out-of-pocket expenses -- will be passed through directly to the Fund
or other participating investment companies, as applicable. AFS, subject to
approval of its board of directors, is authorized in its discretion to
negotiate payments to third parties for account maintenance and/or transaction
processing services provided such payments do not exceed the anticipated
savings to the Fund, either in fees payable to AFS hereunder or in other direct
Fund expenses, that AFS reasonably anticipates would be realized by the Fund
from using the services of such third party rather than maintaining the
accounts directly on AFS' books and/or processing non-automated transactions.
8. It is understood that AFS may have income in excess of its expenses and may
accumulate capital and surplus. AFS is not, however, permitted to distribute
any net income or accumulated surplus to its parent, CRMC, in the form of a
dividend without the affirmative vote of a majority of the members of the
boards of directors/trustees of the Fund and all participating investment
companies.
9. This Agreement may be amended at any time by mutual agreement of the
parties, with agreement of the Fund to be evidenced by affirmative vote of a
majority of the members of the board of directors/trustees of the Fund.
10. This Agreement may be terminated on 180 days' written notice by either
party. In the event of a termination of this Agreement, AFS and the Fund will
each extend full cooperation in effecting a conversion to whatever successor
shareholder service provider(s) the Fund may select, it being understood that
all records relating to the Fund and its shareholders are property of the Fund.
11. In the event of a termination of this Agreement by the Fund, the Fund will
pay to AFS as a termination fee the Fund's proportionate share of any costs of
conversion of the Fund's shareholder service from AFS to a successor. In the
event of termination of this Agreement and all corresponding agreements with
all the participating investment companies, all assets of AFS will be sold or
otherwise converted to cash, with a view to the liquidation of AFS when it
ceases to provide shareholder services for the participating investment
companies. To the extent any such assets are sold by AFS to CRMC and/or any of
its affiliates, such sales shall be at fair market value at the time of sale as
agreed upon by AFS, the purchasing company or companies, and the Review and
Advisory Committee. After all assets of AFS have been converted to cash and
all liabilities of AFS have been paid or discharged, an amount equal to any
capital or paid-in surplus of AFS that shall have been contributed by CRMC or
its affiliates shall be set aside in cash for distribution to CRMC upon
liquidation of AFS. Any other capital or surplus and any assets of AFS
remaining after the foregoing provisions for liabilities and return of capital
or paid-in surplus to CRMC shall be distributed to the participating investment
companies in such proportions as may be determined by the Review and Advisory
Committee.
12. In the event of disagreement between the Fund and AFS, or between the Fund
and other participating investment companies as to any matter arising under
this Agreement, which the parties to the disagreement are unable to resolve,
the question shall be referred to the Review and Advisory Committee for
resolution. If the Review and Advisory Committee is unable to resolve the
question to the satisfaction of both parties, either party may elect to submit
the question to arbitration; one arbitrator to be named by each party to the
disagreement and a third arbitrator to be selected by the two arbitrators named
by the original parties. The decision of a majority of the arbitrators shall
be final and binding on all parties to the arbitration. The expenses of such
arbitration shall be paid by the party electing to submit the question to
arbitration.
13. The obligations of the Fund under this Agreement are not binding upon any
of the directors, trustees, officers, employees, agents or shareholders of the
Fund individually, but bind only the Fund itself. AFS agrees to look solely to
the assets of the Fund for the satisfaction of any liability of the Fund in
respect to this Agreement and will not seek recourse against such directors,
trustees, officers, employees, agents or shareholders, or any of them or their
personal assets for such satisfaction.
AMERICAN FUNDS SERVICE COMPANY
By /S/ Don R. Conlan, Chairman
Don R. Conlan, Chairman
By /s/ Kenneth R. Gorvetzian
Kenneth R. Gorvetzian
CAPITAL WORLD GROWTH AND INCOME FUND, INC.
By /s/ Paul G. Haaga, Jr.
Paul G. Haaga, Jr., President
By /s/ Vincent P. Corti
Vincent P. Corti, Secretary
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 5 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
December 29, 1995, relating to the financial statements and per share data and
ratios of Capital World Growth and Income Fund, Inc., which appears in such
Statement of Additional Information, and to the incorporation by reference of
our report into the Prospectus which constitutes part of this Registration
Statement. We also consent to the references to us under the headings "General
Information - Independent Accountants" and "General Information - Reports to
Shareholders" in such Statement of Additional Information and to the reference
to us under the heading "Financial Highlights" in such Prospectus.
PRICE WATERHOUSE LLP
Los Angeles, California
January 25, 1996
SCHEDULE FOR COMPUTATION OF EACH PERFORMANCE QUOTATION
PROVIDED IN THE REGISTRATION STATEMENT
(1) ENDING REDEMPTION VALUE AND TOTAL RETURN
Value of an initial investment at the end of a period and total return for the
period are computed as set forth below.
(A) INITIAL INVESTMENT DIVIDED BY
PUBLIC OFFERING PRICE FOR ONE SHARE AT BEGINNING
OF PERIOD EQUALS
NUMBER OF SHARES INITIALLY PURCHASED
(B) NUMBER OF SHARES INITIALLY PURCHASED PLUS
NUMBER OF SHARES ACQUIRED AT NET ASSET VALUE
THROUGH REINVESTMENT OF DIVIDENDS AND CAPITAL
GAIN DISTRIBUTIONS DURING PERIOD EQUALS
NUMBER OF SHARES PURCHASED DURING PERIOD
(C) NUMBER OF SHARES PURCHASED DURING PERIOD MULTIPLIED BY
NET ASSET VALUE OF ONE SHARE AS OF THE LAST DAY
OF THE PERIOD EQUALS
VALUE OF INVESTMENT AT END OF PERIOD
(D) VALUE OF INVESTMENT AT END OF PERIOD DIVIDED BY
INITIAL INVESTMENT
MINUS ONE AND THEN MULTIPLIED BY 100 EQUALS
TOTAL RETURN FOR THE PERIOD EXPRESSED AS A
PERCENTAGE
EXHIBIT 16
(2) AVERAGE ANNUAL TOTAL RETURN
Average annual total return quotations for the one year and lifetime periods
ended on the date of the most recent balance sheet are computed according to
the formula set forth below.
P(1+T)/n/ = ERV
WHERE: P = a hypothetical initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 investment as of the
one-year and lifetime period (computed in accordance with the formula shown in
(1), above)
THUS:
TOTAL RETURN AT PUBLIC OFFERING PRICE:
1 Year Rate of Return 1,000(1+T)/1/ = $1,125.20
T = +12.52%
Lifetime Average Annual Total Return 1,000(1+T)/1.767/ = $1,384.08
T = +12.88%
TOTAL RETURN AT NET ASSET VALUE:
1 Year Rate of Return 1,000(1+T)/1/ = $1,194.03
T = +19.40%
Lifetime Average Annual Total Return 1,000(1+T)/1.767/ = $1,468.56
T = +15.40%
Hypothetical illustrations based on $1,000 initial investment used to obtain
ending values are attached.
(3) YIELD
Yield is computed as set forth below.
(A) Dividends and interest earned during the period MINUS
Expenses accrued for the period EQUALS
Net investment income
(B) Net income investment DIVIDED BY
Average daily number of shares
outstanding during the period that
were entitled to receive dividends EQUALS
Net investment income per share earned
during the period
(C) Net investment income per share earned
during the period DIVIDED BY
Maximum offering price per share on
last day of the period EQUALS
Current month's yield
(D) Current months yield PLUS ONE RAISED
TO THE SIXTH
POWER EQUALS
Semiannual compounded yield
(E) Semiannual compounded yield MINUS ONE
MULTIPLIED BY TWO EQUALS
Annualized rate
<PAGE>
<TABLE>
<CAPTION>
CAPITAL WORLD GROWTH AND INCOME FUND
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/95 1000.00 18.54 5.75 % 53.937 17.470 942
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/95 1000 33 33 1033 15 1093 15 1108 35 1143.86 56.459
TOTAL $ 15
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL WORLD GROWTH AND INCOME FUND
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
3/26/93 1000.00 16.00 5.75 % 62.500 15.080 943
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/93 1000 20 20 1020 0 1129 0 1129 22 1151.93 63.748
12/31/94 1000 34 54 1054 19 1092 19 1111 54 1165.98 66.742
12/31/95 1000 43 97 1097 18 1266 41 1307 108 1415.42 69.863
TOTAL $ 37
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL WORLD GROWTH AND INCOME FUND
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
1/01/95 1000.00 17.47 0.00 % 57.241 17.470 1000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/95 1000 36 36 1036 16 1160 16 1176 37 1213.96 59.919
TOTAL $ 16
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL WORLD GROWTH AND INCOME FUND
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
3/26/93 1000.00 15.08 0.00 % 66.313 15.080 1000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/93 1000 22 22 1022 0 1198 0 1198 24 1222.20 67.637
12/31/94 1000 35 57 1057 20 1158 20 1178 59 1237.16 70.816
12/31/95 1000 45 102 1102 20 1343 43 1386 115 1501.83 74.128
TOTAL $ 40
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL WORLD GROWTH AND INCOME FUND
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
12/01/94 1000.00 18.90 5.75 % 52.910 17.810 942
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/30/95 1000 34 34 1034 15 1070 18 1088 37 1125.20 55.648
TOTAL $ 15
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL WORLD GROWTH AND INCOME FUND
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
3/26/93 1000.00 16.00 5.75 % 62.500 15.080 943
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/30/93 1000 14 14 1014 0 1063 0 1063 15 1078.16 63.421
11/30/94 1000 30 44 1044 0 1113 0 1113 46 1159.15 65.084
11/30/95 1000 43 87 1087 19 1264 22 1286 98 1384.08 68.451
TOTAL $ 19
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-1-1994
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 3,118,935
<INVESTMENTS-AT-VALUE> 3,622,000
<RECEIVABLES> 29,543
<ASSETS-OTHER> 416
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,651,959
<PAYABLE-FOR-SECURITIES> 34,990
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,738
<TOTAL-LIABILITIES> 40,728
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,027,271
<SHARES-COMMON-STOCK> 178,630,987
<SHARES-COMMON-PRIOR> 156,363,846
<ACCUMULATED-NII-CURRENT> 16,988
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 61,621
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 396,914
<NET-ASSETS> 3,611,231
<DIVIDEND-INCOME> 96,347
<INTEREST-INCOME> 34,622
<OTHER-INCOME> 0
<EXPENSES-NET> 28,055
<NET-INVESTMENT-INCOME> 102,914
<REALIZED-GAINS-CURRENT> 63,160
<APPREC-INCREASE-CURRENT> 396,914
<NET-CHANGE-FROM-OPS> 562,988
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 104,976
<DISTRIBUTIONS-OF-GAINS> 45,496
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 34,635,645
<NUMBER-OF-SHARES-REDEEMED> 20,156,313
<SHARES-REINVESTED> 7,787,809
<NET-CHANGE-IN-ASSETS> 414,161
<ACCUMULATED-NII-PRIOR> 18,654
<ACCUMULATED-GAINS-PRIOR> 44,748
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 14,847
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 28,055
<AVERAGE-NET-ASSETS> 3,172,318
<PER-SHARE-NAV-BEGIN> 17.81
<PER-SHARE-NII> .61
<PER-SHARE-GAIN-APPREC> 2.72
<PER-SHARE-DIVIDEND> .63
<PER-SHARE-DISTRIBUTIONS> .29
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.22
<EXPENSE-RATIO> .009
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
