CAPITAL WORLD GROWTH AND INCOME FUND
1996 Annual Report
for the year ended November 30
[Photo: various country flags with shadow of globe in the background]
[The American Funds Group(r)]
CAPITAL WORLD GROWTH AND INCOME FUND(SM) seeks long-term capital growth while
providing current income. It invests on a global basis in a diversified
portfolio of common stocks and other equity-type securities, bonds and money
market instruments.
Results at a Glance
(with dividends reinvested)
12 Months Lifetime Total Return
Through 11/30/96 3/26/93 - 11/30/96
Capital World Growth
and Income Fund +23.7% +81.6%
Morgan Stanley Capital
International World Index +19.2 +70.0
Lipper Global Stock
Fund Average +18.7 +59.7
The MSCI World Index measures all of the world's major stock markets, including
the U.S.
ABOUT OUR COVER: The global portfolio of Capital World Growth and Income Fund
is composed of growth-oriented and income-producing securities from a wide
range of companies domiciled in many countries and representing a large number
of industries. The shareholder profile that begins on page 4 illustrates the
increasingly global nature of today's economy and the opportunities it
presents.
FUND RESULTS IN THIS REPORT WERE COMPUTED WITHOUT A SALES CHARGE UNLESS
OTHERWISE INDICATED. THE FIGURES IN THIS REPORT REFLECT PAST RESULTS AND,
UNLESS OTHERWISE NOTED, ASSUME REINVESTMENT OF ALL DISTRIBUTIONS. SHARE PRICE
AND RETURN WILL VARY, SO YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE
SHORTER THE TIME PERIOD OF YOUR INVESTMENT, THE GREATER THE POSSIBILITY OF
LOSS. FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR INSURED OR GUARANTEED
BY, THE U.S. GOVERNMENT, ANY FINANCIAL INSTITUTION, THE FEDERAL DEPOSIT
INSURANCE CORPORATION, OR ANY OTHER AGENCY, ENTITY OR PERSON.
[photo: globe]
FELLOW SHAREHOLDERS:
Fiscal 1996 was another rewarding year for investors in Capital World Growth
and Income Fund. The value of your holdings increased 23.7% during the 12
months ended November 30 if, like most shareholders, you reinvested the
quarterly dividends totaling 72 cents a share as well as the two capital gain
distributions totaling 34 cents a share.
By comparison, the unmanaged Morgan Stanley Capital International (MSCI)
World Index - which measures major markets, including the U.S. - rose 19.2%
with dividends reinvested. According to Lipper Analytical Services, a firm
which tracks mutual fund results, global stock funds recorded an average gain
of 18.7%, also on a reinvested basis.
The fund's latest advance brought its total return since inception in
March 1993 to 81.6% (or 17.6% a year) versus 70.0% for the MSCI World Index and
59.7% for the Lipper global stock fund average. In recent years, growth stocks
which pay small or no dividends have often led markets sharply higher. Capital
World Growth and Income Fund's results are particularly notable in light of its
emphasis on income in addition to capital growth.
THE YEAR IN REVIEW
The fund's strong absolute return in fiscal 1996 reflects primarily a
worldwide advance in stock prices. Of the 22 major world markets, 17 rose to
new highs during the year. The fund's strong return relative to the world index
primarily reflects good individual stock selection.
Capital World Growth and Income Fund's portfolio is broadly diversified,
representing holdings in approximately three dozen industries and 31 countries.
Of the 235 equity-type securities that were held over the course of the year,
189 rose in price, 44 declined and two were unchanged. At the close of the
fiscal year, equity-type securities made up 89% of the portfolio, bonds & notes
about 2%, and cash & equivalents about 9%.
While Capital World Growth and Income Fund invests company by company -
not country by country - the fund tended to have sizable holdings in markets
that did well:
IN THE UNITED STATES, the country with the largest concentration of fund
assets, stocks rose 28.4% over the past 12 months with dividends reinvested, as
measured by the MSCI USA Index. The U.S. economy continued to grow at a
moderate pace. Inflation remained low. Corporate profits again were strong.
Financial markets were also buoyed by record inflows into stocks and stock
mutual funds as well as a favorable interest rate environment in the latter
half of the year. Elsewhere in North America, the Canadian stock market rose
35.2%. (Investment results for individual countries and individual stocks are
in U.S. dollars.)
IN EUROPE, securities markets moved higher as reductions in short-term
interest rates by central banks boosted stock valuations and led investors to
anticipate an improvement in business conditions. In the United Kingdom, where
the fund has its second-largest concentration of assets, stock prices rose
26.4% after factoring in a rise in the value of the British pound. On the
continent, a stronger U.S. dollar partially offset strong local market returns.
Measured in dollars, the Netherlands gained 31.0%, France was up 25.7%, Germany
rose 17.3% and Sweden posted a 33.8% advance. Although the U.S. is the largest
single country in the portfolio, our European stock holdings, taken together,
represent a larger portion of the fund's investments, at 36.9% of net assets.
IN ASIA AND THE PACIFIC RIM, our largest concentrations were in Australia
(where stock prices rose 20.6% over the past 12 months), Hong Kong (+38.1%) and
New Zealand (+20.5%). In other parts of the region, investment returns were
generally restrained due to political and economic developments specific to
individual countries. We again benefited from the fact that the fund had
relatively few investments in Japan. Japan's slow economic recovery, combined
with an uncertain political environment and - perhaps most significantly - a
weakening in the value of the yen, translated into a 4.4% market decline
measured in U.S. dollars.
Capital World Growth and Income Fund also has selected investments in
leading companies in countries such as Mexico, Argentina and the Philippines.
Stocks in these countries - and in many other developing markets - continued to
recover, although prices for the most part are still off sharply from their
earlier highs.
INDUSTRY DIVERSIFICATION
Your fund's industry concentrations, like its country concentrations, are
a byproduct of judgments on the outlook for individual companies and their
valuations. Banking, at 14.4% of fund assets, accounts for the largest
percentage of fund holdings by industry. Many banks are benefiting from efforts
to streamline operations and improve profitability, often through mergers and
acquisitions. Four of the 10 largest individual holdings are banks: Australia
and New Zealand Banking Group (+47.3% in price over the year), First Union
(+39.8%), Royal Bank of Canada (+55.8% since it was first acquired in January
of 1996) and Bank of New York (+52.3%). Our largest individual holding, the
Netherlands-based ING Groep (+14.2%), is active in both banking and insurance.
In telecommunications, our second-largest industry concentration, many of
our investments did well while a number of others, particularly in the United
States, had disappointing short-term returns. This is another area where our
analysts are uncovering attractive long-term value. Many telecommunications
providers in both developed and developing countries are taking steps to expand
their markets, offer new products and services, and form strategic
partnerships. Three of the fund's 10 largest holdings are telecommunications
firms: Portugal Telecom and Koninklijke PTT Nederland (+27.7% and +0.6%,
respectively, since their initial acquisitions in January and August of 1996)
and Telecom Corp. of New Zealand (+25.9%).
Many holdings in health and personal care, energy sources and specialty
chemicals were also areas of strength. Significant holdings that did less well
include Renault, the French automobile manufacturer (-16.9%), and English China
Clays, a global supplier of industrial minerals and materials (-40.2%).
A NOTE ABOUT DIVIDENDS AND CAPITAL GAINS
As many of you know, the fund's dividends vary from quarter to quarter.
This is because companies outside North America usually pay dividends annually
or semi-annually (as opposed to quarterly, which is customary in the United
States). Dividends paid by the fund in September, December and March are
generally smaller than the one paid in June.
At the close of the fiscal year, the fund's distribution rate was 3.0%.
This is a full percentage point above those of the MSCI World Index and the
MSCI USA Index. According to Lipper Analytical Services, it is more than two
percentage points above the global stock fund average.
The fund's distribution rate relative to that of global funds reflects not
only the fact that current income is an objective of the fund, but also our
investment adviser's opinion that many stocks with relatively high dividends
currently offer attractive values. Moreover, it is a direct result of the
fund's relatively low expense ratio (0.85% versus 1.97% for the average global
equity fund*). A lower expense ratio means more income can be passed on to you.
The amount of income generated by the fund in fiscal 1996 also reflects an
unusually large number of "special" dividends by companies that returned excess
capital as a way to enhance shareholder value. As a result, based on the fund's
mix of investments at fiscal year-end and on our current calculations, we
expect the fund's total per-share dividends to be lower in fiscal 1997 than
they were in fiscal 1996. It is worth noting that if you keep your capital
intact and working for you by reinvesting capital gain distributions - as
virtually all shareholders do - the total dollar amount of dividend income will
always be higher than if you took those distributions in cash.
On December 9, following the close of the fiscal year, Capital World
Growth and Income Fund paid a capital gain distribution of 78 cents per share.
If you reinvested that capital gain distribution, the number of shares working
for you rose 3.5%. This distribution reflects the fund's ongoing efforts to
find value in sharply rising markets. Stocks that had risen to the point where
they appeared fully valued were sold in favor of opportunities we felt were
more moderately priced.
While capital appreciation in recent years has tended to obscure the
importance of dividends, such payments are an integral part of your investment
in Capital World Growth and Income Fund. Dividends are a particularly important
component in flat or retreating markets, particularly for those shareholders
who reinvest them, as 97% of you do. Sound, seasoned companies tend to increase
their dividends regularly. We expect that many companies held by the fund will
raise their dividends fairly steadily over time.
All this is not to say that the fund's share price won't fluctuate
sharply. Or that there won't be times when the fund's holdings fall out of
favor with many investors. Still, we believe the fund's research-intensive
approach and its global focus on income and capital growth will prove rewarding
over time.
We look forward to reporting to you again in six months.
Cordially,
[/s/ Thierry Vandeventer] [/s/ Paul G. Haaga, Jr.]
Thierry Vandeventer Paul G. Haaga, Jr.
Chairman of the Board President
January 14, 1997
WHERE CAPITAL WORLD GROWTH AND INCOME FUND'S ASSETS WERE INVESTED
(percent invested by country as of 11/30/96)
EUROPE 36.9%
United Kingdom 12.1
Netherlands 5.2
France 4.5
Germany 3.6
Sweden 3.0
Italy 2.2
Spain 1.8
Portugal 1.4
Finland .6
Denmark .5
Norway .5
Switzerland .5
Luxembourg .4
Belgium .3
Ireland .2
Austria .1
THE AMERICAS 35.6%
United States 28.0
Canada 5.3
Mexico .8
Chile .6
Argentina .6
Brazil .3
ASIA/PACIFIC RIM 14.5%
Australia 5.5
Hong Kong 3.3
New Zealand 2.9
Japan 1.6
Philippines .8
Thailand .2
South Korea .1
India .1
OTHER 2.0%
Supranational 1.3
South Africa .7
TOTAL EQUITY-TYPE SECURITIES 89.0%
BONDS & NOTES 1.9%
CASH & EQUIVALENTS 9.1%
100.0%
*Source: CDA/Wiesenberger. Ratios are based on most recent statistics available
for fiscal year-ends and do not include the effect of sales charges. The
average fund ratio includes some funds that have higher distribution expenses
in lieu of sales charges.
HOW A $10,000 INVESTMENT HAS GROWN
Here's how a $10,000 investment in the fund grew between March 26, 1993, when
the fund began operations, and November 30, 1996, the end of its latest fiscal
year. As you can see, that $10,000, with all distributions reinvested, would
have grown to $17,118, an average increase of 15.7% a year.
AVERAGE ANNUAL COMPOUND RETURNS*
For periods ended
11/30/96 12/31/96
Lifetime +15.72% +15.49%
(since 3/26/93)
One Year +16.58% +14.53%
*Assumes reinvestment of all distributions and payment of the 5.75% maximum
sales charge at the beginning of the stated periods.
The fund's 30-day yield as of December 31, 1996, calculated in accordance with
the Securities and Exchange Commission formula, was 2.47%. Sales charges are
lower for accounts of $50,000 or more.
[chart]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Date Capital World Morgan Stanley U.S. Consumer Price Standard & Poor's
Growth and Income Capital Index (inflation) 500 Composite Index
Fund /1/ /2/ International World /3/ /1/
Index /1/
3/26/93 $9,425 $10,000 $10,000 $10,000
5/31/93 9,719 10,836 10,042 10,054
8/31/93 10,401 11,474 10,084 10,428
11/30/93 10,782 10,923 10,153 10,460
2/28/94 11,615 12,061 10,216 10,652
5/31/94 11,315 11,935 10,272 10,479
8/31/94 12,038 12,500 10,376 10,996
11/30/94 11,592 11,981 10,425 10,565
2/28/95 11,860 12,096 10,508 11,433
5/31/95 12,788 13,241 10,599 12,593
8/31/95 13,412 13,597 10,648 13,354
11/30/95 13,841 14,259 10,696 14,477
2/28/96 14,700 15,041 10,787 15,406
5/31/96 15,326 15,672 10,905 16,183
8/31/96 15,414 15,378 10,954 15,857
11/30/96 17,118 17,002 11,045 18,521
</TABLE>
/1/ With all distributions reinvested.
/2/ These figures, unlike those shown earlier in this report, reflect payment
of the maximum sales charge of 5.75% on the $10,000 investment. Thus, the net
amount invested was $9,425. As outlined in the prospectus, the sales charge is
reduced for investments of $50,000 or more. There is no sales charge on
dividends or capital gain distributions that are reinvested in additional
shares. Results shown do not take into account income or capital gain taxes.
/3/ Computed from data supplied by the U.S. Department of Labor, Bureau of
Labor Statistics.
The indexes are unmanaged and do not reflect sales charges, commissions or
expenses. Past results are not predictive of future results.
[end chart]
A PROFILE IN OWNERSHIP
MARC KASCHKE, A FUND SHAREHOLDER IN NORTH PLATTE, NEBRASKA, OWNS MORE THAN 200
COMPANIES AROUND THE WORLD. SO DO YOU.
[Photo: Marc Kaschke]
[Photo: wheat field]
[Photo: globe]
THE WORLD IS BECOMING INCREASINGLY INTERRELATED AND INTERDEPENDENT. ONE WAY TO
SEE THAT CLEARLY IS THROUGH THE EYES OF MARC KASCHKE - AND HOW HE COMES INTO
CONTACT WITH THE COMPANIES IN WHICH HE HAS INVESTED THROUGH CAPITAL WORLD
GROWTH AND INCOME FUND.
North Platte, Nebraska, population 22,605, lies in America's heartland. The
farmers here and across the Great Plains feed the nation and millions of people
around the world.
Marc Kaschke, 24, was born and raised in North Platte. A budding
entrepreneur, Marc owns a music store in Lincoln, the state capital, that sells
and buys used compact discs, mostly to and from students at the University of
Nebraska. He started the business two years ago while he was a senior there.
Nowadays, he also helps out at Kaschke Co., the local John Deere franchise in
North Platte, which his parents, Orville and Mary Kaschke, have owned and
operated for the past 25 years. Marc is also a Capital World Growth and Income
Fund shareholder.
Marc got his start investing at the age of 13 when his parents told him he
was "in charge" of part of the money they had set aside for his college
education. They sent him to Cal Robinson, a securities broker in town. "I've
spent hours and hours talking with Cal," says Marc. "He basically taught me
about investing." Over the years, Marc has continued to invest whenever he's
been able. On Cal's recommendation, he invested in Capital World Growth and
Income Fund shortly after its launch in 1993 to add global diversification to
his investments.
Over the course of a typical day, Marc Kaschke comes into contact with
dozens of the companies in which he is a part-owner through his investment in
the fund. Like other Capital World Growth and Income Fund shareholders, he
often contributes to the revenues of the companies in which he shares profits.
Some of these companies are U.S.-based. Others are domiciled abroad. Some
are regional firms, like utilities, that serve local communities. Others are
multinational corporations that sell their products and services globally.
Often, a key to their success is that they are positioned to take advantage of
growth opportunities in many parts of the world.
[photos: Marc Kaschke]
[Photo caption]
Whether across rail lines or phone lines, companies from around the world make
their presence felt in North Platte every day.
[Photo caption]
DECEMBER 18, 1996
The first sound that Marc Kaschke hears this morning is the alarm of his clock
radio, made by SONY* (Japan). He pours himself a glass of Mott's apple juice
(CADBURY SCHWEPPES, U.K.), brews some Maxwell House coffee (PHILIP MORRIS,
U.S.) and pops a Centrum vitamin (AMERICAN HOME PRODUCTS, U.S.). Then he times
his VCR to record the Fox Network's "The Simpsons" (NEWS CORP., Australia).
*Portfolio holdings are indicated in bold type.
After breakfast, he washes up with Lever-2000 (UNILEVER, U.K. and the
Netherlands), shaves with a Schick disposable razor (WARNER-LAMBERT, U.S.) and
brushes his teeth with Colgate toothpaste (COLGATE-PALMOLIVE, U.S.).
Marc closes his apartment door behind him, turns the key in his Yale lock
(WILLIAMS HOLDINGS, U.K.) and climbs into his sport-utility vehicle, which has
Michelin tires (MICHELIN, France), as well as automotive parts and components
provided by such fund holdings as TEXTRON (U.S.) and MORGAN CRUCIBLE (U.K.). At
a TOTAL station (TOTAL, France) in North Platte, Marc fills up his gas tank in
preparation for the busy day ahead.
His first stop is the Kaschkes' John Deere dealership. Many companies in
Capital World Growth and Income Fund provide products and services not to
consumers, but to other businesses. At Kaschke Co., the paper in the fax and
photocopier is from UNION CAMP (U.S.). The engines in several models of Deere's
lawn tractors and mowers are made by KAWASAKI HEAVY INDUSTRIES (Japan).
Kawasaki, incidentally, has a plant just outside Lincoln that assembles jet
skis. In today's global economy, it's not unusual for a company headquartered
in one country to have operations in a second country using resources purchased
in a third country to create products sold in dozens of other countries.
CATERPILLAR (U.S.), like Deere, has a dealership in North Platte. It also
has plants in many countries, and uses parts and materials supplied by
literally hundreds of companies around the world, including such fund holdings
as AB SKF (Sweden).
THREE GREAT INFRASTRUCTURES
North Platte's web of business-to-consumer and business-to-business
commerce is supported by three great worldwide infrastructures: transportation,
telecommunications and banking.
In addition to being a farm town, North Platte is a railroad town. The
Union Pacific Railroad put the town on the map in 1867 and today, on its
outskirts, operates one of the largest rail switching yards in the world.
Hundreds of miles north, the tracks ultimately hook up with those of the
CANADIAN NATIONAL RAILWAY SYSTEM, which was recently privatized by the Canadian
government.
Interstate 80, the transcontinental highway that stretches from New York
to San Francisco, also crosses through North Platte. Each day, thousands of
Mack trucks (RENAULT, France) pass over it.
Telecommunications networks provide another vital link to and from the
rest of the world. On this winter's day, Marc uses his Ericsson cellular phone
(LM ERICSSON, Sweden) to keep in touch with a prospective Deere customer. At
home and at the Deere dealership, the local phone service is provided by U S
WEST COMMUNICATIONS (U.S.), whose system is linked to other telecommunications
providers throughout the United States and around the globe.
The third network, a worldwide banking network, facilitates the transfer
of money that makes the transfer of goods and services possible. It is this
system, ultimately, that allows Deere to do business with Kawasaki or any other
of its scores of suppliers around the world. A number of the fund's bank
holdings, including BANK OF NEW YORK (U.S.), derive a significant portion of
their revenues by processing and transferring funds among financial
institutions around the world.
[photos: Marc Kaschke]
[Photo Caption]
Orville and Marc Kaschke (pictured below) note that Kawasaki, a Japanese
company in the fund's portfolio, supplies engines that power several Deere lawn
tractor models.
[End Photo Caption]
A STOP BY THE STORE
After going over the accounts receivable and answering questions from a
couple of farmers who stopped by and wanted to know more about Deere's product
line, Marc drives to the local WAL-MART (U.S.) to pick up a number of sundry
items, including Lysol (RECKITT & COLMAN, U.K.) and Brawny paper towels (JAMES
RIVER CORP. OF VIRGINIA, U.S.). He pays for them with his Visa card from CHASE
MANHATTAN (U.S.). Then he stops by his parents' house for lunch and, on this
cold and windy day, has a cup of hot cocoa (NESTLE, Switzerland) with Mary, his
mom (pictured above).
That afternoon, Marc makes the 21/2-hour drive along Interstate 80 to his
music store in Lincoln to help with sales and to inventory compact discs from
such labels as Capitol Records and Virgin Records America (EMI GROUP, U.K.) and
Atlantic Records, Sire and Elektra ( , U.S.). Later that evening, he finds
time to thumb through Fortune magazine and watch CNN (also Time Warner).
Some of the companies mentioned are relatively large holdings in the fund
while others are relatively small. In some cases, the fund may be adding to its
investment while in others it may be paring back. Along with the fund's other
investments, which you'll find described beginning on page 12, Capital World
Growth and Income Fund's portfolio illustrates the dynamic, exciting nature of
global business today. A day spent with Marc Kaschke - or any other Capital
World Growth and Income shareholder - also illustrates that stocks are not just
pieces of paper but represent ownership in real companies that create real
products and services.
Marc's investment in the fund is currently earmarked for his retirement.
Give or take a decade, that could be 40 years from now. Much, no doubt, will
happen between now and the year 2037, but it appears increasingly clear that
when it comes to business and commerce, the winds that sweep North Platte also
circle the world. Capital World Growth and Income Fund will continue to take
advantage of opportunities presented by the global winds of change.
[Photos: Marc Kaschke]
[Photo: globe]
[Photo Caption]
The winds that sweep North Platte also circle the world.
[End Photo Caption]
<TABLE>
CAPITAL WORLD GROWTH & INCOME FUND
Investment Portfolio, November 30, 1996
<S> <C> <C>
Largest Industry Holdings
Equity-Type Securities 89.02%
Banking 14.36%
Telecommunications 9.38%
Health & Personal Care 4.45%
Energy Sources 3.96%
Utilities: Electric & Gas 3.74%
Other Industries 53.13%
Bonds and Notes 1.87%
Cash & Equivalents 9.11%
Largest Individual Percent of
Equity Holdings Net Assets
ING Groep NV (Netherlands) 2.53%
Telecom Corp. of New Zealand (New Zealand) 1.82
Australia and New Zealand
Banking Group (Australia) 1.61
Portugal Telecom (Portugal) 1.41
Astra (Sweden) 1.20
First Union (USA) 1.12
Koninklijke PTT Nederland (Netherlands) 1.10
Royal Bank of Canada (Canada) 1.08
Bank of New York (USA) 1.07
Cadbury Schweppes (United Kingdom) 1.01
</TABLE>
<TABLE>
CAPITAL WORLD GROWTH AND INCOME FUND
INVESTMENT PORTFOLIO, NOVEMBER 30, 1996
- ------------------------------------------- ---------- ---------- ----------
Equity-Type Securities Shares or Market Percent
(common and preferred stocks and convertible Principal Value of Net
debentures) Amount (Millions) Assets
- ------------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
BANKING- 14.36%
Australia and New Zealand Banking Group Ltd. (Australia) 12571382 $82.551 1.61
First Union Corp. (USA) 752500 57.472 1.12
Royal Bank of Canada (Canada) 1,509,200 55.762 1.08
Bank of New York Co., Inc. (USA) 1540000 55.248 1.07
ABN AMRO Holding NV (Netherlands) 711279 46.042 .90
Barclays PLC (United Kingdom) 2450000 42.152 .82
Chase Manhattan Corp. (USA) 300000 28.350 .55
Cie. de Suez (France) 635000 27.178 .53
First Chicago NBD Corp. (USA) 452500 26.584 .52
Westpac Banking Corp. (Australia) 4025164 24.073 .47
Grupo Financiero Banamex Accival, SA de CV, Class B .00
(Mexico) /1/ 2993000 5.906
Grupo Financiero Banamex Accival, SA de CV, Class L /1/ 509000 .924
Banco Nacional de Mexico, S.A. 11.00% convertible .00
debentures 2003 $15,000,000 15.375 .43
HSBC Holdings PLC (United Kingdom) 1050000 21.865 .43
Banc One Corp. (USA) 440000 20.955 .41
Bank of Scotland (United Kingdom) 4200000 20.686 .40
Istituto Mobiliare Italiano SpA (American Depositary .00
Receipts) (Italy) 600000 15.600
Istituto Mobiliare Italiano SpA 500000 4.219 .39
Credit Commercial de France (France) 379931 18.407 .36
Safra Republic Holdings SA (Luxembourg) 133000 18.288 .36
Advance Bank Australia Ltd. (Australia) 2959755 16.690 .32
Banco de Santander, SA (Spain) 211800 11.473
Banco de Santander, SA (American Depositary Receipts) 88200 4.807 .31
National Bank of Canada (Canada) 1500000 16.009 .31
National Australia Bank Ltd. (Australia) 1,269,071 15.799 .31
Bank of Philippine Islands (Philippines) 2364000 14.841 .29
Wilmington Trust Corp. (USA) 300000 12.225 .24
Allied Irish Banks, PLC (Ireland) 1730000 11.385 .22
Cie. Financiere de Paribas, Class A (France) 150,000 10.309 .20
Bangkok Bank PCL., 3.25% convertible .00
debentures 2004 (Thailand) $9,000,000 9.288 .18
Svenska Handelsbanken Group, Class A (Sweden) 325000 8.913 .17
Svenska Handelsbanken Group, Class B 21900 .578
J.P. Morgan & Co. Inc. (USA) 80000 7.550 .16
MBL International Finance, 3.00% convertible debentures .00
2002 (Bermuda) $3,800,000 4.211 .08
CS Holding Group (Switzerland) 32,500 3.461 .07
Banca Popolare di Bergamo-Credito Varesino S.C.r.l., .00
7.40% convertible debentures 2000 (Italy) /2/ Lr2,277,775 1.621
Banca Popolare di Bergamo-Credito Varesino S.C.r.l., .05
7.50% convertible debentures 1999 Lr1,000,000 .856
Banca Popolare di Bergamo-Credito Varesino S.C.r.l., .00
warrants, expire 2000 /1/ 455555 .147 .00
.00
TELECOMMUNICATIONS- 9.38%
Telecom Corp. of New Zealand Ltd. (New Zealand) 8380000 44.156
Telecom Corp. of New Zealand Ltd. (American Depositary .00
Receipts) 331000 27.845
Telecom Corp. of New Zealand Ltd. /3/ 4048000 21.330 1.82
Portugal Telecom, SA (Portugal) 2737600 72.627 1.41
Koninklijke PTT Nederland NV (Netherlands) 1512800 56.634 1.10
Hong Kong Telecommunications Ltd. (Hong Kong) 27689285 47.990 .93
STET-Societa Finanziaria Telefonica p.a., nonconvertible .00
savings shares (Italy) 7275000 22.380
STET-Societa Finanziaria Telefonica p.a. 3890000 16.563 .76
Tele Danmark AS, Class B (American Depositary Receipts) .00
(Denmark) 924100 23.102
Tele Danmark AS, Class B 82500 4.115 .53
Telecom Italia SpA (Italy) 13610400 25.027
Telecom Italia SpA, savings shares 357800 .837 .51
Telecomunicacoes Brasileiras SA, preferred nominative .00
(American Depositary Receipts) (Brazil) 249000 18.862 .37
Telefonos de Mexico, SA de CV, Class L (American .00
Depositary Receipts) (Mexico) 582300 17.687 .34
U S WEST Communications Group (USA) 500000 15.625 .30
British Telecommunications PLC (United Kingdom) 2000000 12.658 .25
International CableTel Inc., 7.25% convertible .00
debentures 2005 (USA) /3/ $11,000,000 11.907 .23
MFS Communications Co., Inc., 8.00% DECS convertible .00
preferred shares (USA) 130000 10.676 .21
Telefonica de Espana, SA (Spain) 450000 9.861 .19
SmarTone Telecommunications Holdings Ltd. (Incorporated
in Bermuda) /3/ 4000000 8.123 .16
Telecom Italia Mobile SpA, ordinary shares (Italy) 2224200 5.207 .10
Bell Atlantic Corp. (USA) 75000 4.716 .09
AirTouch Communications (USA) /1/ 117820 3.019 .06
ALLTEL Corp. (USA) 36100 1.151 .02
.00
MULTI-INDUSTRY- 7.16%
Imasco Ltd. (Canada) 2,036,200 50.558 .98
Hutchison Whampoa Ltd. (Hong Kong) 5,990,000 46.291 .90
Incentive AB, Class B (Sweden) 580,000 38.471 .75
B. A. T. Industries PLC (United Kingdom) 4766000 38.015 .74
Brierley Investments Ltd. (New Zealand) 26,098,186 23.384
Brierley Investments Ltd., $0.85 convertible preferred .00
shares 4025000 3.492 .52
Orkla AS, Class B (Norway) 351,000 21.389
Orkla AS, Class A 71,000 4.730 .51
U.S. Industries, Inc. (USA) /1/ 623157 18.383 .36
Williams Holdings PLC (United Kingdom) 3000000 17.197 .33
Ayala Corp., 3.00% convertible debentures 2000 .00
(Philippines) $10,000,000 13.400 .26
Industriforvaltnings AB Kinnevik, Class B (Sweden) 468,750 13.135 .26
Lend Lease Corp. Ltd. (Australia) 703632 13.054 .25
Jardine Strategic Holdings Ltd. (Hong Kong--Incorporated .00
in Bermuda) 3375000 11.745
Jardine Strategic Holdings Ltd., 7.50% convertible .00
debentures 2049 $181,000 .200 .00
Jardine Strategic Holdings Ltd., warrants, expire 1998 /1/ 375,000 .139 .24
Canadian Pacific Ltd. (Canada) 400000 11.000 .21
Groupe Bruxelles Lambert SA (Belgium) 63,000 7.991 .16
Tenneco Inc. (USA) 150,000 7.650 .15
Textron Inc. (USA) 75000 7.153 .14
Harsco Corp. (USA) 100,000 6.975 .14
Cie. Nationale a Portefeuille (Belgium) 100000 6.121
Cie. Nationale a Portefeuille, warrants, .00
expire 1999 /1/ 150000 .265 .12
LTV Corp. (USA) 500,000 5.375 .10
Preussag AG (Germany) 8,000 1.878
Preussag AG, warrants, expire 2001 /1/ 3,100 .090 .04
.00
HEALTH & PERSONAL CARE- 4.45% .00
AB Astra, Class A (Sweden) 800000 38.396
AB Astra, Class B 500000 23.513 1.20
Glaxo Wellcome PLC (United Kingdom) 2000000 33.109 .64
Merck & Co., Inc. (USA) 385000 31.955 .62
Eli Lilly and Co. (USA) 400000 30.600 .60
American Home Products Corp. (USA) 442,000 28.399 .55
Bristol-Myers Squibb Co. (USA) 175000 19.906 .39
Warner-Lambert Co. (USA) 150000 10.725 .21
Sandoz Ltd., 2.00% convertible debentures 2002 .00
(Switzerland) /1/ $7,500,000 8.524 .17
Abbott Laboratories (USA) 50000 2.788 .05
Baxter International Inc. (USA) 30000 1.275 .02
Allegiance Corp. (USA) 6000 .136 .00
.00
ENERGY SOURCES- 3.96% .00
Repsol SA (American Depositary Receipts) (Spain) 1,275,000 46.697
Repsol SA 100,000 3.700 .98
"Shell" Transport and Trading Co., PLC (New York .00
Registered Shares) (United Kingdom) 175,000 17.456
Royal Dutch Petroleum Co. (Netherlands) 35000 5.898
Royal Dutch Petroleum Co. (New York Registered Shares) 20,000 3.398 .52
TOTAL, Class B (France) 324,487 25.955 .51
Phillips Petroleum Co. (USA) 475,000 21.434 .42
Unocal Corp. (USA) 520000 21.190 .41
MESA Inc., 8.00% convertible preferred, Series A (USA) /4/ 1,611,327 9.668
MESA Inc. /1/ 1,600,000 8.200 .35
YPF SA, Class D (American Depositary Receipts) .00
(Argentina) 450,000 10.463 .20
Esso SA Francaise (France) 78567 8.410 .16
Engen Ltd. (South Africa) 1176000 6.199 .12
Occidental Petroleum Corp. (USA) 250000 6.000 .12
ENI SpA (American Depositary Shares) (Italy) 100000 5.250 .10
Burmah Castrol PLC (United Kingdom) 206343 3.642 .07
.00
UTILITIES: ELECTRIC & GAS- 3.74%
National Power PLC (United Kingom) 6160000 47.840 .93
Columbia Gas System, Inc. (USA) 535700 34.619 .67
Southern Electric PLC (United Kingdom) 2,050,100 24.175 .47
Scottish Power PLC (United Kingdom) 3066250 17.422 .34
Sonat Inc. (USA) 313000 16.198 .32
Hongkong Electric Holdings Ltd. (Hong Kong) 4073500 13.066 .25
Enersis SA (American Depositary Receipts) (Chile) 378100 10.681 .21
British Gas PLC (American Depositary Receipts) .00
(United Kingdom) 150000 5.569
British Gas PLC 900000 3.306 .17
Australian Gas Light Co. (Australia) 1133367 6.317 .12
GPU Inc. (Formerly General Public Utilities Corp.) (USA) 150000 5.044 .10
Hong Kong and China Gas Co. Ltd. (Hong Kong) 2371144 4.708 .09
National Grid Group PLC (United Kingdom) 1080000 3.549 .07
.00
FOOD & HOUSEHOLD PRODUCTS- 3.67% .00
Cadbury Schweppes PLC (United Kingdom) 6036120 51.900 1.01
Reckitt & Colman PLC (United Kingdom) 3371312 39.727 .77
Unilever PLC (United Kingdom) 650000 15.319
Unilever NV (Netherlands) 30000 5.188 .40
Dalgety PLC (United Kingdom) 3350000 18.724 .36
Cultor Ltd. (Finland) 390000 18.601 .36
Groupe Danone (France) 76480 11.263 .22
Colgate-Palmolive Co. (USA) 100000 9.262 .18
Nestle SA (Switzerland) 8452 9.178 .18
McCormick & Co. (USA) 205000 5.048 .10
Uni-Charm Corp. (Japan) 189000 4.566 .09
.00
BUSINESS & PUBLIC SERVICES- 3.63% .00
United Utilities PLC (United Kingdom) 3886428 38.545 .75
PacifiCare Health Systems, Inc., Class A (USA) /1/ 200000 15.800
PacifiCare Health Systems, Inc., Class B /1/ 125000 10.375 .51
Brambles Industries Ltd. (Australia) 1296000 22.673 .44
Electronic Data Systems Corp. (Formerly General Motors, Class E)
(USA) 300000 14.513 .28
Autopistas del Mare Nostrum, SA Concesionaria del Estado .00
(Spain) 850,000 13.084 .25
American Water Works Co., Inc. (USA) 600,000 11.850 .23
Quintiles Transnational Corp., 4.25% convertible .00
debentures 2000 (USA) /3/ $10,000,000 9.925 .19
Alco Standard Corp. (USA) 160000 8.280 .16
Hyder PLC (United Kingdom) 625000 7.785 .15
Hutchison Delta Finance Ltd., 7.00% convertible .00
debentures 2002 (Hong Kong--Incorporated in Cayman .00
Islands) /3/ $6,000,000 6.696 .13
Vanstar Financing Trust, 6.75% convertible preferred (USA) /3/ 108000 6.102 .12
Omnicom Group Inc. (USA) 100000 5.100 .10
Thorn PLC (United Kingdom) 1009470 4.700 .09
WMX Technologies, Inc. (USA) 125000 4.500 .09
Thames Water PLC (United Kingdom) 441994 4.291 .08
Cie. Generale des Eaux (France) 25490 3.144 .06
.00
INSURANCE- 3.50% .00
ING Groep NV (Netherlands) 3324635 116.370
ING Groep NV, warrants, .00
expire 2001 /1/ 2000000 13.688 2.53
National Mutual Asia Ltd. (Hong Kong) 22008000 20.068 .39
GIO Australia Holdings Ltd. (Australia) 5851530 15.998 .31
Allstate Corp. (USA) 150000 9.038 .18
Prudential Corp. PLC (United Kingdom) 406576 3.332 .06
Yasuda Fire and Marine Insurance Co., Ltd. (Japan) 250000 1.583 .03
.00
.00
METALS: NONFERROUS- 2.76% .00
Aluminum Co. of America (USA) 595000 37.857 .74
Inco Ltd. (Canada) 785000 27.377 .53
Pechiney, Class A (France) 675400 27.174 .53
Teck Corp., 3.75% convertible debentures 2006 (Canada) $14,950,000 17.585 .34
Freeport-McMoRan Copper & Gold Inc., Class A (USA) 500,000 14.937 .29
Noranda Inc. (Canada) 525,000 12.413 .24
Phelps Dodge Corp. (USA) 40200 2.919 .06
Indian Aluminium Co. Ltd. (Global Depositary Receipts) .00
(India) 411800 1.441 .03
.00
BEVERAGES & TOBACCO- 2.76% .00
Philip Morris Companies Inc. (USA) 500000 51.563 1.01
RJR Nabisco Holdings Corp. (USA) 1000000 32.000 .62
Seagram Co. Ltd. (Canada) 670000 27.386 .53
Lion Nathan Ltd. (New Zealand) 5000000 12.835 .25
Coca-Cola Amatil Ltd. (Australia) 993708 11.223 .22
UST Inc. (USA) 200000 6.525 .13
.00
FOREST PRODUCTS & PAPER- 2.75%
James River Corp. of Virginia, $1.55 DECS convertible .00
preferred shares (USA) 450000 13.613
James River Corp. of Virginia 350000 11.200 .48
Champion International Corp. (USA) 530000 22.790 .44
Sonoco Products Co. (USA) 735000 20.029 .39
Jefferson Smurfit Corp. (USA) /1/ 1332300 17.986 .35
Union Camp Corp. (USA) 300000 14.738 .29
Bowater Inc. (USA) 320000 12.040 .23
UPM-Kymmene Corp. (Finland) /1/ 324100 6.492
Kymmene Corp., 8.25% convertible debentures 2043 FM18,000,000 4.429 .22
N.V. Koninklijke KNP BT (Netherlands) 400000 9.110 .18
MAYR-MELNHOF Karton AG (Austria) /1/ 145000 6.967 .13
Carter Holt Harvey Ltd. (New Zealand) 616770 1.421 .03
Fletcher Challenge Paper (New Zealand) 254050 .455 .01
.00
AUTOMOBILES- 2.68% .00
Daimler-Benz AG, 4.125% convertible debentures, .00
consisting of bonds with undetachable warrants, 2003 /3/ DM60,000,000 45.171 .88
Ford Motor Co., Class A (USA) 750,000 24.562 .48
Regie Nationale des Usines Renault, SA (France) 949,079 22.537 .44
Bayerische Motoren Werke AG (Germany) 22000 14.266
Bayerische Motoren Werke AG, preferred shares 10,254 4.695 .37
Chrysler Corp. (USA) 400,000 14.200 .28
Toyota Motor Corp. (Japan) 435000 11.884 .23
.00
CHEMICALS- 2.66% .00
Praxair, Inc. (USA) 992500 48.260 .94
Airgas, Inc. (USA) /1/ 1686100 43.417 .85
Sherwin-Williams Co.(USA) 436000 24.743 .48
L'Air Liquide (France) 50599 8.071 .16
AGA AB, Class B (Sweden) 300000 4.583 .09
DSM NV (Netherlands) 30000 2.903 .06
BASF AG (Germany) 62500 2.313 .05
Akzo Nobel NV (Netherlands) 10200 1.353 .03
MERCHANDISING- 2.30% .00
Tesco PLC (United Kingdom) 7,322,963 41.915 .82
Wal-Mart Stores, Inc. (USA) 1096000 27.948 .54
Amway Japan Ltd. (Japan) 179,000 6.651
AJL PEPS Trust, $1.44 convertible preferred shares 465,000 8.370 .29
J.C. Penney Co., Inc. (USA) 160000 8.600 .17
Duty Free International, Inc. (USA) 470,000 7.403 .14
Staples, Inc., 4.50% convertible debentures 2000 (USA) /3/ $6,000,000 6.510 .13
Giant Food Inc., Class A (USA) 150,000 5.063 .10
Woolworths Ltd. (Australia) 1218696 3.034 .06
WHSmith Group PLC (United Kingdom) 350000 2.489 .05
.00
MACHINERY & ENGINEERING- 1.92% .00
Mannesmann AG (Germany) 120075 50.100 .97
Caterpillar Inc. (USA) 245000 19.386 .38
Kawasaki Heavy Industries, Ltd. (Japan) 2100000 9.629 .19
Triplex Lloyd PLC (United Kingdom) 2465963 8.622 .17
Daewoo Heavy Industries Ltd. (South Korea) 900000 6.200 .12
Zardoya Otis, SA (Spain) 23731 2.527 .05
Bombardier Inc., Class B (Canada) 121100 2.154 .04
Scania AB, Class B, warrants, expire 1999 (Sweden) /1/ 160000 .141 .00
.00
GOLD MINES- 1.49% .00
Normandy Mining Ltd. (Australia) 15228436 20.446
Normandy Mining Ltd., options, expire 2001 /1/ 4875799 1.746 .43
Barrick Gold Corp. (Canada) 650000 19.500 .38
Driefontein Consolidated Ltd. (South Africa) 1200000 13.666 .27
Kloof Gold Mining Co. Ltd. (South Africa) 1500000 12.299 .24
Newcrest Mining Ltd. (Australia) 2393325 8.764 .17
.00
INDUSTRIAL COMPONENTS- 1.32% .00
Federal-Mogul Corp. (USA) 800,000 17.800 .35
Morgan Crucible Co. PLC (United Kingdom) 2119487 16.282 .32
Lear Corp. (USA) /1/ 352300 12.639 .25
Goodyear Tire & Rubber Co. (USA) 256900 12.460 .24
BICC PLC (United Kingdom) 750000 3.549 .07
Cie. Generale des Etablissements Michelin, Class B .00
(France) 50000 2.565
Cie. Generale des Etablissements Michelin, $2.50 .00
convertible preferred shares 3333 .191 .05
AB SKF, Class B (Sweden) 100,000 2.124 .04
.00
FINANCIAL SERVICES- 1.29% .00
Federal Home Loan Mortgage Corp.(USA) 175000 19.994 .39
Household International, Inc. (USA) 175000 16.581 .32
Associates First Capital Corp., Class A (USA) 310000 14.996 .29
Federal National Mortgage Assn. (USA) 200000 8.250 .16
United Companies Financial Corp., 6.75% PRIDES .00
convertible preferred shares (USA) 75000 4.031 .08
Beneficial Corp. (USA) 40000 2.485 .05
.00
BROADCASTING & PUBLISHING- 1.26% .00
Time Warner Inc. (USA) 450,000 18.337 .36
CANAL (France) 60949 13.983 .27
Viacom Inc., Class B (USA) /1/ 275000 10.381 .20
CanWest Global Communications Corp. (Canada) 741300 7.610 .15
Tele-Communications, Inc., Series A, Liberty Media Group .00
(USA) /1/ 265000 6.625 .13
News Corp., preferred (Australia) 1339935 5.888 .11
TeleWest Communications PLC (American Depositary .00
Receipts) (United Kingdom) /1/ 71000 1.420 .03
Elsevier NV (Netherlands) 37500 .639 .01
.00
ENERGY EQUIPMENT- 1.11% .00
Schlumberger Ltd. (Netherlands Antilles) 405000 42.120 .82
Halliburton Co. (USA) 250000 15.063 .29
.00
MISCELLANEOUS MATERIALS & COMMODITIES- 1.10% .00
English China Clays PLC (United Kingdom) 6891000 20.735 .40
Cie. de Saint-Gobain (France) 109195 15.704 .31
Crown Cork & Seal Co., Inc. (USA) 275000 14.575 .28
TRINOVA Corp. (USA) 150000 5.475 .11
.00
ELECTRICAL & ELECTRONIC- 1.03% .00
Siemens AG, 1.00% convertible debentures 2001 (Germany) DM25,000,000 14.187
Siemens AG 150000 7.229 .42
Alcatel Alsthom (France) 127043 11.551 .22
Northern Telecom Ltd. (Canada) 100000 6.575 .13
Telefonaktiebolaget LM Ericsson, Class B (Sweden) 147400 4.548 .09
ABB AG, Class A (Switzerland) 3500 4.381 .09
Lucent Technologies Inc. (USA) 85000 4.356 .08
TRANSPORTATION: RAIL & ROAD- 0.86% .00
TNT Ltd., convertible preferred shares (Australia) 9,043,900 17.956
TNT Ltd. /1/ 524,862 1.034 .37
Railtrack Group PLC (United Kingdom) 2,500,000 15.381 .30
Canadian National Railway System (Canada) 236,200 9.714 .19
.00
.00
REAL ESTATE- 0.62% .00
Sun Hung Kai Properties Ltd. (Hong Kong) 1400000 17.383 .34
SM Prime Holdings, Inc. (Philippines) 45770000 10.971 .21
Westfield Trust (Australia) 1672997 3.376 .07
.00
LEISURE & TOURISM- 0.51% .00
Village Roadshow Ltd., Class A preferred shares
(Australia) /3/ 2500000 7.222 .00
Village Roadshow Ltd., Class A preferred shares 2018592 5.831 .25
ITT Corp. (USA) /1/ 246400 11.365 .22
Euro Disney SCA, 6.75% convertible debentures 2001 .00
(France) FF10,000,000 2.043 .04
RECREATION & OTHER CONSUMER PRODUCTS- 0.33% .00
EMI Group PLC (United Kingdom) 291,704 6.730 .13
Fuji Photo Film Co., Ltd. (Japan) 200000 6.272 .12
Hasbro, Inc. (USA) 103200 4.244 .08
.00
METALS: STEEL- 0.32% .00
Usinor Sacilor (France) 850000 12.721 .25
N.T.S. Steel Group PCL., 4.00% Eurobond,
2008 (Thailand) $6,670,000 1.934 .04
Nippon Denro Ispat Ltd., 3.00% convertible debentures .00
2001 (India) $2,800,000 1.470 .03
TRANSPORTATION: SHIPPING- 0.29% .00
Teekay Shipping Corp. (Bahamas) 416700 12.501 .24
Shun Tak Holdings Ltd. (Hong Kong) 3708471 2.590 .05
.00
CONSTRUCTION & HOUSING- 0.28% .00
Philipp Holzmann AG (Germany) /1/ 60000 14.634 .28
.00
TRANSPORTATION: AIRLINES- 0.27% .00
Air New Zealand Ltd., Class B (New Zealand) 5,320,000 13.997 .27
WHOLESALE & INTERNATIONAL TRADE- 0.27% .00
Mitsubishi Corp. (Japan) 1180000 13.682 .27
.00
ELECTRONIC COMPONENTS- 0.26% .00
Quantum Corp., 5.00% convertible debentures 2003 (USA) /3/ $10,000,000 13.350 .26
APPLIANCES & HOUSEHOLD DURABLES- 0.25% .00
AB Electrolux, Class B (Sweden) 100000 5.865 .11
Sony Corp. (Japan) 75000 4.803 .09
SANYO Electric Co., Ltd. (Japan) 534000 2.500 .05
.00
TEXTILES & APPAREL- 0.13% .00
Courtaulds Textiles PLC (United Kingdom) 1641500 6.898 .13
ELECTRONIC INSTRUMENTS- 0.08% .00
ThermoQuest Corp., 5.00% convertible debentures 2000 .00
(USA) /3/ $3,750,000 3.900 .08
BUILDING MATERIALS & COMPONENTS- 0.01% .00
Fletcher Challenge Building (New Zealand) 127,025 .357 .01
.00
MISCELLANEOUS- 4.26% .00
Other equity-type securities in initial .00
period of acquisition 218.942 4.26
-------- --------
TOTAL EQUITY-TYPE SECURITIES (cost:
$3,492.440 million) 4,575.196 89.02
-------- --------
- ------------------------------------------ -------------
Principal
Amount
Bonds and Notes (Millions)
- ------------------------------------------ -------------
INDUSTRIALS- 0.61%
Container Corp. of America 11.25% May 2004 $6,000 6.480
Container Corp. of America 9.75% April 2003 1.000 1.043 .14
Mesa Operating Co. 10.625% July 2006 4.000 4.320
Mesa Operating Co. 11.625% July 2006 3.500 2.362 .13
Telecom Argentina STET-France Telecom SA 12.00%
November 2002 5.500 6.064 .12
Fort Howard Corp. 8.25% February 2002 4.500 4.511 .09
Multicanal Participacoes SA 12.625% June 2004 /3/ 2.250 2.424 .05
AB SKF 7.625% July 2003 2.000 2.115 .04
Bufete Industrial, SA Eurobond 11.375% July 1999 1.805 1.893 .04
ARGENTINEAN GOVERNMENT- 0.64%
Argentina Eurobond 6.625% March 2005 /2/ 29.645 25.606 .50
Argentina (Republic of) 11.00% October 2006 7.000 7.324 .14
SOUTH AFRICAN GOVERNMENT- 0.42%
South Africa 13.00% August 2010 ZAR120.000 21.605 .42
CANADIAN GOVERNMENT- 0.20%
Canada 6.25% February 1998 C$13.200 10.112 .20
-------- --------
TOTAL BONDS AND NOTES (cost: $90.961 million) 95.859 1.87
-------- --------
- ------------------------------------------ ------------- ------------- -------------
Short-Term Securities
- ------------------------------------------ ------------- ------------- -------------
CORPORATE SHORT-TERM NOTES- 7.12%
Siemens Capital Corp. 5.26%-5.30% due 1/14-2/7/97 54.000 53.555 1.04
Daimler-Benz North America Corp. 5.24%-5.32% .00
due 12/3/96-2/6/97 52.400 52.223 1.02
Sandoz Corp. 5.27%-5.30% due 12/16/96-1/31/97 42.050 41.785 .81
Svenska Handelsbanken Group 5.29%-5.31% due 1/9-1/27/97 37.000 36.716 .71
ABN AMRO North America Finance Inc. 5.29%-5.43%
due 12/3/96-1/21/97 31.900 31.791 .62
Toyota Motor Credit Corp. 5.27%-5.35% due 12/16/96-1/16/97 29.950 29.828 .58
Barclays U.S. Funding Corp. 5.29% due 1/16-2/13/97 28.800 28.494 .55
Canada Bills 5.23%-5.40% due 12/3-12/9/96 26.100 26.074 .51
Gaz de France 5.30% due 1/15/97 25.000 24.830 .48
H.J. Heinz Co. 5.25%-5.27% due 12/4/96-1/2/97 19.600 19.516 .38
Dresdner U.S. Finance Inc. 5.25%-5.30% due 12/5/96-1/6/97 11.000 10.954 .21
Caisse D'Amortissement de La Dette Sociale 5.25% .00
due 12/9/96 10.600 10.586 .21
FEDERAL AGENCY DISCOUNT NOTES- 1.40%
Federal Home Loan Mortgage Corp. 5.195%-5.215% due
12/11-12/20/96 41.000 40.910 .80
Federal Home Loan Bank 5.30% due 12/26/96 30.800 30.682 .60
-------- --------
TOTAL SHORT-TERM SECURITIES (cost: $437.952
million) 437.944 8.52
-------- ------
TOTAL INVESTMENT SECURITIES (cost: $4,021.353
million) 5,108.999 99.41
Excess of cash and receivables over payables 30.486 .59
-------- ------
NET ASSETS $5,139.485 100.00
======================================================== ============ ==========
/1/ Non-income-producing securities.
/2/ Coupon rates may change periodically.
/3/ Purchased in a private placement
transaction; resale to the public may
require registration or sale only
to qualified institutional buyers.
/4/ The issuer has the option of
paying additional securities in lieu of cash.
See Notes to Financial Statements
</TABLE>
<TABLE>
<S> <C>
Equity-Type Securities Added Equity-Type Securities Eliminated
to the Portfolio Since May 31, 1996 from the Portfolio Since May 31, 1996
Banco Nacional de Mexico Advanced Micro Devices
Bank of Scotland American Brands
Bank of the Philippine Islands Atlas Copco
British Telecommunications Autopistas, Concesionaria Espanola
Chrysler Banco Popular Espanol
Crown Cork & Seal Bausch & Lomb
Daewoo Heavy Industries Boatmen's Bancshares
Daimler-Benz British Airways
Federal Home Loan Mortgage China Light & Power
Freeport-McMoRan Copper & Gold CSX
Halliburton Fletcher Challenge Energy
HSBC Holdings Hanson
ITT Havas
Koninklijke KNP BT Hazlewood Foods
Lear Home Depot
MESA Industrivarden
Newcrest Mining Inland Steel Industries
N.T.S. Steel Group Investor
Philipp Holzmann Land Securities
SmarTone Telecommunications Holdings National City
SM Prime Holdings National Westminster Bank
Sonat NationsBank
Time Warner Nordbanken
Vanstar Financing Trust North American Vaccine
Williams Holdings Pacific Telesis
Porsche
Southern Water
Stadshypotek
Sumitomo Bank
Tai Cheung Holdings
Telefonica de Argentina
Toys 'R' Us
Union des Assurances Federales
Whirlpool
</TABLE>
<TABLE>
Capital World Growth and Income Fund, Inc.
Financial Statements
- ---------------------------------------- ---------- ----------
Statement of Assets and Liabilities (dollars in
at November 30, 1996 millions)
- ----------------------------------------- ---------- ----------
<S> <C> <C>
Assets:
Investment securities at market
(cost: $4,021.353) $5,108.999
Cash 3.149
Receivables for--
Sales of investments $19.650
Sales of fund's shares 11.095
Dividends and accrued interest 17.496 48.241
---------- ----------
5,160.389
Liabilities:
Payables for--
Purchases of investments 12.724
Repurchases of fund's shares 3.320
Management services 1.823
Accrued expenses 3.037 20.904
---------- ----------
Net Assets at November 30, 1996--
Equivalent to $23.77 per share on
216,242,143 shares of $0.01 par value
capital stock outstanding (authorized
capital stock - 400,000,000 shares) $5,139.485
==========
---------
Statement of Operations (dollars in
for the year ended November 30, 1996 millions)
- --------------------------------------------- ---------- ----------
Investment Income:
Income:
Dividends $136.224
Interest 40.235 $176.459
---------
Expenses:
Management services fee 19.343
Distribution expenses 9.567
Transfer agent fee 3.781
Reports to shareholders .439
Registration statement and prospectus .386
Postage, stationery and supplies .679
Directors' fees .118
Auditing and legal fees .056
Custodian fee 1.707
Taxes other than federal income tax .119
Other expenses .088 36.283
---------- ----------
Net investment income 140.176
----------
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 207.627
Net increase in unrealized appreciation on investments 584.880
Net realized gain and increase in unrealized ----------
appreciation on investments 792.507
----------
Net Increase in Net Assets Resulting
from Operations $932.683
==========
- ---------------------------------------------- ---------- ----------
Year ended
Statement of Changes in Net Assets November 30
(dollars in millions) 1996 1995
- ---------------------------------------------- ---------- ----------
Operations:
Net investment income $ 140.176 $ 102.914
Net realized gain on investments 207.627 63.160
Net increase in unrealized appreciation
on investments 584.880 396.914
---------- ----------
Net increase in net assets
resulting from operations 932.683 562.988
---------- ----------
Dividends and Distributions Paid to Shareholders:
Dividends from net investment income (138.616) (104.776)
Distributions from net realized gain on investment (64.705) (45.496)
---------- ----------
Total dividends and distributions (203.321) (150.272)
Capital Share Transactions:
Proceeds from shares sold: 48,019,573
and 34,635,645 shares, respectively 1,027.076 647.812
Proceeds from shares issued in reinvestment
of net investment income dividends and distributions
of net realized gain on investments:
9,172,617 and 7,787,809 shares, respectively 190.709 141.079
Cost of shares repurchased: 19,581,034
and 20,156,313 shares, respectively (418.893) (374.730)
---------- ----------
Net increase in net assets
resulting from capital share
transactions 798.892 414.161
---------- ----------
Total Increase in Net Assets 1,528.254 826.877
Net Assets:
Beginning of year 3,611.231 2,784.354
---------- ----------
End of year (including undistributed
net investment income: $22.074
and $16.988, respectively) $5,139.485 $3,611.231
========== =========
See Notes to Financial Statements
</TABLE>
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 fund seeks long-term capital growth while providing
current income. 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.
Securities for which market quotations are not readily available are
valued at fair value by the Board of Directors or a committee thereof.
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.
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 effects of
changes in foreign currency exchange rates on investment securities are
included with the net realized and unrealized gain or loss on investment
securities.
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 $1,707,000 includes $36,000 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, 1996, net unrealized appreciation on investments for
federal income tax purposes aggregated $1,087,646,000, of which $1,202,899,000
related to appreciated securities and $115,253,000 related to depreciated
securities. During the year ended November 30, 1996, the fund realized, on a
tax basis, a net capital gain of $201,370,000 on securities transactions. Net
gains related to non-U.S. currency and passive foreign investment company
transactions of $6,257,000 were treated as adjustments to ordinary income for
federal income tax purposes. The cost of portfolio securities for book and
federal income tax purposes was $4,021,353,000 at November 30, 1996.
3. The fee of $19,343,000 for management services was paid pursuant to an
agreement with 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, 1996,
distribution expenses under the Plan were $9,567,000. As of November 30, 1996,
accrued and unpaid distribution expenses were $2,443,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $3,781,000. American Funds Distributors, Inc. (AFD), the
principal underwriter of the fund's shares, received $4,496,000 (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 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,
1996, aggregate amounts deferred and earnings thereon were $149,000.
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, 1996, accumulated undistributed net realized gain on
investments was $196,920,000 and additional paid-in capital was $3,825,787,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $1,809,496,000 and $1,169,222,000, respectively,
during the year ended November 30, 1996.
Dividend and interest income is recorded net of non-U.S. taxes paid. For
the year ended November 30, 1996, such non-U.S. taxes were $14,765,000. Net
realized currency gains on dividends, interest, withholding taxes reclaimable,
and sales of non-U.S. bonds and notes were $4,097,000 for the year ended
November 30, 1996.
To conform to its tax reporting, the fund reclassified $1,366,000 from
undistributed currency gains to undistributed net realized gains and $3,526,000
from undistributed net realized gains to undistributed net investment income
for the year ended November 30, 1996.
<TABLE>
Per-Share Data and Ratios Period
Year ended November 30 3/26/93 /1/
1996 1995 1994 to 11/30/93
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $20.22 $17.81 $17.00 $15.08
---------- ---------- ---------- ----------
Income From Investment Operations:
Net investment income .70 .61 .52 .29
Net realized and unrealized gain on investments 3.91 2.72 .75 1.86
---------- ---------- ---------- ----------
Total income from investment operations 4.61 3.33 1.27 2.15
---------- ---------- ---------- ----------
Less Distributions:
Dividends from net investment income (.72) /2/ (.63) (.46) (.23)
Distributions from net realized gains (.34) (.29) -- --
---------- ---------- ---------- ----------
Total distributions (1.06) (.92) (.46) (.23)
---------- ---------- ---------- ----------
Net Asset Value, End of Period $23.77 $20.22 $17.81 $17.00
========== ========== ========== ==========
Total Return /3/ 23.67% 19.41% 7.51% 14.39% /4/
Ratios/Supplemental Data:
Net assets, end of period (in millions) $5,139 $3,611 $2,784 $1,521
Ratio of expenses to average net assets .85% .88% .87% .62% /4/
Ratio of net income to average net assets 3.28% 3.24% 3.11% 2.01% /4/
Average commissions paid per share /5/ .25 cents 1.94 cents 1.24 cents 1.31 cents
Portfolio turnover rate 30.18% 25.50% 18.66% 2.71% /4/
/1/Commencement of operations
/2/ Includes 1.5 cents realized non-U.S. currency gains
treated as ordinary income for federal income tax
purposes.
/3/ Calculated without deducting a sales charge. The
maximum sales charge is 5.75% of the fund's
offering price.
/4/ Based on operations for the period shown and,
accordingly, not representative of a full year's
operations.
/5/ Brokerage commissions paid on portfolio
transactions increase the cost of securities
purchased or reduce the proceeds of securities
sold and are not reflected in the fund's
statement of operations. Shares traded on a
principal basis (without commissions) are excluded.
Generally, non-U.S. commissions are lower than
U.S. commissions when expressed as cents per
share but higher when expressed as a percentage
of transactions because of the lower per-share
prices of many non-U.S. securities.
</TABLE>
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, 1996, 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, 1996 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 31, 1996
1996 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:
Dividends and Distributions Per Share
<TABLE>
<CAPTION>
TO PAYMENT FROM NET FROM NET FROM NET
SHAREHOLDERS DATE INVESTMENT REALIZED REALIZED
OF RECORD INCOME SHORT-TERM LONG-TERM
GAINS GAINS
<S> <C> <C> <C> <C>
December 8, 1995 December 11, 1995 $0.14 - $0.270
March 22, 1996 March 25,1996 0.15 $0.032 .038
June 7, 1996 June 10, 1996 0.25 - -
September 26, 1996 September 27, 1996 0.18 - -
</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, 1996 is $0.07723 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, 16% 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 1997 TO DETERMINE THE CALENDAR YEAR
AMOUNTS TO BE INCLUDED ON THEIR 1996 TAX RETURNS. SHAREHOLDERS SHOULD CONSULT
THEIR TAX ADVISERS.
CAPITAL WORLD GROWTH AND INCOME FUND
BOARD OF DIRECTORS
H. FREDERICK CHRISTIE, Rolling Hills Estates, California
Private investor; former President and
Chief Executive Officer, The Mission Group;
former President, Southern California
Edison Company
PAUL G. HAAGA, JR., Los Angeles, California
President of the fund
Executive Vice President and Director,
Capital Research and Management Company
MARY MYERS KAUPPILA, Boston, Massachusetts
Founder and President, Energy Investment, Inc.
GAIL L. NEALE, Burlington, Vermont
President, The Lovejoy Consulting Group, Inc.;
former Executive Vice President of the Salzburg Seminar; former Director of
Development and of the Capital Campaign, Hampshire College
ROBERT J. O'NEILL, Ph.D., Oxford, England
Professor and Fellow, All Souls College,
University of Oxford
DONALD E. PETERSEN, Birmingham, Michigan
Retired; former Chairman of the Board and
Chief Executive Officer, Ford Motor Company
FRANK STANTON, New York, New York
President Emeritus, CBS Inc.
THIERRY VANDEVENTER, Geneva, Switzerland
Chairman of the Board of the fund
Chairman of the Board, Capital Research Company
CHARLES WOLF, JR., PH.D., Santa Monica, California
Dean, The RAND Graduate School; Senior
Economic Adviser, The RAND Corporation
OTHER OFFICERS
STEPHEN E. BEPLER, New York, New York
Senior Vice President of the fund
Senior Vice President, Capital Research Company
LARRY P. CLEMMENSEN, Los Angeles, California
Senior Vice President of the fund
Senior Vice President and Director,
Capital Research and Management Company;
President and Director, The Capital Group Companies, Inc.
MARK E. DENNING, London, England
Vice President of the fund
Senior Vice President and Director,
Capital Research Company
JANET A. MCKINLEY, New York, New York
Vice President of the fund
Senior Vice President, Capital Research Company
VINCENT P. CORTI, Los Angeles, California
Secretary of the fund
Vice President -
Fund Business Management Group,
Capital Research and Management Company
R. MARCIA GOULD, Brea, California
Treasurer of the fund
Vice President -
Fund Business Management Group,
Capital Research and Management Company
Stefanie Powers, a Director since the fund's inception in 1993, has resigned
from the Board because professional commitments had begun to make it difficult
for her to attend Board meetings for a period of time. The Directors wish to
thank her for her many contributions to the fund.
OFFICES OF THE FUND AND OF THE
INVESTMENT ADVISER,
CAPITAL RESEARCH AND MANAGEMENT COMPANY
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92821-5804
TRANSFER AGENT FOR SHAREHOLDER ACCOUNTS
(Please write to the address nearest you.)
American Funds Service Company
P.O. Box 2205
Brea, California 92822-2205
P.O. Box 659522
San Antonio, Texas 78265-9522
P.O. Box 6007
Indianapolis, Indiana 46206-6007
P.O. Box 2280
Norfolk, Virginia 23501-2280
CUSTODIAN OF ASSETS
The Chase Manhattan Bank
One Chase Manhattan Plaza
New York, New York 10081-0001
COUNSEL
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, California 90071-2899
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
400 South Hope Street
Los Angeles, California 90071-2889
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
FOR INFORMATION ABOUT YOUR ACCOUNT OR ANY OF THE FUND'S SERVICES, PLEASE
CONTACT YOUR FINANCIAL ADVISER OR CALL AMERICAN FUNDS SERVICE COMPANY,
TOLL-FREE, AT 800/421-0180.
This report is for the information of shareholders of Capital World Growth and
Income Fund, but it may also be used as sales literature when preceded or
accompanied by the current prospectus, which gives details about charges,
expenses, investment objectives and operating policies of the fund. If used as
sales material after March 31, 1997, this report must be accompanied by an
American Funds Group Statistical Update for the most recently completed
calendar quarter.
Litho in USA AGD/AL/3156
Lit. No. WGI-011-0197
[The American Funds Group(r)]
