[THE AMERICAN FUNDS GROUP(R)]
CAPITAL WORLD GROWTH AND INCOME FUND
SEMI-ANNUAL REPORT
FOR THE SIX MONTHS ENDED MAY 31, 1998
[cover: nine country flags with silhouette of globe in background]
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 consisting primarily of common stocks and other equity securities.
Capital World Growth and Income Fund is one of the 28 mutual funds in The
American Funds Group,R managed by Capital Research and Management Company.
Since 1931, Capital has invested with a long-term focus based on thorough
research and attention to risk.
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RESULTS AT A GLANCE
(with dividends reinvested)
AVERAGE ANNUAL COMPOUND RETURN
12 Months 3 Years 5 Years Lifetime
Through 6/1/95 - 6/1/93 - 3/26/93 -
5/31/98 5/31/98 5/31/98 5/31/98
CAPITAL WORLD +14.5% +20.6% +21.3% +18.6% +18.6%
GROWTH AND
INCOME FUND
Morgan Stanley +15.5 +20.5 +18.8 +15.4 +16.6
Capital
International
World Index
Lipper Global +15.1 +18.5 +18.0 +14.7 +15.7
Stock Fund
Average
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The MSCI World Index is unmanaged and measures all of the world's major stock
markets, including the U.S.
Lipper and fund results do not reflect the effect of sales charges.
Fund results were computed without a sales charge unless otherwise indicated.
Here are the fund's total returns and average annual compound returns with all
distributions reinvested for periods ended June 30, 1998 (the most recent
calendar quarter), assuming payment of the 5.75% maximum sales charge at the
beginning of the stated periods:
Since inception on 3/26/93: +126.98%, or +16.85% a year; 5 years: +122.43%, or
+17.34% a year; 12 months: +8.72%. Sales charges are lower for accounts of
$50,000 or more.
The fund's 30-day yield as of June 30, 1998, calculated in accordance with the
Securities and Exchange Commission formula, was 1.88%.
THE FIGURES IN THIS REPORT REFLECT PAST RESULTS AND ARE NOT PREDICTIVE OF
FUTURE RESULTS. SHARE PRICE AND RETURN WILL VARY, SO YOU MAY LOSE MONEY BY
INVESTING IN THE FUND. THE SHORTER THE TIME PERIOD OF YOUR INVESTMENT, THE
GREATER THE POSSIBILITY OF LOSS. FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR INSURED OR GUARANTEED BY, THE U.S. GOVERNMENT, ANY FINANCIAL
INSTITUTION, THE FEDERAL DEPOSIT INSURANCE CORPORATION, OR ANY OTHER AGENCY,
ENTITY OR PERSON. INVESTING OUTSIDE THE UNITED STATES IS SUBJECT TO ADDITIONAL
RISKS, SUCH AS CURRENCY FLUCTUATIONS, POLITICAL INSTABILITY, DIFFERING
SECURITIES REGULATIONS AND PERIODS OF ILLIQUIDITY, WHICH ARE DETAILED IN THE
FUND'S PROSPECTUS.
FELLOW SHAREHOLDERS:
Capital World Growth and Income Fund continued to make good progress during the
first half of fiscal 1998. For the six months ended May 31, the value of your
investment rose 14.5% if, like most shareholders, you reinvested income
dividends totaling 23 cents a share and capital gain distributions totaling
$1.87 a share. If you took your dividends in cash, the value of your holdings
appreciated 13.5% and you received an income return of 0.9%.
The fund's 14.5% gain over the six months slightly lagged the 15.5% return of
its primary benchmark, the unmanaged Morgan Stanley Capital International
(MSCI) World Index, which measures 23 major markets including the U.S. The
fund's lower exposure to the U.S. market, its somewhat higher exposure to the
Hong Kong market as well as some Japanese holdings that lost ground during the
period all contributed to the modest gap.
Since the fund's introduction on March 26, 1993, it has generated a total
return of 141.9% with dividends reinvested, or an average of 18.6% per year. By
comparison, over the same period, the MSCI World Index has provided a return of
122.0%, or an average of 16.6% a year.
THE SIX MONTHS IN REVIEW
During the semi-annual period, most of the world's major markets outside Asia
made striking progress, posting double-digit gains both in local currency and
in U.S. dollars. A breakdown of the portfolio by country is shown on page 2.
In the United States, by far the fund's largest country concentration (27.1% of
assets), the market retained its upward momentum during the first part of the
six-month period despite some volatility in the wake of the Asian crisis.
Unemployment fell, the rate of inflation continued to slow and interest rates
remained low. Buoyed by a wave of megamergers, large capitalization stocks once
again forged ahead. Chrysler, the fund's fourth-largest holding, announced a
merger with Germany's Daimler-Benz and returned a handsome 62%. Merger activity
was also widespread in the banking sector.
Concerns about the economy overheating as well as further turmoil in Asia
caused the U.S. market to lose momentum late in the period. U.S. stocks
nonetheless closed the period with a strong 14.8% return.*
*All individual country returns are measured in U.S. dollars by MSCI and
include reinvestment of dividends.
Elsewhere in the Americas, Canada (4.7% of assets) posted a gain of 16.8%,
while most Latin American markets had a difficult period. After an impressive
46.0% increase in fiscal 1997, Mexico's stock market dropped 10.4%. Other
markets in the region also moved lower. Because Capital World Growth and Income
Fund emphasizes investments in leading companies in the world's largest stock
markets, it held only a few select securities in Latin America. Happily, most
of our holdings in the region increased in price despite the broad decline.
While the U.S. market was a strong performer, European stocks (40.7% of assets)
rose at an even faster pace. Most of the countries that will participate in the
European Monetary Union significantly lowered their interest rates, triggering
a flurry of new activity in local stock markets. The surge in stock prices can
also be attributed to positive news on corporate earnings, a wave of mergers
and other measures aimed at improving competitiveness and increasing
shareholder value.
Italy led the way. Its stock market index rose a stunning 50.8% over the
period. One of the fund's larger holdings, Istituto Mobiliare Italiano,
recorded a 64.4% increase. The Portuguese market also soared to new heights,
rising 43.7%, while in neighboring Spain, equities gained 47.3%. Telefonica,
Spain's leading telecommunications provider and the fund's
third-largest position, rose 55.1%.
The fund also had substantial investments in companies based in France, where
stocks appreciated 40.6%, and in Germany, up 35.6%. German telecommunications
conglomerate Mannesmann, one of our largest positions, saw a stellar 110.2%
increase. The U.K. market, which represented the fund's second-largest country
concentration, rose 18.2%. The only true laggard was Norway, where equities
declined 1.8%.
[Picture of pie chart cut in five pieces]
WHERE THE FUND'S ASSETS WERE INVESTED
(PERCENT BY COUNTRY AS OF 5/31/98)
EUROPE 40.7%
United Kingdom 13.6
France 4.8
Germany 4.1
Netherlands 3.8
Italy 2.9
Sweden 2.7
Portugal 1.9
Spain 1.9
Denmark 1.2
Finland 1.0
Luxembourg .6
Norway .6
Switzerland .6
Belgium .3
Croatia .3
Poland .3
Austria .1
THE AMERICAS 34.4%
United States 27.1
Canada 4.7
Argentina 1.4
Brazil .6
Mexico .4
Chile .1
Peru .1
ASIA/PACIFIC RIM 13.5%
Japan 4.4
Australia 3.6
Hong Kong 3.1
New Zealand .9
Philippines .7
Taiwan .4
Indonesia .2
South Korea .1
Other Asia/Pacific .1
OTHER 1.1%
Supranational .7
South Africa .4
BONDS, CASH
& EQUIVALENTS 10.3%
While stocks in Europe made heady progress, markets continued to tumble in
Asia. Economies were in turmoil throughout the region as reverberations from
the October currency free-fall continued. That turbulence sparked a market rout
from which the region has not yet recovered. Only the Philippines rebounded,
closing the six months with a 5.7% gain.
Capital World Growth and Income Fund had relatively few investments in the
worst performing markets. The fund had no holdings in Malaysia, and its
combined exposure to Indonesia, South Korea, Taiwan and Thailand was a mere
0.7%. However, 3.1% of the fund's assets were invested in Hong Kong, where
stocks plummeted 20.9%.
Our holdings in Japan, which accounted for 4.4% of the portfolio, also
declined. The nation continued to grapple with severe difficulties and failed
to emerge from a prolonged economic slump. Concerns about the health of Japan's
banking sector increased and the yen wilted against the dollar. Amid the
financial fog, a crisis of confidence gripped the nation. The Japanese market
declined accordingly, closing the period with a 9.4% drop.
A NOTE ABOUT DIVIDENDS
The fund paid dividends of 11 cents a share in December and 12 cents a share in
March. On June 8, after the end of the fiscal reporting period, the fund paid a
dividend of 21 cents a share. Dividends vary from quarter to quarter,
principally because companies outside North America 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 those paid in June.
LOOKING FORWARD
Despite tremors in some parts of the world, the long-term outlook for global
equities remains encouraging. Markets are liquid and inflation has been
comparatively benign worldwide, keeping interest rates low. The trend toward
greater deregulation continues, creating new investment opportunities and
prompting businesses to expand.
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10 LARGEST HOLDINGS Country Market Value Percent of Net
(Millions) Assets
ING Groep Netherlands $140.244 1.65%
Deutsche Telekom Germany 135.098 1.59
Telefonica (formerly Spain 129.819 1.53
Telefonicade Espana)
Chrysler USA 120.428 1.42
Mannesmann Germany 117.391 1.38
Portugal Telecom Portugal 109.161 1.29
Astra Sweden 98.392 1.16
Telecom Italia Italy 92.138 1.09
Koninklijke PTT Nederland Netherlands 90.959 1.07
Royal Bank of Canada Canada 81.549 .96
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While it gives us great pleasure to report on Capital World Growth and Income
Fund's progress, these have been exceptionally good times for most investors.
Stock valuations today are high by historical standards. The sweeping declines
in the Asian markets serve as a lesson in the unpredictability of market
behavior. So do the sudden gains in Europe.
We are confident that our in-depth research should continue to unveil good
values in companies worldwide, and, as always, we will exercise great diligence
in monitoring existing holdings. But at times like this we want to remind
shareholders of the importance of maintaining a long-term perspective. Market
fluctuations are inevitable.
We look forward to reporting to you again in six months.
Cordially,
/S/ Thierry Vandeventer
Thierry Vandeventer
Chairman of the Board
/S/ Paul S. Haaga, Jr.
Paul G. Haaga, Jr.
President
July 16, 1998
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CAPITAL WORLD GROWTH AND INCOME FUND
INVESTMENT PORTFOLIO, MAY 31, 1998
- ------------------------------------------- "--------- -------- --------
Equity Securities Shares or Market Percent
(common and preferred stocks and convertible Principal Value of Net
debentures) Amount (Millions) Assets
- ------------------------------------------- "--------- -------- --------
TELECOMMUNICATIONS- 13.85%
Deutsche Telekom AG (Germany) 5,039,418 $135.098 1.59%
Telefonica, SA (Spain) (Formerly Telefonica de Espana) 2,904,351 129.819 1.53
Mannesmann AG (Germany) 120,075 117.391 1.38
Portugal Telecom, SA (Portugal) 2,076,325 109.161 1.29
Telecom Italia SpA, savings shares (Italy) 16,246,151 87.727
Telecom Italia SpA 588,775 4.411 1.09
Koninklijke PTT Nederland NV (Netherlands) 1,627,800 90.959 1.07
Tele Danmark AS, Class B (American Depositary Receipts)(Denmark) 924,100 42.855
Tele Danmark AS, Class B 382,500 35.776 .93
Telecom Corp. of New Zealand Ltd. (New Zealand) 6,391,000 29.432
Telecom Corp. of New Zealand Ltd. (American Depositary Receipts) 720,700 26.351
Telecom Corp. of New Zealand Ltd. (1) 3,038,610 13.994 .82
France Telecom (France) (2) 1,080,000 60.520 .71
Telecom Italia Mobile SpA, savings shares (Italy) 12,565,800 45.712
Telecom Italia Mobile SpA 2,224,200 13.128 .69
Hong Kong Telecommunications Ltd. (Hong Kong) 31,973,264 57.563 .68
TELECEL - Comunicacoes Pessoais, SA (Portugal) (2) 296,400 51.943 .61
Telecom Argentina SA, Class B (American Depositary Receipts) (Argentina) 1,632,700 50.614 .60
British Telecommunications PLC (United Kingdom) 4,150,000 44.056 .52
U S WEST Communications Group (USA) 850,000 43.137 .51
Telefonos de Mexico, SA de CV, Class L (American Depositary Receipts) (Mexico) 582,300 27.623 .33
Nortel Inversora SA, preferred, Class B (American Depositary Receipts) (Argentina) 980,000 26.460 .31
Philippine Long Distance Telephone Co. (American Depositary Receipts)(Philippines) 650,000 16.494 .19
AT&T Corp. (USA) 150,000 9.131 .11
Telefonica de Argentina SA, Class B (American Depositary Receipts) (Argentina) 277,500 9.036 .11
Nippon Telegraph and Telephone Corp. (Japan) (2) 1,000 8.221 .10
Bell Atlantic Corp. (USA) 75,000 6.872 .08
AirTouch Communications (USA) (2) 117,820 5.611 .07
SmarTone Telecommunications Holdings Ltd. (Hong Kong - Incorporated in Bermuda)(1) 2,000,000 4.736 .06
TELUS Corp. (Canada) 135,000 3.542 .04
BANKING- 11.46%
Royal Bank of Canada (Canada) 1,334,200 81.549 .96
Istituto Mobiliare Italiano SpA (Italy) 1,900,000 32.455
Istituto Mobiliare Italiano SpA (American Depositary Receipts) (Italy) 500,000 25.562 .68
Australia and New Zealand Banking Group Ltd. (Australia) 8,156,562 57.865 .68
Bank of Scotland (United Kingdom) 4,200,000 48.668 .57
Chase Manhattan Corp. (USA) 350,000 47.578 .56
ForeningsSparbanken AB (Sweden) 1,577,000 47.360 .56
First Union Corp. (USA) 850,000 47.016 .55
National Bank of Canada (Canada) 2,000,000 40.794 .48
Safra Republic Holdings SA (Luxembourg) 266,000 39.900 .47
Commonwealth Bank of Australia (Australia) 2,499,000 29.391 .35
Washington Mutual, Inc. (USA) 400,000 28.250 .33
Banc One Corp. (USA) 484,000 26.680 .31
Westpac Banking Corp.(Australia) 4,025,164 26.566 .31
Bank of Nova Scotia (Canada) 968,400 25.938 .31
HSBC Holdings PLC (United Kingdom) 1,067,626 25.904 .31
Cie. Financiere de Paribas, Class A (France) (2) 250,000 25.502 .30
Bank of Montreal (Canada) 450,000 25.295 .30
Fuji Bank, Ltd. (Japan) 1,700,000 8.336 .10
Fuji JGB Investment LLC 9.87% noncumulative preferred, Series A (Japan) (1) $19,000,000 16.483 .19
Hang Seng Bank, Ltd. (Hong Kong) 3,300,000 24.595 .29
Unibanco-Uniao de Bancos Brasileiros, SA (Global Depositary Receipts)(Brazil) 780,000 24.424 .29
Banco de Galicia y Buenos Aires SA (American Depositary Receipts) (Argentina) 987,000 20.233 .24
ABN AMRO Holding NV (Netherlands) 800,000 19.369 .23
Wilmington Trust Corp. (USA) 300,000 18.188 .21
National Australia Bank Ltd. (Australia) 1,307,527 18.114 .21
Unidanmark A/S (Denmark) 215,000 17.359 .20
Crestar Financial Corp. (USA) 300,000 17.231 .20
Asahi Bank, Ltd. (Japan) 4,150,000 15.592 .18
Skandinaviska Enskilda Banken AB (Sweden) 800,000 13.313 .16
Bank of New York Co., Inc. (USA) 200,000 12.225 .14
Sakura Bank, Ltd. (Japan) 4,000,000 11.855 .14
Bank of the Philippine Islands (Philippines) 3,580,400 8.986 .11
Wells Fargo & Co. (USA) 24,500 8.857 .10
Spar Nord Holding A/S (Denmark) 140,000 7.453 .09
Sanwa International Finance (Bermuda) Trust 1.25% preferred share units 2005
(Japan) (1) 849,000,000 6.122 .07
Lloyds TSB Group PLC (United Kingdom) 370,000 5.375 .06
Credit Lyonnais Group (France) (2) 52,692 5.181 .06
Grupo Financiero Banamex Accival, SA de CV, Class L (Mexico) (2) 384,600 .851
Banco Nacional de Mexico, SA, 11.00% convertible debentures 2003 (1) $3,970,000 4.129 .06
National Westminister Bank PLC (United Kingdom) 260,200 4.717 .06
MBL International Finance (Bermuda), 3.00% convertible debentures 2002 (Bermuda) $3,800,000 3.634 .04
UTILITIES: ELECTRIC & GAS- 4.93%
Williams Companies, Inc. (USA) 2,320,560 75.273 .89
Northeast Utilities (USA) (2) 3,050,000 48.609 .57
Southern Electric PLC (United Kingdom) 4,174,707 36.102 .43
Columbia Energy Group (Formerly Columbia Gas System) (USA) 394,400 33.278 .39
National Power PLC (United Kingdom) 3,480,000 32.396 .38
Scottish Power PLC (United Kingdom) 3,066,250 27.242 .32
El Paso Natural Gas Co. (USA) 560,000 21.630 .25
Public Service Co. of New Mexico (USA) 864,300 18.745 .22
Sonat Inc. (USA) 454,100 17.795 .21
K N Energy, Inc. (USA) 325,000 17.591 .21
CalEnergy Co., Inc. (USA) (2) 500,000 15.125 .18
Long Island Lighting Co. (USA) 400,000 11.925 .14
Empresa Nacional de Electricidad SA (American Depositary Receipts) (Chile) 709,546 11.042 .13
Hongkong Electric Holdings Ltd. (Hong Kong) 3,310,500 9.720 .11
Australian Gas Light Co. (Australia) 1,283,367 9.000 .11
Ameren Corp. (Formerly Union Electric Co.) (USA) 230,000 8.999 .11
Cia. Paulista de Forca e Luz - CPFL (Brazil) (2) 74,000,000 7.431 .09
NICOR Inc. (USA) 175,000 6.759 .08
National Fuel Gas Co. (USA) 127,000 5.382 .06
Centrais Eletricas Brasileiras SA - ELETROBRAS, Class B, preferred nominative
(American Depositary Receipts) (Brazil) 240,000 4.260 .05
MULTI-INDUSTRY- 4.31%
Siebe PLC (United Kingdom) 2,720,000 66.635 .79
Suez Lyonnaise des Eaux (France) 390,243 66.628 .79
Orkla AS, Class A (Norway) 804,000 18.296
Orkla AS, Class B 1,404,000 29.436 .56
Williams Holdings PLC (United Kingdom) 6,500,000 46.710 .55
Hutchison Whampoa Ltd. (Hong Kong) 5,507,000 28.784 .34
Societe Generale de Belgique SA (Belgium) 135,000 24.037 .28
Lend Lease Corp. Ltd. (Australia) 787,046 16.790 .20
Swire Pacific Ltd., Class A (Hong Kong) 4,000,000 14.790 .17
FMC Corp. (USA) (2) 170,000 12.994 .15
Canadian Pacific Ltd. (Canada) 400,000 11.625 .14
JG Summit (Cayman) Ltd. 3.50% Euro convertible 2003 (Philippines - Incorporated $20,000,000 11.400
in the Cayman Islands) .13
Ayala Corp., 3.00% convertible debentures 2000 (Philippines) $10,000,000 11.238 .13
Jardine Strategic Holdings Ltd. (Singapore - Incorporated In Bermuda) 3,434,311 7.075 .08
Brierley Investments Ltd. 9.00% convertible preferred (New Zealand) 200,000 .096 .00
Cie. Nationale a Portefeuille, warrants, expire 1999 (2) (Belgium) 1,000 .029 .00
BEVERAGES & TOBACCO- 3.62%
Imperial Tobacco Ltd. (United Kingdom) 9,250,000 70.474 .83
RJR Nabisco Holdings Corp. (USA) 2,100,000 59.194 .70
Gallaher Group PLC (United Kingdom) 9,500,000 49.029 .58
Philip Morris Companies Inc. (USA) 1,000,000 37.375 .44
Foster's Brewing Group Ltd. (Australia) 13,500,000 29.306 .35
Asahi Breweries, Ltd. (Japan) 1,205,000 15.120
Asahi Breweries, Ltd. 1.00% convertible debentures 2003 Y472,000,000 5.143
Asahi Breweries, Ltd. 0.90% convertible debentures 2001 Y267,000,000 2.871
Asahi Breweries, Ltd. 0.95% convertible debentures 2002 Y212,000,000 2.298 .30
Seagram Co. Ltd. (Canada) 525,000 23.067 .27
Coca-Cola Amatil Ltd. (Australia) 1,056,637 7.767 .09
UST Inc. (USA) 200,000 5.325 .06
ENERGY SOURCES- 3.56%
Shell Canada Ltd., Class A (Canada) 2,375,800 40.954 .48
ENI SpA (Italy) 4,700,000 33.105
ENI SpA (American Depositary Receipts) 100,000 7.063 .47
Elf Aquitaine (France) 250,000 34.741 .41
NGC Corp. (USA) 1,975,000 29.995 .35
"Shell" Transport and Trading Co., PLC (New York Registered Shares)(United Kingdom) 400,000 17.750
Royal Dutch Petroleum Co. (Netherlands) 100,000 5.697
Royal Dutch Petroleum Co. (New York Registered Shares) 80,000 4.485 .33
TOTAL, Class B (France) 224,487 27.892 .33
Repsol SA (American Depositary Receipts) (Spain) 425,000 23.269 .27
Pioneer Natural Resources Co. (USA) 683,919 16.072 .19
Mobil Corp. (USA) 200,000 15.600 .18
YPF SA, Class D (American Depositary Receipts)(Argentina) 450,000 13.978 .16
Unocal Corp. (USA) 360,000 12.825 .15
Broken Hill Proprietary Co. Ltd. (Australia) 1,100,000 9.414 .11
Esso SA Francaise (France) 78,567 7.830 .09
Engen Ltd. (South Africa) 900,000 3.370 .04
HEALTH & PERSONAL CARE- 3.40%
AB Astra, Class A (Sweden) 3,552,400 71.350
AB Astra, Class B 1,390,533 27.042 1.16
Glaxo Wellcome PLC (United Kingdom) 2,860,000 78.238 .92
Pfizer Inc (USA) 438,000 45.908 .54
PLIVA d.d. (Global Depositary Receipts) (Croatia) (1) 690,000 11.351
PLIVA d.d. (Global Depositary Receipts) 600,000 9.870 .25
Merck & Co., Inc. (USA) 144,700 16.939 .20
Novartis AG, 2.00% convertible debentures 2002 (Switzerland) (1) $7,500,000 12.037 .14
Zeneca Group PLC (United Kingdom) 225,000 9.146 .12
Eli Lilly and Co. (USA) 100,000 6.144 .07
Allegiance Corp. (USA) 6,000 .300 .00
AUTOMOBILES- 3.18%
Chrysler Corp. (USA) 2,165,000 120.428 1.42
Regie Nationale des Usines Renault, SA (France) (2) 1,200,000 62.809 .74
Ford Motor Co., Class A (USA) 1,098,300 56.974 .67
Bayerische Motoren Werke AG (Germany) 12,000 12.693
Bayerische Motoren Werke AG (new) (2) 2,400 2.508 .18
Suzuki Motor Corp. (Japan) 1,700,000 13.841 .17
FOREST PRODUCTS & PAPER- 3.03%
Fort James Corp. (USA) 1,427,360 68.246 .80
Sonoco Products Co. (USA) 1,017,500 35.549 .42
Metsa-Serla Oy, 4.375% convertible debentures 2002 (Finland) (1) $30,000,000 32.850 .39
Bowater Inc. (USA) 500,000 25.313 .30
Jefferson Smurfit Corp. (USA) (2) 1,332,300 24.564 .29
Union Camp Corp. (USA) 300,000 16.406 .19
Champion International Corp. (USA) 330,000 15.840 .19
UPM-Kymmene Corp. (Finland) 508,960 14.752 .17
APP Global Finance (V) Ltd., 2.00% convertible debentures 2000 (Indonesia)(1) $15,000,000 12.900 .15
MAYR-MELNHOF Karton AG (Austria) 145,000 10.610 .13
BUSINESS & PUBLIC SERVICES- 2.93%
United Utilities PLC (United Kingdom) 4,936,323 66.915 .79
Brambles Industries Ltd. (Australia) 1,524,354 30.898 .36
Thames Water PLC (United Kingdom) 1,575,000 25.581 .30
Hyder PLC (United Kingdom) 1,495,000 23.855 .28
Columbia/HCA Healthcare Corp. (USA) 550,000 17.978 .21
Electronic Data Systems Corp. (USA) 400,000 14.550 .17
Vanstar Financing Trust, 6.75% convertible preferred (USA)(2) 350,000 14.175 .17
Quintiles Transnational Corp., 4.25% convertible debentures 2000 (USA)(1) $10,000,000 12.925 .15
Cendant Corp. 7.50% PRIDES convertible preferred (USA) 300,000 11.325 .13
Omnicom Group Inc. (USA) 200,000 9.362 .11
American Water Works Co., Inc. (USA) 300,000 8.812 .10
Rentokil Initial PLC (United Kingdom) 1,100,000 7.607 .09
Hutchison Delta Finance Ltd., 7.00% convertible debentures 2002
Hong Kong--Incorporated in Cayman Islands (1) $6,000,000 6.000 .07
INSURANCE- 2.93%
ING Groep NV (Netherlands) 2,042,724 140.244 1.65
Transatlantic Holdings, Inc. (USA) 320,400 23.970 .28
Norwich Union PLC (United Kingdom) 2,360,600 17.118 .20
Fairfax Financial Holdings Ltd. (Canada) (2) 35,000 13.509 .16
Guardian Royal Exchange PLC (United Kingdom) 1,900,095 11.963 .14
National Mutual Asia Ltd. (Hong Kong) 15,958,000 11.224 .13
Yasuda Fire and Marine Insurance Co., Ltd (Japan) 1,940,000 8.366 .10
Corporacion Mapfre, CIR, SA (Spain) 172,812 6.652 .08
GIO Australia Holdings Ltd. (Australia) 2,285,486 6.434 .08
PartnerRe Holdings Ltd. (Singapore - Incorporated in Bermuda) 116,500 5.679 .07
Aetna Inc. (USA) 40,000 3.127 .04
MERCHANDISING- 2.90%
Tesco PLC (United Kingdom) 7,469,504 65.510 .77
Dixons Group PLC (United Kingdom) 3,819,700 36.432 .43
Wal-Mart Stores, Inc. (USA) 596,000 32.892 .39
J.C. Penney Co., Inc. (USA) 400,000 28.725 .34
Safeway PLC (United Kingdom) 3,850,000 23.406 .28
AutoZone, Inc. (USA) (2) 550,000 18.287 .22
Coles Myer Ltd. (Australia) 2,150,700 9.687 .11
Kingfisher PLC (United Kingdom) 465,000 8.240 .10
Amway Japan Ltd. (Japan) 179,000 2.194
AJL PEPS Trust, $1.44 convertible preferred (2) 465,000 3.778 .07
Staples, Inc., 4.50% convertible debentures 2000 (USA) (1) $3,000,000 5.179 .06
Woolworths Ltd. (Australia) 1,219,885 4.190 .05
Superdiplo SA (Spain) 179,000 3.841 .05
Thorn PLC (United Kingdom) 865,260 2.883 .03
CHEMICALS- 2.61%
Praxair, Inc. (USA) 1,119,700 55.215 .65
BOC Group PLC (United Kingdom) 2,250,000 35.645 .42
Millennium Chemicals Inc. (USA) 1,095,800 34.655 .41
Airgas, Inc. (USA) (2) 2,037,100 30.938 .36
Sherwin-Williams Co. (USA) 872,000 28.994 .34
DSM NV (Netherlands) 258,064 26.108 .31
L'Air Liquide (France) 50,599 9.976 .12
BROADCASTING & PUBLISHING- 2.60%
Tele-Communications, Inc., Series A, Liberty Media Group (USA) (2) 1,496,250 49.376 .58
Time Warner Inc. (USA) 450,000 35.016 .41
Rogers Communications Inc., Class B (Canada) (2) 3,485,000 28.242 .33
Viacom Inc., Class B (USA) (2) 425,000 23.375 .28
ProSieben Media AG (Germany) (1,2) 320,800 15.996 .19
NTL Inc. (United Kingdom - Incorporated in USA) (2) 326,560 13.267 .16
CanWest Global Communications Corp. (Canada) 741,300 13.033 .15
CANAL+ (France) 59,356 10.779 .13
Tidnings AB Marieberg, Class A (Sweden) 300,000 9.086 .11
Publishing & Broadcasting Ltd. (Australia) 1,765,235 8.371 .10
News Corp. Ltd., preferred (Australia) 1,362,268 7.372 .09
Modern Times Group MTG AB, Class B (American Depositary Receipts) (Sweden)(2) 100,550 5.932 .07
REAL ESTATE- 2.40%
Sun Hung Kai Properties Ltd. (Hong Kong) 6,360,000 30.698 .36
Security Capital Group Inc., Class A (USA)(2) 18,200 24.570 .29
Amoy Properties Ltd. (Hong Kong) 35,531,000 22.813 .27
Hysan Development Co. Ltd. (Hong Kong) 21,000,000 21.411
Hysan Development Co. Ltd., warrants, expire 1999 (2) 1,683,000 .041 .25
CarrAmerica Realty Corp. (USA) 750,000 21.000 .25
Land Securities PLC, 6.00% convertible debentures 2007 (United Kingdom) $10,000,000 20.048 .24
Cheung Kong (Holdings) Ltd. (Hong Kong) 3,000,000 16.222 .19
Meditrust Corp., paired stock (USA) 415,339 11.707 .14
SM Prime Holdings, Inc. (Philippines) 52,885,000 9.393 .11
Kerry Properties Ltd. (Hong Kong) 9,760,500 9.070 .11
Security Capital Global Realty (Luxembourg) (1,2) 450,000 9.000 .11
AMB Property Corp. (USA) 250,000 5.953 .07
Mandamus AB (Sweden) (2) 78,850 .503 .01
ELECTRICAL & ELECTRONIC- 2.36%
Siemens AG (Germany) 759,000 48.987 .58
York International Corp. (USA) 607,900 30.395 .36
Premier Farnell PLC (United Kingdom) 4,600,000 28.135 .33
Nokia Corp., Class A (American Depositary Receipts) (Finland) 400,000 25.975 .31
Telefonaktiebolaget LM Ericsson, Class B (Sweden) 820,000 23.371 .28
Matsushita Communication Industrial Co., Ltd. (Japan) 475,000 13.359 .16
General Electric Co. (USA) 125,000 10.422 .12
Elektrim SA (Poland) 200,000 2.633 .11
Elektrim 2.00% convertible debentures 2004 $9,000,000 6.303
Northern Telecom Ltd. (Canada) 103,000 6.592 .08
Kokusai Electric Co., Ltd. (Japan) 350,000 2.799 .03
ELECTRONIC COMPONENTS- 2.27%
Advanced Micro Devices, Inc. (USA) (2) 2,000,000 39.000 .46
Micron Technology, Inc. (USA) (2) 1,650,000 38.878 .46
Delta Electronics, Inc. (Taiwan) 5,800,000 21.782 .26
Murata Manufacturing Co., Ltd. (Japan) 706,000 20.416 .24
Hoya Corp. (Japan) 527,000 16.646 .20
Altera Corp. (USA) (2) 450,000 15.131 .18
Intel Corp. (USA) 200,000 14.287 .17
Rohm Co., Ltd. (Japan) 100,000 10.384 .12
Mosel Vitelic Inc. (Taiwan) (2) 6,590,000 7.376 .09
Texas Instruments Inc. (USA) 100,000 5.138 .06
Lite-On Technology Corp. (Taiwan) (2) 2,000,000 2.887 .03
FOOD & HOUSEHOLD PRODUCTS- 2.22%
Reckitt & Colman PLC (United Kingdom) 3,109,437 63.809 .75
Cadbury Schweppes PLC (United Kingdom) 2,962,808 45.316 .53
Nestle SA (Switzerland) 17,952 38.423 .45
Groupe Danone (France) 76,480 20.604 .24
Cultor Ltd. (Finland) 682,500 11.766 .14
Unilever NV (Netherlands) 120,000 9.533 .11
FINANCIAL SERVICES- 2.19%
Household International, Inc. (USA) 335,000 45.330 .53
Associates First Capital Corp., Class A (USA) 477,847 35.749 .42
Freddie Mac (USA) 700,000 31.850 .38
Nichiei Co., Ltd. (Japan) 350,110 23.480 .28
OM Gruppen AB (Sweden) 790,000 16.119 .19
Fannie Mae (USA) 250,000 14.969 .18
Credicorp Ltd. (Peru) 678,950 10.778 .13
Medallion Financial Corp. (USA) 275,000 6.944 .08
DATA PROCESSING & REPRODUCTION- 1.29%
Ascend Communications, Inc. (USA) (2) 720,000 31.095 .37
Oracle Corp. (USA) (2) 875,000 20.672 .24
Fujitsu Ltd. (Japan) 1,000,000 11.466
Fujitsu Ltd., warrants, expire 2000 (2) 7,100 8.875 .24
Microsoft Corp. (USA) (2) 175,000 14.842 .17
3Com Corp. (USA) (2) 500,000 12.688 .15
Computer Associates International, Inc. (USA) 200,000 10.500 .12
GOLD MINES- 1.07%
Barrick Gold Corp. (Canada) 1,400,000 26.950 .32
Homestake Mining Co. (USA) 1,750,000 19.031 .22
Normandy Mining Ltd. (Australia) 17,644,925 16.227
Normandy Mining Ltd., options, expire 2001 (2) 4,875,799 .488 .20
Driefontein Consolidated Ltd. (South Africa) 2,200,000 14.128 .17
Newcrest Mining Ltd. (Australia) (2) 6,000,000 7.507 .09
Gold Fields Ltd. (South Africa) (2) 1,044,120 6.077 .07
INDUSTRIAL COMPONENTS- 0.92%
Tomkins PLC (United Kingdom) 4,400,000 25.511 .30
Lear Corp. (USA) (2) 352,300 18.804 .22
Morgan Crucible Co. PLC (United Kingdom) 2,161,523 17.121 .20
Eaton Corp. (USA) 173,300 15.565 .18
Rockwell International Corp. (USA) 30,000 1.650 .02
MISCELLANEOUS MATERIALS & COMMODITIES- 0.77%
English China Clays PLC (United Kingdom) 6,891,000 28.699 .34
Cie. de Saint-Gobain (France) 111,377 21.977 .26
Crown Cork & Seal Co., Inc. (USA) 275,000 14.266 .17
MACHINERY & ENGINEERING- 0.71%
Sidel SA (France) 210,000 17.102 .20
Svedala Industri AB (Sweden) 600,000 14.767 .17
Caterpillar Inc. (USA) 250,000 13.734 .16
AIDA Engineering, Ltd. (Japan) 1,995,000 7.582 .09
Daewoo Heavy Industries Ltd. (South Korea) 1,800,000 6.183 .07
Kawasaki Heavy Industries, Ltd. (Japan) 1,000,000 1.868 .02
METALS: NONFERROUS- 0.62%
Pechiney, Class A (France) 250,000 12.730 .15
Inco Ltd. (Canada) 850,000 12.219 .14
Gencor Ltd. (South Africa) 6,196,800 12.142 .14
Teck Corp., 3.75% convertible debentures 2006 (Canada) $14,950,000 11.848 .14
Indian Aluminum Co., Ltd. (India) 527,700 2.092
Indian Aluminum Co., Ltd. (Global Depositary Receipts) 532,300 2.236 .05
ELECTRONIC INSTRUMENTS- 0.62%
ADVANTEST CORP. (Japan) 401,700 24.797 .29
Security Dynamics Technologies, Inc. (USA) (2) 1,000,000 21.125 .25
Perkin-Elmer Corp. (USA) 100,000 6.850 .08
ENERGY EQUIPMENT- 0.62%
Schlumberger Ltd. (Netherlands Antilles) 455,000 35.518 .42
Halliburton Co. (USA) 359,800 17.046 .20
APPLIANCES & HOUSEHOLD DURABLES- 0.61%
Sony Corp. (Japan) 350,000 29.531 .35
Philips Electronics NV (Netherlands) 231,700 22.012 .26
METALS: STEEL- 0.41%
Usinor Sacilor (France) 1,400,000 23.435 .28
Allegheny Teledyne Inc. (USA) 377,000 8.765 .10
Ispat Industries Ltd., 3.00% convertible debentures 2001 (India)(1) $2,800,000 1.344 .02
N.T.S. Steel Group PCL, 4.00% Euro convertible 2008 (Thailand) $6,670,000 .667 .01
AEROSPACE & MILITARY TECHNOLOGY- 0.37%
Bombardier Inc., Class B (Canada) 738,000 18.981 .22
Boeing Co. (USA) 140,000 6.668 .08
General Motors Corp., Class H (new) (USA) (2) 75,000 3.713 .04
Raytheon Co., Class A (new) (USA) 42,180 2.249 .03
TRANSPORTATION: RAIL & ROAD- 0.34%
Westshore Terminals Inc. (Canada) (1) 3,100,000 16.819 .20
Union Pacific Corp. (USA) 250,000 12.094 .14
LEISURE & TOURISM- 0.32%
Village Roadshow Ltd. (Australia) 1,200,000 2.537
Village Roadshow Ltd., Class A, 5.50% preferred shares 2,518,592 4.018
Village Roadshow Ltd., Class A, 5.50% preferred shares (1) 2,500,000 3.988 .12
King World Productions, Inc. (USA) (2) 400,000 10.200 .12
Thistle Hotels PLC (United Kingdom) 2,100,000 6.808 .08
RECREATION & OTHER CONSUMER PRODUCTS- 0.28%
Nintendo Co., Ltd. (Japan) 125,000 11.673 .14
EMI Group PLC (United Kingdom) 1,365,067 11.548 .14
TEXTILES & APPAREL- 0.19%
Nine West Group Inc. (USA) (2) 300,000 8.456 .10
Courtaulds Textiles PLC (United Kingdom) 1,641,500 7.855 .09
BUILDING MATERIALS & COMPONENTS- 0.14%
Friedrich Grohe AG (Germany) 35,000 12.158 .14
TRANSPORTATION: AIRLINES- 0.10%
Air New Zealand Ltd., Class B (New Zealand) 6,320,000 8.393 .10
TRANSPORTATION: SHIPPING- 0.08%
Mitsui O.S.K. Lines, Ltd. (Japan) 4,180,000 6.390 .08
MISCELLANEOUS- 1.88%
Other equity securities in initial
period of acquisition 159.779 1.88
-------- --------
TOTAL EQUITY SECURITIES (cost: $5,792.372 million) 7,609.695 88.09
- -------------------------------------------------------- --------------------------------------------
- ------------------------------------------ ------------------
Principal
Amount
Bonds and Notes (Millions)
- ------------------------------------------ ------------------
INDUSTRIALS- 0.19%
Container Corp. of America 11.25% 2004 $6.000 6.495
Container Corp. of America 9.75% 2003 1.000 1.075 .09
Telecom Argentina STET-France Telecom SA 12.00% November 2002 5.500 6.163 .07
Multicanal Participacoes SA 12.625% June 2004 2.250 2.379 .03
FINANCIAL- 0.08%
Netia Holdings BV 10.25% November 2007 (1) 4.125 4.089 .05
Netia Holdings BV 0%/11.25% November 2007 (1,3) 3.750 2.592 .03
ARGENTINEAN GOVERNMENT- 0.30%
Argentina (Republic of) 11.75% February 2007 (1) ARP8.000 7.803
Argentina (Republic of) 11.00% October 2006 $7.000 7.473
Argentina (Republic of) 11.375% January 2017 6.000 6.429
Argentina (Republic of) 8.75% July 2002 ARP4.000 3.522 .30
SOUTH AFRICAN GOVERNMENT- 0.42%
South Africa 13.00% August 2010 ZAR197.500 35.764 .42
---------------------------
TOTAL BONDS AND NOTES (cost: $88.998 million) 83.784 .99
---------------------------
- ---------------------------------------------------------------- ---------------- ------------ -------------
Short-Term Securities
- ---------------------------------------------------------------- -------------------------------------------
CORPORATE SHORT-TERM NOTES- 8.57%
Lloyds Bank PLC 5.47%-5.48% due 6/11-7/10/98 $73.400 73.055 .86
Daimler-Benz North America Corp. 5.47%-5.50% due 6/10-8/25/98 65.300 64.881 .76
British Telecommunications PLC 5.48%-5.53% due 6/3-7/21/98 57.645 57.480 .68
Canada Bills 5.44%-5.48% due 7/24/98 50.000 49.591 .58
Rank Xerox Capital (Europe) PLC 5.49%-5.65% due 6/1-6/29/98 48.400 48.277 .57
Nestle Capital Corp. 5.46%-5.47% due 6/12-7/9/98 46.400 46.213 .54
Abbey National North America 5.48%-5.52% due 7/17-8/17/98 45.000 44.548 .52
Reed Elsevier Inc. 5.47%-5.48% due 6/16-7/7/98 (1) 42.200 42.016 .50
Bayer Corp. 5.47% due 7/7-7/14/98 (1) 37.500 37.263 .44
Diageo Capital PLC 5.46%-5.50% due 6/5-7/1/98 (1) 35.000 34.894 .41
E.I. Du Pont de Nemours and Co. 5.46%-5.47% due 7/8-7/16/98 34.500 34.263 .40
Deutsche Bank Financial Inc. 5.49%-5.51% due 6/23-7/23/98 34.000 33.800 .40
Svenska Handelsbanken Group 5.45%-5.48% due 7/2-7/14/98 28.900 28.734 .34
Repsol International Finance BV 5.48% due 7/22/98 21.900 21.726 .26
Societe Generale North America 5.49%-5.50% due 6/8-7/20/98 21.000 20.962 .25
Ford Credit Europe PLC 5.50% due 6/12/98 19.300 19.265 .23
Arco British Ltd. 5.52% due 6/18/98 (1) 16.000 15.956 .19
Sweden (Kingdom of) 5.43% due 7/6/98 15.400 15.315 .18
General Motors Acceptance Corp. 5.49% due 6/4/98 15.300 15.291 .18
Barclays U.S. Funding Corp. 5.48% due 6/1/98 15.000 14.998 .18
ABN AMRO North America Finance Inc. 5.47% due 8/5/98 8.500 8.412 .10
FEDERAL AGENCY DISCOUNT NOTES- 0.81%
Fannie Mae 5.41%-5.42% due 7/15-7/21/98 42.000 41.700 .49
Freddie Mac 5.40%-5.42% due 6/26-7/20/98 27.600 27.440 .32
NON-U.S. CURRENCY- 0.07%
New Taiwanese Dollar $186.068 5.481 .07
------ ---
TOTAL SHORT-TERM SECURITIES (cost: $802.663 million) 801.561 9.45
------- ----
TOTAL INVESTMENT SECURITIES (cost: $6,684.033 million) 8,495.040 98.53
Excess of payables over cash and receivables (8.523) (.10)
---------- ------
NET ASSETS $8,486.517 98.43
======================================================== ========= ======
(1) Purchased in a private placement
transaction; resale to the public may
require registration or sale only
</TABLE>
<TABLE>
<S> <S> <S>
Capital World Growth and Income Fund, Inc.
Financial Statements Unaudited
- ---------------------------------------- --------------- ---------------
Statement of Assets and Liabilities (dollars in
at May 31, 1998 millions)
- ----------------------------------------- --------------- ---------------
Assets:
Investment securities at market
(cost: $6,684.033) $8,495.040
Cash 13.498
Receivables for--
Sales of investments $ 9.896
Sales of fund's shares 14.784
Dividends and accrued interest 28.386 53.066
--------------- ---------------
8,561.604
Liabilities:
Payables for--
Purchases of investments 60.981
Repurchases of fund's shares 6.110
Management services 3.096
Accrued expenses 4.900 75.087
--------------- ---------------
Net Assets at May 31, 1998--
Equivalent to $27.27 per share on
311,169,153 shares of $0.01 par value
capital stock outstanding (authorized
capital stock - 400,000,000 shares) $8,486.517
===============
Unaudited
---------------
Statement of Operations (dollars in
for the six months ended May 31, 1998 millions)
- --------------------------------------------- --------------- ---------------
Investment Income:
Income:
Dividends $85.016
Interest 36.079 $ 121.095
------------
Expenses:
Management services fee 16.924
Distribution expenses 9.045
Transfer agent fee 2.567
Reports to shareholders .361
Registration statement and prospectus .598
Postage, stationery and supplies .511
Directors' fees .104
Auditing and legal fees .060
Custodian fee 1.095
Taxes other than federal income tax .102
Other expenses .078 31.445
-------------- --------------
Net investment income 89.650
--------------
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 456.595
Net increase in unrealized appreciation on investments 501.555
Net realized gain and increase in unrealized ---------------
appreciation on investments 958.150
---------------
Net Increase in Net Assets Resulting
from Operations $1,047.800
===============
See Notes to Financial Statements
(dollars in
millions)
- ---------------------------------------------- --------------- ---------------
Six months
Statement of Changes in Net Assets ended Year ended
(dollars in millions) 5/31/98* 11/30/97
- ---------------------------------------------- --------------- ---------------
Operations:
Net investment income $ 89.650 $ 158.747
Net realized gain on investments 456.595 522.194
Net increase in unrealized appreciation
on investments 501.555 221.200
--------------- ---------------
Net increase in net assets
resulting from operations 1,047.800 902.141
--------------- ---------------
Dividends and Distributions Paid to Shareholders:
Dividends from net investment income (67.076) (160.940)
Distributions from net realized gain on investments (524.360) (201.626)
--------------- ---------------
Total dividends and distributions (591.436) (362.566)
--------------- ---------------
Capital Share Transactions:
Proceeds from shares sold: 26,733,739
and 74,465,301 shares, respectively 704.421 1,853.652
Proceeds from shares issued in reinvestment
of net investment income dividends and distributions
of net realized gain on investments:
23,090,750 and 14,610,266 shares, respectively 563.726 342.876
Cost of shares repurchased: 16,986,023
and 26,987,023 shares, respectively (444.541) (669.041)
--------------- --------------
Net increase in net assets
resulting from capital share
transactions 823.606 1,527.487
--------------- ---------------
Total Increase in Net Assets 1,279.970 2,067.062
Net Assets:
Beginning of period 7,206.547 5,139.485
--------------- ---------------
End of period (including undistributed
net investment income: $43.259
and $20.571, respectively) $8,486.517 $7,206.547
=============== ===============
*Unaudited
See Notes to Financial Statements
</TABLE>
CAPITAL WORLD GROWTH AND INCOME FUND
Notes to Financial Statements Unaudited
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 securities, including depositary receipts, are valued at the last
reported sale price on the exchange or market on which such securities are
traded, as of the close of business on the day the securities are being valued
or, lacking any sales, at the last available bid price. In cases where equity
securities are traded on more than one exchange, the securities are valued on
the exchange or market determined by the investment adviser to be the broadest
and most representative market, which may be either a securities exchange or
the over-the-counter market.
Fixed-income securities are valued at prices obtained from a pricing service,
when such prices are available; however, in circumstances where the investment
adviser deems it appropriate to do so, such securities will be valued at the
mean quoted bid and asked prices or at prices for securities of comparable
maturity, quality and type. Securities with
original maturities of one year or less having 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. Assets or liabilities initially expressed in terms of foreign
currencies are translated into U.S. dollars at the prevailing market rates at
the end of the reporting period. Purchases and sales of securities and income
and expenses are translated into U.S. dollars at the prevailing market rates on
the dates of such transactions. The effects of changes in foreign currency
exchange rates on investment securities are included with the net realized and
unrealized gain or loss on investment securities. Securities and assets for
which representative market quotations are not readily available are valued at
fair value as determined in good faith by a committee appointed by the Board of
Directors.
As is customary in the mutual fund industry, securities transactions are
accounted for on the date the securities are purchased or sold. In the event
the fund purchases securities on a delayed delivery or "when-issued" basis, it
will segregate with its custodian liquid assets in an amount sufficient to meet
its payment obligations in these transactions. 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. Dividends and distributions paid to shareholders are
recorded on the ex-dividend date.
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 May 31, 1998, net unrealized appreciation on investments for book and
federal income tax purposes aggregated $1,811,007,000, of which $2,243,702,000
related to appreciated securities and $432,695,000 related to depreciated
securities. During the six months ended May 31, 1998, the fund realized, on a
tax basis, a net capital gain of $456,691,000 on securities transactions. Net
losses related to non-U.S. currency and other transactions of $96,000 were
treated as an adjustment to ordinary
income for federal income tax purposes. The cost of portfolio securities for
book and federal income tax purposes was $6,684,033,000 at May 31, 1998.
3. The fee of $16,924,000 for management services was incurred pursuant to an
agreement with Capital Research and Management Company (CRMC), with which
certain officers and Directors of the fund are affiliated. The Investment
Advisory and Service Agreement provides for monthly fees, accrued daily, based
on an annual rate of 0.60% of the first $500 million of net assets; 0.50% of
such assets in excess of $500 million but not exceeding $1 billion; 0.46% of
such assets in excess of $1 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 billion; 0.40% of
such assets in excess of $4 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 six months ended
May 31, 1998, distribution expenses under the Plan were $9,045,000. As of May
31, 1998, accrued and unpaid distribution expenses were $4,287,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $2,567,000. American Funds Distributors, Inc. (AFD), the
principal underwriter of the fund's shares, received $3,044,000 (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 May 31, 1998,
aggregate amounts deferred and earnings thereon were $241,000.
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 May 31, 1998, accumulated undistributed net realized
gain on investments was $453,611,000 and additional paid-in capital was
$6,175,930,000. To conform to its tax reporting, the fund reclassified $114,000
to undistributed net investment income from undistributed net realized gains.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $1,706,652,000 and $1,206,244,000, respectively,
during the six months ended May 31, 1998.
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 $1,095,000 includes $36,000 was paid by these credits
rather than in cash.
Dividend and interest income is recorded net of non-U.S. taxes paid. For the
six months ended May 31, 1998, such non-U.S. taxes were $7,744,000. Net
realized currency losses on dividends, interest and withholding taxes
reclaimable, on a book basis, were $219,000 for the six months ended May 31,
1998.
Our holdings in Japan, which accounted for 4.4% of the portfolio, also
declined. The nation continued to grapple with severe difficulties and failed
to emerge from a prolonged economic slump. Concerns about the health of Japan's
banking sector increased and the yen wilted against the dollar. Amid the
financial fog, a crisis of confidence gripped the nation. The Japanese market
declined accordingly, closing the period with a 9.4% drop.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Per-Share Data and Ratios Six months Year ended November 30 Period
ended November 3/26/93(2)
5/31/98(1) 1997 1996 1995 1994 to 11/30/93
---- ---- ---- ---- ---- ----
Net Asset Value, Beginning of Period $25.89 $23.77 $20.22 $17.81 $17.00 $15.08
---- ---- ---- ---- ---- ----
Income From Investment Operations:
Net investment income .30 .640 .70 .61 .52 .29
Net realized and unrealized gain on investments 3.18 3.045 3.91 2.72 .75 1.86
---- ---- ---- ---- ---- ----
Total income from investment operations 3.48 3.685 4.61 3.33 1.27 2.15
---- ---- ---- ---- ---- ----
Less Distributions:
Dividends from net investment income (.23) (.650)(3) (.72)(3) (.63) (.46) (.23)
Distributions from net realized gains (1.87) .915 (.34) (.29) -- --
---- ---- ---- ---- ---- ----
Total distributions (2.10) (1.565) (1.06) (.92) (.46) (.23)
---- ---- ---- ---- ---- ----
Net Asset Value, End of Period $27.27 $25.89 $23.77 $20.22 $17.81 $17.00
====== ====== ====== ====== ====== ======
Total Return (4) 14.48%(5) 16.36% 23.67% 19.41% 7.51% 14.39%(5)
Ratios/Supplemental Data:
Net assets, end of period (in millions) $8,487 $7,207 $5,139 $3,611 $2,784 $1,521
Ratio of expenses to average net assets .40%(5) .82% .85% .88% .87% .62%(5)
Ratio of net income to average net assets 1.13%(5) 2.53% 3.28% 3.24% 3.11% 2.01%(5)
Average commissions paid per share (6) .94c .14c .25c 1.94c 1.24c 1.31c
Portfolio turnover rate 17.25%(5) 32.41% 30.18% 25.50% 18.66% 2.71%(5)
(1) Unaudited
(2) Commencement of operations
(3) Includes 0.2 cents and 1.5 cents realized
non-U.S. currency gains treated as ordinary
income in 1997 and 1996, respectively, for
federal income tax purposes.
(4) Excludes maximum sales charge of 5.75%.
(5) Based on operations for the period shown and,
accordingly, not representative of a full year.
(6) Brokerage commissions paid on portfolio
transactions increase the cost of securities
purchased or reduce the proceeds of securities
sold and are not separately reflected in the
fund's statement of operations. Shares traded
on a principal basis (without commissions),
such as most over-the-counter and fixed
income transactions, 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
transaction amount because of the lower per-share
prices of many non-U.S. securities.
</TABLE>
[THE AMERICAN FUNDS GROUP(R)]
Capital World Growth and Income 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
American Funds Service Company
(Please write to the address nearest you.)
P.O. Box 2205
Brea, California 92822-2205
P.O. Box 659522
San Antonio, Texas 78265-9522
P.O. Box 6007
Indianapolis, Indiana 46206-6007
P.O. Box 2280
Norfolk, Virginia 23501-2280
CUSTODIAN OF ASSETS
The Chase Manhattan Bank
One Chase Manhattan Plaza
New York, New York 10081-0001
COUNSEL
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, California 90071-2899
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
FOR INFORMATION ABOUT YOUR ACCOUNT OR ANY OF THE FUND'S SERVICES, PLEASE
CONTACT YOUR FINANCIAL ADVISER. YOU MAY ALSO CALL AMERICAN FUNDS SERVICE
COMPANY, TOLL-FREE, AT 800/421-0180 OR VISIT WWW.AMERICANFUNDS.COM ON THE WORLD
WIDE WEB.
This report is for the information of shareholders of 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 September 30, 1998, this report must be accompanied by an
American Funds Group Statistical Update for the most recently completed
calendar quarter.
Printed on recycled paper
Litho in USA AGD/AL/3847
Lit. No. WGI-013-0798
