[THE AMERICAN FUNDS GROUP(R)]
CAPITAL WORLD GROWTH AND INCOME FUND
MAKING SMALL NUMBERS COUNT
THE ROLE OF DIVIDENDS IN YOUR FUND'S STRATEGY
[photos of various countries' flags]
[watermark: chess pieces and numbers]
1998 ANNUAL REPORT
FOR THE YEAR ENDED NOVEMBER 30
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.
Results at a Glance
(with distributions reinvested)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Average Annual Compound Return
12 Months 5 Years Lifetime Lifetime Total Return
Through 12/1/93 - 3/26/93 - 3/26/93 -
11/30/98 11/30/98 11/30/98 11/30/98
Capital World Growth
and Income Fund +15.5% +16.4% +17.0% +144.1%
Morgan Stanley Capital
International World +20.4 +16.2 +15.9 +131.4
Index
Lipper Global Stock
Fund Average +10.6 +12.8 +13.7 +106.9
</TABLE>
The MSCI World Index is unmanaged and measures all of the world's major stock
markets, including the U.S.
The Lipper Global Stock Fund Average consists of funds that invest at least 25%
of their portfolios in securities traded outside of the United States.
The fund's 30-day yield as of December 31, 1998, calculated in accordance with
the Securities and Exchange Commission formula, was 2.11%.
THE FIGURES IN THIS REPORT REFLECT PAST RESULTS. SHARE PRICE AND RETURN WILL
VARY, SO YOU MAY LOSE MONEY. INVESTING FOR SHORT PERIODS MAKES LOSSES MORE
LIKELY. INVESTMENTS ARE NOT FDIC-INSURED, NOR ARE THEY DEPOSITS OF OR
GUARANTEED BY A BANK OR ANY OTHER ENTITY. INVESTING OUTSIDE THE UNITED STATES
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.
PREPARING FOR THE YEAR 2000. The fund's key service providers - Capital
Research and Management Company, the investment adviser, and American Funds
Service Company, the transfer agent - have updated all significant computer
systems to process date-related information properly following the turn of the
century. Testing of these and other systems with business partners, vendors and
other service providers will continue through much of 1999. We will continue to
keep you up to date in our regular publications. If you'd like more detailed
information, call Shareholder Services at 800/421-0180, ext. 21, or visit our
Web site at www.americanfunds.com.
[pictures of flags and chess pieces]
FELLOW SHAREHOLDERS:
In a year that saw remarkable volatility in stock markets around the world, we
are pleased to report that Capital World Growth and Income Fund posted a 15.5%
total return for the 12 months ended November 30. This return assumes you
reinvested your dividends of $0.58 a share and capital gains totaling $1.87 a
share.
By comparison, the unmanaged Morgan Stanley Capital International World Index,
which measures 22 major markets including the United States, recorded a 20.4%
increase with dividends reinvested.
The main reason for the gap between the fund's return and that of the index was
the heavy exposure of the index to the U.S. market, one of the year's strongest
performers. Today, the U.S. market makes up more than 50% of the MSCI World
Index. While it may seem paradoxical for any one stock market to dominate a
global index, that is the result of the extraordinary gains posted by U.S.
stocks in recent years. Because the U.S. market has risen so much faster than
most global markets, its size relative to other markets has increased as well,
causing its weighting in the index to rise from 38.2% five years ago to 50.9%
today. To ensure global diversification, your fund cannot invest more than 40%
of its assets in any one country. In any case, our investment professionals
found many large U.S. stocks, which have been driving the U.S. market, too
highly priced, and focused on finding values elsewhere.
Capital World Growth and Income Fund did outpace the average global equity
fund, which posted a 10.6% increase as measured by Lipper Analytical Services,
a leading mutual fund tracking service. Lipper ranks Capital World Growth and
Income Fund in the top 25% of its investment universe for the 12 months ended
November 30, in the top 15% for the last five-year period, and in the top 16%
for the lifetime of the fund.
Since its introduction in March 1993, Capital World Growth and Income Fund has
recorded a total return of 144.1% with dividends and capital gains reinvested,
compared with 131.4% for the MSCI World Index, and 106.9% for the Lipper Global
Stock Fund Average.
THE YEAR IN REVIEW
The fiscal year began in a whirlwind of uncertainty. The Asian crisis, which
last year shook markets around the world, loomed large in the minds of
investors who feared they had not seen the last of its repercussions. After a
sharp drop in late December 1997, however, markets began a steady climb as
investors recovered from the initial effects of global shock and returned to
equity markets. As June rolled into July, most markets outside Asia and Latin
America displayed double-digit gains for the calendar year. In the U.S. and
Europe, a continuing wave of mergers among large companies led markets to new
highs.
The upward trend was interrupted by a brief but severe market decline from
mid-July to the end of August. Gloomy reports warned that Asia's difficulties
had deeper roots than suspected. Japan was sinking further into recession.
Demand from consumers and businesses alike dropped, and many global businesses
saw their profit margins squeezed. Observers warned of lower profits ahead. But
the main culprit was Russia, where a deteriorating financial and economic
situation sparked concern among investors worldwide, raising fears that the
turmoil would spread to Latin America. The U.S. market skidded, dragging along
European stocks. In what Federal Reserve Board Chairman Alan Greenspan
described as a "fear-induced, psychological response," money rushed out of
developing markets, and investors in developed markets moved money from stocks
to lower risk government bonds.
Fortunately, the panic was short-lived. In the fall, most of the world's major
markets began a turnaround, recovering earlier losses and ending the fiscal
year with striking gains. In the United States, by far the fund's largest
country concentration, the Federal Reserve gave the stock market a boost by
lowering interest rates three times in the second half of the fiscal year -
first on September 29, and again on October 15 and November 17. In addition,
unemployment dropped to its lowest point since 1970 and the economy continued
to make headway, boosting consumer confidence and helping drive stock prices
up. The U.S. market closed the fiscal year with a handsome 25.3% gain as
measured by MSCI, contributing significantly to your fund's return.*
European stocks rose at an even faster pace. Countries that are participating
in the European Monetary Union continued to lower interest rates, triggering a
flurry of activity in local stock markets. A wave of mergers and other measures
aimed at improving competitiveness and increasing shareholder value also drove
prices up.
[Begin Sidebar]
<TABLE>
<CAPTION>
PERCENT OF PERCENT CHANGE
10 LARGEST THE FUND'S IN SHARE PRICE
EQUITY HOLDINGS COUNTRY NET ASSETS SINCE 11/30/97
<S> <C> <C> <C>
Telecom Italia Italy 2.49% +56.32%
Deutsche Telekom Germany 1.84 +38.56
Mannesmann Germany 1.27 +132.57
Imperial Tobacco United 1.16 +61.91
Kingdom
Telefonica Spain 1.15 +63.09
ING Groep Netherlands 1.13 +40.93
Astra Sweden 1.06 +5.91
Tele Danmark Denmark .87 +86.25
RJR Nabisco USA .85 -20.93
Holdings
Philip Morris USA .85 +28.59
[End Sidebar]
</TABLE>
HOW YOUR FUND WAS AFFECTED
Because Capital World Growth and Income Fund focuses on established companies
in strong, developed markets, we were positioned to reap the benefits of rising
U.S. and European markets while sidestepping the worst of the global turmoil.
The fund has not held investments in Malaysia, and its combined exposure to the
Philippines, Taiwan, India and Thailand was 1.3% of total assets. Only 3.9% of
assets were invested in Japan - which closed the year with a 4.5% decline - and
2.3% were invested in Hong Kong, which posted a minuscule 0.2% increase. Our
total exposure to Latin America was 2.6%. A breakdown of the portfolio by
country is shown on the opposite page.
Your fund had substantial investments in the telecommunications industry, which
enjoyed an outstanding year despite increased competitiveness. Holdings in the
health & personal care sector also tended to do well, as that industry entered
a major new product cycle that should spawn a record number of therapeutic
breakthroughs.
The fund's largest individual holding, Telecom Italia, rose 56.3%, outpacing
the stellar 52.0% return of the Italian market. In Spain, which posted a 49.6%
increase, one of our larger holdings, Telefonica, recorded a 63.1% gain. In
Germany, Mannesmann, a telecommunications company and one of our larger
holdings, posted a remarkable 132.6% gain. Another of the fund's larger
investments, telecommunications giant Tele Danmark, rose 86.3%.
Among health & personal care holdings, the big news was the release of Viagra,
the anti-impotence drug produced by U.S. pharmaceutical leader Pfizer, whose
stock price increased 53.4%. The fund benefited also from its high exposure to
the U.K. market, which posted a less spectacular but still impressive 18.5%
increase. Imperial Tobacco, for instance, was up 61.9%.
The fund was hurt somewhat by investments in Canada, where currency troubles
led to a 4.4% market decline. It also held a high concentration of stocks in
banking and financial services. While these holdings performed very well early
in the year, many declined significantly in the second half. Royal Bank of
Canada, for instance, declined 7.9%, and Washington Mutual fell 15.9%
Because your fund seeks income, we did not have substantial holdings among
high-technology companies, which tend to pay little or no dividends. We thus
did not reap the benefits of the remarkable growth posted by many high-tech
stocks in the second half of the fiscal year.
A NOTE ABOUT DIVIDENDS
Since your fund emphasizes not only growth but also income, we consistently
search for companies with a history of increasing their dividends. As many
shareholders in the fund already know, dividends vary from quarter to quarter.
Companies outside North America usually pay dividends annually or
semi-annually, as opposed to quarterly in the United States. Dividends paid by
the fund in September, December and March are generally smaller than the one
paid in June.
For the 12 months ended November 30, the fund produced a dividend rate of 2.0%,
exceeding the MSCI World Index's rate of 1.6%. In this year's feature article,
which follows this letter, we will tell you more about the importance of
dividends to your investment.
LOOKING FORWARD
Fiscal 1998 was a study in contrasts. In our report to you six months ago, we
warned that stock valuations were high by historical standards and that
investors had enjoyed exceptionally good times. Despite the turbulence this
year, many markets ended up posting spectacular returns. While it gives us
great pleasure to report on your fund's progress, we want to remind you once
again that these results are not typical. The peaks and valleys of fiscal 1998
serve as lessons in the unpredictability of market behavior.
In spite of recurring tremors in some parts of the world, the long-term outlook
for global equities remains encouraging. Inflation continues to be benign
worldwide, and interest rates are low. Deregulation of various industries is
progressing around the world, boosting competitiveness.
In the United States, it remains unclear what the impeachment proceedings in
Washington will mean for investors. Markets worldwide are also likely to be
impacted by the European Monetary Union, which was officially introduced on
January 1.
While market turbulence may seem daunting, remember that volatility also
creates opportunities to invest in stocks we would otherwise find too highly
priced. Regardless of the economic and political environment, we are confident
that our in-depth research should continue to unveil good values in companies
worldwide. As always, we will exercise great diligence in finding new holdings
and monitoring existing ones.
We look forward to reporting to you again in six months.
Cordially,
/s/Thierry Vandeventer
Thierry Vandeventer
Chairman of the Board
/s/Paul G. Haaga, Jr.
Paul G. Haaga, Jr.
President
January 12, 1999
[Begin footnote]
*All country returns are measured by Morgan Stanley Capital International and
are stated in U.S. dollars.
[End footnote]
[Begin Sidebar]
[Begin pie chart]
WHERE THE
FUND'S ASSETS
WERE INVESTED
Percent by country as of 11/30/98
<TABLE>
<CAPTION>
<S> <C>
EUROPE 35.6%
United Kingdom 11.9
Germany 5.0
Italy 3.6
France 3.2
Netherlands 3.2
Sweden 2.1
Spain 1.5
Denmark 1.1
Switzerland .9
Finland .7
Portugal .6
Norway .5
Other Europe 1.3
THE AMERICAS 33.6%
United States 27.1
Canada 3.9
Argentina 1.3
Brazil .7
Other Americas .6
ASIA/PACIFIC 12.4%
Australia 4.0
Japan 3.9
Hong Kong 2.3
Philippines 1.0
New Zealand .9
Other Asia/Pacific .3
OTHER 1.3%
South Africa .7
Supranational .6
BONDS, CASH 17.1%
& EQUIVALENTS
</TABLE>
[End pie chart]
[End Sidebar]
MAKING SMALL NUMBERS COUNT
[photos: chess pieces, currency, flags, stock market images]
THE ROLE OF DIVIDENDS IN YOUR FUND'S STRATEGY
THE BEST OF BOTH WORLDS. "Do you know the only thing that gives me pleasure?
It's to see my dividends coming in," exclaimed John D. Rockefeller in 1901.
Perhaps the founder of Standard Oil had a somewhat exaggerated love of money.
But his words recall one of the truths of the investment world: dividends
matter.
In that respect, Capital World Growth and Income Fund holds a special place
among globally diversified mutual funds. "Most global funds focus only on
growth," explains New York-based portfolio counselor Steve Bepler, "and don$t
provide much income." When we launched the fund in March 1993, our intent was
to take advantage of growth opportunities around the world while providing
income and dampening risk. We wanted to find a way to make conservative
investors feel comfortable venturing overseas. Dividends - the cash
distributions companies make to shareholders - are an essential part of that
strategy.
Over the past several years, however, it has been difficult to find companies
with attractive dividend yields. While the bull market raged on, many companies
used their profits to buy back their own stock or to plow money into their
operations rather than increase dividends. At the same time, stock prices
zoomed so high that dividends seemed paltry in comparison; they simply didn't
grow at the same rate as stock prices. Your fund, however, has consistently
produced a higher dividend yield than its primary benchmark, the unmanaged
Morgan Stanley Capital International World Index. This year, for instance, your
fund's distribution rate was 2.0%, while the index produced a 1.6% yield. How
has the fund accomplished this? As you read on, we'll tell you how Capital
Research and Management Company, the fund's adviser, has consistently found
good dividend-paying companies in a time of low yields. But first, you'll read
about why dividends matter.
[Begin Sidebar]
[begin bar chart]
YIELDS
The fund/1/ vs. MSCI World Index/2/
<TABLE>
<CAPTION>
Capital World Growth MSCI World Index
and Income Fund
<S> <C> <C>
1994 2.6% 2.4%
1995 3.1% 2.2%
1996 3.0% 2.0%
1997 2.4% 1.8%
1998 2.0% 1.6%
</TABLE>
Fiscal year ended November 30
* Capital World Growth and Income Fund
* MSCI World Index
/1/12-month distribution rates at NAV calculated by Capital Research.
/2/ Gross dividend yields calculated by MSCI.
[end chart]
[End Sidebar]
DIVIDENDS FOR ALL SEASONS
Good Things Come in Small Packages. It's easy to underestimate the importance
of dividends to the growth of your investment. When markets soar, the small,
single-digit number that usually constitutes a dividend yield somehow doesn't
seem all that important. But the beauty of dividends is that their power
becomes dramatically more noticeable the longer you own your investment. The
logic is simple. Unlike capital growth, which is not realized until you sell
your shares, dividends are cash. If reinvested into additional shares of the
fund, dividends can help make your assets grow at a higher pace over long
periods - dividend on top of dividend, tiny percentage increases that multiply
themselves over time.
To illustrate the point, consider the following example. If we told you that a
hypothetical $10,000 investment in U.S. stocks 25 years ago would have grown to
about $312,000 by November 30, 1998, how much of that amount would you think
was a result of reinvested dividends? You might be surprised to learn that
dividends accounted for about 63% of the gain.* The five-year history of
Capital World Growth and Income Fund also demonstrates the importance of
dividends to overall results. In the five years since Capital World Growth and
Income Fund was created, a period marked by spectacular capital appreciation
and low dividend yields, dividends have still accounted for 22% of the fund's
total return. The chart below shows the difference.
*Numbers reflect a hypothetical investment in Standard & Poor's 500 Stock
Composite Index.
[watermark: chess piece]
[Begin Side Bar]
HOW A $10,000 INVESTMENT HAS GROWN
Since March 26, 1993
[begin mountain chart]
$23,137
Morgan Stanley Capital
International World Index
with dividends reinvested
$23,007/1,2/
Capital World Growth
and Income Fund
with dividends reinvested
$19,676/1,3/
Capital World Growth
and Income Fund
with dividends excluded
$11,421/4/
U.S. Consumer
Price Index (inflation)
<TABLE>
<CAPTION>
Date Capital World Capital World Morgan Stanley U.S. Consumer Price
Growth and Income Growth and Income Capital Index (inflation)
Fund /1/ /2/ with fund /1/ /3/ International World /4/
dividends with dividends Index
reinvested excluded with dividends
reinvested
<S> <C> <C> <C> <C>
3/26/93 $9,425 9425 $10,000 $10,000
5/31/93 /+/ 9,719 9719 10,836 10,042
8/31/93 10,401 10313 11,474 10,084
11/30/93 10,782 10625 10,923 10,153
2/28/94 11,615 11388 12,061 10,216
5/31/94 11,315 11044 11,935 10,272
8/31/94 12,038 11656 12,500 10,376
11/30/94 11,592 11131 11,981 10,425
2/28/95 11,860 11293 12,096 10,508
5/31/95 12,788 12094 13,241 10,599
8/31/95 13,412 12558 13,597 10,648
11/30/95 13,841 12850 14,259 10,696
2/28/96 14,700 13553 15,041 10,787
5/31/96 15,326 14031 15,672 10,905
8/31/96 15,414 13947 15,378 10,954
11/30/96 17,118 15362 17,002 11,045
2/28/97 17,848 15936 17,135 11,114
5/31/97 18,908 16782 18,425 11,149
8/31/97 19,755 17380 18,890 11,198
11/30/97 19,917 17414 19,211 11,247
2/28/98 21,881 19,050 21,349 11,481
5/31/98 22,801 19,763 22,196 11,544
8/31/98 19,884 17,104 19,670 11,587
11/30/98 23,007 19,676 23,137
</TABLE>
[end chart]
AVERAGE ANNUAL COMPOUND RETURNS/5/
<TABLE>
<CAPTION>
<S> <C> <C>
For periods ended
11/30/98 12/31/98
Lifetime +15.79% +16.04%
(since 3/26/93)
Five Years +14.99% +14.06%
One Year + 8.86% + 9.50%
</TABLE>
/+/ For the period March 26 through May 31, 1993.
/1/ This number, unlike those shown earlier in this report, reflects 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.
/2/ Includes dividends of $2,332 and capital gain distributions of $2,533
reinvested over the lifetime of the fund.
/3/ Includes reinvested capital gain distributions of $2,257, but does not
reflect income dividends of $2,143 taken in cash.
/4/ Computed from data supplied by the U.S. Department of Labor, Bureau of
Labor Statistics.
/5/ Assumes reinvestment of all distributions and payment of the 5.75% maximum
sales charge at the beginning of the stated periods.
The indexes are unmanaged and do not reflect sales charges, commissions or
expenses. Past results are not predictive of future results.
[End Sidebar]
Smoothing the Ripples. Dividends don't just contribute to growth. They also
smooth out the ripples of stormy markets. "Dividends provide a positive flow of
income even when stock prices are flat or retreating," explains Janet McKinley,
a New York-based portfolio counselor. What's more, companies that emphasize
income tend to be more stable, with more predictable earnings. They also tend
to be less volatile because they don't need all their money to make the
business grow. So, even when markets are down, many of these companies maintain
a positive flow of cash and reliable dividend payouts. Put another way, a
dividend is a cushion - and a cushion has more value in a difficult market. "In
the past 70 years, dividends have declined far fewer times than either stock
prices or company earnings," concludes Steve.
During the fund's five-year lifetime, the MSCI World Index declined more than
5% a total of nine times. Your fund held up better than the index in seven of
those nine periods. In the most recent decline, for instance, from July 20 to
October 5, 1998, when many global funds were still wobbly from the Asian
contagion, the MSCI World Index posted a 20.2% decline vs. 17.3% for Capital
World Growth and Income Fund.
[photos: satellite; two people conversing]
[Begin Sidebar]
PORTFOLIO PROFILE: MANNESMANN
[photo: wires]
German-based Mannesmann, once known mainly for its innovations in steel tubing,
machinery and automotive parts, today is one of the world's leading cellular
telephone networks. It is also one of your fund's largest holdings. It all
began when Mannesmann entered into a joint venture with U.S. mobile telephone
operator AirTouch Communications. Our global team of investment professionals
put their heads together to analyze the stock. Brad Vogt, a research analyst
based in Washington D.C., had been covering AirTouch for some time, and felt
this was an excellent opportunity for AirTouch to make use of its expertise in
overseas markets. After studying the details of the partnership, Brad talked
with David Riley, a Geneva-based analyst who covers the European
telecommunications industry. The two also consulted Ursula Van Almsick, an
analyst based in London who had been following Mannesmann from the time most of
its activities were in engineering. They agreed that the venture was likely to
be highly profitable, and found that Mannesmann had a solid history of dividend
payments that were likely to increase as earnings grew. "We expected Mannesmann
to do well," says portfolio counselor Janet McKinley, "but it has surpassed
even our projections." This year, Mannesmann was the top performer in your
fund's portfolio, its stock price increasing 132.6%. And 1998 marked the fourth
consecutive year Mannesmann raised its dividend by over 10%.
[End Sidebar]
PLANNING OUR MOVES
Focusing on Fundamentals. Since Capital World Growth and Income Fund was
created, we have found many companies that have steadily raised their
dividends, rewarding our investors year after year. "The key is identifying
strong companies with a history of dividend increases and the financial health
to potentially deliver more of the same," says Steve.
"When you're focusing on dividends, it's important to look at the history of
the company," adds Janet. "If management tells you they're going to pay out
steady dividends in the future when they haven't in the past, you have to be
careful. You have to look at how much cash the company is going to need in the
future, and decide if it looks like they'll have enough money left over to pay
attractive dividends."
[Begin Sidebar]
PORTFOLIO PROFILE: PFIZER
[photos: various pills, beakers, lab worker]
When we added Pfizer to your fund's portfolio, the company had already
established itself as an industry leader with innovative products such as
Norvasc, then the world's leading cardiovascular drug, and Zithromax, the most
prescribed branded oral antibiotic in the United States. Meeting with
management, London-based pharmaceuticals analyst Jonathan Knowles learned that
Pfizer also had a number of promising new drugs in its pipeline, including the
anti-impotence drug Viagra. Jonathan also found that Pfizer had exceptional
research and development operations, as well as an outstanding global marketing
capability. He examined the company's financials to gauge its record of
dividend payments to shareholders. A 31-year history of increasing dividends
every year convinced Jonathan that Pfizer was an excellent candidate for your
fund's portfolio. With the phenomenal success of several of its drugs, Pfizer
has enjoyed striking growth these past years, and last year paid a dividend
about 11% higher than in 1997.
[End Sidebar]
"Of course, just because a company has a high yield doesn't mean it's a good
investment. We have to sift through all these companies and figure out which
ones we believe are going to offer decent value over the long term," emphasizes
Janet. "After all, our strategy is to provide not only income, but also
growth." To that end, our investment professionals and analysts typically meet
face-to-face with a firm's executives, suppliers and bankers, as well as with
its customers and competitors. They examine balance sheets and income
statements. They also hold discussions with industry and regional experts,
economists and government officials.
The strength of this global research effort is that it is wide-ranging and
thoroughly integrated. An analyst who specializes in global merchandising, for
example, may study a retail chain relative to similar companies around the
world. At the same time, another analyst may review that retail chain as a
specialist on industries in a certain country or geographic area. Our
investment professionals coordinate their research, ensuring that virtually
every investment idea is looked at from several points of view.
Scouring the World. Today, about 50% of the world's investment opportunities in
stocks are outside the United States. Many companies that are world leaders are
located overseas: five of the 10 largest banks, seven of the 10 largest auto
companies, and seven of the 10 largest electrical and gas utilities, for
instance. Sometimes, the best opportunities are in the United States; other
times, in Europe or Asia or Latin America. Capital World Growth and Income Fund
is designed to reap the benefits of global diversification by selecting the
most attractive opportunities.
For various reasons, including differences in national tax structures, some
countries also tend to foster higher dividend yields than others. The average
dividend yield in the United Kingdom, for instance, is 2.5%, compared with 0.9%
in Japan, according to MSCI. Other countries where companies have a history of
paying high dividend yields include Australia, New Zealand, Hong Kong and the
Netherlands. Certain industries, such as utilities, also tend to pay attractive
dividends. Clearly, this affects the composition of the fund's portfolio. "That
by no means implies that we try to have a certain amount invested in a
high-yielding country or industry," explains London-based portfolio counselor
Mark Denning. "The focus is still on individual companies. Detailed research
and a cautious, company-by-company approach lead us to attractive investment
opportunities in those industries and countries."
The income your investments produce should not only help your money grow, but
also smooth out the peaks and valleys of investing in stocks. We have searched
the world for good value and attractive yields for your fund for the past five
years. We look forward to many more.
[photo: chess piece]
[Begin Sidebar]
PORTFOLIO PROFILE: ING GROEP
[photos: Automatic Teller Machine, bank employee]
ING Groep, formerly known as Internationale Nederlanden Groep, has been in your
fund's portfolio since its inception and has grown into the world's largest
publicly held life and health insurer, providing services on five continents.
In 1991, Nationale Nederland merged with a Dutch commercial bank and acquired
the postal banking system from the Dutch government. At first, many observers
questioned the wisdom of this acquisition. New York-based portfolio counselor
Steve Bepler first consulted our insurance analyst, Ulrich Volk, and Isabelle
de Wismes, who follows banks in Europe. He also met with the management of ING
and returned with a positive outlook. "I was skeptical of the benefits of this
acquisition, but the management presented me with very sound arguments,"
recalls Steve. To facilitate the acquisition and streamline operations, Steve
noted, management was diligently cutting costs as well as shedding redundant
offices and unprofitable businesses. ING also had an excellent record of
increasing its dividend payments to shareholders. In the United States, where
insurance and banking are legally divided, ING "debanked" itself so it could
maintain its more lucrative insurance business. By 1997, it had doubled its
U.S. life insurance operations by acquiring Equitable of Iowa Companies. In
early 1998, ING finalized its purchase of Bank Brussels Lambert in Belgium, the
largest acquisition ever undertaken by a Dutch company. Since 1991, ING has
grown its dividend payments by an annual average of 10.4%, contributing
significantly to the income produced by your fund.
[End Sidebar]
<TABLE>
CAPITAL WORLD GROWTH & INCOME FUND
Investment Portfolio, November 30, 1998
<S> <C> <C> <C>
INVESTMENT MIX
Largest Industry Holdings
Equity Securities 82.9%
Telecommunications 14.9%
Banking 9.3%
Utilities: Electric & Gas 4.9%
Beverages & Tobacco 4.8%
Business & Public Services 3.7%
Other Industries 45.3%
Bonds & Notes 1.1%
Cash & Equivalents 16.0%
Percent Change
10 Largest Percent of in share price
Equity Holdings Country WGI's net ass since 11/30/97
Telecom Italia Italy 2.49% + 56.32
Deutsche Telekom Germany 1.84 + 38.56
Mannesmann Germany 1.27 +132.57
Imperial Tobacco United Kingdom 1.16 + 61.91
Telefonica Spain 1.15 + 63.09
ING Groep Netherlands 1.13 + 40.93
Astra Sweden 1.06 + 5.91
Tele Danmark Denmark .87 + 86.25
RJR Nabisco Holdings USA .85 - 20.93
Philip Morris USA .85 + 58.59
</TABLE>
<TABLE>
CAPITAL WORLD GROWTH AND INCOME FUND
INVESTMENT PORTFOLIO, NOVEMBER 30, 1998
- ------------------------------------------- ---------- ---------- ----------
Equity Securities Shares or Market Percent
(common and preferred stocks and convertible Principal Value of Net
debentures) Amount (Millions) Assets
- ------------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
TELECOMMUNICATIONS- 14.92%
Telecom Italia SpA nonconvertible savings shares (Italy) 25,602,251 158.717
Telecom Italia SpA 6,588,775 53.333 2.49
Deutsche Telekom AG (Germany) 5,576,618 156.467 1.84
Mannesmann AG (Germany) 1,000,750 108.245 1.27
Telefonica, SA (Spain) 2,091,811 98.319 1.15
Tele Danmark AS (Denmark) 379,900 42.424
Tele Danmark AS, Class B (ADR) 565,100 31.328 .87
Telecom Italia Mobile SpA, savings shares (Italy) 12,565,800 53.158
Telecom Italia Mobile SpA 2,224,200 14.618 .80
Telecom Corp. of New Zealand Ltd. (New Zealand) 6,391,000 27.173
Telecom Corp. of New Zealand Ltd. (ADR) 720,700 24.188 .75
Telecom Corp. of New Zealand Ltd. (1) 3,038,610 12.919
Koninklijke PTT Nederland NV (Netherlands) 1,267,369 54.668 .64
Telecom Argentina SA, Class B (ADR) (Argentina) 1,765,700 53.854 .63
TELECEL - Comunicacoes Pessoais, SA (Portugal) 272,200 53.231 .63
U S WEST, Inc. (USA) 850,000 52.913 .62
France Telecom, SA (France) 607,000 42.142 .49
British Telecommunications PLC (United Kingdom) 3,000,000 41.085 .48
Telesp Celular Participacoes SA, preferred (Brazil) (2) 423,995,800 29.829
Telesp Celular Participacoes SA, (2) 159,705,000 5.983 .42
Nortel Inversora SA, preferred, Class B (ADR) (Argentina) 1,465,000 27.835 .33
Telefonos de Mexico, SA de CV, Class L (ADR) (Mexico) 582,300 27.113 .32
Philippine Long Distance Telephone Co. (ADR) (Philippines) 750,000 19.641 .23
AirTouch Communications (USA) (2) 300,000 17.156 .20
Mobistar NV (Belgium) (1,2) 300,000 14.292 .17
AT&T Corp. (USA) 150,000 9.347 .11
Hong Kong Telecommunications Ltd. (Hong Kong) 4,700,783 8.986 .11
Telefonica de Argentina SA, Class B (ADR) (Argentina) 277,500 8.984 .11
NTT Mobile Communications Network, Inc. (Japan) (2) 213 8.135 .10
SmarTone Telecommunications Holdings Ltd.
(Hong Kong- Incorporated in Bermuda) 2,000,000 6.575 .08
TELUS Corp. (Canada) 135,000 2.918 .03
Nippon Telegraph and Telephone Corp. (Japan) 365 2.729 .03
DDI Corp. (Japan) 500 1.625 .02
BANKING- 9.30%
Royal Bank of Canada (Canada) 1,334,200 65.782 .77
Washington Mutual,Inc. (USA) 1,630,000 63.162 .74
First Union Corp. (USA) 900,000 54.675 .64
Australia and New Zealand Banking Group Ltd. (Australia) 7,405,862 48.764 .57
Bank of Scotland (United Kingdom) 4,200,000 46.678 .55
Commonwealth Bank of Australia (Australia) 2,934,483 40.354 .47
Westpac Banking Corp. (Australia) 4,962,577 33.018 .39
Wells Fargo & Co. (USA) 900,000 32.400 .38
National Bank of Canada (Canada) 2,000,000 31.150 .37
Hang Seng Bank Ltd. (Hong Kong) 3,300,000 29.091 .34
HSBC Holdings PLC (United Kingdom) 1,067,626 27.373 .32
Bank of the Philippine Islands (Philippines) 12,154,520 26.631 .31
Safra Republic Holdings SA (Luxembourg) 532,000 25.536 .30
BANK ONE CORP.(USA) 484,000 24.835 .29
Bank of Nova Scotia (Canada) 1,128,400 24.760 .29
Unibanco-Uniao de Bancos Brasileiros SA, units
(Global Depositary Receipts) (Brazil) 980,000 20.458 .24
Corporacion Bancaria de Espana, SA (Spain) 860,000 20.032 .24
Crestar Financial Corp. (USA) 300,000 19.913 .23
National Australia Bank Ltd. (Australia) 1,307,527 19.513 .23
Unidanmark A/S, Class A (Denmark) 215,000 17.540 .21
Wilmington Trust Corp. (USA) 300,000 17.400 .20
Asahi Bank, Ltd. (Japan) 4,150,000 15.850 .19
Paribas, Class A (formerly Cie. Financiere de Paribas) (France) 150,000 13.367 .16
ForeningsSparbanken AB, Class A (Sweden) 477,000 13.365 .16
Chase Manhattan Corp. (USA) 200,000 12.688 .15
ABN AMRO Holding NV (Netherlands) 546,600 11.260 .13
Sakura Bank, Ltd. (Japan) 4,000,000 10.206 .12
Skandinaviska Enskilda Banken AB, Class A (Sweden) 800,000 9.094 .11
Fuji Bank, Ltd. (Japan) 1,700,000 6.728 .08
Sanwa International Finance (Bermuda) Trust 1.25% preferred
share units 2005 (Japan) (1) 849,000,000 6.433 .08
Banco de Galicia y Buenos Aires SA, Class B (ADR) (Argentina) 176,250 3.789 .04
UTILITIES: ELECTRIC & GAS- 4.88%
Williams Companies, Inc. (USA) 2,420,560 69.742 .82
Northeast Utilities (USA) (2) 3,050,000 48.038 .56
Southern Electric PLC (United Kingdom) 3,996,061 45.995 .54
Columbia Energy Group (USA) 591,600 33.573 .39
National Power PLC (United Kingdom) 3,480,000 29.611 .35
Dynegy Inc. (formerly NGC Corp.) (USA) 1,975,000 25.675 .30
Empresa Nacional de Electricidad SA (ADR) (Chile) 2,029,546 21.818 .26
El Paso Energy Corp. (formerly El Paso Natural Gas Co.) (USA) 560,000 19.110 .22
Scottish Power PLC (United Kingdom) 1,700,000 18.081 .21
Public Service Co. of New Mexico (USA) 864,300 16.800 .20
K N Energy, Inc. (USA) 365,000 15.969 .19
CalEnergy Co., Inc. (USA) (2) 500,000 15.656 .18
Sonat Inc. (USA) 454,100 13.481 .16
KeySpan Energy Corp. (formerly Long Island Lighting Co.) (USA) 352,000 10.450 .12
Australian Gas Light Co. (Australia) 1,308,941 9.710 .11
Ameren Corp. (USA) 230,000 9.473 .11
NICOR Inc. (USA) 175,000 7.361 .09
National Fuel Gas Co. (USA) 127,000 5.834 .07
Centrais Geradoras do Sul do Brasil SA - GERASUL,
preferred (ADR) (Brazil) (2) 24,000 .156 .00
BEVERAGES & TOBACCO- 4.75%
Imperial Tobacco Ltd. (United Kingdom) 9,200,000 98.914 1.16
RJR Nabisco Holdings Corp. (USA) 2,525,000 72.752 .85
Philip Morris Companies Inc. (USA) 1,300,000 72.719 .85
Gallaher Group PLC (United Kingdom) 9,500,000 66.892 .79
Foster's Brewing Group Ltd. (Australia) 19,712,399 51.499 .60
Seagram Co. Ltd. (Canada) 575,000 19.730 .23
UST Inc. (USA) 200,000 6.950 .09
Coca-Cola Amatil Ltd. (Australia) 1,909,672 6.398 .08
Asahi Breweries, Ltd. (Japan) 318,000 4.600 .05
Coca-Cola Beverages PLC (United Kingdom) (2) 2,006,362 4.168 .05
BUSINESS & PUBLIC SERVICES- 3.75%
Suez Lyonnaise des Eaux (France) 150,000 29.608
Suez Lyonnaise des Eaux (Belgium) (2) 85,000 17.024
Suez Lyonnaise des Eaux, rights expire 2001 (Belgium) (2) 74,400 .532 .55
Suez Lyonnaise des Eaux, tax free rights (Belgium) (2) 135,000 .003
TNT Post Groep NV (Netherlands) 1,627,800 40.938 .48
United Utilities PLC (United Kingdom) 2,806,091 40.905 .48
Brambles Industries Ltd. (Australia) 1,524,354 37.251 .44
Thames Water PLC (United Kingdom) 1,312,067 25.920 .30
Cendant Corp. (USA) (2) 800,000 15.200
Cendant Corp. 7.50% PRIDES convertible preferred 300,000 10.089 .30
Hyder PLC (United Kingdom) 1,495,000 20.092 .24
Electronic Data Systems Corp. (USA) 400,000 15.600 .18
Columbia/HCA Healthcare Corp. (USA) 550,000 13.544 .16
Quintiles Transnational Corp. 4.25% convertible debentures 2000 (USA)$10,000,000 12.962 .15
Omnicom Group Inc. (USA) 200,000 10.689 .13
Vanstar Financing Trust 6.75% convertible preferred (USA) 350,000 10.631 .12
American Water Works Co., Inc. (USA) 300,000 9.281 .11
Hutchison Delta Finance Ltd. 7.00% convertible debentures 2002
(Hong Kong- Incorporated in the Cayman Islands) (1,3) $6,000,000 6.000 .07
Rentokil Initial PLC (United Kingdom) 450,000 3.006 .04
HEALTH & PERSONAL CARE- 3.27%
Astra AB, Class A (Sweden) 3,552,400 65.045
Astra AB, Class B 1,390,533 24.863 1.06
Glaxo Wellcome PLC (United Kingdom) 2,240,000 70.809 .83
Pfizer Inc (USA) 438,000 48.892 .57
PLIVA d.d. (Croatia) 1,500,000 23.625 .28
Merck & Co., Inc. (USA) 144,700 22.410 .26
Zeneca Group PLC (United Kingdom) 325,000 13.479 .16
Eli Lilly and Co. (USA) 100,000 8.970 .11
MERCHANDISING- 3.01%
Dixons Group PLC (United Kingdom) 5,305,000 64.101 .75
Tesco PLC (United Kingdom) 18,889,753 56.287 .66
Wal-Mart Stores, Inc. (USA) 596,000 44.886 .53
J.C. Penney Co., Inc. (USA) 400,000 22.000 .26
Safeway PLC (United Kingdom) 3,850,000 18.982 .22
AutoZone, Inc. (USA) (2) 550,000 16.568 .19
Coles Myer Ltd. (Australia) 2,150,700 11.116 .13
Kingfisher PLC (United Kingdom) 936,422 8.925 .10
Koninklijke Ahold NV 3.00% convertible debentures 2003 (Netherlands) $9,513,000 5.708 .07
Woolworths Ltd. (Australia) 1,219,885 4.280 .07
George Weston Ltd. (Canada) 83,300 2.925 .03
FOREST PRODUCTS & PAPER- 2.80%
Fort James Corp. (USA) 1,700,000 66.513 .78
Smurfit Stone Container (USA) (2) 2,471,300 34.753 .41
Metsa-Serla Oy 4.375% convertible debentures 2002 (Finland) (1) $30,000,000 27.300 .32
Georgia-Pacific Corp., Georgia-Pacific Group (USA) 450,000 25.538 .30
Bowater Inc. (USA) 500,000 19.750 .23
Union Camp Corp. (USA) 300,000 19.407 .23
Sonoco Products Co. (USA) 577,500 17.289 .20
Champion International Corp. (USA) 330,000 13.715 .16
UPM-Kymmene Corp. (Finland) 287,000 7.513 .09
MAYR-MELNHOF Karton AG (Austria) 145,000 6.646 .08
ELECTRICAL & ELECTRONIC- 2.79%
Siemens AG (Germany) 909,000 63.225 .74
Telefonaktiebolaget LM Ericsson, Class B (Sweden) 1,345,000 37.354
Telefonaktiebolaget LM Ericsson, Class B (ADR) 300,000 8.288 .54
York International Corp. (USA) 650,000 27.300 .31
Northern Telecom Ltd. (Canada) 503,000 23.484 .28
Premier Farnell PLC (United Kingdom) 7,400,000 21.965 .26
Nokia Corp., Class A (ADR) (Finland) 214,000 20.972 .25
Matsushita Communication Industrial Co., Ltd. (Japan) 400,000 17.454 .21
General Electric Co. (USA) 125,000 11.313 .13
Elektrim SA 2.00% convertible debentures 2004 (Poland) $9,000,000 4.615
Elektrim SA 200,000 1.683 .07
MULTI-INDUSTRY- 2.62%
Orkla AS, Class A (Norway) 1,232,000 20.561
Orkla AS, Class B 1,404,000 20.245 .48
Siebe PLC (United Kingdom) 11,280,000 40.503 .48
Williams PLC (formerly Williams Holdings PLC) (United Kingdom) 6,000,000 37.102 .44
Hutchison Whampoa Ltd. (Hong Kong) 2,590,000 18.483 .22
Swire Pacific Ltd., Class A (Hong Kong) 4,000,000 18.135 .21
Lend Lease Corp. Ltd. (Australia) 655,946 15.965 .19
JG Summit Holdings, Inc. 3.50% convertible debentures 2003 (Philippin$26,000,000 15.600 .18
Ayala Corp. 3.00% convertible debentures 2000 (Philippines) $10,000,000 11.625 .14
FMC Corp. (USA) (2) 170,000 9.881 .12
Canadian Pacific Ltd. (Canada) 400,000 8.825 .10
Harsco Corp. (USA) 163,600 5.297 .06
Jardine Strategic Holdings Ltd. (Singapore - Incorporated In Bermuda) 185,000 .349 .00
ELECTRONIC COMPONENTS- 2.55%
Micron Technology, Inc. (USA) (2) 1,600,000 66.100 .78
Advanced Micro Devices, Inc. (USA) (2) 1,500,000 41.531 .49
Delta Electronics, Inc. (Taiwan) 8,400,000 27.490 .32
Hoya Corp. (Japan) 527,000 22.140 .26
Intel Corp. (USA) 200,000 21.525 .25
Altera Corp. (USA) (2) 300,000 14.719 .17
Rohm Co., Ltd. (Japan) 100,000 8.451 .10
Texas Instruments Inc. (USA) 100,000 7.638 .10
Murata Manufacturing Co., Ltd. (Japan) 180,000 7.050 .08
INSURANCE- 2.42%
ING Groep NV (Netherlands) 1,673,683 95.822 1.13
Transatlantic Holdings, Inc. (USA) 320,400 24.350 .29
Guardian Royal Exchange PLC (United Kingdom) 3,600,095 19.591 .23
Norwich Union PLC (United Kingdom) 2,360,600 16.544 .19
Corporacion Mapfre, CIR, SA (Spain) 457,812 12.695 .15
Fairfax Financial Holdings Ltd. (Canada) (2) 35,300 11.318 .13
PartnerRe Holdings Ltd. (Singapore - Incorporated in Bermuda) 250,000 11.062 .13
GIO Australia Holdings Ltd. (Australia) 2,285,486 7.431 .09
General Re Corp. (USA) 28,000 6.538 .08
BROADCASTING & PUBLISHING- 2.41%
Tele-Communications, Inc., Series A, Liberty Media Group (USA) (2) 1,496,250 60.317 .71
Time Warner Inc. (USA) 450,000 47.587 .56
Viacom Inc., Class B (USA) (2) 425,000 28.289 .33
NTL Inc. (United Kingdom) (2) 326,560 18.185 .21
ProSieben Media AG (Germany) 320,800 15.373 .18
CANAL (France) 59,356 13.635 .16
News Corp. Ltd., preferred (Australia) 1,728,482 10.828 .13
CanWest Global Communications Corp. (Canada) 741,300 9.052 .11
Publishing & Broadcasting Ltd. (Australia) 286,800 1.244 .01
Modern Times Group MTG AB, Class B (ADR) (Sweden) (2) 16,278 1.046 .01
AUTOMOBILES- 2.29%
DaimlerChrysler AG (New York Registered Shares)
(formerly Chrysler Corp.) (Germany) (2) 623,500 57.167 .67
Renault V.I. SA (France) 900,000 41.762 .49
Ford Motor Co. (USA) 700,000 38.675 .45
Suzuki Motor Corp. (Japan) 2,100,000 24.061 .29
General Motors Corp. (USA) 300,000 21.000 .25
Bayerische Motoren Werke AG (Germany) 12,000 9.266
Bayerische Motoren Werke AG (2) 3,600 2.716 .14
CHEMICALS- 2.25%
Praxair, Inc. (USA) 1,159,700 44.286 .52
BOC Group PLC (United Kingdom) 2,000,000 29.039 .34
Sherwin-Williams Co. (USA) 872,000 24.743 .31
DSM NV (Netherlands) 258,064 24.112 .28
Airgas, Inc. (USA) (2) 2,367,100 23.967 .28
Millennium Chemicals Inc. (USA) 939,000 22.419 .26
Bayer AG (Germany) 315,000 12.923 .15
L'Air Liquide (France) 57,555 9.782 .11
ENERGY SOURCES- 2.15%
Shell Canada Ltd., Class A (Canada) 2,437,300 37.483 .44
Elf Aquitaine (France) 200,000 24.924 .29
Shell Transport and Trading Co., PLC (New York Registered Shares) 400,000 14.525
(United Kingdom)
Royal Dutch Petroleum Co. (Netherlands) 100,000 4.789
Royal Dutch Petroleum Co. (New York Registered Shares) 80,000 3.760 .27
ENI SpA (Italy) 2,900,000 17.950 .21
Mobil Corp. (USA) 200,000 17.239 .20
YPF SA, Class D (ADR) (Argentina) 450,000 13.275 .16
TOTAL, Class B (France) 100,687 12.477 .15
Unocal Corp. (USA) 360,000 12.195 .14
Pioneer Natural Resources Co. (USA) 683,919 9.062 .11
Broken Hill Proprietary Co. Ltd. (Australia) 1,121,153 8.885 .10
Esso SA Francaise (France) 78,567 6.904 .08
FINANCIAL SERVICES- 2.14%
Household International, Inc. (USA) 1,245,000 48.711 .57
Freddie Mac (USA) 700,000 42.350 .50
Associates First Capital Corp., Class A (USA) 373,459 29.083 .34
Nichiei Co., Ltd. (Japan) 350,100 28.222 .33
Fannie Mae (USA) 180,000 13.095 .15
OM Gruppen AB (Sweden) 790,000 11.359 .14
Bell Atlantic Financial Services, Inc., Senior Exchangeable Notes, 4.25%
convertible debentures 2005 (1) $5,000,000 5.144 .06
Medallion Financial Corp. (USA) 275,000 4.262 .05
REAL ESTATE- 1.93%
Sun Hung Kai Properties Ltd. (Hong Kong) 6,360,000 45.593 .54
Hysan Development Co. Ltd. (Hong Kong) 21,000,000 30.651
Hysan Development Co. Ltd. warrants, expire 1999 (2) 1,683,000 .052 .36
Amoy Properties Ltd. (Hong Kong) 27,000,000 19.530 .23
CarrAmerica Realty Corp. (USA) 750,000 18.188 .21
SM Prime Holdings, Inc. (Philippines) 52,885,000 9.971 .12
Security Capital Global Realty (Luxembourg) (1,2,3) 450,000 9.000 .11
Cheung Kong (Holdings) Ltd. (Hong Kong) 1,100,000 7.921 .09
Security Capital Group Inc., Class A (USA) (2) 9,960 7.022 .08
Meditrust Corp. (USA) 415,339 6.308 .07
AMB Property Corp. (USA) 250,000 5.562 .07
Kerry Properties Ltd. (Hong Kong) 5,243,500 4.232 .05
FOOD & HOUSEHOLD PRODUCTS- 1.59%
Reckitt & Colman PLC (United Kingdom) 3,109,437 43.686 .52
Nestle SA (Switzerland) 15,952 33.122 .39
Barry Callebaut AG (Switzerland) (2) 83,500 19.579 .23
Groupe Danone (France) 58,000 16.923 .20
Cadbury Schweppes PLC (United Kingdom) 1,000,000 15.116 .18
Cultor Ltd. (Finland) 682,500 6.288 .07
DATA PROCESSING & REPRODUCTION- 1.47%
Oracle Corp. (USA) (2) 1,160,000 39.730 .47
Microsoft Corp. (USA) (2) 245,000 29.890 .35
3Com Corp. (USA) (2) 500,000 19.344 .22
Fujitsu Ltd. (Japan) 1,000,000 11.555
Fujitsu Ltd., warrants, expire 2000 (2) 7,670 6.903 .22
Computer Associates International, Inc. (USA) 275,000 12.169 .14
Ascend Communications, Inc. (USA) (2) 100,000 5.618 .07
GOLD MINES- 1.35%
Barrick Gold Corp. (Canada) 1,800,000 36.000 .42
Homestake Mining Co. (USA) 2,000,000 21.500 .25
Normandy Mining Ltd. (Australia) 20,630,175 19.129
Normandy Mining Ltd., options, expire 2001 (2) 4,875,799 .398 .22
Anglogold Ltd. (South Africa) 250,000 12.214 .14
Driefontein Consolidated Ltd. (South Africa) 2,200,000 12.083 .14
Newcrest Mining Ltd. (Australia) (2) 6,000,000 8.495 .10
Gold Fields Ltd. (South Africa) (2) 1,044,120 6.790 .08
INDUSTRIAL COMPONENTS- 1.17%
Federal-Mogul Corp. (USA) 945,000 53.629 .63
Tomkins PLC (United Kingdom) 4,400,000 19.844 .23
Lear Corp. (USA) (2) 352,300 13.608 .16
Morgan Crucible Co. PLC (United Kingdom) 2,161,523 10.871 .13
Rockwell International Corp. (USA) 30,000 1.468 .02
MACHINERY & ENGINEERING- 0.88%
Fuji Machine Mfg. Co., Ltd. (Japan) 1,420,000 44.771 .53
AIDA Engineering, Ltd. (Japan) 3,300,000 11.799 .14
Caterpillar Inc. (USA) 200,000 9.887 .12
Svedala Industri AB (Sweden) 600,000 8.921 .09
METALS: NONFERROUS- 0.70%
Gencor Ltd. (South Africa) 14,320,120 25.796 .30
KGHM Polska Miedz SA (Global Depositary Receipts) (Poland) 1,974,000 14.460 .17
Pechiney, Class A (France) 299,300 9.964 .12
Teck Corp. 3.75% convertible debentures 2006 (Canada) $14,950,000 9.120 .11
Indian Aluminium Co., Ltd. (India) 100 .000 .00
APPLIANCES & HOUSEHOLD DURABLES- 0.64%
Philips Electronics NV (Netherlands) 450,000 28.469 .33
Sony Corp. (Japan) 350,000 25.625 .31
MISCELLANEOUS MATERIALS & COMMODITIES- 0.50%
English China Clays PLC (United Kingdom) 6,891,000 17.840 .21
Cie. de Saint-Gobain (France) 111,377 16.444 .18
Crown Cork & Seal Co., Inc. (USA) 275,000 9.281 .11
ELECTRONIC INSTRUMENTS- 0.45%
ADVANTEST CORP. (Japan) 330,000 22.043 .26
Perkin-Elmer Corp. (USA) 100,000 9.326 .11
Security Dynamics Technologies, Inc. (USA) (2) 450,000 6.862 .08
AEROSPACE & MILITARY TECHNOLOGY- 0.43%
Bombardier Inc., Class B (Canada) 2,210,800 28.802 .34
Boeing Co. (USA) 140,000 5.687 .07
Raytheon Co., Class A (USA) 42,180 2.306 .02
ENERGY EQUIPMENT- 0.38%
Schlumberger Ltd. (Netherlands Antilles) 545,000 24.355 .29
Halliburton Co. (USA) 259,800 7.632 .09
METALS: STEEL- 0.30%
Usinor Sacilor (France) 1,400,000 15.748 .19
Allegheny Teledyne Inc. (USA) 377,000 7.752 .09
Ispat Industries Ltd., 3.00% convertible debentures 2001 (India) (1) $2,800,000 .672 .01
N.T.S. Steel Group PCL 4.00% convertible debentures 2008 (Thailand) $6,670,000 .667 .01
RECREATION & OTHER CONSUMER PRODUCTS- 0.29%
Nintendo Co., Ltd. (Japan) 175,000 16.226 .19
EMI Group PLC (United Kingdom) 1,365,067 8.126 .10
LEISURE & TOURISM- 0.29%
King World Productions, Inc. (USA) (2) 525,000 14.306 .17
Village Roadshow Ltd., Class A, 5.50% preferred (Australia) 2,806,287 4.044
Village Roadshow Ltd., Class A, 5.50% preferred (1) 2,500,000 3.602 .12
Village Roadshow Ltd. 1,200,000 2.353
TRANSPORTATION: RAIL & ROAD- 0.28%
Westshore Terminals Inc. (Canada) (1) 3,040,900 12.312 .14
Union Pacific Corp. (USA) 250,000 12.156 .14
TRANSPORTATION: AIRLINES- 0.10%
Air New Zealand Ltd., Class B (New Zealand) 6,320,000 8.128 .10
TEXTILES & APPAREL- 0.08%
Courtaulds Textiles PLC (United Kingdom) 1,641,500 4.141 .05
Nine West Group Inc. (USA) (2) 213,200 2.665 .03
TRANSPORTATION: SHIPPING- 0.00%
Mitsui O.S.K. Lines, Ltd. (Japan) 165,000 .267 .00
MISCELLANEOUS- 1.78%
Other equity securities in intial period of acquisition 152.607 1.78
Booker PLC (United Kingdom) 550,000 0.608 .01
Corning Inc. (USA) 72,800 2.922 .03
France Telecom, SA, rights, expire 1998 607,000 0.027 .00
Hays PLC (United Kingdom) 1,000,000 8.427 .10
Hongkong Land Holdings Ltd. (Singapore) 9,999,700 14.500 .17
Independent Insurance Group PLC (United Kingdom) 1,041,600 3.728 .04
Kerry Group PLC (United Kingdom) 840,000 11.359 .13
Loblaw Companies Ltd. (Canada) 400,000 8.555 .10
Mercury General Corp. (USA) 413,400 17.311 .20
MYCAL Corp. (Japan) 928,000 5.807 .07
Niagara Mohawk Power Corp. (USA) 1,100,000 16.913 .20
San Paolo-IMI SpA (Italy) 209,000 3.421 .04
Seat Pagine Gialle SpA (Italy) 6,000,000 5.309
Seat Pagine Gialle SpA (Italy) 7,000,000 4.856 .12
Swisscom AG (Switzerland) 68,126 22.925 .27
THK Co., Ltd. (Japan) 2,280,000 25.939 .30
-------- --------
TOTAL EQUITY SECURITIES (cost:
$5,564.085 million) 7,059.031 82.91
-------- --------
- ------------------------------------------
Principal
Amount
Bonds and Notes (Millions)
- ------------------------------------------ -------------
INDUSTRIALS- 0.26%
Indah Kiat Finance Mauritius Ltd. 10.00% 2007 $11.650 7.543
Indah Kiat International Finance 8.875% 2000 2.290 1.672 .12
Indah Kiat Global BD 12.50% 2006 1.000 .737
Container Corp. of America, Series A, 11.25% 2004 6.000 6.180
Container Corp. of America 9.75% 2003 1.000 1.020 .08
Hutchison Whampoa 7.50% 2027 2.700 2.268
Hutchison Whampoa 7.45% 2017 (1) 1.000 .841 .04
Hutchison Whampoa Finance (CI) Ltd., Series D, 6.988% 2037 .750 .679
Multicanal Participacoes SA, Series B, 12.625% 2004 2.250 2.087 .02
TELEPHONE- 0.14%
Netia Holdings BV 10.25% 2007 4.125 3.651
Netia Holdings BV 0%/11.25% 2007 (4) 3.750 2.269 .07
Telecom Argentina STET-France Telecom SA 12.00% 2002 5.500 5.913 .07
FINANCIAL- 0.03%
APP Finance (VI) Mauritius Ltd. 11.75% 2005 2.800 2.219 .03
ARGENTINEAN GOVERNMENT- 0.24%
Argentina (Republic of) 11.00% 2006 7.000 7.157
Argentina (Republic of) 11.75% 2007 ARP8.000 7.041 .24
Argentina (Republic of) 11.375% 2017 6.000 6.098
Argentina (Republic of) 8.75% 2002 ARP4.000 3.381
SOUTH AFRICAN GOVERNMENT- 0.34%
South Africa (Republic of) 13.00% 2010 ZAR197.500 29.216 .34
TOTAL BONDS AND NOTES (cost: $101.851 million) 89.972 1.05
-------- --------
- ------------------------------------------ -----------------------------------
Short-Term Securities
- ------------------------------------------ -----------------------------------
CORPORATE SHORT-TERM NOTES- 13.79%
Abbey National North America 5.22%-5.42% due 12/9/98-1/13/99 $75.000 74.779 .88
Canada Bills 4.93%-5.32% due 12/2/98-2/4/99 72.000 71.709 .84
Daimler-Benz North America Corp. 5.02%-5.33% due 12/16/98-3/19/99 67.500 66.971 .79
Diageo Capital PLC 5.11%-5.26% due 12/10/98-1/19/99 (1) 67.300 66.917 .79
Halifax PLC 5.12%-5.40% due 12/29/98-1/7/99 62.250 61.949 .73
SmithKline Beecham Corp. 5.07%-5.25% due 1/12-1/20/99 61.630 61.217 .72
Ford Motor Credit Co. 5.04%-5.20% due 12/8/98-1/6/99 57.650 57.388 .67
Siemens Capital Corp. 5.10%-5.18% due 12/14/98-1/20/99 53.500 53.237 .63
Xerox Capital (Europe) PLC 5.00%-5.27% due 1/8-1/14/99 51.800 51.490 .60
KfW International Finance Inc. 4.98%-4.99% due 1/22-1/28/99 49.800 49.405 .58
British Gas Capital Inc. 5.10%-5.25% due 1/4-3/11/99 49.100 48.604 .57
BMW U.S. Capital Corp. 5.02%-5.03% due 12/3-12/17/98 48.200 48.131 .56
BP America Inc. 4.95%-5.32% due 12/14/98-1/20/99 47.800 47.578 .56
Procter & Gamble Co. 5.05%-5.15% due 12/7/98-1/5/99 45.000 44.853 .53
British Columbia (Province of) 4.86%-5.03% due 2/3-2/18/99 41.600 41.182 .48
BellSouth Telecommunications Inc. 5.02%-5.06% due 12/10/98-1/21/99 39.200 39.020 .46
France Telecom, SA 5.07%-5.35% due 12/14/98-2/11/99 39.200 38.955 .46
General Electric Capital Services, Inc. 5.18% due 12/1/98 38.000 37.995 .45
Commonwealth Bank of Australia 5.14%-5.42% due 12/2-12/4/98 37.000 36.986 .43
Caisse d'amortissement de la dette sociale 5.03% due 12/28/98 35.200 35.062 .41
International Lease Finance Corp. 5.19% due 1/15/99 29.400 29.205 .34
American Express Credit Corp. 5.34% due 12/9/98 26.200 26.166 .31
Sony Capital Corp. 5.20% due 12/11/98 (1) 23.400 23.363 .27
Rio Tinto America, Inc. 5.17%-5.35% due 12/18/98-2/12/99 (1) 22.900 22.741 .27
National Australia Funding (DE) Inc. 5.07%-5.13% due 1/19-2/4/99 21.100 20.915 .25
Household Finance Corp. 5.05% due 1/14/99 17.800 17.682 .21
FEDERAL AGENCY DISCOUNT NOTES- 2.23%
Freddie Mac 4.93%-5.08% due 1/15-2/25/99 119.860 118.508 1.39
Federal Home Loan Banks 4.95%-5.08% due 12/4/98-2/16/99 72.250 71.730 .84
NON-U.S. CURRENCY- 0.07%
New Taiwanese Dollar NT$190.7 5.890 .07
-------- --------
TOTAL SHORT-TERM SECURITIES (cost: $1,370.450
million) 1,369.628 16.09
-------- ------
TOTAL INVESTMENT SECURITIES (cost: $7,036.386
million) 8,518.631 100.05
Excess of payables over cash and receivables 4.085 .05
-------- ------
NET ASSETS 8,514.546 100.00%
======================================================== =====================
(1) Purchased in a private placement transaction; resale to the public may
require registration or sale only to qualified institutional buyers.
(2) Non-income-producing securities.
(3) Valued under procedures approved by the Board of Directors.
(4) Step-bond; coupon rate will increase at a later date.
ADR = American Depositary Receipts
The descriptions of the companies shown in the portfolio, which were obtained
from published reports and other sources believed to be reliable, are
supplemental and are not covered by the Report of Independent Accountants.
See Notes to Financial Statements
</TABLE>
<TABLE>
Equity Securities Added Equity Securities Eliminated
to the Portfolio Since November 30, 1997from the Portfolio Since November 30, 1997
<S> <C>
ADVANTEST Abbott Laboratories
AIDA Engineering Aetna
AMB Property Allegiance
Anglogold Allied Irish Banks
Barry Callebaut Aluminum Co. of America
Bayer American Home Products
Bell Atlantic Financial Services AMF Bowling
BOC Group Amway Japan
Bombardier Anglovaal
Broken Hill Proprietary APP Global Finance
Cendant Banco de Santander
Centrais Geradoras do Sul do Brasil Banco Nacional de Mexico
Corporacion Bancaria de Espana Bangkok Bank
DDI Bank of New York
DSM B.A.T Industries
Elektrim Bell Atlantic
Fairfax Financial Holdings Beneficial
Fuji Bank BG
Fuji Machine Mfg. Brierley Investments
Gencor Bristol-Myers Squibb
General Electric Bunzl
General Motors Burmah Castrol
General Re Carter Holt Harvey
George Weston Centrais Eletricas Brasileiras-ELECTROBRAS
Georgia-Pacific, Georgia-Pacific Group Centrica
Gold Fields Cia. Paulista de Forca e Luz-CPFL
Harsco Cie. Nationale a Portefeuille
Homestake Mining Daewoo Heavy Industries
Hysan Development Engen
JG Summit (Cayman) First Chicago
KGHM Polska Miedz Freeport-McMoRan Copper & Gold
King World Productions Friedrich Grohe
KN Energy Giant Food
Koninklijke Ahold GPU
Matsushita Communication Industrial Grupo Financiero Banamex Accival
Microsoft Hongkong Electric Holdings
Mitsui O.S.K. Lines IKON Office Solutions
Mobistar Imasco
Nintendo Inco
Nippon Telegraph and Telephone Industriforvaltnings AB Kinnevik
Nokia Istituto Mobiliare Italiano
NTT Mobile Communications Network Kawasaki Heavy Industries
OM Gruppen Kloof Gold Mining
Perkin-Elmer Land Securities
PLIVA Lion Nathan
Publishing & Broadcasting Lite-On Technology
Rockwell International Lloyds TSB Group
Rohm Loewen Group
Sakura Bank Lucent Technologies
Sanwa International Finance Mandamus
Security Capital Group MBL International Finance (Bermuda)
Security Capital Global Realty McCormick
Security Dynamics Technologies National Mutual Asia
Siemens National Westminster Bank
Skandinaviska Enskilda Banken Noranda
Telesp Celular Participacoes Novartis
Texas Instruments PacifiCare Health Systems
TNT Post Groep Philipp Holzmann
Unidanmark Portugal Telecom
Union Pacific Preussag
Wells Fargo Prudential
Repsol
Sidel
Staples
TB Finance (Cayman)
Telecommunicacoes Brasileiras
Tenneco
Textron
Thistle Hotels
Thorn
Tidnings AB Marieberg
Toyota Motor
Triplex Lloyd
Unilever
Unisource Worldwide
United Companies Financial
USA Waste Services
U.S. Industries
Warner-Lambert
WHSmith Group
Yasuda Fire and Marine Insurance
</TABLE>
<TABLE>
Capital World Growth and Income Fund, Inc.
Financial Statements
- ---------------------------------------- ------------------------------
Statement of Assets and Liabilities (dollars in
at November 30, 1998 millions)
- ----------------------------------------- ------------------------------
<S> <C> <C>
Assets:
Investment securities at market
(cost: $5,665.936) $7,149.003
Short-term securities
(cost: $1,370.450) 1,369.628
Cash .192
Receivables for--
Sales of investments $39.292
Sales of fund's shares 6.346
Dividends and accrued interest 24.142 69.780
------------------------------
8,588.603
Liabilities:
Payables for--
Purchases of investments 58.755
Repurchases of fund's shares 7.336
Management services 2.937
Accrued expenses 5.029 74.057
------------------------------
Net Assets at November 30, 1998--
Equivalent to $27.15 per share on
313,667,570 shares of $0.01 par value
capital stock outstanding (authorized
capital stock - 400,000,000 shares) $8,514.546
===============
---------------
Statement of Operations (dollars in
for the year ended November 30, 1998 millions)
- --------------------------------------------- ------------------------------
Investment Income:
Income:
Dividends $169.036
Interest 74.488 $243.524
------------
Expenses:
Management services fee 34.372
Distribution expenses 18.262
Transfer agent fee 5.574
Reports to shareholders .532
Registration statement and prospectus .658
Postage, stationery and supplies .886
Directors' fees .156
Auditing and legal fees .065
Custodian fee 1.897
Taxes other than federal income tax .102
Other expenses .095 62.599
-------------- --------------
Net investment income 180.925
--------------
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 753.023
Net increase in unrealized appreciation on investments 173.442
Net realized gain and increase in unrealized ---------------
appreciation on investments 926.465
---------------
Net Increase in Net Assets Resulting
from Operations $1,107.390
===============
- ---------------------------------------------- ------------------------------
Year ended
Statement of Changes in Net Assets November 30
(dollars in millions) 1998 1997
- ---------------------------------------------- ------------------------------
Operations:
Net investment income $ 180.925 $ 158.747
Net realized gain on investments 753.023 522.194
Net increase in unrealized appreciation
on investments 173.442 221.200
------------------------------
Net increase in net assets
resulting from operations 1,107.390 902.141
------------------------------
Dividends and Distributions Paid to Shareholders:
Dividends from net investment income (176.534) (160.940)
Distributions from net realized gain on investmen (524.360) (201.626)
------------------------------
Total dividends and distributions (700.894) (362.566)
Capital Share Transactions:
Proceeds from shares sold: 47,546,047
and 74,465,301 shares, respectively 1,246.606 1,853.652
Proceeds from shares issued in reinvestment
of net investment income dividends and distributions
of net realized gain on investments:
27,000,566 and 14,610,266 shares, respectively 665.329 342.876
Cost of shares repurchased: 39,209,730
and 26,987,023 shares, respectively (1,010.432) (669.041)
------------------------------
Net increase in net assets
resulting from capital share
transactions 901.503 1,527.487
------------------------------
Total Increase in Net Assets 1,307.999 2,067.062
Net Assets:
Beginning of year 7,206.547 5,139.485
------------------------------
End of year (including undistributed
net investment income: $14.301
and $20.571, respectively) $8,514.546 $7,206.547
==============================
See Notes to Financial Statements
</TABLE>
CAPITAL WORLD GROWTH AND INCOME FUND
Notes to Financial Statements
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - 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.
SIGNIFICANT ACCOUNTING POLICIES - The following is a summary of the
significant accounting policies consistently followed by the fund in the
preparation of its financial statements:
SECURITY VALUATION - Equity securities, including depositary receipts, are
valued at the last reported sale price on the exchange or market on which such
securities are traded, as of the close of business on the day the securities
are being valued or, lacking any sales, at the last available bid price. In
cases where equity securities are traded on more than one exchange, the
securities are valued on the exchange or market determined by the investment
adviser to be the broadest and most representative market, which may be either
a securities exchange or the over-the-counter market. Fixed-income securities
are valued at prices obtained from a pricing service, when such prices are
available; however, in circumstances where the investment adviser deems it
appropriate to do so, such securities will be valued at the mean quoted bid and
asked prices or at prices for securities of comparable maturity, quality and
type. 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. Securities and assets for which
representative market quotations are not readily available are valued at fair
value as determined in good faith by a committee appointed by the Board of
Directors.
NON-U.S. CURRENCY TRANSLATION - Assets or liabilities initially expressed in
terms of non-U.S. currencies are translated into U.S. dollars at the prevailing
market rates at the end of the reporting period. Purchases and sales of
securities and income and expenses are translated into U.S. dollars at the
prevailing market rates on the dates of such transactions. The effects of
changes in non-U.S. currency exchange rates on investment securities are
included with the net realized and unrealized gain or loss on investment
securities.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - 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 and premium on securities purchased are
amortized.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends and distributions paid
to shareholders are recorded on the ex-dividend date.
2. NON-U.S. TAXATION
Net realized gain and net unrealized gain of the fund derived in India are
subject to certain non-U.S. taxes at a rate of 10%. The fund provides for such
non-U.S. taxes on investment income, net realized gain and net unrealized gain.
3. FEDERAL INCOME TAXATION
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, 1998, net unrealized appreciation on investments for book
and federal income tax purposes aggregated $1,477,938,000 of which
$1,916,205,000 related to appreciated securities and $438,267,000 related to
depreciated securities. During the year ended November 30, 1998, the fund
realized, on a tax basis, a net capital gain of $752,155,000 on securities
transactions. Net gains related to non-U.S. currency and other transactions of
$868,000 were treated as ordinary income for federal income tax purposes. The
cost of portfolio securities for book and federal income tax purposes was
$7,040,693,000 at November 30, 1998.
4. FEES AND TRANSACTIONS WITH RELATED PARTIES
INVESTMENT ADVISORY FEE - The fee of $34,372,000 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
average 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; and 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 buy
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.
DISTRIBUTION EXPENSES - 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, 1998, distribution expenses under the Plan were $18,262,000. As of
November 30, 1998, accrued and unpaid distribution expenses were $4,485,000.
American Funds Distributors, Inc. (AFD), the principal underwriter of the
fund's shares, received $5,280,000 (after allowances to dealers) as its portion
of the sales charges paid by purchasers of the fund's shares. Such sales
charges are not an expense of the fund and, hence, are not reflected in the
accompanying statement of operations.
TRANSFER AGENT FEE - American Funds Service Company (AFS), the transfer agent
for the fund, was paid a fee of $5,574,000.
DIRECTORS' FEES - Directors who are unaffiliated with CRMC may elect to defer
part or all of the fees earned for services as members of the Board. Amounts
deferred are not funded and are general unsecured liabilities of the fund. As
of November 30, 1998, aggregate amounts deferred and earnings thereon were
$264,000.
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.
5. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
The fund made purchases and sales of investment securities of $2,749,767,000
and $2,762,855,000, respectively, during the year ended November 30, 1998.
As of November 30, 1998, accumulated undistributed net realized gain on
investments was $717,071,000 and additional paid-in capital was $6,297,545,000.
The fund reclassified $561,000 from undistributed net investment income and
$2,200,000 from undistributed net realized gains to undistributed net realized
currency gains; and reclassified $10,100,000 and $33,643,000 from undistributed
net investment income and undistributed net realized gains, respectively, to
additional paid-in capital for the year ended November 30, 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 $1,897,000 includes $115,000 that was paid by these
credits rather than in cash.
Dividend and interest income is recorded net of non-U.S. taxes paid. For the
year ended November 30, 1998, such non-U.S. taxes were $14,895,000. Net
realized currency losses on dividends, interest, withholding taxes reclaimable,
and sales of non-U.S. bonds and notes, on a book basis, were $1,218,000 for the
year ended November 30, 1998.
<TABLE>
Per-Share Data and Ratios
Year ended November 30
1998 1997 1996 1995 1994
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $25.89 $23.77 $20.22 $17.81 $17.00
------- ------- ------- ------- -------
Income From Investment Operations:
Net investment income .59 .640 .70 .61 .52
Net realized and unrealized gain on inves 3.12 3.045 3.91 2.72 .75
------- ------- ------- ------- -------
Total income from investment operations 3.71 3.685 4.61 3.33 1.27
------- ------- ------- ------- -------
Less Distributions:
Dividends from net investment income (.58) (.650)(1) (.72)(1) (.63) (.46)
Distributions from net realized gains (1.87) (.915) (.34) (.29) --
------- ------- ------- ------- -------
Total distributions (2.45) (1.565) (1.06) (.92) (.46)
------- ------- ------- ------- -------
Net Asset Value, End of Year $27.15 $25.89 $23.77 $20.22 $17.81
======= ======= ======= ======= =======
Total Return (2) 15.51% 16.36% 23.67% 19.41% 7.51%
Ratios/Supplemental Data:
Net assets, end of year (in millions) $8,515 $7,207 $5,139 $3,611 $2,784
Ratio of expenses to average net assets .78% .82% .85% .88% .87%
Ratio of net income to average net assets 2.25% 2.53% 3.28% 3.24% 3.11%
Portfolio turnover rate 39.44% 32.41% 30.18% 25.50% 18.66%
(1) 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.
(2) Excludes maximum sales charge of 5.75%.
</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, 1998, the results of its operations,
the changes in its net assets and the per-share data and ratios for the years
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, 1998 by correspondence with the custodian, provide a
reasonable basis for the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
Los Angeles, California
December 31, 1998
Tax Information (unaudited)
We are required to advise you within 60 days of the fund's fiscal year-end
regarding the federal tax status of distributions received by shareholders
during such fiscal year. The distributions made during the fiscal year by the
fund were earned from the following sources:
<TABLE>
<CAPTION>
Dividends and Distributions per Share
From Net
Investment From Net Realized From Net Realized
Reinvest Date Payment Date Income Short-term Gains Long-term Gains
<S> <C> <C> <C> <C>
December 12, 1997 December 15, 1997 $0.11 $0.365 $1.365*
March 20, 1998 March 23, 1998 0.12 0.015 .125
June 5, 1998 June 8, 1998 0.21 - -
September 25, 1998 September 28, 1998 0.14 - -
</TABLE>
*INCLUDES $0.411 LONG-TERM CAPITAL GAINS TAXED AT A MAXIMUM RATE OF 28%.
The fund also designates as a capital gain distribution a portion of earnings
and profits paid to shareholders in redemption of their shares.
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, 1998 is $0.0485 on a
per-share basis. Foreign source income earned by the fund was $0.3964.
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, 23% of the dividends
paid by the fund from net investment income represent qualifying dividends.
Certain states may exempt from income taxation that portion of the dividends
paid from net investment income that was derived from U.S. Treasury
obligations. For purposes of computing this exclusion, .07% of the dividends
paid by the fund from net investment income were derived from interest on U.S.
Treasury obligations.
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 retirement plan 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 TAX
INFORMATION WHICH WILL BE MAILED IN JANUARY 1999 TO DETERMINE THE CALENDAR YEAR
AMOUNTS TO BE INCLUDED ON THEIR 1998 TAX RETURNS. SHAREHOLDERS SHOULD CONSULT
THEIR TAX ADVISERS.
CAPITAL WORLD GROWTH AND INCOME FUND
SHAREHOLDER SERVICES
[graphic: telephone receiver]
AMERICAN FUNDSLINE(R) Use our 24-hour automated phone system for fund
information and transactions.
[graphic: computer]
FUNDSLINE ONLINE(R) Visit our Web site when you want to access your account,
download a prospectus, or find fund information.
[graphic: coins]
REDUCED SALES CHARGE Larger purchases may qualify for a reduced sales charge.
To help reach a breakpoint, you may -
* Add your present purchase to the value of all eligible household accounts
and/or
* Add your present purchase to purchases you intend to make over 13 months
ASSETS IN MONEY MARKET FUNDS GENERALLY DO NOT APPLY WHEN DETERMINING SALES
CHARGES.
[graphic: sign post with 3 signs: SIMPLE, IRA, 401(K)]
RETIREMENT PLANS A wide range of fund choices for individual and
company-sponsored retirement plans.
[graphic: building]
AMERICAN FUNDSLINK(SM) Link your fund account to your bank account for direct
transfers between the two and to purchase shares using American FundsLine or
FundsLine OnLine.
[graphic: calendar]
AUTOMATIC TRANSACTIONS Use this service when you want to purchase, sell and
exchange shares on a regular basis.
[graphic: dollar signs moving from one box to another, being coordinated by a
conductor]
FLEXIBLE DIVIDEND OPTIONS Use your dividend and capital gain distributions to
meet your changing needs. You may -
* Invest dividends and capital gain distributions back into the fund
* Diversify by investing dividends and capital gain distributions into another
American Fund
* Take dividends in cash
* Have dividends paid directly to someone else
BECAUSE CERTAIN TRANSACTIONS HAVE RESTRICTIONS OR TAX CONSEQUENCES, PLEASE
CONSULT YOUR FINANCIAL ADVISER BEFORE REQUESTING CHANGES.
WOULD YOU LIKE MORE INFORMATION?
Your financial adviser will be happy to explain these services in greater
detail, or you may contact American Funds Service Company.
To contact American Funds Service Company:
SHAREHOLDER SERVICES REPRESENTATIVE - 8 a.m. to 8 p.m. Eastern time -
800/421-0180
AMERICAN FUNDSLINE - 24-hour automated telephone system - 800/325-3590
FUNDSLINE ONLINE - Web site - www.americanfunds.com
BY MAIL - Write to the service center nearest you.
(If you live outside the United States, please write to the western service
center.)
[maps: western, west central, east central, and eastern service areas]
WESTERN
American Funds
Service Company
P.O. Box 2205
Brea, CA 92822-2205
WEST CENTRAL
American Funds
Service Company
P.O. Box 659522
San Antonio, TX 78265-9522
EAST CENTRAL
American Funds
Service Company
P.O. Box 6007
Indianapolis, IN 46206-6007
EASTERN
American Funds
Service Company
P.O. Box 2280
Norfolk, VA 23501-2280
Please obtain the applicable prospectuses from your financial adviser or our
Web site and read them carefully before investing or sending money. American
Funds reserves the right to terminate or modify these services.
[The American Funds Group(r)]
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
Private investor; former owner 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
STEPHANIE POWERS
Beverly Hills, California
Actor; Founder and President,
The William Holden Wildlife Foundation
FRANK STANTON
New York, New York
Retired; former President, CBS Inc. (1946-1973)
THIERRY VANDEVENTER
Geneva, Switzerland
Chairman of the Board of the fund
Director, Capital Research and
Management Company
CHARLES WOLF, JR., PH.D.
Santa Monica, California
Economic Adviser and Corporate Fellow
in International Economics,
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
MARK E. DENNING
London, England
Senior Vice President of the fund
Director, Capital Research and
Management Company
JANET A. MCKINLEY
New York, New York
Senior Vice President of the fund
Director, Capital Research and
Management Company
CARL M. KAWAJA
San Francisco, California
Vice President of the fund
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
DIANA J. PROHOROFF
Brea, California
Assistant Treasurer of the fund
Assistant Vice President -
Fund Business Management Group,
Capital Research and Management Company
OFFICES OF THE FUND AND OF THE
INVESTMENT ADVISER,
CAPITAL RESEARCH AND MANAGEMENT COMPANY
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92821-5823
TRANSFER AGENT FOR SHAREHOLDER ACCOUNTS
American Funds Service Company
(Please write to the address nearest you.)
P.O. Box 2205
Brea, California 92822-2205
P.O. Box 659522
San Antonio, Texas 78265-9522
P.O. Box 6007
Indianapolis, Indiana 46206-6007
P.O. Box 2280
Norfolk, Virginia 23501-2280
CUSTODIAN OF ASSETS
The Chase Manhattan Bank
One Chase Manhattan Plaza
New York, New York 10081-0001
COUNSEL
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, California 90071-2899
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers 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. 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 March 31, 1999, 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/3931
Lit. No. WGI-011-0199
[The American Funds Group(r)]
