UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
Certified Shareholder Report of
Registered Management Investment Companies
Investment Company Act File Number: 811-22215
International Growth and Income Fund
(Exact Name of Registrant as Specified in Charter)
P.O. Box 7650, One Market, Steuart Tower
San Francisco, California 94120
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (415) 421-9360
Date of fiscal year end: June 30
Date of reporting period: December 31, 2010
Patrick F. Quan
Capital Research and Management Company
P.O. Box 7650, One Market, Steuart Tower
San Francisco, California 94120
(Name and Address of Agent for Service)
Copies to:
Michael Glazer
Bingham McCutchen LLP
355 South Grand Avenue, Suite 4400
Los Angeles, California 90071
(Counsel for the Registrant)
ITEM 1 – Reports to Stockholders
International Growth and Income FundSM
[photo – path of stepping stones on grass]
Semi-annual report for the six months ended December 31, 2010
International Growth and Income Fund seeks to provide long-term growth of capital with current income by investing primarily in the stocks of larger, well-established companies outside the U.S.
This fund is one of the 33 American Funds. American Funds is one of the nation’s largest mutual fund families. For nearly 80 years, Capital Research and Management Company,SM the American Funds adviser, has invested with a long-term focus based on thorough research and attention to risk.
Fund results shown in this report, unless otherwise indicated, are for Class A shares at net asset value. If a sales charge (maximum 5.75%) had been deducted, the results would have been lower. Results are for past periods and are not predictive of results for future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors 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, so they may lose value. For current information and month-end results, visit americanfunds.com.
Here are the average annual total returns on a $1,000 investment with all distributions reinvested for periods ended December 31, 2010: | ||||||||||||
Lifetime | ||||||||||||
Class A shares | 1 year | 5 years | (since 10/1/08) | |||||||||
Reflecting 5.75% maximum sales charge | 2.38 | % | — | 11.26 | % |
The total annual fund operating expense ratio was 0.94% for Class A shares as of the most recent fiscal year-end.
Investment results assume all distributions are reinvested and reflect applicable fees and expenses. The fund’s investment adviser waived a portion of its management fees from October 1, 2008, through December 31, 2008, and reimbursed other fees and expenses. These reimbursements may be adjusted or discontinued by the investment adviser at any time, subject to any restrictions in the fund’s prospectus. Applicable fund results shown reflect the waiver and reimbursements, without which they would have been lower. See the fund’s prospectus or the Financial Highlights table on pages 28 to 31 for details.
The fund’s 30-day yield for Class A shares as of January 31, 2011, reflecting the 5.75% maximum sales charge and calculated in accordance with the Securities and Exchange Commission formula, was 2.44%.
Results for other share classes can be found on page 36.
Investing outside the United States may be subject to risks, such as currency fluctuations, periods of illiquidity, price volatility and political instability. These risks may be heightened in connection with investments in developing countries. See the prospectus and the Risk Factors section of this report for more information on these and other risks associated with investing in the fund.
Fellow shareholders:
[photo – path of stepping stones on grass]
For the six months ended December 31, 2010, the global economy continued to show signs of improvement and markets generally registered strong returns. Volatility continued through the period, but upbeat investors looked past Europe’s sovereign debt crisis and money-tightening measures in China to focus on positive corporate earnings and economic growth.
Against that backdrop, International Growth and Income Fund earned a total return of 23.14% during the first half of the fiscal year. While the fund’s return was solid, it trailed the 24.60% return of its benchmark, the MSCI World ex USA Index, which measures more than 20 equity markets in developed countries, excluding the United States. The index is unmanaged and its returns do not include expenses. The Lipper International Funds Index, a measure of the fund’s category peers, also gained 24.60% for the period.
The fund’s total return includes quarterly dividends totaling 44.3 cents a share paid during the period. Shareholders also received a capital gains distribution of 17.5 cents a share in December.
[Begin Sidebar]
Results at a glance | ||||||||||||
For periods ended December 31, 2010, with all distributions reinvested | ||||||||||||
Average annual | ||||||||||||
Total returns | total returns | |||||||||||
Lifetime | ||||||||||||
Six months | 1 year | (since 10/1/2008) | ||||||||||
International Growth and | ||||||||||||
Income Fund (Class A shares) | 23.14 | % | 8.62 | % | 14.24 | % | ||||||
MSCI World ex USA Index* | 24.60 | 9.43 | 6.43 | |||||||||
Lipper International Funds Index† | 24.60 | 11.03 | 7.90 | |||||||||
*The index is unmanaged, and its results include reinvested dividends and/or distributions but do not reflect the effect of sales charges, commissions, account fees, expenses or taxes. | ||||||||||||
† Figures do not reflect the effect of sales charges, account fees or taxes. |
[End Sidebar]
Market overview
Most of the world’s stock markets enjoyed double-digit gains during the six months. The euro zone — the nations that share the euro as a common currency, and which accounts for 25.6% of the fund’s holdings — posted a dollar-adjusted increase of 21.79%.* Notable exceptions to the strong uptrend were heavily indebted Greece and Ireland, which still rose 6.84% and 2.82%, respectively. Results in the region were fueled by improved economic data and higher corporate profits. GDP expanded at a 0.3% rate in the fourth quarter, driven in part by strong demand for German exports. Broader Europe, which includes the United Kingdom, Switzerland and other nations, and accounts for 51.0% of the portfolio, rose an even stronger 24.84%.
In November, markets retreated when Europe’s sovereign debt crisis returned to the news headlines as Ireland became the second euro zone nation to require support from the European Union and International Monetary Fund. By December, however, both Ireland and Italy enacted budget cuts and euro zone leaders entered discussions for a permanent bailout fund for struggling member nations. Reassured investors turned their attention to positive economic developments and markets rallied to close out the period.
Major markets in the Asia/Pacific region also delivered good results. In Japan, where the government adopted stimulus measures and its central bank cut interest rates, stocks were up 18.74%. Australian equities rose 35.84%, aided in part by surging commodities prices. Many corporations in Asia, as well as Europe and the Americas, benefited from continued economic strength in the developing world, particularly in China and India. Concerns about rising inflation in China, however, led to monetary tightening there, which briefly unsettled markets.
*Country returns are based on MSCI indexes, expressed in U.S. dollars, and assume the reinvestment of gross dividends. |
[Begin Sidebar]
Largest equity holdings | |||||
(as of December 31, 2010) | |||||
Percent of | |||||
Company | Country | net assets | |||
Royal Dutch Shell PLC | United Kingdom | 3.0 | % | ||
British American Tobacco PLC | United Kingdom | 3.0 | |||
TOTAL | France | 2.5 | |||
Hongkong Electric Holdings | Hong Kong | 2.1 | |||
National Grid | United Kingdom | 2.1 | |||
Bank of Nova Scotia | Canada | 2.0 | |||
Portugal Telecom | Portugal | 1.9 | |||
Nintendo | Japan | 1.9 | |||
Schneider Electric | France | 1.8 | |||
Tesco PLC | United Kingdom | 1.8 |
[End Sidebar]
[Begin Sidebar]
Where the fund’s assets were invested | |||||||||||
Percent of net assets by country as of December 31, 2010 | |||||||||||
International Growth | MSCI World ex | ||||||||||
and Income Fund | USA Index* | ||||||||||
n | Euro zone | ||||||||||
France | 10.8 | % | 8.5 | % | |||||||
Germany | 4.8 | 7.4 | |||||||||
Netherlands | 2.3 | 2.3 | |||||||||
Portugal | 1.9 | .2 | |||||||||
Greece | 1.4 | .2 | |||||||||
Italy | 1.4 | 2.3 | |||||||||
Austria | 1.3 | .3 | |||||||||
Finland | .7 | 1.0 | |||||||||
Belgium | .5 | .8 | |||||||||
Spain | .3 | 2.9 | |||||||||
Ireland | .2 | .2 | |||||||||
Euro zone | 25.6 | 26.1 | |||||||||
Other Europe | |||||||||||
United Kingdom | 17.5 | 19.1 | |||||||||
Switzerland | 4.7 | 7.2 | |||||||||
Sweden | 1.6 | 2.9 | |||||||||
Norway | .7 | .7 | |||||||||
Czech Republic | .4 | — | |||||||||
Russia | .4 | — | |||||||||
Denmark | .1 | .9 | |||||||||
Other Europe | 25.4 | 30.8 | |||||||||
Total Europe | 51.0 | 56.9 | |||||||||
n | Asia/Pacific | ||||||||||
Japan | 7.4 | 19.8 | |||||||||
Australia | 6.9 | 7.9 | |||||||||
Hong Kong | 3.3 | 2.6 | |||||||||
China | 2.8 | — | |||||||||
Taiwan | 2.3 | — | |||||||||
Singapore | 1.0 | 1.5 | |||||||||
South Korea | .8 | — | |||||||||
India | .6 | — | |||||||||
Indonesia | .3 | — | |||||||||
New Zealand | — | .1 | |||||||||
Asia/Pacific | 25.4 | 31.9 | |||||||||
n | The Americas | ||||||||||
Canada | 7.4 | 10.5 | |||||||||
Mexico | 2.7 | — | |||||||||
Brazil | 2.3 | — | |||||||||
United States | 1.1 | — | |||||||||
The Americas | 13.5 | 10.5 | |||||||||
n | Other | ||||||||||
South Africa | 2.6 | — | |||||||||
Israel | — | .7 | |||||||||
Other | 2.6 | .7 | |||||||||
n | Short-term securities & | ||||||||||
other assets less liabilities | 7.5 | — | |||||||||
Total | 100.0 | % | 100.0 | % | |||||||
*MSCI World ex USA Index market capitalizations as of December 31, 2010. |
[End Sidebar]
Market strength was evident across all 10 sectors that comprise the MSCI World ex USA Index. The materials (+40.71%), energy (+32.97%) and consumer discretionary (+29.28%) sectors were areas of particular strength.
Company-by-company approach
Country and sector returns help to characterize the range of environments for International Growth and Income Fund’s holdings during the period. However, it is important to note that the securities comprising the fund’s portfolio are not chosen based on a macroeconomic approach that emphasizes particular sectors or geographies. Rather, investment decisions are made based on the fundamental merits of each company in the portfolio, regardless of where they are domiciled. This approach has resulted in a broadly diversified portfolio. (Turn to page 3 for a look at the fund’s geographic diversification.)
The fund’s diversification is evident in its top 10 holdings, which includes companies representing seven different industries. Among this group were a number of strong contributors for the fund, including electric equipment manufacturer Schneider Electric (+47.87%), Bank of Nova Scotia (+24.64%) and oil company Royal Dutch Shell (+36.20%), our largest holding. Key contributors outside the fund’s top 10 holdings included South African food retailer Shoprite Holdings (+40.86%), U.K. insurance provider Prudential (+38.95%) and European utility GDF SUEZ (+26.82%).
Nearly all of the fund’s holdings generated positive results. Among the few detractors were Japanese pharmaceutical company Shionogi & Co. (–4.57%) and Cielo (–3.78%), a Brazilian credit card operator.
Looking forward
We are encouraged by the progress we have seen in recent months and see many reasons for long-term investors to be optimistic. The global economy continues to heal, albeit at a subdued pace. And many major corporations around the world have healthy balance sheets and have seen their profits rise sharply.
However, the ongoing recovery continues to face many of the same risks that were evident in 2010. The European Union has taken unprecedented steps toward solving its sovereign debt crisis, but a number of its member nations are still grappling with heavy debt burdens. Investors might continue to worry about the potential consequences of further monetary tightening in China, as that nation seeks to maintain a healthy level of growth. In addition, Australia faced its worst floods in a half-century, which have disrupted industry, and poor harvests in Latin America and other factors could result in food price inflation.
So while we maintain a positive long-term outlook, we expect to see continued volatility in the short term. We believe that it is during periods of volatility that opportunities to invest in good companies at attractive valuations often arise.
As always, we will continue to take a company-by-company approach to investing as we seek what we believe are the best investment opportunities for our shareholders.
We thank you for making us part of your investment plans, and look forward to reporting back to you again at the close of the fiscal year.
Cordially,
/s/ Steven T. Watson
Steven T. Watson
Vice Chairman of the Board
/s/ Carl M. Kawaja
Carl M. Kawaja
President
February 11, 2011
For current information about the fund, visit americanfunds.com.
Summary investment portfolio, December 31, 2010
unaudited
The following summary investment portfolio is designed to streamline the report and help investors better focus on a fund’s principal holdings. See the inside back cover for details on how to obtain a complete schedule of portfolio holdings.
[begin pie chart]
Industry sector diversification | (percent of net assets) | |||
Financials | 17.46 | % | ||
Consumer staples | 12.25 | |||
Industrials | 10.00 | |||
Telecommunication services | 8.97 | |||
Energy | 7.94 | |||
Other industries | 33.03 | |||
Other securities | 2.86 | |||
Short-term securities & other assets less liabilities | 7.49 |
[end pie chart]
Country diversification | (percent of net assets) | |||
Euro zone* | 25.6 | % | ||
United Kingdom | 17.5 | |||
Canada | 7.4 | |||
Japan | 7.4 | |||
Australia | 6.9 | |||
Switzerland | 4.7 | |||
Hong Kong | 3.3 | |||
China | 2.8 | |||
Mexico | 2.7 | |||
South Africa | 2.6 | |||
Other countries | 11.6 | |||
Short-term securities & other assets less liabilities | 7.5 | |||
*Countries using the euro as a common currency; those represented in the fund's portfolio are Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Portugal and Spain. |
Percent | |||
Value | of net | ||
Common stocks - 89.65% | Shares | (000) | assets |
Financials - 17.46% | |||
Bank of Nova Scotia | 1,604,000 | $ 92,113 | 2.02% |
Prudential PLC | 7,208,148 | 75,071 | 1.65 |
Industrial and Commercial Bank of China Ltd., Class H | 73,708,325 | 54,906 | 1.20 |
Toronto-Dominion Bank | 610,000 | 45,552 | 1.00 |
HSBC Holdings PLC (Hong Kong) | 3,406,896 | 34,933 | |
HSBC Holdings PLC (United Kingdom) | 1,008,896 | 10,242 | .99 |
UBS AG (1) | 2,723,000 | 44,704 | .98 |
Australia and New Zealand Banking Group Ltd. | 1,865,664 | 44,557 | .98 |
Agricultural Bank of China, Class H (1) | 88,501,000 | 44,406 | .97 |
Other securities | 349,579 | 7.67 | |
796,063 | 17.46 | ||
Consumer staples - 12.25% | |||
British American Tobacco PLC | 3,577,500 | 137,406 | 3.01 |
Tesco PLC | 12,643,000 | 83,775 | 1.84 |
Unilever NV, depository receipts | 2,425,200 | 75,510 | 1.66 |
Shoprite Holdings Ltd. | 3,585,000 | 54,231 | 1.19 |
Kimberly-Clark de México, SAB de CV, Class A | 6,655,000 | 40,808 | .89 |
Pernod Ricard SA | 369,660 | 34,756 | .76 |
Other securities | 132,289 | 2.90 | |
558,775 | 12.25 | ||
Industrials - 10.00% | |||
Schneider Electric SA | 559,776 | 83,779 | 1.84 |
Siemens AG | 423,500 | 52,461 | 1.15 |
Geberit AG | 195,100 | 45,113 | .99 |
Marubeni Corp. | 6,065,000 | 42,655 | .94 |
Capita Group PLC | 3,855,000 | 41,862 | .92 |
Vallourec SA | 362,000 | 38,022 | .83 |
AB SKF, Class B | 1,255,000 | 35,752 | .78 |
Other securities | 116,259 | 2.55 | |
455,903 | 10.00 | ||
Telecommunication services - 8.97% | |||
Portugal Telecom, SGPS, SA | 7,871,000 | 88,141 | 1.93 |
América Móvil, SAB de CV, Series L (ADR) | 554,000 | 31,766 | |
América Móvil, SAB de CV, Series L | 10,684,600 | 30,687 | 1.37 |
Telstra Corp. Ltd. | 20,894,000 | 59,623 | 1.31 |
Telekom Austria AG, non-registered shares | 4,217,649 | 59,291 | 1.30 |
Other securities | 139,695 | 3.06 | |
409,203 | 8.97 | ||
Energy - 7.94% | |||
Royal Dutch Shell PLC, Class B | 4,179,000 | 137,802 | 3.02 |
TOTAL SA | 2,161,000 | 114,499 | 2.51 |
TransCanada Corp. | 1,294,362 | 49,455 | 1.08 |
Other securities | 60,542 | 1.33 | |
362,298 | 7.94 | ||
Utilities - 7.26% | |||
Hongkong Electric Holdings Ltd. | 15,028,000 | 94,737 | 2.08 |
National Grid PLC | 10,939,655 | 94,320 | 2.07 |
GDF SUEZ | 1,912,271 | 68,612 | 1.50 |
Snam Rete Gas SpA | 7,000,000 | 34,797 | .76 |
Other securities | 38,634 | .85 | |
331,100 | 7.26 | ||
Materials - 6.90% | |||
Orica Ltd. | 1,953,067 | 49,740 | 1.09 |
K+S AG | 638,000 | 48,050 | 1.05 |
L'Air Liquide SA, non-registered shares | 375,466 | 47,484 | 1.04 |
Impala Platinum Holdings Ltd. | 1,225,000 | 43,321 | .95 |
Other securities | 125,912 | 2.77 | |
314,507 | 6.90 | ||
Consumer discretionary - 6.07% | |||
Virgin Media Inc. | 1,815,000 | 49,441 | 1.09 |
OPAP SA | 2,669,870 | 46,167 | 1.01 |
H & M Hennes & Mauritz AB, Class B | 1,141,400 | 38,015 | .83 |
Toyota Motor Corp. | 947,900 | 37,594 | .83 |
Other securities | 105,484 | 2.31 | |
276,701 | 6.07 | ||
Information technology - 5.89% | |||
Nintendo Co., Ltd. | 292,400 | 85,822 | 1.88 |
Canon, Inc. | 895,000 | 46,409 | 1.02 |
Taiwan Semiconductor Manufacturing Co. Ltd. | 17,991,506 | 43,812 | .96 |
Other securities | 92,670 | 2.03 | |
268,713 | 5.89 | ||
Health care - 4.57% | |||
Novartis AG | 1,248,000 | 73,345 | 1.61 |
Other securities | 135,273 | 2.96 | |
208,618 | 4.57 | ||
Miscellaneous - 2.34% | |||
Other common stocks in initial period of acquisition | 106,817 | 2.34 | |
Total common stocks (cost: $3,330,975,000) | 4,088,698 | 89.65 | |
Percent | |||
Value | of net | ||
Preferred stocks - 0.43% | Shares | (000) | assets |
Financials - 0.43% | |||
HSBC Holdings PLC, Series 2, 8.00% | 400,000 | $ 10,709 | 0.24% |
Other securities | 8,656 | .19 | |
Total preferred stocks (cost: $15,202,000) | 19,365 | .43 | |
Percent | |||
Value | of net | ||
Convertible securities - 0.57% | (000) | assets | |
Materials - 0.57% | |||
Other securities | 26,167 | .57 | |
Total convertible securities (cost: $18,645,000) | 26,167 | .57 | |
Principal | Percent | ||
amount | Value | of net | |
Bonds & notes - 1.86% | (000) | (000) | assets |
Consumer staples - 0.37% | |||
British American Tobacco International Finance PLC 8.125 %-9.50% 2013-2018 (2) | $ 14,159 | $ 16,848 | .37 |
Other - 1.49% | |||
Other securities | 67,944 | 1.49 | |
Total bonds & notes (cost: $73,061,000) | 84,792 | 1.86 | |
Principal | Percent | ||
amount | Value | of net | |
Short-term securities - 7.25% | (000) | (000) | assets |
U.S. Treasury Bills 0.147%-0.185% due 4/14-5/19/2011 | $ 70,800 | $ 70,764 | 1.55% |
International Bank for Reconstruction and Development 0.19%-0.20% due 2/28-4/6/2011 | 65,200 | 65,181 | 1.43 |
Bank of Nova Scotia 0.09%-0.24% due 1/3-1/6/2011 | 62,500 | 62,499 | 1.37 |
Caisse d'Amortissement de la Dette Sociale 0.25% due 2/9/2011 (2) | 51,400 | 51,387 | 1.13 |
KfW 0.25% due 3/7/2011 (2) | 37,800 | 37,787 | .83 |
Other securities | 43,197 | .94 | |
Total short-term securities (cost: $330,793,000) | 330,815 | 7.25 | |
Total investment securities (cost: $3,768,676,000) | 4,549,837 | 99.76 | |
Other assets less liabilities | 10,725 | .24 | |
Net assets | $4,560,562 | 100.00% |
"Miscellaneous" securities include holdings in their initial period of acquisition that have not previously been publicly disclosed. |
"Other securities" includes all issues that are not disclosed separately in the summary investment portfolio. |
The following footnotes apply to either the individual securities noted or one or more of the securities aggregated and listed as a single line item. |
(1) Security did not produce income during the last 12 months. |
(2) Acquired in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities, including those in "Other securities," was $151,794,000, which represented 3.33% of the net assets of the fund. |
Key to abbreviation |
ADR = American Depositary Receipts |
See Notes to Financial Statements |
Financial statements
Statement of assets and liabilities | unaudited | |||||||
at December 31, 2010 | (dollars in thousands) | |||||||
Assets: | ||||||||
Investment securities, at value (cost: $3,768,676) | $ | 4,549,837 | ||||||
Cash | 114 | |||||||
Receivables for: | ||||||||
Sales of fund's shares | $ | 11,399 | ||||||
Dividends and interest | 10,027 | 21,426 | ||||||
4,571,377 | ||||||||
Liabilities: | ||||||||
Payables for: | ||||||||
Purchases of investments | 1,608 | |||||||
Repurchases of fund's shares | 4,878 | |||||||
Investment advisory services | 1,989 | |||||||
Services provided by related parties | 1,235 | |||||||
Trustees' deferred compensation | 547 | |||||||
Non-U.S. taxes | 471 | |||||||
Other | 87 | 10,815 | ||||||
Net assets at December 31, 2010 | $ | 4,560,562 | ||||||
Net assets consist of: | ||||||||
Capital paid in on shares of beneficial interest | $ | 3,759,426 | ||||||
Undistributed net investment income | 299 | |||||||
Undistributed net realized gain | 19,814 | |||||||
Net unrealized appreciation | 781,023 | |||||||
Net assets at December 31, 2010 | $ | 4,560,562 |
(dollars and shares in thousands, except per-share amounts) | ||||||||||||
Shares of beneficial interest issued and outstanding (no stated par value) - | ||||||||||||
unlimited shares authorized (146,156 total shares outstanding) | ||||||||||||
Net assets | Shares outstanding | Net asset value per share | ||||||||||
Class A | $ | 3,243,796 | 103,946 | $ | 31.21 | |||||||
Class B | 31,350 | 1,006 | 31.16 | |||||||||
Class C | 212,612 | 6,826 | 31.14 | |||||||||
Class F-1 | 371,507 | 11,904 | 31.21 | |||||||||
Class F-2 | 273,710 | 8,768 | 31.22 | |||||||||
Class 529-A | 51,516 | 1,652 | 31.18 | |||||||||
Class 529-B | 1,357 | 44 | 31.13 | |||||||||
Class 529-C | 11,977 | 385 | 31.08 | |||||||||
Class 529-E | 1,863 | 60 | 31.19 | |||||||||
Class 529-F-1 | 1,547 | 50 | 31.22 | |||||||||
Class R-1 | 4,070 | 131 | 31.16 | |||||||||
Class R-2 | 18,469 | 594 | 31.11 | |||||||||
Class R-3 | 16,576 | 532 | 31.18 | |||||||||
Class R-4 | 7,943 | 254 | 31.21 | |||||||||
Class R-5 | 21,122 | 674 | 31.32 | |||||||||
Class R-6 | 291,147 | 9,330 | 31.21 | |||||||||
See Notes to Financial Statements |
Statement of operations | unaudited | |||||||
for the six months ended December 31, 2010 | (dollars in thousands) | |||||||
Investment income: | ||||||||
Income: | ||||||||
Dividends (net of non-U.S. taxes of $7,259) | $ | 68,627 | ||||||
Interest | 4,553 | $ | 73,180 | |||||
Fees and expenses*: | ||||||||
Investment advisory services | 10,917 | |||||||
Distribution services | 4,782 | |||||||
Transfer agent services | 1,442 | |||||||
Administrative services | 703 | |||||||
Reports to shareholders | 147 | |||||||
Registration statement and prospectus | 276 | |||||||
Trustees' compensation | 224 | |||||||
Auditing and legal | 15 | |||||||
Custodian | 382 | |||||||
Other | 66 | |||||||
Total fees and expenses before reimbursement | 18,954 | |||||||
Less reimbursement of fees and expenses | 6 | |||||||
Total fees and expenses after reimbursement | 18,948 | |||||||
Net investment income | 54,232 | |||||||
Net realized gain and unrealized appreciation | ||||||||
on investments and currency: | ||||||||
Net realized gain on: | ||||||||
Investments | 20,411 | |||||||
Currency transactions | 250 | 20,661 | ||||||
Net unrealized appreciation on: | ||||||||
Investments (net of non-U.S. taxes of $471) | 736,081 | |||||||
Currency translations | 476 | 736,557 | ||||||
Net realized gain and unrealized appreciation | ||||||||
on investments and currency | 757,218 | |||||||
Net increase in net assets resulting | ||||||||
from operations | $ | 811,450 | ||||||
(*) Additional information related to class-specific fees and expenses is included | ||||||||
in the Notes to Financial Statements. | ||||||||
See Notes to Financial Statements | ||||||||
Statements of changes in net assets | ||||||||
(dollars in thousands) | ||||||||
Six months ended December 31, 2010* | Year ended June 30, 2010 | |||||||
Operations: | ||||||||
Net investment income | $ | 54,232 | $ | 88,460 | ||||
Net realized gain on investments and currency transactions | 20,661 | 75,412 | ||||||
Net unrealized appreciation (depreciation) on investments and currency translations | 736,557 | (134,560 | ) | |||||
Net increase in net assets resulting from operations | 811,450 | 29,312 | ||||||
Dividends and distributions paid to shareholders: | ||||||||
Dividends from net investment income | (61,463 | ) | (86,523 | ) | ||||
Distributions from net realized gain on investments | (25,100 | ) | (40,864 | ) | ||||
Total dividends and distributions paid to shareholders | (86,563 | ) | (127,387 | ) | ||||
Net capital share transactions | 355,748 | 1,675,168 | ||||||
Total increase in net assets | 1,080,635 | 1,577,093 | ||||||
Net assets: | ||||||||
Beginning of period | 3,479,927 | 1,902,834 | ||||||
End of period (including undistributed | ||||||||
net investment income: $299 and $7,530, respectively) | $ | 4,560,562 | $ | 3,479,927 | ||||
*Unaudited. | ||||||||
See Notes to Financial Statements |
Notes to financial statements
unaudited
1. | Organization |
International Growth and Income Fund (the “fund”) is registered under the Investment Company Act of 1940 as an open-end, diversified management investment company. The fund seeks to provide long-term growth of capital with current income by investing primarily in the stocks of larger, well-established companies outside the U.S.
The fund has 16 share classes consisting of five retail share classes, five 529 college savings plan share classes and six retirement plan share classes. The 529 college savings plan share classes (529-A, 529-B, 529-C, 529-E and 529-F-1) can be used to save for college education. The six retirement plan share classes (R-1, R-2, R-3, R-4, R-5 and R-6) are generally offered only through eligible employer-sponsored retirement plans. The fund’s share classes are described below:
Share class | Initial sales charge | Contingent deferred sales charge upon redemption | Conversion feature |
Classes A and 529-A | Up to 5.75 % | None (except 1% for certain redemptions within one year of purchase without an initial sales charge) | None |
Classes B and 529-B* | None | Declines from 5% to 0% for redemptions within six years of purchase | Classes B and 529-B convert to Classes A and 529-A, respectively, after eight years |
Class C | None | 1% for redemptions within one year of purchase | Class C converts to Class F-1 after 10 years |
Class 529-C | None | 1% for redemptions within one year of purchase | None |
Class 529-E | None | None | None |
Classes F-1, F-2 and 529-F-1 | None | None | None |
Classes R-1, R-2, R-3, R-4, R-5 and R-6 | None | None | None |
*Class B and 529-B shares of the fund are not available for purchase.
Holders of all share classes have equal pro rata rights to assets, dividends and liquidation proceeds. Each share class has identical voting rights, except for the exclusive right to vote on matters affecting only its class. Share classes have different fees and expenses (“class-specific fees and expenses”), primarily due to different arrangements for distribution, administrative and shareholder services. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different per-share dividends by each class.
2. | Significant accounting policies |
The financial statements have been prepared to comply with accounting principles generally accepted in the United States of America. These principles require management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. The fund follows the significant accounting policies described below, as well as the valuation policies described in the next section on valuation.
Security transactions and related investment income – Security transactions are recorded by the fund as of the date the trades are executed with brokers. Realized gains and losses from security transactions are determined based on the specific identified cost of the securities. Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis. Market discounts, premiums and original issue discounts on fixed-income securities are amortized daily over the expected life of the security.
Class allocations – Income, fees and expenses (other than class-specific fees and expenses) and realized and unrealized gains and losses are allocated daily among the various share classes based on their relative net assets. Class-specific fees and expenses, such as distribution, administrative and shareholder services, are charged directly to the respective share class.
Dividends and distributions to shareholders – Dividends and distributions paid to shareholders are recorded on the ex-dividend date.
Currency translation – Assets and liabilities, including investment securities, denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. On the accompanying financial statements, the effects of changes in exchange rates on investment securities are included with the net realized gain or loss and net unrealized appreciation or depreciation on investments. The realized gain or loss and unrealized appreciation or depreciation resulting from all other transactions denominated in currencies other than U.S. dollars are disclosed separately.
3. | Valuation |
The fund’s investments are reported at fair value as defined by accounting principles generally accepted in the United States of America. The fund generally determines its net asset value as of approximately 4:00 p.m. New York time each day the New York Stock Exchange is open.
Methods and inputs – The fund uses the following methods and inputs to establish the fair value of its assets and liabilities. Use of particular methods and inputs may vary over time based on availability and relevance as market and economic conditions evolve.
Equity securities are generally valued at the official closing price of, or 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. Prices for each security are taken from the principal exchange or market in which the security trades.
Fixed-income securities, including short-term securities purchased with more than 60 days left to maturity, are generally valued at prices obtained as of approximately 3:00 p.m. New York time from one or more pricing vendors. Vendors value such securities based on one or more of the inputs described in the following table. The table provides examples of inputs that are commonly relevant for valuing particular classes of fixed-income securities in which the fund is authorized to invest. However, these classifications are not exclusive, and any of the inputs may be used to value any other class of fixed-income security.
Fixed-income class | Examples of standard inputs |
All | Benchmark yields, transactions, bids, offers, quotations from dealers and trading systems, new issues, spreads and other relationships observed in the markets among comparable securities; and proprietary pricing models such as yield measures calculated using factors such as cash flows, financial or collateral performance and other reference data (collectively referred to as “standard inputs”) |
Corporate bonds & notes; convertible securities | Standard inputs and underlying equity of the issuer |
Bonds & notes of governments & government agencies | Standard inputs and interest rate volatilities |
Mortgage-backed; asset-backed obligations | Standard inputs and cash flows, prepayment information, default rates, delinquency and loss assumptions, collateral characteristics, credit enhancements and specific deal information |
Where the investment adviser deems it appropriate to do so (such as when vendor prices are unavailable or not deemed to be representative), fixed-income securities will be valued in good faith at the mean quoted bid and asked prices that are reasonably and timely available (or bid prices, if asked prices are not available) or at prices for securities of comparable maturity, quality and type.
Securities with both fixed-income and equity characteristics, or equity securities traded principally among fixed-income dealers, are generally valued in the manner described above for either equity or fixed-income securities, depending on which method is deemed most appropriate by the investment adviser. Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates fair value. The value of short-term securities originally purchased with maturities greater than 60 days is determined based on an amortized value to par when they reach 60 days.
Securities and other assets for which representative market quotations are not readily available or are considered unreliable by the investment adviser are fair valued as determined in good faith under guidelines adopted by authority of the fund's board of trustees. Market quotations may be considered unreliable if events occur that materially affect the value of securities (particularly equity securities trading outside the U.S.) between the close of trading in those securities and the close of regular trading on the New York Stock Exchange. Various inputs may be reviewed in order to make a good faith determination of a security’s fair value. These inputs include, but are not limited to, the type and cost of the security; contractual or legal restrictions on resale of the security; relevant f inancial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; significant events occurring after the close of trading in the security; and changes in overall market conditions. Fair valuations and valuations of investments that are not actively trading involve judgment and may differ materially from valuations that would have been used had greater market activity occurred.
Classifications - The fund classifies its assets and liabilities into three levels based on the inputs used to value the assets or liabilities. Level 1 values are based on quoted prices in active markets for identical securities. Level 2 values are based on significant observable market inputs, such as quoted prices for similar securities and quoted prices in inactive markets. Level 3 values are based on significant unobservable inputs that reflect the fund’s determination of assumptions that market participants might reasonably use in valuing the securities. The valuation levels are not necessarily an indication of the risk or liquidity associated with the underlying investment . For example, U.S. government securities are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market. The following table presents the fund’s valuation levels as of December 31, 2010 (dollars in thousands):
Investment securities: | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common stocks: | ||||||||||||||||
Financials | $ | 796,063 | $ | - | $ | - | $ | 796,063 | ||||||||
Consumer staples | 558,775 | - | - | 558,775 | ||||||||||||
Industrials | 455,903 | - | - | 455,903 | ||||||||||||
Telecommunication services | 409,203 | - | - | 409,203 | ||||||||||||
Energy | 362,298 | - | - | 362,298 | ||||||||||||
Utilities | 331,100 | - | - | 331,100 | ||||||||||||
Materials | 314,507 | - | - | 314,507 | ||||||||||||
Consumer discretionary | 276,701 | - | - | 276,701 | ||||||||||||
Information technology | 268,713 | - | - | 268,713 | ||||||||||||
Health care | 208,618 | - | - | 208,618 | ||||||||||||
Miscellaneous | 106,817 | - | - | 106,817 | ||||||||||||
Preferred stocks | - | 19,365 | - | 19,365 | ||||||||||||
Convertible securities | 7,239 | 18,928 | - | 26,167 | ||||||||||||
Bonds & notes | - | 84,792 | - | 84,792 | ||||||||||||
Short-term securities | - | 330,815 | - | 330,815 | ||||||||||||
Total | $ | 4,095,937 | $ | 453,900 | $ | - | $ | 4,549,837 |
4. | Risk factors |
Investing in the fund may involve certain risks including, but not limited to, those described below.
Market risks — The prices of, and the income generated by, the common stocks and other securities held by the fund may decline in response to certain events taking place around the world, including those directly involving the issuers whose securities are owned by the fund; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; governmental or governmental agency responses to economic conditions; and currency, interest rate and commodity price fluctuations.
Risks of investing outside the U.S. — Investments in securities issued by entities based outside the U.S. may also be affected by currency controls; different accounting, auditing, financial reporting, disclosure and regulatory and legal standards and practices; expropriation; changes in tax policy; greater market volatility; different securities market structures; higher transaction costs; and various administrative difficulties, such as delays in clearing and settling portfolio transactions or in receiving payment of dividends. These risks may be heightened in connection with investments in developing countries. Investments in securities issued by entities domiciled in the U.S. may also be subject to many of these risks.
Developing countries risks — Developing countries may have less developed legal and accounting systems. The governments of these countries may be more unstable and more likely to impose capital controls, nationalize a company or industry, place restrictions on foreign ownership and on withdrawing sale proceeds of securities from the country, and/or impose punitive taxes that could adversely affect security prices. In addition, the economies of these countries may be dependent on relatively few industries that are more susceptible to local and global changes. Securities markets in these countries are also relatively small and have substantially lower trading volumes. As a result, securities issued in these countries may be more volatile an d less liquid than securities issued in countries with more developed economies or markets.
Growth stocks risks — The growth-oriented common stocks and other equity-type securities, such as preferred stocks, convertible preferred stocks and convertible bonds, generally purchased by the fund may involve large price swings and potential for loss.
Income stocks risks — Income provided by the fund may be affected by changes in the dividend policies of the companies in which the fund invests and the capital resources available for such payments at such companies.
5. | Taxation and distributions |
Federal income taxation – The fund complies with the requirements under Subchapter M of the Internal Revenue Code applicable to mutual funds and intends to distribute substantially all of its net taxable income and net capital gains each year. The fund is not subject to income taxes to the extent such distributions are made. Therefore, no federal income tax provision is required.
As of and during the period ended December 31, 2010, the fund did not have a liability for any unrecognized tax benefits. The fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the statement of operations. During the period, the fund did not incur any interest or penalties.
The fund is not subject to examination by U.S. federal and state tax authorities for tax years before 2008, the year the fund commenced operations.
Non-U.S. taxation – Dividend and interest income is recorded net of non-U.S. taxes paid. Gains realized by the fund on the sale of securities in certain countries are subject to non-U.S. taxes. The fund records a liability based on unrealized gains to provide for potential non-U.S. taxes payable upon the sale of these securities.
Distributions – Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to different treatment for items such as currency gains and losses; short-term capital gains and losses; capital losses related to sales of certain securities within 30 days of purchase; deferred expenses; cost of investments sold; and income on certain investments. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the fund for financial reporting purposes.
The components of distributable earnings on a tax basis are reported as of the fund’s most recent year-end. As of June 30, 2010, the fund had tax basis undistributed ordinary income of $7,470,000 and undistributed long-term capital gains of $25,070,000.
As of December 31, 2010, the tax basis unrealized appreciation (depreciation) and cost of investment securities were as follows:
(dollars in thousands) | ||||
Gross unrealized appreciation on investment securities | $ | 830,673 | ||
Gross unrealized depreciation on investment securities | (50,868 | ) | ||
Net unrealized appreciation on investment securities | 779,805 | |||
Cost of investment securities | 3,770,032 |
Under the Regulated Investment Company Modernization Act of 2010 (the “Act”), net capital losses recognized after June 30, 2011, may be carried forward indefinitely, and their character is retained as short-term and/or long-term losses. Under the law in effect prior to the Act, pre-enactment net capital losses were carried forward for eight years and treated as short-term losses. As a transition rule, the Act requires that post-enactment net capital losses be used before pre-enactment net capital losses.
The tax character of distributions paid to shareholders was as follows (dollars in thousands):
Six months ended December 31, 2010 | Year ended June 30, 2010 | |||||||||||||||||||||||
Ordinary income | Long-term capital gains | Total distributions paid | Ordinary income | Long-term capital gains | Total distributions paid | |||||||||||||||||||
Share class | ||||||||||||||||||||||||
Class A | $ | 44,345 | $ | 17,858 | $ | 62,203 | $ | 93,532 | $ | - | $ | 93,532 | ||||||||||||
Class B | 318 | 173 | 491 | 932 | - | 932 | ||||||||||||||||||
Class C | 2,090 | 1,176 | 3,266 | 4,988 | - | 4,988 | ||||||||||||||||||
Class F-1 | 4,920 | 2,041 | 6,961 | 10,038 | - | 10,038 | ||||||||||||||||||
Class F-2 | 3,924 | 1,505 | 5,429 | 7,768 | - | 7,768 | ||||||||||||||||||
Class 529-A | 675 | 280 | 955 | 1,066 | - | 1,066 | ||||||||||||||||||
Class 529-B | 13 | 7 | 20 | 32 | - | 32 | ||||||||||||||||||
Class 529-C | 112 | 65 | 177 | 190 | - | 190 | ||||||||||||||||||
Class 529-E | 21 | 10 | 31 | 36 | - | 36 | ||||||||||||||||||
Class 529-F-1 | 19 | 8 | 27 | 22 | - | 22 | ||||||||||||||||||
Class R-1 | 42 | 23 | 65 | 92 | - | 92 | ||||||||||||||||||
Class R-2 | 182 | 102 | 284 | 292 | - | 292 | ||||||||||||||||||
Class R-3 | 187 | 91 | 278 | 273 | - | 273 | ||||||||||||||||||
Class R-4 | 97 | 43 | 140 | 139 | - | 139 | ||||||||||||||||||
Class R-5 | 309 | 116 | 425 | 601 | - | 601 | ||||||||||||||||||
Class R-6 | 4,209 | 1,602 | 5,811 | 7,386 | - | 7,386 | ||||||||||||||||||
Total | $ | 61,463 | $ | 25,100 | $ | 86,563 | $ | 127,387 | $ | - | $ | 127,387 |
6. | Fees and transactions with related parties |
Capital Research and Management Company ("CRMC"), the fund’s investment adviser, is the parent company of American Funds Distributors,® Inc. ("AFD"), the principal underwriter of the fund’s shares, and American Funds Service Company® ("AFS"), the fund’s transfer agent.
Investment advisory services - The Investment Advisory and Service Agreement with CRMC provided for monthly fees accrued daily. At the beginning of the year, these fees were based on a series of decreasing annual rates beginning with 0.690% on the first $500 million of daily net assets and decreasing to 0.470% on such assets in excess of $4.0 billion. The board of trustees approved an amended agreement effective January 1, 2011, lowering the series of rates to include the additional annual rate of 0.460% on daily net assets in excess of $6.5 billion. For the six months ended December 31, 2010, the investment advisory services fee was $10,917,000, which was equivalent to an annualized rate of 0.530% of average daily net assets.
Class-specific fees and expenses – Expenses that are specific to individual share classes are accrued directly to the respective share class. The principal class-specific fees and expenses are described on the following page:
Distribution services – The fund has adopted plans of distribution for all share classes, except Classes F-2, R-5 and R-6. Under the plans, the board of trustees approves certain categories of expenses that are used to finance activities primarily intended to sell fund shares and service existing accounts. The plans provide for payments, based on an annualized percentage of average daily net assets, ranging from 0.30% to 1.00% as noted below. In some cases, the board of trustees has limited the amounts that may be paid to less than the maximum allowed by the plans. All share classes with a plan may use up to 0.25% of average daily net assets to pay service fees, or to compensat e AFD for paying service fees, to firms that have entered into agreements with AFD to provide certain shareholder services. The remaining amounts available to be paid under each plan are paid to dealers to compensate them for their sales activities.
For Classes A and 529-A, the board of trustees has also approved the reimbursement of dealer and wholesaler commissions paid by AFD for certain shares sold without a sales charge. These classes reimburse AFD for amounts billed within the prior 15 months but only to the extent that the overall annual expense limit of 0.30% is not exceeded. As of December 31, 2010, there were no unreimbursed expenses subject to reimbursement for Classes A or 529-A.
Share class | Currently approved limits | Plan limits |
Class A | 0.30% | 0.30% |
Class 529-A | 0.30 | 0.50 |
Classes B and 529-B | 1.00 | 1.00 |
Classes C, 529-C and R-1 | 1.00 | 1.00 |
Class R-2 | 0.75 | 1.00 |
Classes 529-E and R-3 | 0.50 | 0.75 |
Classes F-1, 529-F-1 and R-4 | 0.25 | 0.50 |
Transfer agent services – The fund has a transfer agent agreement with AFS for Classes A and B. Under this agreement, these share classes compensate AFS for transfer agent services including shareholder recordkeeping, communications and transaction processing. AFS is also compensated for certain transfer agent services provided to all other share classes from the administrative services fees paid to CRMC as described below.
Administrative services – The fund has an administrative services agreement with CRMC for all share classes, except Classes A and B, to provide certain services, including transfer agent and recordkeeping services; coordinating, monitoring, assisting and overseeing third-party service providers; and educating advisers and shareholders about the impact of market-related events, tax laws affecting investments, retirement plan restrictions, exchange limitations and other related matters. Each relevant share class pays CRMC annual fees up to 0.15% (0.10% for Class R-5 and 0.05% for Class R-6) based on its respective average daily net assets. Each relevant share class also pays AFS additional amounts for certain transfer agent services. CRMC and AFS may use these fees to compensate third parties for performing these services. CRMC has agreed to pay AFS on the fund's behalf for a portion of the transfer agent services fees for some of the retirement plan share classes. For the six months ended December 31, 2010, the total administrative services fees paid by CRMC were $6,000 for Class R-2. Administrative services fees are presented gross of any payments made by CRMC.
Each 529 share class is subject to an additional administrative services fee payable to the Commonwealth of Virginia for the maintenance of the 529 college savings plan. The quarterly fee is based on a series of decreasing annual rates beginning with 0.10% on the first $30 billion of the net assets invested in Class 529 shares of the American Funds and decreasing to 0.06% on such assets between $120 billion and $150 billion. The fee for any given calendar quarter is accrued and calculated on the basis of the average net assets of Class 529 shares of the American Funds for the last month of the prior calendar quarter. Although these amounts are included with administrative services fees on the accompanying financial statements, the Commonw ealth of Virginia is not considered a related party.
Expenses under the agreements described on the previous page and above for the six months ended December 31, 2010, were as follows (dollars in thousands):
Administrative services | ||||||||||||||||||||
Share class | Distribution services | Transfer agent services | CRMC administrative services | Transfer agent services | Commonwealth of Virginia administrative services | |||||||||||||||
Class A | $ | 3,031 | $ | 1,426 | Not applicable | Not applicable | Not applicable | |||||||||||||
Class B | 152 | 16 | Not applicable | Not applicable | Not applicable | |||||||||||||||
Class C | 975 | Included in administrative services | $ | 143 | $ | 16 | Not applicable | |||||||||||||
Class F-1 | 415 | 198 | 10 | Not applicable | ||||||||||||||||
Class F-2 | Not applicable | 144 | 3 | Not applicable | ||||||||||||||||
Class 529-A | 32 | 19 | 2 | $ | 22 | |||||||||||||||
Class 529-B | 6 | 1 | - | * | 1 | |||||||||||||||
Class 529-C | 51 | 4 | 1 | 5 | ||||||||||||||||
Class 529-E | 4 | 1 | - | * | 1 | |||||||||||||||
Class 529-F-1 | - | 1 | - | * | - | * | ||||||||||||||
Class R-1 | 17 | 1 | 1 | Not applicable | ||||||||||||||||
Class R-2 | 59 | 11 | 28 | Not applicable | ||||||||||||||||
Class R-3 | 33 | 8 | 5 | Not applicable | ||||||||||||||||
Class R-4 | 7 | 3 | 1 | Not applicable | ||||||||||||||||
Class R-5 | Not applicable | 10 | - | * | Not applicable | |||||||||||||||
Class R-6 | Not applicable | 63 | - | * | Not applicable | |||||||||||||||
Total | $ | 4,782 | $ | 1,442 | $ | 607 | $ | 67 | $ | 29 | ||||||||||
*Amount less than one thousand. |
Trustees’ deferred compensation – Trustees who are unaffiliated with CRMC may elect to defer the cash payment of part or all of their compensation. These deferred amounts, which remain as liabilities of the fund, are treated as if invested in shares of the fund or other American Funds. These amounts represent general, unsecured liabilities of the fund and vary according to the total returns of the selected funds. Trustees’ compensation of $224,000, shown on the accompanying financial statements, includes $163,000 in current fees (either paid in cash or deferred) and a net increase of $61,000 in the value of the deferred amounts.
Affiliated officers and trustees – Officers and certain trustees of the fund are or may be considered to be affiliated with CRMC, AFS and AFD. No affiliated officers or trustees received any compensation directly from the fund.
7. | Capital share transactions |
Capital share transactions in the fund were as follows (dollars and shares in thousands):
Sales(*) | Reinvestments of dividends and distributions | Repurchases(*) | Net increase (decrease) | |||||||||||||||||||||||||||||
Share class | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | ||||||||||||||||||||||||
Six months ended December 31, 2010 | ||||||||||||||||||||||||||||||||
Class A | $ | 391,879 | 13,024 | $ | 59,534 | 1,949 | $ | (244,125 | ) | (8,291 | ) | $ | 207,288 | 6,682 | ||||||||||||||||||
Class B | 3,159 | 105 | 481 | 15 | (5,959 | ) | (202 | ) | (2,319 | ) | (82 | ) | ||||||||||||||||||||
Class C | 26,185 | 874 | 3,138 | 102 | (18,613 | ) | (632 | ) | 10,710 | 344 | ||||||||||||||||||||||
Class F-1 | 74,976 | 2,497 | 6,665 | 218 | (42,397 | ) | (1,412 | ) | 39,244 | 1,303 | ||||||||||||||||||||||
Class F-2 | 43,034 | 1,433 | 4,813 | 158 | (14,814 | ) | (499 | ) | 33,033 | 1,092 | ||||||||||||||||||||||
Class 529-A | 10,705 | 357 | 954 | 31 | (2,798 | ) | (94 | ) | 8,861 | 294 | ||||||||||||||||||||||
Class 529-B | 171 | 6 | 20 | 1 | (222 | ) | (8 | ) | (31 | ) | (1 | ) | ||||||||||||||||||||
Class 529-C | 2,900 | 96 | 177 | 6 | (994 | ) | (33 | ) | 2,083 | 69 | ||||||||||||||||||||||
Class 529-E | 413 | 14 | 31 | 1 | (132 | ) | (4 | ) | 312 | 11 | ||||||||||||||||||||||
Class 529-F-1 | 547 | 18 | 26 | 1 | (34 | ) | (1 | ) | 539 | 18 | ||||||||||||||||||||||
Class R-1 | 563 | 19 | 45 | 2 | (302 | ) | (10 | ) | 306 | 11 | ||||||||||||||||||||||
Class R-2 | 5,086 | 171 | 264 | 9 | (1,990 | ) | (67 | ) | 3,360 | 113 | ||||||||||||||||||||||
Class R-3 | 5,616 | 187 | 255 | 8 | (1,406 | ) | (47 | ) | 4,465 | 148 | ||||||||||||||||||||||
Class R-4 | 2,735 | 89 | 116 | 4 | (439 | ) | (15 | ) | 2,412 | 78 | ||||||||||||||||||||||
Class R-5 | 6,298 | 216 | 425 | 14 | (2,817 | ) | (93 | ) | 3,906 | 137 | ||||||||||||||||||||||
Class R-6 | 38,147 | 1,251 | 5,811 | 190 | (2,379 | ) | (81 | ) | 41,579 | 1,360 | ||||||||||||||||||||||
Total net increase | ||||||||||||||||||||||||||||||||
(decrease) | $ | 612,414 | 20,357 | $ | 82,755 | 2,709 | $ | (339,421 | ) | (11,489 | ) | $ | 355,748 | 11,577 | ||||||||||||||||||
Year ended June 30, 2010 | ||||||||||||||||||||||||||||||||
Class A | $ | 1,547,259 | 53,619 | $ | 89,715 | 3,131 | $ | (477,427 | ) | (16,928 | ) | $ | 1,159,547 | 39,822 | ||||||||||||||||||
Class B | 20,194 | 700 | 906 | 32 | (11,014 | ) | (389 | ) | 10,086 | 343 | ||||||||||||||||||||||
Class C | 115,339 | 3,996 | 4,733 | 165 | (33,576 | ) | (1,202 | ) | 86,496 | 2,959 | ||||||||||||||||||||||
Class F-1 | 185,692 | 6,455 | 9,213 | 322 | (78,192 | ) | (2,780 | ) | 116,713 | 3,997 | ||||||||||||||||||||||
Class F-2 | 111,621 | 3,922 | 6,899 | 241 | (36,034 | ) | (1,266 | ) | 82,486 | 2,897 | ||||||||||||||||||||||
Class 529-A | 30,029 | 1,041 | 1,065 | 37 | (2,811 | ) | (99 | ) | 28,283 | 979 | ||||||||||||||||||||||
Class 529-B | 860 | 30 | 32 | 2 | (172 | ) | (6 | ) | 720 | 26 | ||||||||||||||||||||||
Class 529-C | 7,510 | 260 | 190 | 6 | (620 | ) | (22 | ) | 7,080 | 244 | ||||||||||||||||||||||
Class 529-E | 1,161 | 40 | 35 | 1 | (244 | ) | (9 | ) | 952 | 32 | ||||||||||||||||||||||
Class 529-F-1 | 865 | 29 | 22 | 1 | (87 | ) | (3 | ) | 800 | 27 | ||||||||||||||||||||||
Class R-1 | 1,902 | 65 | 54 | 2 | (439 | ) | (16 | ) | 1,517 | 51 | ||||||||||||||||||||||
Class R-2 | 11,793 | 410 | 255 | 9 | (1,977 | ) | (70 | ) | 10,071 | 349 | ||||||||||||||||||||||
Class R-3 | 9,766 | 337 | 232 | 8 | (1,915 | ) | (69 | ) | 8,083 | 276 | ||||||||||||||||||||||
Class R-4 | 3,797 | 131 | 95 | 3 | (939 | ) | (33 | ) | 2,953 | 101 | ||||||||||||||||||||||
Class R-5 | 10,258 | 383 | 599 | 21 | (3,314 | ) | (118 | ) | 7,543 | 286 | ||||||||||||||||||||||
Class R-6 | 152,347 | 5,408 | 7,386 | 259 | (7,895 | ) | (264 | ) | 151,838 | 5,403 | ||||||||||||||||||||||
Total net increase | ||||||||||||||||||||||||||||||||
(decrease) | $ | 2,210,393 | 76,826 | $ | 121,431 | 4,240 | $ | (656,656 | ) | (23,274 | ) | $ | 1,675,168 | 57,792 | ||||||||||||||||||
* Includes exchanges between share classes of the fund. |
8. | Investment transactions |
The fund made purchases and sales of investment securities, excluding short-term securities and U.S. government obligations, if any, of $908,143,000 and $737,281,000, respectively, during the six months ended December 31, 2010.
Financial highlights(1)
Income from investment operations(2) | Dividends and distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | Net investment income | Net gains (losses) on securities (both realized and unrealized) | Total from investment operations | Dividends (from net investment income) | Distributions (from capital gains) | Total dividends and distributions | Net asset value, end of period | Total return(3)(4) | Net assets, end of period (in millions) | Ratio of expenses to average net assets before reimbursements/ waivers | Ratio of expenses to average net assets after reimbursements/ waivers(4) | Ratio of net income to average net assets(4) | |||||||||||||||||||||||||||||||||||||||||
Class A: | Six months ended 12/31/2010(5) | $ | 25.86 | $ | .40 | $ | 5.57 | $ | 5.97 | $ | (.44 | ) | $ | (.18 | ) | $ | (.62 | ) | $ | 31.21 | 23.14 | % | $ | 3,244 | .89 | %⁽⁶⁾ | .89 | %⁽⁶⁾ | 2.66 | %⁽⁶⁾ | |||||||||||||||||||||||
Year ended 6/30/2010 | 24.78 | .80 | 1.39 | 2.19 | (.74 | ) | (.37 | ) | (1.11 | ) | 25.86 | 8.44 | 2,515 | .94 | .93 | 2.79 | |||||||||||||||||||||||||||||||||||||
Period from 10/1/2008(7) to 6/30/2009 | 25.00 | .62 | (.39 | ) | .23 | (.45 | ) | - | (.45 | ) | 24.78 | 1.04 | 1,424 | 1.11 | (6) | 1.06 | (6) | 3.73 | (6) | ||||||||||||||||||||||||||||||||||
Class B: | Six months ended 12/31/2010(5) | 25.82 | .27 | 5.57 | 5.84 | (.32 | ) | (.18 | ) | (.50 | ) | 31.16 | 22.63 | 31 | 1.69⁽⁶⁾ | 1.69⁽⁶⁾ | 1.84⁽⁶⁾ | ||||||||||||||||||||||||||||||||||||
Year ended 6/30/2010 | 24.75 | .56 | 1.40 | 1.96 | (.52 | ) | (.37 | ) | (.89 | ) | 25.82 | 7.60 | 28 | 1.72 | 1.71 | 1.96 | |||||||||||||||||||||||||||||||||||||
Period from 10/1/2008(7) to 6/30/2009 | 25.00 | .53 | (.42 | ) | .11 | (.36 | ) | - | (.36 | ) | 24.75 | .49 | 18 | 1.81 | (6) | 1.77 | (6) | 3.16 | (6) | ||||||||||||||||||||||||||||||||||
Class C: | Six months ended 12/31/2010(5) | 25.81 | .27 | 5.56 | 5.83 | (.32 | ) | (.18 | ) | (.50 | ) | 31.14 | 22.59 | 213 | 1.75⁽⁶⁾ | 1.75⁽⁶⁾ | 1.80⁽⁶⁾ | ||||||||||||||||||||||||||||||||||||
Year ended 6/30/2010 | 24.75 | .57 | 1.38 | 1.95 | (.52 | ) | (.37 | ) | (.89 | ) | 25.81 | 7.55 | 167 | 1.75 | 1.74 | 2.00 | |||||||||||||||||||||||||||||||||||||
Period from 10/1/2008(7) to 6/30/2009 | 25.00 | .51 | (.41 | ) | .10 | (.35 | ) | - | (.35 | ) | 24.75 | .48 | 87 | 1.84 | (6) | 1.80 | (6) | 3.07 | (6) | ||||||||||||||||||||||||||||||||||
Class F-1: | Six months ended 12/31/2010(5) | 25.86 | .39 | 5.57 | 5.96 | (.43 | ) | (.18 | ) | (.61 | ) | 31.21 | 23.10 | 371 | .96⁽⁶⁾ | .96⁽⁶⁾ | 2.59⁽⁶⁾ | ||||||||||||||||||||||||||||||||||||
Year ended 6/30/2010 | 24.78 | .79 | 1.39 | 2.18 | (.73 | ) | (.37 | ) | (1.10 | ) | 25.86 | 8.41 | 274 | .97 | .96 | 2.76 | |||||||||||||||||||||||||||||||||||||
Period from 10/1/2008(7) to 6/30/2009 | 25.00 | .63 | (.39 | ) | .24 | (.46 | ) | - | (.46 | ) | 24.78 | 1.06 | 164 | 1.07 | (6) | 1.03 | (6) | 3.76 | (6) | ||||||||||||||||||||||||||||||||||
Class F-2: | Six months ended 12/31/2010(5) | 25.87 | .43 | 5.57 | 6.00 | (.47 | ) | (.18 | ) | (.65 | ) | 31.22 | 23.24 | 274 | .70⁽⁶⁾ | .70⁽⁶⁾ | 2.85⁽⁶⁾ | ||||||||||||||||||||||||||||||||||||
Year ended 6/30/2010 | 24.79 | .86 | 1.39 | 2.25 | (.80 | ) | (.37 | ) | (1.17 | ) | 25.87 | 8.69 | 199 | .71 | .70 | 3.02 | |||||||||||||||||||||||||||||||||||||
Period from 10/1/2008(7) to 6/30/2009 | 25.00 | .60 | (.31 | ) | .29 | (.50 | ) | - | (.50 | ) | 24.79 | 1.28 | 119 | .82 | (6) | .76 | (6) | 3.57 | (6) | ||||||||||||||||||||||||||||||||||
Class 529-A: | Six months ended 12/31/2010(5) | 25.85 | .39 | 5.56 | 5.95 | (.44 | ) | (.18 | ) | (.62 | ) | 31.18 | 23.11 | 52 | .93⁽⁶⁾ | .93⁽⁶⁾ | 2.63⁽⁶⁾ | ||||||||||||||||||||||||||||||||||||
Year ended 6/30/2010 | 24.77 | .82 | 1.35 | 2.17 | (.72 | ) | (.37 | ) | (1.09 | ) | 25.85 | 8.33 | 35 | .99 | .98 | 2.87 | |||||||||||||||||||||||||||||||||||||
Period from 10/1/2008(7) to 6/30/2009 | 25.00 | .70 | (.49 | ) | .21 | (.44 | ) | - | (.44 | ) | 24.77 | .96 | 9 | 1.20 | (6) | 1.16 | (6) | 4.16 | (6) | ||||||||||||||||||||||||||||||||||
Class 529-B: | Six months ended 12/31/2010(5) | 25.80 | .26 | 5.55 | 5.81 | (.30 | ) | (.18 | ) | (.48 | ) | 31.13 | 22.56 | 1 | 1.80⁽⁶⁾ | 1.80⁽⁶⁾ | 1.74⁽⁶⁾ | ||||||||||||||||||||||||||||||||||||
Year ended 6/30/2010 | 24.74 | .55 | 1.38 | 1.93 | (.50 | ) | (.37 | ) | (.87 | ) | 25.80 | 7.49 | 1 | 1.82 | 1.81 | 1.94 | |||||||||||||||||||||||||||||||||||||
Period from 10/1/2008(7) to 6/30/2009 | 25.00 | .50 | (.41 | ) | .09 | (.35 | ) | - | (.35 | ) | 24.74 | .43 | - | (8) | 1.93 | (6) | 1.88 | (6) | 3.00 | (6) | |||||||||||||||||||||||||||||||||
Class 529-C: | Six months ended 12/31/2010(5) | 25.77 | .26 | 5.54 | 5.80 | (.31 | ) | (.18 | ) | (.49 | ) | 31.08 | 22.54 | 12 | 1.79⁽⁶⁾ | 1.79⁽⁶⁾ | 1.77⁽⁶⁾ | ||||||||||||||||||||||||||||||||||||
Year ended 6/30/2010 | 24.72 | .59 | 1.35 | 1.94 | (.52 | ) | (.37 | ) | (.89 | ) | 25.77 | 7.53 | 8 | 1.81 | 1.80 | 2.08 | |||||||||||||||||||||||||||||||||||||
Period from 10/1/2008(7) to 6/30/2009 | 25.00 | .65 | (.57 | ) | .08 | (.36 | ) | - | (.36 | ) | 24.72 | .41 | 2 | 1.91 | (6) | 1.88 | (6) | 3.81 | (6) | ||||||||||||||||||||||||||||||||||
Class 529-E: | Six months ended 12/31/2010(5) | $ | 25.85 | $ | .34 | $ | 5.56 | $ | 5.90 | $ | (.38 | ) | $ | (.18 | ) | $ | (.56 | ) | $ | 31.19 | 22.92 | % | $ | 2 | 1.28 | %⁽⁶⁾ | 1.28 | %⁽⁶⁾ | 2.26 | %⁽⁶⁾ | |||||||||||||||||||||||
Year ended 6/30/2010 | 24.78 | .75 | 1.33 | 2.08 | (.64 | ) | (.37 | ) | (1.01 | ) | 25.85 | 8.01 | 1 | 1.30 | 1.29 | 2.64 | |||||||||||||||||||||||||||||||||||||
Period from 10/1/2008(7) to 6/30/2009 | 25.00 | .74 | (.56 | ) | .18 | (.40 | ) | - | (.40 | ) | 24.78 | .82 | - | (8) | 1.39 | (6) | 1.35 | (6) | 4.36 | (6) | |||||||||||||||||||||||||||||||||
Class 529-F-1: | Six months ended 12/31/2010(5) | 25.87 | .43 | 5.56 | 5.99 | (.46 | ) | (.18 | ) | (.64 | ) | 31.22 | 23.21 | 2 | .78⁽⁶⁾ | .78⁽⁶⁾ | 2.84⁽⁶⁾ | ||||||||||||||||||||||||||||||||||||
Year ended 6/30/2010 | 24.79 | .91 | 1.32 | 2.23 | (.78 | ) | (.37 | ) | (1.15 | ) | 25.87 | 8.60 | 1 | .79 | .78 | 3.18 | |||||||||||||||||||||||||||||||||||||
Period from 10/1/2008(7) to 6/30/2009 | 25.00 | .76 | (.49 | ) | .27 | (.48 | ) | - | (.48 | ) | 24.79 | 1.18 | - | (8) | .90 | (6) | .86 | (6) | 4.48 | (6) | |||||||||||||||||||||||||||||||||
Class R-1: | Six months ended 12/31/2010(5) | 25.82 | .29 | 5.56 | 5.85 | (.33 | ) | (.18 | ) | (.51 | ) | 31.16 | 22.70 | 4 | 1.63⁽⁶⁾ | 1.62⁽⁶⁾ | 1.92⁽⁶⁾ | ||||||||||||||||||||||||||||||||||||
Year ended 6/30/2010 | 24.76 | .59 | 1.37 | 1.96 | (.53 | ) | (.37 | ) | (.90 | ) | 25.82 | 7.58 | 3 | 1.71 | 1.70 | 2.06 | |||||||||||||||||||||||||||||||||||||
Period from 10/1/2008(7) to 6/30/2009 | 25.00 | .45 | (.34 | ) | .11 | (.35 | ) | - | (.35 | ) | 24.76 | .52 | 2 | 1.82 | (6) | 1.77 | (6) | 2.68 | (6) | ||||||||||||||||||||||||||||||||||
Class R-2: | Six months ended 12/31/2010(5) | 25.79 | .27 | 5.55 | 5.82 | (.32 | ) | (.18 | ) | (.50 | ) | 31.11 | 22.60 | 18 | 1.80⁽⁶⁾ | 1.72⁽⁶⁾ | 1.84⁽⁶⁾ | ||||||||||||||||||||||||||||||||||||
Year ended 6/30/2010 | 24.74 | .61 | 1.34 | 1.95 | (.53 | ) | (.37 | ) | (.90 | ) | 25.79 | 7.57 | 13 | 1.81 | 1.73 | 2.15 | |||||||||||||||||||||||||||||||||||||
Period from 10/1/2008(7) to 6/30/2009 | 25.00 | .54 | (.44 | ) | .10 | (.36 | ) | - | (.36 | ) | 24.74 | .48 | 3 | 1.88 | (6) | 1.78 | (6) | 3.22 | (6) | ||||||||||||||||||||||||||||||||||
Class R-3: | Six months ended 12/31/2010(5) | 25.84 | .35 | 5.56 | 5.91 | (.39 | ) | (.18 | ) | (.57 | ) | 31.18 | 22.90 | 17 | 1.27⁽⁶⁾ | 1.27⁽⁶⁾ | 2.31⁽⁶⁾ | ||||||||||||||||||||||||||||||||||||
Year ended 6/30/2010 | 24.78 | .75 | 1.33 | 2.08 | (.65 | ) | (.37 | ) | (1.02 | ) | 25.84 | 8.02 | 10 | 1.30 | 1.29 | 2.65 | |||||||||||||||||||||||||||||||||||||
Period from 10/1/2008(7) to 6/30/2009 | 25.00 | .61 | (.42 | ) | .19 | (.41 | ) | - | (.41 | ) | 24.78 | .85 | 3 | 1.38 | (6) | 1.33 | (6) | 3.64 | (6) | ||||||||||||||||||||||||||||||||||
Class R-4: | Six months ended 12/31/2010(5) | 25.86 | .40 | 5.57 | 5.97 | (.44 | ) | (.18 | ) | (.62 | ) | 31.21 | 23.11 | 8 | .96⁽⁶⁾ | .95⁽⁶⁾ | 2.67⁽⁶⁾ | ||||||||||||||||||||||||||||||||||||
Year ended 6/30/2010 | 24.79 | .84 | 1.33 | 2.17 | (.73 | ) | (.37 | ) | (1.10 | ) | 25.86 | 8.38 | 5 | .98 | .96 | 2.93 | |||||||||||||||||||||||||||||||||||||
Period from 10/1/2008(7) to 6/30/2009 | 25.00 | .61 | (.37 | ) | .24 | (.45 | ) | - | (.45 | ) | 24.79 | 1.09 | 2 | 1.07 | (6) | 1.02 | (6) | 3.63 | (6) | ||||||||||||||||||||||||||||||||||
Class R-5: | Six months ended 12/31/2010(5) | 25.95 | .43 | 5.59 | 6.02 | (.47 | ) | (.18 | ) | (.65 | ) | 31.32 | 23.26 | 21 | .68⁽⁶⁾ | .68⁽⁶⁾ | 2.87⁽⁶⁾ | ||||||||||||||||||||||||||||||||||||
Year ended 6/30/2010 | 24.86 | .85 | 1.41 | 2.26 | (.80 | ) | (.37 | ) | (1.17 | ) | 25.95 | 8.69 | 14 | .72 | .70 | 2.96 | |||||||||||||||||||||||||||||||||||||
Period from 10/1/2008(7) to 6/30/2009 | 25.00 | .76 | (.47 | ) | .29 | (.43 | ) | - | (.43 | ) | 24.86 | 1.28 | 6 | .81 | (6) | .78 | (6) | 4.65 | (6) | ||||||||||||||||||||||||||||||||||
Class R-6: | Six months ended 12/31/2010(5) | 25.86 | .44 | 5.57 | 6.01 | (.48 | ) | (.18 | ) | (.66 | ) | 31.21 | 23.30 | 291 | .63⁽⁶⁾ | .63⁽⁶⁾ | 2.94⁽⁶⁾ | ||||||||||||||||||||||||||||||||||||
Year ended 6/30/2010 | 24.78 | .90 | 1.37 | 2.27 | (.82 | ) | (.37 | ) | (1.19 | ) | 25.86 | 8.74 | 206 | .66 | .65 | 3.16 | |||||||||||||||||||||||||||||||||||||
Period from 5/1/2009 to 6/30/2009 | 22.97 | .25 | 1.90 | 2.15 | (.34 | ) | - | (.34 | ) | 24.78 | 9.38 | 64 | .12 | .12 | 1.01 |
Six months ended December 31, 2010(5) | Year ended June 30, 2010 | For the period 10/1/2008(7) to 6/30/2009 | ||||||||||
Portfolio turnover rate for all share classes | 20 | % | 16 | % | 33 | % |
(1)Based on operations for the periods shown (unless otherwise noted) and, accordingly, may not be representative of a full year. | |||||||||||||
(2)Based on average shares outstanding. | |||||||||||||
(3)Total returns exclude any applicable sales charges, including contingent deferred sales charges. | |||||||||||||
(4)This column reflects the impact, if any, of certain reimbursements/waivers from CRMC. During some of the periods shown, CRMC reduced fees for investment advisory services and reimbursed other fees and expenses. In addition, during the periods shown, CRMC paid a portion of the fund's transfer agent fees for certain retirement plan share classes. | |||||||||||||
(5)Unaudited. | |||||||||||||
(6)Annualized. | |||||||||||||
(7)Commencement of operations. | |||||||||||||
(8)Amount less than $1 million. | |||||||||||||
See Notes to Financial Statements |
Expense example 0;
unaudited
As a shareholder of the fund, you incur two types of costs: (1) transaction costs, such as initial sales charges on purchase payments and contingent deferred sales charges on redemptions (loads), and (2) ongoing costs, including management fees, distribution and service (12b-1) fees, and other expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund so you can compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2010, through December 31, 2010).
Actual expenses:
The first line of each share class in the table on the next page provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses paid during period" to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes:
The second line of each share class in the table on the next page provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for the share class and an assumed rate of return of 5.00% per year before expenses, which is not the actual return of the share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5.00% hypothetical example with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.
Notes:
There are some account fees that are charged to certain types of accounts, such as individual retirement accounts and 529 college savings plan accounts (generally, a $10 fee is charged to set up the account and an additional $10 fee is charged to the account annually), that would increase the amount of expenses paid on your account. In addition, retirement plan participants may be subject to certain fees charged by the plan sponsor, and Class F-1, F-2 and 529-F-1 shareholders may be subject to fees charged by financial intermediaries, typically ranging from 0.75% to 1.50% of assets annually depending on services offered. You can estimate the impact of these fees by adding the amount of the fees to the total estimated expenses you paid on your account during the period as calculated above. In additi on, your ending account value would be lower by the amount of these fees.
Note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of each share class in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning account value 7/1/2010 | Ending account value 12/31/2010 | Expenses paid during period* | Annualized expense ratio | |||||||||||||
Class A -- actual return | $ | 1,000.00 | $ | 1,231.42 | $ | 5.01 | .89 | % | ||||||||
Class A -- assumed 5% return | 1,000.00 | 1,020.72 | 4.53 | .89 | ||||||||||||
Class B -- actual return | 1,000.00 | 1,226.33 | 9.48 | 1.69 | ||||||||||||
Class B -- assumed 5% return | 1,000.00 | 1,016.69 | 8.59 | 1.69 | ||||||||||||
Class C -- actual return | 1,000.00 | 1,225.89 | 9.82 | 1.75 | ||||||||||||
Class C -- assumed 5% return | 1,000.00 | 1,016.38 | 8.89 | 1.75 | ||||||||||||
Class F-1 -- actual return | 1,000.00 | 1,231.02 | 5.40 | .96 | ||||||||||||
Class F-1 -- assumed 5% return | 1,000.00 | 1,020.37 | 4.89 | .96 | ||||||||||||
Class F-2 -- actual return | 1,000.00 | 1,232.44 | 3.94 | .70 | ||||||||||||
Class F-2 -- assumed 5% return | 1,000.00 | 1,021.68 | 3.57 | .70 | ||||||||||||
Class 529-A -- actual return | 1,000.00 | 1,231.14 | 5.23 | .93 | ||||||||||||
Class 529-A -- assumed 5% return | 1,000.00 | 1,020.52 | 4.74 | .93 | ||||||||||||
Class 529-B -- actual return | 1,000.00 | 1,225.56 | 10.10 | 1.80 | ||||||||||||
Class 529-B -- assumed 5% return | 1,000.00 | 1,016.13 | 9.15 | 1.80 | ||||||||||||
Class 529-C -- actual return | 1,000.00 | 1,225.39 | 10.04 | 1.79 | ||||||||||||
Class 529-C -- assumed 5% return | 1,000.00 | 1,016.18 | 9.10 | 1.79 | ||||||||||||
Class 529-E -- actual return | 1,000.00 | 1,229.23 | 7.19 | 1.28 | ||||||||||||
Class 529-E -- assumed 5% return | 1,000.00 | 1,018.75 | 6.51 | 1.28 | ||||||||||||
Class 529-F-1 -- actual return | 1,000.00 | 1,232.07 | 4.39 | .78 | ||||||||||||
Class 529-F-1 -- assumed 5% return | 1,000.00 | 1,021.27 | 3.97 | .78 | ||||||||||||
Class R-1 -- actual return | 1,000.00 | 1,226.99 | 9.09 | 1.62 | ||||||||||||
Class R-1 -- assumed 5% return | 1,000.00 | 1,017.04 | 8.24 | 1.62 | ||||||||||||
Class R-2 -- actual return | 1,000.00 | 1,226.05 | 9.65 | 1.72 | ||||||||||||
Class R-2 -- assumed 5% return | 1,000.00 | 1,016.53 | 8.74 | 1.72 | ||||||||||||
Class R-3 -- actual return | 1,000.00 | 1,228.99 | 7.14 | 1.27 | ||||||||||||
Class R-3 -- assumed 5% return | 1,000.00 | 1,018.80 | 6.46 | 1.27 | ||||||||||||
Class R-4 -- actual return | 1,000.00 | 1,231.11 | 5.34 | .95 | ||||||||||||
Class R-4 -- assumed 5% return | 1,000.00 | 1,020.42 | 4.84 | .95 | ||||||||||||
Class R-5 -- actual return | 1,000.00 | 1,232.63 | 3.83 | .68 | ||||||||||||
Class R-5 -- assumed 5% return | 1,000.00 | 1,021.78 | 3.47 | .68 | ||||||||||||
Class R-6 -- actual return | 1,000.00 | 1,232.95 | 3.55 | .63 | ||||||||||||
Class R-6 -- assumed 5% return | 1,000.00 | 1,022.03 | 3.21 | .63 | ||||||||||||
*The “expenses paid during period” are equal to the “annualized expense ratio,” multiplied by the average account value over the period, multiplied by the number of days in the period, and divided by 365 (to reflect the one-half year period). |
Approval of Investment Advisory and Service Agreement
The fund’s board has approved the fund’s Investment Advisory and Service Agreement (the “agreement”) with Capital Research and Management Company (“CRMC”) for an additional one-year term through December 31, 2011. The agreement was amended to add an additional advisory fee breakpoint if and when the fund’s net assets exceed $6.5 billion. The board approved the agreement following the recommendation of the fund’s Contracts Committee (the “committee”), which is composed of all of the fund’s independent board members. The board and the committee determined that the fund’s advisory fee structure was fair and reasonable in relation to the services provided and that approving the agreement was in the best interests of the fund and its shareholders.
In reaching this decision, the board and the committee took into account information furnished to them throughout the year, as well as information prepared specifically in connection with their review of the agreement, and were advised by their independent counsel. They considered the factors discussed below, among others, but did not identify any single issue or particular piece of information that, in isolation, was the controlling factor.
1. Nature, extent and quality of services
The board and the committee considered the depth and quality of CRMC’s investment management process, including its global research capabilities; the experience, capability and integrity of its senior management and other personnel; the low turnover rates of its key personnel; the overall financial strength and stability of its organization; and the ongoing evolution of CRMC’s organizational structure designed to maintain and strengthen these qualities. The board and the committee considered, among other things, the impact of current market conditions on the fund and CRMC. The board and the committee also considered the nature, extent and quality of administrative, compliance and shareholder services provided by CRMC to the fund under the agreement and other agreements, as well as the be nefits to fund shareholders from investing in a fund that is part of a large family of funds. The board and the committee concluded that the nature, extent and quality of the services provided by CRMC have benefited and should continue to benefit the fund and its shareholders.
2. Investment results
The board and the committee considered the investment results of the fund in light of its objective of providing long-term growth of capital with current income. They compared the fund’s total returns with those of other relevant funds (including the other funds that are the basis of the Lipper index for the category in which the fund is included) and market data such as relevant market indices, in each case as available at the time of the related board and committee meetings. This report, including the letter to shareholders and related disclosures, contains certain information about the fund’s investment results. The board and the committee concluded that the fund’s results have been satisfactory and that CRMC’s record in managing the fund indicated that its continued manag ement should benefit the fund and its shareholders.
3. Advisory fees and total expenses
The board and the committee compared the advisory fees and total expense levels of the fund to those of other relevant funds. They observed that the fund’s advisory fees and expenses remain significantly below those of most other relevant funds. The board and the committee also noted the breakpoint discounts in the fund’s advisory fee structure that reduce the level of fees charged by CRMC to the fund as fund assets increase. In addition, they reviewed information regarding the advisory fees paid by clients of an affiliate of CRMC. They noted that, to the extent there were differences between the advisory fees paid by the fund and the advisory fees paid by those clients, the differences appropriately reflected the investment, operational and regulatory differences between advising the fu nd and the other clients. The board and the committee concluded that the fund’s cost structure was fair and reasonable in relation to the services provided, and that the shareholders receive reasonable value in return for the advisory fees and other amounts paid to CRMC by the fund.
4. Ancillary benefits
The board and the committee considered a variety of other benefits received by CRMC and its affiliates as a result of CRMC’s relationship with the fund and the other American Funds, including fees for administrative services provided to certain share classes; fees paid to CRMC’s affiliated transfer agent; sales charges and distribution fees received and retained by the fund’s principal underwriter, an affiliate of CRMC; and possible ancillary benefits to CRMC’s institutional management affiliates. The board and the committee reviewed CRMC’s portfolio trading practices, noting that while CRMC receives the benefit of research provided by broker-dealers executing portfolio transactions on behalf of the fund, it does not obtain third-party research or other services in retu rn for allocating brokerage to such broker-dealers. The board and the committee took these ancillary benefits into account in evaluating the reasonableness of the advisory fees and other amounts paid to CRMC by the fund.
5. Adviser financial information
The board and the committee reviewed information regarding CRMC’s costs of providing services to the American Funds, including personnel, systems and resources of investment, compliance, trading, accounting and other administrative operations. They considered CRMC’s costs and willingness to invest in technology, infrastructure and staff to maintain and expand services and capabilities, respond to industry and regulatory developments, and attract and retain qualified personnel. They noted information regarding the compensation structure for CRMC’s investment professionals. The board and the committee also compared CRMC’s profitability to the reported results of several large, publicly held investment management companies. The board and the committee noted the competitiveness a nd cyclicality of both the mutual fund industry and the capital markets, and the importance in that environment of CRMC’s long-term profitability for maintaining its independence, company culture and management continuity. They further considered the breakpoint discounts in the fund’s advisory fee structure and the termination of CRMC’s 10% advisory fee waiver effective December 31, 2008. The board and the committee concluded that the fund’s advisory fee structure reflected a reasonable sharing of benefits between CRMC and the fund’s shareholders.
Other share class results
unaudited
Classes B, C, F and 529
Fund results shown are for past periods and are not predictive of results for future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors may lose money. For current information and month-end results, visit americanfunds.com.
Average annual total returns for periods ended December 31, 2010: | ||||||||||||
Life | ||||||||||||
1 year | 5 years | of class | ||||||||||
Class B shares1 — first sold 10/1/08 | ||||||||||||
Reflecting applicable contingent deferred sales charge | ||||||||||||
(CDSC), maximum of 5%, payable only if shares | ||||||||||||
are sold within six years of purchase | 2.74 | % | — | 11.83 | % | |||||||
Not reflecting CDSC | 7.74 | — | 13.37 | |||||||||
Class C shares — first sold 10/1/08 | ||||||||||||
Reflecting CDSC, maximum of 1%, payable only | ||||||||||||
if shares are sold within one year of purchase | 6.69 | — | 13.32 | |||||||||
Not reflecting CDSC | 7.69 | — | 13.32 | |||||||||
Class F-1 shares2 — first sold 10/1/08 | ||||||||||||
Not reflecting annual asset-based fee charged by | ||||||||||||
sponsoring firm | 8.58 | — | 14.22 | |||||||||
Class F-2 shares2 — first sold 10/1/08 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | 8.84 | — | 14.52 | |||||||||
Class 529-A shares3 — first sold 10/1/08 | ||||||||||||
Reflecting 5.75% maximum sales charge | 2.30 | — | 11.17 | |||||||||
Not reflecting maximum sales charge | 8.56 | — | 14.15 | |||||||||
Class 529-B shares1,3 — first sold 10/1/08 | ||||||||||||
Reflecting applicable CDSC, maximum of 5%, payable | ||||||||||||
only if shares are sold within six years of purchase | 2.66 | — | 11.71 | |||||||||
Not reflecting CDSC | 7.66 | — | 13.25 | |||||||||
Class 529-C shares3 — first sold 10/1/08 | ||||||||||||
Reflecting CDSC, maximum of 1%, payable only | ||||||||||||
if shares are sold within one year of purchase | 6.66 | — | 13.25 | |||||||||
Not reflecting CDSC | 7.66 | — | 13.25 | |||||||||
Class 529-E shares2,3 — first sold 10/1/08 | 8.21 | — | 13.84 | |||||||||
Class 529-F-1 shares2,3 — first sold 10/1/08 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | 8.74 | — | 14.42 |
1These shares are not available for purchase. |
2These shares are sold without any initial or contingent deferred sales charge. |
3Results shown do not reflect the $10 account setup fee and an annual $10 account maintenance fee. |
Investment results assume all distributions are reinvested and reflect applicable fees and expenses. The fund’s investment adviser waived a portion of its management fees from October 1, 2008, through December 31, 2008, and reimbursed other fees and expenses. These reimbursements may be adjusted or discontinued by the investment adviser at any time, subject to any restrictions in the fund’s prospectus. Applicable fund results shown reflect the waiver and reimbursements, without which they would have been lower. See the fund’s prospectus or the Financial Highlights table on pages 28 to 31 for details.
For information regarding the differences among the various share classes, refer to the fund’s prospectus.
Office of the fund
One Market
Steuart Tower, Suite 2000
Mailing address: P.O. Box 7650
San Francisco, CA 94120-7650
Investment adviser
Capital Research and Management Company
333 South Hope Street
Los Angeles, CA 90071-1406
6455 Irvine Center Drive
Irvine, CA 92618
Transfer agent for shareholder accounts
American Funds Service Company
(Write to the address near you.)
P.O. Box 6007
Indianapolis, IN 46206-6007
P.O. Box 2280
Norfolk, VA 23501-2280
Custodian of assets
JPMorgan Chase Bank
270 Park Avenue
New York, NY 10017-2070
Counsel
Bingham McCutchen LLP
355 South Grand Avenue, Suite 4400
Los Angeles, CA 90071-3106
Independent registered public accounting firm
Deloitte & Touche LLP
695 Town Center Drive
Suite 1200
Costa Mesa, CA 92626-7188
Principal underwriter
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, CA 90071-1406
Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds. This and other important information is contained in the fund’s prospectus and summary prospectus, which can be obtained from your financial professional and should be read carefully before investing. You may also call American Funds Service Company (AFS) at 800/421-0180 or visit the American Funds website at americanfunds.com.
“American Funds Proxy Voting Procedures and Principles” — which describes how we vote proxies relating to portfolio securities — is available on the American Funds website or upon request by calling AFS. The fund files its proxy voting record with the U.S. Securities and Exchange Commission (SEC) for the 12 months ended June 30 by August 31. The proxy voting record is available free of charge on the SEC website at sec.gov and on the American Funds website.
A complete December 31, 2010, portfolio of International Growth and Income Fund’s investments is available free of charge by calling AFS or visiting the SEC website (where it is part of Form N-CSR).
International Growth and Income Fund files a complete list of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. This filing is available free of charge on the SEC website. You may also review or, for a fee, copy this filing at the SEC’s Public Reference Room in Washington, D.C. Additional information regarding the operation of the Public Reference Room may be obtained by calling the SEC’s Office of Investor Education and Advocacy at 800/SEC-0330. Additionally, the list of portfolio holdings is available by calling AFS.
This report is for the information of shareholders of International Growth and Income Fund, but it also may be used as sales literature when preceded or accompanied by the current prospectus or summary prospectus, which gives details about charges, expenses, investment objectives and operating policies of the fund. If used as sales material after March 31, 2011, this report must be accompanied by an American Funds statistical update for the most recently completed calendar quarter.
What makes American Funds different?
For nearly 80 years, we have followed a consistent philosophy to benefit our investors. Our 33 carefully conceived, broadly diversified funds, in addition to the target date retirement series, offer opportunities that have attracted over 50 million shareholder accounts.
Our unique combination of strengths includes these five factors:
•A long-term, value-oriented approach |
We seek to buy securities at reasonable prices relative to their prospects and hold them for the long term.
•An extensive global research effort |
Our investment professionals travel the world to find the best investment opportunities and gain a comprehensive understanding of companies and markets.
•The multiple portfolio counselor system |
Our unique approach to portfolio management, developed more than 50 years ago, blends teamwork with individual accountability and has provided American Funds with a sustainable method of achieving fund objectives.
•Experienced investment professionals |
American Funds portfolio counselors have an average of 26 years of investment experience, providing a depth of knowledge and broad perspective that few organizations have.
•A commitment to low management fees |
The American Funds provide exceptional value for shareholders, with management fees that are among the lowest in the mutual fund industry.
American Funds span a range of investment objectives
•Growth funds |
Emphasis on long-term growth through stocks |
AMCAP Fund® |
EuroPacific Growth Fund® |
The Growth Fund of America® |
The New Economy Fund® |
New Perspective Fund® |
New World Fund® |
SMALLCAP World Fund® |
•Growth-and-income funds |
Emphasis on long-term growth and dividends through stocks |
American Mutual Fund® |
Capital World Growth and Income FundSM |
Fundamental InvestorsSM |
>International Growth and Income FundSM |
The Investment Company of America® |
Washington Mutual Investors FundSM |
•Equity-income funds |
Emphasis on above-average income and growth through stocks and/or bonds |
Capital Income Builder® |
The Income Fund of America® |
•Balanced funds |
Emphasis on long-term growth and current income through stocks and bonds |
American Balanced Fund® |
American Funds Global Balanced FundSM |
•Bond funds |
Emphasis on current income through bonds |
American Funds Mortgage FundSM |
American High-Income TrustSM |
The Bond Fund of AmericaSM |
Capital World Bond Fund® |
Intermediate Bond Fund of America® |
Short-Term Bond Fund of AmericaSM |
U.S. Government Securities FundSM |
•Tax-exempt bond funds |
Emphasis on tax-exempt current income through municipal bonds |
American Funds Short-Term Tax-Exempt Bond FundSM |
American High-Income Municipal Bond Fund® |
Limited Term Tax-Exempt Bond Fund of AmericaSM |
The Tax-Exempt Bond Fund of America® |
State-specific tax-exempt funds |
American Funds Tax-Exempt Fund of New YorkSM |
The Tax-Exempt Fund of California® |
The Tax-Exempt Fund of Maryland® |
The Tax-Exempt Fund of Virginia® |
•Money market fund |
American Funds Money Market Fund® |
•American Funds Target Date Retirement Series® |
The Capital Group Companies
American Funds Capital Research and Management Capital International Capital Guardian Capital Bank and Trust
Lit. No. MFGESR-934-0211P
Litho in USA CGD/ACME/9996-S26362
Printed on paper containing 10% post-consumer waste
Printed with inks containing soy and/or vegetable oil
ITEM 2 – Code of Ethics
Not applicable for filing of semi-annual reports to shareholders.
ITEM 3 – Audit Committee Financial Expert
Not applicable for filing of semi-annual reports to shareholders.
ITEM 4 – Principal Accountant Fees and Services
Not applicable for filing of semi-annual reports to shareholders.
ITEM 5 – Audit Committee of Listed Registrants
Not applicable to this Registrant, insofar as the Registrant is not a listed issuer as defined in Rule 10A-3 under the Securities Exchange Act of 1934.
ITEM 6 – Schedule of Investments
International Growth and Income FundSM
Investment portfolio
December 31, 2010
unaudited
Common stocks — 89.65% | Shares | Value (000) | ||||||
FINANCIALS — 17.46% | ||||||||
Bank of Nova Scotia | 1,604,000 | $ | 92,113 | |||||
Prudential PLC | 7,208,148 | 75,071 | ||||||
Industrial and Commercial Bank of China Ltd., Class H | 73,708,325 | 54,906 | ||||||
Toronto-Dominion Bank | 610,000 | 45,552 | ||||||
HSBC Holdings PLC (Hong Kong) | 3,406,896 | 34,933 | ||||||
HSBC Holdings PLC (United Kingdom) | 1,008,896 | 10,242 | ||||||
UBS AG1 | 2,723,000 | 44,704 | ||||||
Australia and New Zealand Banking Group Ltd. | 1,865,664 | 44,557 | ||||||
Agricultural Bank of China, Class H1 | 88,501,000 | 44,406 | ||||||
AXA SA | 2,079,939 | 34,604 | ||||||
Sampo Oyj, Class A | 1,235,000 | 33,089 | ||||||
Fairfax Financial Holdings Ltd. | 70,000 | 28,669 | ||||||
Hong Kong Exchanges and Clearing Ltd. | 1,185,000 | 26,878 | ||||||
QBE Insurance Group Ltd. | 1,375,000 | 25,525 | ||||||
Itaú Unibanco Holding SA, preferred nominative | 998,000 | 23,922 | ||||||
Singapore Exchange Ltd. | 3,430,000 | 22,504 | ||||||
Standard Chartered PLC | 795,597 | 21,403 | ||||||
United Overseas Bank Ltd. | 1,485,000 | 21,060 | ||||||
Nomura Holdings, Inc. | 3,219,900 | 20,424 | ||||||
DnB NOR ASA | 1,417,777 | 19,900 | ||||||
Longfor Properties Co. Ltd. | 10,500,000 | 14,616 | ||||||
Allianz SE | 118,150 | 14,041 | ||||||
Société Générale | 233,062 | 12,526 | ||||||
ING Groep NV, depository receipts1 | 928,568 | 9,033 | ||||||
Banco Bilbao Vizcaya Argentaria, SA | 840,000 | 8,486 | ||||||
BNP Paribas SA | 106,536 | 6,778 | ||||||
Absa Group Ltd. | 288,000 | 6,121 | ||||||
796,063 | ||||||||
CONSUMER STAPLES — 12.25% | ||||||||
British American Tobacco PLC | 3,577,500 | 137,406 | ||||||
Tesco PLC | 12,643,000 | 83,775 | ||||||
Unilever NV, depository receipts | 2,425,200 | 75,510 | ||||||
Shoprite Holdings Ltd. | 3,585,000 | 54,231 | ||||||
Kimberly-Clark de México, SAB de CV, Class A | 6,655,000 | 40,808 | ||||||
Pernod Ricard SA | 369,660 | 34,756 | ||||||
Coca-Cola Amatil Ltd. | 2,621,731 | 29,121 | ||||||
Anheuser-Busch InBev NV | 375,000 | 21,448 | ||||||
Grupo Modelo, SAB de CV, Series C | 3,425,000 | 21,199 | ||||||
X5 Retail Group NV (GDR)1 | 360,000 | 16,650 | ||||||
Foster’s Group Ltd. | 2,865,000 | 16,644 | ||||||
Wesfarmers Ltd. | 500,000 | 16,365 | ||||||
Imperial Tobacco Group PLC | 354,000 | 10,862 | ||||||
558,775 | ||||||||
INDUSTRIALS — 10.00% | ||||||||
Schneider Electric SA | 559,776 | 83,779 | ||||||
Siemens AG | 423,500 | 52,461 | ||||||
Geberit AG | 195,100 | 45,113 | ||||||
Marubeni Corp. | 6,065,000 | 42,655 | ||||||
Capita Group PLC | 3,855,000 | 41,862 | ||||||
Vallourec SA | 362,000 | 38,022 | ||||||
AB SKF, Class B | 1,255,000 | 35,752 | ||||||
Mitsubishi Corp. | 1,151,200 | 31,166 | ||||||
Cia. de Concessões Rodoviárias, ordinary nominative | 1,000,000 | 28,253 | ||||||
Adani Enterprises Ltd. | 1,300,000 | 18,894 | ||||||
Qantas Airways Ltd.1 | 5,826,126 | 15,136 | ||||||
Orkla AS | 1,207,800 | 11,736 | ||||||
Ryanair Holdings PLC (ADR) | 360,000 | 11,074 | ||||||
455,903 | ||||||||
TELECOMMUNICATION SERVICES — 8.97% | ||||||||
Portugal Telecom, SGPS, SA | 7,871,000 | 88,141 | ||||||
América Móvil, SAB de CV, Series L (ADR) | 554,000 | 31,766 | ||||||
América Móvil, SAB de CV, Series L | 10,684,600 | 30,687 | ||||||
Telstra Corp. Ltd. | 20,894,000 | 59,623 | ||||||
Telekom Austria AG, non-registered shares | 4,217,649 | 59,291 | ||||||
Taiwan Mobile Co., Ltd. | 14,430,000 | 34,496 | ||||||
Bell Aliant Regional Communications Income Fund | 855,000 | 22,349 | ||||||
KT Corp. | 429,485 | 17,502 | ||||||
Telefónica 02 Czech Republic, AS | 842,000 | 17,139 | ||||||
Koninklijke KPN NV | 1,000,000 | 14,592 | ||||||
China Telecom Corp. Ltd., Class H | 27,650,000 | 14,478 | ||||||
France Télécom SA | 480,800 | 10,020 | ||||||
Telefónica, SA | 283,000 | 6,416 | ||||||
Vodafone Group PLC | 1,045,500 | 2,703 | ||||||
409,203 | ||||||||
ENERGY — 7.94% | ||||||||
Royal Dutch Shell PLC, Class B | 4,179,000 | 137,802 | ||||||
TOTAL SA | 2,161,000 | 114,499 | ||||||
TransCanada Corp. | 1,294,362 | 49,455 | ||||||
Saipem SpA, Class S | 575,700 | 28,341 | ||||||
Oil Search Ltd. | 2,750,000 | 19,802 | ||||||
Uranium One Inc. | 2,590,000 | 12,399 | ||||||
362,298 | ||||||||
UTILITIES — 7.26% | ||||||||
Hongkong Electric Holdings Ltd. | 15,028,000 | 94,737 | ||||||
National Grid PLC | 10,939,655 | 94,320 | ||||||
GDF SUEZ | 1,912,271 | 68,612 | ||||||
Snam Rete Gas SpA | 7,000,000 | 34,797 | ||||||
CLP Holdings Ltd. | 1,550,000 | 12,583 | ||||||
Cia. Energética de Minas Gerais — CEMIG, preferred nominative | 646,181 | 10,397 | ||||||
E.ON AG | 275,000 | 8,428 | ||||||
SUEZ Environnement Co. | 350,000 | 7,226 | ||||||
331,100 | ||||||||
MATERIALS — 6.90% | ||||||||
Orica Ltd. | 1,953,067 | 49,740 | ||||||
K+S AG | 638,000 | 48,050 | ||||||
L’Air Liquide SA, non-registered shares | 375,466 | 47,484 | ||||||
Impala Platinum Holdings Ltd. | 1,225,000 | 43,321 | ||||||
BHP Billiton PLC (ADR) | 394,600 | 31,766 | ||||||
Syngenta AG | 80,800 | 23,635 | ||||||
PT Semen Gresik (Persero) Tbk | 15,300,000 | 16,047 | ||||||
Shin-Etsu Chemical Co., Ltd. | 290,000 | 15,716 | ||||||
BASF SE | 195,000 | 15,557 | ||||||
Anglo American PLC | 235,000 | 12,236 | ||||||
Barrick Gold Corp. | 206,000 | 10,955 | ||||||
314,507 | ||||||||
CONSUMER DISCRETIONARY — 6.07% | ||||||||
Virgin Media Inc. | 1,815,000 | 49,441 | ||||||
OPAP SA | 2,669,870 | 46,167 | ||||||
H & M Hennes & Mauritz AB, Class B | 1,141,400 | 38,015 | ||||||
Toyota Motor Corp. | 947,900 | 37,594 | ||||||
Bayerische Motoren Werke AG | 280,000 | 22,019 | ||||||
Daimler AG1 | 294,000 | 19,930 | ||||||
Naspers Ltd., Class N | 275,000 | 16,195 | ||||||
Volkswagen AG, nonvoting preferred | 87,000 | 14,114 | ||||||
Thomson Reuters Corp. | 345,000 | 12,921 | ||||||
Intercontinental Hotels Group PLC | 550,000 | 10,659 | ||||||
Esprit Holdings Ltd. | 2,026,442 | 9,646 | ||||||
276,701 | ||||||||
INFORMATION TECHNOLOGY — 5.89% | ||||||||
Nintendo Co., Ltd. | 292,400 | 85,822 | ||||||
Canon, Inc. | 895,000 | 46,409 | ||||||
Taiwan Semiconductor Manufacturing Co. Ltd. | 17,991,506 | 43,812 | ||||||
HTC Corp. | 931,050 | 28,740 | ||||||
Samsung Electronics Co. Ltd. | 24,000 | 20,069 | ||||||
Keyence Corp. | 66,000 | 19,120 | ||||||
Cielo SA, ordinary nominative | 2,065,000 | 16,731 | ||||||
HOYA CORP. | 329,800 | 8,010 | ||||||
268,713 | ||||||||
HEALTH CARE — 4.57% | ||||||||
Novartis AG | 1,248,000 | 73,345 | ||||||
GlaxoSmithKline PLC | 1,500,000 | 28,999 | ||||||
Smith & Nephew PLC | 2,531,000 | �� | 26,695 | |||||
CSL Ltd. | 610,000 | 22,642 | ||||||
Sanofi-aventis | 331,000 | 21,165 | ||||||
Roche Holding AG | 129,600 | 18,990 | ||||||
Shionogi & Co., Ltd. | 850,000 | 16,782 | ||||||
208,618 | ||||||||
MISCELLANEOUS — 2.34% | ||||||||
Other common stocks in initial period of acquisition | 106,817 | |||||||
Total common stocks (cost: $3,330,975,000) | 4,088,698 | |||||||
Preferred stocks — 0.43% | ||||||||
FINANCIALS — 0.43% | ||||||||
HSBC Holdings PLC, Series 2, 8.00% | 400,000 | 10,709 | ||||||
SMFG Preferred Capital USD 3 Ltd. 9.50%2,3 | 5,410,000 | 6,316 | ||||||
Resona Preferred Global Securities (Cayman) Ltd. 7.191%2,3 | 2,355,000 | 2,340 | ||||||
Total preferred stocks (cost: $15,202,000) | 19,365 | |||||||
Convertible securities — 0.57% | Shares or principal amount | Value (000 | ) | |||||
MATERIALS — 0.57% | ||||||||
Sino-Forest Corp. 4.25% convertible notes 20162 | $ | 14,400,000 | $ | 18,928 | ||||
Vale SA 6.75% convertible preferred 2012 | 75,000 | 7,239 | ||||||
Total convertible securities (cost: $18,645,000) | 26,167 | |||||||
Principal amount | ||||||||
Bonds & notes — 1.86% | (000 | ) | ||||||
BONDS & NOTES OF GOVERNMENTS OUTSIDE THE U.S. — 0.66% | ||||||||
Brazilian Treasury Bill 0% 2011 | BRL28,700 | 17,293 | ||||||
Greek Government, Series 30, 4.60% 2040 | € | 18,000 | 13,022 | |||||
30,315 | ||||||||
FINANCIALS — 0.52% | ||||||||
Westfield Group 5.40% 20122 | $ | 175 | 185 | |||||
Westfield Capital Corp. Ltd., WT Finance (Australia) Pty Ltd. and WEA Finance LLC 5.125% 20142 | 430 | 457 | ||||||
Westfield Group 5.70% 20162 | 4,540 | 4,907 | ||||||
Westfield Group 7.125% 20182 | 8,940 | 10,299 | ||||||
Société Générale 6.999% (undated)3 | € | 6,200 | 7,705 | |||||
23,553 | ||||||||
CONSUMER STAPLES — 0.37% | ||||||||
British American Tobacco International Finance PLC 8.125% 20132 | $ | 12,159 | 14,212 | |||||
British American Tobacco International Finance PLC 9.50% 20182 | 2,000 | 2,636 | ||||||
16,848 | ||||||||
CONSUMER DISCRETIONARY — 0.26% | ||||||||
DaimlerChrysler North America Holding Corp., Series E, 5.75% 2011 | 2,995 | 3,095 | ||||||
DaimlerChrysler North America Holding Corp. 7.75% 2011 | 1,450 | 1,454 | ||||||
DaimlerChrysler North America Holding Corp. 7.30% 2012 | 4,642 | 4,933 | ||||||
DaimlerChrysler North America Holding Corp. 6.50% 2013 | 1,990 | 2,254 | ||||||
11,736 | ||||||||
TELECOMMUNICATION SERVICES — 0.05% | ||||||||
Digicel Group Ltd. 12.00% 20142 | 2,000 | 2,340 | ||||||
Total bonds & notes (cost: $73,061,000) | 84,792 | |||||||
Short-term securities — 7.25% | ||||||||
U.S. Treasury Bills 0.147%–0.185% due 4/14–5/19/2011 | 70,800 | 70,764 | ||||||
International Bank for Reconstruction and Development 0.19%–0.20% due 2/28–4/6/2011 | 65,200 | 65,181 | ||||||
Bank of Nova Scotia 0.09%–0.24% due 1/3–1/6/2011 | 62,500 | 62,499 | ||||||
Caisse d’Amortissement de la Dette Sociale 0.25% due 2/9/20112 | 51,400 | 51,387 | ||||||
KfW 0.25% due 3/7/20112 | 37,800 | 37,787 | ||||||
Deutsche Bank Financial LLC 0.24% due 1/13/2011 | 20,100 | 20,099 | ||||||
Freddie Mac 0.25% due 1/18/2011 | 18,800 | 18,798 | ||||||
Fannie Mae 0.24% due 1/5/2011 | 4,300 | 4,300 | ||||||
Total short-term securities (cost: $330,793,000) | 330,815 | |||||||
Total investment securities (cost: $3,768,676,000) | 4,549,837 | |||||||
Other assets less liabilities | 10,725 | |||||||
Net assets | $ | 4,560,562 |
“Miscellaneous” securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.
1Security did not produce income during the last 12 months. |
2Acquired in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities was $151,794,000, which represented 3.33% of the net assets of the fund. |
3Coupon rate may change periodically. |
Key to abbreviations and symbol
ADR = American Depositary Receipts
GDR = Global Depositary Receipts
BRL = Brazilian reais
€ = Euros
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds. This and other important information is contained in the fund’s prospectus and summary prospectus, which can be obtained from your financial professional and should be read carefully before investing. You may also call American Funds Service Company (AFS) at 800/421-0180 or visit the American Funds website at americanfunds.com.
MFGEFP-934-0211O-S25501
ITEM 7 – Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.
ITEM 8 – Portfolio Managers of Closed-End Management Investment Companies
Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.
ITEM 9 – Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.
ITEM 10 – Submission of Matters to a Vote of Security Holders
There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s board of trustees since the Registrant last submitted a proxy statement to its shareholders. The procedures are as follows. The Registrant has a nominating and governance committee comprised solely of persons who are not considered ‘‘interested persons’’ of the Registrant within the meaning of the Investment Company Act of 1940, as amended. The committee periodically reviews such issues as the board’s composition, responsibilities, committees, compensation and other relevant issues, and recommends any appropriate changes to the full board of trustees. While the committee normally is able to identify from its own resources an ample number of qualified candidates, it will c onsider shareholder suggestions of persons to be considered as nominees to fill future vacancies on the board. Such suggestions must be sent in writing to the nominating and governance committee of the Registrant, c/o the Registrant’s Secretary, and must be accompanied by complete biographical and occupational data on the prospective nominee, along with a written consent of the prospective nominee for consideration of his or her name by the nominating and governance committee.
ITEM 11 – Controls and Procedures
(a) | The Registrant’s Principal Executive Officer and Principal Financial Officer have concluded, based on their evaluation of the Registrant’s disclosure controls and procedures (as such term is defined in Rule 30a-3 under the Investment Company Act of 1940), that such controls and procedures are adequate and reasonably designed to achieve the purposes described in paragraph (c) of such rule. |
(b) | There were no changes in the Registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the Registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
ITEM 12 – Exhibits
(a)(1) | Not applicable for filing of semi-annual reports to shareholders. |
(a)(2) | The certifications required by Rule 30a-2 of the Investment Company Act of 1940 and Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are attached as exhibits hereto. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
INTERNATIONAL GROWTH AND INCOME FUND | |
By /s/ Paul F. Roye | |
Paul F. Roye, Executive Vice President and Principal Executive Officer | |
Date: February 28, 2011 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By /s/ Paul F. Roye |
Paul F. Roye, Executive Vice President and Principal Executive Officer |
Date: February 28, 2011 |
By /s/ Jennifer M. Buchheim |
Jennifer M. Buchheim, Treasurer and Principal Financial Officer |
Date: February 28, 2011 |