NWF 497 Filing

<PAGE>

NEW WORLD FUND, INC.

Part B
Statement of Additional Information

January 1, 2006
(as supplemented April 1, 2006)

This document is not a prospectus but should be read in conjunction with the
current prospectus or retirement plan prospectus of New World Fund, Inc. (the
"fund" or "NWF") dated January 1, 2006. You may obtain a prospectus from your
financial adviser or by writing to the fund at the following address:

New World Fund, Inc.
Attention: Secretary
333 South Hope Street
Los Angeles, California 90071
213/486-9200

Shareholders who purchase shares at net asset value through eligible retirement
plans should note that not all of the services or features described below may
be available to them. They should contact their employers for details.

TABLE OF CONTENTS

Item Page no.
---- --------

Certain investment limitations and guidelines . . . . . . . . . . . 2
Description of certain securities and investment techniques . . . . 2
Fundamental policies and investment restrictions. . . . . . . . . . 9
Management of the fund . . . . . . . . . . . . . . . . . . . . . . 11
Execution of portfolio transactions . . . . . . . . . . . . . . . . 30
Disclosure of portfolio holdings. . . . . . . . . . . . . . . . . . 31
Price of shares . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Taxes and distributions . . . . . . . . . . . . . . . . . . . . . . 34
Purchase and exchange of shares . . . . . . . . . . . . . . . . . . 39
Sales charges . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Sales charge reductions and waivers . . . . . . . . . . . . . . . . 44
Selling shares. . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Shareholder account services and privileges . . . . . . . . . . . . 48
General information . . . . . . . . . . . . . . . . . . . . . . . . 51
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Financial statements

New World Fund -- Page 1
<PAGE>

CERTAIN INVESTMENT LIMITATIONS AND GUIDELINES

The following limitations and guidelines are considered at the time of purchase,
under normal circumstances, and are based on a percentage of the fund's net
assets unless otherwise noted. This summary is not intended to reflect all of
the fund's investment limitations.

GENERAL

. The fund will invest at least 35% of its assets in equity and debt
securities of companies based primarily in qualified countries with
developing economies and/or markets.

EQUITY SECURITIES

. The fund may invest its assets in equity securities of any company,
regardless of where it is based, if the fund's investment adviser
determines that a significant portion of its assets or revenues (generally
20% or more) is attributable to developing countries.

DEBT SECURITIES

. The fund may invest up to 25% of its assets in nonconvertible debt
securities, including government bonds and securities rated Ba or below by
Moody's Investors Service (Moody's) and BB or below by Standard & Poor's
Corporation (S&P) or unrated but determined to be of equivalent quality, of
issuers primarily based in qualified countries with developing economies
and/or markets, or of issuers that the fund's investment adviser determines
have a significant portion of their assets or revenues (generally 20% or
more) attributable to developing countries. The fund will generally
purchase debt securities considered consistent with its objective of
long-term capital appreciation.

* * * * * *

The fund may experience difficulty liquidating certain portfolio securities
during significant market declines or periods of heavy redemptions.

DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT TECHNIQUES

The descriptions below are intended to supplement the material in the prospectus
under "Investment objective, strategies and risks."

EQUITY SECURITIES -- Equity securities represent an ownership position in a
company. Equity securities held by the fund typically consist of common stocks
and may also include securities with equity conversion or purchase rights. The
prices of equity securities fluctuate based on, among other things, events
specific to their issuers and market, economic and other conditions.

There may be little trading in the secondary market for particular equity
securities, which may adversely affect the fund's ability to value accurately or
dispose of such equity securities. Adverse publicity and investor perceptions,
whether or not based on fundamental analysis, may decrease the value and/or
liquidity of equity securities.

The growth-oriented, equity-type securities generally purchased by the fund may
involve large price swings and potential for loss, particularly in the case of
smaller capitalization stocks.

New World Fund -- Page 2
<PAGE>

INVESTING IN SMALLER CAPITALIZATION STOCKS -- The fund may invest in the stocks
of smaller capitalization companies (typically companies with market
capitalizations of less than $2.0 billion at the time of purchase). The
investment adviser believes that the issuers of smaller capitalization stocks
often provide attractive investment opportunities. However, investing in smaller
capitalization stocks can involve greater risk than is customarily associated
with investing in stocks of larger, more established companies. For example,
smaller companies often have limited product lines, limited markets or financial
resources, may be dependent for management on one or a few key persons and can
be more susceptible to losses. Also, their securities may be thinly traded (and
therefore have to be sold at a discount from current prices or sold in small
lots over an extended period of time), may be followed by fewer investment
research analysts and may be subject to wider price swings, thus creating a
greater chance of loss than securities of larger capitalization companies.

INVESTING IN VARIOUS COUNTRIES -- Investing outside the United States may
involve additional risks caused by, among other things, currency controls and
fluctuating currency values; different accounting, auditing, financial reporting
and legal standards and practices in some countries; changing local, regional
and global economic, political and social conditions; expropriation; changes in
tax policy; greater market volatility; differing 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.

The risks described above may be heightened in connection with investments in
developing countries. Although there is no universally accepted definition, the
investment adviser generally considers a developing country as a country that is
in the earlier stages of its industrialization cycle with a low per capita gross
domestic product ("GDP") and a low market capitalization to GDP ratio relative
to those in the United States and the European Union. Historically, the markets
of developing countries have been more volatile than the markets of developed
countries, reflecting the greater uncertainties of investing in less established
markets and economies. In particular, developing countries may have less stable
governments; may present the risks of nationalization of businesses,
restrictions on foreign ownership and prohibitions on the repatriation of
assets; and may have less protection of property rights than more developed
countries. The economies of developing countries may be reliant on only a few
industries, may be highly vulnerable to changes in local or global trade
conditions and may suffer from high and volatile debt burdens or inflation
rates. Local securities markets may trade a small number of securities and may
be unable to respond effectively to increases in trading volume, potentially
making prompt liquidation of holdings difficult or impossible at times.

In determining where an issuer of a security is based, the Investment Adviser
may consider such factors as where the company is legally organized, maintains
its principal corporate offices and/ or conducts its principal operations.

Additional costs could be incurred in connection with the fund's investment
activities outside the United States. Brokerage commissions may be higher
outside the United States, and the fund will bear certain expenses in connection
with its currency transactions. Furthermore, increased custodian costs may be
associated with maintaining assets in certain jurisdictions.

CERTAIN RISK FACTORS RELATED TO DEVELOPING COUNTRIES

CURRENCY FLUCTUATIONS -- The fund's investments may be valued in currencies
other than the U.S. dollar. Certain developing countries' currencies have
experienced and may in the

New World Fund -- Page 3
<PAGE>

future experience significant declines against the U.S. dollar. For
example, if the U.S. dollar appreciates against foreign currencies, the
value of the fund's securities holdings would generally depreciate and vice
versa. Consistent with its investment objective, the fund can engage in
certain currency transactions to hedge against currency fluctuations. See
"Currency Transactions" below.

GOVERNMENT REGULATION -- The political, economic and social structures of
certain developing countries may be more volatile and less developed than
those in the United States. Certain developing countries lack uniform
accounting, auditing and financial reporting standards, have less
governmental supervision of financial markets than in the United States,
and do not honor legal rights enjoyed in the United States. Certain
governments may be more unstable and present greater risks of
nationalization or restrictions on foreign ownership of local companies.

Repatriation of investment income, capital and the proceeds of sales by
foreign investors may require governmental registration and/or approval in
some developing market countries. While the fund will only invest in
markets where these restrictions are considered acceptable, a country could
impose new or additional repatriation restrictions after the fund's
investment. If this happened, the fund's response might include, among
other things, applying to the appropriate authorities for a waiver of the
restrictions or engaging in transactions in other markets designed to
offset the risks of decline in that country. Such restrictions will be
considered in relation to the fund's liquidity needs and all other positive
and negative factors. Further, some attractive equity securities may not be
available to the fund due to foreign shareholders already holding the
maximum amount legally permissible.

While government involvement in the private sector varies in degree among
developing countries, such involvement may in some cases include government
ownership of companies in certain sectors, wage and price controls or
imposition of trade barriers and other protectionist measures. With respect
to any developing country, there is no guarantee that some future economic
or political crisis will not lead to price controls, forced mergers of
companies, expropriation, or creation of government monopolies to the
possible detriment of the fund's investments.

LESS DEVELOPED SECURITIES MARKETS -- Developing countries may have less
well-developed securities markets and exchanges. These markets have lower
trading volumes than the securities markets of more developed countries.
These markets may be unable to respond effectively to increases in trading
volume. Consequently, these markets may be substantially less liquid than
those of more developed countries, and the securities of issuers located in
these markets may have limited marketability. These factors may make prompt
liquidation of substantial portfolio holdings difficult or impossible at
times.

SETTLEMENT RISKS -- Settlement systems in developing countries are
generally less well organized than developed markets. Supervisory
authorities may also be unable to apply standards comparable to those in
developed markets. Thus, there may be risks that settlement may be delayed
and that cash or securities belonging to the fund may be in jeopardy
because of failures of or defects in the systems. In particular, market
practice may require that payment be made before receipt of the security
being purchased or that delivery of a security be made before payment is
received. In such cases, default by a broker or bank (the "counterparty")
through whom the transaction is effected might cause

New World Fund -- Page 4
<PAGE>

the fund to suffer a loss. The fund will seek, where possible, to use
counterparties whose financial status is such that this risk is reduced.
However, there can be no certainty that the fund will be successful in
eliminating this risk, particularly as counterparties operating in
developing countries frequently lack the substance or financial resources
of those in developed countries. There may also be a danger that, because
of uncertainties in the operation of settlement systems in individual
markets, competing claims may arise with respect to securities held by or
to be transferred to the fund.

INVESTOR INFORMATION -- The fund may encounter problems assessing
investment opportunities in certain developing securities markets in light
of limitations on available information and different accounting, auditing
and financial reporting standards. In such circumstances, the fund's
investment adviser will seek alternative sources of information, and to the
extent the investment adviser may not be satisfied with the sufficiency of
the information obtained with respect to a particular market or security,
the fund will not invest in such market or security.

TAXATION -- Taxation of dividends and capital gains received by
non-residents varies among developing countries and, in some cases, is
comparatively high. In addition, developing countries typically have less
well-defined tax laws and procedures and such laws may permit retroactive
taxation so that the fund could in the future become subject to local tax
liability that it had not reasonably anticipated in conducting its
investment activities or valuing its assets.

LITIGATION -- The fund and its shareholders may encounter substantial
difficulties in obtaining and enforcing judgments against non-U.S. resident
individuals and companies.

FRAUDULENT SECURITIES -- Securities purchased by the fund may subsequently
be found to be fraudulent or counterfeit, resulting in a loss to the fund.

LOAN PARTICIPATIONS -- The fund may invest, subject to its overall limitation on
debt securities, in loan participations, typically made by a syndicate of banks
to governmental or corporate borrowers for a variety of purposes. The underlying
loans to developing market governmental borrowers may be in default and may be
subject to restructuring under the Brady Plan. The underlying loans may be
secured or unsecured, and will vary in term and legal structure. When purchasing
such instruments, the fund may assume the credit risks associated with the
original bank lender as well as the credit risks associated with the borrower.
Investment in loan participations presents the possibility that in the United
States, the fund could be held liable as a co-lender under emerging legal
theories of lender liability. In addition, if the loan is foreclosed, the fund
could be part owner of any collateral, and could bear the costs and liabilities
of owning and disposing of the collateral. Loan participations are generally not
rated by major rating agencies, may not be protected by securities laws and are
often considered to be illiquid.

CURRENCY TRANSACTIONS -- The fund may purchase and sell currencies to facilitate
securities transactions and enter into forward currency contracts to protect
against changes in currency exchange rates. A forward currency contract is an
obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days from the date of the contract agreed upon by the
parties, at a price set at the time of the contract. Forward currency contracts
entered into by the fund will involve the purchase or sale of one currency
against the U.S. dollar. While entering into forward currency transactions could
minimize the risk of loss due to a decline in the value of the hedged currency,
it could also limit any potential gain that may result from an

New World Fund -- Page 5
<PAGE>

increase in the value of the currency. The fund will not generally attempt to
protect against all potential changes in exchange rates. The fund will segregate
liquid assets that will be marked to market daily to meet its forward contract
commitments to the extent required by the Securities and Exchange Commission.

Certain provisions of the Internal Revenue Code may affect the extent to which
the fund may enter into forward contracts. Such transactions also may affect the
character and timing of income, gain or loss recognized by the fund for U.S.
federal income tax purposes.

WARRANTS AND RIGHTS -- The fund may purchase warrants, which may be issued
together with bonds or preferred stocks. Warrants generally entitle the holder
to buy a proportionate amount of common stock at a specified price, usually
higher than the current market price. Warrants may be issued with an expiration
date or in perpetuity. Rights are similar to warrants except that they normally
entitle the holder to purchase common stock at a lower price than the current
market price.

DEBT SECURITIES -- Debt securities are used by issuers to borrow money.
Generally, issuers pay investors periodic interest and repay the amount borrowed
either periodically during the life of the security and/or at maturity. Some
debt securities, such as zero coupon bonds, do not pay current interest, but are
purchased at a discount from their face values and accrue interest at the
applicable coupon rate over a specified time period. The market prices of debt
securities fluctuate depending on such factors as interest rates, credit quality
and maturity. In general, market prices of debt securities decline when interest
rates rise and increase when interest rates fall.

Lower rated debt securities, rated Ba or below by Moody's and/or BB or below by
S&P or unrated but determined to be of equivalent quality, are described by the
rating agencies as speculative and involve greater risk of default or price
changes due to changes in the issuer's creditworthiness than higher rated debt
securities, or they may already be in default. The market prices of these
securities may fluctuate more than higher quality securities and may decline
significantly in periods of general economic difficulty. It may be more
difficult to dispose of, and to determine the value of, lower rated debt
securities.

Certain additional risk factors relating to debt securities are discussed below:

SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES -- Debt securities may be
sensitive to economic changes, political and corporate developments, and
interest rate changes. In addition, during an economic downturn or
substantial period of rising interest rates, issuers that are highly
leveraged may experience increased financial stress that would adversely
affect their ability to meet projected business goals, to obtain additional
financing and to service their principal and interest payment obligations.
Periods of economic change and uncertainty also can be expected to result
in increased volatility of market prices and yields of certain debt
securities.

PAYMENT EXPECTATIONS -- Debt securities may contain redemption or call
provisions. If an issuer exercises these provisions in a lower interest
rate market, the fund would have to replace the security with a lower
yielding security, resulting in decreased income to investors. If the
issuer of a debt security defaults on its obligations to pay interest or
principal or is the subject of bankruptcy proceedings, the fund may incur
losses or expenses in seeking recovery of amounts owed to it.

New World Fund -- Page 6
<PAGE>

LIQUIDITY AND VALUATION -- There may be little trading in the secondary
market for particular debt securities, which may affect adversely the
fund's ability to value accurately or dispose of such debt securities.
Adverse publicity and investor perceptions, whether or not based on
fundamental analysis, may decrease the value and/or liquidity of debt
securities.

The investment adviser attempts to reduce the risks described above through
diversification of the fund's portfolio and by credit analysis of each issuer,
as well as by monitoring broad economic trends and corporate and legislative
developments, but there can be no assurance that it will be successful in doing
so.

SECURITIES WITH EQUITY AND DEBT CHARACTERISTICS -- The fund may invest in
securities that have a combination of equity and debt characteristics. These
securities may at times behave more like equity than debt and vice versa. Some
types of convertible bonds or preferred stocks automatically convert into common
stocks. The prices and yields of nonconvertible preferred stocks generally move
with changes in interest rates and the issuer's credit quality, similar to the
factors affecting debt securities. Certain of these securities will be treated
as debt for fund investment limit purposes.

Convertible bonds, convertible preferred stocks and other securities may
sometimes be converted, or may automatically convert, into common stocks or
other securities at a stated conversion ratio. These securities, prior to
conversion, may pay a fixed rate of interest or a dividend. Because convertible
securities have both debt and equity characteristics, their value varies in
response to many factors, including the value of the underlying assets, general
market and economic conditions, and convertible market valuations, as well as
changes in interest rates, credit spreads and the credit quality of the issuer.

U.S. GOVERNMENT OBLIGATIONS -- U.S. government obligations are securities backed
by the full faith and credit of the U.S. government. U.S. government obligations
include the following types of securities:

U.S. TREASURY SECURITIES -- U.S. Treasury securities include direct
obligations of the U.S. Treasury, such as Treasury bills, notes and bonds.
For these securities, the payment of principal and interest is
unconditionally guaranteed by the U.S. government, and thus they are of the
highest possible credit quality. Such securities are subject to variations
in market value due to fluctuations in interest rates, but, if held to
maturity, will be paid in full.

FEDERAL AGENCY SECURITIES BACKED BY "FULL FAITH AND CREDIT" -- The
securities of certain U.S. government agencies and government-sponsored
entities are guaranteed as to the timely payment of principal and interest
by the full faith and credit of the U.S. government. Such agencies and
entities include the Government National Mortgage Association (Ginnie Mae),
the Veterans Administration (VA), the Federal Housing Administration (FHA),
the Export-Import Bank (Exim Bank), the Overseas Private Investment
Corporation (OPIC), the Commodity Credit Corporation (CCC) and the Small
Business Administration (SBA).

OTHER FEDERAL AGENCY OBLIGATIONS -- Additional federal agency securities are
neither direct obligations of, nor guaranteed by, the U.S. government. These
obligations include securities issued by certain U.S. government agencies and
government-sponsored entities. However, they generally involve some form of
federal sponsorship: some operate under a government charter,

New World Fund -- Page 7
<PAGE>

some are backed by specific types of collateral; some are supported by the
issuer's right to borrow from the Treasury; and others are supported only by the
credit of the issuing government agency or entity. These agencies and entities
include, but are not limited to: Federal Home Loan Bank, Federal Home Loan
Mortgage Corporation (Freddie Mac), Federal National Mortgage Association
(Fannie Mae), Tennessee Valley Authority and Federal Farm Credit Bank System.

FORWARD COMMITMENTS -- The fund may enter into commitments to purchase or sell
securities at a future date. When the fund agrees to purchase such securities,
it assumes the risk of any decline in value of the security from the date of the
agreement. When the fund agrees to sell such securities, it does not participate
in further gains or losses with respect to the securities beginning on the date
of the agreement. If the other party to such a transaction fails to deliver or
pay for the securities, the fund could miss a favorable price or yield
opportunity, or could experience a loss.

The fund will not use these transactions for the purpose of leveraging and will
segregate liquid assets that will be marked to market daily in an amount
sufficient to meet its payment obligations in these transactions. Although these
transactions will not be entered into for leveraging purposes, to the extent the
fund's aggregate commitments in connection with these transactions exceed its
segregated assets, the fund temporarily could be in a leveraged position
(because it may have an amount greater than its net assets subject to market
risk). Should market values of the fund's portfolio securities decline while the
fund is in a leveraged position, greater depreciation of its net assets would
likely occur than if it were not in such a position. The fund will not borrow
money to settle these transactions and, therefore, will liquidate other
portfolio securities in advance of settlement if necessary to generate
additional cash to meet its obligations.

CASH AND CASH EQUIVALENTS -- These include (a) commercial paper (for example,
short-term notes with maturities typically up to 12 months in length issued by
corporations, governmental bodies or bank/corporation sponsored conduits
(asset-backed commercial paper)) (b) short-term bank obligations (for example,
certificates of deposit, bankers' acceptances (time drafts on a commercial bank
where the bank accepts an irrevocable obligation to pay at maturity)) or bank
notes, (c) savings association and savings bank obligations (for example, bank
notes and certificates of deposit issued by savings banks or savings
associations), (d) securities of the U.S. government, its agencies or
instrumentalities that mature, or may be redeemed, in one year or less, and (e)
corporate bonds and notes that mature, or that may be redeemed, in one year or
less.

RESTRICTED OR ILLIQUID SECURITIES -- The fund may purchase securities subject to
restrictions on resale. Restricted securities generally can be sold in privately
negotiated transactions, pursuant to an exemption from registration under the
Securities Act of 1933 (the "1933 Act"), or in a registered public offering.
Where registration is required, the holder of a registered security may be
obligated to pay all or part of the registration expense and a considerable
period may elapse between the time it decides to seek registration and the time
it may be permitted to sell a security under an effective registration
statement. Difficulty in selling such securities may result in a loss or be
costly to the fund.

Securities (including restricted securities) not actively traded will be
considered illiquid unless they have been specifically determined to be liquid
under procedures adopted by the fund's Board of Directors, taking into account
factors such as the frequency and volume of trading, the commitment of dealers
to make markets and the availability of qualified investors, all of which can

New World Fund -- Page 8
<PAGE>

change from time to time. The fund may incur certain additional costs in
disposing of illiquid securities.

* * * * * *

PORTFOLIO TURNOVER -- Portfolio changes will be made without regard to the
length of time particular investments may have been held. Short-term trading
profits are not the fund's objective, and changes in its investments are
generally accomplished gradually, though short-term transactions may
occasionally be made. High portfolio turnover involves correspondingly greater
transaction costs in the form of dealer spreads or brokerage commissions, and
may result in the realization of net capital gains, which are taxable when
distributed to shareholders.

A fund's portfolio turnover rate would equal 100% if each security in the fund's
portfolio were replaced once per year. The fund's portfolio turnover rates for
the fiscal years ended October 31, 2005 and 2004 were 26% and 20%, respectively.
See "Financial highlights" in the prospectus for the fund's annual portfolio
turnover rate for previous periods.

FUNDAMENTAL POLICIES AND INVESTMENT RESTRICTIONS

FUNDAMENTAL POLICIES -- The fund has adopted the following fundamental policies
and investment restrictions, which may not be changed without approval by
holders of a majority of its outstanding shares. Such majority is defined in the
Investment Company Act of 1940, as amended (the "1940 Act"), as the vote of the
lesser of (a) 67% or more of the outstanding voting securities present at a
meeting, if the holders of more than 50% of the outstanding voting securities
are present in person or by proxy, or (b) more than 50% of the outstanding
voting securities. All percentage limitations are considered at the time
securities are purchased and are based on the fund's net assets unless otherwise
indicated. None of the following investment restrictions involving a maximum
percentage of assets will be considered violated unless the excess occurs
immediately after, and is caused by, an acquisition by the fund.

1. The fund may not borrow money or securities, except for temporary or
emergency purposes in an amount not exceeding 33-1/3% of its total assets.

2. The fund may not make loans, if, as a result, more than 33-1/3% of its
total assets would be lent to other parties (this limitation does not apply to
purchases of debt securities, repurchase agreements or loans of portfolio
securities).

3. The fund may not invest 25% or more of its assets in securities of issuers
in any one industry (other than securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities).

4. The fund may not purchase or sell real estate unless acquired as a result
of ownership of securities or other instruments (this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business, such as real estate
investment trusts).

5. The fund may not purchase or sell physical commodities unless acquired as a
result of ownership of securities or other instruments (this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical commodities).

New World Fund -- Page 9
<PAGE>

6. The fund may not engage in the business of underwriting securities of other
issuers, except to the extent that the purchase or disposal of an investment
position may technically constitute the fund as an underwriter as that term is
defined under the Securities Act of 1933.

7. The fund may not issue senior securities, except as permitted under the
Investment Company Act of 1940.

In addition, the fund will not change its subclassification from a diversified
to non-diversified company except as permitted under the Investment Company Act
of 1940.

NONFUNDAMENTAL POLICIES -- The following nonfundamental policies may be changed
without shareholder approval:

1. The fund may not with respect to 75% of its total assets, invest more than
5% of its assets in securities of any one issuer or acquire more than 10% of the
voting securities of any one issuer. These limitations do not apply to
securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities.

2. The fund may not invest more than 15% of its net assets in securities which
are not readily marketable.

3. The fund may not purchase securities on margin, except for such short-term
credits as are necessary for the clearance of transactions, and provided that
the fund may make margin payments in connection with purchases or sales of
futures contracts or of options on futures contracts.

4. The fund may not engage in short sales except to the extent it owns or has
the right to obtain securities equivalent in kind and amount to those sold
short.

5. The fund may not invest in other companies for the purpose of exercising
control or management.

6. The fund may not invest more than 5% of its total assets in the securities
of other managed investment companies; such investments shall be limited to 3%
of the voting stock of any investment company, provided, however, that
investment in the open market of a closed-end investment company where no more
than customary brokers' commissions are involved and investment in connection
with a merger, consolidation, acquisition or reorganization shall not be
prohibited by this restriction.

New World Fund -- Page 10
<PAGE>

MANAGEMENT OF THE FUND

BOARD OF DIRECTORS AND OFFICERS

YEAR FIRST NUMBER OF PORTFOLIOS
POSITION ELECTED WITHIN THE FUND
WITH THE A DIRECTOR PRINCIPAL OCCUPATION(S) DURING COMPLEX/2/ OVERSEEN
NAME AND AGE FUND OF THE FUND/1/ PAST FIVE YEARS BY DIRECTOR
-------------------------------------------------------------------------------------------------------------------
"NON-INTERESTED" DIRECTORS/4/
-------------------------------------------------------------------------------------------------------------------

Elisabeth Allison Director 1999 Partner, ANZI, Ltd. (transactional 3
Age: 59 work specializing in joint ventures
and strategic alliances); Business
negotiator, Harvard Medical School
-------------------------------------------------------------------------------------------------------------------
Vanessa C.L. Chang Director 2005 Director, El & El Investments (real 3
Age: 53 estate); former Chief Executive
Officer and President,
ResolveitNow.com (insurance-related
internet company); former Senior
Vice President, Secured Capital
Corporation (real estate investment
bank); former Partner, KPMG LLP
(registered public accounting firm)
-------------------------------------------------------------------------------------------------------------------
Robert A. Fox Director 1999 Managing General Partner, Fox 7
Age: 68 Investments LP; Corporate director;
retired President and CEO, Foster
Farms (poultry producer)
-------------------------------------------------------------------------------------------------------------------
Jae H. Hyun Director 2005 Chairman of the Board, Tong Yang 3
Age: 56 Major Corp. (holding company of
Tong Yang Group companies)
-------------------------------------------------------------------------------------------------------------------
Koichi Itoh Director 1999 Executive Chairman of the Board, 5
Age: 65 Itoh Building Co., Ltd. (building
management); former President,
Autosplice KK (electronics)
-------------------------------------------------------------------------------------------------------------------
William H. Kling Director 1999 President, American Public Media 8
Age: 63 Group
-------------------------------------------------------------------------------------------------------------------
John G. McDonald Director 1999 Professor of Finance, Graduate 8
Age: 68 School of Business, Stanford
University
-------------------------------------------------------------------------------------------------------------------
William I. Miller Chairman of 1999 Chairman of the Board and CEO, 3
Age: 49 the Board Irwin Financial Corporation
(Independent
and
Non-Executive)
-------------------------------------------------------------------------------------------------------------------
Alessandro Ovi Director 2001 Publisher and Editor, Technology 3
Age: 61 Review; President, TechRev.srl;
former Special Advisor to the
President, European Commission;
former Chief Executive Officer,
Tecnitel (subsidiary of a
telecommunications company
-------------------------------------------------------------------------------------------------------------------
Kirk P. Pendleton Director 1999 Chairman of the Board and CEO, 6
Age: 66 Cairnwood, Inc. (venture capital
investment)
-------------------------------------------------------------------------------------------------------------------
Rozanne L. Ridgway Director 2005 Director of companies; Chair 3
Age: 70 (non-executive), Baltic-American
Enterprise Fund; former Co-Chair,
Atlantic Council of the United
States
-------------------------------------------------------------------------------------------------------------------

OTHER DIRECTORSHIPS/3/ HELD
NAME AND AGE BY DIRECTOR
------------------------------------------------------
"NON-INTERESTED" DIRECTORS/4/
------------------------------------------------------

Elisabeth Allison Color Kinetics, Inc.
Age: 59
------------------------------------------------------
Vanessa C.L. Chang None
Age: 53
------------------------------------------------------
Robert A. Fox Chemtura Corporation
Age: 68
------------------------------------------------------
Jae H. Hyun Tong Yang Investment Bank;
Age: 56 Tong Yang Magic, Inc.; Tong
Yang Systems Corp.
------------------------------------------------------
Koichi Itoh None
Age: 65
------------------------------------------------------
William H. Kling Irwin Financial Corporation
Age: 63
------------------------------------------------------
John G. McDonald iStar Financial, Inc.; Plum
Age: 68 Creek Timber Co.; Scholastic
Corporation; Varian, Inc.

------------------------------------------------------
William I. Miller Cummins, Inc.
Age: 49
------------------------------------------------------
Alessandro Ovi Assicurazioni Generali; Korn &
Age: 61 Ferry Europe (Advisory Board);
Telecom Italia Media; ST
Microelectronics; Guala
Closures SpA
------------------------------------------------------
Kirk P. Pendleton None
Age: 66
------------------------------------------------------
Rozanne L. Ridgway Boeing; 3M Corporation;
Age: 70 Emerson Electric; Manpower,
Inc.; Sara Lee Corporation

------------------------------------------------------

New World Fund -- Page 11

<PAGE>

PRINCIPAL OCCUPATION(S) DURING
YEAR FIRST PAST FIVE YEARS AND
ELECTED POSITIONS HELD NUMBER OF PORTFOLIOS
POSITION A DIRECTOR WITH AFFILIATED ENTITIES WITHIN THE FUND
WITH THE AND/OR OFFICER OR THE PRINCIPAL UNDERWRITER COMPLEX/2/ OVERSEEN
NAME AND AGE FUND OF THE FUND/1/ OF THE FUND BY DIRECTOR
--------------------------------------------------------------------------------------------------------------
"INTERESTED" DIRECTORS/5,6/
--------------------------------------------------------------------------------------------------------------

Gina H. Despres Vice 1999 Senior Vice President, Capital 4
Age: 64 Chairman of Research and Management
the Board Company; Senior Vice President,
Capital Strategy Research,
Inc.*
--------------------------------------------------------------------------------------------------------------
Robert W. Lovelace President 1999 Senior Vice President, Capital 1
Age: 43 and Research and Management
Director Company; Chairman of the Board,
Capital Research Company*;
Director, The Capital Group
Companies, Inc.*
--------------------------------------------------------------------------------------------------------------

OTHER DIRECTORSHIPS/3/ HELD
NAME AND AGE BY DIRECTOR
---------------------------------------------------
"INTERESTED" DIRECTORS/5,6/
---------------------------------------------------

Gina H. Despres None
Age: 64
---------------------------------------------------
Robert W. Lovelace None
Age: 43
---------------------------------------------------

New World Fund -- Page 12

<PAGE>

PRINCIPAL OCCUPATION(S) DURING
POSITION YEAR FIRST ELECTED PAST FIVE YEARS AND POSITIONS HELD
WITH THE AN OFFICER WITH AFFILIATED ENTITIES
NAME AND AGE FUND OF THE FUND/1/ OR THE PRINCIPAL UNDERWRITER OF THE FUND
-----------------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS/6/
-----------------------------------------------------------------------------------------------------------------------------------

Mark E. Denning Senior Vice 1999 Director, Capital Research and Management Company; Director,
Age: 48 President The Capital Group Companies, Inc.*; Senior Vice President,
Capital Research Company*
-----------------------------------------------------------------------------------------------------------------------------------
David C. Barclay Vice President 1999 Senior Vice President, Capital Research and Management
Age: 49 Company; Director, The Capital Group Companies, Inc.*
-----------------------------------------------------------------------------------------------------------------------------------
Michael J. Downer Vice President 2003 Vice President and Secretary, Capital Research and Management
Age: 50 Company; Secretary and Director, American Funds Distributors,
Inc.*; Director, Capital Bank and Trust Company*
-----------------------------------------------------------------------------------------------------------------------------------
Alwyn Heong Vice President 1999 Senior Vice President, Capital Research Company*
Age: 45
-----------------------------------------------------------------------------------------------------------------------------------
Joseph R. Higdon Vice President 1999 Senior Vice President, Capital Research Company*; Senior Vice
Age: 64 President and Director, Capital Strategy Research, Inc.*
-----------------------------------------------------------------------------------------------------------------------------------
Carl M. Kawaja Vice President 1999 Senior Vice President, Capital Research Company*; Director,
Age: 41 Capital International, Inc.*; Director, Capital International
Asset Management*
-----------------------------------------------------------------------------------------------------------------------------------
Vincent P. Corti Secretary 1999 Vice President - Fund Business Management Group, Capital
Age: 49 Research and Management Company
-----------------------------------------------------------------------------------------------------------------------------------
R. Marcia Gould Treasurer 1999 Vice President - Fund Business Management Group, Capital
Age: 51 Research and Management Company
-----------------------------------------------------------------------------------------------------------------------------------
Jennifer M. Buchheim Assistant Treasurer 2005 Vice President - Fund Business Management Group, Capital
Age: 32 Research and Management Company
-----------------------------------------------------------------------------------------------------------------------------------

New World Fund -- Page 13

<PAGE>

* Company affiliated with Capital Research and Management Company.
1 Directors and officers of the fund serve until their resignation, removal or
retirement.
2 Capital Research and Management Company manages the American Funds, consisting
of 29 funds. Capital Research and Management Company also manages American
Funds Insurance Series,(R) which serves as the underlying investment vehicle
for certain variable insurance contracts, and Endowments, whose shareholders
are limited to certain nonprofit organizations.
3 This includes all directorships (other than those of the American Funds) that
are held by each Director as a director of a public company or a registered
investment company.
4 A "Non-Interested" Director refers to a Director who is not an "interested
person" within the meaning of the 1940 Act, on the basis of his or her
affiliation with the fund's investment adviser, Capital Research and Management
Company, or affiliated entities (including the fund's principal underwriter).
5 "Interested persons," within the meaning of the 1940 Act, on the basis of
their affiliation with the fund's investment adviser, Capital Research and
Management Company, or affiliated entities (including the fund's principal
underwriter).
6 All of the officers listed, with the exception of Joseph R. Higdon, are
officers and/or Directors/Trustees of one or more of the other funds for which
Capital Research and Management Company serves as investment adviser.

THE ADDRESS FOR ALL DIRECTORS AND OFFICERS OF THE FUND IS 333 SOUTH HOPE STREET,
55TH FLOOR, LOS ANGELES, CALIFORNIA 90071, ATTENTION: FUND SECRETARY.

New World Fund -- Page 14

<PAGE>

FUND SHARES OWNED BY DIRECTORS AS OF DECEMBER 31, 2004

AGGREGATE DOLLAR RANGE/1/
OF SHARES
OWNED IN ALL FUNDS
IN THE AMERICAN FUNDS
DOLLAR RANGE/1/ OF FUND FAMILY OVERSEEN
NAME SHARES OWNED BY DIRECTOR
-------------------------------------------------------------------------------

"NON-INTERESTED" DIRECTORS
-------------------------------------------------------------------------------
Elisabeth Allison Over $100,000 Over $100,000
-------------------------------------------------------------------------------
Vanessa C.L. Chang/2/ $10,001 - $50,000 Over $100,000
-------------------------------------------------------------------------------
Robert A. Fox Over $100,000 Over $100,000
-------------------------------------------------------------------------------
Jae H. Hyun/2/ None Over $100,000
-------------------------------------------------------------------------------
Koichi Itoh $50,001 - $100,000 Over $100,000
-------------------------------------------------------------------------------
William H. Kling Over $100,000 Over $100,000
-------------------------------------------------------------------------------
John G. McDonald Over $100,000 Over $100,000
-------------------------------------------------------------------------------
William I. Miller Over $100,000 Over $100,000
-------------------------------------------------------------------------------
Alessandro Ovi $10,001 - $50,000 $50,001 - $100,000
-------------------------------------------------------------------------------
Kirk P. Pendleton Over $100,000 Over $100,000
-------------------------------------------------------------------------------
Rozanne L. Ridgway/2/ None/3/ $50,001 - $100,000/3/
-------------------------------------------------------------------------------
"INTERESTED" DIRECTORS
-------------------------------------------------------------------------------
Gina H. Despres Over $100,000 Over $100,000
-------------------------------------------------------------------------------
Robert W. Lovelace Over $100,000 Over $100,000
-------------------------------------------------------------------------------

1 Ownership disclosure is made using the following ranges: None; $1 - $10,000;
$10,001 - $50,000; $50,001 - $100,000; and Over $100,000. The amounts listed
for "interested" Directors include shares owned through The Capital Group
Companies, Inc. retirement plan and 401(k) plan.
2 Elected a Director effective March 9, 2005.
3 As of December 28, 2005, the dollar range of fund shares owned was $10,001 -
$50,000 and the aggregate holdings of American Funds overseen by the director
was greater than $100,000.

DIRECTOR COMPENSATION -- No compensation is paid by the fund to any officer or
Director who is a director, officer or employee of the investment adviser or its
affiliates. The fund typically pays each Non-Interested Director an annual fee
of $10,000. If the aggregate annual fees paid to a Non-Interested Director by
all funds advised by the investment adviser is less than $60,000, that
Non-Interested Director would be eligible for a $60,000 alternative fee. This
alternative fee is paid by those funds for which the Non-Interested Director
serves as a director on a pro rata basis according to each fund's relative share
of the annual fees that it would typically pay. The alternative fee reflects the
significant time and labor commitment required for a Director to oversee even
one fund. A Non-Interested Director who is Chairman of the Board (an
"independent chair") also receives an additional annual fee of $25,000, paid in
equal portions by the fund and the funds whose Boards and Committees typically
meet jointly with those of the

New World Fund -- Page 15
<PAGE>

fund. The fund pays to its independent chair an attendance fee (as described
below) for each meeting of a committee of the Board of Directors attended as a
non voting ex-officio member.

In addition, the fund generally pays to Non-Interested Directors fees of (a)
$2,000 for each Board of Directors meeting attended and (b) $1,000 for each
meeting attended as a member of a committee of the Board of Directors.

Non-Interested Directors also receive attendance fees of (a) $2,500 for each
Director seminar or information session organized by the investment adviser, (b)
$1,500 for each joint Audit Committee meeting with all other audit committees of
funds advised by the investment adviser and (c) $500 for each meeting of the
Board or Committee Chairs of other funds advised by the investment adviser. The
fund and the other funds served by each Non-Interested Director each pay an
equal portion of these attendance fees.

The Nominating Committee of the Board of Directors, a Committee comprised
exclusively of Non-Interested Directors, reviews Director compensation
periodically, and typically recommends adjustments every other year. In making
its recommendations, the Nominating Committee considers a number of factors,
including operational, regulatory and other developments affecting the
complexity of the Board's oversight obligations, as well as comparative industry
data.

No pension or retirement benefits are accrued as part of fund expenses.
Non-Interested Directors may elect, on a voluntary basis, to defer all or a
portion of their fees through a deferred compensation plan in effect for the
fund. The fund also reimburses certain expenses of the Non-Interested Directors.

DIRECTOR COMPENSATION PAID DURING THE FISCAL YEAR ENDED OCTOBER 31, 2005

TOTAL COMPENSATION (INCLUDING
AGGREGATE COMPENSATION VOLUNTARILY DEFERRED
(INCLUDING VOLUNTARILY COMPENSATION/1/)
DEFERRED COMPENSATION/1/) FROM ALL FUNDS MANAGED BY
NAME FROM THE FUND CAPITAL RESEARCH AND MANAGEMENT
--------------------------------------------------------------------------------------------------- COMPANY OR ITS AFFILIATES/2/
---------------------------------

Elisabeth Allison $28,167 $113,500
------------------------------------------------------------------------------------------------------------------------------------
Vanessa C.L. Chang 17,167 95,500
------------------------------------------------------------------------------------------------------------------------------------
Robert A. Fox/3/ 25,927 272,500
------------------------------------------------------------------------------------------------------------------------------------
Jae H. Hyun 12,000 77,000
------------------------------------------------------------------------------------------------------------------------------------
Koichi Itoh/3/ 27,167 116,001
------------------------------------------------------------------------------------------------------------------------------------
William H. Kling/3/ 23,067 154,000
------------------------------------------------------------------------------------------------------------------------------------
John G. McDonald/3/ 21,563 334,500
------------------------------------------------------------------------------------------------------------------------------------
William I. Miller/3/ 23,000 96,000
------------------------------------------------------------------------------------------------------------------------------------
Alessandro Ovi/3/ 26,434 96,100
------------------------------------------------------------------------------------------------------------------------------------
Kirk P. Pendleton/3/ 27,150 216,500
------------------------------------------------------------------------------------------------------------------------------------
Rozanne L. Ridgway/3/ 17,167 91,500
------------------------------------------------------------------------------------------------------------------------------------

New World Fund -- Page 16
<PAGE>

1 Amounts may be deferred by eligible Directors under a nonqualified deferred
compensation plan adopted by the fund in 1999. Deferred amounts accumulate at
an earnings rate determined by the total return of one or more American Funds
as designated by the Directors. Compensation shown in this table for the fiscal
year ended October 31, 2005 does not include earnings on amounts deferred in
previous fiscal years. See footnote 3 to this table for more information.
2 Capital Research and Management Company manages the American Funds, consisting
of 29 funds. Capital Research and Management Company also manages American
Funds Insurance Series,(R) which serves as the underlying investment vehicle
for certain variable insurance contracts, and Endowments, whose shareholders
are limited to certain nonprofit organizations.
3 Since the deferred compensation plan's adoption, the total amount of deferred
compensation accrued by the fund (plus earnings thereon) through the 2005
fiscal year for participating Directors is as follows: Robert A. Fox
($174,870), Koichi Itoh ($186,705), William H. Kling ($89,913), John G.
McDonald ($130,254), William I. Miller ($96,594), Alessandro Ovi ($22,785),
Kirk P. Pendleton ($188,531) and Rozanne L. Ridgway ($18,419). Amounts deferred
and accumulated earnings thereon are not funded and are general unsecured
liabilities of the fund until paid to the Directors.

As of December 1, 2005, the officers and Directors of the fund and their
families, as a group, owned beneficially or of record less than 1% of the
outstanding shares of the fund.

FUND ORGANIZATION AND THE BOARD OF DIRECTORS -- The fund, an open-end,
diversified management investment company, was organized as a Maryland
corporation on November 13, 1998. Although the Board of Directors has delegated
day-to-day oversight to the investment adviser, all fund operations are
supervised by the fund's Board, which meets periodically and performs duties
required by applicable state and federal laws.

Under Maryland law, the business affairs of a fund are managed under the
direction of the Board of Directors, and all powers of the fund are exercised by
or under the authority of the Board except as reserved to the shareholders by
law or the fund's charter or by-laws. Maryland law requires each Director to
perform his/her duties as a Director, including his/her duties as a member of
any Board committee on which he/she serves, in good faith, in a manner he/she
reasonably believes to be in the best interest of the fund, and with the care
that an ordinarily prudent person in a like position would use under similar
circumstances.

Members of the Board who are not employed by the investment adviser or its
affiliates are paid certain fees for services rendered to the fund as described
above. They may elect to defer all or a portion of these fees through a deferred
compensation plan in effect for the fund.

The fund has several different classes of shares, including Class A, B, C, F,
529-A, 529-B, 529-C, 529-E, 529-F, R-1, R-2, R-3, R-4 and R-5 shares. The 529
share classes are available only through CollegeAmerica/(R)/ to investors
establishing qualified higher education savings accounts. The R share classes
are generally available only to employer-sponsored retirement plans. Class R-5
shares are also available to clients of the Personal Investment Management group
of Capital Guardian Trust Company who do not have an intermediary associated
with their accounts and without regard to the $1 million purchase minimum.

Shares of each class represent an interest in the same investment portfolio.
Each class has pro rata rights as to voting, redemption, dividends and
liquidation, except that each class bears different distribution expenses and
may bear different transfer agent fees and other expenses properly attributable
to the particular class as approved by the Board of Directors and set forth in
the fund's rule 18f-3 Plan. Each class' shareholders have exclusive voting
rights with respect to the respective class' rule 12b-1 plans adopted in
connection with the distribution of shares and on other matters in which the
interests of one class are different from interests in another class. Shares of
all classes of the fund vote together on matters that affect all classes in
substantially the same manner. Each class votes as a class on matters that
affect that class alone. Note that CollegeAmerica account owners are not
shareholders of the fund and, accordingly, do not have the rights of a
shareholder, such as the right to vote proxies relating to fund shares. As the
legal

New World Fund -- Page 17
<PAGE>

owner of the fund's shares, the Virginia College Savings Plan/SM/ will vote any
proxies relating to fund shares.

The fund does not hold annual meetings of shareholders. However, significant
matters that require shareholder approval, such as certain elections of Board
members or a change in a fundamental investment policy, will be presented to
shareholders at a meeting called for such purpose. Shareholders have one vote
per share owned. At the request of the holders of at least 10% of the shares,
the fund will hold a meeting at which any member of the Board could be removed
by a majority vote.

The fund's Articles of Incorporation and by-laws as well as separate
indemnification agreements that the fund has entered into with Non-Interested
Directors provide in effect that, subject to certain conditions, the fund will
indemnify its officers and Directors against liabilities or expenses actually
and reasonably incurred by them relating to their service to the fund. However,
Directors are not protected from liability by reason of their willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of their office.

COMMITTEES OF THE BOARD OF DIRECTORS -- The fund has an Audit Committee
comprised of Elisabeth Allison, Vanessa C.L. Chang, Robert A. Fox, Kirk P.
Pendleton and Rozanne L. Ridgway, none of whom is an "interested person" of the
fund within the meaning of the 1940 Act. The Committee provides oversight
regarding the fund's accounting and financial reporting policies and practices,
its internal controls and the internal controls of the fund's principal service
providers. The Committee acts as a liaison between the fund's independent
registered public accounting firm and the full Board of Directors. Four Audit
Committee meetings were held during the 2005 fiscal year.

The fund has a Governance and Contracts Committee comprised of Elisabeth
Allison, Vanessa C.L. Chang, Robert A. Fox, Jae H. Hyun, Koichi Itoh, William H.
Kling, John G. McDonald, William I. Miller, Alessandro Ovi, Kirk P. Pendleton
and Rozanne L. Ridgway, none of whom is an "interested person" of the fund
within the meaning of the 1940 Act. The Committee's principal function is to
request, review and consider the information deemed necessary to evaluate the
terms of certain agreements between the fund and its investment adviser or the
investment adviser's affiliates, such as the Investment Advisory and Service
Agreement, Principal Underwriting Agreement, Administrative Services Agreement
and Plans of Distribution adopted pursuant to rule 12b-1 under the 1940 Act,
that the fund may enter into, renew or continue, and to make its recommendations
to the full Board of Directors on these matters. Three Governance and Contracts
Committee meetings were held during the 2005 fiscal year.

The fund has a Nominating Committee comprised of Jae H. Hyun, Koichi Itoh,
William H. Kling, John G. McDonald and Alessandro Ovi, none of whom is an
"interested person" of the fund within the meaning of the 1940 Act. 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 Directors. The Committee
also evaluates, selects and nominates Non-Interested Director candidates to the
full Board of Directors. While the Committee normally is able to identify from
its own and other resources an ample number of qualified candidates, it will
consider 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 Committee of the fund, addressed to the fund's Secretary, and must be
accompanied by complete biographical and occupational data on the prospective
nominee, along

New World Fund -- Page 18
<PAGE>

with a written consent of the prospective nominee for consideration of his or
her name by the Committee. One Nominating Committee meeting was held during the
2005 fiscal year.

PROXY VOTING PROCEDURES AND GUIDELINES -- The fund and its investment adviser
have adopted Proxy Voting Guidelines (the "Guidelines") with respect to voting
proxies of securities held by the fund, other American Funds, Endowments and
American Funds Insurance Series. Certain American Funds have established
separate proxy committees that vote proxies or delegate to a voting officer the
authority to vote on behalf of those funds. Proxies for all other funds are
voted by a committee of the investment adviser under authority delegated by
those funds' Boards. Therefore, if more than one fund invests in the same
company, they may vote differently on the same proposal.

All U.S. proxies are voted. Non-U.S. proxies also are voted, provided there is
sufficient time and information available. After a proxy is received, the
investment adviser prepares a summary of the proposals in the proxy. A
discussion of any potential conflicts of interest is also included in the
summary. After reviewing the summary, one or more research analysts familiar
with the company and industry make a voting recommendation on the proxy
proposals. A second recommendation is made by a proxy coordinator (a senior
investment professional) based on the individual's knowledge of the Guidelines
and familiarity with proxy-related issues. The proxy summary and voting
recommendations are then sent to the appropriate proxy voting committee for the
final voting decision.

The analyst and proxy coordinator making voting recommendations are responsible
for noting any potential material conflicts of interest. One example might be
where a director of one or more American Funds is also a director of a company
whose proxy is being voted. In such instances, proxy committee members are
alerted to the potential conflict. The proxy committee may then elect to vote
the proxy or seek a third-party recommendation or vote of an ad hoc group of
committee members.

The Guidelines, which have been in effect in substantially their current form
for many years, provide an important framework for analysis and decision-making
by all funds. However, they are not exhaustive and do not address all potential
issues. The Guidelines provide a certain amount of flexibility so that all
relevant facts and circumstances can be considered in connection with every
vote. As a result, each proxy received is voted on a case-by-case basis
considering the specific circumstances of each proposal. The voting process
reflects the funds' understanding of the company's business, its management and
its relationship with shareholders over time.

Information regarding how the fund voted proxies relating to portfolio
securities during the 12-month period ended June 30 of each year will be
available on or about September 1 of each year (a) without charge, upon request
by calling American Funds Service Company at 800/421-0180 and (b) on the SEC's
website at www.sec.gov.

The following summary sets forth the general positions of the American Funds,
Endowments, American Funds Insurance Series and the investment adviser on
various proposals. A copy of the full Guidelines is available upon request, free
of charge, by calling American Funds Service Company at 800/421-0180 or visiting
the American Funds website.

DIRECTOR MATTERS -- The election of a company's slate of nominees for
director is generally supported. Votes may be withheld for some or all of
the nominees if this is determined to be in the best interest of
shareholders. Separation of the chairman and

New World Fund -- Page 19
<PAGE>

CEO positions may also be supported. Typically, proposals to declassify the
board (elect all directors annually) are supported based on the belief that
this increases the directors' sense of accountability to shareholders.

SHAREHOLDER RIGHTS -- Proposals to repeal an existing poison pill, to
provide for confidential voting and to provide for cumulative voting are
usually supported. Proposals to eliminate the right of shareholders to act
by written consent or to take away a shareholder's right to call a special
meeting are not typically supported.

COMPENSATION AND BENEFIT PLANS -- Option plans are complicated, and many
factors are considered in evaluating a plan. Each plan is evaluated based
on protecting shareholder interests and a knowledge of the company and its
management. Considerations include the pricing (or repricing) of options
awarded under the plan and the impact of dilution on existing shareholders
from past and future equity awards. Compensation packages should be
structured to attract, motivate and retain existing employees and qualified
directors; however, they should not be excessive.

ROUTINE MATTERS -- The ratification of auditors, procedural matters
relating to the annual meeting and changes to company name are examples of
items considered routine. Such items are generally voted in favor of
management's recommendations unless circumstances indicate otherwise.

PRINCIPAL FUND SHAREHOLDERS -- The following table identifies those investors
who own of record or are known by the fund to own beneficially 5% or more of any
class of its shares as of the opening of business on December 1, 2005. Unless
otherwise indicated, the ownership percentages below represent ownership of
record rather than beneficial ownership.

NAME AND ADDRESS OWNERSHIP PERCENTAGE
----------------------------------------------------------------------------

Edward D. Jones & Co. Class A 15.34%
201 Progress Parkway Class B 9.63
Maryland Heights, MO 63043-3009
----------------------------------------------------------------------------
Citigroup Global Markets, Inc. Class C 10.95
333 W. 34th Street
New York, NY 10001-2402
----------------------------------------------------------------------------
MLPF&S Class C 9.31
4800 Deer Lake Drive East, Floor 2
Jacksonville, FL 32246-6484
----------------------------------------------------------------------------
Charles Schwab & Co., Inc. Class F 7.16
101 Montgomery Street
San Francisco, CA 94104-4122
----------------------------------------------------------------------------
RBC Dain Rauscher, Inc. Class R-1 11.73
10831 Summitview Road
Yakima, WA 98908-8703
----------------------------------------------------------------------------
Raymond James & Associates, Inc. Class R-1 11.68
880 Carillon Parkway
St. Petersburg, FL 33716-1100
----------------------------------------------------------------------------
Panzer Nursery, Inc. Class R-1 8.75
17980 SW Baseline Road
Beaverton, OR 97006-3760
----------------------------------------------------------------------------
Curiale Dellaverson Hirschfeld Kraemer & Sloan Class R-1 5.47
111 Sutter Street, Floor 1800
San Francisco, CA 94104-4545
----------------------------------------------------------------------------
JP Morgan Chase Class R-4 13.80
P.O. Box 419692
Kansas City, MO 64141-6692
----------------------------------------------------------------------------
MCB TR Services Class R-4 8.51
1414 9th Avenue
Altoona, PA 16602
----------------------------------------------------------------------------
CGTC Class R-5 34.10
333 S. Hope Street, Floor 49
Los Angeles, CA 90071
----------------------------------------------------------------------------
Fidelity Investments Institutional Operations Co. Class R-5 29.61
100 Magellan Way KWIC
Covington, KY 41015
----------------------------------------------------------------------------
UBS Financial Services, Inc. Class R-5 7.93
P.O. Box 92994
Chicago, IL 60675-2994
----------------------------------------------------------------------------

New World Fund -- Page 20
<PAGE>

INVESTMENT ADVISER -- Capital Research and Management Company, the investment
adviser, founded in 1931, maintains research facilities in the United States and
abroad (Los Angeles, San Francisco, New York, Washington, DC, London, Geneva,
Hong Kong, Singapore and Tokyo). These facilities are staffed with experienced
investment professionals. The investment adviser is located at 333 South Hope
Street, Los Angeles, CA 90071 and 135 South State College Boulevard, Brea, CA
92821. It is a wholly owned subsidiary of The Capital Group Companies, Inc., a
holding company for several investment management subsidiaries. The investment
adviser manages equity assets for the American Funds through two divisions.
These divisions generally function separately from each other with respect to
investment research activities and they make investment decisions for the funds
on a separate basis.

POTENTIAL CONFLICTS OF INTEREST -- The investment adviser has adopted policies
and procedures that address conflicts of interest that may arise between a
portfolio counselor's management of the fund and his or her management of other
funds and accounts. Potential areas of conflict could involve allocation of
investment opportunities and trades among funds and accounts, use of information
regarding the timing of fund trades, personal investing activities, portfolio
counselor compensation and proxy voting of portfolio securities. The investment
adviser has adopted policies and procedures that it believes are reasonably
designed to address these conflicts. However, there is no guarantee that such
policies and procedures will be effective or that the investment adviser will
anticipate all potential conflicts of interest.

COMPENSATION OF INVESTMENT PROFESSIONALS -- As described in the prospectus, the
investment adviser uses a system of multiple portfolio counselors in managing
fund assets. In addition, Capital Research and Management Company's investment
analysts may make investment decisions with respect to a portion of a fund's
portfolio within their research coverage. Portfolio

New World Fund -- Page 21
<PAGE>

counselors and investment analysts may also manage assets in other mutual funds
advised by Capital Research and Management Company.

Portfolio counselors and investment analysts are paid competitive salaries by
Capital Research and Management Company. In addition, they may receive bonuses
based on their individual portfolio results. Investment professionals also may
participate in profit-sharing plans. The relative mix of compensation
represented by bonuses, salary and profit-sharing will vary depending on the
individual's portfolio results, contributions to the organization and other
factors. In order to encourage a long-term focus, bonuses based on investment
results are calculated by comparing pretax total returns to relevant benchmarks
over both the most recent year and a four-year rolling average, with the greater
weight placed on the four-year rolling average. For portfolio counselors,
benchmarks may include measures of the marketplaces in which the relevant fund
invests and measures of the results of comparable mutual funds. For investment
analysts, benchmarks may include relevant market measures and appropriate
industry or sector indexes reflecting their areas of expertise. Capital Research
and Management Company also separately compensates analysts for the quality of
their research efforts. The benchmarks against which New World Fund portfolio
counselors are measured include: MSCI All Country World Index; Lipper Global
Funds Index; Lipper Emerging Markets Funds Index; and JP Morgan Emerging Markets
Bond Index Global.

PORTFOLIO COUNSELOR FUND HOLDINGS AND OTHER MANAGED ACCOUNTS -- As described
below, portfolio counselors may personally own shares of the fund. In addition,
portfolio counselors may manage a portion of other mutual funds or accounts
advised by Capital Research and Management Company or its affiliates.

THE FOLLOWING TABLE REFLECTS INFORMATION AS OF OCTOBER 31, 2005:

NUMBER NUMBER
OF OTHER OF OTHER NUMBER
REGISTERED POOLED OF OTHER
INVESTMENT INVESTMENT ACCOUNTS
COMPANIES (RICS) VEHICLES (PIVS) THAT
THAT THAT PORTFOLIO
PORTFOLIO PORTFOLIO COUNSELOR
DOLLAR RANGE COUNSELOR COUNSELOR MANAGES
OF FUND MANAGES MANAGES (ASSETS OF
PORTFOLIO SHARES (ASSETS OF RICS (ASSETS OF PIVS OTHER ACCOUNTS
COUNSELOR OWNED/1/ IN BILLIONS)/2/ IN BILLIONS)/3/ IN BILLIONS)/4/
-----------------------------------------------------------------------------------------------

Robert W. $500,001 -- 3 $168.7 1 $0.24 None
Lovelace $1,000,000
-----------------------------------------------------------------------------------------------
Mark E. Denning $100,001 -- 6 $238.3 2 $0.05 None
$500,000
-----------------------------------------------------------------------------------------------
David C. Barclay Over 4 $157.8 5 $1.15 13 $2.91
$1,000,000
-----------------------------------------------------------------------------------------------
Alwyn Heong $100,001 -- 2 $127.2 None None
$500,000
-----------------------------------------------------------------------------------------------
Carl M. Kawaja $500,001 -- 4 $216.9 1 $0.24 None
$1,000,000
-----------------------------------------------------------------------------------------------

New World Fund -- Page 22
<PAGE>

1 Ownership disclosure is made using the following ranges: None; $1 - $10,000;
$10,001 - $50,000; $50,001 - $100,000; $100,001 - $500,000; $500,001 -
$1,000,000; and Over $1,000,000. The amounts listed include shares owned
through The Capital Group Companies, Inc. retirement plan and 401(k) plan.
2 Indicates fund(s) where the portfolio counselor also has significant
responsibilities for the day to day management of the fund(s). Assets noted are
the total net assets of the registered investment companies and are not
indicative of the total assets managed by the individual, which is a
substantially lower amount.
3 Represents funds advised or sub-advised by Capital Research and Management
Company and sold outside the United States and/ or fixed-income assets in
institutional accounts managed by investment adviser subsidiaries of Capital
Group International, Inc., an affiliate of Capital Research and Management
Company. Assets noted are the total net assets of the fund or account and are
not indicative of the total assets managed by the individual, which is a
substantially lower amount.

4 Reflects other professionally managed accounts held at companies affiliated
with Capital Research and Management Company. Personal brokerage accounts of
portfolio counselors and their families are not reflected.

INVESTMENT ADVISORY AND SERVICE AGREEMENT -- The Investment Advisory and Service
Agreement (the "Agreement") between the fund and the investment adviser will
continue in effect until December 31, 2006, unless sooner terminated, and may be
renewed from year to year thereafter, provided that any such renewal has been
specifically approved at least annually by (a) the Board of Directors, or by the
vote of a majority (as defined in the 1940 Act) of the outstanding voting
securities of the fund, and (b) the vote of a majority of Directors who are not
parties to the Agreement or interested persons (as defined in the 1940 Act) of
any such party, cast in person at a meeting called for the purpose of voting on
such approval. The Agreement provides that the investment adviser has no
liability to the fund for its acts or omissions in the performance of its
obligations to the fund not involving willful misconduct, bad faith, gross
negligence or reckless disregard of its obligations under the Agreement. The
Agreement also provides that either party has the right to terminate it, without
penalty, upon 60 days' written notice to the other party, and that the Agreement
automatically terminates in the event of its assignment (as defined in the 1940
Act).

In addition to providing investment advisory services, the investment adviser
furnishes the services and pays the compensation and travel expenses of persons
to perform the fund's executive, administrative, clerical and bookkeeping
functions, and provides suitable office space, necessary small office equipment
and utilities, general purpose accounting forms, supplies and postage used at
the fund's offices. The fund pays all expenses not assumed by the investment
adviser, including, but not limited to, custodian, stock transfer and dividend
disbursing fees and expenses; shareholder recordkeeping and administrative
expenses; costs of the designing, printing and mailing of reports, prospectuses,
proxy statements and notices to its shareholders; taxes; expenses of the
issuance and redemption of fund shares (including stock certificates,
registration and qualification fees and expenses); expenses pursuant to the
fund's plans of distribution (described below); legal and auditing expenses;
compensation, fees and expenses paid to Non-Interested Directors; association
dues; costs of stationery and forms prepared exclusively for the fund; and costs
of assembling and storing shareholder account data.

As compensation for its services, the investment adviser receives a monthly fee
that is accrued daily, calculated at the annual rate of 0.85% on the first $500
million of the Fund's net assets, 0.77% on net assets between $500 million and
$1 billion, 0.71% on net assets from $1 billion to $1.5 billion, 0.66% on net
assets from $1.5 billion to $2.5 billion, 0.62% on net assets from $2.5 billion
to $4 billion, 0.58% on net assets from $4 billion to $6.5 billion, and 0.54% on
net assets in excess of $6.5 billion.

The investment adviser has agreed that in the event the Class A expenses of the
fund (with the exclusion of interest, taxes, brokerage costs, distribution
expenses pursuant to a plan under rule 12b-1 and extraordinary expenses such as
litigation and acquisitions or other expenses excludable under applicable state
securities laws or regulations) for any fiscal year ending on a

New World Fund -- Page 23
<PAGE>

date on which the Agreement is in effect, exceed the expense limitations, if
any, applicable to the fund pursuant to state securities laws or any related
regulations, it will reduce its fee by the extent of such excess and, if
required pursuant to any such laws or any regulations thereunder, will reimburse
the fund in the amount of such excess. To the extent the fund's management fee
must be waived due to Class A share expense ratios exceeding the above limit,
management fees will be reduced similarly for all classes of shares of the fund,
or other Class A fees will be waived in lieu of management fees.

For the fiscal years ended October 31, 2005 and 2004, the investment adviser was
entitled to receive from the fund management fees of $27,569,000 and
$16,931,000, respectively. After giving effect to the management fee waiver
described below, the fund paid the investment adviser management fees of
$25,295,000 (a reduction of $2,274,000) and $16,772,000 (a reduction of
$159,000) for the fiscal years ended October 31, 2005 and 2004, respectively.
For the fiscal year ended October 31, 2003, the fund paid the investment adviser
management fees of $10,601,000.

For the period from September 1, 2004 through March 31, 2005, the investment
adviser agreed to waive 5% of the management fees that it was otherwise entitled
to receive under the Agreement. Beginning April 1, 2005, this waiver increased
to 10% of the management fees that the investment adviser is otherwise entitled
to receive and is expected to continue at this level until further review. As a
result of this waiver, management fees will be reduced similarly for all classes
of shares of the fund.

ADMINISTRATIVE SERVICES AGREEMENT -- The Administrative Services Agreement (the
"Administrative Agreement") between the fund and the investment adviser relating
to the fund's Class C, F, R and 529 shares will continue in effect until
December 31, 2006, unless sooner terminated, and may be renewed from year to
year thereafter, provided that any such renewal has been specifically approved
at least annually by the vote of a majority of Directors who are not parties to
the Administrative Agreement or interested persons (as defined in the 1940 Act)
of any such party, cast in person at a meeting called for the purpose of voting
on such approval. The fund may terminate the Administrative Agreement at any
time by vote of a majority of Non-Interested Directors. The investment adviser
has the right to terminate the Administrative Agreement upon 60 days' written
notice to the fund. The Administrative Agreement automatically terminates in the
event of its assignment (as defined in the 1940 Act).

Under the Administrative Agreement, the investment adviser provides certain
transfer agent and administrative services for shareholders of the fund's Class
C and F shares, and all Class R and 529 shares. The investment adviser contracts
with third parties, including American Funds Service Company, the fund's
Transfer Agent, to provide these services. Services include, but are not limited
to, shareholder account maintenance, transaction processing, tax information
reporting and shareholder and fund communications. In addition, the investment
adviser monitors, coordinates and oversees the activities performed by third
parties providing such services. For Class R-1, R-2 and R-3 shares, the
investment adviser has agreed to pay a portion of the fees payable under the
Administrative Agreement that would otherwise have been paid by the fund. For
the year ended October 31, 2005, the total fees paid by the investment adviser
were $110,000.

As compensation for its services, the investment adviser receives transfer agent
fees for transfer agent services provided to the fund's Class C, F, R and 529
shares. Transfer agent fees are paid monthly according to a fee schedule
contained in a Shareholder Services Agreement between the fund and American
Funds Service Company. The investment adviser also receives an

New World Fund -- Page 24
<PAGE>

administrative services fee at the annual rate of up to 0.15% of the average
daily net assets for each applicable share class (excluding Class R-5 shares)
for administrative services provided to these share classes. Administrative
services fees are paid monthly and accrued daily. The investment adviser uses a
portion of this fee to compensate third parties for administrative services
provided to the fund. Of the remainder, the investment adviser will not retain
more than 0.05% of the average daily net assets for each applicable share class.
For Class R-5 shares, the administrative services fee is calculated at the
annual rate of up to 0.10% of the average daily net assets. This fee is subject
to the same uses and limitations described above.

During the 2005 fiscal year, administrative services fees, gross of any payments
made by the investment adviser, were:

ADMINISTRATIVE SERVICES FEE
------------------------------------------------------------------------------

CLASS C $308,000
------------------------------------------------------------------------------
CLASS F 378,000
------------------------------------------------------------------------------
CLASS 529-A 77,000
------------------------------------------------------------------------------
CLASS 529-B 16,000
------------------------------------------------------------------------------
CLASS 529-C 25,000
------------------------------------------------------------------------------
CLASS 529-E 5,000
------------------------------------------------------------------------------
CLASS 529-F 5,000
------------------------------------------------------------------------------
CLASS R-1 6,000
------------------------------------------------------------------------------
CLASS R-2 232,000
------------------------------------------------------------------------------
CLASS R-3 94,000
------------------------------------------------------------------------------
CLASS R-4 14,000
------------------------------------------------------------------------------
CLASS R-5 142,000
------------------------------------------------------------------------------

PRINCIPAL UNDERWRITER AND PLANS OF DISTRIBUTION -- American Funds Distributors,
Inc. (the "Principal Underwriter") is the principal underwriter of the fund's
shares. The Principal Underwriter is located at 333 South Hope Street, Los
Angeles, CA 90071; 135 South State College Boulevard, Brea, CA 92821; 3500
Wiseman Boulevard, San Antonio, TX 78251; 8332 Woodfield Crossing Boulevard,
Indianapolis, IN 46240; and 5300 Robin Hood Road, Norfolk, VA 23513.

The Principal Underwriter receives revenues from sales of the fund's shares. For
Class A and 529-A shares, the Principal Underwriter receives commission revenue
consisting of that portion of the Class A and 529-A sales charge remaining after
the allowances by the Principal Underwriter to investment dealers. For Class B
and 529-B shares, the Principal Underwriter sells the rights to the 12b-1 fees
paid by the fund for distribution expenses to a third party and receives the
revenue remaining after compensating investment dealers for sales of Class B and
529-B shares. The fund also pays the Principal Underwriter for advancing the
immediate service fees paid to qualified dealers of Class B and 529-B shares.
For Class C and 529-C shares, the Principal Underwriter receives any contingent
deferred sales charges that apply during the first year after purchase. The fund
pays the Principal Underwriter for advancing the immediate service

New World Fund -- Page 25
<PAGE>

fees and commissions paid to qualified dealers of Class C and 529-C shares. For
Class 529-E shares, the fund pays the Principal Underwriter for advancing the
immediate service fees and commissions paid to qualified dealers. For Class F
and 529-F shares, the fund pays the Principal Underwriter for advancing the
immediate service fees paid to qualified dealers and advisers who sell Class F
and 529-F shares. For Class R-1, R-2, R-3 and R-4 shares, the fund pays the
Principal Underwriter for advancing the immediate service fees paid to qualified
dealers and advisers who sell Class R-1, R-2, R-3 and R-4 shares.

Commissions, revenue or service fees retained by the Principal Underwriter after
allowances or compensation to dealers were:

COMMISSIONS, ALLOWANCE OR
REVENUE COMPENSATION
FISCAL YEAR/PERIOD OR FEES RETAINED TO DEALERS
-----------------------------------------------------------------------------------------------------

CLASS A 2005 $4,253,000 $18,745,000
2004 1,585,000 6,908,000
2003 483,000 2,331,000
-----------------------------------------------------------------------------------------------------
CLASS B 2005 182,000 1,484,000
2004 123,000 988,000
2003 65,000 413,000
-----------------------------------------------------------------------------------------------------
CLASS C 2005 0 1,078,000
2004 0 458,000
2003 0 195,000
-----------------------------------------------------------------------------------------------------
CLASS 529-A 2005 167,000 764,000
2004 75,000 341,000
2003 28,000 134,000
-----------------------------------------------------------------------------------------------------
CLASS 529-B 2005 17,000 99,000
2004 14,000 82,000
2003 9,000 54,000
-----------------------------------------------------------------------------------------------------
CLASS 529-C 2005 0 77,000
2004 0 35,000
2003 0 17,000
-----------------------------------------------------------------------------------------------------

New World Fund -- Page 26
<PAGE>

The fund has adopted plans of distribution (the "Plans") pursuant to rule 12b-1
under the 1940 Act. The Principal Underwriter receives amounts payable pursuant
to the Plans (see below). As required by rule 12b-1 and the 1940 Act, the Plans
(together with the Principal Underwriting Agreement) have been approved by the
full Board of Directors and separately by a majority of the Directors who are
not "interested persons" of the fund and who have no direct or indirect
financial interest in the operation of the Plans or the Principal Underwriting
Agreement. Potential benefits of the Plans to the fund include quality
shareholder services; savings to the fund in transfer agency costs; and benefits
to the investment process from growth or stability of assets. The selection and
nomination of Directors who are not "interested persons" of the fund are
committed to the discretion of the Directors who are not "interested persons"
during the existence of the Plans. The Plans may not be amended to increase
materially the amount spent for distribution without shareholder approval. Plan
expenses are reviewed quarterly and the Plans must be renewed annually by the
Board of Directors.

Under the Plans, the fund may annually expend the following amounts to finance
any activity primarily intended to result in the sale of fund shares, provided
the fund's Board of Directors has approved the category of expenses for which
payment is being made: (a) for Class A shares, up to 0.30% of the average daily
net assets attributable to Class A shares; (b) for Class 529-A shares, up to
0.50% of the average daily net assets attributable to Class 529-A shares; (c)
for Class B and 529-B shares, up to 1.00% of the average daily net assets
attributable to Class B and 529-B shares, respectively; (d) for Class C and
529-C shares, up to 1.00% of the average daily net assets attributable to Class
C and 529-C shares, respectively; (e) for Class 529-E shares, up to 0.75% of the
average daily net assets attributable to Class 529-E shares; (f) for Class F and
529-F shares, up to 0.50% of the average daily net assets attributable to Class
F and 529-F shares; (g) for Class R-1 shares, up to 1.00% of the average daily
net assets attributable to Class R-1 shares; (h) for Class R-2 shares, up to
1.00% of the average daily net assets attributable to Class R-2 shares; (i) for
Class R-3 shares, up to 0.75% of the average daily net assets attributable to
Class R-3 shares; and (j) for Class R-4 shares, up to 0.50% of the average daily
net assets attributable to Class R-4 shares. The fund has not adopted a Plan for
Class R-5 shares; accordingly, no 12b-1 fees are paid from Class R-5 share
assets.

For Class A and 529-A shares: (a) up to 0.25% is reimbursed to the Principal
Underwriter for paying service-related expenses, including paying service fees
to qualified dealers, and (b) up to the amount allowable under the fund's Class
A and 529-A 12b-1 limit is reimbursed to the Principal Underwriter for paying
distribution-related expenses, including for Class A and 529-A shares dealer
commissions and wholesaler compensation paid on sales of shares of $1 million or
more purchased without a sales charge (including purchases by employer-sponsored
defined contribution-type retirement plans investing $1 million or more or with
100 or more eligible employees, and retirement plans, endowments and foundations
with $50 million or more in assets -- "no load purchases"). Commissions on no
load purchases of Class A and 529-A shares, in excess of the Class A and 529-A
plan limitations not reimbursed to the Principal Underwriter during the most
recent fiscal quarter are recoverable for five quarters, provided that such
commissions do not exceed the annual expense limit. After five quarters, these
commissions are not recoverable.

For Class B and 529-B shares: (a) up to 0.25% is paid to the Principal
Underwriter for paying service-related expenses, including paying service fees
to qualified dealers, and (b) 0.75% is paid to the Principal Underwriter for
distribution-related expenses, including the financing of commissions paid to
qualified dealers.

New World Fund -- Page 27
<PAGE>

For Class C and 529-C shares: (a) up to 0.25% is paid to the Principal
Underwriter for paying service-related expenses, including paying service fees
to qualified dealers, and (b) up to 0.75% is paid to the Principal Underwriter
for paying distribution-related expenses, including commissions paid to
qualified dealers.

For Class 529-E shares: currently (a) up to 0.25% is paid to the Principal
Underwriter for paying service-related expenses, including paying service fees
to qualified dealers, and (b) up to 0.25% is paid to the Principal Underwriter
for paying distribution-related expenses, including commissions paid to
qualified dealers.

For Class F and 529-F shares: currently up to 0.25% is paid to the Principal
Underwriter for paying service-related expenses, including paying service fees
to qualified dealers or advisers.

For Class R-1 shares: (a) up to 0.25% is paid to the Principal Underwriter for
paying service-related expenses, including paying service fees to qualified
dealers, and (b) up to 0.75% is paid to the Principal Underwriter for
distribution-related expenses, including commissions paid to qualified dealers.

For Class R-2 shares: currently (a) up to 0.25% is paid to the Principal
Underwriter for paying service-related expenses, including paying service fees
to qualified dealers, and (b) up to 0.50% is paid to the Principal Underwriter
for paying distribution-related expenses, including commissions paid to
qualified dealers.

For Class R-3 shares: currently (a) up to 0.25% is paid to the Principal
Underwriter for paying service-related expenses, including paying service fees
to qualified dealers, and (b) up to 0.25% is paid to the Principal Underwriter
for paying distribution-related expenses, including commissions paid to
qualified dealers.

For Class R-4 shares: currently up to 0.25% is paid to the Principal Underwriter
for paying service-related expenses, including paying service fees to qualified
dealers or advisers.

As of the end of the 2005 fiscal year, total 12b-1 expenses, and the portion of
the expense that remained unpaid, were:

12B-1 UNPAID LIABILITY
12B-1 EXPENSES OUTSTANDING
-------------------------------------------------------------------------------------------

CLASS A $8,243,000 $1,059,000
-------------------------------------------------------------------------------------------
CLASS B 1,288,000 165,000
-------------------------------------------------------------------------------------------
CLASS C 1,691,000 305,000
-------------------------------------------------------------------------------------------
CLASS F 622,000 131,000
-------------------------------------------------------------------------------------------
CLASS 529-A 87,000 15,000
-------------------------------------------------------------------------------------------
CLASS 529-B 82,000 11,000
-------------------------------------------------------------------------------------------
CLASS 529-C 138,000 25,000
-------------------------------------------------------------------------------------------
CLASS 529-E 14,000 3,000
-------------------------------------------------------------------------------------------
CLASS 529-F 4,000 0
-------------------------------------------------------------------------------------------
CLASS R-1 24,000 5,000
-------------------------------------------------------------------------------------------
CLASS R-2 236,000 56,000
-------------------------------------------------------------------------------------------
CLASS R-3 152,000 34,000
-------------------------------------------------------------------------------------------
CLASS R-4 20,000 5,000
-------------------------------------------------------------------------------------------

New World Fund -- Page 28
<PAGE>

OTHER COMPENSATION TO DEALERS -- As of January 2006, the top dealers that
American Funds Distributors anticipates will receive additional compensation
(as described in the prospectus) include:

A. G. Edwards & Sons, Inc.
AIG Advisors Group
American General Securities Inc.
Ameritas Investment Corp.
AXA Advisors, LLC
Cadaret, Grant & Co., Inc.
Cambridge Investment Research, Inc.
Capital Analysts, Inc.
Commonwealth Financial Network
Cuna Brokerage Services, Inc.
Deutsche Bank Securities Inc.
Edward Jones
Ferris, Baker Watts, Inc.
Genworth Financial Securities Corp.
Hefren-Tillotson, Inc.
Hornor, Townsend & Kent, Inc.
ING Advisors Network Inc.
InterSecurities, Inc./Transamerica Financial Advisors, Inc.
Investacorp, Inc.
Janney Montgomery Scott LLC
Jefferson Pilot Securities Corporation
JJB Hilliard, WL Lyons, Inc./PNC Bank
Legg Mason Wood Walker, Inc.
Lincoln Financial Advisors Corporation
McDonald Investments Inc./Society National Bank
Merrill Lynch, Pierce, Fenner & Smith Inc.
Metlife Enterprises
MML Investors Services, Inc.
Morgan Keegan & Company, Inc.
Morgan Stanley DW
NatCity Investment, Inc.
National Planning Holdings Inc.
NFP Securities, Inc.
Northwestern Mutual Investment Services, LLC.
Pacific Select Distributors Inc.
Park Avenue Securities LLC
Piper Jaffray & Co.
Princor Financial Services
ProEquities, Inc.
Raymond James Financial Services/Raymond James & Associates
RBC Dain Rauscher Inc.
Robert W. Baird & Co. Inc.
Securian Financial Services/C.R.I. Securities Inc.
Securities Service Network Inc.
Signator Investors, Inc.
Smith Barney
Stifel, Nicolaus & Company, Inc.
The O.N. Equity Sales Company
UBS Financial Services Inc.
US Bancorp Investments, Inc.
Wachovia Securities

New World Fund -- Page 29
<PAGE>

EXECUTION OF PORTFOLIO TRANSACTIONS

As described in the prospectus, the investment adviser places orders with
broker-dealers for the fund's portfolio transactions. Portfolio transactions for
the fund may be executed as part of concurrent authorizations to purchase or
sell the same security for other funds served by the investment adviser, or for
trusts or other accounts served by affiliated companies of the investment
adviser. When such concurrent authorizations occur, the objective is to allocate
the executions in an equitable manner.

Brokerage commissions paid on portfolio transactions, including investment
dealer concessions on underwritings, if applicable, for the fiscal years ended
October 31, 2005, 2004 and 2003 amounted to $7,997,000, $4,219,000 and
$2,431,000, respectively. With respect to fixed-income securities, brokerage
commissions include explicit investment dealer concessions and may exclude other
transaction costs which may be reflected in the spread between the bid and asked
price. The volume of trading activity increased during 2005 as compared to 2003
and 2004, resulting in an increase in brokerage commissions/concessions paid on
portfolio transactions.

The fund is required to disclose information regarding investments in the
securities of its "regular" broker-dealers (or parent companies of its regular
broker-dealers) that derive more than 15% of their revenue from broker-dealer,
underwriter or investment adviser activities. A regular broker-dealer is (a) one
of the 10 broker-dealers that received from the fund the largest amount of
brokerage commissions by participating, directly or indirectly, in the fund's
portfolio transactions during the fund's most recent fiscal year; (b) one of the
10 broker-dealers that engaged as principal in the largest dollar amount of
portfolio transactions of the fund during the fund's most recent fiscal year; or
(c) one of the 10 broker-dealers that sold the largest amount of securities of
the fund during the fund's most recent fiscal year.

At the end of the fund's most recent fiscal year, the fund's regular
broker-dealers included Citigroup Global Markets, Inc. As of the fund's most
recent fiscal year-end, the fund held equity securities of Citigroup, Inc. in
the amount of $8,012,000.

New World Fund -- Page 30
<PAGE>

DISCLOSURE OF PORTFOLIO HOLDINGS

The fund's investment adviser, on behalf of the fund, has adopted policies and
procedures with respect to the disclosure of information about fund portfolio
securities. These policies and procedures have been reviewed by the fund's Board
of Directors and compliance will be periodically assessed by the Board in
connection with reporting from the fund's Chief Compliance Officer.

Under these policies and procedures, the fund's complete list of portfolio
holdings available for public disclosure, dated as of the end of each calendar
quarter, is permitted to be posted on the American Funds website no earlier than
the tenth day after such calendar quarter. In practice, the public portfolio
typically is posted on the website approximately 45 days after the end of the
calendar quarter. In addition, the fund's list of top 10 equity portfolio
holdings measured by percentage of net assets invested, dated as of the end of
each calendar month, is permitted to be posted on the American Funds website no
earlier than the tenth day after such month. Such portfolio holdings information
may then be disclosed to any person pursuant to an ongoing arrangement to
disclose portfolio holdings information to such person no earlier than one day
after the day on which the information is posted on the American Funds website.
Affiliates of the fund (including the fund's Board members and officers, and
certain personnel of the fund's investment adviser and its affiliates) and
certain service providers (such as the fund's custodian and outside counsel) who
require portfolio holdings information for legitimate business and fund
oversight purposes may receive the information earlier.

Affiliated persons of the fund as described above who receive portfolio holdings
information are subject to restrictions and limitations on the use and handling
of such information pursuant to applicable codes of ethics, including
requirements to maintain the confidentiality of such information, preclear
securities trades and report securities transactions activity, as applicable.
Third party service providers of the fund receiving such information are subject
to confidentiality obligations. When portfolio holdings information is disclosed
other than through the American Funds website to persons not affiliated with the
fund (which, as described above, would typically occur no earlier than one day
after the day on which the information is posted on the American Funds website),
such persons may be bound by agreements (including confidentiality agreements)
that restrict and limit their use of the information to legitimate business uses
only. Neither the fund nor its investment adviser or any affiliate thereof
receives compensation or other consideration in connection with the disclosure
of information about portfolio securities.

Subject to Board policies, the authority to disclose a fund's portfolio
holdings, and to establish policies with respect to such disclosure, resides
with the Investment Committee of the fund's investment adviser. In exercising
its authority, the Investment Committee determines whether disclosure of
information about the fund's portfolio securities is appropriate and in the best
interest of fund shareholders. The investment adviser has implemented policies
and procedures to address conflicts of interest that may arise from the
disclosure of fund holdings. For example, the investment adviser's code of
ethics specifically requires, among other things, the safeguarding of
information about fund holdings and contains prohibitions designed to prevent
the personal use of confidential, proprietary investment information in a way
that would conflict with fund transactions. In addition, the investment adviser
believes that its current policy of not selling portfolio holdings information
and not disclosing such information to unaffiliated third parties until such
holdings have been made public on the American Funds website (other than to
certain fund service providers for legitimate business and fund oversight
purposes) helps reduce

New World Fund -- Page 31
<PAGE>

potential conflicts of interest between fund shareholders and the investment
adviser and its affiliates.

PRICE OF SHARES

Shares are purchased at the offering price or sold at the net asset value price
next determined after the purchase or sell order is received and accepted by the
fund or the Transfer Agent; the offering or net asset value price is effective
for orders received prior to the time of determination of the net asset value
and, in the case of orders placed with dealers or their authorized designees,
accepted by the Principal Underwriter, the Transfer Agent, a dealer or any of
their designees. In the case of orders sent directly to the fund or the Transfer
Agent, an investment dealer MUST be indicated. The dealer is responsible for
promptly transmitting purchase and sell orders to the Principal Underwriter.

Orders received by the investment dealer or authorized designee, the Transfer
Agent or the fund after the time of the determination of the net asset value
will be entered at the next calculated offering price. Note that investment
dealers or other intermediaries may have their own rules about share
transactions and may have earlier cut-off times than those of the fund. For more
information about how to purchase through your intermediary, contact your
intermediary directly.

Prices that appear in the newspaper do not always indicate prices at which you
will be purchasing and redeeming shares of the fund, since such prices generally
reflect the previous day's closing price, while purchases and redemptions are
made at the next calculated price. The price you pay for shares, the offering
price, is based on the net asset value per share, which is calculated once daily
as of approximately 4:00 p.m. New York time, which is the normal close of
trading on the New York Stock Exchange, each day the Exchange is open. If, for
example, the Exchange closes at 1:00 p.m., the fund's share price would still be
determined as of 4:00 p.m. New York time. The New York Stock Exchange is
currently closed on weekends and on the following holidays: New Year's Day;
Martin Luther King, Jr. Day; Presidents' Day; Good Friday; Memorial Day;
Independence Day; Labor Day; Thanksgiving; and Christmas Day. Each share class
of the fund has a separately calculated net asset value (and share price).

All portfolio securities of funds managed by Capital Research and Management
Company (other than money market funds) are valued, and the net asset values per
share for each share class are determined, as follows:

1. Equity securities, including depositary receipts, are 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 are valued at
prices obtained from an independent pricing service, when such prices are
available; however, in circumstances where the investment adviser deems it
appropriate to do so, such securities will be valued at the mean quoted bid and
asked prices (or bid prices, if asked prices are not available) or at prices for
securities of comparable maturity, quality and type. The pricing services base
bond prices on, among other things, an evaluation of the yield curve as of
approximately 3:00 p.m. New York time. The fund's investment adviser performs
certain checks on these prices prior to the fund's net asset value being
calculated.

New World Fund -- Page 32
<PAGE>

Securities with both fixed-income and equity characteristics (e.g., convertible
bonds, preferred stocks, units comprised of more than one type of security,
etc.), or equity securities traded principally among fixed-income dealers, are
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.

Securities with original maturities of one year or less having 60 days or less
to maturity are amortized to maturity based on their cost if acquired within 60
days of maturity, or if already held on the 60th day, based on the value
determined on the 61st day. Forward currency contracts are valued at the mean of
representative quoted bid and asked prices.

Assets or liabilities initially expressed in terms of non-U.S. currencies are
translated prior to the next determination of the net asset value of the fund's
shares into U.S. dollars at the prevailing market rates.

Securities and assets for which market quotations are not readily available or
are considered unreliable are valued at fair value as determined in good faith
under policies approved by the fund's Board. Subject to Board oversight, the
fund's Board has delegated the obligation to make fair valuation determinations
to a Valuation Committee established by the fund's investment adviser. The Board
receives regular reports describing fair-valued securities and the valuation
methods used.

The Valuation Committee has adopted guidelines and procedures (consistent with
SEC rules and guidance) to ensure that certain basic principles and factors are
considered when making all fair value determinations. As a general principle,
securities lacking readily available market quotations, or that have quotations
that are considered unreliable, are valued in good faith by the Valuation
Committee based upon what the fund might reasonably expect to receive upon their
current sale. The Valuation Committee considers all indications of value
available to it in determining the fair value to be assigned to a particular
security, including, without limitation, the type and cost of the security,
contractual or legal restrictions on resale of the security, relevant financial
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. The Valuation Committee employs
additional fair value procedures to address issues related to investing
substantial portions of applicable fund portfolios outside the United States.
Securities owned by these funds trade in markets that open and close at
different times, reflecting time zone differences. If significant events occur
after the close of a market (and before these fund's net asset values are next
determined) which affect the value of portfolio securities, appropriate
adjustments from closing market prices may be made to reflect these events.
Events of this type could include, for example, earthquakes and other natural
disasters or significant price changes in other markets (e.g., U.S. stock
markets);

2. Each class of shares represents interests in the same portfolio of
investments and is identical in all respects to each other class, except for
differences relating to distribution, service and other charges and expenses,
certain voting rights, differences relating to eligible investors, the
designation of each class of shares, conversion features and exchange
privileges. Expenses attributable to the fund, but not to a particular class of
shares, are borne by each class pro rata based on relative aggregate net assets
of the classes. Expenses directly attributable to a class of shares are borne by
that class of shares. Liabilities, including accruals of taxes and other

New World Fund -- Page 33
<PAGE>

expense items attributable to particular share classes, are deducted from total
assets attributable to such share classes.

3. Net assets so obtained for each share class are then divided by the total
number of shares outstanding of that share class, and the result, rounded to the
nearer cent, is the net asset value per share for that share class.

TAXES AND DISTRIBUTIONS

FUND TAXATION -- The fund has elected to be treated as a regulated investment
company under Subchapter M of the Internal Revenue Code (the "Code"). A
regulated investment company qualifying under Subchapter M of the Code is
required to distribute to its shareholders at least 90% of its investment
company taxable income (including the excess of net short-term capital gain over
net long-term capital losses) and generally is not subject to federal income tax
to the extent that it distributes annually 100% of its investment company
taxable income and net realized capital gains in the manner required under the
Code. The fund intends to distribute annually all of its investment company
taxable income and net realized capital gains and therefore does not expect to
pay federal income tax, although in certain circumstances, the fund may
determine that it is in the interest of shareholders to distribute less than
that amount.

To be treated as a regulated investment company under Subchapter M of the Code,
the fund must also (a) derive at least 90% of its gross income from dividends,
interest, payments with respect to securities loans, net income from certain
publicly traded partnerships and gains from the sale or other disposition of
securities or foreign currencies, or other income (including, but not limited
to, gains from options, futures or forward contracts) derived with respect to
the business of investing in such securities or currencies, and (b) diversify
its holdings so that, at the end of each fiscal quarter, (i) at least 50% of the
market value of the fund's assets is represented by cash, U.S. government
securities and securities of other regulated investment companies, and other
securities (for purposes of this calculation, generally limited in respect of
any one issuer, to an amount not greater than 5% of the market value of the
fund's assets and 10% of the outstanding voting securities of such issuer) and
(ii) not more than 25% of the value of its assets is invested in the securities
of (other than U.S. government securities or the securities of other regulated
investment companies) any one issuer; two or more issuers which the fund
controls and which are determined to be engaged in the same or similar trades or
businesses; or the securities of certain publicly traded partnerships.

Under the Code, a nondeductible excise tax of 4% is imposed on the excess of a
regulated investment company's "required distribution" for the calendar year
ending within the regulated investment company's taxable year over the
"distributed amount" for such calendar year. The term "required distribution"
means the sum of (a) 98% of ordinary income (generally net investment income)
for the calendar year, (b) 98% of capital gain (both long-term and short-term)
for the one-year period ending on October 31 (as though the one-year period
ending on October 31 were the regulated investment company's taxable year) and
(c) the sum of any untaxed, undistributed net investment income and net capital
gains of the regulated investment company for prior periods. The term
"distributed amount" generally means the sum of (a) amounts actually distributed
by the fund from its current year's ordinary income and capital gain net income
and (b) any amount on which the fund pays income tax during the periods
described above. Although the fund intends to distribute its net investment
income and net capital gains so as to avoid excise tax liability, the fund may
determine that it is in the interest of shareholders to distribute a lesser
amount.

New World Fund -- Page 34
<PAGE>

The following information may not apply to you if you hold fund shares in a
tax-deferred account, such as a retirement plan or education savings account.
Please see your tax adviser for more information.

DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS -- Dividends and capital gain
distributions on fund shares will be reinvested in shares of the fund of the
same class, unless shareholders indicate in writing that they wish to receive
them in cash or in shares of the same class of other American Funds, as provided
in the prospectus. Dividends and capital gain distributions by 529 share classes
will be automatically reinvested.

Distributions of investment company taxable income and net realized capital
gains to individual shareholders will be taxable whether received in shares or
in cash, unless such shareholders are exempt from taxation. Shareholders
electing to receive distributions in the form of additional shares will have a
cost basis for federal income tax purposes in each share so received equal to
the net asset value of that share on the reinvestment date. Dividends and
capital gain distributions by the fund to a tax-deferred retirement plan account
are not taxable currently.

DIVIDENDS -- The fund intends to follow the practice of distributing
substantially all of its investment company taxable income, which includes
any excess of net realized short-term gains over net realized long-term
capital losses. Investment company taxable income generally includes
dividends, interest, net short-term capital gains in excess of net
long-term capital losses, and certain foreign currency gains, if any, less
expenses and certain foreign currency losses. To the extent the fund
invests in stock of domestic and certain foreign corporations and meets the
applicable holding period requirement, it may receive "qualified
dividends". The fund will designate the amount of "qualified dividends" to
its shareholders in a notice sent within 60 days of the close of its fiscal
year and will report "qualified dividends" to shareholders on Form
1099-DIV.

Under the Code, gains or losses attributable to fluctuations in exchange
rates that occur between the time the fund accrues receivables or
liabilities denominated in a foreign currency and the time the fund
actually collects such receivables, or pays such liabilities, generally are
treated as ordinary income or ordinary loss. Similarly, on disposition of
debt securities denominated in a foreign currency and on disposition of
certain futures contracts, forward contracts and options, gains or losses
attributable to fluctuations in the value of foreign currency between the
date of acquisition of the security or contract and the date of disposition
are also treated as ordinary gain or loss. These gains or losses, referred
to under the Code as Section 988 gains or losses, may increase or decrease
the amount of the fund's investment company taxable income to be
distributed to its shareholders as ordinary income.

If the fund invests in stock of certain passive foreign investment
companies, the fund may be subject to U.S. federal income taxation on a
portion of any "excess distribution" with respect to, or gain from the
disposition of, such stock. The tax would be determined by allocating such
distribution or gain ratably to each day of the fund's holding period for
the stock. The distribution or gain so allocated to any taxable year of the
fund, other than the taxable year of the excess distribution or
disposition, would be taxed to the fund at the highest ordinary income rate
in effect for such year, and the tax would be further increased by an
interest charge to reflect the value of the tax deferral deemed to have
resulted from the ownership of the foreign company's stock. Any amount of
distribution or gain allocated to the taxable year of the distribution or
disposition would be included in the

New World Fund -- Page 35
<PAGE>

fund's investment company taxable income and, accordingly, would not be
taxable to the fund to the extent distributed by the fund as a dividend to
its shareholders.

To avoid such tax and interest, the fund intends to elect to treat these
securities as sold on the last day of its fiscal year and recognize any
gains for tax purposes at that time. Under this election, deductions for
losses are allowable only to the extent of any prior recognized gains, and
both gains and losses will be treated as ordinary income or loss. The fund
will be required to distribute any resulting income, even though it has not
sold the security and received cash to pay such distributions. Upon
disposition of these securities, any gain recognized is treated as ordinary
income and loss is treated as ordinary loss to the extent of any prior
recognized gain.

Dividends from domestic corporations are expected to comprise some portion
of the fund's gross income. To the extent that such dividends constitute
any of the fund's gross income, a portion of the income distributions of
the fund may be eligible for the deduction for dividends received by
corporations. Corporate shareholders will be informed of the portion of
dividends that so qualifies. The dividends-received deduction is reduced to
the extent that either the fund shares, or the underlying shares of stock
held by the fund, with respect to which dividends are received, are treated
as debt-financed under federal income tax law, and is eliminated if the
shares are deemed to have been held by the shareholder or the fund, as the
case may be, for less than 46 days during the 90-day period beginning on
the date that is 45 days before the date on which the shares become
ex-dividend. Capital gain distributions are not eligible for the
dividends-received deduction.

A portion of the difference between the issue price of zero coupon
securities and their face value (original issue discount) is considered to
be income to the fund each year, even though the fund will not receive cash
interest payments from these securities. This original issue discount
(imputed income) will comprise a part of the investment company taxable
income of the fund that must be distributed to shareholders in order to
maintain the qualification of the fund as a regulated investment company
and to avoid federal income taxation at the level of the fund.

In addition, some of the bonds may be purchased by the fund at a discount
that exceeds the original issue discount on such bonds, if any. This
additional discount represents market discount for federal income tax
purposes. The gain realized on the disposition of any bond having a market
discount may be treated as taxable ordinary income to the extent it does
not exceed the accrued market discount on such bond or a fund may elect to
include the market discount in income in tax years to which it is
attributable. Generally, accrued market discount may be figured under
either the ratable accrual method or constant interest method. If the fund
has paid a premium over the face amount of a bond, the fund has the option
of either amortizing the premium until bond maturity and reducing the
fund's basis in the bond by the amortized amount, or not amortizing and
treating the premium as part of the bond's basis. In the case of any debt
security having a fixed maturity date of not more than one year from its
date of issue, the gain realized on disposition generally will be treated
as a short-term capital gain. In general, any gain realized on disposition
of a security held less than one year is treated as a short-term capital
gain.

New World Fund -- Page 36
<PAGE>

Dividend and interest income received by the fund from sources outside the
United States may be subject to withholding and other taxes imposed by such
foreign jurisdictions. Tax conventions between certain countries and the
United States, however, may reduce or eliminate these foreign taxes. Most
foreign countries do not impose taxes on capital gains with respect to
investments by foreign investors.

CAPITAL GAIN DISTRIBUTIONS -- The fund also intends to follow the practice
of distributing the entire excess of net realized long-term capital gains
over net realized short-term capital losses. Net capital gains for a fiscal
year are computed by taking into account any capital loss carry forward of
the fund.

If any net long-term capital gains in excess of net short-term capital
losses are retained by the fund for reinvestment, requiring federal income
taxes to be paid thereon by the fund, the fund intends to elect to treat
such capital gains as having been distributed to shareholders. As a result,
each shareholder will report such capital gains as long-term capital gains
taxable to individual shareholders at a maximum 15% capital gains rate,
will be able to claim a pro rata share of federal income taxes paid by the
fund on such gains as a credit against personal federal income tax
liability, and will be entitled to increase the adjusted tax basis on fund
shares by the difference between a pro rata share of the retained gains and
such shareholder's related tax credit.

SHAREHOLDER TAXATION -- In January of each year, individual shareholders holding
fund shares in taxable accounts will receive a statement of the federal income
tax status of all distributions. Shareholders of the fund also may be subject to
state and local taxes on distributions received from the fund.

DIVIDENDS -- Fund dividends are taxable to shareholders as ordinary income.
Under the 2003 Tax Act, all or a portion of a fund's dividend distribution
may be a "qualified dividend." If the fund meets the applicable holding
period requirement, it will distribute dividends derived from qualified
corporation dividends to shareholders as qualified dividends. Interest
income from bonds and money market instruments and nonqualified foreign
dividends will be distributed to shareholders as nonqualified fund
dividends. The fund will report on Form 1099-DIV the amount of each
shareholder's dividend that may be treated as a qualified dividend. If a
shareholder meets the requisite holding period requirement, qualified
dividends are taxable at a maximum rate of 15%.

CAPITAL GAINS -- Distributions of the excess of net long-term capital gains
over net short-term capital losses that the fund properly designates as
"capital gain dividends" generally will be taxable as long-term capital
gain. Regardless of the length of time the shares of the fund have been
held by a shareholder, a capital gain distribution by the fund is subject
to a maximum tax rate of 15%. Any loss realized upon the redemption of
shares held at the time of redemption for six months or less from the date
of their purchase will be treated as a long-term capital loss to the extent
of any amounts treated as distributions of long-term capital gains during
such six-month period.

Distributions by the fund result in a reduction in the net asset value of the
fund's shares. Investors should consider the tax implications of buying shares
just prior to a distribution. The price of shares purchased at that time
includes the amount of the forthcoming distribution. Those purchasing just prior
to a distribution will subsequently receive a partial return of their investment
capital upon payment of the distribution, which will be taxable to them.

New World Fund -- Page 37
<PAGE>

The fund may make the election permitted under Section 853 of the Code so that
shareholders may (subject to limitations) be able to claim a credit or deduction
on their federal income tax returns for, and will be required to treat as part
of the amounts distributed to them, their pro rata portion of qualified taxes
paid by the fund to foreign countries (such taxes relate primarily to investment
income). The fund may make an election under Section 853 of the Code, provided
that more than 50% of the value of the total assets of the fund at the close of
the taxable year consists of securities of foreign corporations. The foreign tax
credit available to shareholders is subject to certain limitations imposed by
the Code.

Redemptions of shares, including exchanges for shares of other American Funds,
may result in federal, state and local tax consequences (gain or loss) to the
shareholder. However, conversion from one class to another class in the same
fund should not be a taxable event.

If a shareholder exchanges or otherwise disposes of shares of the fund within 90
days of having acquired such shares, and if, as a result of having acquired
those shares, the shareholder subsequently pays a reduced sales charge for
shares of the fund, or of a different fund, the sales charge previously incurred
in acquiring the fund's shares will not be taken into account (to the extent
such previous sales charges do not exceed the reduction in sales charges) for
the purposes of determining the amount of gain or loss on the exchange, but will
be treated as having been incurred in the acquisition of such other fund(s).

Any loss realized on a redemption or exchange of shares of the fund will be
disallowed to the extent substantially identical shares are reacquired within
the 61-day period beginning 30 days before and ending 30 days after the shares
are disposed of. Any loss disallowed under this rule will be added to the
shareholder's tax basis in the new shares purchased.

The fund will be required to report to the IRS all distributions of investment
company taxable income and capital gains as well as gross proceeds from the
redemption or exchange of fund shares, except in the case of certain exempt
shareholders. Under the backup withholding provisions of Section 3406 of the
Code, distributions of investment company taxable income and capital gains and
proceeds from the redemption or exchange of a regulated investment company may
be subject to backup withholding of federal income tax in the case of non-exempt
U.S. shareholders who fail to furnish the investment company with their taxpayer
identification numbers and with required certifications regarding their status
under the federal income tax law. Withholding may also be required if the fund
is notified by the IRS or a broker that the taxpayer identification number
furnished by the shareholder is incorrect or that the shareholder has previously
failed to report interest or dividend income. If the withholding provisions are
applicable, any such distributions and proceeds, whether taken in cash or
reinvested in additional shares, will be reduced by the amounts required to be
withheld.

The foregoing discussion of U.S. federal income tax law relates solely to the
application of that law to U.S. persons (i.e., U.S. citizens and residents and
U.S. corporations, partnerships, trusts and estates). Each shareholder who is
not a U.S. person should consider the U.S. and foreign tax consequences of
ownership of shares of the fund, including the possibility that such a
shareholder may be subject to a U.S. withholding tax at a rate of 30% (or a
lower rate under an applicable income tax treaty) on dividend income received by
the shareholder.

Shareholders should consult their tax advisers about the application of federal,
state and local tax law in light of their particular situation.

New World Fund -- Page 38
<PAGE>

UNLESS OTHERWISE NOTED, ALL REFERENCES IN THE FOLLOWING PAGES TO CLASS A, B, C
OR F SHARES ALSO REFER TO THE CORRESPONDING CLASS 529-A, 529-B, 529-C OR 529-F
SHARES. CLASS 529 SHAREHOLDERS SHOULD ALSO REFER TO THE COLLEGEAMERICA PROGRAM
DESCRIPTION FOR INFORMATION ON POLICIES AND SERVICES SPECIFICALLY RELATING TO
COLLEGEAMERICA ACCOUNTS. SHAREHOLDERS HOLDING SHARES THROUGH AN ELIGIBLE
RETIREMENT PLAN SHOULD CONTACT THEIR PLAN'S ADMINISTRATOR OR RECORDKEEPER FOR
INFORMATION REGARDING PURCHASES, SALES AND EXCHANGES.

PURCHASE AND EXCHANGE OF SHARES

PURCHASES BY INDIVIDUALS -- As described in the prospectus, you may generally
open an account and purchase fund shares by contacting a financial adviser or
investment dealer authorized to sell the fund's shares. You may make investments
by any of the following means:

CONTACTING YOUR FINANCIAL ADVISER -- Deliver or mail a check to your
financial adviser.

BY MAIL -- for initial investments, you may mail a check, made payable to
the fund, directly to the address indicated on the account application.
Please indicate an investment dealer on the account application. You may
make additional investments by filling out the "Account Additions" form at
the bottom of a recent account statement and mailing the form, along with a
check made payable to the fund, using the envelope provided with your
account statement.

BY TELEPHONE -- using the American FundsLine. Please see the "Shareholder
account services and privileges" section of this document for more
information regarding this service.

BY INTERNET -- using americanfunds.com. Please see the "Shareholder account
services and privileges" section of this document for more information
regarding this service.

BY WIRE -- If you are making a wire transfer, instruct your bank to wire
funds to:

Wells Fargo Bank
ABA Routing No. 121000248
Account No. 4600-076178

Your bank should include the following information when wiring funds:

For credit to the account of:
American Funds Service Company
(fund's name)

For further credit to:
(shareholder's fund account number)
(shareholder's name)

You may contact American Funds Service Company at 800/421-0180 if you have
questions about making wire transfers.
The Principal Underwriter will not knowingly sell shares of the fund directly or
indirectly to any person or entity, where, after the sale, such person or entity
would own beneficially directly or

New World Fund -- Page 39
<PAGE>

indirectly more than 4.5% of the outstanding shares of the fund without the
consent of a majority of the fund's Board.

Class 529 shares may be purchased only through CollegeAmerica by
investors establishing qualified higher education savings accounts.
Class 529-E shares may be purchased only by investors participating in
CollegeAmerica through an eligible employer plan. The R share
classes are generally available only to employer-sponsored retirement plans.
Class R-5 shares are also available to clients of the Personal Investment
Management group of Capital Guardian Trust Company who do not have an
intermediary associated with their accounts and without regard to the $1 million
purchase minimum. In addition, the American Funds state tax-exempt funds are
qualified for sale only in certain jurisdictions, and tax-exempt funds in
general should not serve as retirement plan investments. The fund and the
Principal Underwriter reserve the right to reject any purchase order.

PURCHASE MINIMUMS AND MAXIMUMS -- All investments are subject to the purchase
minimums and maximums described in the prospectus. Purchase minimums may be
waived or reduced in certain cases. For accounts established with an automatic
investment plan, the initial purchase minimum of $250 may be waived if the
purchases (including purchases through exchanges from another fund) made under
the plan are sufficient to reach $250 within five months of account
establishment.

The initial purchase minimum of $25 may be waived for the following account types:

. Payroll deduction retirement plan accounts (such as, but not limited
to, 403(b), 401(k), SIMPLE IRA, SARSEP and deferred compensation plan
accounts); and

. Employer-sponsored CollegeAmerica accounts.

The following account types may be established without meeting the initial
purchase minimum:

. Retirement accounts that are funded with employer contributions; and

. Accounts that are funded with monies set by court decree.

The following account types may be established without meeting the initial
purchase minimum, but shareholders wishing to invest in two or more funds must
meet the normal initial purchase minimum of each fund:

. Accounts that are funded with (a) transfers of assets, (b) rollovers
from retirement plans, (c) rollovers from 529 college savings plans or
(d) required minimum distribution automatic exchanges; and

. American Funds money market fund accounts registered in the name of
clients of Capital Guardian Trust Company's Personal Investment
Management group.

EXCHANGES -- You may only exchange shares into other American Funds within the
same share class. However, exchanges from Class A shares of The Cash Management
Trust of America may be made to Class B or C shares of other American Funds for
dollar cost averaging purposes. Exchange purchases are subject to the minimum
investment requirements of the fund purchased and no sales charge generally
applies. However, exchanges of shares from American Funds money market funds are
subject to applicable sales charges on the fund being purchased, unless the
money market fund shares were acquired by an exchange from a fund having a sales
charge, or by reinvestment or cross-reinvestment of dividends or capital gain
distributions. Exchanges of

New World Fund -- Page 40
<PAGE>

Class F shares generally may only be made through fee-based programs of
investment firms that have special agreements with the fund's distributor and
certain registered investment advisers.

You may exchange shares of other classes by contacting the Transfer Agent, by
contacting your investment dealer or financial adviser, by using American
FundsLine or americanfunds.com, or by telephoning 800/421-0180 toll-free, or
faxing (see "American Funds Service Company service areas" in the prospectus for
the appropriate fax numbers) the Transfer Agent. For more information, see
"Shareholder account services and privileges" below. THESE TRANSACTIONS HAVE THE
SAME TAX CONSEQUENCES AS ORDINARY SALES AND PURCHASES.

Shares held in employer-sponsored retirement plans may be exchanged into other
American Funds by contacting your plan administrator or recordkeeper. Exchange
redemptions and purchases are processed simultaneously at the share prices next
determined after the exchange order is received (see "Price of shares" above).

FREQUENT TRADING OF FUND SHARES -- As noted in the prospectus, certain
redemptions may trigger a purchase block lasting 30 calendar days under the
fund's "purchase blocking policy." Under this policy, systematic redemptions
will not trigger a purchase block and systematic purchases will not be
prevented. For purposes of this policy, systematic redemptions include, for
example, regular periodic automatic redemptions and statement of intention
escrow share redemptions. Systematic purchases include, for example, regular
periodic automatic purchases and automatic reinvestments of dividends and
capital gain distributions.

OTHER POTENTIALLY ABUSIVE ACTIVITY -- In addition to implementing purchase
blocks, American Funds Service Company will monitor for other types of activity
that could potentially be harmful to the American Funds - for example,
short-term trading activity in multiple funds. When identified, American Funds
Service Company will request that the shareholder discontinue the activity. If
the activity continues, American Funds Service Company will freeze the
shareholder account to prevent all activity other than redemptions of fund
shares.

MOVING BETWEEN SHARE CLASSES

AUTOMATIC CONVERSIONS -- As described more fully in the prospectus, Class
B, 529-B and C shares automatically convert to Class A, 529-A and F shares,
respectively, after a certain period from the purchase date.

MOVING FROM CLASS B TO CLASS A SHARES -- Under the right of reinvestment
policy as described in the prospectus, if you redeem Class B shares during
the contingent deferred sales charge period, you may reinvest the proceeds
in Class A shares without paying a Class A sales charge if you notify
American Funds Service Company and the reinvestment occurs within 90 days
after the date of redemption. If you redeem your Class B shares after the
contingent deferred sales charge period and with the redemption proceeds
you purchase Class A shares, you are still responsible for paying any
applicable Class A sales charges.

MOVING FROM CLASS C TO CLASS A SHARES -- If you redeem Class C shares and
with the redemption proceeds purchase Class A shares, you are still
responsible for paying any Class C contingent deferred sales charges and
applicable Class A sales charges.

New World Fund -- Page 41
<PAGE>

MOVING FROM CLASS F TO CLASS A SHARES -- You can redeem Class F shares held
in a qualified fee-based program and with the redemption proceeds purchase
Class A shares without paying an initial Class A sales charge if all of the
following are met: (a) you are leaving or have left the fee-based program,
(b) you have held the Class F shares in the program for at least one year,
and (c) you notify American Funds Service Company and purchase the Class A
shares within 90 days after redeeming the Class F shares.

MOVING FROM CLASS A TO CLASS F SHARES -- If you are part of a qualified
fee-based program and you wish to redeem your Class A shares and with the
redemption proceeds purchase Class F shares for the program, any Class A
sales charges (including contingent deferred sales charges) that you paid
or are payable will not be credited back to your account.

SALES CHARGES

CLASS A PURCHASES

PURCHASES BY CERTAIN 403(B) PLANS

Individual 403(b) plans may be treated similarly to employer-sponsored
plans for Class A sales charge purposes (i.e., individual participant
accounts are eligible to be aggregated together) if: (a) the American Funds
are principal investment options; (b) the employer facilitates the
enrollment process by, for example, allowing for onsite group enrollment
meetings held during working hours; and (c) there is only one dealer firm
assigned to the plans.

OTHER PURCHASES

Pursuant to a determination of eligibility by a vice president or more
senior officer of the Capital Research and Management Company Fund
Administration Unit, or by his or her designee, Class A shares of the
American Funds stock, stock/bond and bond funds may be sold at net asset
value to:

(1) current or retired directors, trustees, officers and advisory board
members of, and certain lawyers who provide services to, the funds
managed by Capital Research and Management Company, current or retired
employees of Washington Management Corporation, current or retired
employees and partners of The Capital Group Companies, Inc. and its
affiliated companies, certain family members and employees of the
above persons, and trusts or plans primarily for such persons;

(2) currently registered representatives and assistants directly employed
by such representatives, retired registered representatives with
respect to accounts established while active, or full-time employees
(collectively, "Eligible Persons") (and their (a) spouses or
equivalents if recognized under local law, (b) parents and children,
including parents and children in step and adoptive relationships,
sons-in-law and daughters-in-law, and (c) parents-in-law, if the
Eligible Persons or the spouses, children or parents of the Eligible
Persons are listed in the account registration with the
parents-in-law) of dealers who have sales agreements with the
Principal Underwriter (or who clear transactions through such
dealers), plans

New World Fund -- Page 42
<PAGE>

for the dealers, and plans that include as participants only the
Eligible Persons, their spouses, parents and/or children;

(3) currently registered investment advisers ("RIAs") and assistants
directly employed by such RIAs, retired RIAs with respect to accounts
established while active, or full-time employees (collectively,
"Eligible Persons") (and their (a) spouses or equivalents if
recognized under local law, (b) parents and children, including
parents and children in step and adoptive relationships, sons-in-law
and daughters-in-law and (c) parents-in-law, if the Eligible Persons
or the spouses, children or parents of the Eligible Persons are listed
in the account registration with the parents-in-law) of RIA firms that
are authorized to sell shares of the funds, plans for the RIA firms,
and plans that include as participants only the Eligible Persons,
their spouses, parents and/or children;

(4) companies exchanging securities with the fund through a merger,
acquisition or exchange offer;

(5) insurance company separate accounts;

(6) accounts managed by subsidiaries of The Capital Group Companies, Inc.;

(7) The Capital Group Companies, Inc., its affiliated companies and
Washington Management Corporation;

(8) an individual or entity with a substantial business relationship with
The Capital Group Companies, Inc. or its affiliates, or an individual
or entity related or relating to such individual or entity;

(9) wholesalers and full-time employees directly supporting wholesalers
involved in the distribution of insurance company separate accounts
whose underlying investments are managed by any affiliate of The
Capital Group Companies, Inc.; and

(10) full-time employees of banks that have sales agreements with the
Principal Underwriter, who are solely dedicated to directly supporting
the sale of mutual funds.

Shares are offered at net asset value to these persons and organizations
due to anticipated economies in sales effort and expense. Once an account
is established under this net asset value privilege, additional investments
can be made at net asset value for the life of the account.

DEALER COMMISSIONS AND COMPENSATION -- Commissions (up to 1.00%) are paid to
dealers who initiate and are responsible for certain Class A share purchases not
subject to sales charges. These purchases consist of purchases of $1 million or
more, purchases by employer-sponsored defined contribution-type retirement plans
investing $1 million or more or with 100 or more eligible employees, and
purchases made at net asset value by certain retirement plans, endowments and
foundations with assets of $50 million or more. Commissions on such investments
(other than IRA rollover assets that roll over at no sales charge under the
fund's IRA rollover policy as described in the prospectus) are paid to dealers
at the following rates: 1.00% on amounts to $4 million, 0.50% on amounts over $4
million to $10 million and 0.25% on amounts over $10 million. Commissions are
based on cumulative investments and are not annually reset.

New World Fund -- Page 43
<PAGE>

A dealer concession of up to 1% may be paid by the fund under its Class A plan
of distribution to reimburse the Principal Underwriter in connection with dealer
and wholesaler compensation paid by it with respect to investments made with no
initial sales charge.

SALES CHARGE REDUCTIONS AND WAIVERS

REDUCING YOUR CLASS A SALES CHARGE -- As described in the prospectus, there are
various ways to reduce your sales charge when purchasing Class A shares.
Additional information about Class A sales charge reductions is provided below.

STATEMENT OF INTENTION -- By establishing a statement of intention (the
"Statement"), you enter into a nonbinding commitment to purchase shares of
American Funds non-money market funds over a 13-month period and receive
the same sales charge as if all shares had been purchased at once.

When a shareholder elects to use a Statement, shares equal to 5% of the
dollar amount specified in the Statement will be held in escrow in the
shareholder's account out of the initial purchase (or subsequent purchases,
if necessary) by the Transfer Agent. All dividends and any capital gain
distributions on shares held in escrow will be credited to the
shareholder's account in shares (or paid in cash, if requested). If the
intended investment is not completed within the specified Statement period,
the purchaser will remit to the Principal Underwriter the difference
between the sales charge actually paid and the sales charge which would
have been paid if the total of such purchases had been made at a single
time. The dealer assigned to an account at the time of each purchase made
during the Statement period will receive an appropriate commission
adjustment. If the difference is not paid by the close of the Statement
period, the appropriate number of shares held in escrow will be redeemed to
pay such difference. If the proceeds from this redemption are inadequate,
the purchaser will be liable to the Principal Underwriter for the balance
still outstanding.

The Statement may be revised upward at any time during the Statement
period, and such a revision will be treated as a new Statement, except that
the Statement period during which the purchase must be made will remain
unchanged. Accordingly, upon your request, the sales charge paid on
investments made 90 days prior to the Statement revision will be adjusted
to reflect the revised Statement.

The market value of your existing holdings eligible to be aggregated (see
below) as of the day immediately before the start of the Statement period,
may be credited toward satisfying the Statement.

The Statement will be considered completed if the shareholder dies within
the Statement period. Commissions to dealers will not be adjusted or paid
on the difference between the Statement amount and the amount actually
invested before the shareholder's death.

When the trustees of certain retirement plans purchase shares by payroll
deduction, the sales charge for the investments made during the Statement
period will be handled as follows: the total monthly investment will be
multiplied by 13 and then multiplied by 1.5. The market value of existing
American Funds investments (other than shares representing direct purchases
of money market funds) as of the day immediately before the start of the
Statement period, and any rollovers or transfers reasonably anticipated to
be

New World Fund -- Page 44
<PAGE>

invested in non-money market American Funds during the Statement period,
are added to the figure determined above. The sum is the Statement amount
and applicable breakpoint level. On the first investment and all other
investments made pursuant to the Statement, a sales charge will be assessed
according to the sales charge breakpoint thus determined. There will be no
retroactive adjustments in sales charges on investments made during the
Statement period.

Shareholders purchasing shares at a reduced sales charge under a Statement
indicate their acceptance of these terms and those in the prospectus with
their first purchase.

AGGREGATION -- Qualifying investments for aggregation include those made by
you and your "immediate family" as defined in the prospectus, if all
parties are purchasing shares for their own accounts and/or:

. individual-type employee benefit plan(s), such as an IRA, individual
403(b) plan (see exception in "Purchases by certain 403(b) plans"
under "Sales charges") or single-participant Keogh-type plan;

. business accounts solely controlled by you or your immediate family
(for example, you own the entire business);
. trust accounts established by you or your immediate family (For trusts
with only one primary beneficiary, upon the trustor's death the trust
account may be aggregated with such beneficiary's own accounts; for
trusts with multiple primary beneficiaries, upon the trustor's death
the trustees of the trust may instruct American Funds Service Company
to establish separate trust accounts for each primary beneficiary;
each primary beneficiary's separate trust account may then be
aggregated with such beneficiary's own accounts);

. endowments or foundations established and controlled by you or your
immediate family; or

. CollegeAmerica accounts, which will be aggregated at the account owner
level (Class 529-E accounts may only be aggregated with an eligible
employer plan).

Individual purchases by a trustee(s) or other fiduciary(ies) may also be
aggregated if the investments are:

. for a single trust estate or fiduciary account, including employee
benefit plans other than the individual-type employee benefit plans
described above;

. made for two or more employee benefit plans of a single employer or of
affiliated employers as defined in the 1940 Act, excluding the
individual-type employee benefit plans described above;

. for a diversified common trust fund or other diversified pooled
account not specifically formed for the purpose of accumulating fund
shares;

. for nonprofit, charitable or educational organizations, or any
endowments or foundations established and controlled by such
organizations, or any employer-sponsored retirement plans established
for the benefit of the employees of such organizations, their
endowments, or their foundations; or

. for individually established participant accounts of a 403(b) plan
that is treated similarly to an employer-sponsored plan for sales
charge purposes (see

New World Fund -- Page 45
<PAGE>

"Purchases by certain 403(b) plans" under "Sales charges" above), or
made for two or more such 403(b) plans that are treated similarly to
employer-sponsored plans for sales charge purposes of a single
employer or affiliated employers as defined in the 1940 Act.

Purchases made for nominee or street name accounts (securities held in the
name of an investment dealer or another nominee such as a bank trust
department instead of the customer) may not be aggregated with those made
for other accounts and may not be aggregated with other nominee or street
name accounts unless otherwise qualified as described above.

CONCURRENT PURCHASES -- As described in the prospectus, you may reduce your
Class A sales charge by combining purchases of all classes of shares in the
American Funds, as well as individual holdings in Endowments, American
Legacy variable annuity contracts and variable life insurance policies.
Shares of money market funds purchased through an exchange, reinvestment or
cross-reinvestment from a fund having a sales charge also qualify. However,
direct purchases of American Funds money market funds are excluded.

RIGHTS OF ACCUMULATION -- Subject to the limitations described in the
aggregation policy, you may take into account your accumulated holdings in
all share classes of the American Funds, as well as your holdings in
Endowments, to determine your sales charge on investments in accounts
eligible to be aggregated. Subject to your investment dealer's or
recordkeeper's capabilities, your accumulated holdings will be calculated
as the higher of (a) the current value of your existing holdings (the
"market value") or (b) the amount you invested (including reinvested
dividends and capital gains, but excluding capital appreciation) less any
withdrawals (the "cost value"). Depending on the entity on whose books your
account is held, the value of your holdings in that account may not be
eligible for calculation at cost value. For example, the value of accounts
held in nominee or street name are not eligible for calculation at cost
value and instead will be calculated at market value for purposes of rights
of accumulation.

The value of all of your holdings in accounts established in calendar year
2005 or earlier will be assigned an initial cost value equal to the market
value of those holdings as of the last business day of 2005. Thereafter,
the cost value of such accounts will increase or decrease according to
actual investments or withdrawals. You must contact your financial adviser
or American Funds Service Company if you have additional information that
is relevant to the calculation of the value of your holdings.

When determining your American Funds Class A sales charge, if you are not
an employer-sponsored retirement plan, you may also take into account the
market value (as of the end of the week prior to your American Funds
investment) of your individual holdings in various American Legacy variable
annuity contracts and variable life insurance policies. An
employer-sponsored retirement plan may also take into account the market
value of its investments in American Legacy Retirement Investment Plans.
Direct purchases of American Funds money market funds are excluded. If you
make a gift of American Funds Class A shares, upon your request, you may
purchase the shares at the sales charge discount allowed under rights of
accumulation of all of your American Funds and American Legacy accounts.

New World Fund -- Page 46
<PAGE>

CDSC WAIVERS FOR CLASS A, B AND C SHARES -- As noted in the prospectus, a
contingent deferred sales charge ("CDSC") may be waived for redemptions due to
death or postpurchase disability of a shareholder (this generally excludes
accounts registered in the names of trusts and other entities). In the case of
joint tenant accounts, if one joint tenant dies, a surviving joint tenant, at
the time he or she notifies the Transfer Agent of the other joint tenant's death
and removes the decedent's name from the account, may redeem shares from the
account without incurring a CDSC. Redemptions made after the Transfer Agent is
notified of the death of a joint tenant will be subject to a CDSC.

In addition, a CDSC may be waived for the following types of transactions, if
together they do not exceed 12% of the value of an "account" (defined below)
annually (the "12% limit"):

. Required minimum distributions taken from retirement accounts upon the
shareholder's attainment of age 70-1/2 (required minimum distributions
that continue to be taken by the beneficiary(ies) after the account
owner is deceased also qualify for a waiver).

. Redemptions through a systematic withdrawal plan (SWP) (see "Automatic
withdrawals" under "Shareholder account services and privileges"
below). For each SWP payment, assets that are not subject to a CDSC,
such as appreciation on shares and shares acquired through
reinvestment of dividends and/or capital gain distributions, will be
redeemed first and will count toward the 12% limit. If there is an
insufficient amount of assets not subject to a CDSC to cover a
particular SWP payment, shares subject to the lowest CDSC will be
redeemed next until the 12% limit is reached. Any dividends and/or
capital gain distributions taken in cash by a shareholder who receives
payments through a SWP will also count toward the 12% limit. In the
case of a SWP, the 12% limit is calculated at the time a systematic
redemption is first made, and is recalculated at the time each
additional systematic redemption is made. Shareholders who establish a
SWP should be aware that the amount of a payment not subject to a CDSC
may vary over time depending on fluctuations in the value of their
accounts. This privilege may be revised or terminated at any time.

For purposes of this paragraph, "account" means:

. in the case of Class A shares, your investment in Class A shares of
all American Funds (investments representing direct purchases of
American Funds money market funds are excluded);

. in the case of Class B shares, your investment in Class B shares of
the particular fund from which you are making the redemption; and

. in the case of Class C shares, your investment in Class C shares of
the particular fund from which you are making the redemption.

CDSC waivers are allowed only in the cases listed here and in the prospectus.
For example, CDSC waivers will not be allowed on redemptions of Class 529-B and
529-C shares due to termination of CollegeAmerica; a determination by the
Internal Revenue Service that CollegeAmerica does not qualify as a qualified
tuition program under the Code; proposal or enactment of law that eliminates or
limits the tax-favored status of CollegeAmerica; or the Virginia College Savings
Plan eliminating the fund as an option for additional investment within
CollegeAmerica.

New World Fund -- Page 47
<PAGE>

SELLING SHARES

The methods for selling (redeeming) shares are described more fully in the
prospectus. If you wish to sell your shares by contacting American Funds Service
Company directly, any such request must be signed by the registered
shareholders.

A signature guarantee may be required for certain redemptions. In such an event,
your signature may be guaranteed by a domestic stock exchange or the National
Association of Securities Dealers, Inc., bank, savings association or credit
union that is an eligible guarantor institution. The Transfer Agent reserves the
right to require a signature guarantee on any redemptions.

Additional documentation may be required for sales of shares held in corporate,
partnership or fiduciary accounts. You must include with your written request
any shares you wish to sell that are in certificate form.

If you sell Class A, B or C shares and request a specific dollar amount to be
sold, we will sell sufficient shares so that the sale proceeds, after deducting
any applicable CDSC, equals the dollar amount requested.

Redemption proceeds will not be mailed until sufficient time has passed to
provide reasonable assurance that checks or drafts (including certified or
cashier's checks) for shares purchased have cleared (which may take up to 15
calendar days from the purchase date). Except for delays relating to clearance
of checks for share purchases or in extraordinary circumstances (and as
permissible under the 1940 Act), sale proceeds will be paid on or before the
seventh day following receipt and acceptance of an order. Interest will not
accrue or be paid on amounts that represent uncashed distribution or redemption
checks.

You may request that redemption proceeds of $1,000 or more from money market
funds be wired to your bank by writing American Funds Service Company. A
signature guarantee is required on all requests to wire funds.

SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES

The following services and privileges are generally available to all
shareholders. However, certain services and privileges may not be available for
Class 529 shareholders or if your account is held with an investment dealer or
through an employer-sponsored retirement plan.

AUTOMATIC INVESTMENT PLAN -- An automatic investment plan enables you to make
monthly or quarterly investments in the American Funds through automatic debits
from your bank account. To set up a plan, you must fill out an account
application and specify the amount that you would like to invest ($50 minimum)
and the date on which you would like your investments to occur. The plan will
begin within 30 days after your account application is received. Your bank
account will be debited on the day or a few days before your investment is made,
depending on the bank's capabilities. The Transfer Agent will then invest your
money into the fund you specified on or around the date you specified. If the
date you specified falls on a weekend or holiday, your money will be invested on
the following business day. However, if the following business day falls in the
next month, your money will be invested on the business day immediately
preceding the weekend or holiday. If your bank account cannot be debited due to
insufficient funds, a stop-payment or the closing of the account, the plan may
be terminated and the related

New World Fund -- Page 48
<PAGE>

investment reversed. You may change the amount of the investment or discontinue
the plan at any time by contacting the Transfer Agent.

AUTOMATIC REINVESTMENT -- Dividends and capital gain distributions are
reinvested in additional shares of the same class and fund at net asset value
unless you indicate otherwise on the account application. You also may elect to
have dividends and/or capital gain distributions paid in cash by informing the
fund, the Transfer Agent or your investment dealer. Dividends and capital gain
distributions paid to retirement plan shareholders or shareholders of the 529
share classes will be automatically reinvested.

If you have elected to receive dividends and/or capital gain distributions in
cash, and the postal or other delivery service is unable to deliver checks to
your address of record, or you do not respond to mailings from American Funds
Service Company with regard to uncashed distribution checks, your distribution
option will automatically be converted to having all dividends and other
distributions reinvested in additional shares.

CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS -- For all share classes,
except the 529 classes of shares, you may cross-reinvest dividends and capital
gains (distributions) into other American Funds in the same share class at net
asset value, subject to the following conditions:

(1) the aggregate value of your account(s) in the fund(s) paying distributions
equals or exceeds $5,000 (this is waived if the value of the account in the fund
receiving the distributions equals or exceeds that fund's minimum initial
investment requirement);

(2) if the value of the account of the fund receiving distributions is below
the minimum initial investment requirement, distributions must be automatically
reinvested; and

(3) if you discontinue the cross-reinvestment of distributions, the value of
the account of the fund receiving distributions must equal or exceed the minimum
initial investment requirement. If you do not meet this requirement within 90
days of notification, the fund has the right to automatically redeem the
account.

AUTOMATIC EXCHANGES -- For all share classes, you may automatically exchange
shares of the same class in amounts of $50 or more among any of the American
Funds on any day (or preceding business day if the day falls on a nonbusiness
day) of each month you designate.

AUTOMATIC WITHDRAWALS -- For all share classes, except the R and 529 classes of
shares, you may automatically withdraw shares from any of the American Funds.
You can make automatic withdrawals of $50 or more as often as you wish if your
account is worth at least $10,000, or up to four times a year for an account
worth at least $5,000. You can designate the day of each period for withdrawals
and request that checks be sent to you or someone else. Withdrawals may also be
electronically deposited to your bank account. The Transfer Agent will withdraw
your money from the fund you specify on or around the date you specify. If the
date you specified falls on a weekend or holiday, the redemption will take place
on the previous business day. However, if the previous business day falls in the
preceding month, the redemption will take place on the following business day
after the weekend or holiday.

Withdrawal payments are not to be considered as dividends, yield or income.
Automatic investments may not be made into a shareholder account from which
there are automatic withdrawals. Withdrawals of amounts exceeding reinvested
dividends and distributions and

New World Fund -- Page 49
<PAGE>

increases in share value would reduce the aggregate value of the shareholder's
account. The Transfer Agent arranges for the redemption by the fund of
sufficient shares, deposited by the shareholder with the Transfer Agent, to
provide the withdrawal payment specified.

ACCOUNT STATEMENTS -- Your account is opened in accordance with your
registration instructions. Transactions in the account, such as additional
investments, will be reflected on regular confirmation statements from the
Transfer Agent. Dividend and capital gain reinvestments, purchases through
automatic investment plans and certain retirement plans, as well as automatic
exchanges and withdrawals will be confirmed at least quarterly.

AMERICAN FUNDSLINE AND AMERICANFUNDS.COM -- You may check your share balance,
the price of your shares or your most recent account transaction; redeem shares
(up to $75,000 per American Funds shareholder each day) from nonretirement plan
accounts; or exchange shares around the clock with American FundsLine or using
americanfunds.com. To use American FundsLine, call 800/325-3590 from a
TouchTone(TM) telephone. Redemptions and exchanges through American FundsLine
and americanfunds.com are subject to the conditions noted above and in
"Telephone and Internet purchases, redemptions and exchanges" below. You will
need your fund number (see the list of the American Funds under "General
information -- fund numbers"), personal identification number (generally the
last four digits of your Social Security number or other tax identification
number associated with your account) and account number.

Generally, all shareholders are automatically eligible to use these services.
However, if you are not currently authorized to do so, you may complete an
American FundsLink Authorization Form. Once you establish this privilege, you,
your financial adviser or any person with your account information may use these
services.

TELEPHONE AND INTERNET PURCHASES, REDEMPTIONS AND EXCHANGES -- By using the
telephone (including American FundsLine) or the Internet (including
americanfunds.com), or fax purchase, redemption and/or exchange options, you
agree to hold the fund, the Transfer Agent, any of its affiliates or mutual
funds managed by such affiliates, and each of their respective directors,
trustees, officers, employees and agents harmless from any losses, expenses,
costs or liability (including attorney fees) that may be incurred in connection
with the exercise of these privileges. Generally, all shareholders are
automatically eligible to use these services. However, you may elect to opt out
of these services by writing the Transfer Agent (you may also reinstate them at
any time by writing the Transfer Agent). If the Transfer Agent does not employ
reasonable procedures to confirm that the instructions received from any person
with appropriate account information are genuine, it and/or the fund may be
liable for losses due to unauthorized or fraudulent instructions. In the event
that shareholders are unable to reach the fund by telephone because of technical
difficulties, market conditions or a natural disaster, redemption and exchange
requests may be made in writing only.

CHECKWRITING -- You may establish check writing privileges for Class A shares
(but not Class 529-A shares) of American Funds money market funds. This can be
done by using an account application. If you request check writing privileges,
you will be provided with checks that you may use to draw against your account.
These checks may be made payable to anyone you designate and must be signed by
the authorized number of registered shareholders exactly as indicated on your
account application.

REDEMPTION OF SHARES -- The fund's Articles of Incorporation permit the fund to
direct the Transfer Agent to redeem the shares of any shareholder for their then
current net asset value per

New World Fund -- Page 50
<PAGE>

share if at such time the shareholder of record owns shares having an aggregate
net asset value of less than the minimum initial investment amount required of
new shareholders as set forth in the fund's current registration statement under
the 1940 Act, and subject to such further terms and conditions as the Board of
Directors of the fund may from time to time adopt.

While payment of redemptions normally will be in cash, the fund's Articles of
Incorporation permit payment of the redemption price wholly or partly in
securities or other property included in the assets belonging to the fund when
in the opinion of the fund's Board of Directors, which shall be conclusive,
conditions exist which make payment wholly in cash unwise or undesirable.

SHARE CERTIFICATES -- Shares are credited to your account and certificates are
not issued unless you request them by contacting the Transfer Agent.
Certificates are not available for the 529 or R share classes.

GENERAL INFORMATION

CUSTODIAN OF ASSETS -- Securities and cash owned by the fund, including proceeds
from the sale of shares of the fund and of securities in the fund's portfolio,
are held by JPMorgan Chase Bank, 270 Park Avenue, New York, NY 10017-2070, as
Custodian. If the fund holds non-U.S. securities, the Custodian may hold these
securities pursuant to subcustodial arrangements in non-U.S. banks or non-U.S.
branches of U.S. banks.

TRANSFER AGENT -- American Funds Service Company, a wholly owned subsidiary of
the investment adviser, maintains the records of shareholder accounts, processes
purchases and redemptions of the fund's shares, acts as dividend and capital
gain distribution disbursing agent, and performs other related shareholder
service functions. The principal office of American Funds Service Company is
located at 135 South State College Boulevard, Brea, CA 92821-5823. American
Funds Service Company was paid a fee of $3,753,000 for Class A shares and
$181,000 for Class B shares for the 2005 fiscal year.

In the case of certain shareholder accounts, third parties who may be
unaffiliated with the investment adviser provide transfer agency and shareholder
services in place of American Funds Service Company. These services are rendered
under agreements with American Funds Service Company or its affiliates and the
third parties receive compensation according to such agreements. Compensation
for transfer agency and shareholder services, whether paid to American Funds
Service Company or such third parties, is ultimately paid from fund assets and
is reflected in the expenses of the fund as disclosed in the prospectus.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM -- Deloitte & Touche LLP, 695 Town
Center Drive, Costa Mesa, California 92626, serves as the fund's independent
registered public accounting firm, providing audit services, preparation of tax
returns and review of certain documents to be filed with the Securities and
Exchange Commission. The financial statements included in this statement of
additional information from the annual report have been so included in reliance
on the report of Deloitte & Touche LLP, independent registered public accounting
firm, given on the authority of said firm as experts in accounting and auditing.
The selection of the fund's independent registered public accounting firm is
reviewed and determined annually by the Board of Directors.

INDEPENDENT LEGAL COUNSEL -- Kirkpatrick & Lockhart Nicholson Graham LLP, Four
Embarcadero Center, 10th Floor, San Francisco, CA 94111, serves as counsel for
the fund and

New World Fund -- Page 51
<PAGE>

for Non-Interested Directors in their capacities as such. Counsel does not
provide legal services to the fund's investment adviser, but provides an
insignificant amount of legal services unrelated to the operations of the fund
to an investment adviser affiliate. A determination with respect to the
independence of the fund's "independent legal counsel" will be made at least
annually by the Non-Interested Directors of the fund, as prescribed by the 1940
Act and related rules.

PROSPECTUSES, REPORTS TO SHAREHOLDERS AND PROXY STATEMENTS -- The fund's fiscal
year ends on October 31. Shareholders are provided updated prospectuses annually
and at least semiannually with reports showing the summary investment portfolio,
financial statements and other information. The fund's annual financial
statements are audited by the fund's independent registered public accounting
firm, Deloitte & Touche LLP. In addition, shareholders may also receive proxy
statements for the fund. In an effort to reduce the volume of mail shareholders
receive from the fund when a household owns more than one account, the Transfer
Agent has taken steps to eliminate duplicate mailings of prospectuses,
shareholder reports and proxy statements. To receive additional copies of a
prospectus, report or proxy statement, shareholders should contact the Transfer
Agent.

CODES OF ETHICS -- The fund and Capital Research and Management Company and its
affiliated companies, including the fund's Principal Underwriter, have adopted
codes of ethics that allow for personal investments, including securities in
which the fund may invest from time to time. These codes include a ban on
acquisitions of securities pursuant to an initial public offering; restrictions
on acquisitions of private placement securities; preclearance and reporting
requirements; review of duplicate confirmation statements; annual
recertification of compliance with codes of ethics; blackout periods on personal
investing for certain investment personnel; ban on short-term trading profits
for investment personnel; limitations on service as a director of publicly
traded companies; and disclosure of personal securities transactions.

LEGAL PROCEEDINGS -- On February 16, 2005, the NASD filed an administrative
complaint against the Principal Underwriter. The complaint alleges violations of
certain NASD rules by the Principal Underwriter with respect to the selection of
broker-dealer firms that buy and sell securities for mutual fund investment
portfolios. The complaint seeks sanctions, restitution and disgorgement.

On March 24, 2005, the investment adviser and Principal Underwriter filed a
complaint against the Attorney General of the State of California in Los Angeles
County Superior Court. The complaint alleged that the Attorney General
threatened to take enforcement actions against the investment adviser and
Principal Underwriter that are without merit and preempted by federal law. On
the same day, following the filing of the investment adviser's and Principal
Underwriter's complaint, the Attorney General of the State of California filed a
complaint against the Principal Underwriter and investment adviser. Filed in Los
Angeles County Superior Court, the Attorney General's complaint alleged
violations of certain sections of the California Corporations Code with respect
to so-called "revenue sharing" disclosures in mutual fund prospectuses and
statements of additional information. On November 22, 2005, the Los Angeles
Superior Court dismissed the Attorney General's complaint. On February 7, 2006,
the Attorney General filed a notice that he intends to appeal the Superior
Court's decision to California's Court of Appeal for the Second Appellate
District.

The investment adviser and Principal Underwriter believe that the likelihood
that these matters could have a material adverse effect on the fund or on the
ability of the investment adviser or Principal Underwriter to perform their
contracts with the fund is remote. The SEC is conducting a

New World Fund -- Page 52
<PAGE>

related investigation as of the date of this statement of additional
information. The investment adviser and Principal Underwriter are cooperating
fully. In addition, a class action lawsuit has been filed in the U.S. District
Court, Central District of California, relating to these matters. Although the
suit was dismissed in its entirety, an amended complaint relating to management
fees has been filed. The investment adviser believes that this suit is without
merit and will defend itself vigorously. Further updates on these issues will be
available on the American Funds website (americanfunds.com) under "American
Funds regulatory matters."

OTHER INFORMATION -- The financial statements including the investment portfolio
and the report of the fund's independent registered public accounting firm
contained in the annual report are included in this statement of additional
information. The following information is not included in the annual report:

DETERMINATION OF NET ASSET VALUE, REDEMPTION PRICE AND MAXIMUM OFFERING PRICE
PER SHARE FOR CLASS A SHARES -- OCTOBER 31, 2005

Net asset value and redemption price per share
(Net assets divided by shares outstanding). . $36.32
Maximum offering price per share
(100/94.25 of net asset value per share,
which takes into account the fund's current maximum
sales charge). . . . . . . . . . . . . . . . $38.54

FUND NUMBERS -- Here are the fund numbers for use with our automated telephone
line, American FundsLine/(R)/, or when making share transactions:

FUND NUMBERS
------------------------------------
FUND CLASS A CLASS B CLASS C CLASS F
-----------------------------------------------------------------------------------------------------

STOCK AND STOCK/BOND FUNDS
AMCAP Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . . 002 202 302 402
American Balanced Fund/(R)/ . . . . . . . . . . . . . . . . . 011 211 311 411
American Mutual Fund/(R)/ . . . . . . . . . . . . . . . . . . 003 203 303 403
Capital Income Builder/(R)/ . . . . . . . . . . . . . . . . . 012 212 312 412
Capital World Growth and Income Fund/SM/ . . . . . . . . . . . 033 233 333 433
EuroPacific Growth Fund/(R)/ . . . . . . . . . . . . . . . . . 016 216 316 416
Fundamental Investors/SM/ . . . . . . . . . . . . . . . . . . 010 210 310 410
The Growth Fund of America/(R)/ . . . . . . . . . . . . . . . 005 205 305 405
The Income Fund of America/(R)/ . . . . . . . . . . . . . . . 006 206 306 406
The Investment Company of America/(R)/ . . . . . . . . . . . . 004 204 304 404
The New Economy Fund/(R)/ . . . . . . . . . . . . . . . . . . 014 214 314 414
New Perspective Fund/(R)/ . . . . . . . . . . . . . . . . . . 007 207 307 407
New World Fund/SM/ . . . . . . . . . . . . . . . . . . . . . . 036 236 336 436
SMALLCAP World Fund/(R)/ . . . . . . . . . . . . . . . . . . . 035 235 335 435
Washington Mutual Investors Fund/SM/ . . . . . . . . . . . . . 001 201 301 401
BOND FUNDS
American High-Income Municipal Bond Fund/(R)/ . . . . . . . . 040 240 340 440
American High-Income Trust/SM/ . . . . . . . . . . . . . . . . 021 221 321 421
The Bond Fund of America/SM/ . . . . . . . . . . . . . . . . . 008 208 308 408
Capital World Bond Fund/(R)/ . . . . . . . . . . . . . . . . . 031 231 331 431
Intermediate Bond Fund of America/SM/ . . . . . . . . . . . . 023 223 323 423
Limited Term Tax-Exempt Bond Fund of America/SM/ . . . . . . . 043 243 343 443
The Tax-Exempt Bond Fund of America/(R)/ . . . . . . . . . . . 019 219 319 419
The Tax-Exempt Fund of California/(R)/* . . . . . . . . . . . 020 220 320 420
The Tax-Exempt Fund of Maryland/(R)/* . . . . . . . . . . . . 024 224 324 424
The Tax-Exempt Fund of Virginia/(R)/* . . . . . . . . . . . . 025 225 325 425
U.S. Government Securities Fund/SM/ . . . . . . . . . . . . . 022 222 322 422
MONEY MARKET FUNDS
The Cash Management Trust of America/(R)/ . . . . . . . . . . 009 209 309 409
The Tax-Exempt Money Fund of America/SM/ . . . . . . . . . . . 039 N/A N/A N/A
The U.S. Treasury Money Fund of America/SM/ . . . . . . . . . 049 N/A N/A N/A
___________
*Qualified for sale only in certain jurisdictions.

New World Fund -- Page 53
<PAGE>

FUND NUMBERS
---------------------------------------------
CLASS CLASS CLASS CLASS CLASS
FUND 529-A 529-B 529-C 529-E 529-F
-------------------------------------------------------------------------------

STOCK AND STOCK/BOND FUNDS
AMCAP Fund . . . . . . . . . . 1002 1202 1302 1502 1402
American Balanced Fund . . . . 1011 1211 1311 1511 1411
American Mutual Fund . . . . . 1003 1203 1303 1503 1403
Capital Income Builder . . . . 1012 1212 1312 1512 1412
Capital World Growth and Income
Fund . . . . . . . . . . . . . 1033 1233 1333 1533 1433
EuroPacific Growth Fund . . . . 1016 1216 1316 1516 1416
Fundamental Investors . . . . . 1010 1210 1310 1510 1410
The Growth Fund of America . . 1005 1205 1305 1505 1405
The Income Fund of America . . 1006 1206 1306 1506 1406
The Investment Company of
America . . . . . . . . . . . . 1004 1204 1304 1504 1404
The New Economy Fund . . . . . 1014 1214 1314 1514 1414
New Perspective Fund . . . . . 1007 1207 1307 1507 1407
New World Fund . . . . . . . . 1036 1236 1336 1536 1436
SMALLCAP World Fund . . . . . . 1035 1235 1335 1535 1435
Washington Mutual Investors Fund
. . . . . . . . . . . . . . . 1001 1201 1301 1501 1401
BOND FUNDS
American High-Income Trust . . 1021 1221 1321 1521 1421
The Bond Fund of America . . . 1008 1208 1308 1508 1408
Capital World Bond Fund . . . . 1031 1231 1331 1531 1431
Intermediate Bond Fund of
America . . . . . . . . . . . . 1023 1223 1323 1523 1423
U.S. Government Securities Fund 1022 1222 1322 1522 1422
MONEY MARKET FUND
The Cash Management Trust of
America . . . . . . . . . . . . 1009 1209 1309 1509 1409

New World Fund -- Page 54
<PAGE>

FUND NUMBERS
----------------------------------------
CLASS CLASS CLASS CLASS CLASS
FUND R-1 R-2 R-3 R-4 R-5
-------------------------------------------------------------------------------

STOCK AND STOCK/BOND FUNDS
AMCAP Fund . . . . . . . . . . . . . 2102 2202 2302 2402 2502
American Balanced Fund . . . . . . . 2111 2211 2311 2411 2511
American Mutual Fund . . . . . . . . 2103 2203 2303 2403 2503
Capital Income Builder . . . . . . . 2112 2212 2312 2412 2512
Capital World Growth and Income Fund 2133 2233 2333 2433 2533
EuroPacific Growth Fund . . . . . . 2116 2216 2316 2416 2516
Fundamental Investors . . . . . . . 2110 2210 2310 2410 2510
The Growth Fund of America . . . . . 2105 2205 2305 2405 2505
The Income Fund of America . . . . . 2106 2206 2306 2406 2506
The Investment Company of America . 2104 2204 2304 2404 2504
The New Economy Fund . . . . . . . . 2114 2214 2314 2414 2514
New Perspective Fund . . . . . . . . 2107 2207 2307 2407 2507
New World Fund . . . . . . . . . . . 2136 2236 2336 2436 2536
SMALLCAP World Fund . . . . . . . . 2135 2235 2335 2435 2535
Washington Mutual Investors Fund . . 2101 2201 2301 2401 2501
BOND FUNDS
American High-Income Municipal Bond
Fund . . . . . . . . . . . . . . . . N/A N/A N/A N/A 2540
American High-Income Trust . . . . . 2121 2221 2321 2421 2521
The Bond Fund of America . . . . . . 2108 2208 2308 2408 2508
Capital World Bond Fund . . . . . . 2131 2231 2331 2431 2531
Intermediate Bond Fund of America . 2123 2223 2323 2423 2523
Limited Term Tax-Exempt Bond Fund of
America. . . . . . . . . . . . . . . N/A N/A N/A N/A 2543
The Tax-Exempt Bond Fund of America N/A N/A N/A N/A 2519
The Tax-Exempt Fund of California* . N/A N/A N/A N/A 2520
The Tax-Exempt Fund of Maryland* . . N/A N/A N/A N/A 2524
The Tax-Exempt Fund of Virginia* . . N/A N/A N/A N/A 2525
U.S. Government Securities Fund . . 2122 2222 2322 2422 2522
MONEY MARKET FUNDS
The Cash Management Trust of America 2109 2209 2309 2409 2509
The Tax-Exempt Money Fund of America N/A N/A N/A N/A 2539
The U.S. Treasury Money Fund of
America . . . . . . . . . . . . . . 2149 2249 2349 2449 2549
___________
*Qualified for sale only in certain
jurisdictions.

New World Fund -- Page 55
<PAGE>

APPENDIX

The following descriptions of debt security ratings are based on information
provided by Moody's Investors Service and Standard & Poor's Corporation.

DESCRIPTION OF BOND RATINGS

MOODY'S
LONG-TERM RATING DEFINITIONS

Aaa
Obligations rated Aaa are judged to be of the highest quality, with minimal
credit risk.

Aa
Obligations rated Aa are judged to be of high quality and are subject to very
low credit risk.

A
Obligations rated A are considered upper-medium grade and are subject to low
credit risk.

Baa
Obligations rated Baa are subject to moderate credit risk. They are considered
medium-grade and as such may possess certain speculative characteristics.

Ba
Obligations rated Ba are judged to have speculative elements and are subject to
substantial credit risk.

B
Obligations rated B are considered speculative and are subject to high credit
risk.

Caa
Obligations rated Caa are judged to be of poor standing and are subject to very
high credit risk.

Ca
Obligations rated Ca are highly speculative and are likely in, or very near,
default, with some prospect of recovery of principal and interest.

C
Obligations rated C are the lowest rated class of bonds and are typically in
default, with little prospect for recovery of principal or interest.

NOTE: Moody's appends numerical modifiers 1, 2, and 3 to each generic rating
classification from Aa through Caa. The modifier 1 indicates that the obligation
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of
that generic rating category.

New World Fund -- Page 56
<PAGE>

STANDARD & POOR'S
LONG-TERM ISSUE CREDIT RATINGS

AAA
An obligation rated AAA has the highest rating assigned by Standard & Poor's.
The obligor's capacity to meet its financial commitment on the obligation is
extremely strong.

AA
An obligation rated AA differs from the highest-rated obligations only in small
degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.

A
An obligation rated A is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.

BBB
An obligation rated BBB exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligor to meet its financial commitment on the
obligation.

BB, B, CCC, CC, AND C
Obligations rated BB, B, CCC, CC, and C are regarded as having significant
speculative characteristics. BB indicates the least degree of speculation and C
the highest. While such obligations will likely have some quality and protective
characteristics, these may be outweighed by large uncertainties or major
exposures to adverse conditions.

BB
An obligation rated BB is less vulnerable to nonpayment than other speculative
issues. However, it faces major ongoing uncertainties or exposure to adverse
business, financial, or economic conditions which could lead to the obligor's
inadequate capacity to meet its financial commitment on the obligation.

B
An obligation rated B is more vulnerable to nonpayment than obligations rated
BB, but the obligor currently has the capacity to meet its financial commitment
on the obligation. Adverse business, financial, or economic conditions will
likely impair the obligor's capacity or willingness to meet its financial
commitment on the obligation.

CCC
An obligation rated CCC is currently vulnerable to nonpayment and is dependent
upon favorable business, financial, and economic conditions for the obligor to
meet its financial commitment on the obligation. In the event of adverse
business, financial, or economic conditions, the obligor is not likely to have
the capacity to meet its financial commitment on the obligation.

CC
An obligation rated CC is currently highly vulnerable to nonpayment.

New World Fund -- Page 57
<PAGE>

C
The C rating may be used to cover a situation where a bankruptcy petition has
been filed or similar action has been taken, but payments on this obligation are
being continued.

D
An obligation rated D is in payment default. The D rating category is used when
payments on an obligation are not made on the date due even if the applicable
grace period has not expired, unless Standard & Poor's believes that such
payments will be made during such grace period. The D rating also will be used
upon the filing of a bankruptcy petition or the taking of a similar action if
payments on an obligation are jeopardized.

PLUS (+) OR MINUS (-)
The ratings from AA to CCC may be modified by the addition of a plus or minus
sign to show relative standing within the major rating categories.

New World Fund -- Page 58

[logo - AMERICAN FUNDS (R)]

New World Fund^SM

Investment portfolio

October 31, 2005

		Market value
Common stocks — 76.21%	Shares	(000)

FINANCIALS — 16.21%
Grupo Financiero Banorte, SA de CV	9,280,000	$ 79,157
Itaúsa - Investimentos Itaú SA, preferred nominative	20,226,642	60,630
EFG International¹	1,938,000	55,670
Banco Itaú Holding Financeira SA, preferred nominative	2,165,000	51,908
Unibanco-União de Bancos Brasileiros SA, units (GDR)	766,000	40,062
Unibanco-União de Bancos Brasileiros SA, units	1,000,000	10,407
Housing Development Finance Corp. Ltd.	2,207,818	47,446
National Savings and Commercial Bank Ltd.²	1,291,000	46,626
KASIKORNBANK PCL, nonvoting depositary receipt²	25,300,000	37,626
KASIKORNBANK PCL²	2,500,000	3,869
Erste Bank der oesterreichischen Sparkassen AG²	716,800	37,257
ICICI Bank Ltd.²	2,865,100	31,812
ICICI Bank Ltd. (ADR)	27,000	639
PT Bank Mandiri (Persero) Tbk²	220,083,500	28,718
HSBC Holdings PLC²	1,747,017	27,342
Banco Bradesco SA, preferred nominative	498,000	25,670
Banco Bilbao Vizcaya Argentaria, SA²	1,400,000	24,697
Siam City Bank PCL, nonvoting depositary receipt²	41,590,000	23,880
Bank Muscat (SAOG) (GDR)¹	652,790	16,320
Bank Muscat (SAOG) (GDR)^1,3	265,900	6,647
Siam Commercial Bank PCL²	19,130,000	22,179
Banco Latinoamericano de Exportaciones, SA	1,240,000	21,092
National Bank of Pakistan	7,385,000	18,942
Piraeus Bank SA²	890,000	18,062
Banco Santander Central Hispano, SA²	1,239,528	15,775
Bank Polska Kasa Opieki SA²	324,000	15,384
SM Prime Holdings, Inc.²	98,000,000	14,121
HDFC Bank Ltd.²	836,800	11,350
PT Bank Rakyat Indonesia²	46,221,800	11,206
Bank Hapoalim Ltd.²	2,728,000	10,468
Bank of the Philippine Islands²	9,710,460	9,225
American International Group, Inc.	140,000	9,072
Daegu Bank, Ltd.²	725,000	8,660
Citigroup Inc.	175,000	8,012
Bank Zachodni WBK SA²	200,000	6,739
Kookmin Bank²	121,000	6,714
Malayan Banking Bhd.²	1,430,000	4,394
		867,778

TELECOMMUNICATION SERVICES — 10.36%
Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk, Class B²	161,770,000	$ 80,737
Philippine Long Distance Telephone Co.²	2,129,960	64,971
América Móvil SA de CV, Series L (ADR)	2,178,600	57,188
Telefónica, SA²	3,358,314	53,495
Partner Communications Co. Ltd.²	3,481,800	28,589
Partner Communications Co. Ltd. (ADR)	1,735,000	14,123
Tele Norte Leste Participações SA, preferred nominative	2,043,905	35,833
Advanced Info Service PCL²	13,641,500	33,493
TIM Participações SA, preferred nominative (ADR)	1,448,228	29,356
Maxis Communications Bhd.²	10,746,400	25,628
Telekom Austria AG²	1,025,000	21,244
Tele Centro Oeste Celular Participações SA, preferred nominative	1,009,577	8,980
Tele Centro Oeste Celular Participações SA, preferred nominative (ADR)	985,000	8,914
Tele Centro Oeste Celular Participações SA, ordinary nominative	17,540	152
Celular CRT SA, Class A, preferred nominative	660,150	15,267
Celular CRT SA, ordinary nominative	24,114	449
Magyar Távközlési Rt. (ADR)	525,000	12,285
Magyar Távközlési Rt.²	194,099	920
China Mobile (Hong Kong) Ltd.²	2,919,800	13,037
China Unicom Ltd.²	13,991,300	10,743
KT Corp. (ADR)	422,000	9,094
Portugal Telecom, SGPS, SA²	1,002,900	9,064
Bharti Tele-Ventures Ltd.^1,2	810,000	5,809
Telenor ASA²	590,000	5,771
Teléfonos de México, SA de CV, Class L (ADR)	200,000	4,036
GLOBE TELECOM, Inc.²	223,993	2,880
PT Indosat Tbk (ADR)	111,500	2,687
		554,745

CONSUMER STAPLES — 8.62%
Fomento Económico Mexicano, SA de CV (ADR)	1,182,000	80,364
Nestlé SA²	187,700	55,819
Pyaterochka Holding NV (GDR)^1,2,3	2,167,800	42,501
Pyaterochka Holding NV (GDR)^1,2	50,000	980
Cía. de Bebidas das Américas - AmBev, preferred nominative (ADR)	900,000	31,950
Cía. de Bebidas das Américas - AmBev, ordinary nominative (ADR)	197,000	5,502
Tesco PLC²	6,185,000	32,895
PepsiCo, Inc.	436,000	25,759
Nestlé India Ltd.	1,051,300	19,702
Avon Products, Inc.	728,000	19,649
China Mengniu Dairy Co.²	22,483,000	17,701
Wal-Mart de México, SA de CV, Series V (ADR)	340,000	16,609
Coca-Cola Co.	356,700	15,260
Groupe Danone²	143,800	14,666
Migros Türk TAS²	1,500,956	13,123
Anheuser-Busch Companies, Inc.	295,000	12,172
Oriflame Cosmetics SA (SDR)²	402,550	10,406
Unilever NV²	119,500	8,402
Unilever PLC²	799,034	8,097
Kimberly-Clark de México, SA de CV, Class A, ordinary participation certificates	2,000,000	6,643
Coca-Cola HBC SA	200,000	5,453
Coca-Cola FEMSA, SA de CV, Series L	2,065,000	5,298
Hindustan Lever Ltd.²	1,200,000	4,302
L'Oréal SA²	58,000	4,259
Heineken NV²	125,000	3,954
		461,466

MATERIALS — 7.75%
Cía. Vale do Rio Doce, preferred nominative, Class A	1,192,000	43,943
Cía. Vale do Rio Doce, ordinary nominative (ADR)	123,000	5,084
INI Steel Co.²	1,975,000	44,078
Hindalco Industries Ltd.²	15,490,820	39,440
Aracruz Celulose SA, Class B, preferred nominative (ADR)	888,000	34,010
Votorantim Celulose e Papel SA, preferred nominative (ADR)	2,835,000	33,935
AngloGold Ashanti Ltd.²	849,785	33,666
Cemex, SA de CV, ordinary participation certificates, units (ADR)	582,365	30,324
Associated Cement Companies Ltd.²	2,500,000	24,739
Siam Cement PCL²	4,320,000	24,376
Ivanhoe Mines Ltd.¹	2,660,000	19,952
Phelps Dodge Corp.	137,000	16,504
Siam City Cement PCL²	1,874,600	13,159
Hanil Cement Co., Ltd.	181,500	11,793
BHP Billiton PLC²	682,288	10,019
Holcim Ltd.²	140,142	8,703
Asian Paints (India) Ltd.	750,000	8,059
Formosa Plastics Corp.²	3,519,828	5,315
Harmony Gold Mining Co. Ltd.^1,2	475,000	5,027
Hyosung Corp.²	237,608	2,756
		414,882

CONSUMER DISCRETIONARY — 6.77%
Toyota Motor Corp.²	1,058,700	48,413
Maruti Udyog Ltd.²	3,567,000	43,513
Shangri-La Asia Ltd.²	26,874,000	37,619
Honda Motor Co., Ltd.²	614,500	33,562
Kuoni Reisen Holding AG, Class B¹	85,150	32,019
Grupo Televisa, SA, ordinary participation certificates (ADR)	335,000	24,488
BEC World PCL²	45,200,000	16,645
Li & Fung Ltd.²	7,349,000	15,672
Cheng Shin Rubber (Xiamen) Ind., Ltd.²	21,223,264	15,328
Makita Corp.²	625,000	14,472
Yue Yuen Industrial (Holdings) Ltd.²	5,224,000	13,195
Laureate Education, Inc.¹	265,000	13,091
LG Electronics Inc.²	178,630	11,702
Central European Media Enterprises Ltd., Class A¹	238,917	11,107
Cheil Industries Inc.²	400,000	9,702
Astro All Asia Networks PLC²	6,088,500	8,871
Koninklijke Philips Electronics NV²	290,000	7,566
Nien Hsing Textile Co., Ltd.²	8,600,000	5,296
Antena 3 Televisión, SA²	5,344	104
		362,365

INDUSTRIALS — 6.30%
Daelim Industrial Co., Ltd.²	1,003,260	58,359
Wienerberger AG²	1,199,000	46,354
Thai Airways International PCL²	50,138,200	45,500
Hyundai Development Co.²	887,000	32,557
Italian-Thai Development PCL²	135,416,600	29,304
Bharat Heavy Electricals Ltd.	1,100,000	27,596
Metso Oyj²	770,000	20,017
Jet Airways (India) Ltd.²	721,600	16,149
International Container Terminal Services, Inc.²	88,828,000	15,251
Sandvik AB²	300,000	$ 14,451
AGCO Corp.¹	825,000	13,192
Asahi Glass Co., Ltd.²	1,050,000	11,401
Hi-P International Ltd.²	4,664,000	3,852
3M Co.	47,000	3,571
		337,554

UTILITIES — 5.73%
CPFL Energia SA (ADR)	2,155,000	67,171
Cia. Energética de Minas Gerais - CEMIG, preferred nominative	1,349,200,000	49,204
NTPC Ltd.²	15,986,000	34,499
Perusahaan Gas Negara (Persero) Tbk.²	58,260,000	31,099
Reliance Energy Ltd.	2,711,000	31,043
GAIL (India) Ltd.	4,630,000	24,106
Cheung Kong Infrastructure Holdings Ltd.²	5,050,000	15,704
Electricity Generating PCL, nonvoting depositary receipt²	4,774,227	9,050
Electricity Generating PCL	3,635,773	6,218
AES Corp.¹	700,000	11,123
Tenaga Nasional Bhd.²	3,550,000	9,405
Gas Natural SDG, SA²	336,000	9,152
Veolia Environnement²	220,000	9,150
		306,924

ENERGY— 4.51%
MOL Magyar Olaj- és Gázipari Rt., Class A²	645,000	59,658
Petróleo Brasileiro SA - Petrobras, ordinary nominative (ADR)	559,000	35,720
Petróleo Brasileiro SA - Petrobras, preferred nominative (ADR)	231,892	13,304
Oil & Natural Gas Corp. Ltd.²	1,019,533	21,032
FMC Technologies, Inc.¹	571,700	20,844
Nexen Inc.	480,713	19,779
Banpu PCL²	4,904,000	16,851
China Shenhua Energy Co. Ltd.^1,2	11,450,000	12,545
Noble Energy, Inc.	300,000	12,015
Harvest Natural Resources, Inc.¹	934,000	9,041
Royal Dutch Shell PLC, Class B (ADR)	109,819	7,183
Reliance Industries Ltd.²	421,000	7,132
China Oilfield Services Ltd., Class H²	11,298,700	4,150
OAO NOVATEK (GDR)^1,2,3	93,300	2,084
		241,338

INFORMATION TECHNOLOGY — 3.83%
NHN Corp.^1,2	287,482	47,600
Kingboard Chemical Holdings Ltd.²	21,199,400	44,775
Mediatek Incorporation²	3,517,576	30,703
Hon Hai Precision Industry Co., Ltd.²	5,641,537	24,451
Samsung Electronics Co., Ltd.²	43,000	22,812
Venture Corp. Ltd.²	1,531,800	11,318
NetEase.com, Inc. (ADR)¹	80,000	6,102
QUALCOMM Inc.¹	150,000	5,964
SINA Corp.¹	210,000	5,323
Sohu.com Inc.¹	180,000	2,725
Samsung SDI Co., Ltd.²	21,800	2,146
KEC Corp.²	750,000	1,279
		205,198


HEALTH CARE — 1.51%
Novo Nordisk A/S, Class B²	483,300	$ 24,750
Gedeon Richter Ltd.²	89,500	14,684
Ranbaxy Laboratories Ltd.	1,537,142	11,976
Teva Pharmaceutical Industries Ltd. (ADR)	275,000	10,483
AstraZeneca PLC²	172,700	7,764
Dr. Reddy’s Laboratories Ltd.²	400,000	7,184
Apollo Hospitals Enterprise Ltd. (GDR)³	253,800	2,398
Apollo Hospitals Enterprise Ltd.²	5,500	53
Lumenis Ltd.¹	820,000	1,640
		80,932

MISCELLANEOUS — 4.62%
Other common stocks in initial period of acquisition		247,276


Total common stocks (cost: $3,056,380,000)		4,080,458


Warrants — 0.01%

INFORMATION TECHNOLOGY — 0.01%
Kingboard Chemical Holdings Ltd., warrants, expire 2006¹	1,869,940	494


Total warrants (cost: $0)		494



	Principal amount
Bonds & notes — 10.71%	(000)

NON-U.S. GOVERNMENT BONDS & NOTES — 10.11%
United Mexican States Government Global 8.625% 2008	$ 5,471	5,925
United Mexican States Government Global 4.83% 2009⁴	18,750	19,073
United Mexican States Government Global 10.375% 2009	4,500	5,213
United Mexican States Government Global 9.875% 2010	21,625	25,485
United Mexican States Government Global 6.375% 2013	10,000	10,500
United Mexican States Government, Series MI10, 8.00% 2013	MXP67,600	5,952
United Mexican States Government, Series MI10, 9.50% 2014	29,700	2,849
United Mexican States Government Global 11.375% 2016	$12,120	17,544
United Mexican States Government, Series M20, 8.00% 2023	MXP52,700	4,389
Russian Federation 8.25% 2010	$49,400	52,848
Russian Federation 8.25% 2010³	5,648	6,042
Russian Federation 5.00% 2030^3,4	30,813	34,279
Russian Federation 5.00% 2030⁵	3,000	3,337
Brazilian Treasury Bill 0% 2007	R$5	1,949
Brazil (Federal Republic of) Global 5.25% 2009⁴	$ 2,817	2,789
Brazil (Federal Republic of) Global 14.50% 2009	4,625	5,901
Brazil (Federal Republic of) Global 9.25% 2010	12,600	13,866
Brazil (Federal Republic of) Global 8.00% 2018	15,045	15,579
Brazil (Federal Republic of) Global 8.875% 2019	4,000	4,230
Brazil (Federal Republic of) Global 10.125% 2027	12,000	13,890
Brazil (Federal Republic of) Global 11.00% 2040	22,025	26,491
Argentina (Republic of) 3.504% 2012⁴	18,700	14,514
Argentina (Republic of) 2.192% 2014⁶	ARS 10,960	$ 3,305
Argentina (Republic of) 6.501% 2033^6,7	111,031	38,879
Argentina (Republic of) 0.72% 2038⁶	60,889	8,646
Panama (Republic of) Global 8.25% 2008	$26,050	27,776
Panama (Republic of) Global 9.625% 2011	2,685	3,101
Panama (Republic of) Global 9.375% 2012	6,527	7,637
Panama (Republic of) Global 10.75% 2020	2,255	3,072
Panama (Republic of) Global 9.375% 2023	8,161	9,956
Panama (Republic of) Global 8.875% 2027	100	117
Panama (Republic of) Global 9.375% 2029	6,535	8,022
Peru (Republic of) 9.125% 2012	25,300	29,373
Peru (Republic of) 8.375% 2016	14,250	16,138
Peru (Republic of) Past Due Interest Eurobond 5.00% 2017⁴	5,679	5,480
Colombia (Republic of) Global 10.00% 2012	18,725	22,142
Colombia (Republic of) Global 10.75% 2013	9,840	12,005
Columbia (Republic of) Global 8.25% 2014	3,100	3,370
Columbia (Republic of) 8.125% 2024	3,375	3,513
Turkey (Republic of) 20.00% 2007	TRY9,955	8,115
Turkey (Republic of) 15.00% 2010	5,700	4,608
Turkey (Republic of) 11.875% 2030	$8,900	12,949
Philippines (Republic of) 8.875% 2008	4,740	5,084
Philippines (Republic of) 8.375% 2009	8,335	8,846
Philippines (Republic of) Global 10.625% 2025	4,250	4,925
Venezuela (Republic of) 9.25% 2027	1,500	1,751
		541,455

INFORMATION TECHNOLOGY — 0.30%
Amkor Technology, Inc. 10.50% 2009	5,960	5,126
Amkor Technology, Inc. 7.125% 2011	12,340	10,736
		15,862

UTILITIES — 0.15%
Enersis SA 7.375% 2014	4,550	4,803
AES Gener SA 7.50% 2014	3,000	3,003
		7,806

ENERGY — 0.09%
Pemex Project Funding Master Trust 8.00% 2011	2,300	2,577
Petrozuata Finance, Inc., Series B, 8.22% 2017^3,8	2,250	2,126
		4,703

INDUSTRIALS — 0.06%
TFM, SA de CV 9.375% 2012³	3,200	3,488


Total bonds & notes (cost: $519,864,000)		573,314




Short-term securities — 12.69%

Barclays U.S. Funding LLC 3.835% due 11/28/2005	39,500	39,384
Siemens Capital Co. LLC 3.85%-3.98% due 11/10-12/16/2005	37,100	36,933
IXIS Commercial Paper Corp. 3.80%-3.94% due 11/10-12/13/2005³	35,200	35,111
Dexia Delaware LLC 3.84%-3.855% due 11/15-11/28/2005	34,200	34,132
KfW International Finance Inc. 3.92%-4.04% due 12/13-12/27/2005³	34,100	33,908
CBA (Delaware) Finance Inc. 3.91%-3.93% due 12/12-12/19/2005	31,600	31,449
BNP Paribas Finance Inc. 3.775%-3.855% due 11/30-12/2/2005	30,500	30,405
Bank of Ireland 3.78% due 11/9-11/14/2005³	29,800	29,769
Thunder Bay Funding, LLC 3.78%-3.91% due 11/7-11/22/2005³	29,100	29,061
Royal Bank of Scotland PLC 3.63%-3.77% due 11/3-11/8/2005	28,700	28,683
Lloyds Bank PLC 3.78% due 11/4/2005	25,000	24,990
Depfa Bank PLC 3.675% due 11/14/2005³	25,000	24,964
HBOS Treasury Services PLC 3.97% due 12/19/2005	25,000	24,867
DaimlerChrysler Revolving Auto Conduit LLC II 3.89% due 11/16/2005	23,500	23,459
Calyon North America Inc. 3.63% due 11/7/2005	22,400	22,384
Edison Asset Securitization LLC 3.65% due 11/7/2005³	20,700	20,685
Federal Home Loan Bank 3.675%-3.80% due 11/2-11/18/2005	18,200	18,174
GlaxoSmithKline Finance PLC 3.90% due 12/12/2005	17,900	17,820
Spintab AB (Swedmortgage) 3.72%-3.87% due 11/18/2005	17,800	17,766
Allied Irish Banks N.A. Inc. 3.67% due 11/8/2005³	17,200	17,186
Société Générale 3.70% due 11/1/2005	17,000	17,000
Shell International Finance BV 3.94%-4.00% due 12/19-12/20/2005	17,000	16,907
Amsterdam Funding Corp. 3.78% due 11/8/2005³	16,600	16,586
Stadshypotek Delaware Inc. 3.68% due 11/14/2005³	16,000	15,977
ANZ (Delaware) Inc. 3.63% due 11/7/2005	10,000	9,993
ANZ National (International) Ltd. 3.88% due 12/12/2005³	5,900	5,873
Toyota Motor Credit Corp. 3.98% due 12/28/2005⁹	13,100	13,019
HSBC USA Inc. 3.67% due 11/1/2005	12,000	11,999
Gaz de France 3.99%-4.00% due 12/12/2005³	11,600	11,546
Concentate Manufacturing Co. of Ireland 3.985% due 11/28/2005	10,000	9,969
Total Capital SA 3.88% due 12/8/2005³	9,300	9,262


Total short-term securities (cost: $679,250,000)		679,261

Total investment securities (cost: $4,255,494,000)		5,333,527
Other assets less liabilities		20,165

Net assets		$5,353,692

“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.

²Valued under fair value procedures adopted by authority of the Board of Directors. At October 31, 2005, 126 of the fund’s securities, including

those in “Miscellaneous” (with aggregate value of $2,416,634,000), were fair valued under procedures that took into account significant price

changes that occurred between the close of trading in those securities and the close of regular trading on the New York Stock Exchange.

³Purchased in a private placement transaction; resale may be limited to qualified institutional buyers; resale to the public may require

registration. The total value of all such restricted securities was $349,493,000, which represented 6.53% of the net assets of the fund.

⁴Coupon rate may change periodically.

⁵Step bond; coupon rate will increase at a later date.

⁶Index-linked bond whose principal amount moves with a government retail price index.

⁷Payment in kind; the issuer has the option of paying additional securities in lieu of cash.

⁸Pass-through security backed by a pool of mortgages or other loans on which principal payments are periodically made. Therefore, the effective

maturity is shorter than the stated maturity.

⁹This security, or a portion of this security, has been segregated to cover funding requirements on investment transactions settling in the future.

ADR = American Depositary Receipts

GDR = Global Depositary Receipts

SDR = Swedish Depositary Receipts

See Notes to Financial Statements

Financial statements

Statement of assets and liabilities
at October 31, 2005 (dollars and shares in thousands, except per-share amounts)

Assets:
Investment securities at market (cost: $4,255,494)			$	5,333,527
Cash denominated in non-U.S. currencies
(cost: $564)				554
Cash				2,092
Receivables for:
Sales of investments	$	14,795
Sales of fund's shares		30,616
Dividends and interest		13,691		59,102
				5,395,275
Liabilities:
Payables for:
Purchases of investments		31,743
Repurchases of fund's shares		2,561
Investment advisory services		2,683
Services provided by affiliates		2,303
Deferred Directors' compensation		953
Other fees and expenses		1,340		41,583
Net assets at October 31, 2005			$	5,353,692

Net assets consist of:
Capital paid in on shares of capital stock			$	4,244,754
Undistributed net investment income				54,426
Accumulated net realized loss				(22,539	)
Net unrealized appreciation				1,077,051
Net assets at October 31, 2005			$	5,353,692

Total authorized capital stock - 200,000 shares, $.01 par value (147,758 total shares outstanding)

	Net assets		Shares outstanding		Net asset value per share (1)

Class A	$	4,194,702		115,502	$	36.32
Class B		170,020		4,761		35.71
Class C		245,815		6,939		35.42
Class F		335,491		9,285		36.13
Class 529-A		75,499		2,086		36.19
Class 529-B		11,058		311		35.58
Class 529-C		19,659		552		35.60
Class 529-E		4,030		112		36.00
Class 529-F		3,933		109		36.15
Class R-1		3,362		94		35.64
Class R-2		47,469		1,333		35.62
Class R-3		40,924		1,135		36.07
Class R-4		14,240		392		36.33
Class R-5		187,490		5,147		36.43

(1) Maximum offering price and redemption price per share were equal to the net asset value per share for all share classes, except for classes A and 529-A, for which the maximum offering prices per share were $38.54 and $38.40, respectively.

See Notes to Financial Statements

Statement of operationsfor the year ended October 31, 2005		(dollars in thousands)

Investment income:
Income:
Dividends (net of non-U.S. withholding tax of $9,616)	$	77,256
Interest		48,326		$	125,582

Fees and expenses:(1)
Investment advisory services		27,569
Distribution services		12,601
Transfer agent services		3,934
Administrative services		1,382
Reports to shareholders		453
Registration statement and prospectus		417
Postage, stationery and supplies		522
Directors' compensation		451
Auditing and legal		153
Custodian		2,374
State and local taxes		68
Other		126
Total fees and expenses before reimbursements/waivers		50,050
Less reimbursement/waiver of fees and expenses:
Investment advisory services		2,274
Administrative services		110
Total fees and expenses after reimbursements/waivers					47,666
Net investment income					77,916

Net realized gain and change in unrealized appreciation
on investments and non-U.S. currency:
Net realized gain (loss) on:
Investments		165,849
Non-U.S. currency transactions		(1,548	)		164,301
Net change in unrealized appreciation on:
Investments		553,027
Non-U.S. currency translations		75			553,102
Net realized gain and change in unrealized appreciation
on investments and non-U.S. currency					717,403
Net increase in net assets resulting
from operations				$	795,319

(1) 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)


		Year ended October 31
		2005			2004
Operations:
Net investment income	$	77,916		$	37,346
Net realized gain on investments and
non-U.S. currency transactions		164,301			103,824
Net change in unrealized appreciation on investment and
non-U.S. currency translations		553,102			223,009
Net increase in net assets resulting
from operations		795,319			364,179

Dividends paid to shareholders from net investment income		(52,051	)		(42,150	)
and non U.S. currency gains

Capital share transactions		1,877,407			641,208

Total increase in net assets		2,620,675			963,237

Net assets:
Beginning of year		2,733,017			1,769,780
End of year (including undistributed net investment
income: $54,426 and $10,894, respectively)	$	5,353,692		$	2,733,017




See Notes to Financial Statements

Notes to financial statements

1.	Organization and significant accounting policies

Organization - New World Fund, Inc. (the "fund") is registered under the Investment Company Act of 1940 as an open-end, diversified management investment company. The fund seeks long-term growth of capital by investing in stocks and bonds with significant exposure to countries that have developing economies and/or markets.

The fund offers 14 share classes consisting of four retail share classes, five CollegeAmerica^Ò savings plan share classes and five retirement plan share classes. The CollegeAmerica savings plan share classes (529-A, 529-B, 529-C, 529-E and 529-F) can be utilized to save for college education. The five retirement plan share classes (R-1, R-2, R-3, R-4 and R-5) are sold without any sales charges and do not carry any conversion rights. 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 after 10 years
Class 529-C	None	1% for redemptions within one year of purchase	None
Class 529-E	None	None	None
Classes F and 529-F	None	None	None
Classes R-1, R-2, R-3, R-4 and R-5	None	None	None

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.

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 following is a summary of the significant accounting policies followed by the fund:

Security valuation - Equity securities are 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 valued at prices obtained from an independent pricing service when such prices are available. However, where the investment adviser deems it appropriate, such securities will be valued at the mean quoted bid and asked prices (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 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 market 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 or less remaining to maturity. The ability of the issuers of the debt securities held by the fund to meet their obligations may be affected by economic developments in a specific industry, state or region. Securities and other assets for which representative market quotations are not readily available are fair valued as determined in good faith under procedures adopted by authority of the fund's Board of Directors. Various factors may be reviewed in order to make a good faith determination of a security’s fair value. These factors include, but are not limited to, the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; and changes in overall market conditions. If events occur that materially affect the value of securities (particularly non-U.S. securities) between the close of trading in those securities and the close of regular trading on the New York Stock Exchange, the securities are fair valued.

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. In the event a security is purchased with a delayed payment date, the fund will segregate liquid assets sufficient to meet its payment obligations. 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.

Non-U.S. currency translation - Assets and liabilities, including investment securities, denominated in non-U.S. currencies 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. In the accompanying financial statements, the effects of changes in non-U.S. 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 non-U.S. currencies are disclosed separately.

Forward currency contracts - The fund may enter into forward currency contracts, which represent agreements to exchange non-U.S. currencies on specific future dates at predetermined rates. The fund enters into these contracts to manage its exposure to changes in non-U.S. exchange rates arising from investments denominated in non-U.S. currencies. Upon entering into these contracts, risks may arise from the potential inability of counterparties to meet the terms of their contracts and from possible movements in non-U.S. exchange rates. Due to these risks, the fund could incur losses up to the entire contract amount, which may exceed the net unrealized value shown in the accompanying financial statements. On a daily basis, the fund values forward currency contracts based on the applicable exchange rates and records unrealized gains or losses. The fund records realized gains or losses at the time the forward contract is closed or offset by another contract with the same broker for the same settlement date and currency.

2.	Non-U.S. investments

Investment risk - The risks of investing in securities of non-U.S. issuers may include, but are not limited to, investment and repatriation restrictions; revaluation of currencies; adverse political, social and economic developments; government involvement in the private sector; limited and less reliable investor information; lack of liquidity; certain local tax law considerations; and limited regulation of the securities markets.

Taxation - Dividend and interest income is recorded net of non-U.S. withholding 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. For the year ended October 31, 2005, non-U.S. withholding taxes paid on realized gains were $1,173,000. As of October 31, 2005, non-U.S. taxes provided on unrealized gains were $1,082,000.

3. Federal income taxation and distributions

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.

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 differing treatment for items such as non-U.S. currency gains and losses; short-term capital gains and losses; unrealized appreciation of certain investments in non-U.S. securities; deferred expenses; cost of investments sold; paydowns on investments; net capital losses; and interest from defaulted securities. 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. As of October 31, 2005, the cost of investment securities for federal income tax purposes was $4,290,535,000.

During the year ended October 31, 2005, the fund reclassified $17,692,000 to undistributed net investment income from undistributed net realized gains and $25,000 from undistributed net investment income to capital paid in on shares of capital stock to align financial reporting with tax reporting.

As of October 31, 2005, the components of distributable earnings on a tax basis were as follows (dollars in thousands):


Undistributed net investment income and non-U.S. currency gains	$90,373
Short-term capital loss deferrals	(22,491)
Gross unrealized appreciation on investment securities	1,157,804
Gross unrealized depreciation on investment securities	(114,812)
Net unrealized appreciation on investment securities	1,042,992

Short-term capital loss deferrals above include a capital loss carryforward of $22,491,000 expiring in 2011. During the year ended October 31, 2005, the fund realized, on a tax basis, a net capital gain of $146,594,000, which was offset by the utilization of capital loss carryforwards. The remaining capital loss carryforward will be used to offset any capital gains realized by the fund in future years through the expiration date. The fund will not make distributions from capital gains while a capital loss carryforward remains.

Ordinary income distributions paid to shareholders from net investment income were as follows (dollars in thousands):

Share class	Year ended October 31, 2005		Year ended October 31, 2004
Class A	$	42,710	$	36,096
Class B		1,140		1,014
Class C		1,414		945
Class F		3,321		2,050
Class 529-A		615		338
Class 529-B		67		49
Class 529-C		101		81
Class 529-E		28		17
Class 529-F		43		25
Class R-1		24		7
Class R-2		259		139
Class R-3		292		148
Class R-4		79		34
Class R-5		1,958		1,207
Total	$	52,051	$	42,150

4. Fees and transactions with related parties

Capital Research and Management Company ("CRMC"), the fund’s investment adviser, is the parent company of American Funds Service Company ("AFS"), the fund’s transfer agent, and American Funds Distributors, Inc. ("AFD"), the principal underwriter of the fund’s shares.

Investment advisory services - The Investment Advisory and Service Agreement with CRMC provides for monthly fees accrued daily. At the beginning of the year, these fees were based on a declining series of annual rates beginning with 0.850% on the first $500 million of daily net assets and decreasing to 0.620% on such assets in excess of $2.5 billion. The Board of Directors approved an amended agreement effective March 10, 2005, continuing the series of rates to include additional annual rates of 0.580% on daily net assets in excess of $4 billion but not exceeding $6.5 billion and 0.540% on such assets in excess of $6.5 billion. At the beginning of the year, CRMC waived 5% of these fees and increased the waiver to 10% on April 1, 2005. During the year ended October 31, 2005, total investment advisory services fees waived by CRMC were $2,274,000. As a result, the fee shown on the accompanying financial statements of $27,569,000, which was equivalent to an annualized rate of 0.685%, was reduced to $25,295,000, or 0.629% 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 below:

Distribution services - The fund has adopted plans of distribution for all share classes, except Class R-5. Under the plans, the Board of Directors 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/on the following page>. In some cases, the Board of Directors has limited the amounts that may be paid to less than the maximum allowed by the plans. All share classes may use up to 0.25% of average daily net assets to pay service fees, or to compensate AFD for paying service fees, to firms that have entered into agreements with AFD for providing certain shareholder services. The remaining amounts available to be paid under each plan are paid to selling dealers to compensate them for their selling activities.

For classes A and 529-A, the Board of Directors 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 October 31, 2005, 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, 529-F 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 described below.

Administrative services - The fund has an administrative services agreement with CRMC to provide transfer agent and other related shareholder services for all share classes other than classes A and B. Each relevant share class pays CRMC annual fees up to 0.15% (0.10% for Class R-5) 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 year ended October 31, 2005, the total administrative services fees paid by CRMC were $2,000, $100,000 and $8,000 for classes R-1, R-2 and R-3, respectively. Administrative services fees are presented gross of any payments made by CRMC. Each 529 share class is subject to an additional annual administrative services fee of 0.10% of its respective average daily net assets; this fee is payable to the Commonwealth of Virginia for the maintenance of the CollegeAmerica plan. Although these amounts are included with administrative services fees on the accompanying financial statements, the Commonwealth of Virginia is not considered a related party.

Expenses under the agreements described [above/on the previous page] for the year ended October 31, 2005, were as follows (dollars in thousands):

Share class	Distribution services	Transfer agent services	Administrative services
Share class	Distribution services	Transfer agent services	CRMC administrative services	Transfer agent services	Commonwealth of Virginia administrative services
Class A	$8,243	$3,753	Not applicable	Not applicable	Not applicable
Class B	1,288	181	Not applicable	Not applicable	Not applicable
Class C	1,691	Included in administrative services	$254	$54	Not applicable
Class F	622		313	65	Not applicable
Class 529-A	87		67	10	$52
Class 529-B	82		11	5	8
Class 529-C	138		18	7	14
Class 529-E	14		4	1	3
Class 529-F	4		4	1	3
Class R-1	24		3	3	Not applicable
Class R-2	236		47	185	Not applicable
Class R-3	152		45	49	Not applicable
Class R-4	20		12	2	Not applicable
Class R-5	Not applicable		138	4	Not applicable
Total	$12,601	$3,934	$916	$386	$80

Deferred Directors’ compensation - Since the adoption of the deferred compensation plan in 1999, Directors 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. Directors’ compensation of $451,000, shown on the accompanying financial statements, includes $254,000 in current fees (either paid in cash or deferred) and a net increase of $197,000 in the value of the deferred amounts.

Affiliated officers and Directors - Officers and certain Directors of the fund are or may be considered to be affiliated with CRMC, AFS and AFD. No affiliated officers or Directors received any compensation directly from the fund.

5. Capital share transactions

Capital share transactions in the fund were as follows (dollars and shares in thousands):

Share class	Sales(1)		Reinvestments of dividends and distributions		Repurchases(1)		Net increase
	Amount	Shares	Amount	Shares	Amount	Shares	Amount	Shares
Year ended October 31, 2005
Class A	$1,725,369	50,781	$ 40,564	1,293	$ (375,444)	(11,102)	$1,390,489	40,972
Class B	71,650	2,138	1,100	35	(15,270)	(458)	57,480	1,715
Class C	141,506	4,264	1,352	44	(22,546)	(685)	120,312	3,623
Class F	179,769	5,348	2,907	94	(54,524)	(1,644)	128,152	3,798
Class 529-A	36,812	1,091	615	20	(2,124)	(63)	35,303	1,048
Class 529-B	4,262	128	67	2	(200)	(6)	4,129	124
Class 529-C	9,846	297	101	3	(848)	(26)	9,099	274
Class 529-E	1,949	58	28	1	(107)	(3)	1,870	56
Class 529-F	1,318	40	43	1	(279)	(8)	1,082	33
Class R-1	2,530	75	24	1	(1,325)	(39)	1,229	37
Class R-2	32,939	988	258	8	(8,685)	(260)	24,512	736
Class R-3	30,144	898	290	9	(11,345)	(323)	19,089	584
Class R-4	11,245	331	79	3	(1,791)	(53)	9,533	281
Class R-5	83,844	2,476	1,837	59	(10,553)	(313)	75,128	2,222
Total net increase
(decrease)	$2,333,183	68,913	$ 49,265	1,573	$ (505,041)	(14,983)	$1,877,407	55,503

Year ended October 31, 2004
Class A	$ 625,724	22,400	$ 34,242	1,300	$ (246,193)	(8,873)	$ 413,773	14,827
Class B	37,650	1,366	985	38	(11,205)	(408)	27,430	996
Class C	58,556	2,139	905	35	(11,002)	(406)	48,459	1,768
Class F	105,482	3,817	1,807	69	(32,794)	(1,192)	74,495	2,694
Class 529-A	15,766	568	338	13	(1,171)	(42)	14,933	539
Class 529-B	2,319	85	49	2	(83)	(3)	2,285	84
Class 529-C	3,863	141	81	3	(592)	(22)	3,352	122
Class 529-E	796	29	17	1	(35)	(2)	778	28
Class 529-F	1,198	43	25	1	(89)	(3)	1,134	41
Class R-1	1,889	68	7	-*	(707)	(26)	1,189	42
Class R-2	12,563	455	136	5	(2,803)	(102)	9,896	358
Class R-3	11,921	424	146	5	(3,154)	(114)	8,913	315
Class R-4	2,965	108	34	1	(600)	(22)	2,399	87
Class R-5	38,583	1,380	1,171	44	(7,582)	(275)	32,172	1,149
Total net increase
(decrease)	$ 919,275	33,023	$ 39,943	1,517	$ (318,010)	(11,490)	$ 641,208	23,050

* Amount less than one thousand.

(1) Includes exchanges between share classes of the fund.

6. Investment transactions

The fund made purchases and sales of investment securities, excluding short-term securities, of $2,322,605,000 and $911,679,000, respectively, during the year ended October 31, 2005.

CollegeAmerica is a registered trademark of and sponsored by the Virginia College Savings Plan.^SM

Financial highlights (1)

		Income (loss) from investment operations(2)
	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)	Net asset value, end of period	Total return (3)	Net assets, end of period (in millions)		Ration of expenses to average net assets before reimbursements/waivers		Ration of expenses to average net assets after reimbursements/waivers		Ratio of net income to average net assets
Class A:
Year ended 10/31/2005	$29.68	$.68		$6.51	$7.19	$(.55)	$36.32	24.50%	$4,195		1.18%		1.12%		2.00%
Year ended 10/31/2004	25.60	.47		4.20	4.67	(.59)	29.68	18.51	2,212		1.23		1.22		1.68
Year ended 10/31/2003	18.90	.39		6.56	6.95	(.25)	25.60	37.19	1,528		1.31		1.31		1.86
Year ended 10/31/2002	19.04	.34		.07	.41	(.55)	18.90	1.95	1,071		1.34		1.34		1.65
Year ended 10/31/2001	22.81	.47		(3.87)	(3.40)	(.37)	19.04	(15.13)	1,053		1.29		1.29		2.15
Class B:
Year ended 10/31/2005	29.23	.42		6.42	6.84	(.36)	35.71	23.57	170		1.94		1.88		1.24
Year ended 10/31/2004	25.29	.25		4.14	4.39	(.45)	29.23	17.58	89		2.01		2.00		.91
Year ended 10/31/2003	18.69	.22		6.50	6.72	(.12)	25.29	36.12	52		2.10		2.10		1.05
Year ended 10/31/2002	18.82	.16		.09	.25	(.38)	18.69	1.17	29		2.15		2.15		.78
Year ended 10/31/2001	22.71	.28		(3.85)	(3.57)	(.32)	18.82	(15.91)	20		2.13		2.13		1.32
Class C:
Year ended 10/31/2005	29.03	.40		6.37	6.77	(.38)	35.42	23.52	246		1.98		1.92		1.21
Year ended 10/31/2004	25.18	.24		4.11	4.35	(.50)	29.03	17.53	96		2.04		2.03		.89
Year ended 10/31/2003	18.66	.21		6.48	6.69	(.17)	25.18	36.10	39		2.12		2.12		.99
Year ended 10/31/2002	18.76	.12		.12	.24	(.34)	18.66	1.15	13		2.14		2.14		.61
Period from 3/15/2001 to 10/31/2001	21.44	.09		(2.77)	(2.68)	-	18.76	(12.50)	3		2.19	(5)	2.19	(5)	.69	(5)
Class F:
Year ended 10/31/2005	29.54	.67		6.47	7.14	(.55)	36.13	24.46	336		1.19		1.14		1.98
Year ended 10/31/2004	25.52	.46		4.17	4.63	(.61)	29.54	18.44	162		1.27		1.26		1.65
Year ended 10/31/2003	18.88	.38		6.54	6.92	(.28)	25.52	37.10	71		1.35		1.35		1.77
Year ended 10/31/2002	18.98	.28		.12	.40	(.50)	18.88	1.95	23		1.38		1.38		1.35
Period from 3/16/2001 to 10/31/2001	21.42	.21		(2.65)	(2.44)	-	18.98	(11.39)	3		1.40	(5)	1.40	(5)	1.62	(5)
Class 529-A:
Year ended 10/31/2005	29.59	.67		6.48	7.15	(.55)	36.19	24.45	76		1.21		1.15		1.97
Year ended 10/31/2004	25.56	.46		4.18	4.64	(.61)	29.59	18.43	31		1.27		1.26		1.65
Year ended 10/31/2003	18.89	.40		6.54	6.94	(.27)	25.56	37.18	13		1.30		1.30		1.87
Period from 2/19/2002 to 10/31/2002	21.19	.14		(2.44)	(2.30)	-	18.89	(10.85)	5		1.47	(5)	1.47	(5)	.99	(5)
Class 529-B:
Year ended 10/31/2005	29.15	.36		6.41	6.77	(.34)	35.58	23.38	11		2.09		2.04		1.09
Year ended 10/31/2004	25.25	.20		4.14	4.34	(.44)	29.15	17.41	6		2.17		2.17		.74
Year ended 10/31/2003	18.79	.19		6.48	6.67	(.21)	25.25	35.86	3		2.27		2.27		.89
Period from 2/26/2002 to 10/31/2002	21.20	.02		(2.43)	(2.41)	-	18.79	(11.37)	1		2.25	(5)	2.25	(5)	.14	(5)
Class 529-C:
Year ended 10/31/2005	29.17	.37		6.40	6.77	(.34)	35.60	23.38	20		2.08		2.02		1.11
Year ended 10/31/2004	25.28	.21		4.14	4.35	(.46)	29.17	17.43	8		2.16		2.15		.76
Year ended 10/31/2003	18.79	.19		6.50	6.69	(.20)	25.28	35.90	4		2.24		2.24		.90
Period from 2/25/2002 to 10/31/2002	21.15	.04		(2.40)	(2.36)	-	18.79	(11.16)	1		2.21	(5)	2.21	(5)	.26	(5)
Class 529-E:
Year ended 10/31/2005	29.46	.56		6.45	7.01	(.47)	36.00	24.02	4		1.55		1.49		1.65
Year ended 10/31/2004	25.46	.36		4.18	4.54	(.54)	29.46	18.07	2		1.62		1.61		1.31
Year ended 10/31/2003	18.86	.31		6.53	6.84	(.24)	25.46	36.64	1		1.69		1.69		1.47
Period from 3/22/2002 to 10/31/2002	22.57	.10		(3.81)	(3.71)	-	18.86	(16.44)	-	(6)	1.66	(5)	1.66	(5)	.78	(5)
Class 529-F:
Year ended 10/31/2005	29.53	.68		6.47	7.15	(.53)	36.15	24.49	4		1.17		1.11		2.02
Year ended 10/31/2004	25.54	.43		4.18	4.61	(.62)	29.53	18.33	2		1.37		1.36		1.54
Year ended 10/31/2003	18.90	.39		6.52	6.91	(.27)	25.54	37.01	1		1.43		1.43		1.74
Period from 9/17/2002 to 10/31/2002	19.44	-	(7)	(.54)	(.54)	-	18.90	(2.78)	-	(6)	.17		.17		-	(8)
Class R-1:
Year ended 10/31/2005	$29.22	$.40		$6.41	$6.81	$(.39)	$35.64	23.51%	$3		2.06%		1.92%		1.19%
Year ended 10/31/2004	25.33	.25		4.14	4.39	(.50)	29.22	17.57	2		2.16		2.04		.92
Year ended 10/31/2003	18.85	.23		6.50	6.73	(.25)	25.33	36.07	-	(6)	2.84		2.10		1.05
Period from 6/11/2002 to 10/31/2002	22.44	.01		(3.60)	(3.59)	-	18.85	(16.00)	-	(6)	3.49		.81		.06
Class R-2:
Year ended 10/31/2005	29.21	.41		6.40	6.81	(.40)	35.62	23.53	47		2.27		1.89		1.23
Year ended 10/31/2004	25.34	.25		4.14	4.39	(.52)	29.21	17.58	17		2.57		2.00		.91
Year ended 10/31/2003	18.86	.22		6.51	6.73	(.25)	25.34	36.09	6		2.69		2.06		.98
Period from 6/7/2002 to 10/31/2002	22.37	(.02)		(3.49)	(3.51)	-	18.86	(15.69)	1		1.04		.83		(.11)
Class R-3:
Year ended 10/31/2005	29.53	.55		6.47	7.02	(.48)	36.07	24.02	41		1.60		1.51		1.62
Year ended 10/31/2004	25.56	.36		4.18	4.54	(.57)	29.53	18.03	16		1.70		1.62		1.30
Year ended 10/31/2003	18.96	.30		6.56	6.86	(.26)	25.56	36.63	6		1.84		1.68		1.37
Period from 6/6/2002 to 10/31/2002	22.41	.03		(3.48)	(3.45)	-	18.96	(15.39)	1		.77		.68		.13
Class R-4:
Year ended 10/31/2005	29.72	.68		6.49	7.17	(.56)	36.33	24.44	14		1.21		1.15		1.98
Year ended 10/31/2004	25.68	.47		4.20	4.67	(.63)	29.72	18.48	3		1.29		1.27		1.66
Year ended 10/31/2003	18.90	.39		6.57	6.96	(.18)	25.68	37.14	1		1.43		1.33		1.79
Period from 10/7/2002 to 10/31/2002	18.21	-	(7)	.69	.69	-	18.90	3.79	-	(6)	.13		.09		-	(8)
Class R-5:
Year ended 10/31/2005	29.76	.78		6.51	7.29	(.62)	36.43	24.83	187		.89		.84		2.28
Year ended 10/31/2004	25.66	.55		4.20	4.75	(.65)	29.76	18.83	87		.95		.94		1.96
Year ended 10/31/2003	18.93	.46		6.57	7.03	(.30)	25.66	37.60	45		1.01		1.01		2.15
Period from 5/15/2002 to 10/31/2002	23.05	.12		(4.24)	(4.12)	-	18.93	(17.87)	27		.46		.46		.62

	Year ended October 31
		2005	2004	2003	2002	2001

Portfolio turnover rate for all classes of shares		26%	20%	30%	32%	40%

(1) Based on operations for the period shown (unless otherwise noted) and, accordingly, may not be representative of a full year.

(2) Based on average shares outstanding.

(3) Total returns exclude all sales charges, including contingent deferred sales charges.

(4) The ratios in this column reflect the impact, if any, of certain reimbursements/waivers from CRMC.

During some of the periods shown, CRMC reduced fees for investment advisory services for all share classes.

In addition, during the start-up period for the retirement plan share classes (except Class R-5),

CRMC agreed to pay a portion of the fees related to transfer agent services.

(5) Annualized.

(6) Amount less than $1 million.

(7) Amount less than one cent.

(8) Amount less than .01 percent.

See Notes to Financial Statements

Report of independent registered public accounting firm

To the Shareholders and Board of Directors of New World Fund, Inc.:

We have audited the accompanying statement of assets and liabilities of New World Fund, Inc. (the “Fund”), including the summary investment portfolio, as of October 31, 2005, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2005, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of New World Fund, Inc. as of October 31, 2005, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP

Costa Mesa, California

December 14, 2005

Tax information unaudited

We are required to advise you within 60 days of the fund’s fiscal year-end regarding the federal tax status of certain distributions received by shareholders during such fiscal year. The information below is provided for the fund’s fiscal year ended October 31, 2005.

The amount of foreign taxes passed through to shareholders for the fiscal year was $9,983,000. Foreign source income earned by the fund for the fiscal year was $129,627,000.

Individual shareholders are eligible for reduced tax rates on qualified dividend income. The fund designates $73,460,000 of the dividends received as qualified dividend income.

Corporate shareholders may exclude up to 70% of qualifying dividends. The fund designates $2,274,000 of dividends received as qualified dividend income.

For state tax purposes, certain states may exempt from income taxation that portion of the income dividends paid by the fund that were derived from direct U.S. government obligations. The fund designates $390,000 as interest derived on direct U.S. government obligations.

Individual shareholders should refer to their Form 1099-DIV or other tax information, which will be mailed in January 2006, to determine the calendar year amounts to be included on their 2005 tax returns. Shareholders should consult their tax advisers.