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CAPITAL WORLD BOND FUND
SEMI-ANNUAL REPORT
FOR THE SIX MONTHS ENDED MARCH 31, 1995
[The American Funds Group(R)]
CAPITAL WORLD BOND FUND (R) is designed to help you take advantage of
fixed-income opportunities around the globe. The fund seeks high total return,
consistent with prudent management, by investing in quality fixed-income
securities issued primarily by major governments and corporations throughout
the world, including the United States. That total return is made up of three
elements: interest income, any change in the local market value of the fund's
investments and any change in the value of other currencies against the U.S.
dollar.
Fund results in this report were computed without a sales charge unless
otherwise indicated. Here are the total returns and average annual compound
returns with all distributions reinvested, assuming payment of the 4.75%
maximum sales charge at the beginning of the stated periods.
<TABLE>
<CAPTION>
Periods Ended 3/31/95 Total Return Average Annual
Compound Return
<S> <C> <C>
Lifetime (since 8/4/87) +86.97% +8.52%
Five Years +57.86 +9.56
One Year +3.55 -
</TABLE>
Sales charges are lower for accounts of $25,000 or more. The fund's 30-day
yield as of April 30, 1995, calculated in accordance with the Securities and
Exchange Commission formula, was 6.51%. The fund's distribution rate as of that
date was 5.57%. The SEC yield reflects income earned by the fund, while the
distribution rate reflects dividends actually paid by the fund.
THE FIGURES IN THIS REPORT REFLECT PAST RESULTS. SHARE PRICE AND RETURN WILL
VARY, SO YOU MAY HAVE A GAIN OR LOSS OF PRINCIPAL WHEN YOU SELL YOUR SHARES.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR INSURED OR GUARANTEED BY,
THE U.S. GOVERNMENT, ANY FINANCIAL INSTITUTION, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, OR ANY OTHER AGENCY, ENTITY OR PERSON. All investments are subject
to certain risks. For example, those which include bonds are affected by
interest rate fluctuations. Investments in non-U.S. bonds are subject to
additional risks including currency fluctuations, political and social
instability, differing securities regulations and accounting standards, higher
transaction costs and possible changes in taxation. Accordingly, investors
should maintain a long-term perspective.
FELLOW SHAREHOLDERS:
After experiencing one of the worst bond markets in history last year, it is
heartening to be able to report some good news. The fiscal half-year ended
March 31 was a very rewarding period for Capital World Bond Fund. The value of
your holdings rose 9.6% on a total return basis if, like most shareholders, you
reinvested income dividends totaling 74 cents a share. During this same period,
the U.S. bond market, as measured by the unmanaged Salomon Brothers Broad
Investment-Grade Bond Index, gained 5.5%.
What a difference six months makes. In our report to you last November, we
described an environment in which the Federal Reserve and other central banks
were raising interest rates to ward off inflation; bond prices were falling,
and nearly every major bond market in the world was experiencing negative
returns.
By contrast, over the past six months fears about economic overheating have
subsided. In most industrialized countries, long-term interest rates have
either stabilized or declined, and long-term bond prices have stopped skidding.
In some places they have turned up; in Japan, they have risen substantially.
The fund's six-month results reflect appreciation by several major currencies
against the dollar but were achieved without a large exposure in Japan, where
Investment Results at a Glance
(for periods ended March 31, 1995)
Total return over the fund's lifetime (since 8/4/87) + 96.3%
Total return for the latest 12 months + 8.7%
Total return for the latest six months + 9.6%
a combination of declining interest rates and an appreciating currency produced
by far the best total return of any world market. With the dollar hitting new
lows against Japan's currency, we felt it was prudent to hedge a portion of our
Japanese holdings into dollars. As shown in the table on page 5, this left us
with a currency weighting in yen on March 31 that was well below the weighting
in the unmanaged Salomon Brothers World Government Bond Index, which tracks all
major markets. Our securities weighting also was below the weighting in that
index. As a result, for the six months the fund trailed this index, which
recorded a total return of 11.5%.
[Pull Quote]
The fiscal half-year ended March 31 was a very rewarding period for Capital
World Bond Fund.
[End Pull Quote]
In our view, the yen has become grossly overvalued against the dollar, far
exceeding levels justifiable by fundamental economic analysis. We have been
under-represented in yen bonds and optimistic about the dollar for some time,
and we remain unshaken in our belief that the greenback will soon reach bottom.
Capital World Bond Fund Net Assets
North America 44.4%
Europe 35.3%
Pacific Basin 20.3%
World Bond Market Capitalization
North America 38.5%
Europe 40.0%
Pacific Basin 21.5%
Percentages weighted by currency, based on table shown on page 5.
During the October-March period, we made a few adjustments in the fund's
portfolio that are worth noting. In addition to increasing our U.S. holdings,
we also bought more German bonds, while reducing our investments in Finland and
France. Yet the overall structure of the portfolio remains roughly the same as
at the start of the fiscal year. More than a third of it is concentrated in
Europe, where, in our judgment, top-quality fixed-income securities represent
good value. European economies do not seem as strong as they were in 1994, and
inflation rates in most of Europe are not increasing. Moreover, monetary
policies remain fairly tight, and bond yields are high relative to the U.S. and
extremely high relative to Japan. We feel this combination of circumstances
bodes well for European bonds.
Also on the positive side, the fund avoided the impact of the December
devaluation of the Mexican peso. That traumatic event drove bond and stock
prices lower in Mexico as well as in numerous other developing countries in
Latin America and elsewhere. Global bond funds holding developing-world debt
were hurt, in some cases badly, by the devaluation and its ripple effects.
Although Capital World Bond Fund can purchase investment-grade bonds
denominated in the currencies of developing countries, it currently owns none.
Partly for that reason, your fund did better for the six months than most
mutual funds in its universe; as a group, general world income funds recorded
an average total return of only 2.2%, according to Lipper Analytical Services.
It should be added that as the economic fundamentals in developing countries
change over time, we may see more attractive values in the bonds of those
countries.
Looking back over the past 12 months, Capital World Bond Fund showed a total
return of 8.7%, and this also surpassed the return recorded by a majority of
its peers; the average general world income fund tracked by Lipper gained 2.4%.
That placed your fund in the top 22% of its universe of 124 funds for those 12
months. The figures for the past five years are equally impressive. Your fund's
average annual compound return of 10.6% placed it in the top 15% of the 27
comparable funds in existence throughout that period.
[Pull Quote]
The fund's six-month results reflect appreciation by several major currencies
against the dollar but were achieved without a large exposure in Japan.
[End Pull Quote]
The results for the six-month period bring the fund's total return since
operations began in August 1987 to 96.3%. That works out to an average compound
rate of 9.2% a year, almost two and one-half times the average annual inflation
rate of 3.8% for that period as measured by the Consumer Price Index.
Capital World Bond Fund's results continue to underscore the advantages of
diversifying bond investments globally. We look forward to reporting to you
again this autumn, after the close of our fiscal year.
Cordially,
Paul G. Haaga, Jr.
Chairman Of The Board
Abner D. Goldstine
President
May 12, 1995
Where the Fund's Assets Are Invested
<TABLE>
<CAPTION>
CAPITAL WORLD SALOMON BROS.
BOND FUND WORLD GOV'T
NET ASSETS BOND INDEX
Currency of Securities Currency Average Weighting Average
Denomination Weighting# Weighting# Maturity Maturity
as of 3/31/95 by by
Currency Currency
<S> <C> <C> <C> <C> <C>
United States 23.6% 39.1% 5.8 yrs 35.7% 8.1 yrs
Japan 13.2 8.3 5.8 20.6 6.8
Netherlands 7.1 2.0 24.8 3.1 7.9
New Zealand 6.9 6.9 6.6 * *
Denmark 6.1 4.8 9.0 1.5 6.1
Germany 6.0 6.0 5.9 10.8 6.2
Spain 5.8 5.8 5.6 2.1 4.9
United Kingdom 5.5 5.5 6.4 5.3 10.2
Canada 5.3 5.3 10.1 2.8 8.7
Australia 5.1 5.1 10.3 0.9 6.4
Sweden 3.4 2.5 4.3 1.4 6.2
Ireland 2.9 2.9 5.6 * *
Italy 2.8 2.8 6.1 6.0 5.0
Finland 2.7 1.4 8.8 * *
France 2.5 0.5 23.2 6.3 8.6
ECU^ 1.1 1.1 5.9 * *
Austria - - - 0.8 5.7
Belgium - - - 2.7 6.5
100.0% 100.0% 100.0%
</TABLE>
#Securities and currency weightings may differ due to the fund's use of hedging
techniques designed to control its exposure to fluctuations in exchange rates.
Short-term investments, cash equivalents, receivables and payables are included
in the securities weighting.
*This market is not included in the index.
^ European Currency Unit
CAPITAL WORLD BOND FUND
INVESTMENT PORTFOLIO March 31, 1995 Unaudited
<TABLE>
<CAPTION>
Principal Market Percent
Amount Value of Net
(000) (000) Assets
<S> <C> <C> <C>
Bonds & Notes
Australian Dollars
Australian Government 12.00% 1999 A$ 6,000 US$4,790 .83%
Australian Government 9.00% 2004 1,000 697 .12
Australian Government 6.75% 2006 10,000 5,761 1.00
New South Wales Treasury 11.50%
Eurobond 1999 1,000 780 .14
New South Wales Treasury 7.00% 2004 12,000 6,911 1.20
News America Holdings Inc. 8.625% 2014 11,000 6,011 1.05
Southern Australia Finance Authority
11.25% 2001 5,500 4,150 .72
-------- --------
29,100 5.06
-------- --------
British Pounds
National Westminster Bank PLC 11.75% 2001 Br.Pound 3,000 5,394 .94
United Kingdom 15.25% 1996 3,750 6,565 1.14
United Kingdom 9.50% 1999 5,000 8,388 1.46
United Kingdom 8.00% 2000 400 636 .11
United Kingdom 7.00% 2001 2,500 3,740 .65
United Kingdom 4.375% 2004/1/ 1,000 1,775 .31
United Kingdom 9.00% 2012 2,900 4,901 .85
-------- --------
31,399 5.46
-------- --------
Canadian Dollars
Canadian Government 6.25% 1995 C$ 7,000 4,955 .86
Canadian Government 10.75% 1998 2,000 1,528 .26
Canadian Government 9.75% 2001 12,250 9,364 1.63
Canadian Government 0% 2003 6,000 2,046 .35
Canadian Government 0% 2005 12,685 3,722 .65
Canadian Government 10.75% 2009 13,000 10,844 1.89
Canadian Government 4.25% 2021/1/ 4,000 2,752 .48
-------- --------
35,211 6.12
-------- --------
Danish Kroners
Danish Government 9.00% 1998 DKr124,000 23,217 4.04
Danish Government 8.00% 2003 31,500 5,488 .96
Danish Government 7.00% 2024 44,000 6,231 1.08
-------- --------
34,936 6.08
-------- --------
Deutsche Marks
Bundesrepublik 6.625% 1998 DM10,000 7,386 1.28
Bundesschatzanweisungen 6.875% 1998 5,000 3,692 .64
Deutschland Republic 6.75% 2003 15,750 11,156 1.94
Treuhandanstalt 6.25% 1999 6,000 4,346 .76
Treuhandanstalt 7.375% 2002 11,000 8,104 1.41
-------- --------
34,684 6.03
-------- --------
European Currency Units
France O.A.T. 8.50% 2002 ECU2,000 2,679 .47
Italy (Republic of) 10.75% 2000 2,500 3,574 .62
-------- --------
6,253 1.09
-------- --------
Finnish Markkaa
Finnish Government 11.75% 1996 FM 1,000 243 .04
Finnish Government 9.50% 2004 69,000 15,437 2.69
-------- --------
15,680 2.73
-------- --------
French Francs
France O.A.T. 6.75% 2003 Fr 4,500 867 .15
France O.A.T. 6.75% 2004 15,000 2,880 .50
France O.A.T. 8.50% 2023 50,900 10,769 1.87
-------- --------
14,516 2.52
-------- --------
Irish Pounds
Ireland (Republic of) 6.25% 1999 IR Pound 6,950 10,218 1.78
Ireland (Republic of) 9.25% 2003 3,800 6,249 1.08
-------- --------
16,467 2.86
-------- --------
Italian Lire
Deutsche Bank Finance NV 11.00% 1996 Lr 3,950,000 2,298 .40
Italian Government 8.50% 1999 4,400,000 2,258 .39
Italian Government 8.50% 1999 5,400,000 2,711 .47
Italian Government 8.50% 2004 4,500,000 2,025 .35
Italian Government 8.50% 2004 12,700,000 5,671 .99
KfW International Finance Inc.
11.625% 1998 2,500,000 1,452 .26
-------- --------
16,415 2.86
-------- --------
Japanese Yen
European Investment Bank 6.75% 2001 Yen 2,100,000 28,532 4.96
Export-Import Bank of Japan 4.375% 2003 1,475,000 17,832 3.10
GMAC International Finance 3.75% 1999 700,000 8,130 1.42
International Bank for Reconstruction
and Development 4.50% 1997 315,000 3,831 .67
Japan Development Bank
5.00% Eurobond 1999 1,050,000 13,117 2.28
Oesterreichische KontrollBank AG
4.625% 1997 350,000 4,257 .74
-------- --------
75,699 13.17
-------- --------
Netherlands Guilders
Netherlands Government 7.50% 1999 NLG 5,000 3,361 .59
Netherlands Government 7.25% 2004 3,600 2,322 .40
Netherlands Government 7.50% 2023 57,300 35,474 6.17
-------- --------
41,157 7.16
-------- --------
New Zealand Dollars
New Zealand Government 10.00% 1997 NZ$ 1,000 676 .12
New Zealand Government 6.50% 2000 36,550 22,357 3.89
New Zealand Government 8.00% 2004 25,500 16,675 2.90
-------- --------
39,708 6.91
-------- --------
Spanish Pesetas
Spain (Kingdom of) 8.30% 1998 Pta 505,000 3,562 .62
Spain (Kingdom of) 11.45% 1998 2,020,000 15,719 2.73
Spain (Kingdom of) 10.50% 2003 2,000,000 14,255 2.48
-------- --------
33,536 5.83
-------- --------
Swedish Kronor
Swedish Government 10.75% 1997 SKr 24,500 3,328 .58
Swedish Government 11.00% 1999 101,000 13,699 2.38
Swedish Government 6.00% 2005 28,000 2,566 .45
-------- --------
19,593 3.41
-------- --------
United States Dollars
Bayerische Landesbank Girozentrale
7.375% 2002 US$ 1,000 987 .17
Capital One Bank 8.125% 1998 2,000 2,008 .35
CEZ Finance BV 144A 8.875% 1999 2,000 2,064 .36
ConAgra, Inc. 9.75% 2021 8,500 9,540 1.66
Czech National Bank Eurobond 7.00% 1996 8,000 7,984 1.39
Den Danske Bank 144A 6.55% 2003 1,000 890 .15
Federal Home Loan Mortgage Corp.
8.50% 2020/2/ 1,835 1,856 .32
Government National Mortgage Assn.
9.00% 2017-2025/2/ 5,714 5,896 1.02
Province of Ontario 5.70% 1997 1,000 965 .17
Skandinaviska Enskilda Banken 6.875%
2009 4,000 3,514 .61
Standard Credit Card Trust, credit card
participation certificates, Series
1991-4A, 8.00% 1997 3,000 3,035 .53
Standard Credit Card Trust, credit card
participation certificates, Series
1990-6A, 9.375% 1998 2,200 2,297 .40
Svenska Handelsbanken, Inc. 8.125% 2007 500 494 .09
United States Treasury 4.750% 1998 11,500 10,727 1.87
United States Treasury 5.375% 1998 3,000 2,865 .50
United States Treasury 6.375% 1999 22,000 21,447 3.73
United States Treasury 6.375% 2002 6,000 5,720 1.00
United States Treasury 11.625% 2004 1,000 1,295 .22
United States Treasury 10.375% 2009 7,000 8,411 1.46
United States Treasury 6.250% 2023 1,000 852 .15
-------- --------
92,847 16.15
-------- --------
Total bonds and notes (cost:
$519,920,000) 537,201 93.44
-------- --------
Short-Term Securities
Corporate Short-Term Notes
Caterpillar Financial Services Corp.
9.39% 12/5/95 500 508 .09
Daimler-Benz North America Corp.
5.98% due 05/08/95 10,000 9,937 1.73
Exxon Imperial U.S. Inc.
5.94% to 5.95% due 4/4 to 4/10/95 8,900 8,889 1.55
UBS Finance (Delaware) Inc.
6.32% due 04/03/95 13,200 13,193 2.29
-------- --------
32,527 5.66
-------- --------
Non-U.S. Currency
Deutsche Mark Deposit DM167 121 .02
-------- --------
Total Short-Term Securities (cost:
$32,647,000) 32,648 5.68
-------- --------
Total Investment Securities (cost:
$552,567,000) 569,849 99.12
Excess of cash and receivables over
payables 5,019 .88
-------- --------
Net Assets $574,868 100.00%
======== ========
</TABLE>
/1/ Represents an index-linked bond, which
is a floating rate bond whose principal
amount moves with a government retail
price index.
/2/ Pass-through security backed by a pool
of mortgages or other loans on which
principal payments are periodically
made. Therefore, the effective maturity
of this security is shorter than the
stated maturity.
See Notes to Financial Statements
CAPITAL WORLD BOND FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
at March 31, 1995
<TABLE>
<CAPTION>
(dollars in thousands)
<S> <C> <C>
Assets:
Investment securities at market
(cost: $552,567) $569,849
Cash 144
Receivables for-
Sales of fund's shares $1,027
Accrued interest 15,411 16,438
--------- ---------
586,431
Liabilities:
Payables for-
Purchases of investments 5,427
Repurchases of fund's shares 667
Open forward currency contracts 5,139
Management services 330 11,563
--------- ---------
Net Assets at March 31, 1995-
Equivalent to $16.02 per share on
35,885,924 shares of $0.01 par value
capital stock outstanding (authorized
capital stock - 200,000,000 shares) $574,868
=========
Statement of Operations
for the six months ended March 31, 1995
(dollars in thousands)
Investment Income:
Income:
Interest $23,541
---------
Expenses:
Management services fee $1,951
Distribution expenses 625
Transfer agent fee 245
Reports to shareholders 3
Registration statement and prospectus 3
Postage, stationery and supplies 30
Directors' fees 7
Auditing and legal fees 8
Custodian fee 126
Taxes other than federal income tax 9
Other expenses 8 3,015
--------- ---------
Net investment income 20,526
---------
Realized Loss and Unrealized Appreciation:
Net realized loss (8,331)
Net unrealized appreciation
on investments 42,103
Net unrealized depreciation on
open forward currency contracts (2,161)
---------
Net unrealized appreciation 39,942
---------
Net realized loss and change in
unrealized appreciation on investments 31,611
---------
Net Increase in Net Assets Resulting
from Operations $52,137
=========
Statement of Changes in Net Assets
(dollars in thousands)
Six months Year
ended ended
3/31/95* 9/30/94
--------- ---------
Operations:
Net investment income $20,526 $37,771
Net realized loss on investments (8,331) (4,212)
Net unrealized appreciation (depreciation)
on investments 39,942 (40,576)
--------- ---------
Net increase (decrease) in net
assets resulting from operations 52,137 (7,017)
--------- ---------
Dividends and Distributions
Paid to Shareholders:
Dividends from net
investment income (27,269) (30,899)
Distributions from net realized
gain on investments 0 (3,706)
--------- ---------
Total dividends and distributions (27,269) (34,605)
--------- ---------
Capital Share Transactions:
Proceeds from shares sold:
4,362,563 and 18,607,545
shares, respectively 67,203 298,788
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions of
net realized gain on investments:
1,529,282 and 1,828,168 shares, respectively 23,326 28,937
Cost of shares repurchased:
7,550,945 and 10,172,029
shares, respectively (116,135) (160,190)
--------- ---------
Net (decrease) increase in net assets
resulting from capital share
transactions (25,606) 167,535
--------- ---------
Total (Decrease) Increase in Net Assets (738) 125,913
Net Assets:
Beginning of period 575,606 449,693
--------- ---------
End of period (including undistributed
net investment income: $7,650 and
$14,392, respectively) $574,868 $575,606
========= =========
*Unaudited
</TABLE>
See Notes to Financial Statements
Notes to Financial Statements
1. Capital World Bond Fund, Inc. (the "fund") is registered under the
Investment Company Act of 1940 as an open-end, nondiversified management
investment company. The following paragraphs summarize the significant
accounting policies consistently followed by the fund in the preparation of its
financial statements:
Bonds and notes are valued at prices obtained from a bond-pricing service
provided by a major dealer in bonds, when such prices are available; however,
in circumstances where the investment adviser deems it appropriate to do so,
such securities will be valued at the mean of their representative quoted bid
and asked prices or, if such prices are not available, at the mean of such
prices for securities of comparable maturity, quality and type. Securities
denominated in non-U.S. currencies are generally valued on the basis of bid
quotations. Short-term securities with original or remaining maturities in
excess of 60 days, including forward currency contracts, are valued at the mean
of their quoted bid and asked prices. Short-term securities with 60 days or
less to maturity are valued at amortized cost, which approximates market value.
Securities for which market quotations are not readily available are valued at
fair value as determined in good faith by the Valuation Committee of the Board
of Directors.
As is customary in the mutual fund industry, securities transactions are
accounted for on the date the securities are purchased or sold. Realized gains
and losses from securities transactions are reported on an identified cost
basis. Interest income is reported on the accrual basis. Discounts on
securities purchased are amortized over the life of the respective securities.
The fund does not amortize premiums on securities purchased. Distributions to
shareholders are recorded on the ex-dividend date.
Investment securities, including forward currency contracts, denominated in
non-U.S. currencies are recorded in the financial statements after translation
into U.S. dollars utilizing rates of exchange on the last business day of the
period. Interest income from such investments is calculated using the
approximate exchange rate as accrued or when received. Purchases and sales of
investment securities and interest income are calculated using the approximate
exchange rate as accrued. The fund does not identify the portion of each amount
shown in the fund's statement of operations under the caption "Realized Loss
and Unrealized Appreciation" that arises from changes in non-U.S. currency
exchange rates.
Pursuant to the custodian agreement, the fund receives credit against its
custodian fee for imputed interest on certain balances with the custodian bank.
During the six months ended March 31, 1995, no credit was used to offset the
custodian fee.
2. It is the fund's policy to continue to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its net taxable income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision
is required.
As of March 31, 1995, net unrealized appreciation on investments, excluding
forward currency contracts, for book and federal income tax purposes aggregated
$17,282,000, of which $31,521,000 related to appreciated securities and
$14,239,000 related to depreciated securities. There was no difference between
book and tax realized gains on securities transactions for the six months ended
March 31, 1995. The cost of portfolio securities, excluding forward currency
contracts, for book and federal income tax purposes was $552,567,000 at March
31, 1995.
3. The fee of $1,951,000 for management services was paid pursuant to an
agreement with Capital Research and Management Company (CRMC), with which
certain officers and Directors of the fund are affiliated. The Investment
Advisory and Service Agreement provides for monthly fees, accrued daily, based
on an annual rate of 0.70% of the first $500 million of average net assets;
0.60% of such assets in excess of $500 million but not exceeding $1 billion;
and 0.50% of such assets in excess of $1 billion.
Pursuant to a Plan of Distribution, the fund may expend up to 0.30% of its
average net assets annually for any activities primarily intended to result in
sales of fund shares, provided the categories of expenses for which
reimbursement is made are approved by the fund's Board of Directors. Fund
expenses under the Plan include payments to dealers to compensate them for
their selling and servicing efforts. During the six months ended March 31,
1995, distribution expenses under the Plan were $625,000. As of March 31,
1995, accrued and unpaid distribution expenses were $94,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $245,000. American Funds Distributors, Inc. (AFD), the
principal underwriter of the fund's shares, received $179,179(after allowances
to dealers) as its portion of the sales charges paid by purchasers of the
fund's shares. Such sales charges are not an expense of the fund and, hence,
are not reflected in the accompanying statement of operations.
Directors of the fund who are unaffiliated with CRMC may elect to defer part
or all of the fees earned for services as members of the board. Amounts
deferred are not funded and are general unsecured liabilities of the fund. As
of March 31, 1995, aggregate amounts deferred were $9,000.
CRMC is owned by the Capital Group Companies, Inc. AFS and AFD are both
wholly owned subsidiaries of CRMC. Certain of the Directors and officers of
the fund are or may be considered to be affiliated with CRMC, AFS and AFD. No
such persons received any remuneration directly from the fund.
4. As of March 31, 1995, accumulated net realized loss on investments was
$6,328,000 and paid-in capital was $569,375,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $253,769,000 and $294,220,000, respectively, during
the six months ended March 31, 1995.
The fund purchases forward currency contracts in anticipation of, or to
protect itself against, fluctuations in exchange rates. The contracts are
recorded at market value and reflect the extent of the fund's involvement in
these financial instruments. Risks may arise upon entering these contracts from
the potential inability of counterparties to meet the terms of their contracts
and from possible movements in foreign exchange rates and securities values
underlying these instruments. At March 31, 1995, the fund had outstanding
forward currency contracts to purchase and sell non-U.S. currencies as follows:
- ------------
<TABLE>
<CAPTION>
U.S. Valuation
Non-U.S. Contract Amount at 3/31/95
Currency Unrealized
<S> <C> <C> <C> <C>
Contracts Non-U.S. U.S. Amount Appreciation
(Depreciation)
Purchases:
Deutsche Marks
expiring 9/13/95 DM9,762,095 7,067,000 7,133,000 $66,000
============
Sales:
Danish Kroners
expiring 4/6/95 DKr40,000,000 6,534,000 7,327,000 $(793,000)
Finnish Markaa
expiring 9/13/95 FM33,360,000 7,723,000 7,709,000 14,000
French Francs
expiring 5/7 to
6/7/95 Fr56,267,000 10,491,000 11,636,000 (1,145,000)
Japanese Yen
expiring 6/13 to
9/11/95 Yen 2,357,837,500 25,763,000 27,660,000 (1,897,000)
Netherlands
Guilders
expiring 8/17 to
9/14/95 NLG45,744,663 28,396,000 29,818,000 (1,422,000)
Swedish Kronor
expiring 8/21/95 SKr38,000,000 5,117,000 5,079,000 38,000
------------
$(5,205,000)
============
</TABLE>
- --------------
Per-Share
Data and Ratios
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Six months
ended
March 31, Year Ended September 30
1995
1995/1/ 1994 1993 1992 1991 1990
Net Asset Value, Beginning
of Period $15.33 $16.48 $15.95 $15.60 $14.46 $14.55
---------- ------- ------- ------- ------- -------
Income From Investment
Operations:
Net investment income .57 1.05 .91 1.03 1.05 1.18
Net realized and unrealized
(loss) gain on investments .86 (1.14) .65 .40 1.19 (.08)
--------- ------- ------- ------- ------- -------
Total income from
investment operations 1.43 (.09) 1.56 1.43 2.24 1.10
--------- ------- ------- ------- ------- -------
Less Distributions:
Dividends from net
investment income (.74) (.94) (.84) (1.01) (1.10) (1.19)
Distributions from net
realized gains - (.12)/2/ (.19)/2/ (.07)/2/ - -
--------- ------- ------- ------- ------- -------
Total distributions (0.74) (1.06) (1.03) (1.08) (1.10) (1.19)
--------- ------- ------- ------- ------- -------
Net Asset Value, End of Period $16.02 $15.33 $16.48 $15.95 $15.60 $14.46
========= ======= ======= ======= ======= =======
= =
Total Return/3/ 9.65%/4/ (0.62)% 10.40% 9.46% 16.10% 7.95%
Ratios/Supplemental Data:
Net assets, end of
period (in millions) $575 $576 $450 $224 $76 $41
Ratio of expenses to
average net assets 0.53%/4/ 1.11% 1.19% 1.38% 1.42% 1.52%
Ratio of net income to
average net assets 3.60%/4/ 6.88% 6.25% 6.88% 7.54% 8.40%
Portfolio turnover rate 47.62%/4/ 77.04% 27.95% 95.11% 81.44% 75.53%
</TABLE>
/1/ Unaudited
/2/ Amount includes realized non-
U.S. currency gains of 4 cents, 3 cents
and 7 cents for the years 1994, 1993
and 1992, respectively,
treated as net investment
income for federal income
tax purposes.
/3/ This was calculated without deducting
sales charge; The maximum sales charge
is 4.75% of the fund's offering price.
/4/ Based on operations for the period
shown and, accordingly, not
representative of a full year's operations.
RESULTS OF SHAREHOLDER MEETING HELD MARCH 2, 1995
<TABLE>
<CAPTION>
<S> <C>
Shares Outstanding on January 5, 1995 (record date) 37,124,441
Shares Voting on April 5, 1995 22,835,767 (61.5%)
</TABLE>
- ---------------------------------------------------------------------------
ELECTION OF DIRECTORS
<TABLE>
<CAPTION>
DIRECTOR Votes Percent of Votes Percent of Abstentions Percent of
For Shares Withheld Shares Shares
Voting Voting Voting
- --------------------- ---------- ---------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
H. FREDERICK CHRISTIE 22,026,628 96.5% 809,138 3.5% none 0.0%
DIANE C. CREEL 22,015,563 96.4 823,204 3.6 none 0.0
MARTIN FENTON, JR. 22,031,123 96.5 804,644 3.5 none 0.0
LEONARD R. FULLER 22,023,281 96.5 812,485 3.5 none 0.0
ABNER D. GOLDSTINE 22,028,273 96.5 807,494 3.5 none 0.0
HERBERT HOOVER III 22,036,347 96.5 799,420 3.5 none 0.0
PAUL G. HAAGA, JR. 22,020,274 96.5 815,493 3.5 none 0.0
RICHARD G. NEWMAN 22,027,885 96.5 807,882 3.5 none 0.0
PETER C. VALLI 22,033,981 96.5 801,786 3.5 none 0.0
RATIFICATION OF AUDITORS For Percent of Against Percent of Abstentions Percent of
Shares Shares Shares
Voting Voting Voting
Deloitte & Touche LLP 21,955,010 96.1% 132,683 0.6% 748,073 3.3%
</TABLE>
CAPITAL WORLD BOND FUND
BOARD OF DIRECTORS
H. FREDERICK CHRISTIE
Palos Verdes Estates, California
Private investor; former President and Chief
Executive Officer, The Mission Group; former
President, Southern California Edison Company
DIANE C. CREEL
Long Beach, California
Chairwoman, Chief Executive Officer and President,
The Earth Technology Corporation
MARTIN FENTON, JR.
San Diego, California
Chairman of the Board, Senior Resource Group,
Inc. (senior living centers management)
LEONARD R. FULLER
Los Angeles, California
President, Fuller & Company, Inc.
(financial management consulting firm)
ABNER D. GOLDSTINE
Los Angeles, California
President of the fund
Senior Vice President and Director,
Capital Research and Management Company
PAUL G. HAAGA, JR.
Los Angeles, California
Chairman of the Board of the fund
Senior Vice President and Director,
Capital Research and Management Company
HERBERT HOOVER III
Pasadena, California
Private investor
RICHARD G. NEWMAN
Los Angeles, California
Chairman of the Board, President and Chief
Executive Officer, AECOM Technology Corporation
(architectural engineering)
PETER C. VALLI
Long Beach, California
Chairman of the Board and Chief Executive Officer,
BW/IP International, Inc. (industrial manufacturing)
LEONARD WEIL retired from the Board effective
December 31, 1994. He had been a member
of the Board of Directors since 1987. The
Directors thank him for his many contribu-
tions to the fund.
DIANE CREEL and LEONARD FULLER were elected
Directors effective March 2, 1995.
OTHER OFFICERS
MARY C. CREMIN
Los Angeles, California
Vice President and Treasurer of the fund
Senior Vice President -
Fund Business Management Group,
Capital Research and Management Company
MICHAEL J. DOWNER
Los Angeles, California
Vice President of the fund
Senior Vice President -
Fund Business Management Group,
Capital Research and Management Company
JULIE F. WILLIAMS
Los Angeles, California
Secretary of the fund
Vice President -
Fund Business Management Group,
Capital Research and Management Company
KIMBERLY S. VERDICK
Los Angeles, California
Assistant Secretary of the fund
Compliance Associate -
Fund Business Management Group,
Capital Research and Management Company
ANTHONY W. HYNES, JR.
Los Angeles, California
Assistant Treasurer of the fund
Vice President -
Fund Business Management Group,
Capital Research and Management Company
OFFICES OF THE FUND AND OF THE
INVESTMENT ADVISER, CAPITAL RESEARCH
AND MANAGEMENT COMPANY
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92621-5804
TRANSFER AGENT FOR
SHAREHOLDER ACCOUNTS
American Funds Service Company
P.O. Box 2205
Brea, California 92622-2205
P.O. Box 659522
San Antonio, Texas 78265-9522
P.O. Box 6007
Indianapolis, Indiana 46206-6007
P.O. Box 2280
Norfolk, Virginia 23501-2280
CUSTODIAN OF ASSETS
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, New York 10081-0001
COUNSEL
Morrison & Foerster
345 California Street
San Francisco, California 94104-2675
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
FOR INFORMATION ABOUT YOUR ACCOUNT OR ANY OF THE FUND'S SERVICES, PLEASE
CONTACT YOUR SECURITIES DEALER OR FINANCIAL PLANNER, OR CALL THE FUND'S
TRANSFER AGENT, TOLL-FREE, AT 800/421-0180.
This report is for the information of shareholders of Capital World Bond Fund,
but it may also be used as sales literature when preceded or accompanied by the
current prospectus, which gives details about charges, expenses, investment
objectives and operating policies of the fund. If used as sales material after
June 30, 1995, this report must be accompanied by an American Funds Group
Statistical Update for the most recently completed calendar quarter.
Litho in USA MNC/GRS/2636
Lit. No. WBF-013-0595
Printed on recycled paper
[The American Funds Group(R)]
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