SEC. File Nos. 33-12447
811-5104
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
Registration Statement
Under
the Securities Act of 1933
Post-Effective Amendment No. 13
and
Registration Statement
Under
The Investment Company Act of 1940
Amendment No. 14
CAPITAL WORLD BOND FUND, INC.
(Exact Name of Registrant as specified in charter)
333 South Hope Street
Los Angeles, California 90071
(Address of principal executive offices)
Registrant's telephone number, including area code:
(213) 486-9200
JULIE F. WILLIAMS
333 South Hope Street
Los Angeles, California 90071
(name and address of agent for service)
Copies to:
Cary I. Klafter, Esq.
MORRISON & FOERSTER
345 California Street
San Francisco, California 94104
(Counsel for the Registrant)
The Registrant has filed a declaration pursuant to rule 24f-2
registering an indefinite number of shares under the Securities Act of 1933.
On November 16, 1995, it filed its 24f-2 notice for fiscal 1995.
Approximate date of proposed public offering:
It is proposed that this filing become effective on November 25, 1995, pursuant
to paragraph (b) of rule 485.
CAPITAL WORLD BOND FUND, INC.
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Item Number of
Part "A" of Form N-1A Captions in Prospectus (Part "A")
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Summary of Expenses
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Investment Objective and Policies
5. Management of the Fund Summary of Expenses: Fund Organization and
Management
6. Capital Stock and Other Securities Investment Objective and Policies; Certain
Securities and Investment Techniques;
Fund Organization and Management;
Dividends, Distributions and Taxes
7. Purchase of Securities Being Offered Purchasing Shares
8. Redemption or Repurchase Redeeming Shares
9. Legal Proceedings N/A
</TABLE>
<TABLE>
<CAPTION>
Item Number of Captions in Statement of
Part "B" of Form N-1A Additional Information (Part "B")
<S> <C> <C>
10. Cover Page Cover
11. Table of Contents Table of Contents
12. General Information and History General Information; Investment Restrictions
13. Investment Objectives and Policies Description of Securities and Investment Techniques;
Investment Restrictions
14. Management of the Registrant Fund Officers and Directors; Management
15. Control Persons and Principal Holders Fund Officers and Directors
of Securities
16. Investment Advisory and Other Services Management
17. Brokerage Allocation and Other Practices Execution of Portfolio Transactions
18. Capital Stock and Other Securities None
19. Purchase, Redemption and Pricing of Purchase of Shares; Shareholder
Securities Being Offered Account Services and Privileges
20. Tax Status Dividends, Distributions and Federal Taxes
21. Underwriter Management -- Principal Underwriter
22. Calculation of Performance Data Investment Results
23. Financial Statements Financial Statements
</TABLE>
<TABLE>
<CAPTION>
Item in Part "C"
<S> <C>
24. Financial Statements and Exhibits
25. Persons Controlled by or under
Common Control with Registrant
26. Number of Holders of Securities
27. Indemnification
28. Business and Other Connections of
Investment Adviser
29. Principal Underwriters
30. Location of Accounts and Records
31. Management Services
32. Undertakings
Signature Page
</TABLE>
Prospectus
CAPITAL
WORLD
BOND
FUND(R)
AN OPPORTUNITY FOR AS HIGH A LEVEL
OF TOTAL RETURN OVER THE LONG TERM
AS IS CONSISTENT WITH PRUDENT
INVESTMENT MANAGEMENT THROUGH
FIXED-INCOME INVESTMENTS ALL OVER
THE WORLD
November 25, 1995
[LOGO OF THE AMERICAN FUNDS GROUP(R)]
CAPITAL WORLD BOND FUND
333 South Hope Street
Los Angeles, CA 90071
The fund's investment objective is to seek, over the long term, as high a level
of total return as is consistent with prudent investment management. Total
return consists of a combination of interest income, capital appreciation and
currency gains. The fund seeks to meet this objective by investing primarily in
fixed-income obligations denominated in various currencies, including U.S.
dollars.
This prospectus presents information you should know before investing in the
fund. It should be retained for future reference.
You may obtain the statement of additional information dated November 25, 1995,
which contains the fund's financial statements, without charge, by writing to
the Secretary of the fund at the above address or telephoning 800/421-0180.
These requests will be honored within three business days of receipt.
SHARES OF THE FUND 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. THE PURCHASE OF
FUND SHARES INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
31-010-1195
<PAGE>
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SUMMARY
OF EXPENSES
Average annual
expenses paid over
a 10-year period
would be
approximately $18
per year, assuming
a $1,000
investment and a
5% annual return
with a maximum
sales charge.
TABLE OF CONTENTS
<TABLE>
<S> <C>
Summary of Expenses............................... 2
Financial Highlights.............................. 3
Investment Objective and Policies................. 3
Certain Securities and Investment Techniques...... 5
Investment Results................................ 7
Dividends, Distributions and Taxes................ 8
Fund Organization and Management.................. 9
The American Funds Shareholder Guide.............. 12-20
Purchasing Shares................................. 12
Reducing Your Sales Charge........................ 15
Shareholder Services.............................. 16
Redeeming Shares.................................. 18
Retirement Plans.................................. 20
</TABLE>
IMPORTANT PHONE NUMBERS
Shareholder Services:
800/421-0180 ext. 1
Dealer Services:
800/421-9900 ext. 11
American FundsLine(R):
800/325-3590
(24-hour information)
This table is designed to help you understand costs of investing in the fund.
These are historical expenses; your actual expenses may vary.
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge on purchases
(as a percentage of offering price)... 4.75%/1/
The fund has no sales charge on reinvested dividends, deferred sales charge,/2/
redemption fees or exchange fees.
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management fees......................................... 0.68%
12b-1 expenses.......................................... 0.23%/3/
Other expenses (including audit, legal, shareholder
services, transfer agent and custodian expenses)....... 0.21%
Total fund operating expenses........................... 1.12%
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following
cumulative expenses on a $1,000
investment, assuming
a 5% annual return./4/ $58 $81 $106 $177
</TABLE>
/1/ Sales charges are reduced for certain large purchases. (See "The American
Funds Shareholder Guide: Purchasing Shares--Sales Charges.")
/2/ Any employer-sponsored 403(b) plan or defined contribution plan qualified
under Section 401(a) of the Internal Revenue Code including a "401(k)" plan
with 200 or more eligible employees or any other purchaser investing at
least $1 million in shares of the fund (or in combination with shares of
other funds in The American Funds Group other than the money market funds)
may purchase shares at net asset value; however, a contingent deferred
sales charge of 1% applies on certain redemptions within 12 months
following such purchases. (See "The American Funds Shareholder Guide:
Redeeming Shares--Contingent Deferred Sales Charge.")
/3/ These expenses may not exceed 0.30% of the fund's average net assets
annually. (See "Fund Organization and Management--Plan of Distribution.")
Due to these distribution expenses, long-term shareholders may pay more
than the economic equivalent of the maximum front-end sales charge
permitted by the National Association of Securities Dealers.
/4/ Use of this assumed 5% return is required by the Securities and Exchange
Commission; it is not an illustration of past or future investment results.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES; ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.
2
<PAGE>
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FINANCIAL The following information has been audited by Deloitte
HIGHLIGHTS & Touche LLP, independent accountants, whose
(For a share unqualified report covering each of the most recent
outstanding five years is included in the statement of additional
throughout the information. This information should be read in
fiscal year) conjunction with the financial statements and
accompanying notes which are also included in the
statement of additional information.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30
-----------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987/1/
------ ------ ------ ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, begin-
ning of year........... $15.33 $16.48 $15.95 $15.60 $14.46 $14.55 $15.18 $14.24 $14.29
------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income.. 1.09 1.05 .91 1.03 1.05 1.18 1.16 1.05 .13
Net realized and
unrealized gain (loss)
on investments........ 1.57 (1.14) .65 .40 1.19 (.08) (.36) .82 (.18)
------ ------ ------ ------ ------ ------ ------ ------ ------
Total from Investment
Operations........... 2.66 (.09) 1.56 1.43 2.24 1.10 .80 1.87 (.05)
------ ------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net in-
vestment income....... (1.18)/2/ (.94)/2/ (.84)/2/ (1.01)/2/ (1.10) (1.19) (1.10) (.92) --
Distributions from net
realized gains........ -- (.12) (.19) (.07) -- -- (.33) (.01) --
------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions... (1.18) (1.06) (1.03) (1.08) (1.10) (1.19) (1.43) (.93) --
------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, end of
year................... $16.81 $15.33 $16.48 $15.95 $15.60 $14.46 $14.55 $15.18 $14.24
====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return/3/......... 18.10% (0.62)% 10.40% 9.46% 16.10% 7.95% 5.46% 13.16% 0.33%
RATIOS/SUPPLEMENTAL DATA
Net Assets, end of year
(in millions)......... $653 $576 $450 $224 $76 $41 $35 $35 $12
Ratios of expenses to
average net assets.... 1.12% 1.11% 1.19% 1.38% 1.42% 1.52% 1.30% 1.38% .12%/4/
Ratio of net income to
average net assets.... 6.83% 6.88% 6.25% 6.88% 7.54% 8.40% 7.69% 6.84% .91%/4/
Portfolio turnover
rate.................. 104.96% 77.04% 27.95% 95.11% 81.44% 75.53% 61.57% 94.46% 6.13%/4/
</TABLE>
--------
/1/ Period from 8/4/87-9/30/87.
/2/ Amount includes realized non-U.S. currency gains of 12c, 4c, 3c and 7c for
the years ended 1995, 1994, 1993 and 1992, respectively, treated as net
investment income for federal income tax purposes.
/3/ This was calculated without deducting a sales charge. The maximum sales
charge is 4.75% of the fund's offering price.
/4/ These ratios are based on operations for the period shown, and,
accordingly, are not representative of a full year's operations.
INVESTMENT The fund's investment objective is to seek, over the
OBJECTIVE long term, as high a level of total return as is
AND POLICIES consistent with prudent investment management. Total
return consists of a combination of interest income,
The fund's goal is capital appreciation and currency gains. The fund seeks
to provide you to achieve its objective by investing primarily in debt
with as high a obligations denominated in various currencies,
level of total including U.S. dollars, or in multinational currency
return as is units such as European Currency Units (ECU's).
consistent
withprudent The fund may purchase debt obligations issued or
investment guaranteed by the United States or governments
management over (including states, provinces or municipalities) of
the long term. countries other than the U.S., or by their agencies,
authorities or instrumentalities, or by supranational
entities organized or supported by several national
governments, such as the International Bank for
Reconstruction and Development (the "World Bank"), the
Inter-American Development Bank, the Asian Development
Bank and the European Investment Bank. It also may
purchase debt obligations of United States or non-U.S.
corporations or financial institutions, although it
currently anticipates that its investments in issuers
located outside the United States will be concentrated
in governmental or quasi-governmental issues. The fund
currently contemplates that it will invest
3
<PAGE>
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primarily in obligations denominated in the currencies
of the United States, Japan, Canada, the Western
European nations, New Zealand and Australia, as well as
in multinational currency units.
The fund will limit its purchases of fixed-income
securities to investment grade obligations. For long-
term debt obligations this includes securities that are
rated Baa or better by Moody's Investors Service, Inc.
or BBB or better by Standard & Poor's Corporation, or
that are not rated but considered to be of equivalent
quality by the fund's investment adviser, Capital
Research and Management Company. Securities rated
Baa/BBB have speculative characteristics.
The fund's portfolio of debt securities will be fully
managed. Under normal market conditions, the fund will
invest at least 65% of its assets in bonds. (For this
purpose, bonds are considered to be any debt securities
having initial maturities in excess of one year.)
Issuers of these bonds will be located in at least
three countries and issuers located in any one country
(other than the United States) will represent no more
than 40% of total assets. For defensive reasons or
during times of international political or economic
uncertainty, most or all of the fund's investments
temporarily may be made in the United States and
denominated in U.S. dollars.
The fund may hold a portion of its assets in U.S.
dollars and other currencies and in cash equivalents of
either U.S. issuers or issuers outside the U.S. (see
the statement of additional information for a
description of cash equivalents). The fund may also
invest in fixed-income obligations convertible into
equity securities or having attached warrants or rights
to purchase equity securities (subject to certain
limitations described in the statement of additional
information).
The fund is a non-diversified investment company, and
is therefore not subject to any investment restriction
on the percentage of its assets that may be invested at
any time in the securities of any one issuer. See "Fund
Organization and Management." However, the fund intends
to limit its investment in the securities of any single
issuer, except for securities issued or guaranteed as
to payment of principal and interest by governments or
their agencies or instrumentalities or by supranational
agencies, to 5% of its total assets at the time of
purchase.
The fund's investment restrictions (which are described
in the statement of additional information) and objec-
tive cannot be changed without shareholder approval.
All other investment practices may be changed by the
fund's board.
THE FUND IS SUBJECT TO THE RISK OF FLUCTUATING INTEREST
RATES AND SHARE VALUES AND THERE IS NO ASSURANCE THAT
ITS OBJECTIVE WILL BE REALIZED.
4
<PAGE>
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CERTAIN INVESTING IN VARIOUS COUNTRIES Investing globally in-
SECURITIES AND volves special risks, particularly in certain develop-
INVESTMENT ing countries, caused by, among other things: trade
TECHNIQUES balances and imbalances, and related economic policies;
expropriation or confiscatory taxation; limitations on
Investing outside the removal of funds or other assets; political or so-
the U.S. involves cial instability; the diverse structure and liquidity
special risks and of the various securities markets; nationalization pol-
opportunities. icies of governments around the world; and other spe-
cific local political and economic considerations. Com-
panies located outside the United States operate under
different accounting, auditing and financial reporting
regulations than U.S. companies, and frequently there
is less information publicly available about such com-
panies. However, in the opinion of Capital Research and
Management Company, global investing also can reduce
certain of these risks through greater diversification
opportunities.
Additional costs could be incurred in connection with
the fund's investment activities. Brokerage commissions
are generally higher outside the U.S., and the fund
will bear certain expenses in connection with its cur-
rency transactions. Increased custodian costs as well
as administrative difficulties (for example, delays in
clearing and settling portfolio transactions or in re-
ceiving payments of dividends) may be associated with
the maintenance of assets in certain jurisdictions.
CURRENCY TRANSACTIONS The fund has the ability to enter
into forward currency contracts and purchase put or
call options on currencies to protect against changes
in currency exchange rates. However, there is no
assurance that such strategies will be successful.
Moreover, due to the expenses involved, the fund will
not generally attempt to protect against all potential
changes in exchange rates.
RISKS If market interest rates decline, fixed-income
securities such as bonds generally appreciate in value.
If the currency in which a security is denominated
appreciates against the U.S. dollar, the dollar value
of the security will increase. Conversely, a rise in
interest rates or a decline in the exchange rate of the
currency would adversely affect the value of the
security expressed in dollars. Fixed-income securities
denominated in currencies other than the U.S. dollar or
in multinational currency units are evaluated on the
strength of the particular currency against the U.S.
dollar as well as on the current and expected levels of
interest rates in the country or countries.
WHEN-ISSUED SECURITIES, FIRM COMMITMENT AGREEMENTS AND
"ROLL" TRANSACTIONS The fund may purchase securities on
a delayed delivery or "when-issued" basis and enter
into firm commitment agreements (transactions whereby
the payment obligation and interest rate are fixed at
the time of the transaction but the settlement is
delayed). The fund as purchaser assumes the risk of any
decline in value of the
5
<PAGE>
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security beginning on the date of the agreement or
purchase. As the fund's aggregate commitments under
these transactions increase, the opportunity for
leverage similarly increases. The fund also may enter
into "roll" transactions which are the sale of
securities issued by the Government National Mortgage
Association commonly known as "GNMA certificates"
(securities representing part ownership of a pool of
mortgage loans on which timely payment of interest and
principal is guaranteed by the U.S. Government) or
other securities together with a commitment (for which
the fund typically receives a fee) to purchase similar,
but not identical, securities at a later date.
PORTFOLIO TURNOVER Portfolio changes will be made
without regard to the length of time particular
investments may have been held. 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.
Fixed-income securities are generally traded on a net
basis and usually neither brokerage commissions nor
transfer taxes are involved. The fund's portfolio
turnover rate would equal 100% if each security in the
fund's portfolio were replaced once per year.
MATURITY Under normal economic and market conditions,
the fund's portfolio will be invested substantially in
intermediate-term (three to ten years to maturity) and
long-term (more than ten years to maturity) debt
securities. However, there are no restrictions on the
maturity composition of the fund's portfolio.
MULTIPLE PORTFOLIO COUNSELOR SYSTEM The basic
investment philosophy of Capital Research and
Management Company is to seek fundamental values at
reasonable prices, using a system of multiple portfolio
counselors in managing mutual fund assets. Under this
system the portfolio of the fund is divided into
segments, which are managed by individual counselors.
Each counselor decides how their segment will be
invested (within the limits provided by the fund's
objective and policies and by Capital Research and
Management Company's investment committee). In
addition, Capital Research and Management Company's
research professionals make investment decisions with
respect to a portion of the fund's portfolio. The
primary individual portfolio counselors for the fund
are listed on the next page.
6
<PAGE>
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<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
YEARS OF EXPERIENCE
AS INVESTMENT PROFESSIONAL
(APPROXIMATE)
YEARS OF EXPERIENCE AS
PORTFOLIO COUNSELORS PORTFOLIO COUNSELOR WITH CAPITAL
FOR PRIMARY TITLE(S) FOR RESEARCH AND
CAPITAL WORLD CAPITAL WORLD MANAGEMENT
BOND FUND BOND FUND COMPANY OR TOTAL
(APPROXIMATE) ITS AFFILIATES YEARS
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mark H. Dalzell Vice President-- 5 years 7 years 18 years
Investment Management
Group, Capital
Research
and Management Company
- ---------------------------------------------------------------------------------------------------------
Laurentius Harrer Vice President, 1 year 2 years 7 years
Capital Research
International*
- ---------------------------------------------------------------------------------------------------------
James R. Mulally Vice President--Fixed Since the fund began 15 years 19 years
Income, Capital operations
Research Company*
- ---------------------------------------------------------------------------------------------------------
Richard T. Schotte Senior Vice President, 1 year 18 years 28 years
Capital Research and
Management Company
- ---------------------------------------------------------------------------------------------------------
</TABLE>
The fund began operations on August 4, 1987.
* Company affiliated with Capital Research and Management Company
- -------------------------------------------------------------------------------
INVESTMENT The fund may from time to time compare its investment
RESULTS results to various unmanaged indices or other mutual
funds in reports to shareholders, sales literature and
The fund has advertisements. The results may be calculated on a to-
averaged a total tal return, yield and/or distribution rate basis for
return of 8.96% a various periods, with or without sales charges. Results
year (assuming the calculated without a sales charge will be higher. Total
maximum sales returns assume the reinvestment of all dividends and
charge was paid) capital gain distributions.
over its lifetime
The fund's yield and the average annual total returns
(August 4, 1987 are calculated in accordance with Securities and Ex-
through change Commission requirements which provide that the
September 30, maximum sales charge be reflected. The fund's distribu-
1995). tion rate is calculated by dividing the dividends paid
by the fund over the last 12 months by the sum of the
month-end price and the capital gains paid over the
last 12 months. For the 30-day period ended September
30, 1995, the fund's SEC yield was 5.83% and the dis-
tribution rate was 6.69% at maximum offering price. The
SEC yield reflects income earned by the fund, while the
distribution rate reflects dividends paid by the fund.
Among the elements used to calculate the SEC yield are
the dividend and interest income earned and expenses
paid by the fund, whereas the income paid to sharehold-
ers is used to calculate the distribution rate. The
fund's total return over the past 12 months and average
annual total returns over the past five-year and life-
time periods, as of September 30, 1995, were 12.53%,
9.42% and 8.96%, respectively. Of course, past results
are not an indication of future results. Further infor-
mation regarding the fund's investment results is con-
tained in the fund's annual report which may be ob-
tained without charge by writing to the Secretary of
the fund at the address indicated on the cover of this
prospectus.
7
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DIVIDENDS, DIVIDENDS AND DISTRIBUTIONS Dividends are usually paid
DISTRIBUTIONS in March, June, October and December. The first three
AND TAXES dividends of each year are normally the same; the
December dividend may be greater or less than the first
Income three reflecting the impact of foreign currency
distributions are transactions. All capital gains, if any, are
usually made in distributed annually, usually in December. When a
March, June, dividend or capital gain is distributed, the net asset
October and value per share is reduced by the amount of the
December. payment.
FEDERAL TAXES The fund intends to operate as a
"regulated investment company" under the Internal
Revenue Code. In any fiscal year in which the fund so
qualifies and distributes to shareholders all of its
net investment income and net capital gains, the fund
itself is relieved of federal income tax.
All dividends and capital gains are taxable whether
they are reinvested or received in cash--unless you are
exempt from taxation or entitled to tax deferral. Early
each year, you will be notified as to the amount and
federal tax status of all dividends and capital gains
paid during the prior year. Such dividends and capital
gains may also be subject to state or local taxes.
IF YOU HAVE NOT FURNISHED A CERTIFIED CORRECT TAXPAYER
IDENTIFICATION NUMBER (GENERALLY YOUR SOCIAL SECURITY
NUMBER) AND HAVE NOT CERTIFIED THAT WITHHOLDING DOES
NOT APPLY, OR IF THE INTERNAL REVENUE SERVICE HAS
NOTIFIED THE FUND THAT THE TAXPAYER IDENTIFICATION
NUMBER LISTED ON YOUR ACCOUNT IS INCORRECT ACCORDING TO
ITS RECORDS OR THAT YOU ARE SUBJECT TO BACKUP
WITHHOLDING, FEDERAL LAW GENERALLY REQUIRES THE FUND TO
WITHHOLD 31% FROM ANY DIVIDENDS AND/OR REDEMPTIONS
(INCLUDING EXCHANGE REDEMPTIONS). Amounts withheld are
applied to your federal tax liability; a refund may be
obtained from the Service if withholding results in
overpayment of taxes. Federal law also requires the
fund to withhold 30% or the applicable tax treaty rate
from dividends paid to certain nonresident alien, non-
U.S. partnership and non-U.S. corporation shareholder
accounts.
This is a brief summary of some of the tax laws that
affect your investment in the fund. Please see the
statement of additional information and your tax
adviser for further information.
8
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FUND FUND ORGANIZATION AND VOTING RIGHTS The fund, an open-
ORGANIZATION end, non-diversified management investment company, was
AND organized as a Maryland corporation in 1987. The fund's
MANAGEMENT board supervises fund operations and performs duties
required by applicable state and federal law. Members
The fund is a of the board who are not employed by Capital Research
member of The and Management Company or its affiliates are paid
American Funds certain fees for services rendered to the fund as
Group, which is described in the statement of additional information.
managed by one of They may elect to defer all or a portion of these fees
the largest and through a deferred compensation plan in effect for the
most experienced fund. Shareholders have one vote per share owned and,
investment at the request of the holders of at least 10% of the
advisers. shares, the fund will hold a meeting at which the board
could be removed by a majority vote. There will not
usually be a shareholder meeting in any year except,
for example, when the election of the board is required
to be acted upon by shareholders under the Investment
Company Act of 1940.
THE INVESTMENT ADVISER Capital Research and Management
Company, a large and experienced investment management
organization founded in 1931, is the investment adviser
to the fund and other funds, including those in The
American Funds Group. Capital Research and Management
Company is located at 333 South Hope Street, Los
Angeles, CA 90071 and at 135 South State College
Boulevard, Brea, CA 92621. (See "The American Funds
Shareholder Guide--Investment Minimums and Fund
Numbers" for a listing of funds in The American Funds
Group.) Capital Research and Management Company manages
the investment portfolio and business affairs of the
fund and receives a fee at the annual rate of 0.70% of
the first $500 million of the fund's assets, plus 0.60%
on net assets in excess of $500 million but not
exceeding $1 billion, plus 0.50% on net assets in
excess of $1 billion.
Capital Research and Management Company is a wholly
owned subsidiary of The Capital Group Companies, Inc.
(formerly "The Capital Group, Inc."), located at 333
South Hope Street, Los Angeles, CA 90071. The research
activities of Capital Research and Management Company
are conducted by affiliated companies which have
offices in Los Angeles, San Francisco, New York,
Washington, D.C., London, Geneva, Singapore, Hong Kong
and Tokyo.
Capital Research and Management Company and its
affiliated companies have adopted a personal investing
policy that is consistent with the recommendations
contained in the report dated May 9, 1994 issued by the
Investment Company Institute's Advisory Group on
Personal Investing. (See the statement of additional
information.)
9
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PORTFOLIO TRANSACTIONS Orders for the fund's portfolio
securities transactions are placed by Capital Research
and Management Company, which strives to obtain the
best available prices, taking into account the costs
and quality of executions. Fixed-income securities are
generally traded on a "net" basis with a dealer acting
as principal for its own account without a stated
commission, although the price of the security usually
includes a profit to the dealer. In underwritten
offerings, securities are usually purchased at a fixed
price which includes an amount of compensation to the
underwriter, generally referred to as the underwriter's
concession or discount. On occasion, securities may be
purchased directly from an issuer, in which case no
commissions or discounts are paid.
Subject to the above policy, when two or more brokers
are in a position to offer comparable prices and
executions, preference may be given to brokers that
have sold shares of the fund or have provided
investment research, statistical, and other related
services for the benefit of the fund and/or other funds
served by Capital Research and Management Company.
PRINCIPAL UNDERWRITER American Funds Distributors,
Inc., a wholly owned subsidiary of Capital Research and
Management Company, is the principal underwriter of the
fund's shares. American Funds Distributors is located
at 333 South Hope Street, Los Angeles, CA 90071, 135
South State College Boulevard, Brea, CA 92621, 8000 IH-
10 West, San Antonio, TX 78230, 8332 Woodfield Crossing
Boulevard, Indianapolis, IN 46240, and 5300 Robin Hood
Road, Norfolk, VA 23513. Telephone conversations with
American Funds Distributors may be recorded or
monitored for verification, recordkeeping and quality
assurance purposes.
PLAN OF DISTRIBUTION The fund has a plan of
distribution or "12b-1 Plan" under which it may finance
activities primarily intended to sell shares, provided
the categories of expenses are approved in advance by
the board and the expenses paid under the plan were
incurred within the last 12 months and accrued while
the plan is in effect. Expenditures by the fund under
the plan may not exceed 0.30% of its average net assets
annually (0.25% of which may be for service fees). See
"Purchasing Shares--Sales Charges" below.
10
<PAGE>
- --------------------------------------------------------------------------------
TRANSFER AGENT American Funds Service Company, a wholly
owned subsidiary of Capital Research and Management
Company, is the transfer agent and performs shareholder
service functions. It was paid a fee of $521,000 for
the fiscal year ended September 30, 1995. Telephone
conversations with American Funds Service Company may
be recorded or monitored for verification,
recordkeeping and quality assurance purposes.
AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS
SERVICE ADDRESS AREAS SERVED
AREA
------------------------------------------------------------
WEST P.O. Box 2205 AK, AZ, CA, HI, ID,
Brea, CA 92622-2205 MT, NV, OR, UT, WA and
Fax: 714/671-7080 outside the U.S.
------------------------------------------------------------
CENTRAL- P.O. Box 659522 AR, CO, IA, KS, LA,
WEST San Antonio, TX 78265-9522 MN, MO, ND, NE, NM,
Fax: 210/530-4050 OK, SD, TX, and WY
------------------------------------------------------------
CENTRAL- P.O. Box 6007 AL, IL, IN, KY, MI,
EAST Indianapolis, IN 46206-6007 MS, OH, TN and WI
Fax: 317/735-6620
------------------------------------------------------------
EAST P.O. Box 2280 CT, DE, FL, GA, MA,
Norfolk, VA 23501-2280 MD, ME, NC, NH, NJ,
Fax: 804/670-4773 NY, PA, RI, SC, VA,
VT, WV and Washington,
D.C.
------------------------------------------------------------
ALL SHAREHOLDERS MAY CALL AMERICAN FUNDS SERVICE COMPANY
AT 800/421-0180 FOR SERVICE.
------------------------------------------------------------
[MAP OF UNITED STATES]
------------------------------------------------------------
West (light grey); Central-West (white); Central-East
(dark grey); East (green)
11
<PAGE>
[LOGO OF THE AMERICAN FUNDS SHAREHOLDER GUIDE]
- --------------------------------------------------------------------------------
PURCHASING METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS
SHARES ---------------------------------------------------------
Your investment See "Investment $50 minimum (except
dealer can help Minimums and Fund where a lower
you establish your Numbers" for minimum is noted
account--and help initial under "Investment
you add to it investment Minimums and Fund
whenever you like. minimums. Numbers").
---------------------------------------------------------
By Visit any Mail directly to
contacting investment dealer your investment
your who is registered dealer's address
investment in the state printed on your
dealer where the account statement.
purchase is made
and who has a
sales agreement
with American
Funds
Distributors.
---------------------------------------------------------
By mail Make your check Fill out the account
payable to the additions form at the
fund and mail to bottom of a recent
the address account statement,
indicated on the make your check
account payable to the fund,
application. write your account
Please indicate number on your check,
an investment and mail the check
dealer on the and form in the
account envelope provided
application. with your account
statement.
---------------------------------------------------------
By wire Call 800/421-0180 Your bank should wire
to obtain your your additional
account investments in the
number(s), if same manner as
necessary. Please described under
indicate an "Initial Investment."
investment dealer
on the account.
Instruct your
bank to wire
funds to:
Wells Fargo Bank
155 Fifth Street
Sixth Floor
San
Francisco, CA 94106
(ABA #121000248)
For credit to the
account of:
American Funds
Service Company
a/c #4600-076178
(fund name)
(your fund acct.
no.)
---------------------------------------------------------
THE FUNDS AND AMERICAN FUNDS DISTRIBUTORS RESERVE
THE RIGHT TO REJECT ANY PURCHASE ORDER.
---------------------------------------------------------
SHARE PRICE Shares are purchased at the offering price
next determined after the order is received by the fund
or American Funds Service Company. In the case of orders
sent directly to the fund or American Funds Service
Company, an investment dealer MUST be indicated. This
price is the net asset value plus a sales charge, if
applicable. Dealers are responsible for promptly
transmitting orders. (See the statement of additional
information under "Purchase of Shares--Price of
Shares.")
The net asset value per share is determined as of the
close of trading (currently 4:00 p.m., New York time) on
each day the New York Stock Exchange is open. The
current value of the fund's total assets, less all
liabilities, is divided by the total number of shares
outstanding and the result, rounded to the nearer cent,
is the net asset value per share. The net asset value
per share of the money market funds normally will remain
constant at $1.00 based on the funds' current practice
of valuing their shares using the penny-rounding method
in accordance with rules of the Securities and Exchange
Commission.
SHARE CERTIFICATES Shares are credited to your account
and certificates are not issued unless specifically
requested. This eliminates the costly problem of lost or
destroyed certificates.
12
<PAGE>
- -------------------------------------------------------------------------------
If you would like certificates issued, please request
them by writing to American Funds Service Company.
There is usually no charge for issuing certificates in
reasonable denominations. CERTIFICATES ARE NOT AVAIL-
ABLE FOR THE MONEY MARKET FUNDS.
INVESTMENT MINIMUMS AND FUND NUMBERS Here are the
minimum initial investments required by the funds in
The American Funds Group along with fund numbers for
use with our automated phone line, American
FundsLine(R) (see description below):
<TABLE>
<CAPTION>
MINIMUM
INITIAL FUND
FUND INVESTMENT NUMBER
---- ---------- ------
<S> <C> <C>
STOCK AND STOCK/BOND FUNDS
AMCAP Fund(R)......... $1,000 02
American Balanced
Fund(R).............. 500 11
American Mutual
Fund(R).............. 250 03
Capital Income
Builder(R)........... 1,000 12
Capital World Growth
and Income Fund(SM).. 1,000 33
EuroPacific Growth
Fund(R).............. 250 16
Fundamental
Investors(SM)........ 250 10
The Growth Fund of
America(R)........... 1,000 05
The Income Fund of
America(R)........... 1,000 06
The Investment Company
of America(R)........ 250 04
The New Economy
Fund(R).............. 1,000 14
New Perspective
Fund(R).............. 250 07
SMALLCAP World
Fund(SM)............. 1,000 35
Washington Mutual In-
vestors Fund(SM)..... 250 01
<CAPTION>
MINIMUM
INITIAL FUND
FUND INVESTMENT NUMBER
---- ---------- ------
<S> <C> <C>
BOND FUNDS
American High-Income Mu-
nicipal Bond Fund(SM).. $1,000 40
American High-Income
Trust(R)............... 1,000 21
The Bond Fund of
America(SM)............ 1,000 08
Capital World Bond
Fund(R)................ 1,000 31
Intermediate Bond Fund
of America(R).......... 1,000 23
Limited Term Tax-Exempt
Bond Fund of
America(SM)............ 1,000 43
The Tax-Exempt Bond Fund
of America(SM)......... 1,000 19
The Tax-Exempt Fund of
California(R)*......... 1,000 20
The Tax-Exempt Fund of
Maryland(R)*........... 1,000 24
The Tax-Exempt Fund of
Virginia(R)*........... 1,000 25
U.S. Government Securi-
ties Fund(SM).......... 1,000 22
MONEY MARKET FUNDS
The Cash Management
Trust of America(R).... 2,500 09
The Tax-Exempt Money
Fund of America(SM).... 2,500 39
The U.S. Treasury Money
Fund of America(SM).... 2,500 49
</TABLE>
--------
* Available only in certain states.
For retirement plan investments, the minimum is $250,
except that the money market funds have a minimum of
$1,000 for individual retirement accounts (IRAs). Mini-
mums are reduced to $50 for purchases through "Auto-
matic Investment Plans" (except for the money market
funds) or to $25 for purchases by retirement plans
through payroll deductions and may be reduced or waived
for shareholders of other funds in The American Funds
Group. TAX-EXEMPT FUNDS SHOULD NOT SERVE AS RETIREMENT
PLAN INVESTMENTS. The minimum is $50 for additional in-
vestments (except as noted above).
SALES CHARGES The sales charges you pay when purchasing
the stock, stock/bond, and bond funds of The American
Funds Group are set forth below. The money market funds
of The American Funds Group are offered at net asset
value. (See "Investment Minimums and Fund Numbers" for
a listing of the funds.)
13
<PAGE>
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DEALER
SALES CHARGE AS CONCESSION
PERCENTAGE OF THE: AS PERCENTAGE
------------------ OF THE
AMOUNT OF PURCHASE NET AMOUNT OFFERING OFFERING
AT THE OFFERING PRICE INVESTED PRICE PRICE
--------------------- ---------- -------- -------------
<S> <C> <C> <C>
STOCK AND STOCK/BOND FUNDS
Less than $50,000................. 6.10% 5.75% 5.00%
$50,000 but less than $100,000.... 4.71 4.50 3.75
BOND FUNDS
Less than $25,000................. 4.99 4.75 4.00
$25,000 but less than $50,000..... 4.71 4.50 3.75
$50,000 but less than $100,000.... 4.17 4.00 3.25
STOCK, STOCK/BOND, AND BOND FUNDS
$100,000 but less than $250,000... 3.63 3.50 2.75
$250,000 but less than $500,000... 2.56 2.50 2.00
$500,000 but less than $1,000,000. 2.04 2.00 1.60
$1,000,000 or more................ none none (see below)
</TABLE>
Commissions of up to 1% will be paid to dealers who
initiate and are responsible for purchases of $1
million or more, for purchases by any employer-
sponsored 403(b) plan or defined contribution plan
qualified under Section 401(a) of the Internal Revenue
Code including a "401(k)" plan with 200 or more
eligible employees (paid pursuant to the fund's plan of
distribution), and for purchases made at net asset
value by certain retirement plans of organizations with
collective retirement plan assets of $100 million or
more as set forth in the statement of additional
information (paid by American Funds Distributors).
American Funds Distributors, at its expense (from a
designated percentage of its income), will, during
calendar year 1996, provide additional promotional
incentives to dealers. Currently these incentives are
limited to the top one hundred dealers who have sold
shares of the fund or other funds in The American Funds
Group. These incentive payments will be based on a pro
rata share of a qualifying dealer's sales. American
Funds Distributors will, on an annual basis, determine
the advisability of continuing these promotional
incentives.
Any employer-sponsored 403(b) plan or defined
contribution plan qualified under Section 401(a) of the
Internal Revenue Code including a "401(k)" plan with
200 or more eligible employees or any other purchaser
investing at least $1 million in shares of the fund (or
in combination with shares of other funds in The
American Funds Group other than the money market funds)
may purchase shares at net asset value; however, a
contingent deferred sales charge of 1% is imposed on
certain redemptions made within one year of the
purchase. (See "Redeeming Shares--Contingent Deferred
Sales Charge.")
Qualified dealers currently are paid a continuing
service fee not to exceed 0.25% of average net assets
(0.15% in the case of the money market funds) annually
in order to promote selling efforts and to
14
<PAGE>
- -------------------------------------------------------------------------------
compensate them for providing certain services. (See
"Fund Organization and Management--Plan of
Distribution.") These services include processing
purchase and redemption transactions, establishing
shareholder accounts and providing certain information
and assistance with respect to the fund.
NET ASSET VALUE PURCHASES The stock, stock/bond and
bond funds may sell shares at net asset value to: (1)
current or retired directors, trustees, officers and
advisory board members of the funds managed by Capital
Research and Management Company, employees of
Washington Management Corporation, employees and
partners of The Capital Group Companies, Inc. and its
affiliated companies, certain family members of the
above persons, and trusts or plans primarily for such
persons; (2) current registered representatives,
retired registered representatives with respect to
accounts established while active, or full-time
employees (and their spouses, parents, and children) of
dealers who have sales agreements with American Funds
Distributors (or who clear transactions through such
dealers) and plans for such persons or the dealers; (3)
companies exchanging securities with the fund through a
merger, acquisition or exchange offer; (4) trustees or
other fiduciaries purchasing shares for certain
retirement plans of organizations with retirement plan
assets of $100 million or more; (5) insurance company
separate accounts; (6) accounts managed by subsidiaries
of The Capital Group Companies, Inc.; and (7) The
Capital Group Companies, Inc., its affiliated companies
and Washington Management Corporation. Shares are
offered at net asset value to these persons and
organizations due to anticipated economies in sales
effort and expense.
REDUCING AGGREGATION Sales charge discounts are available for
YOUR SALES certain aggregated investments. Qualifying investments
CHARGE include those by you, your spouse and your children
under the age of 21, if all parties are purchasing
You and your shares for their own account(s), which may include
immediate family purchases through employee benefit plan(s) such as an
may combine IRA, individual-type 403(b) plan or single-participant
investments to Keogh-type plan or by a business solely controlled by
reduce your costs. these individuals (for example, the individuals own the
entire business) or by a trust (or other fiduciary
arrangement) solely for the benefit of these
individuals. Individual purchases by a trustee(s) or
other fiduciary(ies) may also be aggregated if the
investments are (1) for a single trust estate or
fiduciary account, including an employee benefit plan
other than those described above or (2) made for two or
more employee benefit plans of a single employer or of
affiliated employers as defined in the Investment
Company Act of 1940, again excluding employee benefit
plans described above, or (3) for a diversified common
trust fund or other diversified pooled account not
specifically formed for the purpose of accumulating
fund shares. 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
15
<PAGE>
- -------------------------------------------------------------------------------
other accounts and may not be aggregated with other
nominee or street name accounts unless otherwise
qualified as described above.
CONCURRENT PURCHASES To qualify for a reduced sales
charge, you may combine concurrent purchases of two or
more funds in The American Funds Group, except direct
purchases of the money market funds. (Shares of the
money market funds purchased through an exchange,
reinvestment or cross-reinvestment from a fund having a
sales charge do qualify.) For example, if you
concurrently invest $25,000 in one fund and $25,000 in
another, the sales charge would be reduced to reflect a
$50,000 purchase.
RIGHT OF ACCUMULATION The sales charge for your invest-
ment may also be reduced by taking into account the
current value of your existing holdings in The American
Funds Group. Direct purchases of the money market funds
are excluded. (See account application.)
STATEMENT OF INTENTION You may reduce sales charges on
all investments by meeting the terms of a statement of
intention, a non-binding commitment to invest a certain
amount in fund shares subject to a commission within a
13-month period. Five percent of the statement amount
will be held in escrow to cover additional sales
charges which may be due if your total investments over
the statement period are insufficient to qualify for a
sales charge reduction. (See account application and
the statement of additional information under "Purchase
of Shares--Statement of Intention.")
YOU MUST LET YOUR INVESTMENT DEALER OR AMERICAN FUNDS
SERVICE COMPANY KNOW IF YOU QUALIFY FOR A REDUCTION IN
YOUR SALES CHARGE USING ONE OR ANY COMBINATION OF THE
METHODS DESCRIBED ABOVE.
SHAREHOLDER AUTOMATIC INVESTMENT PLAN You may make regular monthly
SERVICES or quarterly investments through automatic charges to
your bank account. Once a plan is established, your ac-
The fund offers count will normally be charged by the 10th day of the
you a valuable month during which an investment is made (or by the
array of services 15th day of the month in the case of any retirement
designed to plan for which Capital Guardian Trust Company--another
increase the affiliate of The Capital Group Companies, Inc.--acts as
convenience and trustee or custodian).
flexibility of
your investment-- AUTOMATIC REINVESTMENT Dividends and capital gain dis-
services you can tributions are reinvested in additional shares at no
use to alter your sales charge unless you indicate otherwise on the
investment program account application. You also may elect to have divi-
as your needs and dends and/or capital gain distributions paid in cash by
circumstances informing the fund, American Funds Service Company or
change. your investment dealer.
CROSS-REINVESTMENT You may cross-reinvest dividends or
dividends and capital gain distributions paid by one
fund into another fund in The American Funds Group,
subject to conditions outlined in the statement of ad-
ditional information. Generally, to use this service
the value of your account in the paying fund must equal
at least $5,000.
16
<PAGE>
- -------------------------------------------------------------------------------
EXCHANGE PRIVILEGE You may exchange shares into other
funds in The American Funds Group. Exchange purchases
are subject to the minimum investment requirements of
the fund purchased and no sales charge generally
applies. However, exchanges of shares from the 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.
You may exchange shares by writing to American Funds
Service Company (see "Redeeming Shares"), by contacting
your investment dealer, by using American FundsLine(R)
(see "Shareholder Services--American FundsLine(R)" be-
low), or by telephoning 800/421-0180 toll-free, faxing
(see "Transfer Agent" above for the appropriate fax
numbers) or telegraphing American Funds Service Compa-
ny. (See "Telephone Redemptions and Exchanges" below.)
Shares held in corporate-type retirement plans for
which Capital Guardian Trust Company serves as trustee
may not be exchanged by telephone, fax or telegraph.
Exchange redemptions and purchases are processed simul-
taneously at the share prices next determined after the
exchange order is received. (See "Purchasing Shares--
Share Price.") THESE TRANSACTIONS HAVE THE SAME TAX
CONSEQUENCES AS ORDINARY SALES AND PURCHASES.
AUTOMATIC EXCHANGES You may automatically exchange
shares (in amounts of $50 or more) among any of the
funds in The American Funds Group on any day (or pre-
ceding business day if the day falls on a non-business
day) of each month you designate. You must either meet
the minimum initial investment requirement for the re-
ceiving fund OR the originating fund's balance must be
at least $5,000 and the receiving fund's minimum must
be met within one year.
AUTOMATIC WITHDRAWALS You may make automatic
withdrawals of $50 or more as follows: five or more
times per year if you have an account of $10,000 or
more, or four or fewer times per year if you have an
account of $5,000 or more. Withdrawals are made on or
about the 15th day of each month you designate, and
checks will be sent within seven days. (See "Other
Important Things to Remember.") Additional investments
in a withdrawal account must not be less than one
year's scheduled withdrawals or $1,200, whichever is
greater. However, additional investments in a
withdrawal account may be inadvisable due to sales
charges and tax liabilities.
THESE SERVICES ARE AVAILABLE ONLY IN STATES WHERE THE
FUND TO BE PURCHASED MAY BE LEGALLY OFFERED AND MAY BE
TERMINATED OR MODIFIED AT ANY TIME UPON 60 DAYS'
WRITTEN NOTICE.
ACCOUNT STATEMENTS Your account is opened in accordance
with your registration instructions. Transactions in
the account, such as additional investments and
dividend reinvestments, will be reflected on regular
confirmation statements from American Funds Service
Company.
17
<PAGE>
- -------------------------------------------------------------------------------
AMERICAN FUNDSLINE(R) You may check your share balance,
the price of your shares, or your most recent account
transaction, redeem shares (up to $10,000 per fund, per
account each day), or exchange shares around the clock
with American FundsLine(R). To use this service, call
800/325-3590 from a TouchTone(TM) telephone.
Redemptions and exchanges through American FundsLine(R)
are subject to the conditions noted above and in
"Redeeming Shares--Telephone Redemptions and Exchanges"
below. You will need your fund number (see the list of
funds in The American Funds Group under "Purchasing
Shares--Investment Minimums and Fund Numbers"),
personal identification number (the last four digits of
your Social Security number or other tax identification
number associated with your account) and account
number.
--------------------------------------------------------
REDEEMING By writing to Send a letter of instruction
SHARES American specifying the name of the fund, the
Funds Service number of shares or dollar amount to
You may take money Company (at be sold, your name and account
out of your the number. You should also enclose any
account whenever appropriate share certificates you wish to
you please. address redeem. For redemptions over $50,000
indicated and for certain redemptions of
under "Fund $50,000 or less (see below), your
Organization signature must be guaranteed by a
and bank, savings association, credit
Management-- union, or member firm of a domestic
Transfer stock exchange or the National
Agent") Association of Securities Dealers,
Inc., that is an eligible guarantor
institution. You should verify with
the institution that it is an
eligible guarantor prior to signing.
Additional documentation may be
required for redemption of shares
held in corporate, partnership or
fiduciary accounts. Notarization by a
Notary Public is not an acceptable
signature guarantee.
--------------------------------------------------------
By contacting If you redeem shares through your
your investment dealer, you may be charged
investment for this service. SHARES HELD FOR YOU
dealer IN YOUR INVESTMENT DEALER'S STREET
NAME MUST BE REDEEMED THROUGH THE
DEALER.
--------------------------------------------------------
You may have You may use this option, provided the
a redemption account is registered in the name of
check sent to an individual(s), a UGMA/UTMA
you by using custodian, or a non-retirement plan
American trust. These redemptions may not
FundsLine(R) exceed $10,000 per day, per fund
or by account and the check must be made
telephoning, payable to the shareholder(s) of
faxing, or record and be sent to the address of
telegraphing record provided the address has been
American used with the account for at least 10
Funds Service days. See "Transfer Agent" and
Company "Exchange Privilege" above for the
(subject to appropriate telephone or fax number.
the
conditions
noted in this
section and
in "Telephone
Redemptions
and
Exchanges"
below)
--------------------------------------------------------
In the case Upon request (use the account
of the money application for the money market
market funds, funds) you may establish telephone
you may have redemption privileges (which will
redemptions enable you to have a redemption sent
wired to your to your bank account) and/or check
bank by writing privileges. If you request
telephoning check writing privileges, you will be
American provided with checks that you may use
Funds Service to draw against your account. These
Company checks may be made payable to anyone
($1,000 or you designate and must be signed by
more) or by the authorized number of registered
writing a shareholders exactly as indicated on
check ($250 your checking account signature card.
or more)
--------------------------------------------------------
A SIGNATURE GUARANTEE IS NOT CURRENTLY REQUIRED FOR ANY
REDEMPTION OF $50,000 OR LESS PROVIDED THE REDEMPTION
CHECK IS MADE PAYABLE TO THE REGISTERED SHAREHOLDER(S)
AND IS MAILED TO THE ADDRESS OF RECORD, PROVIDED THE
ADDRESS HAS BEEN USED WITH THE ACCOUNT FOR AT LEAST 10
DAYS.
18
<PAGE>
- -------------------------------------------------------------------------------
THE PRICE YOU RECEIVE FOR THE SHARES YOU REDEEM IS THE
NET ASSET VALUE NEXT DETERMINED AFTER YOUR ORDER AND
ALL REQUIRED DOCUMENTATION ARE RECEIVED BY THE FUND OR
AMERICAN FUNDS SERVICE COMPANY. (SEE "PURCHASING
SHARES--SHARE PRICE.")
TELEPHONE REDEMPTIONS AND EXCHANGES By using the
telephone (including American FundsLine(R)), fax or
telegraph redemption and/or exchange options, you agree
to hold the fund, American Funds Service Company, 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) which may be incurred in connection with
the exercise of these privileges. Generally, all
shareholders are automatically eligible to use these
options. However, you may elect to opt out of these
options by writing American Funds Service Company (you
may reinstate them at any time also by writing American
Funds Service Company). If American Funds Service
Company does not employ reasonable procedures to
confirm that the instructions received from any person
with appropriate account information are genuine, 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.
CONTINGENT DEFERRED SALES CHARGE A contingent deferred
sales charge of 1% applies to certain redemptions
within the first year on investments of $1 million or
more and on any investment made with no initial sales
charge by any employer-sponsored 403(b) plan or defined
contribution plan qualified under Section 401(a) of the
Internal Revenue Code including a "401(k)" plan with
200 or more eligible employees. The charge is 1% of the
lesser of the value of the shares redeemed (exclusive
of reinvested dividends and capital gain distributions)
or the total cost of such shares. Shares held for the
longest period are assumed to be redeemed first for
purposes of calculating this charge. The charge is
waived for exchanges (except if shares acquired by
exchange were then redeemed within 12 months of the
initial purchase); for distributions from qualified
retirement plans and other employee benefit plans; for
redemptions resulting from participant-directed
switches among investment options within a participant-
directed employer-sponsored retirement plan; for
distributions from 403(b) plans or IRAs due to death,
disability or attainment of age 59 1/2; for tax-free
returns of excess contributions to IRAs; for
redemptions through certain automatic withdrawals not
exceeding 10% of the amount that would otherwise be
subject to the charge; and for redemptions in
connection with loans made by qualified retirement
plans.
REINSTATEMENT PRIVILEGE You may reinvest proceeds from
a redemption or a dividend or capital gain distribution
without a sales charge (any contingent deferred sales
charge paid will be credited to your
19
<PAGE>
- -------------------------------------------------------------------------------
account) in any fund in The American Funds Group. Send
a written request and a check to American Funds Service
Company within 90 days after the date of the redemption
or distribution. Reinvestment will be at the next
calculated net asset value after receipt. The tax
status of a gain realized on a redemption will not be
affected by exercise of the reinstatement privilege,
but a loss may be nullified if you reinvest in the same
fund within 30 days. If you redeem your shares within
90 days after purchase and the sales charge on the
purchase of other shares is waived under the
reinstatement privilege, the sales charge you
previously paid for the shares may not be taken into
account when you calculate your gain or loss on that
redemption.
OTHER IMPORTANT THINGS TO REMEMBER The net asset value
for redemptions is determined as indicated under
"Purchasing Shares--Share Price." Because each stock,
stock/bond and bond fund's net asset value fluctuates,
reflecting the market value of the fund's portfolio,
the amount a shareholder receives for shares redeemed
may be more or less than the amount paid for them.
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 Investment Company Act of
1940), redemption proceeds will be paid on or before
the seventh day following receipt of a proper
redemption request.
A fund may, with 60 days' written notice, close your
account if, due to a redemption, the account has a
value of less than the minimum required initial
investment. (For example, a fund may close an account
if a redemption is made shortly after a minimum initial
investment is made.)
RETIREMENT You may invest in the funds through various retirement
PLANS plans including the following plans for which Capital
Guardian Trust Company acts as trustee or custodian:
IRAs, Simplified Employee Pension plans, 403(b) plans
and Keogh- and corporate-type business retirement
plans. For further information about any of the plans,
agreements, applications and annual fees, contact
American Funds Distributors or your investment dealer.
To determine which retirement plan is appropriate for
you, please consult your tax adviser. TAX-EXEMPT FUNDS
SHOULD NOT SERVE AS INVESTMENTS FOR RETIREMENT PLANS.
FOR MORE INFORMATION, PLEASE REFER TO THE ACCOUNT
APPLICATION OR THE STATEMENT OF ADDITIONAL INFORMATION.
IF YOU HAVE ANY QUESTIONS ABOUT ANY OF THE SHAREHOLDER
SERVICES DESCRIBED HEREIN OR YOUR ACCOUNT, PLEASE
CONTACT YOUR INVESTMENT DEALER OR AMERICAN FUNDS
SERVICE COMPANY.
[LOGO OF RECYCLED This prospectus has been printed on
PAPER] recycled paper that meets the
guidelines of the United States
Environmental Protection Agency
20
Prospectus
for Eligible Retirement Plans
CAPITAL WORLD
BOND FUND(R)
AN OPPORTUNITY FOR AS HIGH A LEVEL OF
TOTAL RETURN OVER THE LONG TERM AS IS
CONSISTENT WITH PRUDENT INVESTMENT
MANAGEMENT THROUGH FIXED-INCOME
INVESTMENTS ALL OVER THE WORLD
NOVEMBER 25, 1995
[LOGO OF THE AMERICAN FUNDS GROUP(R)]
CAPITAL WORLD BOND FUND
333 South Hope Street
Los Angeles, California 90071
The fund's investment objective is to seek, over the long term, as high a
level of total return as is consistent with prudent investment management.
Total return consists of a combination of interest income, capital
appreciation and currency gains. The fund seeks to meet this objective by
investing primarily in fixed-income obligations denominated in various
currencies, including U.S. dollars.
This prospectus relates only to shares of the fund offered without a sales
charge to eligible retirement plans. For a prospectus regarding shares of the
fund to be acquired otherwise, contact the Secretary of the fund at the
address indicated above.
This prospectus presents information you should know before investing in the
fund. It should be retained for future reference.
You may obtain the statement of additional information dated November 25,
1995, which contains the fund's financial statements, without charge, by
writing to the Secretary of the fund at the above address or telephoning
800/421-0180. These requests will be honored within three business days of
receipt.
SHARES OF THE FUND 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. THE
PURCHASE OF FUND SHARES INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS
OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
RP 31-010-1195
<PAGE>
TABLE OF CONTENTS
Summary of Expenses...................................................... 3
Financial Highlights..................................................... 4
Investment Objectives and Policies....................................... 4
Certain Securities and Investment Techniques............................. 6
Investment Results....................................................... 8
Dividends, Distributions and Taxes....................................... 9
Fund Organization and Management......................................... 9
Purchasing Shares........................................................ 11
Shareholder Services..................................................... 13
Redeeming Shares......................................................... 13
<PAGE>
- -------------------------------------------------------------------------------
SUMMARY OF
EXPENSES
Average annual expenses
paid over a 10-year
period would be
approximately $14 per
year, assuming a $1,000
investment and a 5%
annual return with no
sales charge.
This table is designed to help you understand the costs of investing in the
fund. These are historical expenses; your actual expenses may vary.
SHAREHOLDER TRANSACTION EXPENSES
Certain retirement plans may purchase shares of the fund with no sales
charge./1/ The fund has no sales charge on reinvested dividends, deferred
sales charge, redemption fees or exchange fees.
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<S> <C>
Management fees....................................................... 0.68%
12b-1 expenses........................................................ 0.23%/2/
Other expenses (including audit, legal, shareholder services, transfer
agent and custodian expenses)........................................ 0.21%
Total fund operating expenses......................................... 1.12%
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following
cumulative expenses on a $1,000
investment, assuming
a 5% annual return./3/ $11 $36 $62 $136
</TABLE>
/1/ Retirement plans of organizations with $100 million or more in collective
retirement plan assets may purchase shares of the fund with no sales charge.
In addition, any employer-sponsored 403(b) plan or defined contribution plan
qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees or any other plan that
invests at least $1 million in shares of the fund (or in combination with
shares of other funds in The American Funds Group other than the money
market funds) may purchase shares at net asset value; however, a contingent
deferred sales charge of 1% applies on certain redemptions within 12 months
following such purchases. (See "Redeeming Shares--Contingent Deferred Sales
Charge.")
/2/ These expenses may not exceed 0.30% of the fund's average net assets
annually. (See "Fund Organization and Management--Plan of Distribution.")
Due to these distribution expenses, long-term shareholders may pay more than
the economic equivalent of the maximum front-end sales charge permitted by
the National Association of Securities Dealers.
/3/ Use of this assumed 5% return is required by the Securities and Exchange
Commission; it is not an illustration of past or future investment results.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES; ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.
3
<PAGE>
- -------------------------------------------------------------------------------
FINANCIAL The following information has been audited by Deloitte
HIGHLIGHTS & Touche LLP, independent accountants, whose
(For a share unqualified report covering each of the most recent
outstanding five years is included in the statement of additional
throughout the information. This information should be read in
fiscal year) conjunction with the financial statements and
accompanying notes which are also included in the
statement of additional information.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30
-----------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987/1/
------ ------ ------ ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, begin-
ning of year........... $15.33 $16.48 $15.95 $15.60 $14.46 $14.55 $15.18 $14.24 $14.29
------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income.. 1.09 1.05 .91 1.03 1.05 1.18 1.16 1.05 .13
Net realized and
unrealized gain (loss)
on investments........ 1.57 (1.14) .65 .40 1.19 (.08) (.36) .82 (.18)
------ ------ ------ ------ ------ ------ ------ ------ ------
Total from Investment
Operations........... 2.66 (.09) 1.56 1.43 2.24 1.10 .80 1.87 (.05)
------ ------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net
investment income..... (1.18)/2/ (.94)/2/ (.84)/2/ (1.01)/2/ (1.10) (1.19) (1.10) (.92) --
Distributions from net
realized gains........ -- (.12) (.19) (.07) -- -- (.33) (.01) --
------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions... (1.18) (1.06) (1.03) (1.08) (1.10) (1.19) (1.43) (.93) --
------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, end of
year................... $16.81 $15.33 $16.48 $15.95 $15.60 $14.46 $14.55 $15.18 $14.24
====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return/3/......... 18.10% (0.62)% 10.40% 9.46% 16.10% 7.95% 5.46% 13.16% 0.33%
RATIOS/SUPPLEMENTAL DATA
Net Assets, end of year
(in millions)......... $653 $576 $450 $224 $76 $41 $35 $35 $12
Ratios of expenses to
average net assets.... 1.12% 1.11% 1.19% 1.38% 1.42% 1.52% 1.30% 1.38% .12%/4/
Ratio of net income to
average net assets.... 6.83% 6.88% 6.25% 6.88% 7.54% 8.40% 7.69% 6.84% .91%/4/
Portfolio turnover
rate.................. 104.96% 77.04% 27.95% 95.11% 81.44% 75.53% 61.57% 94.46% 6.13%/4/
</TABLE>
--------
/1/ Period from 8/4/87-9/30/87.
/2/ Amount includes realized non-U.S. currency gains of 12c, 4c, 3c and 7c for
the years ended 1995, 1994, 1993 and 1992, respectively, treated as net
investment income for federal income tax purposes.
/3/ Calculated with no sales charge.
/4/ These ratios are based on operations for the period shown, and,
accordingly, are not representative of a full year's operations.
INVESTMENT The fund's investment objective is to seek, over the
OBJECTIVE long-term, as high a level of total return as is
AND POLICIES consistent with prudent investment management. Total
return consists of a combination of interest income,
The fund's goal is capital appreciation and currency gains. The fund seeks
to provide you to achieve its objective by investing primarily in debt
with as high a obligations denominated in various currencies,
level of total including U.S. dollars, or in multinational currency
return as is units such as European Currency Units (ECU's).
consistent with
prudent investment The fund may purchase debt obligations issued or
management over guaranteed by the United States or governments
the long term. (including states, provinces or municipalities) of
countries other than the U.S., or by their agencies,
authorities or instrumentalities, or by supranational
entities organized or supported by several national
governments, such as the International Bank for
Reconstruction and Development (the "World Bank"), the
Inter-American Development Bank, the Asian Development
Bank and the European Investment Bank. It also may
purchase debt obligations of United States or non-U.S.
corporations or financial institutions, although it
currently anticipates that its investments in issuers
located outside the
4
<PAGE>
- -------------------------------------------------------------------------------
United States will be concentrated in governmental or
quasi-governmental issues. The fund currently contem-
plates that it will invest primarily in obligations de-
nominated in the currencies of the United States, Ja-
pan, Canada, the Western European nations, New Zealand
and Australia, as well as in multinational currency
units.
The fund will limit its purchases of fixed-income secu-
rities to investment grade obligations. For long-term
debt obligations this includes securities that are
rated Baa or better by Moody's Investors Service, Inc.
or BBB or better by Standard & Poor's Corporation, or
that are not rated but considered to be of equivalent
quality by the fund's investment adviser, Capital Re-
search and Management Company. Securities rated Baa/BBB
have speculative characteristics.
The fund's portfolio of debt securities will be fully
managed. Under normal market conditions, the fund will
invest at least 65% of its assets in bonds. (For this
purpose, bonds are considered to be any debt securities
having initial maturities in excess of one year.) Is-
suers of these bonds will be located in at least three
countries and issuers located in any one country (other
than the United States) will represent no more than 40%
of total assets. For defensive reasons or during times
of international political or economic uncertainty,
most or all of the fund's investments temporarily may
be made in the United States and denominated in U.S.
dollars.
The fund may hold a portion of its assets in U.S.
dollars and other currencies and in cash equivalents of
either U.S. issuers or issuers outside the U.S. (see
the statement of additional information for a
description of cash equivalents). The fund may also
invest in fixed-income obligations convertible into
equity securities or having attached warrants or rights
to purchase equity securities (subject to certain
limitations described in the statement of additional
information).
The fund is a non-diversified investment company, and
is therefore not subject to any investment restriction
on the percentage of its assets that may be invested at
any time in the securities of any one issuer. See "Fund
Organization and Management." However, the fund intends
to limit its investment in the securities of any single
issuer, except for securities issued or guaranteed as
to payment of principal and interest by governments or
their agencies or instrumentalities or by supranational
agencies, to 5% of its total assets at the time of pur-
chase.
The fund's investment restrictions (which are described
in the statement of additional information) and objec-
tive cannot be changed without shareholder approval.
All other investment practices may be changed by the
fund's board.
5
<PAGE>
- --------------------------------------------------------------------------------
THE FUND IS SUBJECT TO THE RISK OF FLUCTUATING INTEREST
RATES AND SHARE VALUES AND THERE IS NO ASSURANCE THAT
ITS OBJECTIVE WILL BE REALIZED.
CERTAIN INVESTING IN VARIOUS COUNTRIES Investing globally
SECURITIES AND involves special risks, particularly in certain
INVESTMENT developing countries, caused by, among other things:
TECHNIQUES trade balances and imbalances, and related economic
policies; expropriation or confiscatory taxation;
Investing outside limitations on the removal of funds or other assets;
the U.S. involves political or social instability; the diverse structure
special risks and and liquidity of the various securities markets;
opportunities. nationalization policies of governments around the
world; and other specific local political and economic
considerations. Companies located outside the United
States operate under different accounting, auditing and
financial reporting regulations than U.S. companies, and
frequently there is less information publicly available
about such companies. However, in the opinion of Capital
Research and Management Company, global investing also
can reduce certain of these risks through greater
diversification opportunities.
Additional costs could be incurred in connection with
the fund's investment activities. Brokerage commissions
are generally higher outside the U.S., and the fund will
bear certain expenses in connection with its currency
transactions. Increased custodian costs as well as ad-
ministrative difficulties (for example, delays in clear-
ing and settling portfolio transactions or in receiving
payments of dividends) may be associated with the main-
tenance of assets in certain jurisdictions.
CURRENCY TRANSACTIONS The fund has the ability to enter
into forward currency contracts and purchase put or call
options on currencies to protect against changes in
currency exchange rates. However, there is no assurance
that such strategies will be successful. Moreover, due
to the expenses involved, the fund will not generally
attempt to protect against all potential changes in
exchange rates.
RISKS If market interest rates decline, fixed-income
securities such as bonds generally appreciate in value.
If the currency in which a security is denominated
appreciates against the U.S. dollar, the dollar value of
the security will increase. Conversely, a rise in
interest rates or a decline in the exchange rate of the
currency would adversely affect the value of the
security expressed in dollars. Fixed-income securities
denominated in currencies other than the U.S. dollar or
in multinational currency units are evaluated on the
strength of the particular currency against the U.S.
dollar as well as on the current and expected levels of
interest rates in the country or countries.
6
<PAGE>
- -------------------------------------------------------------------------------
WHEN-ISSUED SECURITIES, FIRM COMMITMENT AGREEMENTS AND
"ROLL" TRANSACTIONS The fund may purchase securities on
a delayed delivery or "when-issued" basis and enter
into firm commitment agreements (transactions whereby
the payment obligation and interest rate are fixed at
the time of the transaction but the settlement is
delayed). The fund as purchaser assumes the risk of any
decline in value of the security beginning on the date
of the agreement or purchase. As the fund's aggregate
commitments under these transactions increase, the
opportunity for leverage similarly increases. The fund
also may enter into "roll" transactions which are the
sale of securities issued by the Government National
Mortgage Association commonly known as "GNMA
certificates" (securities representing part ownership
of a pool of mortgage loans on which timely payment of
interest and principal is guaranteed by the U.S.
Government) or other securities together with a
commitment (for which the fund typically receives a
fee) to purchase similar, but not identical, securities
at a later date.
PORTFOLIO TURNOVER Portfolio changes will be made
without regard to the length of time particular
investments may have been held. 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.
Fixed-income securities are generally traded on a net
basis and usually neither brokerage commissions nor
transfer taxes are involved. The fund's portfolio
turnover rate would equal 100% if each security in the
fund's portfolio were replaced once per year.
MATURITY Under normal economic and market conditions,
the fund's portfolio will be invested substantially in
intermediate-term (three to ten years to maturity) and
long-term (more than ten years to maturity) debt
securities. However, there are no restrictions on the
maturity composition of the fund's portfolio.
MULTIPLE PORTFOLIO COUNSELOR SYSTEM The basic
investment philosophy of Capital Research and
Management Company is to seek fundamental values at
reasonable prices, using a system of multiple portfolio
counselors in managing mutual fund assets. Under this
system the portfolio of the fund is divided into
segments, which are managed by individual counselors.
Each counselor decides how their segment will be
invested (within the limits provided by the fund's
objective and policies and by Capital Research and
Management Company's investment committee). In
addition, Capital Research and Management Company's
research professionals make investment decisions with
respect to a portion of the fund's portfolio. The
primary individual portfolio counselors for the fund
are listed on the next page.
7
<PAGE>
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
YEARS OF EXPERIENCE
AS INVESTMENT PROFESSIONAL
YEARS OF EXPERIENCE AS (APPROXIMATE)
PORTFOLIO COUNSELORS PORTFOLIO COUNSELOR
FOR FOR WITH CAPITAL
CAPITAL WORLD PRIMARY TITLE(S) CAPITAL WORLD RESEARCH AND
BOND FUND BOND FUND MANAGEMENT
(APPROXIMATE) COMPANY OR TOTAL
ITS AFFILIATES YEARS
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mark H. Dalzell Vice President-- 5 years 7 years 18 years
Investment Management
Group, Capital Research
and Management Company
- --------------------------------------------------------------------------------------------------------
Laurentius Harrer Vice President, 1 year 2 years 7 years
Capital Research
International*
- --------------------------------------------------------------------------------------------------------
James R. Mulally Vice President--Fixed Since the fund began 15 years 19 years
Income, Capital operations
Research Company*
- --------------------------------------------------------------------------------------------------------
Richard T. Schotte Senior Vice President, 1 year 18 years 28 years
Capital Research and
Management Company
- --------------------------------------------------------------------------------------------------------
</TABLE>
The fund began operations on August 4, 1987.
* Company affiliated with Capital Research and Management Company
INVESTMENT The fund may from time to time compare its investment
RESULTS results to various unmanaged indices or other mutual
funds in reports to shareholders, sales literature and
The fund has advertisements. The results may be calculated on a to-
averaged a total tal return, yield and/or distribution rate basis for
return (at no various periods, with or without sales charges. Results
sales charge) of calculated without a sales charge will be higher. Total
9.62% a year over returns assume the reinvestment of all dividends and
its lifetime capital gain distributions.
(August 4, 1987 The fund's yield and the average annual total returns
through September are calculated with no sales charge in accordance with
30, 1995). Securities and Exchange Commission requirements. The
fund's distribution rate is calculated by dividing the
dividends paid by the fund over the last 12 months by
the sum of the month-end price and the capital gains
paid over the last 12 months. For the 30-day period
ended September 30, 1995, the fund's SEC yield was
6.12% and the distribution rate was 7.02% with no sales
charge. The SEC yield reflects income earned by the
fund, while the distribution rate reflects dividends
paid by the fund. Among the elements used to calculate
the SEC yield are the dividend and interest income
earned and expenses paid by the fund, whereas the
income paid to shareholders is used to calculate the
distribution rate. The fund's total return over the
past 12 months and average annual total returns over
the past five-year and lifetime periods, as of
September 30, 1995, were 18.10%, 10.49% and 9.62%,
respectively. Of course, past results are not an
indication of future results. Further information
regarding the fund's investment results is contained in
the fund's annual report which may be obtained without
charge by writing to the Secretary of the fund at the
address indicated on the cover of this prospectus.
8
<PAGE>
- -------------------------------------------------------------------------------
DIVIDENDS, DIVIDENDS AND DISTRIBUTIONS Dividends are usually paid
DISTRIBUTIONS in March, June, October and December. The first three
AND TAXES dividends of each year are normally the same; the
December dividend may be greater or less than the first
Income three reflecting the impact of foreign currency
distributions are transactions. All capital gains, if any, are
usually made in distributed annually, usually in December. When a
March, June, dividend or capital gain is distributed, the net asset
October and value per share is reduced by the amount of the
December. payment.
The terms of your plan will govern how your plan may
receive distributions from the fund. Generally,
periodic distributions from the fund to your plan are
reinvested in additional fund shares, although your
plan may permit fund distributions from net investment
income to be received by you in cash while reinvesting
capital gain distributions in additional shares or all
fund distributions to be received in cash. Unless you
select another option, all distributions will be
reinvested in additional fund shares.
FEDERAL TAXES The fund intends to operate as a
"regulated investment company" under the Internal
Revenue Code. For any fiscal year in which the fund so
qualifies and distributes to shareholders all of its
net investment income and net capital gains, the fund
itself is relieved of federal income tax. The tax
treatment of redemptions from a retirement plan may
differ from redemptions from an ordinary shareholder
account.
Please see the statement of additional information and
your tax adviser for further information.
FUND FUND ORGANIZATION AND VOTING RIGHTS The fund, an open-
ORGANIZATION end, non-diversified management investment company, was
AND organized as a Maryland corporation in 1987. The fund's
MANAGEMENT board supervises fund operations and performs duties
required by applicable state and federal law. Members
The fund is a of the board who are not employed by Capital Research
member of The and Management Company or its affiliates are paid
American Funds certain fees for services rendered to the fund as
Group, which is described in the statement of additional information.
managed by one of They may elect to defer all or a portion of these fees
the largest and through a deferred compensation plan in effect for the
most experienced fund. Shareholders have one vote per share owned and,
investment at the request of the holders of at least 10% of the
advisers. shares, the fund will hold a meeting at which the board
could be removed by a majority vote. There will not
usually be a shareholder meeting in any year except,
for example, when the election of the board is required
to be acted upon by shareholders under the Investment
Company Act of 1940.
THE INVESTMENT ADVISER Capital Research and Management
Company, a large and experienced investment management
organization founded in 1931, is the investment adviser
to the fund and other funds, including those in The
American Funds Group. Capital Research and Management
Company is located at 333 South Hope Street, Los
Angeles,
9
<PAGE>
- -------------------------------------------------------------------------------
CA 90071, and at 135 South State College Boulevard,
Brea, CA 92621. Capital Research and Management Company
manages the investment portfolio and business affairs
of the fund and receives a fee at the annual rate of
0.70% of the first $500 million of the fund's assets,
plus 0.60% on net assets in excess of $500 million but
not exceeding $1 billion, plus 0.50% on net assets in
excess of $1 billion.
Capital Research and Management Company is a wholly
owned subsidiary of The Capital Group Companies, Inc.
(formerly "The Capital Group, Inc.") located at 333
South Hope Street, Los Angeles, CA 90071. The research
activities of Capital Research and Management Company
are conducted by affiliated companies which have
offices in Los Angeles, San Francisco, New York,
Washington, D.C., London, Geneva, Singapore, Hong Kong
and Tokyo.
Capital Research and Management Company and its
affiliated companies have adopted a personal investing
policy that is consistent with the recommendations
contained in the report dated May 9, 1994 issued by the
Investment Company Institute's Advisory Group on
Personal Investing. (See the statement of additional
information.)
PORTFOLIO TRANSACTIONS Orders for the fund's portfolio
securities transactions are placed by Capital Research
and Management Company, which strives to obtain the
best available prices, taking into account the costs
and quality of executions. Fixed-income securities are
generally traded on a "net" basis with a dealer acting
as principal for its own account without a stated
commission, although the price of the security usually
includes a profit to the dealer. In underwritten
offerings, securities are usually purchased at a fixed
price which includes an amount of compensation to the
underwriter, generally referred to as the underwriter's
concession or discount. On occasion, securities may be
purchased directly from an issuer, in which case no
commissions or discounts are paid.
Subject to the above policy, when two or more brokers
are in a position to offer comparable prices and
executions, preference may be given to brokers that
have sold shares of the fund or have provided
investment research, statistical, and other related
services for the benefit of the fund and/or other funds
served by Capital Research and Management Company.
PRINCIPAL UNDERWRITER American Funds Distributors,
Inc., a wholly owned subsidiary of Capital Research and
Management Company, is the principal underwriter of the
fund's shares. American Funds Distributors is located
at 333 South Hope Street, Los Angeles, CA 90071, 135
South State College Boulevard, Brea, CA 92621, 8000 IH-
10 West, San Antonio, TX 78230, 8332 Woodfield Crossing
Boulevard,
10
<PAGE>
- --------------------------------------------------------------------------------
Indianapolis, IN 46240, and 5300 Robin Hood Road,
Norfolk, VA 23513. Telephone conversations with American
Funds Distributors may be recorded or monitored for
verification, recordkeeping and quality assurance
purposes.
PLAN OF DISTRIBUTION The fund has a plan of distribution
or "12b-1 Plan" under which it may finance activities
primarily intended to sell shares, provided the
categories of expenses are approved in advance by the
board and the expenses paid under the plan were incurred
within the last 12 months and accrued while the plan is
in effect. Expenditures by the fund under the plan may
not exceed 0.30% of its average net assets annually
(0.25% of which may be for service fees).
TRANSFER AGENT American Funds Service Company, 800/421-
0180, a wholly owned subsidiary of Capital Research and
Management Company, is the transfer agent and performs
shareholder service functions. American Funds Service
Company is located at 333 South Hope Street, Los
Angeles, CA 90071, 135 South State College Boulevard,
Brea, CA 92621, 8000 1H-10 West, San Antonio, TX 78230,
8332 Woodfield Crossing Boulevard, Indianapolis, IN
46240 and 5300 Robin Hood Road, Norfolk, VA 23513. It
was paid a fee of $521,000 for the fiscal year ended
September 30, 1995. Telephone conversations with
American Funds Service Company may be recorded or
monitored for verification, recordkeeping and quality
assurance purposes.
PURCHASING SHARES ALL ORDERS TO PURCHASE SHARES MUST BE MADE THROUGH YOUR
RETIREMENT PLAN. FOR MORE INFORMATION ABOUT HOW TO
PURCHASE SHARES OF THE FUND THROUGH YOUR PLAN OR
LIMITATIONS ON THE AMOUNT THAT MAY BE PURCHASED, PLEASE
CONSULT WITH YOUR EMPLOYER. Shares are sold to eligible
retirement plans at the net asset value per share next
determined after receipt of an order by the fund or
American Funds Service Company. Orders must be received
before the close of regular trading on the New York
Stock Exchange in order to receive that day's net asset
value. Plans of organizations with collective retirement
plan assets of $100 million or more may purchase shares
at net asset value. In addition, any employer-sponsored
403(b) plan or defined contribution plan qualified under
Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees or any
other plan that invests at least $1 million in shares of
the fund (or in combination with shares of other funds
in The American Funds Group other than the money market
funds) may purchase shares at net asset value; however,
a contingent deferred sales charge of 1% is imposed on
certain redemptions made within one year of such
purchase. (See "Redeeming Shares--Contingent Deferred
Sales Charge.") Plans may also qualify to purchase
shares at net asset value by completing a statement of
intention to purchase $1 million in fund shares subject
to a
11
<PAGE>
- -------------------------------------------------------------------------------
commission over a maximum of 13 consecutive months.
Certain redemptions of such shares may also be subject
to a contingent deferred sales charge as described
above. (See the statement of additional information.)
The minimum initial investment is $250, except that the
money market funds have a minimum of $1,000 for
individual retirement accounts (IRAs). Minimums are
reduced to $50 for purchases through "Automatic
Investment Plans" (except for the money market funds)
or to $25 for purchases by retirement plans through
payroll deductions and may be reduced or waived for
shareholders of other funds in The American Funds
Group.
American Funds Distributors, at its expense (from a
designated percentage of its income), will, during
calendar year 1996, provide additional promotional
incentives to dealers. Currently these incentives are
limited to the top one hundred dealers who have sold
shares of the fund or other funds in The American Funds
Group. The incentive payments will be based on a pro
rata share of a qualifying dealer's sales. American
Funds Distributors will, on an annual basis, determine
the advisability of continuing these promotional
incentives.
Qualified dealers currently are paid a continuing
service fee not to exceed 0.25% of average net assets
(0.15% in the case of the money market funds) annually
in order to promote selling efforts and to compensate
them for providing certain services. (See "Fund
Organization and Management--Plan of Distribution.")
These services include processing purchase and
redemption transactions, establishing shareholder
accounts and providing certain information and
assistance with respect to the fund.
Shares of the fund are offered to other shareholders
pursuant to another prospectus at public offering
prices that may include an initial sales charge.
SHARE PRICE Shares are offered to eligible retirement
plans at the net asset value next determined after the
order is received by the fund or American Funds Service
Company. In the case of orders sent directly to the
fund or American Funds Service Company, an investment
dealer must be indicated. Dealers are responsible for
promptly transmitting orders. (See the statement of
additional information under "Purchase of Shares--Price
of Shares.")
The fund's net asset value per share is determined as
of the close of trading (currently 4:00 p.m., New York
time) on each day the New York Stock Exchange is open.
The current value of the fund's total assets, less all
liabilities, is divided by the total number of shares
outstanding and the result, rounded to the nearer cent,
is the net asset value per share.
12
<PAGE>
- --------------------------------------------------------------------------------
SHAREHOLDER Subject to any restrictions contained in your plan, you
SERVICES can exchange your shares for shares of other funds in
The American Funds Group which are offered through the
plan at net asset value. In addition, again depending on
your plan, you may be able to exchange shares
automatically or cross-reinvest dividends in shares of
other funds. Contact your plan administrator/trustee
regarding how to use these services. Also, see the
fund's statement of additional information for a
description of these and other services that may be
available through your plan. These services are
available only in states where the fund to be purchased
may be legally offered and may be terminated or modified
at any time upon 60 days' written notice.
REDEEMING Subject to any restrictions imposed by your plan, you
SHARES can sell your shares through the plan any day the New
York Stock Exchange is open. For more information about
how to sell shares of the fund through your retirement
plan, including any charges that may be imposed by the
plan, please consult with your employer.
---------------------------------------------------------
By contacting Your plan administrator/trustee must
your plan send a letter of instruction
administrator/ specifying the name of the fund, the
trustee number of shares or dollar amount to
be sold, and, if applicable, your
name and account number. For your
protection, if you redeem more than
$50,000, the signatures of the
registered owners (i.e., trustees or
their legal representatives) must be
guaranteed by a bank, savings
association, credit union, or member
firm of a domestic stock exchange or
the National Association of
Securities Dealers, Inc. that is an
eligible guarantor institution. Your
plan administrator/trustee should
verify with the institution that it
is an eligible guarantor prior to
signing. Additional documentation
may be required to redeem shares
from certain accounts. Notarization
by a Notary Public is not an
acceptable signature guarantee.
---------------------------------------------------------
By contacting Shares may also be redeemed through
your investment an investment dealer, however, you
dealer or your plan may be charged for this
service. SHARES HELD FOR YOU IN AN
INVESTMENT DEALER'S STREET NAME MUST
BE REDEEMED THROUGH THE DEALER.
---------------------------------------------------------
THE PRICE YOU RECEIVE FOR THE SHARES YOU REDEEM IS THE
NET ASSET VALUE NEXT DETERMINED AFTER YOUR ORDER AND ALL
REQUIRED DOCUMENTATION ARE RECEIVED BY THE FUND OR
AMERICAN FUNDS SERVICE COMPANY. (SEE "PURCHASING
SHARES--SHARE PRICE")
CONTINGENT DEFERRED SALES CHARGE A contingent deferred
sales charge of 1% applies to certain redemptions within
the first year on investments of $1 million or more and
on any investment made with no initial sales charge by
any employer-sponsored 403(b) plan or defined
contribution plan qualified under Section 401(a) of the
Internal Revenue Code including a "401(k)" plan with 200
or more eligible employees. The charge is 1% of the
lesser of the value of the shares redeemed (exclusive of
reinvested dividends and capital gain distributions) or
the total cost of such shares. Shares held for the
longest period are assumed to be redeemed first for
purposes of calculating this charge. The charge is
13
<PAGE>
- -------------------------------------------------------------------------------
waived for exchanges (except if shares acquired by
exchange were then redeemed within 12 months of the
initial purchase) and for distributions from qualified
retirement plans and other employee benefit plans; for
redemptions resulting from participant-directed
switches among investment options within a participant-
directed employer-sponsored retirement plan; and for
redemptions in connection with loans made by qualified
retirement plans.
OTHER IMPORTANT THINGS TO REMEMBER The net asset value
for redemptions is determined as indicated under
"Purchasing Shares--Share Price." Because the fund's
net asset value fluctuates, reflecting the market value
of the portfolio, the amount you receive for shares
redeemed may be more or less than the amount paid for
them.
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 Investment Company Act of
1940), redemption proceeds will be paid on or before
the seventh day following receipt of a proper
redemption request.
[RECYCLE LOGO] This prospectus has been printed on
recycled paper that meets the
guidelines of the United States
Environmental Protection Agency
14
<PAGE>
THIS PROSPECTUS RELATES ONLY TO SHARES OF THE FUND
OFFERED WITHOUT A SALES CHARGE TO ELIGIBLE RETIREMENT
PLANS. FOR A PROSPECTUS REGARDING SHARES OF THE FUND
TO BE ACQUIRED OTHERWISE, CONTACT THE SECRETARY OF
THE FUND AT THE ADDRESS INDICATED ON THE FRONT.
<PAGE>
Capital
World
Bond
Fund(R)
November 25, 1995
CAPITAL WORLD BOND FUND(R)
Profile
333 South Hope Street November 25, 1995
Los Angeles, CA 90071
1. Goal
The fund primarily seeks to make your money grow over time consistent with
prudent investment management.
2. Investment Strategies
The fund primarily invests in bonds denominated in various currencies including
U.S. dollars. The fund purchases only investment grade obligations (those
rated in the top four categories by Standard & Poor's Corporation or Moody's
Investors Service, Inc.). The fund currently anticipates that its investments
in issuers located outside the U.S. will be concentrated in governmental or
quasi-governmental issues.
3. Risks
Bond prices rise and fall. Bonds are subject to credit risks (the possibility
that the bond issuer will default on its obligation) and market risk (when
interest rates rise, bond prices fall and vice versa). Lower rated bonds are
subject to greater price fluctuations and risk of loss than higher rated bonds.
The fund is non-diversified and is not subject to any restriction on the
percentage of assets that may be invested in the securities of any one issuer;
however, except for governmental-type securities, it will not invest more than
5% of its assets (measured at the time of purchase) in the securities of any
one issuer.
YOU CAN LOSE MONEY BY INVESTING IN THE FUND; YOUR INVESTMENT IS NOT GUARANTEED.
THE LIKELIHOOD OF LOSS IS GREATER IF YOU INTEND TO INVEST FOR A SHORTER PERIOD
OF TIME.
4. Appropriateness
If you are not a long-term investor seeking capital growth through investments
in bonds of issuers located throughout the world, this fund may not be
appropriate for you. Please consult your investment dealer.
5. Fees and Expenses
Shareholder transaction expenses are charges you pay when you buy or sell
shares of a fund. Annual fund operating expenses are paid out of the fund's
assets. The fund's expenses are factored into its share price or dividends and
are not charged directly to shareholder accounts.
Shareholder Transaction Expenses
<TABLE>
<CAPTION>
<S> <C>
Maximum sales charge
on purchases
(as a percentage of offering price) 4.75%
</TABLE>
SALES CHARGES ARE REDUCED OR ELIMINATED FOR LARGER PURCHASES. The fund has no
sales charge on reinvested dividends, and no deferred sales charge or
redemption or exchange fees. A contingent deferred sales charge of 1% applies
on certain redemptions within 12 months following purchases without a sales
charge.
Annual Fund Operating Expenses
(as a percentage of average net assets)
<TABLE>
<CAPTION>
<S> <C>
Management fees 0.68%
12b-1 expenses 0.23%
Other expenses 0.21%
Total fund operating expenses 1.12%
</TABLE>
Example
You would pay the following cumulative expenses on a $1,000 investment,
assuming a 5% annual return. This example should not be considered a
representation of past or future expenses.
<TABLE>
<CAPTION>
<S> <C>
One year $ 58
Three years 81
Five years 106
Ten years 177
</TABLE>
6. Past Results
Here are the fund's annual total returns for each calendar year over the fund's
lifetime:
[CHART]
<TABLE>
<CAPTION>
<S> <C>
1988 -2.15
1989 -0.39
1990 6.33
1991 9.79
1992 -3.96
1993 11.15
1994 -6.09
</TABLE>
[END CHART]
Sales charges have not been deducted from results shown above.
The fund's average annual total return* is +8.96% over its lifetime (August 4,
1987 through September 30, 1995). PAST RESULTS ARE NOT A GUARANTEE OF FUTURE
RESULTS.
<TABLE>
<CAPTION>
<S> <C>
Average Annual
Total Returns*
One year + 12.53%
Five years + 9.42%
Lifetime + 8.96%
30-Day Yield*
5.83%
</TABLE>
* These results were calculated for periods ended September 30, 1995 in
accordance with Securities and Exchange Commission rules which require that the
maximum sales charge be deducted.
7. Investment Adviser
Capital Research and Management Company, one of the world's largest and most
experienced investment advisers, manages the fund, which is a member of The
American Funds Group. Capital Research and Management Company manages this
mutual fund using the multiple portfolio counselor system. Under this system,
the fund's assets are divided into several portions. Each portion is
independently managed by a portfolio counselor or a group of research
professionals, subject to oversight by the investment adviser's investment
committee.
8. Purchases
The fund's shares are sold through investment dealers. Your investment dealer
can help you with your account, or you may call American Funds Service Company
at 800/421-0180 with questions about your account. Generally, the minimum
initial investment is $1,000.
9. Redemptions
You may redeem shares at no cost at any time through your investment dealer or
by calling American FundsLineR at 800/325-3590. (You will need the fund's
number - 31 - if you use this service.) Transactions will be processed as of
the next close of the New York Stock Exchange.
10. Distributions
Dividends and capital gain distributions are automatically reinvested unless
you notify American Funds Service Company that you would like to invest them in
another of the American Funds or receive payment in cash. Income distributions
are usually made monthly. Capital gains, if any, are usually distributed in
December.
11. Other Services
You may exchange your shares for any of the other American Funds or obtain
information about your investment any time by calling American FundsLineR. If
you who purchase shares at net asset value through a retirement plan, some or
all of the services or features described may not be available. Contact your
employer for details.
THIS PROFILE CONTAINS KEY INFORMATION ABOUT THE FUND. MORE DETAILS APPEAR IN
THE FUND'S ACCOMPANYING PROSPECTUS.
This profile has been printed on recycled
paper that meets the guidelines of the United
States Environmental Protection Agency.
<PAGE>
Capital
World
Bond
Fund(R)
November 25, 1995
CAPITAL WORLD BOND FUND(R)
Profile for Eligible Retirement Plans
333 South Hope StreetNovember 25, 1995
Los Angeles, CA 90071
1. Goal
The fund primarily seeks to make your money grow over time consistent with
prudent investment management.
2. Investment Strategies
The fund primarily invests in bonds denominated in various currencies including
U.S. dollars. The fund purchases only investment grade obligations (those
rated in the top four categories by Standard & Poor's Corporation or Moody's
Investors Service, Inc.). The fund currently anticipates that its investments
in issuers located outside the U.S. will be concentrated in governmental or
quasi-governmental issues.
3. Risks
Bond prices rise and fall. Bonds are subject to credit risks (the possibility
that the bond issuer will default on its obligation) and market risk (when
interest rates rise, bond prices fall and vice versa). Lower rated bonds are
subject to greater price fluctuations and risk of loss than higher rated bonds.
The fund is non-diversified and is not subject to any restriction on the
percentage of assets that may be invested in the securities of any one issuer;
however, except for governmental-type securities, it will not invest more than
5% of its assets (measured at the time of purchase) in the securities of any
one issuer.
YOU CAN LOSE MONEY BY INVESTING IN THE FUND; YOUR INVESTMENT IS NOT GUARANTEED.
THE LIKELIHOOD OF LOSS IS GREATER IF YOU INTEND TO INVEST FOR A SHORTER PERIOD
OF TIME.
4. Appropriateness
If you are not a long-term investor seeking capital growth through investments
in bonds of issuers located throughout the world, this fund may not be
appropriate for you. For more information, consult your investment dealer or
employer.
5. Fees and Expenses
Shareholder transaction expenses are charges you pay when you buy or sell
shares of a fund. Annual fund operating expenses are paid out of the fund's
assets. The fund's expenses are factored into its share price or dividends and
are not charged directly to shareholder accounts.
Shareholder Transaction Expenses
Shares of the fund are sold to eligible retirement plans* with no sales charge.
However, a 1% contingent deferred sales charge is imposed on certain
redemptions within one year of the purchase from certain plans investing $1
million or more. The fund has no sales charge on reinvested dividends and no
deferred sales charge for redemptions or exchanges.
Annual Fund Operating Expenses
(as a percentage of average net assets)
<TABLE>
<S> <C>
Management fees 0.68%
12b-1 expenses 0.23%
Other expenses 0.21%
Total fund operating expenses 1.12%
</TABLE>
Example
You would pay the following cumulative expenses on a $1,000 investment,
assuming a 5% annual return. This example should not be considered a
representation of past or future expenses.
<TABLE>
<CAPTION>
<S> <C>
One year $ 11
Three years 36
Five years 62
Ten years 136
</TABLE>
* Plans of companies with collective retirement plan assets of $100 million or
more or plans purchasing $1 million or more or having 200 or more eligible
employees.
6. Past Results
Here are the fund's annual total returns for each calendar year over the fund's
lifetime:
[CHART]
<TABLE>
<CAPTION>
<S> <C>
1988 2.72
1989 4.57
1990 11.65
1991 15.28
1992 0.82
1993 16.73
1994 -1.43
</TABLE>
[END CHART]
The fund's average annual total return* is +9.62% over its lifetime August 4,
1987 through September 30, 1995). PAST RESULTS ARE NOT A GUARANTEE OF FUTURE
RESULTS.
<TABLE>
<CAPTION>
<S> <C>
Average Annual
Total Returns*
One year + 18.10%
Five years + 10.49%
Lifetime + 9.62%
30-Day Yield*
6.12%
</TABLE>
* These results were calculated for periods ended September 30, 1995 in
accordance with Securities and Exchange Commission rules.
7. Investment Adviser
Capital Research and Management Company, one of the world's largest and most
experienced investment advisers, manages the fund, which is a member of The
American Funds Group. Capital Research and Management Company manages this
mutual fund using the multiple portfolio counselor system. Under this system,
the fund's assets are divided into several portions. Each portion is
independently managed by a portfolio counselor or a group of research
professionals, subject to oversight by the investment adviser's investment
committee.
8. Purchases
All orders to purchase shares must be made through your retirement plan. For
more information about how to purchase shares of the fund through your plan or
limitations on the amount that may be purchased, please consult with your
employer.
9. Redemption
Subject to any restrictions imposed by your plan, you may sell your shares
through the plan any day the New York Stock Exchange is open. For more
information about how to sell shares of the fund through your retirement plan,
including any charges that may be imposed by the plan, please consult with your
employer.
10. Distributions
Dividends and capital gain distributions are automatically reinvested unless
you notify American Funds Service Company that you would like to invest them in
another of the American Funds or receive payment in cash. Income distributions
are usually made monthly. Capital gains, if any, are usually distributed in
December.
11. Other Services
You may exchange your shares for any of the other American Funds or obtain
information about your investment any time by calling American FundsLineR. If
you who purchase shares at net asset value through a retirement plan, some or
all of the services or features described may not be available. Contact your
employer for details.
THIS PROFILE RELATES ONLY TO SHARES OF THE FUND OFFERED WITHOUT SALES CHARGE TO
ELIGIBLE RETIREMENT PLANS. TO RECEIVE A FULL PROSPECTUS, CONTACT YOUR EMPLOYER
OR THE SECRETARY OF THE FUND AT THE ABOVE ADDRESS.
This profile has been printed on recycled
paper that meets the guidelines of the United
States Environmental Protection Agency.
<PAGE>
Part B
Statement of Additional Information
NOVEMBER 25, 1995
This document is not a prospectus but should be read in conjunction
with the current prospectus dated November 25, 1995 of Capital World Bond Fund,
Inc. (the "fund"). The prospectus may be obtained from your investment dealer
or financial planner or by writing to the fund at the following address:
Capital World Bond Fund, Inc.
Attention: Secretary
333 South Hope Street
Los Angeles, CA 90071
(213) 486-9200
The fund has two forms of prospectuses. Each reference to the prospectus
in this Statement of Additional Information includes both of the fund's
prospectuses. Shareholders who purchase shares at net asset value through
employer-sponsored defined contribution plans should note that not all of the
services or features described below may be available to them, and they should
contact their employer for details.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ITEM PAGE NO.
DESCRIPTION OF SECURITIES AND INVESTMENT TECHNIQUES 1
INVESTMENT RESTRICTIONS 5
FUND OFFICERS AND DIRECTORS 7
MANAGEMENT 10
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES 12
PURCHASE OF SHARES 15
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES 17
EXECUTION OF PORTFOLIO TRANSACTIONS 18
GENERAL INFORMATION 18
INVESTMENT RESULTS 19
APPENDIX 23
FINANCIAL STATEMENTS ATTACHED
</TABLE>
DESCRIPTION OF SECURITIES AND INVESTMENT TECHNIQUES
The descriptions below are intended to supplement the material in the
prospectus under "Investment Objective and Policies."
INVESTMENT POLICY - The fund currently purchases only investment grade
obligations (rated Baa or better by Moody's Investors Service, Inc. or BBB or
better by Standard & Poor's Corporation). Although the fund is not normally
required to dispose of a security in the event its rating is reduced below the
current minimum rating for its purchase (or it is not rated and its quality
becomes equivalent to such a security), if, as a result of a downgrade or
otherwise, the fund holds more than 5% of its net assets in these securities
(also known as "high-yield, high-risk securities"), the fund will dispose of
the excess as expeditiously as possible.
PORTFOLIO TRADING - The fund intends to engage in portfolio trading when it is
believed that the sale of a security owned by the fund and the purchase of
another security of better value can enhance principal and/or increase income.
A security may be sold to avoid any prospective decline in market value in
light of what is evaluated as an expected rise in prevailing yields, or a
security may be purchased in anticipation of a market rise (a decline in
prevailing yields). A security also may be sold and a comparable security
purchased coincidentally in order to take advantage of what is believed to be a
disparity in the normal yield and price relationship between the two
securities, or in connection with a "roll" transaction as described below.
CASH AND CASH EQUIVALENTS - Subject to the requirement that under normal
market conditions it maintain at least 65% of its assets in bonds, the fund may
maintain assets in cash or cash equivalents, including commercial bank
obligations (certificates of deposit, which are interest-bearing time deposits;
bankers' acceptances, which are time drafts on a commercial bank where the bank
accepts an irrevocable obligation to pay at maturity; and demand or time
deposits), commercial paper (short-term notes issued by corporations or
governmental bodies) rated Prime-1 or Prime-2 by Moody's or A-1 or A-2 by
Standard & Poor's, and short-term obligations issued or guaranteed by a
government or its agency or instrumentality or by a supranational entity. Cash
and cash equivalents may be denominated in U.S. dollars, non-U.S. currencies or
multinational currency units.
STOCK, WARRANTS AND RIGHTS - The fund may not make direct purchases of common
or preferred stocks, and common or preferred stocks acquired through
conversions, exchanges or the exercise of warrants or rights will be disposed
of by the fund within a reasonable period of time after acquisition. As a
condition of its continuing registration in a state, the fund has undertaken
that its investments in warrants or rights, valued at the lower of cost or
market, will not exceed 5% of the value of its net assets. Included within
that amount, but not to exceed 2% of the fund's net assets, may be warrants or
rights that are not listed on either the New York Stock Exchange or the
American Stock Exchange. Warrants or rights acquired by the fund in units or
attached to securities will be deemed to be without value for purposes of this
restriction. These limits are not fundamental policies of the fund and may be
changed by the Board of Directors without shareholder approval.
OTHER INVESTMENT COMPANIES - Although it intends to do so only infrequently,
if at all, the fund has the authority to invest up to 10% of its total assets
in shares of other investment companies. (Any such shares would be included in
the fund's average net assets for purposes of calculating the investment
adviser's fee, as described under "Investment Adviser" in the prospectus.) The
fund may not invest more than 5% of its total assets in any one investment
company nor acquire more than 3% of the outstanding voting securities of any
one investment company.
REPURCHASE AGREEMENTS - Although the fund has no current intention to do so
during the next 12 months, the fund may enter into repurchase agreements, under
which it buys a security and obtains a simultaneous commitment from the seller
to repurchase the security at a specified time and price.
The seller must maintain with the fund's custodian collateral equal to at least
100% of the repurchase price including accrued interest, as monitored daily by
Capital Research and Management Company (the "Investment Adviser"). If the
seller under the repurchase agreement defaults, the fund may incur a loss if
the value of the collateral security under or subject to the repurchase
agreement has declined and may incur disposition costs in connection with
liquidating the collateral. If bankruptcy proceedings are commenced with
respect to the seller, liquidation of the collateral by the fund may be delayed
or limited.
WHEN-ISSUED SECURITIES AND FIRM COMMITMENT AGREEMENTS - The fund may
purchase securities on a delayed delivery or "when-issued" basis and enter into
firm commitment agreements (transactions whereby the payment obligation and
interest rate are fixed at the time of the transaction but the settlement is
delayed). The fund as purchaser assumes the risk of any decline in the value
of the security beginning on the date of the agreement or purchase. As the
fund's aggregate commitments under these transactions increase, the opportunity
for leverage similarly may increase.
The fund will not use these transactions for the purpose of leveraging
and will maintain in a segregated account (with the value adjusted daily based
on market valuations) cash or high-grade debt securities 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 under these transactions exceed its
holdings of cash and securities that do not fluctuate in value (such as
short-term money market instruments), the fund temporarily will be in a
leveraged position (because it will 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 were it 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
thereunder.
REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS - Although the fund
has no current intention to do so during the next 12 months, the fund is
authorized to enter into reverse repurchase agreements and "roll" transactions.
A reverse repurchase agreement is the sale of a security by a fund and its
agreement to repurchase the security at a specified time and price. A "roll"
transaction is the sale of securities together with a commitment (for which the
fund may receive a fee) to purchase similar, but not identical, securities at a
future date. The fund will segregate liquid assets such as cash, U.S.
Government securities or other high-grade debt obligations in an amount
sufficient to cover its obligations under "roll" transactions and under reverse
repurchase agreements with broker-dealers (but no collateral is required on
reverse repurchase agreements with banks). Under the Investment Company Act of
1940 (the "1940 Act"), these transactions may be considered borrowings by the
fund; accordingly, the fund will limit these transactions, together with any
other borrowings, to no more than one-third of its total assets. Although
these transactions will not be entered into for the purpose of leveraging, to
the extent the fund's aggregate commitments under these transactions exceed its
holdings of cash and securities that do not fluctuate in value (such as
short-term money market instruments), the fund temporarily will be in a
leveraged position (I.E., it will 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 were it not in such a
position. As the fund's aggregate commitments under these transactions
increase, the opportunity for leverage similarly increases. If the income and
gains on securities purchased with the proceeds of reverse purchase agreements
exceed the costs of the agreements, the fund's earnings or net asset value will
increase faster than otherwise would be the case; conversely, if the income and
gains fail to exceed the costs, earnings or net asset value would decline
faster than otherwise would be the case.
CURRENCY TRANSACTIONS - The fund will not hold a currency other than U.S.
dollars or invest in securities not denominated in U.S. dollars if such
currency is not fully exchangeable into U.S. dollars without legal restriction
at the time of investment. The fund may purchase securities that are issued by
the government or a corporation or financial institution of one nation but
denominated in the currency of another nation (or a multinational currency
unit). In addition, the fund may enter into forward currency contracts and
purchase put or call options on currencies.
A forward currency contract is an obligation to purchase or sell a
currency against another currency at a future date and price as agreed upon by
the parties. The fund may either accept or make delivery of the currency at
the maturity of the forward contract or, prior to maturity, enter into a
closing transaction involving the purchase or sale of an offsetting contract.
The fund engages in forward currency transactions in anticipation of, or to
protect itself against, fluctuations in exchange rates. The fund might sell a
particular currency forward, for example, when it wanted to hold bonds
denominated in that currency but anticipated, and wished to be protected
against, a decline in the currency against the dollar. Similarly it might
purchase a currency forward to "lock in" the dollar price of securities
denominated in that currency which it anticipated purchasing. Although forward
contracts typically will involve the purchase or sale of a non-U.S. currency
against the dollar, the fund also may purchase or sell one non-U.S. currency
forward against another non-U.S. currency.
The fund may attempt to accomplish objectives similar to those involved in
its use of forward currency contracts by purchasing put or call options on
currencies. A put option gives the fund as purchaser the right (but not the
obligation) to sell a specified amount of currency at the exercise price until
the expiration of the option. A call option gives the fund as purchaser the
right (but not the obligation) to purchase a specified amount of currency at
the exercise price until its expiration. The fund might purchase a currency
put option, for example, to protect itself during the contract period against a
decline in the dollar value of a currency in which it holds or anticipates
holding securities. If the currency's value should decline against the dollar,
the loss in currency value should be offset, in whole or in part, by an
increase in the value of the put. If the value of the currency instead should
rise against the dollar, any gain to the fund would be reduced by the premium
it had paid for the put option. A currency call option might be purchased, for
example, in anticipation of, or to protect against, a rise in the value against
the dollar of a currency in which the fund anticipates purchasing securities.
Currency options may be either listed on an exchange or traded
over-the-counter ("OTC options"). Listed options are third-party contracts
(i.e., performance of the obligations of the purchaser and seller is guaranteed
by the exchange or clearing corporation), and have standardized strike prices
and expiration dates. OTC options are two-party contracts with negotiated
strike prices and expiration dates. The fund will not purchase an OTC option
unless it believes that daily valuations for such options are readily
obtainable. OTC options differ from exchange-traded options in that OTC
options are transacted with dealers directly and not through a clearing
corporation (which guarantees performance). Consequently, there is a risk of
non-performance by the dealer. Since no exchange is involved, OTC options are
valued on the basis of a quote provided by the dealer. In the case of OTC
options, there can be no assurance that a liquid secondary market will exist
for any particular option at any specific time.
LOANS OF PORTFOLIO SECURITIES - The fund is authorized to make loans of its
portfolio securities to broker-dealers or to other institutional investors
whose financial condition is monitored by the Investment Adviser. The borrower
must maintain with the fund's custodian collateral consisting of cash, cash
equivalents or U.S. Government securities equal to at least 100% of the value
of the borrowed securities, plus any accrued interest. The Investment Adviser
will monitor the adequacy of the collateral on a daily basis. The fund may at
any time call a loan of its portfolio securities and obtain the return of the
loaned securities. The fund will receive any interest paid on the loaned
securities and a fee or a portion of the interest earned on the collateral.
The fund will limit its loans of portfolio securities to an aggregate of 10% of
the value of its total assets, measured at the time any such loan is made.
DIVERSIFICATION - For the fund to be considered a "diversified" investment
company under federal and state laws, it would be required to limit its
investment in any one issuer (other than the U.S. Government) to 5% of its
total assets. However, such a limitation would reduce the extent to which the
fund could concentrate its non-U.S. investments in securities of governmental
issuers, which are generally considered to be of higher credit quality than are
non-U.S. private issuers, and accordingly might have increased the fund's
investment risk. The fund intends to comply with the diversification and other
requirements of the U.S. Internal Revenue Code of 1986, as amended, applicable
to regulated investment companies so that the fund will not be subject to U.S.
taxes on the net investment income and net capital gains that it distributes to
its shareholders.
INVESTMENT RESTRICTIONS
The fund has adopted certain investment restrictions which may not be
changed without a majority vote of its outstanding shares. Such majority is
defined by the 1940 Act as the vote of the lesser of (i) 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
(ii) more than 50% of the outstanding voting securities. These restrictions
provide that the fund may not:
1. Invest 25% or more of the value of its total assets in the
securities of issuers conducting their principal business activities in the
same industry;
2. Invest in companies for the purpose of exercising control or
management;
3. Buy or sell real estate or commodities or commodity contracts;
however, the fund may invest in debt securities secured by real estate or
interests therein or issued by companies which invest in real estate or
interests therein, including real estate investment trusts, and may purchase or
sell currencies (including forward currency contracts) or options on
currencies;
4. Acquire securities subject to restrictions on disposition or
securities for which there is no readily available market or OTC options for
which there is no secondary market, or enter into repurchase agreements or
purchase time deposits maturing in more than seven days, if, immediately after
and as a result, the value of such securities would exceed, in the aggregate,
10% of the fund's total assets;
5. Engage in the business of underwriting securities of other issuers,
except to the extent that the disposal of an investment position may
technically cause it to be considered an underwriter as that term is defined
under the Securities Act of 1933;
6. Make loans, except that the fund may purchase debt securities and
enter into repurchase agreements and make loans of portfolio securities;
7. Sell securities short, except to the extent that the fund
contemporaneously owns or has the right to acquire at no additional cost
securities identical to those sold short;
8. Purchase securities on margin, provided that the fund may obtain
such short-term credits as may be necessary for the clearance of purchases and
sales of securities;
9. Borrow money, except from banks for temporary or emergency purposes
not in excess of 5% of the value of the fund's total assets (in the event that
the asset coverage for such borrowings falls below 300%, the fund will reduce,
within three days, the amount of its borrowings in order to provide for 300%
asset coverage), and except that the fund may enter into reverse repurchase
agreements and engage in "roll" transactions, provided that reverse repurchase
agreements, "roll" transactions and any other transactions constituting
borrowing by the fund may not exceed one-third of the fund's total assets;
10. Mortgage, pledge, or hypothecate any of its assets, provided that
this restriction shall not apply to the transfer of securities in connection
with any permissible borrowing;
11. Invest in interests in oil, gas, or other mineral exploration or
development programs;
12. Invest more than 5% of its total assets in securities of companies
having, together with their predecessors, a record of less than three years of
continuous operation;
13. Write, purchase or sell put options, call options or combinations
thereof, except that this shall not prevent the purchase of put or call options
on currencies;
14. Purchase or retain the securities of any issuer, if those
individual officers and Directors of the fund, its investment adviser, or
distributor, each owning beneficially more than 1/2 of 1% of the securities of
such issuer, together own more than 5% of the securities of such issuer.
A further investment policy of the fund, which may be changed by action of
the Board of Directors without shareholder approval, is that the fund will not
invest in securities of an issuer if the investment would cause the fund to own
more than 10% of any class of securities of any one issuer.
FUND OFFICERS AND DIRECTORS
Directors and Director Compensation
<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE POSITION WITH PRINCIPAL OCCUPATION(S) DURING AGGREGATE TOTAL TOTAL NUMBER
REGISTRANT PAST 5 YEARS (POSITIONS WITHIN THE COMPENSATION COMPENSATION OF FUND
ORGANIZATIONS LISTED MAY HAVE (INCLUDING FROM ALL FUNDS BOARDS ON
CHANGED DURING THIS PERIOD) VOLUNTARILY DEFERRED MANAGED BY WHICH
COMPENSATION/1/) FROM CAPITAL DIRECTOR
THE COMPANY DURING RESEARCH AND SERVES/2/
FISCAL YEAR ENDED MANAGEMENT
SEPTEMBER 30, 1995 COMPANY/2/
<S> <C> <C> <C> <C> <C>
++ H. Frederick Christie Private Investor. The Mission Group $2,65
Age: 62 Director (non-utility holding company, subsidiary of 9/3/ $137,600 18
P.O. Box 144 Southern California Edison Company),
Palos Verdes Estates, CA 90274 former President and Chief
Executive Officer
Diane C. Creel Director Chairwoman, CEO and President, $1,40
Age: 46 The Earth Technology Corporation 0 $37,825 12
100 W. Broadway
Suite 5000
Long Beach, CA 90802
Martin Fenton, Jr. Director Chairman, Senior Resource Group $2,27
Age: 60 (management of senior living centers) 2/3/ $103,850 16
4350 Executive Drive
Suite 101
San Diego, CA 92121-2116
Leonard R. Fuller Director President, Fuller & Company, Inc. $1,60
Age: 48 (financial management consulting firm) 0 $38,325 12
4337 Marina City Drive
Suite 841 ETN
Marina del Rey, CA 90292
+* Abner D. Goldstine Capital Research and Management none
Age: 65 President, PEO Company, Senior Vice President /4/ none/4/ 12
and Director and Director
+** Paul G. Haaga, Jr. Capital Research and Management none
Age: 46 Chairman of Company, Senior Vice President /4/ none/4/ 14
the Board and Director
Herbert Hoover III Trustee Private Investor $2,47
Age: 67 7 $59,600 14
200 S. Los Robles Avenue
Suite 520
Pasadena, CA 91101-2431
Richard G. Newman Trustee Chairman, President and CEO, $2,29
Age: 60 AECOM Technology Corporation 0/3/ $39,000 12
3250 Wilshire Boulevard (architectural engineering)
Los Angeles, CA 90010-1599
Peter C. Valli Trustee Chairman and CEO, BW/IP $2,20
Age: 68 International Inc. (industrial 0/3/ $37,000 12
200 Oceangate Boulevard manufacturing)
Suite 900
Long Beach, CA 90802
</TABLE>
+ Directors who are considered "interested persons as defined in the Investment
Company Act of 1940, as amended (the "1940 Act"), on the basis of their
affiliation with the fund's Investment Adviser, Capital Research and
Management Company.
++ May be deemed an "interested person" of the fund due to membership on the
board of directors of the parent company of a registered broker-dealer.
* Address is 11100 Santa Monica Boulevard, Los Angeles, CA 90025
** Address is 333 South Hope Street, Los Angeles, CA 90071//
/1/ Amounts may be deferred by eligible Directors under a non-qualified
deferred compensation plan adopted by thefund in 1994. Deferred amounts
accumulate at an earnings rate determined by the total return of one or more
funds in The American Funds Group as designated by the Director.
/2/ Capital Research and Management Company manages The American Funds Group
consisting of 28 funds: AMCAP Fund, Inc., American Balanced Fund, Inc.,
American High-Income Municipal Bond Fund, Inc., American High-Income Trust,
American Mutual Fund, Inc., The Bond Fund of America, Inc., The Cash Management
Trust of America, Capital Income Builder, Inc., Capital World Growth and Income
Fund, Inc., Capital World Bond Fund, Inc., EuroPacific Growth Fund, Fundamental
Investors, Inc., The Growth Fund of America, Inc., The Income Fund of America,
Inc., Intermediate Bond Fund of America, The Investment Company of America,
Limited Term Tax-Exempt Bond Fund of America, The New Economy Fund, New
Perspective Fund, Inc., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of
America, Inc., The Tax-Exempt Fund of California, The Tax-Exempt Fund of
Maryland, The Tax-Exempt Fund of Virginia, The Tax-Exempt Money Fund of
America, The U. S. Treasury Money Fund of America, U.S. Government Securities
Fund and Washington Mutual Investors Fund, Inc. Capital Research and
Management Company also manages American Variable Insurance Series and Anchor
Pathway Fund which serve as the underlying investment vehicle for certain
variable insurance contracts; and Bond Portfolio for Endowments, Inc. and
Endowments, Inc. whose shares may be owned only by tax-exempt
organizations.
/3/ Since the plan's adoption, the total amount of deferred compensation
accrued by the fund (plus earnings thereon) for participating Directors is as
follows: H. Frederick Christie ($1,831), Martin Fenton, Jr. ($3,505), Richard
G. Newman ($5,029), and Peter C. Valli ($4,778). Amounts deferred and
accumulated earnings thereon are not funded and are general unsecured
liabilities of the fund until paid to the Director.
/4/ Paul G. Haaga, Jr. and Abner D. Goldstine are affiliated with the
Investment Adviser and, accordingly, receive no compensation from the fund.
OFFICERS
(with their principal occupations during the past five years)#
** MARY C. CREMIN, VICE PRESIDENT AND TREASURER. Capital Research and
Management Company, Senior Vice President - Fund Business Management Group
* MICHAEL J. DOWNER, VICE PRESIDENT. Capital Research and Management Company,
Senior Vice President - Fund Business Management Group
* JULIE F. WILLIAMS, SECRETARY. Capital Research and Management Company,
Vice President - Fund Business Management Group
* KIMBERLY S. VERDICK, ASSISTANT SECRETARY. Capital Research and Management
Company, Assistant Vice President - Fund Business Management Group
** ANTHONY W. HYNES, JR., ASSISTANT TREASURER. Capital Research and Management
Company, Vice President - Fund Business Management Group
# Positions within the organizations listed may have changed during this
period.
* Address is 333 South Hope Street, Los Angeles, CA 90071.
** Address is 135 South State College Boulevard, Brea, CA 92621.
*** Address is 11100 Santa Monica Boulevard, Los Angeles, CA 90025.
No compensation is paid by the fund to any officer or Director who is
a director or officer of the Investment Adviser. The fund pays annual fees of
$1,200 to Directors who are not affiliated with the Investment Adviser, plus
$200 for each Board of Directors meeting attended, plus $200 for each meeting
attended as a member of a committee of the Board of Directors. The Directors
may elect, on a voluntary basis, to defer all or a portion of these fees
through a deferred compensation plan in effect for the fund. The fund also
reimburses certain expenses of the Directors who are not affiliated with the
Investment Adviser. As of November 1, 1995, the officers and Directors and
their families as a group, owned beneficially or of record fewer than 1% of the
outstanding shares of the fund.
MANAGEMENT
INVESTMENT ADVISER - The Investment Adviser, founded in 1931, maintains
research facilities in the U.S. and abroad, with a staff of professionals, many
of whom have years of investment experience. The Investment Adviser's research
professionals travel several million miles a year, making more than 5,000
research visits in more than 50 countries around the world. The Investment
Adviser believes that it is able to attract and retain quality personnel.
An affiliate of the Investment Adviser compiles indices for major stock
markets around the world and compiles and edits the Morgan Stanley Capital
International Perspective, providing financial and market information about
more than 2,400 companies around the world.
The Investment Adviser is responsible for more than $100 billion of
stocks, bonds and money market instruments and serves over five million
investors of all types throughout the world. These investors include privately
owned businesses and large corporations, as well as schools, colleges,
foundations and other non-profit and tax-exempt organizations.
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 October 31, 1996 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 (i) 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 (ii) 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 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).
The Agreement provides for an advisory fee reduction by any amount
necessary to assure that the fund's annual ordinary net operating expenses do
not exceed applicable expense limitations in any state in which the fund's
shares are being offered for sale. Only one state, California, continues to
impose expense limitations on funds registered for sale therein. The
California provision currently limits annual expenses to the sum of 2-1/2% of
the first $30 million of average net assets, 2% of the next $70 million and
1-1/2% of the remaining average net assets. Expenses pursuant to the fund's
Plan of Distribution are excluded from this limit. Other expenses which are
not subject to these limitations include interest, taxes, brokerage
commissions, transaction costs, and extraordinary items such as litigation, as
well as, for purposes of the state expense limitations, any amounts excludable
under the applicable regulation. Expenditures, including costs incurred in
connection with the purchase or sale of portfolio securities, which are
capitalized in accordance with generally accepted accounting principles
applicable to investment companies, are accounted for as capital items and not
as expenses.
During the fiscal years ended September 30, 1995, 1994, and 1993, the
Investment Adviser's total fees amounted to $4,073,000, $3,801,000, and
$2,336,000, respectively.
PRINCIPAL UNDERWRITER - American Funds Distributors, Inc. (the "Principal
Underwriter") is the principal underwriter of the fund's shares. The fund has
adopted a Plan of Distribution (the "Plan"), pursuant to rule 12b-1 under the
1940 Act (see "Principal Underwriter" in the Prospectus). The Principal
Underwriter receives amounts payable pursuant to the Plan (see below) and
commissions consisting of that portion of the sales charge remaining after the
discounts which it allows to investment dealers. Commissions retained by the
Principal Underwriter on sales of fund shares during the fiscal year ended
September 30, 1995 amounted to $838,000 after allowance of $1,800,000 to
dealers. During the fiscal years ended September 30, 1994, 1993 and 1992, the
Principal Underwriter retained $1,293,000, $807,000 and $570,000, respectively.
As required by rule 12b-1, the Plan (together with the Principal
Underwriting Agreement) has 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 Plan or the Principal Underwriting Agreement, and the Plan has been
approved by a majority of the outstanding voting securities of the fund. The
officers and Directors who are "interested persons" of the fund may be
considered to have a direct or indirect financial interest in the operation of
the Plan due to present or past affiliations with the Investment Adviser and
related companies. Potential benefits of the Plan to the fund include improved
shareholder services, savings to the fund in transfer agency costs, savings to
the fund in advisory fees and other expenses, and benefits to the investment
process from growth or stability of assets and maintenance of a financially
healthy management organization. The selection and nomination of Directors who
are not "interested persons" of the fund is committed to the discretion of the
Directors who are not interested persons during the existence of the Plan. The
Plan is reviewed quarterly and must be renewed annually by the Board of
Directors.
Under the Plan the fund may expend up to 0.30% of its average net
assets annually to finance any activity which is primarily intended to result
in the sale of fund shares, provided the Board of Directors has approved the
category of expenses for which payment is being made. These include service
fees for qualified dealers and dealers commissions and wholesaler compensation
on sales of shares exceeding $1 million (including purchases by any
employer-sponsored 403(b) plan or purchases by any defined contribution plan
qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees). During the year ended
September 30, 1995, the Fund paid $1,364,000 to the Principal Underwriter under
the Plan as compensation to dealers. As of September 30, 1995, accrued and
unpaid distribution expenses to the Principal Underwriter were $103,000.
The Glass-Steagall Act and other applicable laws, among other things,
generally prohibit federally chartered or supervised banks from engaging in the
business of underwriting, selling or distributing securities, but permit banks
to make shares of mutual funds available to their customers and to perform
administrative and shareholder servicing functions. However, judicial or
administrative decisions or interpretations of such laws, as well as changes in
either federal or state statutes or regulations relating to the permissible
activities of banks or their subsidiaries of affiliates, could prevent a bank
from continuing to perform all or a part of its servicing activities. If a
bank were prohibited from so acting, shareholder clients of such bank would be
permitted to remain shareholders of the fund and alternate means for continuing
the servicing of such shareholders would be sought. In such event, changes in
the operation of the fund might occur and shareholders serviced by such bank
might no longer be able to avail themselves of any automatic investment or
other services then being provided by such bank. It is not expected that
shareholders would suffer adverse financial consequences as a result of any of
these occurrences.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and certain banks and financial
institutions may be required to be registered as dealers pursuant to state law.
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES
The fund intends to meet all the requirements and to elect the tax status
of a "regulated investment company" under the provisions of Subchapter M of the
Internal Revenue Code of 1986 (the "Code"). Under Subchapter M, if the fund
distributes within specified times at least 90% of the sum of its investment
company taxable income (net investment income and the excess of net short-term
capital gains over net long-term capital losses), it will be taxed only on that
portion (if any) of the investment company taxable income and net capital gain
which it retains.
To qualify, the fund must (a) derive at least 90% of its gross income from
dividends, interest, payments with respect to securities loans, and gains from
the sale or other disposition of stock, securities or currencies or other
income derived with respect to its business of investing in such stock,
securities, or currencies; (b) derive less than 30% of its gross income from
the sale or other disposition of stock or securities held less than three
months; and (c) 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, cash items, U.S. Government securities, securities of
other regulated investment companies and other securities (but such other
securities must be limited, in respect of any one issuer, to an amount not
greater than 5% 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 any one issuer (other than U.S.
Government securities or the securities of other regulated investment
companies), or in two or more issuers which the fund controls and which are
engaged in the same or similar trades or businesses or related trades or
businesses.
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 (i) 98% of ordinary income (generally net investment income)
for the calendar year, (ii) 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
(iii) 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 (i) amounts actually
distributed by the fund from its current year's ordinary income and capital
gain net income and (ii) any amount on which the fund pays income tax for the
year. The fund intends to meet these distribution requirements to avoid the
excise tax liability.
The fund also intends to distribute to shareholders all of the excess of
net long-term capital gain over net short-term capital loss on sales of
securities. If the net asset value of shares of the fund should, by reason of
a distribution of realized capital gains, be reduced below a shareholder's
cost, such distribution would to that extent be a return of capital to that
shareholder even though taxable to the shareholder, and a sale of shares by a
shareholder at net asset value at that time would establish a capital loss for
federal tax purposes. In particular, investors should consider the tax
implications of purchasing shares just prior to a dividend or distribution
record date. Those investors purchasing shares just prior to such a date will
then receive a partial return of capital upon the dividend or distribution,
which will nevertheless be taxable to them as an ordinary or capital gains
dividend.
Sales of forward currency contracts which are intended to hedge against a
change in the value of securities or currencies held by the fund may affect the
holding period of such securities or currencies and, consequently, the nature
of the gain or loss on such securities or currencies upon disposition.
It is anticipated that any net gain realized from the closing out of
forward currency contracts will be considered a gain from the sale of
securities or currencies and therefore be qualifying income for purposes of the
90% of gross income from qualified sources requirement, as discussed above. In
order to avoid realizing excessive gains on securities or currencies held less
than three months, the fund may be required to defer the closing out of a
forward currency contract beyond the time when it would otherwise be
advantageous to do so. It is anticipated that unrealized gains on forward
currency contracts, which have been open for less than three months as of the
end of the fund's fiscal year and which are recognized for tax purposes, will
not be considered gains on securities or currencies held less than three months
for purposes of the 30% test, as discussed above.
The amount of any realized gain or loss on closing out a forward currency
contract such as a forward commitment for the purchase or sale of non-U.S.
currency will generally result in a realized capital gain or loss for tax
purposes. Under Code Section 1256, forward currency contracts held by the fund
at the end of each fiscal year will be required to be "marked to market" for
federal income tax purposes, that is, deemed to have been sold at market value.
Except for transactions in forward currency contracts which are classified as
part of a "mixed straddle," any gain or loss recognized with respect to forward
currency contracts is considered to be 60% long-term capital gain or loss, and
40% short-term capital gain or loss, without regard to the holding period of
the contract. In the case of a transaction classified as a "mixed straddle,"
the recognition of losses may be deferred to a later taxable year. Code
Section 988 may also apply to forward currency contracts. Under Section 988,
each non-U.S. currency gain or loss is generally computed separately and
treated as ordinary income or loss. In the case of overlap between Sections
1256 and 988, special provisions determine the character and timing of any
income, gain or loss. The fund will attempt to monitor Section 988
transactions to avoid an adverse tax impact.
The fund will distribute to shareholders annually any net long-term
capital gains which have been recognized for federal income tax purposes
(including unrealized gains at the end of the fund's fiscal year) on forward
currency contract transactions. Such distributions will be combined with
distributions of capital gains realized on the fund's other investments.
Dividends and distributions generally are taxable to shareholders at the
time they are paid. However, dividends and distributions declared in October,
November and December and made payable to shareholders of record in such a
month are treated as paid and are thereby taxable as of December 31, provided
that the fund pays the dividend no later than the end of January of the
following year.
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 shall not be taken into account (to the
extent such previous sales charges do not exceed the reduction in sales
charges) for the purpose 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 shares. Also, any loss realized on a redemption or exchange of
shares of a 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.
Under the Code, a fund's taxable income for each year will be computed
without regard to any net non-U.S. currency loss attributable to transactions
after October 31, and any such net non-U.S. currency loss will be treated as
arising on the first day of the following taxable year.
The fund may be required to pay withholding and other taxes imposed by
countries outside the United States which would reduce the fund's investment
income, generally at rates from 10% to 40%. Tax conventions between certain
countries and the United States may reduce or eliminate such taxes. If more
than 50% in value of the fund's total assets at the close of its taxable year
consist of securities of non-U.S. corporations, the fund will be eligible to
file elections with the Internal Revenue Service pursuant to which shareholders
of the fund will be required to include their respective pro rata portions of
such withholding taxes in their federal income tax returns as gross income,
treat such amounts as foreign taxes paid by them, and deduct such amounts in
computing their taxable income or, alternatively, use them as foreign tax
credits against their federal income taxes.
As of the date of this statement of additional information, the
maximum individual tax rate applicable to ordinary income is 39.6% (effective
tax rates may be higher for some individuals due to phase out of exemptions and
elimination of deductions); the maximum individual tax rate applicable to net
capital gains is 28%; and the maximum corporate tax applicable to ordinary
income and net capital gains is 35%. However, to eliminate the benefit of
lower marginal corporate income tax rates, corporations which have taxable
income in excess of $100,000 in a taxable year will be required to pay an
additional amount of tax of up to $11,750, and corporations which have taxable
income in excess of $15,000,000 for a taxable year will be required to pay an
additional amount of income tax up to $100,000. Naturally, the amount of tax
payable by a taxpayer will be affected by a combination of tax law rules
covering deductions, credits, deferrals, exemptions, sources of income and
other matters. Under the Code, an individual is entitled to establish an IRA
each year (prior to the tax return filing deadline for that year) whereby
earnings on investments are tax-deferred. In addition, in some cases, the IRA
contribution itself may be deductible.
The foregoing is limited to a summary discussion of federal taxation and
should not be viewed as a comprehensive discussion of all provisions of the
Code relevant to investors. Dividends and distributions may also be subject to
state or local taxes. Investors should consult their own tax advisers for
additional details as to their particular tax status.
PURCHASE OF SHARES
PRICE OF SHARES - Purchases of shares are made at the offering price next
determined after the purchase order is received by the fund or American Funds
Service Company; this offering 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, accepted by the Principal Underwriter prior to its close
of business. The dealer is responsible for promptly transmitting purchase
orders to the Principal Underwriter. Orders received by the investment dealer,
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. Prices
which appear in the newspaper are not always indicative of prices at which you
will be purchasing and redeeming shares of the fund, since such prices
generally reflect the previous day's closing price whereas purchases and
redemptions are made at the next calculated price.
The price you pay for fund shares, the offering price, is based on the
net asset value per share which is calculated once daily at the close of
trading (currently 4:00 p.m., New York Time) each day the New York Stock
Exchange is open. The New York Stock Exchange is currently closed on weekends
and on the following holidays: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas Day. The
net asset value per share is determined as follows:
1. Stocks and convertible bonds will be valued at closing sales prices
reported on recognized securities exchanges on the day of valuation or, for
listed stocks and convertible bonds having no sales reported and for unlisted
stocks and convertible bonds, upon last-reported bid prices on that date.
Long-term fixed-income obligations denominated in U.S. dollars generally are
valued at prices obtained for the day of valuation from a bond pricing service;
however, in circumstances where the Investment Adviser deems it appropriate to
do so, such securities are valued at the mean of representative quoted bid or
asked prices for such securities or, if such prices are not available, at
prices for securities of comparable maturity, quality and type. Short-term
securities with more than 60 days remaining to maturity are valued at the mean
of representative quoted bid and asked prices. Short-term securities with 60
days or less remaining to maturity are amortized to maturity based on their
cost to the fund, if acquired within 60 days of maturity or, if already held by
the fund on the 60th day, based on the value determined on the 61st day.
Securities denominated in currencies other than U.S. dollars generally are
valued on the basis of bid quotations. Options on currencies purchased by the
fund are valued at their bid price on the exchange in the case of listed
options or at the average of the bid prices obtained from dealers in the case
of OTC options. Where market quotations are not readily available, securities
are valued at fair value by the Board of Directors or a committee thereof. The
fair value of any other assets is added to the value of securities to arrive at
total assets;
2. The value of each security denominated in a currency other than U.S.
dollars will be translated into U.S. dollars at the prevailing market rate as
determined by the fund's officers.
3. The fund's liabilities, including proper accruals of expense items,
are deducted from total assets; and
4. The net assets so obtained are then divided by the total number of
shares outstanding, and the result, rounded to the nearer cent, is the net
asset value per share.
Any purchase order may be rejected by the Principal Underwriter or by
the fund. The fund will not knowingly sell fund shares (other than for the
reinvestment of dividends or capital gain distributions) directly or indirectly
or through a unit investment trust to any other investment company, person or
entity, where, after the sale, such investment company, person, or entity would
own beneficially directly, indirectly, or through a unit investment trust more
than 4.5% of the outstanding shares of the fund without the consent of a
majority of the Board of Directors.
STATEMENT OF INTENTION - The reduced sales charges and offering prices set
forth in the prospectus apply to purchases of $25,000 or more made within a
13-month period subject to the following statement of intention (the Statement)
terms. The Statement is not a binding obligation to purchase the indicated
amount. When a shareholder elects to utilize the Statement in order to qualify
for a reduced sales charge, 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 capital gain distributions on these 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
13-month 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 purchases had been made at a single time. If
the difference is not paid within 20 days after written request by the
Principal Underwriter or the securities dealer, the appropriate number of
escrowed shares 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 13-month period, and such a revision will be
treated as a new Statement, except that the 13-month period during which the
purchase must be made will remain unchanged and there will be no retroactive
reduction of the sales charges paid on prior purchases. Existing holdings
eligible for rights of accumulation (see the prospectus and account
application) may be credited toward satisfying the Statement. During the
Statement period reinvested dividends and capital gain distributions,
investments in money market funds, and investments made under a right of
reinstatement will not be credited toward satisfying the Statement.
In the case of purchase orders by the trustees of certain retirement
plans by payroll deduction, the sales charge for the investments made during
the 13-month period will be handled as follows: The regular monthly payroll
deduction investment will be multiplied by 13 and then multiplied by 1.5. The
current value of existing American Funds investments (other than money market
fund investments) and any rollovers or transfers reasonably anticipated to be
invested in non-money market American Funds during the 13-month 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 of intention, 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 previously made during
the 13-month period.
Shareholders purchasing shares at a reduced sales charge under a
Statement indicate their acceptance of these terms with their first
purchase.
DEALER COMMISSIONS - The following commissions will be paid to dealers who
initiate and are responsible for purchases of $1 million or more, for purchases
by any employer-sponsored 403(b) plan or purchases by any defined contribution
plan qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees, and for purchases made at
net asset value by certain retirement plans of organizations with collective
retirement plan assets of $100 million or more: 1.00% on amounts to $2
million, 0.80% on amounts over $2 million to $3 million, 0.50% on amounts over
$3 million to $50 million, 0.25% on amounts over $50 million to $100 million,
and 0.15% on amounts over $100 million. The level of dealer commissions will be
determined based on sales made over a 12-month period commencing from the date
of the first sale at net asset value. See "The American Funds Shareholder
Guide" in the fund's prospectus for more information.
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES
AUTOMATIC INVESTMENT PLAN - The automatic investment plan enables shareholders
to make regular monthly or quarterly investments in shares through automatic
charges to their bank accounts. With shareholder authorization and bank
approval, the Transfer Agent will automatically charge the bank account for the
amount specified ($50 minimum), which will be automatically invested in shares
at the offering price on or about the 10th day of the month (or on or about the
15th day of the month in the case of accounts for retirement plans where
Capital Guardian Trust Company serves as trustee or custodian). Bank accounts
will be charged on the day or a few days before investments are credited,
depending on the bank's capabilities, and shareholders will receive a
confirmation statement showing the current transaction. Participation in the
plan will begin within 30 days after receipt of the account application. If
the shareholder's bank account cannot be charged due to insufficient funds, a
stop-payment order or closing of the account, the plan may be terminated and
the related investment reversed. The shareholder may change the amount of the
investment or discontinue the plan at any time by writing the Transfer Agent.
AUTOMATIC WITHDRAWALS - 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 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.
CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS - A shareholder in one fund
may elect to cross-reinvest dividends or dividends and capital gain
distributions paid by that fund (the "paying fund") into any other fund in The
American Funds Group (the "receiving fund") subject to the following
conditions: (i) the aggregate value of the shareholder's account(s) in the
paying fund(s) must equal or exceed $5,000 (this condition is waived if the
value of the account in the receiving fund equals or exceeds that fund's
minimum initial investment requirement), (ii) as long as the value of the
account in the receiving fund is below that fund's minimum initial investment
requirement, dividends and capital gain distributions paid by the receiving
fund must be automatically reinvested in the receiving fund, and (iii) if this
privilege is discontinued with respect to a particular receiving fund, the
value of the account in that fund must equal or exceed the fund's minimum
initial investment requirement or the fund shall have the right, if the
shareholder fails to increase the value of the account to such minimum within
90 days after being notified of the deficiency, automatically to redeem the
account and send the proceeds to the shareholder. These cross-reinvestments of
dividends and capital gain distributions will be at net asset value (without
sales charge).
EXECUTION OF PORTFOLIO TRANSACTIONS
There are occasions on which 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.
Although such concurrent authorizations potentially could be either
advantageous or disadvantageous to the fund, they are effected only when the
Investment Adviser believes that to do so is in the interest of the fund. When
such concurrent authorizations occur, the objective is to allocate the
executions in an equitable manner.
Brokerage commissions paid on portfolio transactions, including
dealer concessions on underwritings, for the fiscal years ended September 30,
1995, 1994 and 1993 amounted to $22,000, $110,000 and $37,000, respectively.
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 The Chase Manhattan Bank, N.A., One Chase Manhattan Plaza, New
York, NY 10081, as Custodian. Non-U.S. securities may be held by the Custodian
pursuant to sub-custodial agreements in non-U.S. banks or non-U.S. branches of
U.S. banks.
INDEPENDENT ACCOUNTANTS - Deloitte & Touche LLP, 1000 Wilshire Boulevard, 15th
Floor, Los Angeles, CA 90017, has served as the fund's independent auditors
since inception, 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 have been so included in reliance on the report of the independent
auditors given on the authority of said firm as experts in accounting and
auditing.
REMOVAL OF DIRECTORS BY SHAREHOLDERS - At any meeting of shareholders, duly
called and at which a quorum is present, the shareholders may, by the
affirmative vote of the holders of a majority of the votes entitled to be cast
thereon, remove any director or directors from office and may elect a successor
or successors to fill any resulting vacancies for the unexpired terms of
removed directors. The fund has made an undertaking, at the request of the
staff of the Securities and Exchange Commission, to apply the provisions of
section 16(c) of the 1940 Act with respect to the removal of directors, as
though the fund were a common-law trust. Accordingly, the directors of the
fund shall promptly call a meeting of shareholders for the purpose of voting
upon the question of removal of any director when requested in writing to do so
by the record holders of not less than 10% of the outstanding shares.
REPORTS TO SHAREHOLDERS - The fund's fiscal year ends on September 30.
Shareholders are provided, at least semiannually, with reports showing the
investment portfolio, financial statements and other information audited
annually by the fund's independent auditors, whose selection is determined
annually by the Directors.
PERSONAL INVESTING POLICY - Capital Research and Management Company and its
affiliated companies have adopted a personal investing policy consistent with
Investment Company Institute guidelines. This policy includes: a ban on
acquisitions of securities pursuant to an initial public offering; restrictions
on acquisitions of private placement securities; pre-clearance and reporting
requirements; review of duplicate confirmation statements; annual
recertification of compliance with codes of ethics; disclosure of personal
holdings by certain investment personnel prior to recommendation for purchase
for the fund; 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.
The financial statements including the investment portfolio and the report
of Independent Auditors contained in the Annual Report are included in this
Statement of Additional Information. The following information is not included
in the Annual Report:
<TABLE>
<CAPTION>
DETERMINATION OF NET ASSET VALUE, REDEMPTION PRICE AND
OFFERING PRICE PER SHARE -- SEPTEMBER 30, 1995
<S> <C>
Net asset value and redemption price per share
(Net assets divided by shares outstanding) $16.81
Offering price per share (100/95.25 of per share
net asset value, which takes into account the
fund's current maximum sales charge) $17.65
</TABLE>
SHAREHOLDER VOTING RIGHTS - The fund currently issues shares in one class and
series, but the Board of Directors may establish additional classes or series
of shares in the future. When more than one class or series of shares is
outstanding, shares of all classes and series will vote together for a single
set of Directors, and on other matters affecting the entire fund, with each
share entitled to a single vote. On matters affecting only one class or
series, only the shareholders of that class or series shall be entitled to
vote. On matters relating to more than one class or series but affecting the
classes and series differently, separate votes by class and series are
required.
INVESTMENT RESULTS
The fund's yield is 5.83% based on a 30-day (or one month) period ended
September 30, 1995, computed by dividing the net investment income per share
earned during the period by the maximum offering price per share on the last
day of the period, according to the following formula:
YIELD = 2[( a-b/cd + 1)/6/ -1]
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period that were
entitled to receive dividends.
d = the maximum offering price per share on the last day of the period.
The fund may also calculate a distribution rate on a taxable and tax
equivalent basis. The distribution rate is computed by dividing the dividends
paid by the fund over the last 12 months by the sum of the month-end net asset
value or maximum offering price and the capital gains paid over the last 12
months. The distribution rate may differ from the yield.
In addition, investments in certain currency contracts may affect the
fund's distribution rate. The Internal Revenue Service requires funds to
recognize as ordinary income certain realized currency gains on non-U.S.
currency transactions and to distribute such amounts as dividends to
shareholders. Conversely, realized currency losses must be recognized as
ordinary losses and reflected by reductions in dividends. Because such
adjustments affect a fund's distribution rate calculations, a fund's
distribution rate may be greater (if there is a net currency gain) or lesser
(if there is a net currency loss) than its SEC yield. In addition, because of
special tax treatment, certain other transactions may result in differences
between the SEC yield and distribution rate. For example, unrealized gains on
certain open forward currency contracts are required to be recognized as income
and distributed as dividends (and are therefore included in the distribution
rate but are not included in the SEC yield).
The fund's average annual total return for the one-, five-year and
lifetime periods ending on September 30, 1995 was 12.53%, 9.42% and 8.96%,
respectively. The average annual total return ("T") is computed by equating
the value at the end of the period ("ERV") with a hypothetical initial
investment of $1,000 ("P") over a period of years ("n") according to the
following formula as required by the Securities and Exchange Commission:
P(1+T)/n/ = ERV.
The following assumptions will be reflected in computations made in
accordance with the formula stated above: (1) deduction of the maximum sales
load of 4.75% from the $1,000 initial investment; (2) reinvestment of dividends
and distributions at net asset value on the reinvestment date determined by the
Board; and (3) a complete redemption at the end of any period illustrated. The
fund will calculate total return for five and ten-year periods after such
periods have elapsed. In addition, the fund will provide lifetime average
annual total return figures.
EXPERIENCE OF INVESTMENT ADVISER - Capital Research and Management Company
manages nine common stock funds that are at least 10 years old. Since 1964, in
all of the 10-year periods during which those funds were managed by Capital
Research and Management Company 115 in all), those funds have had better total
returns than the Standard and Poor's 500 Stock Composite Index in 94 of the 115
periods.
Note that past results are not an indication of future investment results.
Also, the fund has different investment policies than the funds mentioned
above. These results are included solely for the purpose of informing
investors about the experience and history of Capital Research and Management
Company.
The fund may from time to time compare its investment results with the
following:
(1) The Salomon Brothers non-U.S. Dollar Indexes, which measure the total
return of high-quality non-U.S. dollar denominated securities in major sectors
of the bond market.
(2) The Lehman Brothers Government/Corporate Bond Index, which is a
comprehensive measure of all public obligations of the U.S. Treasury (excluding
flower bonds and foreign-targeted issues), all publicly issued debt of agencies
of the U.S.Government (excluding mortgage-backed securities), and all public,
fixed-rate, non-convertible investment grade domestic corporate debt.
(3) The Salomon Brothers Broad Investment-Grade Bond Index, which
represents over 5,000 individually priced securities and is a market
capitalization weighted index and includes Treasury, Government-sponsored,
mortgage, and investment-grade fixed-rate corporates (BBB/Baa3) with a maturity
of one year or longer and a minimum of $50 million outstanding at entry, and
which remain in the Index until their amount falls below $25 million.
(4) The Salomon Brothers World Bond Index, which is a sub-component of
the International Bond Index and provides a comprehensive measure of the total
return of high-quality securities in major sectors of the bond market.
Included in the index are U.S. and non-U.S. Government bonds.
(5) The Salomon Brothers World Government Bond Index, which is designed
to provide a comprehensive measure of the total return performance of the
domestic Government bond markets in each of nine countries (United States,
Japan, United Kingdom, Germany, France, Canada, the Netherlands, Australia and
Switzerland) and in the nine countries combined.
(6) Average of Savings Accounts, which is a measure of all kinds of savings
deposits, including longer-term certificates (based on figures supplied by the
U.S. League of Savings Institutions). Savings accounts offer a guaranteed rate
of return on principal, but no opportunity for capital growth.
(7) The Consumer Price Index, which is a measure of the average change in
prices over time in a fixed market basket of goods and services (e.g. food,
clothing, shelter, and fuels, transportation fares, charges for doctors' and
dentists' services, prescription medicines, and other goods and services that
people buy for day-to-day living).
The fund may also refer to results compiled by organizations such as Lipper
Analytical Services, Morningstar, Inc. and Wiesenberger Investment Companies
Services. Additionally, the fund may, from time to time, refer to results
published in various newspapers or periodicals, including Barrons, Forbes,
Fortune, Institutional Investor, Kiplinger's Personal Finance Magazine, Money,
U.S. News and World Report and The Wall Street Journal.
In addition, the fund may also from time to time illustrate the benefits of
tax-deferral by comparing taxable investments to investments made through
tax-deferred retirement plans.
<TABLE>
<CAPTION>
If you are considering the fund for an Individual Retirement Account
Here's how much you would have if you invested $2,000 a year in the Fund:
<S> <C> <C>
1 Year 3 Years Lifetime
(10/1/94 - 9/30/95) (10/1/92 - 9/30/95) (8/4/87 - 9/30/95)
$2,250 $6,925 $25,902
</TABLE>
See the difference time can make in an investment program
<TABLE>
<CAPTION>
... and taken all
distributions in shares,
If you had invested your investment would
$10,000 in the Fund have been worth this
this many years ago... much at September 30, 1995
<S> <C> <C>
| |
Periods
Number of Years 10/1-9/30 Value**
1 1994 - 1995 $11,252
2 1993 - 1995 11,181
3 1992 - 1995 12,339
4 1991 - 1995 13,508
5 1990 - 1995 15,686
6 1989 - 1995 16,927
7 1988 - 1995 17,853
8 1987 - 1995 20,207
Lifetime 1987 - 1995* 20,140
</TABLE>
Illustration of a $10,000 investment in the Fund
WITH DIVIDENDS AND CAPITAL GAINS REINVESTED
(For the lifetime of the Fund August 4, 1987 - September 30, 1995)
COST OF SHARES VALUE OF SHARES**
<TABLE>
<CAPTION>
Fiscal Total From From From
Year End Annual Dividends Investment Initial Capital Gains Dividends Total
September 30 Dividends (cumulative) Cost Investment Reinvested Reinvested Value
<S> <C> <C> <C> <C> <C> <C> <C>
1987* --- --- $10,000 $9,493 --- --- $ 9,493
1988 $ 621 $ 621 10,621 10,120 $ 8 615 10,743
1989 801 1,422 11,422 9,700 237 1,392 11,330
1990 945 2,367 12,367 9,640 236 2,355 12,231
1991 948 3,315 13,315 10,400 254 3,545 14,199
1992 1,000 4,315 14,315 10,633 260 4,649 15,542
1993 871 5,186 15,186 10,987 443 5,729 17,159
1994 1,046 6,232 16,232 10,220 491 6,342 17,053
1995 1,354 7,586 17,586 11,207 539 8,394 20,140
</TABLE>
The dollar amount of capital gain distributions during the period was $485.
* From inception on August 4, 1987.
** Results assume deduction of the maximum sales charge of 4.75% from the
initial purchase payment.
APPENDIX
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Moody's Investors Service, Inc. employs the designations "Prime-1"and
"Prime-2" to indicate the two highest grades of commercial paper.
"ISSUERS RATED PRIME-1 (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations. Prime-1 repayment
capacity will normally be evidenced by the following characteristics:
- Leading market positions in well established industries.
- High rates of return on funds employed.
- Conservative capitalization structures with moderate reliance on debt and
ample asset protection.
- Broad margins in earning coverage of fixed financial charges and high
internal cash generation.
- Well established access to a range of financial markets and assured sources
of alternate liquidity."
"ISSUERS RATED PRIME-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternative liquidity is
maintained."
Standard & Poor's Corporation's two highest ratings of commercial paper are
"A-1" and "A-2."
"A Issues assigned this highest rating are regarded as having the greatest
capacity for timely payment. Issues in this category in which the fund invests
may be delineated with the numbers 1 or 2 to indicate the relative degree of
safety."
"A-1 This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong."
"A-2 Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues designated
'A-1'."
DESCRIPTION OF BOND RATINGS
Moody's Investors Service, Inc. rates "investment grade" long-term debt
obligations issued by various entities from "Aaa" to "Baa." These ratings are
described below:
"Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as 'gilt
edge.' Interest payments are protected by a large or by an exceptionally
stable margin, and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues."
"Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, or fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present which make the long-term risks appear somewhat larger than the Aaa
securities."
"Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future."
"Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well."
Standard & Poor's Corporation rates the investment grade long-term debt
obligations of various entities in categories ranging from "AAA" to "BBB"
according to quality. These ratings are described below:
"Debt rated 'AAA' has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong."
"Debt rated 'AA' has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree."
"Debt rated 'A' has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories."
"Debt rated 'BBB' is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories."
<PAGE>
Capital World Bond Fund
Investment Portfolio September 30, 1995
<TABLE>
<CAPTION>
Principal Market Percent of
Amount Value Net Assets
(000) (000)
<S> <C> <C> <C>
Bonds & Notes
Australian Dollars
Australian Government 9.00% 2004 A$ 1,000 US$776 .12%
New South Wales Treasury 11.50% 1999 1,000 839 .13
New South Wales Treasury 7.00% 2004 12,000 8,109 1.24
News America Holdings Inc. 8.625% 2014 11,000 6,981 1.07
Southern Australia Finance Authority
11.25% 2001 5,500 4,631 .71
-------- --------
21,336 3.27
-------- --------
Austrian Schillings
Austria Government 7.00% 2000 ATS14,000 1,456 .22
- -
British Pounds
Bank of Ireland 9.75% 2005 Pound 250 411 .06
European Investment Bank 6.00% 2004 250 333 .05
United Kingdom:
9.50% 1999 3,000 5,031 .77
8.00% 2000 400 643 .10
7.00% 2001 8,500 12,868 1.97
4.375% 2004/1/ 3,000 5,406 .83
-------- --------
24,692 3.78
-------- --------
Canadian Dollars
Canadian Government:
7.75% 1996 C$ 2,000 1,504 .23
6.25% 1998 2,000 1,468 .23
10.75% 1998 3,000 2,426 .37
9.75% 2001 14,250 11,796 1.81
0% 2003 6,000 2,358 .36
7.50% 2003 5,000 3,680 .56
0% 2005 12,685 4,321 .66
8.75% 2005 6,550 5,213 .80
10.75% 2009 9,500 8,717 1.34
4.25% 2021/1/ 4,000 2,925 .45
9.00% 2025 5,500 4,468 .68
-------- --------
48,876 7.49
-------- --------
Danish Kroner
Danish Government:
9.00% 1998 DKr124,000 23,730 3.63
9.00% 2000 36,000 6,964 1.07
8.00% 2003 46,500 8,467 1.30
7.00% 2024 104,000 15,547 2.38
-------- --------
54,708 8.38
-------- --------
Deutsche Marks
Deutschland Republic:
6.75% 2003 DM15,500 10,995 1.68
6.875% 2005 16,200 11,540 1.77
6.25% 2024 20,500 12,403 1.90
Treuhandanstalt:
7.375% 2002 11,000 8,091 1.24
7.50% 2004 4,100 3,019 .46
-------- --------
46,048 7.05
-------- --------
European Currency Units
France O.A.T.:
6.75% 2002 ECU3,000 3,722 .57
8.50% 2002 2,000 2,715 .41
Italy (Republic of) 10.75% 2000 2,500 3,630 .56
-------- --------
10,067 1.54
-------- --------
Finnish Markkaa
Finnish Government:
11.75% 1996 FM1,000 239 .03
9.50% 2004 4,000 1,028 .16
-------- --------
1,267 .19
-------- --------
French Francs
France O.A.T.:
6.75% 2004 Fr15,000 2,912 .45
8.50% 2023 6,000 1,275 .19
-------- --------
4,187 .64
-------- --------
Irish Pounds
Ireland (Republic of):
6.25% 1999 IR POUND3,450 5,332 .82
9.25% 2003 3,800 6,505 1.00
6.25% 2004 530 746 .11
-------- --------
12,583 1.93
-------- --------
Italian Lire
Credit Local de France 7.50% 1999 Lr 2,000,000 1,122 .17
Deutsche Bank Finance NV 11.00% 1996 3,700,000 2,305 .35
Italian Government:
8.50% 1999 4,400,000 2,541 .39
8.50% 1999 2,900,000 1,641 .25
11.50% 2003 1,000,000 618 .10
8.50% 2004 4,500,000 2,315 .36
8.50% 2004 25,700,000 13,148 2.01
KfW International Finance Inc.
11.625% 1998 5,500,000 3,474 .53
- --------
27,164 4.16
-------- --------
Japanese Yen
Austria Government 5.00% 2001 Yen 50,000 574 .09
European Investment Bank 6.75% 2001 1,500,000 18,637 2.85
Export-Import Bank of Japan:
4.375% 2003 325,000 3,649 .56
2.875% 2005 990,000 9,893 1.52
GMAC International Finance 3.75% 1999 300,000 3,205 .49
Japan Development Bank:
5.00% 1999 340,000 3,871 .59
6.50% 2001 130,000 1,609 .25
-------- --------
41,438 6.35
-------- --------
Netherlands Guilders
Netherlands Government:
7.50% 1999 NLG 5,000 3,342 .51
7.50% 2023 57,300 36,630 5.61
-------- --------
39,972 6.12
-------- --------
New Zealand Dollars
New Zealand Government:
6.50% 2000 NZ$15,550 9,663 1.48
8.00% 2004 27,000 17,953 2.75
8.00% 2006 18,500 12,372 1.90
-------- --------
39,988 6.13
-------- --------
Spanish Pesetas
Spain (Kingdom of):
8.30% 1998 Pta 755,000 5,831 .89
11.45% 1998 2,020,000 16,751 2.57
10.50% 2003 2,000,000 16,116 2.47
-------- --------
38,698 5.93
-------- --------
Swedish Kronor
Swedish Government:
10.75% 1997 SKr 20,000 2,939 .45
11.00% 1999 149,000 22,420 3.43
6.00% 2005 46,000 5,278 .81
-------- --------
30,637 4.69
-------- --------
United States Dollars
Banamex 1995 Receivables Trust
0% 2002 US$ 6,665 5,009 .77
Bayerische Landesbank Girozentrale
7.375% 2002 1,000 1,050 .16
Caterpillar Financial Services Corp.
9.39% 12/5/95 500 503 .08
ConAgra, Inc. 9.75% 2021 8,500 10,459 1.60
Czech National Bank 7.00% 1996 2,000 2,003 .31
Den Danske Bank 144A 6.55% 2003 1,000 969 .15
Federal Home Loan Mortgage Corp.:
5.78% 2003/2/ 3,000 2,840 .44
6.19% 2004/2/ 3,000 2,882 .44
Government National Mortgage Assn.:
9.00% 2017-2004/2/ 8,893 9,362 1.43
7.00% 2020/2/ 2,838 2,877 .44
8.50% 2021/2/ 975 1,015 .16
6.00% 2024/2/ 3,033 3,055 .47
6.50% 2024/2/ 3,466 3,514 .54
Parker & Parsley Petroleum Co.
8.25% 2007 2,000 2069 .32
Poland Government 7.75% 2000 9,750 9779 1.50
Province of Ontario 5.70% 1997 500 497 .08
Skandinaviska Enskilda Banken 6.875%
2009 4,000 3,819 .59
Standard Credit Card Trust, credit card
participation certificates, Series
1990-6A, 9.375% 1998 2,200 2,309 .35
Svenska Handelsbanken, Inc. 8.125% 2007 500 541 .08
United States Treasury:
4.75% 1998 2,500 2,423 .37
5.375% 1998 3,000 2,961 .45
6.375% 1999 22,000 22,292 3.41
8.00% 2001 6,000 6,547 1.00
6.375% 2002 13,500 13,700 2.10
11.625% 2004 11,000 15,060 2.31
7.50% 2005 5,000 5,446 .83
10.375% 2009 9,000 11,479 1.76
6.25% 2023 1,000 952 .15
7.625% 2025 4,000 4,529 .69
-------- --------
149,941 22.98
-------- --------
Total bonds & notes (cost:
$567,958,000) 593,058 90.85
-------- --------
Short-Term Securities
Corporate Short-Term Notes
Daimler-Benz North America Corp.
5.73% due 10/6/95 3,900 3,896 .60
PepsiCo Inc.:
5.69% due 10/20/95 6,700 6,679 1.02
5.68% due 11/6/95 3,300 3,280 .50
UBS Finance (Delaware) Inc.
6.50% due 10/2/95 17,700 17,694 2.71
-------- --------
31,549 4.83
-------- --------
Federal Agency Discount Notes
Federal Home Loan Mortgage Corp.
5.62% due 11/10/95 5,700 5,664 .87
- -
Non-U.S. Currency
British Pound Deposit Pound 41 64 .01
Deutsche Mark Deposit DM167 117 .02
Japanese Yen Deposit Yen 25,217 254 .04
-------- --------
435 .07
-------- --------
Total Short-Term Securities (cost:
$37,636,000) 37,648 5.77
-------- --------
Total Investment Securities (cost:
$605,594,000) 630,706 96.62
Excess of cash and receivables over
payables 22,081 3.38
-------- --------
Net Assets $652,787 100.00%
======== ========
</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
<PAGE>
Capital World Bond Fund
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
at September 30, 1995
<TABLE>
<CAPTION>
(dollars in thousands)
ASSETS:
<S> <C> <C>
Investment securities at market
(cost: $605,594) $630,706
Cash 55
Receivables for-
Sales of investments $3,581
Sales of fund's shares 1,589
Accrued interest 20,178 25,348
--------- ---------
656,109
LIABILITIES:
Payables for-
Purchases of investments 1,837
Repurchases of fund's shares 667
Open forward currency contracts 311
Management services 358
Accrued Expenses 149 3,322
--------- ---------
NET ASSETS AT SEPTEMBER 30, 1995-
Equivalent to $16.81 per share on
38,837,677 shares of $0.01 par value
capital stock outstanding (authorized
capital stock - 200,000,000 shares) $652,787
=========
STATEMENT OF OPERATIONS
for the year ended September 30, 1995
(dollars in thousands)
INVESTMENT INCOME:
Income:
Interest $47,517
Expenses:
Management services fee $4,073
Distribution expenses 1,364
Transfer agent fee 521
Reports to shareholders 109
Registration statement and prospectus 110
Postage, stationery and supplies 179
Directors' fees 17
Auditing and legal fees 43
Custodian fee 236
Taxes other than federal income tax 16
Other expenses 9 6,677
--------- ---------
Net investment income 40,840
---------
REALIZED GAIN AND UNREALIZED APPRECIATION:
Net realized gain 3,523
Net unrealized appreciation on
investments 49,945
Open forward currency contracts 2,654
---------
Net unrealized appreciation 52,599
---------
Net realized gain and change in
unrealized appreciation on investments 56,122
---------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $96,962
=========
Statement of Changes in Net Assets
(dollars in thousands)
Year ended September 30
1995 1994
--------- ---------
OPERATIONS:
Net investment income $40,840 $37,771
Net realized gain (loss) on investments 3,523 (4,212)
Net unrealized appreciation (depreciation)
on investments 52,599 (40,576)
--------- ---------
Net increase (decrease) in net
assets resulting from operations 96,962 (7,017)
--------- ---------
DIVIDENDS AND DISTRIBUTIONS
PAID TO SHAREHOLDERS:
Dividends from net
investment income (43,886) (30,899)
Distributions from net realized
gain on investments - (3,706)
--------- ---------
Total dividends and distributions (43,886) (34,605)
--------- ---------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
12,188,125 and 18,607,545
shares, respectively 198,146 298,788
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions of
net realized gain on investments:
2,348,338 and 1,828,168 shares, respectively 37,011 28,937
Cost of shares repurchased:
13,243,810 and 10,172,029
shares, respectively (211,052) (160,190)
--------- ---------
Net increase in net assets
resulting from capital share
transactions 24,105 167,535
--------- ---------
TOTAL INCREASE IN NET ASSETS 77,181 125,913
NET ASSETS:
Beginning of year 575,606 449,693
--------- ---------
End of year (including undistributed
net investment income: $11,346 and
$14,392, respectively) $652,787 $575,606
========= =========
</TABLE>
See Notes to Financial Statements
<PAGE>
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, cash balances, and other assets and liabilities,
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 year. Interest
income from such investments is calculated using the prevailing exchange rate
as accrued or when received. Purchases and sales of investment securities and
interest income are calculated at the rates of exchange prevailing on the
respective dates of such transactions. The fund does not identify the portion
of each amount shown in the fund$s statement of operations under the caption
"Realized Gain 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.
The custodian fee of $236,000 includes $5,000 that was paid by these credits
rather than in cash.
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 September 30, 1995, net unrealized appreciation on investments,
excluding forward currency contracts, for book and federal income tax purposes
aggregated $25,112,000, of which $27,382,000 related to appreciated securities
and $2,270,000 related to depreciated securities. There was no difference
between book and tax realized gains on securities transactions for the year
ended September 30, 1995. The cost of portfolio securities, excluding forward
currency contracts, for book and federal income tax purposes was $605,594,000
at Septeber 30, 1995.
3. The fee of $4,073,000 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 year ended September 30, 1995,
distribution expenses under the Plan were $1,364,000. As of September 30,
1995, accrued and unpaid distribution expenses were $103,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $521,000. American Funds Distributors, Inc. (AFD), the
principal underwriter of the fund's shares, received $838,000 (after allowances
to dealers) as its portion of the sales charges paid by purchasers of the
fund's shares. Such sales charges are not an expense of the fund and, hence,
are not reflected in the accompanying statement of operations.
Directors who are unaffiliated with CRMC may elect to defer part or all of
the fees earned for services as members of the Board. Amounts deferred are not
funded and are general unsecured liabilities of the fund. As of September 30,
1995, aggregate amounts deferred were $13,000.
CRMC is owned by the Capital Group Companies, Inc. AFS and AFD are both
wholly owned subsidiaries of CRMC. Certain Directors and officers of the fund
are or may be considered to be affiliated with CRMC, AFS and AFD. No such
persons received any remuneration directly from the fund.
4. As of September 30, 1995, accumulated undistributed net realized loss on
investments was $2,804,000 and paid-in capital was $619,056,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $580,682,000 and $586,087,000, respectively, during
the year ended September 30, 1995.
The fund purchases and sells forward currency contracts in anticipation of,
or to protect itself against, fluctuations in exchange rates. The contracts are
recorded at market value and reflect the extent of the fund$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 September 30, 1995, the fund had outstanding
forward currency contracts to purchase and sell non-U.S. currencies as follows:
NON-U.S. CURRENCY CONTRACTS
<TABLE>
<CAPTION>
U.S. Valuation
Contract Amount at 9/30/95
------------ Unrealized
(Depreciation)
Non-U.S. U.S. Amount Appreciation
- -------------------------- ------------ --------- --------- -------------
<S> <C> <C> <C> <C>
Sales:
Australian Dollars
expiring 11/20/95 A$995,000 735,000 751,000 (16,000)
Canadian Dollars
expiring 2/9/96 C$5,650,000 4,159,000 4,200,000 (41,000)
Danish Kroner
expiring10/5/95 to
2/8/96 DKr80,000,000 14,672,000 14,434,000 238,000
Deutsche Mark
expiring 11/20/95 to
3/19/96 DM21,862,000 15,180,000 15,418,000 (238,000)
French Francs
expiring 2/8/96 Fr6,000,000 1,249,000 1,216,000 33,000
Japanese Yen
expiring 2/8 to
3/11/96 Yen 12,981,000 12,551,000 430,000
1,218,470,500
Netherlands
Guilders
expiring 2/9 to
3/11/96 NLG43,090,948 26,352,000 27,160,000 (808,000)
------------
$(402,000)
============
Purchases:
Japanese Yen
expiring 11/21/95 JPY200,000,000 1,939,000 2,030,000 $91,000
===========
</TABLE>
<PAGE>
- -------------
Per-Share Data and Ratios
<TABLE>
<CAPTION>
Year Ended September 30
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $15.33 $16.48 $15.95 $15.60 $14.46
------ ------- ----- ------- -------
Income From Investment Operations:
Net investment income 1.09 1.05 .91 1.03 1.05
Net realized and unrealized gain (loss)
on investments 1.57 (1.14) .65 .40 1.19
------ ------- ----- ------- -------
Total income from investment operations 2.66 (.09) 1.56 1.43 2.24
------ ------- ----- ------- -------
Less Distributions:
Dividends from net investment income (1.18)/1/ (.94)/1/ (.84)/1/ (1.01)/1/ (1.10)
Distributions from net realized gains - (.12) (.19) (.07) -
------ ------- ----- ------- -------
Total distributions (1.18) (1.06) (1.03) (1.08) (1.10)
------ ------- ----- ------- -------
Net Asset Value, End of Year $16.81 $15.33 $16.48 $15.95 $15.60
====== ==== ===== ===== =====
Total Return/2/ 18.10% (.62)% 10.40% 9.46% 16.10%
Ratios/Supplemental Data:
Net assets end of year (in millions) $653 $576 $450 $224 $76
Ratio of expenses to average net assets 1.12% 1.11% 1.19% 1.38% 1.42%
Ratio of net income to average net assets 6.83% 6.88% 6.25% 6.88% 7.54%
Portfolio turnover rate 104.96% 77.04% 27.95% 95.11% 81.44%
</TABLE>
/1/Amount includes realized non-U.S. currency gains of 12 cents, 4 cents, 3
cents and 7 cents for the years ended 1995, 1994, 1993 and 1992, respectively,
treated as net investment income for federal income tax purposes.
/2/ This was calculated without deducting a sales charge. The maximum sales
charge is 4.75% of the fund's offering price.
<PAGE>
Independent Auditors' Report
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
CAPITAL WORLD BOND FUND, INC.:
We have audited the accompanying statement of assets and liabilities of
Capital World Bond Fund, Inc., including the schedule of portfolio investments,
as of September 30, 1995, and the related statement of operations for the year
then ended, the statement of changes in net assets for each of the two years
in the period then ended, and the per-share data and ratios for each of the
five years in the period then ended. These financial statements and the
per-share data and ratios are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and the
per-share data and ratios based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
per-share data and ratios are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned at September 30, 1995 by correspondence with the custodian and brokers;
where replies were not received from brokers, we performed other auditing
procedures. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and per-share data and ratios
referred to above present fairly, in all material respects, the financial
position of Capital World Bond Fund, Inc. at September 30, 1995, 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 per-share data and ratios
for each of the five years in the period then ended, in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Los Angeles, California
October 23, 1995
1995 TAX INFORMATION (unaudited)
We are required to advise you within 60 days of the fund$s fiscal year-end
regarding the federal tax status of distributions.
Certain states may exempt from income taxation a portion of the dividends
paid from net investment income if derived from direct U.S. Treasury
obligations. For purposes of computing this
exclusion, 7% of the dividends paid by the fund from net investment income was
derived from interest on direct U.S.Treasury obligations.
Dividends and distributions received by retirement plans such as IRAs,
Keogh-type plans, and 403(b) plans need not be reported as taxable income.
However, many retirement trusts may need this information for their annual
information reporting.
Since the amounts above are reported for the fiscal year and not a
calendar year, shareholders should refer to their Form 1099 DIV or other tax
information which will be mailed in January
1996 to determine the CALENDAR YEAR amounts to be included on their 1995 tax
returns. Shareholders should consult their tax advisers.
<PAGE>
PART C
CAPITAL WORLD BOND FUND, INC.
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS:
Included in Prospectus - Part A
Financial Highlights
Included in Statement of Additional Information
Investment Portfolio Notes to Financial Statements
Statement of Assets and Liabilities Selected Per-Share Data and Ratios
Statement of Operations Independent Auditors Report
Statement of Changes in Net Assets
(B) EXHIBITS:
1. On file (see SEC file no. 33-12447, Pre-Eff Amndmnt No. 1 filed 6/10/87).
2. On file (see SEC file no. 33-12447, Pre-Eff Amndmnt No. 2 filed 7/31/87).
3. None.
4. On file (see SEC file no. 33-12447, Pre-Eff Amndmnt No. 2 filed 7/31/87).
5. On file (see SEC file no. 33-12447, Pre-Eff Amndmnt No. 1 filed 6/10/87).
6. On file (see SEC file no. 33-12447, Post-Eff Amndmnt No. 10 filed 11/19/93.
7. None.
8. On file (see SEC file no. 33-12447, Pre-Eff Amndmnt No. 1 filed 6/10/87).
9. Form of Shareholder Service Agreement between Registrant and American
Funds Service Company, as amended 1/1/95
10. On file (see SEC file no. 33-12447, Pre-Eff Amndmnt No. 2 filed 7/31/87).
11. Consent of Independent Auditors
12. None.
13. On file (see SEC file no. 33-12447, Pre-Eff Amndmnt No. 2 filed 7/31/87).
14. On file (see SEC file no. 33-12447, Pre-Eff Amndmnt No. 1 filed 6/10/87).
15. On file (see SEC file no. 33-12447, Pre-Eff Amndmnt No. 1 filed 6/10/87).
16. Updates to previously filed schedule for computation of each performance
quotation provided in the Registration Statement in response to Item 22 (see
SEC file Nos. 811-5104 and 33-12447).
17. Financial data schedule (EDGAR)
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
As of September 30, 1995
<TABLE>
<CAPTION>
<S> <C>
Number of
Title of Class Record Holders
Capital Stock 45,534
($0.01 par value)
</TABLE>
ITEM 27. INDEMNIFICATION.
Registrant is a joint-insured under an Investment Advisor/Mutual Fund
Errors and Omissions Policy written by American International Surplus Lines
Insurance, Chubb Custom Insurance Company and ICI Mutual Insurance Company
which insures its officers and Directors against certain liabilities. However,
in no event will Registrant maintain insurance to indemnify any such person for
any act for which Registrant itself is not permitted to indemnify the
individual.
Article VIII of the Articles of Incorporation of the Fund provides that
"The Corporation shall indemnify (1) its directors to the full extent provided
by the general laws of the State of Maryland now or hereafter in force,
including the advance of expenses under the procedures provided by such laws;
(2) its officers to the same extent it shall indemnify its directors; and (3)
its officers who are not directors to such further extent as shall be
authorized by the Board of Directors and be consistent with law. The foregoing
shall not limit the authority of the Corporation to indemnify other employees
and agents. Any indemnification by the Corporation shall be consistent with
the requirements of law, including the Investment Company Act of 1940."
Subsection (b) of Section 2-418 of the General Corporation Law of Maryland
empowers a corporation to indemnify any person who was or is party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of that
fact that he is or was a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise,
against expenses (including attorneys' fees), judgements, fines and amounts
paid in settlement actually and reasonably incurred by him in connection with
such action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
Subsection (c) of Section 2-418 empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgement in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted under similar standards, except
that no indemnification may be made in respect to any claim, issue or matter as
to which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the corporation unless and only to
the extent that a court
ITEM 27. INDEMNIFICATION (CONT.)
of equity or the court in which such action or suit was brought shall determine
that despite the adjudication of liability such person is fairly and reasonably
entitled to indemnity for such expenses which the court shall deem proper.
Section 2-418 further provides that to the extent a director or officer of
a corporation has been successful in the defense of any action, suit or
proceeding referred to in subsections (b) and (c) or in the defense of any
claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith; that indemnification provided for by Section 2-418 shall
not be deemed exclusive of any other rights to which the indemnified party may
be entitled; that the scope of indemnification extends to directors, officers,
employees or agents of a constituent corporation absorbed in a consolidation,
or merger and persons serving in that capacity at the request of the
constituent corporation for another; and empowers the corporation to purchase
and maintain insurance on behalf of a director or officer of the corporation
against any liability asserted against him or incurred by him in any such
capacity or arising out of his status as such whether or not the corporation
would have the power to indemnify him against such liabilities under Section
2-418.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
None.
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) American Funds Distributors, Inc. is also the Principal Underwriter of
shares of: AMCAP Fund, Inc., American Balanced Fund, Inc., The American Funds
Income Series, The American Funds Tax-Exempt Series I, The American Funds
Tax-Exempt Series II, American High-Income Municipal Bond Fund, Inc., American
High-Income Trust, American Mutual Fund, Inc., The Bond Fund of America, Inc.,
Capital Income Builder, Inc., Capital World Growth and Income Fund, Inc., The
Cash Management Trust of America, EuroPacific Growth Fund, Fundamental
Investors, Inc., The Growth Fund of America, Inc., The Income Fund of America,
Inc., Intermediate Bond Fund of America, The Investment Company of America,
Limited Term Tax-Exempt Bond Fund of America, The New Economy Fund, New
Perspective Fund, Inc., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of
America, Inc., The Tax-Exempt Money Fund of America, The U.S. Treasury Money
Fund of America and Washington Mutual Investors Fund, Inc.
<TABLE>
<CAPTION>
(B) (1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
<S> <C> <C> <C>
# David L. Abzug Assistant Vice President None
John A. Agar Regional Vice President None
1501 N. University, Suite 225
Little Rock, AR 72207
Robert B. Aprison Regional Vice President None
2983 Bryn Wood Drive
Madison, WI 53711
& Richard Armstrong Assistant Vice President None
* William W. Bagnard Vice President None
Steven L. Barnes Vice President None
8000 Town Line Avenue South
Suite 204
Minneapolis, MN 55438
Michelle A. Bergeron Regional Vice President None
1190 Rockmart Circle
Kennesaw, GA 30144
Joseph T. Blair Vice President None
27 Drumlin Road
West Simsbury, CT 06092
Ian B. Bodell Regional Vice President None
3100 West End Avenue, Suite 870
Nashville, TN 37215
Michael L. Brethower Vice President None
108 Hagen Court
Georgetown, TX 78628
C. Alan Brown Regional Vice President None
4619 McPherson Avenue
St. Louis, MO 63108
* Daniel C. Brown Director, Sr. Vice President None
@ J. Peter Burns Vice President None
Brian C. Casey Regional Vice President None
9508 Cable Drive
Kensington, MO 20895
Victor C. Cassato Vice President None
999 Green Oaks Drive
Littleton, CO 80121
Christopher J. Cassin Regional Vice President None
231 Burlington
Clarendon Hills, IL 60514
Denise M. Cassin Regional Vice President None
1425 Vallejo, #203
San Francisco, CA 94109
* Larry P. Clemmensen Director, Treasurer None
* Kevin G. Clifford Senior Vice President None
Ruth M. Collier Vice President None
145 West 67th St. Ste. 12K
New York, NY 10023
Thomas E. Cournoyer Vice President None
2333 Granada Boulevard
Coral Gables, FL 33134
Douglas A. Critchell Vice President None
3521 Rittenhouse Street, N.W.
Washington, DC 20007
* Carl D. Cutting Vice President None
Michael A. Dilella Vice President None
P. O. Box 661
Ramsey, NJ 07446
G. Michael Dill Senior Vice President None
3622 E. 87th Street
Tulsa, OK 74137
Kirk D. Dodge Regional Vice President None
2617 Salisbury Road
Ann Arbor, MI 48103
Peter J. Doran Sr. Vice President None
1205 Franklin Avenue
Garden City, NY 11530
* Michael J. Downer Secretary Vice President
Robert W. Durbin Vice President None
74 Sunny Lane
Tiffin, OH 44883
& Lloyd G. Edwards Vice President None
@ Richard A. Eychner Vice President None
* Paul H. Fieberg Sr. Vice President None
John Fodor Regional Vice President None
5 Marlborough Street
Suite 51
Boston, MA 02116
* Mark P. Freeman, Jr. Director, President None
Clyde E. Gardner Vice President None
Route 2, Box 3162
Osage Beach, MO 65065
# Evelyn K. Glassford Vice President None
Jeffrey J. Greiner Regional Vice President None
5898 Heather Glen Court
Dublin, OH 43017
* Paul G. Haaga, Jr. Director Chairman of the Board
David E. Harper Vice President None
R.D., 1 Box 210, Rte 519
Baptistown, NJ 08825
Ronald R. Hulsey Regional Vice President None
6744 Avalon
Dallas, TX 75214
* Robert L. Johansen Vice President, Controller None
Michael J. Johnston Chairman of the Board None
630 Fifth Avenue, 36th Floor
New York, NY 10111-0121
* V. John Kriss Sr. Vice President None
Arthur J. Levine Vice President None
12558 Highlands Place
Fishers, IN 46038
# Karl A. Lewis Assistant Vice President None
T. Blake Liberty Regional Vice President None
12585-E East Tennessee Circle
Aurora, CO 80012
Steve A. Malbasa Regional Vice President None
13405 Lake Shore Blvd.
Cleveland, OH 44110
Steven M. Markel Vice President None
5241 South Race Street
Littleton, CO 90121
* John C. Massar Vice President None
* E. Lee McClennahan Vice President None
Laurie B. McCurdy Regional Vice President None
6008 E. Anderson Drive
Scottsdale, AZ 85255
& John V. McLaughlin Senior Vice President None
Terry W. McNabb Vice President None
2002 Barrett Station Road
St. Louis, MO 63131
* R. William Melinat Vice President - Institutional None
Investment Services Division
David R. Murray Regional Vice President None
25701 S.E. 32nd Place
Issaquah, WA 98027
Stephen S. Nelson Vice President None
7215 Trevor Court
Charlotte, NC 28226
* Barbara G. Nicholich Assistant Vice President - None
Institutional Investment
Services Division
William E. Noe Regional Vice President None
12535 Barkley
Overland Park, KS 66209
Peter A. Nyhus Regional Vice President None
3084 Wilds Ridge Court
Prior Lake, MN 55372
Eric P. Olson Regional Vice President None
62 Park Drive
Glenview, IL 60025
Fredric Phillips Regional Vice President None
32 Ridge Avenue
Newton Centre, MA 02159
# Candance D. Pilgrim Assistant Vice President None
Carl S. Platou Regional Vice President None
4021 96th Avenue, S.E.
Mercer Island, WA 98040
* John O. Post Vice President None
Steven J. Reitman Vice President None
212 The Lane
Hinsdale, IL 60521
Brian A. Roberts Regional Vice President None
12025 Delmahoy Drive
Charlotte, NC 28277
* George L. Romine Vice President - Institutional None
Investment Services Division
George S. Ross Vice President None
55 Madison Avenue
Morristown, NJ 07962
* Julie D. Roth Vice President None
Douglas F. Rowe Regional Vice President None
104 River Road
Georgetown, TX 78628
* Christopher Rowey Regional Vice President None
Dean B. Rydquist Vice President None
1080 Bay Point Crossing
Alpharetta, GA 30202
Richard R. Samson Vice President None
4604 Glencoe Avenue, No. 4
Marina del Rey, CA 90292
Joseph D. Scarpitti Regional Vice President None
25760 Kensington Drive
Westlake, OH 44145
David W. Short Vice President None
1000 RIDC Plaza, Suite 212
Pittsburgh, PA 15238
* Victor S. Sidhu Vice President - Institutional None
Investment Services Division
William P. Simon, Jr. Vice President None
554 Canterbury Lane
Berwyn, PA 19312
* John C. Smith Vice President - Institutional None
Investment Services Division
* Mary E. Smith Assistant Vice President - None
Institutional Investment
Services Division
Rodney G. Smith Regional Vice President None
2350 Lakeside Blvd., #850
Richardson, TX 75082
Nicholas D. Spadaccini Regional Vice President None
855 Markley Woods Way
Cincinnati, OH 45230
Daniel S. Spradling Senior Vice President None
#4 West Fourth Avenue, Suite 406
San Mateo, CA 94402
Craig R. Strauser Regional Vice President None
17040 Summer Place
Lake Oswego, OR 97035
Francis N. Strazzeri Regional Vice President None
31641 Saddletree Drive
Westlake Village, CA 91361
& James P. Toomey Assistant Vice President None
% Christopher E. Trede Assistant Vice President None
George F. Truesdail Vice President None
400 Abbotsford Court
Charlotte, NC 28270
Scott W. Ursin-Smith Regional Vice President None
606 Glenwood Avenue
Mill Valley, CA 94941
@ Andrew J. Ward Vice President None
* David M. Ward Assistant Vice President - None
Institutional Investment
Services Division
Thomas E. Warren Regional Vice President None
4001 Crockers Lake Blvd., #1012
Sarasota, FL 34242
# J. Kelly Webb Sr. Vice President None
Gregory J. Weimer Regional Vice President None
125 Surrey Drive
Canonsburg, PA 15317
# Timothy W. Weiss Director None
** N. Dexter Williams Vice President None
Timothy J. Wilson Regional Vice President None
113 Farmview Place
Venetia, PA 15367
@ Marshall D. Wingo Sr. Vice President None
# Robert L. Winston Director, Sr. Vice President None
William R. Yost Regional Vice President None
9320 Overlook Trail
Eden Prairie, MN 55347
Janet M. Young Regional Vice President None
1616 Vermont
Houston, TX 77006
</TABLE>
__________
* Business Address, 333 South Hope Street, Los Angeles, CA 90071
** Business Address, Four Embarcadero, Suite 1800, San Francisco, CA 94111
# Business Address, 135 South State College Boulevard, Brea, CA 92621
& Business Address, 8000 IH-10, Suite 1400, San Antonio, TX 78230
@ Business Address, 5300 Robin Hood Road, Norfolk, VA 23513
% Business Address, 8332 Woodfield Crossing Blvd., Indianapolis, IN 46240
(c) None.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
Accounts, books and other records required by Rules 31a-1 and 31a-2 under
the Investment Company Act of 1940, as amended, are maintained and kept in the
offices of the fund and its investment adviser, Capital Research and Management
Company, 333 South Hope Street, Los Angeles, CA 90071. Certain accounting
records are maintained and kept in the offices of the fund's accounting
department, 135 South State College Blvd., Brea, CA 92621.
Records covering shareholder accounts are maintained and kept by the
transfer agent, American Funds Service Company, 135 South State College Blvd.,
Brea, CA 92621, 8000 IH-10, Suite 1400, San Antonio, TX 78230, 8332 Woodfield
Crossing Boulevard, Indianapolis, IN 42640, and 5300 Robin Hood Road, Norfolk,
VA 23514.
Records covering portfolio transactions are also maintained and kept by
the custodian, The Chase Manhattan Bank, One Chase Manhattan Plaza, New York,
NY 10081.
ITEM 31. MANAGEMENT SERVICES.
None.
ITEM 32. UNDERTAKINGS.
(c) As reflected in the prospectus, the fund undertakes to provide each
person to whom a prospectus is delivered with a copy of the fund's latest
annual report to shareholders, upon request and without charge.
<PAGE>
SIGNATURE OF REGISTRANT
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Los Angeles, and State of California, on the
20th day of November, 1995.
CAPITAL WORLD BOND FUND, INC.
By /s/ Paul G. Haaga, Jr.
(Paul G. Haaga, Jr., Chairman of the Board)
Pursuant to the requirements of the Securities Act of 1933, this amendment
to registration statement has been signed below on November 20, 1995, by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C> <C>
(1) Principal Executive Officer:
/s/ Abner D. Goldstine President and Director
(Abner D. Goldstine)
(2) Principal Financial Officer and Principal Accounting Officer:
/s/ Mary C. Cremin Vice President and Treasurer
(Mary C. Cremin)
(3) Directors:
H. Frederick Christie* Director
Diane C. Creel*/1/ Director
Martin Fenton, Jr.* Director
Leonard R. Fuller*/1/ Director
/s/ Abner D. Goldstine President and Director
(Abner D. Goldstine)
/s/ Paul G. Haaga, Jr. Chairman of the Board
(Paul G. Haaga, Jr.)
Herbert Hoover III* Director
Richard G. Newman* Director
Peter C. Valli* Director
</TABLE>
/1/ Powers of Attorney attached hereto.
*By /s/ Julie F. Williams
Julie F. Williams, Attorney-in-Fact
Counsel represents that this amendment does not contain disclosures that
would make the amendment ineligible for effectiveness under the provisions of
Rule 485(b).
/s/ Michael J. Downer
Michael J. DownerC-12
<PAGE>
POWER OF ATTORNEY
I, Diane C. Creel, the undersigned Director of Capital World Bond Fund,
Inc., a Maryland corporation, revoking all prior powers of attorney given as a
Director of Capital World Bond Fund, Inc. do hereby constitute and appoint Mary
C. Cremin, Michael J. Downer, Paul G. Haaga, Jr., Kimberly S. Verdick and Julie
F. Williams, or any of them, to act as attorneys-in-fact for and in my name,
place and stead (1) to sign my name as Director of said Corporation to any and
all Registration Statements of Capital World Bond Fund, Inc., File No.
33-12447, under the Securities Act of 1933 as amended and/or the Investment
Company Act of 1940, as amended, and any and all amendments thereto, said
Registration Statements and amendments to be filed with the Securities and
Exchange Commission, and to any and all reports, applications or renewal of
applications required by any State in the United States of America in which
this Corporation is registered to sell shares, and (2) to deliver any and all
such Registration Statements and amendments, so signed, for filing with the
Securities and Exchange Commission under the provisions of the Securities Act
of 1933 as amended and/or the Investment Company Act of 1940, as amended,
granting to said attorneys-in-fact, and each of them, full power and authority
to do and perform every act and thing whatsoever requisite and necessary to be
done in and about the premises as fully to all intents and purposes as the
undersigned might or could do if personally present, hereby ratifying and
approving the acts of said attorneys-in-fact.
EXECUTED at Los Angeles, California, this 19th day of September, 1995.
/s/ Diane C. Creel
Diane C. Creel, Director
<PAGE>
POWER OF ATTORNEY
I, Leonard R. Fuller, the undersigned Director of Capital World Bond Fund,
Inc., a Maryland corporation, revoking all prior powers of attorney given as a
Director of Capital World Bond Fund, Inc. do hereby constitute and appoint Mary
C. Cremin, Michael J. Downer, Paul G. Haaga, Jr., Kimberly S. Verdick and Julie
F. Williams, or any of them, to act as attorneys-in-fact for and in my name,
place and stead (1) to sign my name as Director of said Corporation to any and
all Registration Statements of Capital World Bond Fund, Inc., File No.
33-12447, under the Securities Act of 1933 as amended and/or the Investment
Company Act of 1940, as amended, and any and all amendments thereto, said
Registration Statements and amendments to be filed with the Securities and
Exchange Commission, and to any and all reports, applications or renewal of
applications required by any State in the United States of America in which
this Corporation is registered to sell shares, and (2) to deliver any and all
such Registration Statements and amendments, so signed, for filing with the
Securities and Exchange Commission under the provisions of the Securities Act
of 1933 as amended and/or the Investment Company Act of 1940, as amended,
granting to said attorneys-in-fact, and each of them, full power and authority
to do and perform every act and thing whatsoever requisite and necessary to be
done in and about the premises as fully to all intents and purposes as the
undersigned might or could do if personally present, hereby ratifying and
approving the acts of said attorneys-in-fact.
EXECUTED at Los Angeles, California, this 19th day of September, 1995.
/s/ Leonard R. Fuller
Leonard R. Fuller, Director
CONFORMED
SHAREHOLDER SERVICES AGREEMENT
1. The parties to this Agreement, which is effective as of January 1, 1995, are
CAPITAL WORLD BOND FUND, INC., a Maryland corporation (hereinafter called "the
Fund"), and American Funds Service Company, a California corporation
(hereinafter called "AFS"). AFS is a wholly owned subsidiary of Capital
Research and Management Company (hereinafter called "CRMC"). This Agreement
will continue in effect until amended or terminated in accordance with its
terms.
2. The Fund hereby employs AFS, and AFS hereby accepts such employment by the
Fund, as its transfer agent. In such capacity AFS will provide the services of
stock transfer agent, dividend disbursing agent, redemption agent, and such
additional related services as the Fund may from time to time require, all of
which services are sometimes referred to herein as "shareholder services."
3. AFS has entered into substantially identical agreements with other
investment companies for which CRMC serves as investment adviser. (For the
purposes of this Agreement, such investment companies, including the Fund, are
called "participating investment companies.")
4. AFS has entered into an agreement with DST Systems, Inc. (hereinafter called
"DST"), to provide AFS with electronic data processing services sufficient for
the performance of the shareholder services referred to in paragraph 2.
5. The Fund, together with the other participating companies, will maintain a
Review and Advisory Committee, which Committee will review and may make
recommendations to the boards of the participating investment companies
regarding all fees and charges provided for in this Agreement, as well as
review the level and quality of the shareholder services rendered to the
participating investment companies and their shareholders. Each participating
investment company may select one director or trustee who is not affiliated
with CRMC, or any of its affiliated companies, or with Washington Management
Corporation or any of its affiliated companies, to serve on the Review and
Advisory Committee.
6. AFS will provide to the participating investment companies the shareholder
services referred to herein in return for the following fees:
ANNUAL ACCOUNT MAINTENANCE FEE (PAID MONTHLY):
$.67 per month for each open account on AFS books or in Level 2 or 4
Networking ($8.04 per year)
$.09 per month for each open account maintained in Street Name or Level 1
or 3 Networking ($1.08 per year)
EXHIBIT 9
No annual fee will be charged for a participant account underlying a 401(k)
or other defined contribution plan where the plan maintains a single account on
AFS books and responds to all participant inquiries
TRANSACTION FEES:
$2.00 per non-automated transaction
$0.50 per automated transaction
For this purpose, "transactions" shall include all types of transactions
included in an "activity index" as reported to the Review and Advisory
Committee at least annually. AFS will bill the Fund monthly, on or shortly
after the first of each calendar month, and the Fund will pay to AFS within
five business days of such billing.
Any revision of the schedule of charges set forth herein shall require the
affirmative vote of a majority of the members of the board of
directors/trustees of the Fund.
7. All fund-specific charges from third parties -- including DST charges,
payments described in the next sentence, postage, NSCC transaction charges and
similar out-of-pocket expenses -- will be passed through directly to the Fund
or other participating investment companies, as applicable. AFS, subject to
approval of its board of directors, is authorized in its discretion to
negotiate payments to third parties for account maintenance and/or transaction
processing services provided such payments do not exceed the anticipated
savings to the Fund, either in fees payable to AFS hereunder or in other direct
Fund expenses, that AFS reasonably anticipates would be realized by the Fund
from using the services of such third party rather than maintaining the
accounts directly on AFS' books and/or processing non-automated transactions.
8. It is understood that AFS may have income in excess of its expenses and may
accumulate capital and surplus. AFS is not, however, permitted to distribute
any net income or accumulated surplus to its parent, CRMC, in the form of a
dividend without the affirmative vote of a majority of the members of the
boards of directors/trustees of the Fund and all participating investment
companies.
9. This Agreement may be amended at any time by mutual agreement of the
parties, with agreement of the Fund to be evidenced by affirmative vote of a
majority of the members of the board of directors/trustees of the Fund.
10. This Agreement may be terminated on 180 days' written notice by either
party. In the event of a termination of this Agreement, AFS and the Fund will
each extend full cooperation in effecting a conversion to whatever successor
shareholder service provider(s) the Fund may select, it being understood that
all records relating to the Fund and its shareholders are property of the Fund.
11. In the event of a termination of this Agreement by the Fund, the Fund will
pay to AFS as a termination fee the Fund's proportionate share of any costs of
conversion of the Fund's shareholder service from AFS to a successor. In the
event of termination of this Agreement and all corresponding agreements with
all the participating investment companies, all assets of AFS will be sold or
otherwise converted to cash, with a view to the liquidation of AFS when it
ceases to provide shareholder services for the participating investment
companies. To the extent any such assets are sold by AFS to CRMC and/or any of
its affiliates, such sales shall be at fair market value at the time of sale as
agreed upon by AFS, the purchasing company or companies, and the Review and
Advisory Committee. After all assets of AFS have been converted to cash and
all liabilities of AFS have been paid or discharged, an amount equal to any
capital or paid-in surplus of AFS that shall have been contributed by CRMC or
its affiliates shall be set aside in cash for distribution to CRMC upon
liquidation of AFS. Any other capital or surplus and any assets of AFS
remaining after the foregoing provisions for liabilities and return of capital
or paid-in surplus to CRMC shall be distributed to the participating investment
companies in such proportions as may be determined by the Review and Advisory
Committee.
12. In the event of disagreement between the Fund and AFS, or between the Fund
and other participating investment companies as to any matter arising under
this Agreement, which the parties to the disagreement are unable to resolve,
the question shall be referred to the Review and Advisory Committee for
resolution. If the Review and Advisory Committee is unable to resolve the
question to the satisfaction of both parties, either party may elect to submit
the question to arbitration; one arbitrator to be named by each party to the
disagreement and a third arbitrator to be selected by the two arbitrators named
by the original parties. The decision of a majority of the arbitrators shall
be final and binding on all parties to the arbitration. The expenses of such
arbitration shall be paid by the party electing to submit the question to
arbitration.
13. The obligations of the Fund under this Agreement are not binding upon any
of the directors, trustees, officers, employees, agents or shareholders of the
Fund individually, but bind only the Fund itself. AFS agrees to look solely to
the assets of the Fund for the satisfaction of any liability of the Fund in
respect to this Agreement and will not seek recourse against such directors,
trustees, officers, employees, agents or shareholders, or any of them or their
personal assets for such satisfaction.
AMERICAN FUNDS SERVICE COMPANY CAPITAL WORLD BOND FUND, INC.
By /s/ Don R. Conlan By /s/ Paul G. Haaga, Jr.
Don R. Conlan, Chairman Paul G. Haaga, Jr., Chairman
By /s/ Kenneth R. Gorvetzian By /s/ Julie F. Williams
Kenneth R. Gorvetzian, Secretary Julie F. Williams, Secretary
CONSENT OF INDEPENDENT AUDITORS
Capital World Bond Fund, Inc.:
We consent to (a) the use in this Post-Effective Amendment No. 13 to
Registration Statement No. 33-12447 on Form N-1A of our report dated October
23, 1995 appearing in the Financial Statements, which are included
in Part B, the Statement of Additional Information of such Registration
Statement, (b) the reference to us under the heading "General Information" in
such Statement of Additional Information, and (c) the reference to us under the
heading "Financial Highlights" in the Prospectus, which is a part of such
Registration Statement.
DELOITTE & TOUCHE llp
November 17, 1995
SCHEDULE FOR COMPUTATION OF EACH PERFORMANCE QUOTATION
PROVIDED IN THE REGISTRATION STATEMENT
(1) ENDING REDEMPTION VALUE AND TOTAL RETURN
Value of an initial investment at the end of a period and total return for the
period are computed as set forth below.
(A) Initial investment DIVIDED BY
Public offering price for one share at
beginning of period EQUALS
Number of shares initially purchased
(B) Number of shares initially purchased PLUS
Number of shares acquired at net asset
value through reinvestment of dividends
and capital gain distributions during period EQUALS
Number of shares purchased during period
(C) Number of shares purchased during period MULTIPLIED BY
Net asset value of one share as of the last day
of the period EQUALS
Value of investment at end of period
(D) Value of investment at end of period DIVIDED BY
Initial investment
minus one and then multiplied by 100 EQUALS
Total return for the period expressed as a
percentage
EXHIBIT 16
(2) AVERAGE ANNUAL TOTAL RETURN
Average annual total return quotations for the 1-year, 5-year and lifetime
periods ended September 30, 1995 are computed according to the formula set
forth below.
P(1+T)/n/ = ERV
WHERE: P= a hypothetical initial investment of $1,000
T= average annual total return
n= number of years
ERV= ending redeemable value of a hypothetical $1,000 investment as of the end
of 1-year, 5-year and lifetime periods (computed in accordance with the formula
shown in (1), above)
THUS:
AVG. ANNUAL TOTAL RETURN AT PUBLIC OFFERING PRICE:
1 Year Total Return 1,000(1+T)/1/ = 1,125.26
T = + 12.53%
5 Year Average Annual Total Return 1,000(1+T)/5/ = 1,568.56
T = + 9.42%
Lifetime Average Annual Total Return 1,000(1+T)/8.16/ = 2,013.96
T = +8.96%
Hypothetical illustrations which are based on $1,000 and $10,000 initial
investments used to obtain ending values over various time periods are
attached.
(3) YIELD
Yield is computed as set forth below.
(A) Dividends and interest earned during the period MINUS
Expenses accrued for the period EQUALS
Net investment income
(B) Net income investment DIVIDED BY
Average daily number of shares
outstanding during the period that
were entitled to receive dividends EQUALS
Net investment income per share earned
during the period
(C) Net investment income per share earned
during the period DIVIDED BY
Maximum offering price per share on
last day of the period EQUALS
Current month's yield
(D) Current months yield PLUS ONE RAISED
TO THE SIXTH
POWER EQUALS
Semiannual compounded yield
(E) Semiannual compounded yield MINUS ONE
MULTIPLIED
BY TWO EQUALS
Annualized rate
<PAGE>
<TABLE>
<CAPTION>
CAPITAL WORLD BOND FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
10/01/94 1000.00 16.09 4.75 % 62.150 15.330 953
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/95 1000 76 76 1076 0 1045 0 1045 80 1125.26 66.940
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL WORLD BOND FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
10/01/90 1000.00 15.18 4.75 % 65.876 14.460 953
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/91 1000 74 74 1074 0 1028 0 1028 77 1105.88 70.890
9/30/92 1000 78 152 1152 0 1051 0 1051 159 1210.51 75.894
9/30/93 1000 68 220 1220 12 1086 14 1100 236 1336.45 81.095
9/30/94 1000 82 302 1302 7 1010 19 1029 299 1328.15 86.637
9/30/95 1000 105 407 1407 0 1107 21 1128 440 1568.56 93.311
TOTAL $ 19
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL WORLD BOND FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/04/87 1000.00 15.00 4.75 % 66.667 14.287 952
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/87 1000 0 0 1000 0 949 0 949 0 949.34 66.667
9/30/88 1000 62 62 1062 1 1012 1 1013 61 1074.32 70.772
9/30/89 1000 80 142 1142 23 970 24 994 138 1132.95 77.866
9/30/90 1000 95 237 1237 0 964 24 988 235 1223.04 84.581
9/30/91 1000 95 332 1332 0 1040 25 1065 354 1419.90 91.019
9/30/92 1000 100 432 1432 0 1063 26 1089 465 1554.23 97.444
9/30/93 1000 87 519 1519 16 1099 44 1143 572 1715.90 104.120
9/30/94 1000 105 624 1624 8 1022 49 1071 634 1705.26 111.237
9/30/95 1000 135 759 1759 0 1121 54 1175 838 2013.96 119.807
TOTAL $ 48
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL WORLD BOND FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
10/01/94 1000.00 15.33 0.00 % 65.232 15.330 1000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/95 1000 79 79 1079 0 1097 0 1097 84 1181.04 70.258
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL WORLD BOND FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
10/01/90 1000.00 14.46 0.00 % 69.156 14.460 1000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/91 1000 77 77 1077 0 1079 0 1079 81 1160.94 74.419
9/30/92 1000 82 159 1159 0 1103 0 1103 167 1270.77 79.672
9/30/93 1000 71 230 1230 13 1140 14 1154 248 1402.96 85.131
9/30/94 1000 86 316 1316 7 1060 20 1080 314 1394.26 90.950
9/30/95 1000 111 427 1427 0 1163 22 1185 461 1646.66 97.957
TOTAL $ 20
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL WORLD BOND FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/04/87 1000.00 14.29 0.00 % 69.994 14.287 1000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/87 1000 0 0 1000 0 997 0 997 0 996.71 69.994
9/30/88 1000 65 65 1065 1 1063 1 1064 63 1127.92 74.303
9/30/89 1000 84 149 1149 25 1018 25 1043 146 1189.49 81.752
9/30/90 1000 99 248 1248 0 1012 25 1037 247 1284.09 88.803
9/30/91 1000 100 348 1348 0 1092 27 1119 371 1490.77 95.562
9/30/92 1000 105 453 1453 0 1116 27 1143 488 1631.80 102.307
9/30/93 1000 92 545 1545 17 1153 46 1199 602 1801.56 109.318
9/30/94 1000 109 654 1654 9 1073 52 1125 665 1790.36 116.788
9/30/95 1000 143 797 1797 0 1177 57 1234 880 2114.46 125.786
TOTAL $ 52
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL WORLD BOND FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
10/01/94 2000.00 16.09 4.75 % 124.301 15.330 1906
ANNUAL INVESTMENTS OF $ 2000.00 -- SAME DAY AS INITIAL INVESTMENT
DIVIDENDS AND CAPITAL GAINS REINVESTED
RIGHT OF ACCUMULATION DISCOUNT REFLECTED WHERE APPLICABLE IN THIS ILLUSTRATION
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/95 2000 151 151 2151 0 2089 0 2089 161 2250.47 133.877
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL WORLD BOND FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
10/01/92 2000.00 16.75 4.75 % 119.403 15.950 1904
ANNUAL INVESTMENTS OF $ 2000.00 -- SAME DAY AS INITIAL INVESTMENT
DIVIDENDS AND CAPITAL GAINS REINVESTED
RIGHT OF ACCUMULATION DISCOUNT REFLECTED WHERE APPLICABLE IN THIS ILLUSTRATION
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/93 2000 106 106 2106 19 1968 21 1989 113 2102.58 127.584
9/30/94 4000 217 323 4323 20 3603 38 3641 316 3957.70 258.167
9/30/95 6000 464 787 6787 0 6040 42 6082 842 6924.61 411.934
TOTAL $ 39
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL WORLD BOND FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/04/87 2000.00 15.00 4.75 % 133.333 14.287 1905
ANNUAL INVESTMENTS OF $ 2000.00 -- SAME DAY AS INITIAL INVESTMENT
DIVIDENDS AND CAPITAL GAINS REINVESTED
RIGHT OF ACCUMULATION DISCOUNT REFLECTED WHERE APPLICABLE IN THIS ILLUSTRATION
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/87 2000 0 0 2000 0 1899 0 1899 0 1898.66 133.333
9/30/88 4000 124 124 4124 2 3947 2 3949 122 4071.34 268.204
9/30/89 6000 304 428 6428 89 5679 88 5767 422 6189.37 425.386
9/30/90 8000 517 945 8945 0 7563 88 7651 949 8600.66 594.790
9/30/91 10000 666 1611 11611 0 10163 95 10258 1730 11988.80 768.513
9/30/92 12000 845 2456 14456 0 12272 97 12369 2634 15003.89 940.683
9/30/93 14000 840 3296 17296 153 14622 268 14890 3616 18506.91 1122.992
9/30/94 16000 1128 4424 20424 91 15507 335 15842 4455 20297.61 1324.045
9/30/95 18000 1636 6060 24060 0 18909 368 19277 6624 25901.74 1540.853
TOTAL $ 335
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL WORLD BOND FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
8/04/87 10000.00 15.00 4.75 % 666.667 14.287 9525
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/87 10000 0 0 10000 0 9493 0 9493 0 9493.34 666.667
9/30/88 10000 621 621 10621 9 10120 8 10128 615 10743.02 707.709
9/30/89 10000 801 1422 11422 234 9700 237 9937 1392 11329.50 778.660
9/30/90 10000 945 2367 12367 0 9640 236 9876 2354 12230.56 845.820
9/30/91 10000 948 3315 13315 0 10400 254 10654 3545 14199.09 910.198
9/30/92 10000 1000 4315 14315 0 10633 260 10893 4649 15542.38 974.444
9/30/93 10000 871 5186 15186 158 10987 443 11430 5729 17159.14 1041.210
9/30/94 10000 1046 6232 16232 84 10220 491 10711 6341 17052.63 1112.370
9/30/95 10000 1354 7586 17586 0 11207 539 11746 8393 20139.56 1198.070
TOTAL $ 485
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL WORLD BOND FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
10/01/87 10000.00 14.95 4.75 % 668.896 14.240 9525
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/88 10000 622 622 10622 9 10154 9 10163 615 10778.92 710.074
9/30/89 10000 805 1427 11427 234 9732 238 9970 1397 11367.35 781.261
9/30/90 10000 949 2376 12376 0 9672 237 9909 2362 12271.39 848.644
9/30/91 10000 951 3327 13327 0 10435 255 10690 3556 14246.50 913.237
9/30/92 10000 1004 4331 14331 0 10669 261 10930 4664 15594.28 977.698
9/30/93 10000 873 5204 15204 159 11023 444 11467 5749 17216.46 1044.688
9/30/94 10000 1050 6254 16254 85 10254 493 10747 6362 17109.61 1116.087
9/30/95 10000 1359 7613 17613 0 11244 541 11785 8421 20206.88 1202.075
TOTAL $ 487
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL WORLD BOND FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
10/01/88 10000.00 15.94 4.75 % 627.353 15.180 9523
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/89 10000 711 711 10711 207 9128 203 9331 712 10043.11 690.248
9/30/90 10000 838 1549 11549 0 9072 202 9274 1567 10841.86 749.783
9/30/91 10000 840 2389 12389 0 9787 218 10005 2581 12586.88 806.851
9/30/92 10000 887 3276 13276 0 10006 223 10229 3548 13777.66 863.803
9/30/93 10000 771 4047 14047 140 10339 384 10723 4487 15210.86 922.989
9/30/94 10000 927 4974 14974 75 9617 428 10045 5071 15116.47 986.071
9/30/95 10000 1200 6174 16174 0 10546 469 11015 6837 17852.91 1062.041
TOTAL $ 422
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL WORLD BOND FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
10/01/89 10000.00 15.28 4.75 % 654.450 14.550 9522
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/90 10000 795 795 10795 0 9463 0 9463 816 10279.56 710.896
9/30/91 10000 796 1591 11591 0 10209 0 10209 1725 11934.08 765.005
9/30/92 10000 841 2432 12432 0 10438 0 10438 2625 13063.10 819.003
9/30/93 10000 731 3163 13163 133 10785 146 10931 3490 14421.96 875.119
9/30/94 10000 880 4043 14043 71 10033 203 10236 4096 14332.48 934.930
9/30/95 10000 1139 5182 15182 0 11001 223 11224 5702 16926.98 1006.959
TOTAL $ 204
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL WORLD BOND FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
10/01/90 10000.00 15.18 4.75 % 658.762 14.460 9526
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/91 10000 738 738 10738 0 10277 0 10277 781 11058.89 708.903
9/30/92 10000 779 1517 11517 0 10507 0 10507 1598 12105.09 758.940
9/30/93 10000 678 2195 12195 123 10856 135 10991 2373 13364.32 810.942
9/30/94 10000 814 3009 13009 66 10099 188 10287 2994 13281.39 866.366
9/30/95 10000 1055 4064 14064 0 11074 206 11280 4405 15685.65 933.114
TOTAL $ 189
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL WORLD BOND FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
10/01/91 10000.00 16.38 4.75 % 610.501 15.600 9524
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/92 10000 671 671 10671 0 9737 0 9737 687 10424.81 653.593
9/30/93 10000 584 1255 11255 106 10061 117 10178 1331 11509.24 698.376
9/30/94 10000 703 1958 11958 57 9359 162 9521 1916 11437.80 746.106
9/30/95 10000 908 2866 12866 0 10263 178 10441 3067 13508.31 803.588
TOTAL $ 163
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL WORLD BOND FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
10/01/92 10000.00 16.75 4.75 % 597.015 15.950 9522
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/93 10000 532 532 10532 97 9839 107 9946 566 10512.95 637.922
9/30/94 10000 641 1173 11173 52 9152 148 9300 1147 10447.73 681.522
9/30/95 10000 828 2001 12001 0 10036 162 10198 2141 12339.01 734.028
TOTAL $ 149
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL WORLD BOND FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
10/01/93 10000.00 17.30 4.75 % 578.035 16.480 9526
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/94 10000 580 580 10580 47 8861 44 8905 561 9466.90 617.541
9/30/95 10000 752 1332 11332 0 9717 49 9766 1414 11180.63 665.118
TOTAL $ 47
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL WORLD BOND FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
10/01/94 10000.00 16.09 4.75 % 621.504 15.330 9528
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/95 10000 755 755 10755 0 10447 0 10447 805 11252.40 669.387
TOTAL $ 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL WORLD BOND FUND, INC.
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
10/01/95 10000.00 17.65 4.75 % 566.572 16.810 9524
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/95 10000 0 0 10000 0 9524 0 9524 0 9524.08 566.572
TOTAL $ 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-31-1994
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 605,594
<INVESTMENTS-AT-VALUE> 630,706
<RECEIVABLES> 25,348
<ASSETS-OTHER> 55
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 656,109
<PAYABLE-FOR-SECURITIES> 1,837
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,485
<TOTAL-LIABILITIES> 3,322
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 619,056
<SHARES-COMMON-STOCK> 38,837,677
<SHARES-COMMON-PRIOR> 37,545,024
<ACCUMULATED-NII-CURRENT> 11,346
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2,804)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 25,112
<NET-ASSETS> 652,787
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 47,517
<OTHER-INCOME> 0
<EXPENSES-NET> 6,677
<NET-INVESTMENT-INCOME> 40,840
<REALIZED-GAINS-CURRENT> 3,523
<APPREC-INCREASE-CURRENT> 52,599
<NET-CHANGE-FROM-OPS> 96,962
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 43,886
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 12,188,125
<NUMBER-OF-SHARES-REDEEMED> 13,243,810
<SHARES-REINVESTED> 2,348,338
<NET-CHANGE-IN-ASSETS> 24,105
<ACCUMULATED-NII-PRIOR> 14,392
<ACCUMULATED-GAINS-PRIOR> (6,328)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,073
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6,677
<AVERAGE-NET-ASSETS> 598,224
<PER-SHARE-NAV-BEGIN> 15.33
<PER-SHARE-NII> 1.09
<PER-SHARE-GAIN-APPREC> 1.57
<PER-SHARE-DIVIDEND> 1.18
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.81
<EXPENSE-RATIO> .011
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
