CAPITAL WORLD BOND FUND
1996 ANNUAL REPORT
for the year ended September 30
[Photo: Various paper and coin currency on an atlas]
[The American Funds Group(r)]
CAPITAL WORLD BOND FUND
THE FUND SEEKS TO MAXIMIZE TOTAL RETURN, CONSISTENT WITH PRUDENT MANAGEMENT, BY
INVESTING IN QUALITY FIXED-INCOME SECURITIES ISSUED BY MAJOR GOVERNMENTS AND
CORPORATIONS ALL OVER THE WORLD, INCLUDING THE UNITED STATES. THAT TOTAL RETURN
IS MADE UP OF THREE ELEMENTS: INTEREST INCOME, ANY CHANGE IN THE MARKET VALUE
OF THE FUND'S INVESTMENTS AND ANY CHANGE IN THE VALUE OF OTHER CURRENCIES
AGAINST THE U.S. DOLLAR.
INVESTMENT RESULTS AT A GLANCE
Total return for the fiscal year
(10/1/95 - 9/30/96) +7.7%
Total return over the fund's lifetime
(8/4/87 - 9/30/96) +127.7%
Average annual compound return
(lifetime) +9.4%
Here are returns over various periods ended September 30, 1996 and a chart
showing the growth of an investment over the fund's lifetime, with all
distributions reinvested. These figures differ from those above (and in the
letter) because they assume payment of the 4.75% maximum sales charge at the
beginning of the stated periods.
Total Average Annual
Return Compound Return
Lifetime (since 8/4/87) +116.84% +8.82%
Five Years +45.45 +7.78
One Year +2.55 --
[chart]
HOW A $10,000 INVESTMENT HAS GROWN
<TABLE>
<CAPTION>
Year ended 9/30 Capital World Bond Salomon Brothers World Consumer Price Index
Fund/1/ Government Bond Index/1/ (Inflation)
<S> <C> <C> <C>
1987 /2/ 9,493 9,865 10,105
1988 10,743 11,280 10,527
1989 11,330 12,013 10,984
1990 12,231 12,918 11,661
1991 14,199 14,861 12,056
1992 15,542 17,581 12,417
1993 17,159 19,187 12,750
1994 17,053 19,535 13,128
1995 20,140 22,696 13,462
1996 21,684 23,649 13,866
</TABLE>
/1/With dividends reinvested or interest compounded
/2/For the period August 4 through September 30, 1987
The indexes are unmanaged and do not reflect sales charges, commissions or
expenses. Past results are not predictive of future results.
[end chart]
Fund results in this report were computed without a sales charge unless
otherwise indicated. Sales charges are lower for accounts of $25,000 or more.
The fund's 30-day yield as of October 31, 1996, calculated in accordance with
the Securities and Exchange Commission formula, was 4.96%. The fund's
distribution rate as of that date was 6.63%. The SEC yield reflects income the
fund expects to earn based on its current portfolio of securities, while the
distribution rate is based solely on the fund's past dividends.
THE FIGURES IN THIS REPORT REFLECT PAST RESULTS. SHARE PRICE AND RETURN WILL
VARY, SO YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE SHORTER THE TIME
PERIOD OF YOUR INVESTMENT, THE GREATER THE POSSIBILITY OF LOSS. FUND SHARES ARE
NOT DEPOSITS OR OBLIGATIONS OF, OR INSURED OR GUARANTEED BY, THE U.S.
GOVERNMENT, ANY FINANCIAL INSTITUTION, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, OR ANY OTHER AGENCY, ENTITY OR PERSON. Investing in non-U.S.
bonds is subject to additional risks. They include currency fluctuations,
political and social instability, differing securities regulations and
accounting standards, higher transaction costs, possible changes in taxation
and periods of illiquidity.
FELLOW SHAREHOLDERS:
Capital World Bond Fund made solid progress during fiscal 1996. In a period
marked by falling bond yields in Europe, weakness in the Japanese yen and mixed
results in the United States bond market, the value of your investment rose
7.7% assuming you reinvested income dividends totaling $1.20 a share.
[photo: close-up of British paper currency]
The fund's total return outpaced the leading unmanaged world and U.S. bond
indexes. The Salomon Brothers World Government Bond Index, which measures major
world markets, increased 4.2% for the 12 months ended September 30. The Salomon
Brothers Broad Investment-Grade Bond Index, a key measure of the U.S. bond
market, posted a gain of 4.9%.
Capital World Bond Fund's results in the recent fiscal year show how
intensive research and active management can add value to an investment
portfolio. The feature article following this letter explains our investment
approach and how we seek value for our shareholders in bond markets around the
world.
One important contributor to the fund's fiscal 1996 relative return was
its Japanese yen strategy. Nearly 20% of the world's bond market is composed of
Japanese yen bonds, according to Salomon Brothers. U.S. investors who invested
that percentage of their global bond portfolios in Japanese bonds would have
suffered a sizable loss because of the weakness of the yen against the U.S.
dollar, making Japanese bond investments worth less in dollars. Japanese bond
yields were flat during the recent 12 months, beginning and ending at about
2.8%. Because of currency devaluation, however, Japanese bonds showed a loss of
8.6% for U.S. dollar investors.
Fortunately we were convinced that the yen would weaken against the
dollar, so we limited our exposure to Japan and hedged some of those assets
back into the U.S. dollar during the first months of the period. Capital World
Bond Fund had less than 5% of its investments in Japanese bonds for most of the
year - in contrast with the World Government Bond Index weighting of 20%.
We have been adding to our yen position in recent months now that the
dollar has risen so sharply against the yen. As a result, nearly 11% of the
fund's net assets were exposed to the yen as of September 30, 1996.
Another important component of total return in an actively managed global
bond fund is selecting bonds in countries where yields are declining. As we
will explain further in our feature article, this is a decision that calls for
in-depth research, including personal meetings with leading government
officials and in-depth analysis of economic, political and social trends in the
nations whose bonds we are considering.
Our holdings of European bonds significantly added to the fund's total
return during the year, since bond yields fell throughout Europe, causing bond
prices to rise. We invested primarily in markets where returns were
particularly strong. Italy produced a total return of 29.1% in dollars; Sweden,
23.9%; Spain, 17.2%; and Ireland, 13.9%, according to the Salomon Brothers
World Government Bond Index. We began the fiscal year with nearly 17% of the
portfolio invested among those four countries. As the fiscal year progressed
and these markets rallied, we sold a portion of these bonds and added to our
holdings in the U.S. and Germany.
[pie charts]
CAPITAL WORLD BOND FUND NET ASSETS
Pacific Basin 19.5%
The Americas 51.8%
Europe 28.7%
WORLD BOND MARKET
Pacific Basin 20.5%
The Americas 36.0%
Europe 43.5%
[end pie charts]
We have mentioned in previous letters that we confine our investments to
investment-grade debt and invest primarily in developed nations. That is in
sharp contrast to some global income funds which have a large portion of their
assets in higher yielding but more volatile bonds from so-called "emerging
nations." After showing losses in the 1995 fiscal year, bonds from emerging
countries surged during the recent period. That was one reason the 124 global
income funds tracked by Lipper Analytical Services had an average total return
of 11.1% for the 12 months ended September 30. In the previous year,
investments in emerging nation debt had a negative impact on returns for many
global income funds. We explain why we focus on investment-grade debt in our
accompanying feature article.
It is also worth reiterating our policy concerning the payment of quarterly
dividends. The fund has typically paid a level dividend in the first three
quarters of the calendar year, and then adjusted the fourth quarter dividend
(up or down) to reflect currency gains or losses and any undistributed interest
income, as required by tax laws. This year, since the fund had net currency
gains, shareholders will receive a dividend in December that we anticipate to
be about 50 cents, compared to the 22-cent dividend in the three previous
quarters.
During the past 12 months, we reduced the average maturity of our bond
investments to 6.6 years from 8.9 years. The move reflects our concerns about
possible increased economic activity in the months ahead, which could lead to
higher interest rates and inflation in certain nations.
More investors have come to share our belief that Capital World Bond Fund
is a sound way to diversify their fixed-income investments. At the fiscal
year-end, the fund had a total of 40,700 shareholder accounts, up 9% from a
year ago. Its total assets are $810.8 million, up 24.2% from a year ago.
We look forward to reporting to you again in the spring.
Cordially,
[signature]
Paul G. Haaga, Jr.
Chairman of the Board
[signature]
Abner D. Goldstine
President
November 8, 1996
Where the Fund's Assets Are Invested
(as of September 30, 1996)
<TABLE>
<CAPTION>
CAPITAL WORLD SALOMON BROTHERS
BOND FUND WORLD GOVERNMENT
NET ASSETS BOND INDEX
AVERAGE AVERAGE
CURRENCY OF SECURITIES CURRENCY MATURITY BY MATURITY BY
DENOMINATION WEIGHTING# WEIGHTING# CURRENCY WEIGHTING CURRENCY
<S> <C> <C> <C> <C> <C>
United States 43.9% 43.5% 6.1yrs 32.9% 7.9yrs
Japan 3.5 10.7 4.7 19.5 6.7
Finland 0.1 0.1 7.5 0.4 5.8
Netherlands 1.1 0.6 4.5 3.5 7.1
New Zealand 4.9 4.6 10.5 * *
Spain 3.8 3.8 5.8 2.5 5.3
Australia 2.3 4.2 10.5 1.0 6.0
Canada 6.5 8.3 10.5 3.1 8.4
France - - - 7.7 7.7
United Kingdom 4.1 3.7 5.8 5.4 10.3
Denmark 3.1 1.8 4.9 1.7 6.3
Ireland 5.2 5.2 5.3 * *
Germany 15.6 7.8 7.5 10.0 5.6
Italy 1.8 2.2 3.8 6.4 5.2
Sweden 1.7 1.7 5.5 1.8 6.1
Switzerland 0.4 0.0 5.8 0.5 6.7
Austria 0.1 0.1 4.8 0.9 5.2
Belgium - - - 2.7 6.6
Mexico 0.1 0.1 0.9 * *
Poland 0.1 0.1 0.5 * *
Portugal 1.7 1.5 6.7 * *
----- ----- -----
100.0% 100.0% 100.0%
===== ===== =====
</TABLE>
# Securities and currency weightings may differ due to the fund's use of
hedging techniques designed to control its exposure to fluctuations in exchange
rates. Short-term investments, cash equivalents, receivables and payables are
included in the securities weighting.
* This market is not included in the index.
A COMPARISON
10-YEAR GOVERNMENT BOND YIELDS AROUND THE WORLD:
[Global charts]
<TABLE>
<CAPTION>
Yield as of Yield as of
9/30/95 9/30/96
<S> <C>
JAPAN
2.8% 2.8%
AUSTRALIA
8.6% 7.8%
NEW ZEALAND
7.8% 8.0%
Yield as of Yield as of
9/30/95 9/30/96
CANADA
7.8% 7.1%
UNITED STATES
6.2% 6.7%
Yield as of Yield as of
9/30/95 9/30/96
FINLAND
8.1%* 6.7%*
SWEDEN
9.4% 7.4%
DENMARK
7.9% 6.9%
IRELAND
8.3% 7.0%
UNITED KINGDOM
8.1% 7.7%
SPAIN
10.9% 7.9%
FRANCE
7.5% 6.1%
NETHERLANDS
6.7% 5.9%
SWITZERLAND
4.4% 4.1%
GERMANY
6.6% 6.1%
AUSTRIA
7.1% 6.2%
ITALY
11.8% 9.4%
</TABLE>
*7-year government bonds
Source: Morgan Stanley Capital International Perspective
[end charts]
WHAT INVESTORS WANT TO KNOW ABOUT CAPITAL WORLD BOND FUND TODAY.
OVER THE PAST THREE YEARS, THE TOTAL ASSETS OF CAPITAL WORLD BOND FUND HAVE
INCREASED BY 80% TO $810 MILLION. WITH MANY NEW INVESTORS JOINING THE FUND, WE
THOUGHT IT WOULD BE TIMELY TO ANSWER SOME BASIC QUESTIONS ABOUT WHAT WE DO AND
HOW WE TRY TO CREATE VALUE FOR SHAREHOLDERS.
[Photo: close-up of Japanese paper currency]
KEY QUESTIONS ON WHAT WE DO
WHAT KINDS OF SECURITIES DOES CAPITAL WORLD BOND FUND OWN?
The fund buys investment-grade bonds denominated in a variety of the world's
currencies, including the U.S. dollar. Most of our holdings are government and
government-backed bonds from major industrialized countries. The fund also
invests in securities issued by international agencies or by leading
corporations around the world. You will find a complete listing of our
investments starting on page 10.
WHY INVEST ALL OVER THE WORLD?
More than 60% of the world's fixed-income securities are issued in currencies
other than the U.S. dollar, according to the Salomon Brothers World Government
Bond Index. Investors who limit themselves to the bonds of only one country are
cutting themselves off from a huge segment of the total universe of bond
investments. At any given time, some bond markets offer better opportunities
than others. Maps on page 3 show the yields on 10-year government bonds in 17
countries. We believe that investors who have the flexibility to take advantage
of these differences have an opportunity for better results.
DOES THE FUND INVEST ONLY IN THE HIGHEST YIELDING BONDS?
No. It's important to remember that Capital World Bond Fund seeks to achieve a
high level of total return over the long run <UNDEF> not simply high current
yields. Total return is made up of three elements, and interest income is only
one of them. The other two are changes in the market value of our bonds and
changes in the value of other currencies in which the fund is invested. With
interest rates in the U.S. at a relatively low level, bonds in some other
countries have been providing higher yields. Even bond markets that offer lower
yields, however, can be attractive investments if we expect their yields to
decline further or their currenciesto appreciate.
DOES THE FUND INVEST IN BONDS OF EMERGING NATIONS?
All of our bond investments have an investment-grade rating, meaning that they
fall in one of the top four rating levels (AAA, AA, A or BBB). As a result,
they are concentrated in the major nations of Europe, the United States, Japan
and the dollar-bloc countries of Australia, New Zealand and Canada. We have
invested in so-called emerging nation debt only when those securities become
investment grade. A recent example is our holding of Polish Government bonds.
WHY DO WE FOCUS ON INVESTMENT-GRADE BONDS?
We feel our shareholders are best served by our concentration on quality bonds
in major nations. We are trying to add value by taking advantage of global
interest rate trends and major movements in currencies. A large investment in
high-yield, below-investment-grade bonds, primarily those in emerging nations,
could potentially add substantial volatility to the fund's portfolio.
WHAT IS THE BENEFIT OF INVESTING IN BOTH U.S. AND NON-U.S. BONDS?
Investing in U.S. and non-U.S. bonds adds diversification to a fixed-income
portfolio. In any given year, you never know which country's bonds will do
best. Therefore, it makes sense to diversify and spread your opportunities and
risks by investing in the bonds of many countries.
[Photo: coin currency]
FUND SHAREHOLDERS DON'T HAVE ALL THEIR EGGS IN THE DOLLAR BASKET.
HOW DOES THE FUND DEAL WITH FLUCTUATING CURRENCIES?
When investing in another country, you have to be concerned about currency
exchange rates in addition to movements in bond prices. If the currency in
which a bond is denominated appreciates against the dollar, the dollar value of
that bond increases. For example, in 1994 German bonds lost 1.8% in market
value in local currency. But the German mark appreciated against the dollar by
11.8%. The result: U.S. investors had a net gain of 10% in their German bond
investments. Conversely, a decline in a country's exchange rate against the
dollar reduces the value of its bonds to U.S. investors.
We focus our research not only on bond markets, but also on currencies.
Our investment managers can use forward exchange contracts to express their
judgments about a country's currency independent of their views on a country's
bond market. We may find the bonds of a country attractive but feel that the
currency is risky. In that situation, we would perhaps invest in the country's
bonds but "hedge" all or part of our exposure to that currency created by the
bond purchase. Conversely, we may find value in a currency but perhaps not in
the bonds of that country. In that case, we might buy that nation's currency
with a forward contract but not purchase the bonds.
The Japanese yen is a good recent example of our currency strategy. Some
18 months ago, we determined that the yen had risen to an extraordinary level
against the dollar. So we sold most of our investments in Japanese bonds and
hedged our remaining holdings at the time when the Japanese currency was
"expensive" - or, in our view, overpriced compared with the U.S. dollar.
[Photo: various foreign paper currency]
Our move turned out to be a sound one. The dollar began a rally in the
summer of 1995. We gradually bought back into the yen in the latter part of the
fiscal year at lower prices than when we eliminated much of our position.
Of course, all our currency judgments do not prove to be this successful.
Although we base our investments on intensive research, there are times that we
do not succeed.
BUT DON'T YOU NEED EXTENSIVE RESEARCH TO MAKE THESE STRATEGIES WORK?
Yes, that's true. The fund has five portfolio counselors, each of whom has a
slightly different approach, and four analysts. The analysts are experts in the
economics, politics and financial markets of various nations, while the
portfolio counselors have a more general focus. The analysts stay abreast of
political and economic trends in many locations and the impact on individual
bond markets. The fund's analysts also focus on the credit quality of
individual companies, often teaming up with CRMC stock analysts when they do
research on bonds of a specific company or country.
[Photo: close-up of Germany paper currency]
DO WE BUY CORPORATE BONDS IN THE FUND?
We do when we know the company well and believe that the bonds are a good
value. In Australia, for example, we bought the bonds of News Corp. Ltd., a
large multinational media conglomerate. We knew the company well from our
equity research so we felt confident in buying its bonds. While the portfolio
does concentrate on government bonds, 27 bonds of private companies are also
held in the portfolio.
THE FUND'S ANALYSTS ARE EXPERTS IN THE BONDS OF MANY NATIONS.
[Photo: close-up of American paper currency]
KEY QUESTIONS ON HOW WE CREATE VALUE FOR SHAREHOLDERS
WHO MANAGES THESE BOND INVESTMENTS FOR THE FUND?
Capital Research and Management Company (CRMC) is the fund's investment
adviser. CRMC has 64 years of investment management experience and 22 years of
bond fund management experience. CRMC is well equipped to manage bonds globally
with nine research offices around the world.
HOW DO ANALYSTS WORK IN THIS FUND?
To put it simply, they analyze a country in much the same way that equity
analysts research a stock. Instead of just visiting a chief executive officer
of a corporation, they meet with officials from the finance ministry and the
central bank. They often seek views of opposition politicians, economists and
labor union leaders. They talk to business leaders. That way they get insights
into how the country is really doing - and whether that country's bonds are a
good investment.
CAN ANALYSTS ACTUALLY BUY BONDS - OR DO THEY JUST MAKE RECOMMENDATIONS?
In Capital World Bond Fund, the analysts make the buy and sell decisions on
securities in the fund's research portfolio, which makes up about 20% of the
assets of the fund. It gives the fund an advantage by allowing our analysts to
demonstrate their strong convictions in a country's prospects by directly
investing for the fund.
DESCRIBE HOW CAPITAL WORLD BOND FUND'S INVESTMENT STRATEGY WORKS.
One way to illustrate our approach to managing global bonds is to describe our
recent investment in Swedish bonds.
In 1992 and 1993, Sweden suffered its worst economic crisis since the
1930s. The economy contracted for three straight years, unemployment soared and
the Swedish krona was sharply devalued. Many of the country's financial
problems were due to the high costs of the Swedish welfare state - and many
political observers doubted that the Social Democratic Party could solve the
worsening economic problems. Swedish bonds were offering yields as high as
11.5%.
Thanks to our understanding of local politics and economics in Sweden, we
believed that the Social Democrats would be successful. So we bought a large
position in Swedish bonds when their prices were cheap in 1994.
Our projection proved to be accurate. The Swedish government acted to put
its fiscal house in order by cutting spending, privatizing government
enterprises, slashing the top marginal income tax rates and lowering jobless
benefits. Yields fell to 6.6% at the end of this fiscal year, and the value of
our Swedish bond holdings rose sharply. We have now sold many of our Swedish
bonds after their prices became "more expensive" - reflecting the government's
success in addressing the nation's problems.
[Photo: world map]
<TABLE>
<S> <C> <C> <C>
Capital World Bond Fund Principal Market Percent
Investment Portfolio September 30, 1996 Amount Value of Net
Bonds & Notes (000) (000) Assets
Australian Dollars
Australian Government:
12.50 1998 A$ 4,000 US$3,389 .42%
4.00% 2010 /1/ 1,000 810 .10
New South Wales Treasury:
11.50% 1999 1,000 878 .11
7.00% 2004 5,500 4,151 .51
News America Holdings Inc. 8.625% 2014 11,000 7,965 .98
Southern Australia Finance Authority
11.25% 2001 1,500 1,358 .17
-------- --------
18,551 2.29
-------- --------
Austrian Schillings
Austrian Government 5.50% 2001 ATS5,000 473 .06
-------- --------
British Pounds
Bank of Ireland 9.75% 2005 735 Pounds 1,239 .15
European Investment Bank 6.00% 2004 250 352 .04
United Kingdom:
9.50% 1999 2,000 3,324 .41
7.00% 2001 12,750 19,850 2.45
4.375% 2004/1/ 3,000 5,498 .68
8.50% 2005 1,850 3,063 .38
-------- --------
33,326 4.11
-------- --------
Canadian Dollars
Canadian Government:
6.25% 1998 C$ 2,000 1,497 .19
10.75% 1998 3,500 2,790 .34
9.75% 2001 17,500 14,750 1.82
0% 2003 1,500 669 .08
7.50% 2003 10,250 7,822 .96
0% 2005 12,685 4,915 .61
7.00% 2006 3,000 2,181 .27
10.75% 2009 10,000 9,415 1.16
4.25% 2021/1/ 12,000 9,079 1.12
-------- --------
53,118 6.55
-------- --------
Danish Kroner
Danish Government:
9.00% 1998 DKr88,000 16,392 2.02
9.00% 2000 16,000 3,085 .38
8.00% 2001 10,000 1,869 .23
8.00% 2003 10,000 1,854 .23
7.00% 2024 12,000 1,860 .23
-------- --------
25,060 3.09
-------- --------
German Marks
Bayerische Vereinsbank AG
6.50% 2005 DM11,000 7,356 .91
Bundesobligation 5.875% 2000 8,250 5,638 .70
Deutschland Republic:
8.25% 2001 8,500 6,329 .78
8.00% 2002 32,000 23,654 2.92
6.75% 2003 17,500 12,162 1.50
6.50% 2005 11,000 7,417 .91
6.875% 2005 10,000 6,913 .85
6.25% 2024 10,000 6,037 .74
German Unity Fund 8.00% 2002 3,500 2,584 .32
Norddeutsche Landesbank Girozentrale
6.75% 2005 3,500 2,378 .29
Rheinische Hypothekenbank 5.50% 2001 13,000 8,598 1.06
Treuhandanstalt:
7.375% 2002 2,700 1,937 .24
7.125% 2003 45,600 32,314 3.99
7.50% 2004 4,500 3,237 .40
-------- --------
126,554 15.61
-------- --------
Finnish Markkaa
Finnish Government:
9.50% 2004 FM4,000 1,041 .13
-------- --------
Irish Pounds
Ireland (Republic of):
6.25% 1999 8,850 IRPounds 14,198 1.75
8.00% 2000 4,250 7,216 .89
6.50% 2001 1,800 2,898 .36
6.25% 2004 8,030 12,445 1.53
8.00% 2006 2,000 3,428 .42
Irish Permanent Treasury
6.75% 2000 1,100 1,769 .22
-------- --------
41,954 5.17
-------- --------
Italian Lire
Deutsche Bank Finance NV 11.00% 1996 Lr1,550,000 1,022 .13
Italian Government National:
8.50% 1999 2,000,000 1,340 .16
8.50% 1999 3,500,000 2,342 .29
9.50% 2001 5,000,000 3,471 .43
8.50% 2004 500,000 331 .04
10.50% 2005 3,500,000 2,585 .32
KfW International Finance Inc.
11.625% 1998 5,500,000 3,885 .48
- --------
14,976 1.85
-------- --------
Japanese Yen
European Investment Bank 6.75% 2001 1,150,000Yen 12,462 1.53
Export-Import Bank of Japan:
4.375% 2003 325,000 3,231 .40
2.875% 2005 230,000 2,057 .25
GMAC International Finance 3.75% 1999 300,000 2,827 .35
International Bank for Reconstruction
and Development 4.50% 2003 74,000 743 .09
Japan Development Bank:
5.00% 1999 590,000 5,838 .72
6.50% 2001 87,000 943 .12
-------- --------
28,101 3.46
-------- --------
Mexican Pesos
CETES B 970731 MXP434 467 .06
Netherlands Guilders
Netherlands Government:
7.50% 1999 NLG5,000 3,176 .39
8.50% 2001 1,400 935 .12
8.75% 2001 6,000 4,077 .50
7.00% 2005 1,500 942 .12
-------- --------
9,130 1.13
-------- --------
New Zealand Dollars
New Zealand Government:
6.50% 2000 NZ$13,050 8,690 1.07
8.00% 2004 17,000 11,816 1.45
8.00% 2006 11,000 7,667 .95
4.5945% 2016/1/ 18,500 11,266 1.39
-------- --------
39,439 4.86
-------- --------
Polish Zloty
Poland (Republic of) Treasury Bill 1997 PLZ1,830 590 .07
-------- --------
Portugese Escudos
Portugal (Republic of):
11.875% 2000 PTE100,000 730 .09
11.875% 2000 595,000 4,393 .54
8.75% 2001 140,000 949 .12
11.875% 2005 300,000 2,395 .30
9.50% 2006 770,000 5,468 .67
- -
13,935 1.72
- -
Spanish Pesetas
Spain (Kingdom of):
11.45% 1998 Pta 770,000 6,461 .80
12.25% 2000 210,000 1,868 .23
10.50% 2003 2,154,000 19,262 2.37
8.00% 2004 400,000 3,157 .39
-------- --------
30,748 3.79
-------- --------
Swedish Kronor
Swedish Government:
10.75% 1997 SKR10,000 1,532 .19
11.00% 1999 17,000 2,844 .35
10.25% 2003 35,000 6,144 .76
6.00% 2005 26,000 3,592 .44
-------- --------
14,112 1.74
-------- --------
Swiss Francs
Swiss Government 4.50% 2002 CHF4000 3,373 .42
-------- --------
United States Dollars
Airplanes Pass Through Trust, pass - through
certificates, Class C 8.15% 2019/2/ $ 8,000 8,130 1.00
Banco Nacional de Mexico, SA 1995 Trust
Certificates 0% 2002/3/ 5,704 4,443 .55
China (People's Republic of)
9.00% 2096 500 488 .06
Colombia (Republic of):
7.25% 2004 2,000 1,855 .23
8.70% 2016 1,000 912 .11
ConAgra, Inc. 9.75% 2021 8,500 10,127 1.25
Continental Airlines, Inc., Series 1996A
6.94% 2015/3/ 2,000 1,942 .24
Credit Foncier de France 8.00% 2002 3,240 3,378 .42
Den Danske Bank 6.55% 2003/3/ 1,000 960 .12
EquiCredit Funding Trust, pass-through
certificates, Series 1996-A,
Class A3 7.35% 2019 3,000 3,007 .37
Federal Home Loan Mortgage Corp.:
5.78% 2003 4,000 3,726 .46
6.19% 2004 9,000 8,511 1.05
Federal National Mortgage Assn.
7.50% 2025/2/ 1,452 1,435 .18
Government National Mortgage Assn.:
9.00% 2017-2024/2/ 7,533 7,965 .98
8.50% 2021/2/ 797 830 .10
7.00% 2022-2026/2/ 5,241 5,313 .66
6.00% 2024/2/ 2,664 2,687 .33
6.50% 2024/2/ 2,828 2,645 .33
5.50% 2025/2/ 2,868 2,865 .35
7.00% 2026/2/ 1,950 1,876 .23
Green Tree Financial Corp., Net Interest
Margin Trust, Series 1995-A
7.25% 2005 1,513 1,507 .19
Inter America Development Bank
8.875% 2001 3,000 3,266 .40
Italy (Republic of) 6.875% 2023 1,250 1,138 .14
McDermott Inc. 9.375% 2002 2,000 2,103 .26
Merita Bank Ltd. 6.50% 2006 3,000 2,801 .35
Ontario (Province of):
7.75% 2002 2,000 2,087 .26
7.375% 2003 5,000 5,112 .63
7.00% 2005 3,750 3,722 .46
Parker & Parsley Petroleum Co.
8.25% 2007 2,000 2,094 .26
Philips Electronics NV 7.20% 2026 3,500 3,480 .43
Poland (Republic of) Past Due Interest Bonds:
Bearer shares 3.75% 2014/4/ 17,000 13,473 1.66
Registered shares 3.75% 2014/4/ 2,000 1,585 .20
Quebec (Province of):
8.625% 2005 1,250 1,347 .17
7.50% 2023 3,500 3,353 .41
Reliance Industries Ltd.8.125% 2005 500 485 .06
Skandinaviska Enskilda Banken
6.875% 2009 1,000 940 .12
Slovenia (Republic of) 7.00% 2001/3/ 7,000 7,000 .86
UCFC Acceptance Corp. pass-through
certificates, Series 1996-B1, Class A3
7.30% 2013 3,000 3,026 .37
United Mexican States Government
7.6875% 20013,4 4,000 4,006 .49
United States Treasury:
5.375% 1998 3,000 2,968 .37
5.875% 1998 14,250 14,219 1.75
8.25% 1998 1,250 1,295 .16
6.375% 1999 26,000 26,089 3.22
8.875% 1999 11,000 11,639 1.43
6.75% 2000 6,675 6,752 .83
8.50% 2000 1,250 1,343 .17
6.50% 2001 250 250 .03
6.625% 2001 1,000 1,006 .12
7.50% 2001 8,000 8,346 1.03
7.75% 2001 2,250 2,361 .29
8.00% 2001 11,000 11,670 1.44
6.375% 2002 18,600 18,472 2.28
5.75% 2003 510 487 .06
6.25% 2003 2,250 2,214 .27
7.25% 2004 5,750 5,957 .73
11.625% 2004 14,750 19,258 2.38
6.50% 2005 250 247 .03
10.375% 2009 1,000 1,220 .15
Woolworth Corp., Series A:
7.00% 2000 1,000 989 .12
6.98% 2001 3,000 2,940 .36
-------- --------
275,342 33.96
-------- --------
Total Bonds & Notes (cost:
$716,630,000) 730,290 90.07
-------- --------
Short-Term Securities
Corporate Short-Term Notes
Daimler-Benz North America Corp.
5.39% due 11/15/96 10,000 9,931 1.22
Ford Credit Europe PLC
5.33% due 10/22/96 11,300 11,263 1.39
Halifax Building Society
5.34% due 11/14/96 11,500 11,423 1.41
Sandoz Corp.:
5.34% due 10/31/96 8,700 8,660 1.07
5.38% due 11/7/96 10,200 10,142 1.25
Toyota Motor Credit Corp.:
5.28% due 10/15/96 6,200 6,186 .76
5.35% due 12/16/96 5,800 5,734 .71
-------- --------
63,339 7.81
-------- --------
Non-U.S. Currency Deposits:
British Pound Sterling 47Pounds 74 .01
Deutsche Mark DM184 121 .02
Italian Lira Lr551,983 362 .04
-------- --------
557 .07
-------- --------
Total Short-Term Securities (cost:
$63,881,000) 63,896 7.88
-------- --------
Total Investment Securities (cost:
$780,511,000) 794,186 97.95
Excess of cash and receivables over
payables 16,653 2.05
-------- --------
Net Assets $810,839 100.00%
======== ========
/1/ 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.
/3/ Purchased in a private placement transaction; resale to the public may
require registration or sale only to qualified institutional buyers.
/4/ Coupon rates may change periodically.
See Notes to Financial Statements
</TABLE>
<TABLE>
<S> <C> <C>
Capital World Bond Fund
Financial Statements
Statement of Assets and Liabilities
at September 30, 1996 (dollars in thousands)
Assets:
Investment securities at market
(cost: $780,511) $794,186
Cash 228
Receivables for-
Sales of investments $6,052
Sales of fund's shares 2,016
Accrued interest 19,797 27,865
--------- ---------
822,279
Liabilities:
Payables for-
Purchases of investments 9,068
Repurchases of fund's shares 1,447
Forward currency contracts - net 320
Management services 435
Accrued Expenses 170 11,440
--------- ---------
Net Assets at September 30, 1996-
Equivalent to $16.86 per share on
48,105,799 shares of $0.01 par value
capital stock outstanding (authorized
capital stock - 200,000,000 shares) $810,839
=========
Statement of Operations
for the year ended September 30, 1996
(dollars in thousands)
Investment Income:
Income:
Interest $51,770
Expenses:
Management services fee $4,847
Distribution expenses 1,746
Transfer agent fee 608
Reports to shareholders 114
Registration statement and prospectus 106
Postage, stationery and supplies 121
Directors' fees 16
Auditing and legal fees 44
Custodian fee 217
Taxes other than federal income tax 18
Other expenses 11 7,848
--------- ---------
Net investment income 43,922
---------
Realized Gain and Unrealized Depreciation on Investments:
Net realized gain 20,877
Net unrealized (depreciation)
appreciation on:
investments (11,452)
Open forward currency contracts 7
---------
Net unrealized depreciation (11,445)
---------
Net realized gain and unrealized
depreciation on investments 9,432
---------
Net Increase in Net Assets Resulting
from Operations $53,354
=========
Statement of Changes in Net Assets
(dollars in thousands)
Year endedSeptember 30
1996 1995
--------- ---------
Operations:
Net investment income $43,922 $40,840
Net realized gain on investments 20,877 3,523
Net unrealized (depreciation) appreciation
on investments (11,445) 52,599
--------- ---------
Net increase in net
assets resulting from operations 53,354 96,962
--------- ---------
Dividends Paid to Shareholders (51,067) (43,886)
--------- ---------
Capital Share Transactions:
Proceeds from shares sold:
17,575,138 and 12,188,125
shares, respectively 296,074 198,146
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions of
net realized gain on investments:
2,527,117 and 2,348,338 shares, respectively 42,286 37,011
Cost of shares repurchased:
10,834,133 and 13,243,810
shares, respectively (182,595) (211,052)
--------- ---------
Net increase in net assets
resulting from capital share
transactions 155,765 24,105
--------- ---------
Total Increase in Net Assets 158,052 77,181
Net Assets:
Beginning of year 652,787 575,606
--------- ---------
End of year (including undistributed
net investment income: $8,786 and
$11,346, respectively) $810,839 $652,787
========= =========
See Notes to Financial Statements
</TABLE>
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 fund seeks long-term total return, consistent with
prudent management, by investing in quality fixed-income securities issued by
major governments and corporations all over the world, including the United
States. 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 prices for securities
of comparable maturity, quality and type. The value of each security
denominated in a currencey other than U.S. dollars will be translated into U.S.
dollars at the prevailing market rate provided by a pricing service in
accordance with procedures established by the fund's officers. Short-term
securities with more than 60 days remaining to maturity, including forward
currency contracts, are valued at the mean of their representative quoted bid
and asked prices. Where pricing service or market quotations are not readily
available, securities will be valued at fair value by the Board of Directors or
a committee thereof. Short-term securities with 60 days or less remaining to
maturity are valued at amortized cost, which approximates market value.
As is customary in the mutual fund industry, securities transactions are
accounted for on the date the securities are purchased or sold. In the event
the fund purchases securities on a delayed-delivery or "when-issued" basis, it
will segregate with its custodian liquid assets in an amount sufficient to meet
its payment obligations in these transactions. Realized gains and losses from
securities transactions are reported on an identified cost basis. Interest
income is reported on the accrual basis. Discounts and premiums on securities
purchased are amortized over the life of the respective securities.
Distributions to shareholders are recorded on the ex-dividend date.
Investment securities, 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. Purchases and sales of
investment securities and income are calculated using the prevailing exchange
rate. The effect of changes in foreign currency exchange rates on investment
securities are included with the net realized and unrealized gain or loss on
investment securities.
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 $217,000 includes $13,000 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 investment income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision
is required.
As of September 30, 1996, net unrealized appreciation on investments,
excluding forward currency contracts, for book and federal income tax purposes
aggregated $13,675,000, of which $19,001,000 related to appreciated securities
and $5,326,000 related to depreciated securities. During the year ended
September 30, 1996, the fund realized, on a tax basis, a net capital gain of
$11,828,000 on security transactions. Net gains related to non-U.S. currency
transactions of $9,049,000 are reported as ordinary income for federal income
tax purposes. Dividends paid to shareholders included $4,585,000 of non-U.S.
currency gains treated as income dividends for tax purposes. The fund has
available at September 30, 1996 a net capital loss carryforward totaling
$5,687,000 which may be used to offset capital gains realized during subsequent
years through 2004 and thereby relieve the fund and its shareholders of any
federal income tax liability with respect to the capital gains that are so
offset. It is the intention of the fund not to make distributions from capital
gains while there is a capital loss carryforward. The cost of portfolio
securities, excluding forward currency contracts, for book and federal income
tax purposes was $780,511,000 at September 30, 1996.
3. The fee of $4,847,000 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, 1996,
distribution expenses under the Plan were $1,746,000. As of September 30,
1996, accrued and unpaid distribution expenses were $111,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $608,000. American Funds Distributors, Inc. (AFD), the principal
underwriter of the fund's shares, received $707,000 (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,
1996, aggregate amounts deferred and earnings thereon were $25,000.
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, 1996, accumulated undistributed net realized loss on
investments was $5,687,000 and paid-in capital was $774,729,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $729,188,000 and $598,413,000, respectively, during
the year ended September 30, 1996.
The fund purchases and sells forward currency contracts in anticipation
of, or to protect itself against, fluctuations in exchange rates. The contracts
are recorded in the statement of assets and liabilities at their net unrealized
value; the fund's maximum potential liability in these contracts is equal to
the full contract amounts. 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, 1996, the fund had outstanding
forward currency contracts to purchase and sell non-U.S. currencies as follows:
<TABLE>
U.S. Valuation
Non-U.S. Contract Amount
Currency ------------------- ------------- Unrealized
Contracts Non-U.S. U.S. Amount (Depreciation)
Appreciation
- -------------------------- --------------------- ----------------- ----------------- -------------------
<S> <C> <C> <C> <C>
Sales:
British Pounds
expiring 11/5/96 1,930,000Pound $3,000,000 $3,018,000 $(18,000)
Danish Kroner
expiring 11/5/96 to
1/10/97 DKr62,243,000 10,928,000 10,662,000 266,000
German Marks
expiring 10/15/96 to
3/19/97 DM95,482,000 63,892,000 62,663,000 1,229,000
Netherlands
Guilders
expiring 11/5/96 NLG6,855,000 4,146,000 4,016,000 130,000
New Zealand Dollars
expiring 11/13/96 NZ$2,522,000 1,700,000 1,754,000 (54,000)
Portugese Escudos
expiring 12/19/96 PTE317,595,000 2,051,000 2,040,000 11,000
Swiss Francs
expiring 11/7/96 CHF4,130,000 3,437,000 3,305,000 132,000
-------------------
1,696,000
-------------------
Purchases:
Australian Dollars
expiring 11/13 to
2/24/97 A$19,978,000 $15,689,000 $ 15,764,000 75,000
Canadian Dollars
expiring 11/7/96 to
3/10/97 C$19,038,000 13,994,000 14,054,000 60,000
Italian Lire
expiring 11/08/96 to
12/19/96 Lr2,129,101,000 2,389,000 2,384,000 (5,000)
Japanese Yen
expiring 10/22/96 to
4/2/97 5,819,008,000Yen 60,437,000 58,291,000 (2,146,000)
-------------------
(2,016,000)
-------------------
Forward currency contracts - net $ (320,000)
============
</TABLE>
<TABLE>
Per-Share Data and Ratios
Year Ended Septem ber 30
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $16.81 $15.33 $16.48 $15.95 $15.60
------ ----- ----- ---- -----
Income From Investment Operations:
Net investment income 1.09 1.09 1.05 .91 1.03
Net realized and unrealized gain(loss)
on investments .16 1.57 (1.14) .65 .40
------ ---- ----- ---- ----
Total income from investment operations 1.25 2.66 (.09) 1.56 1.43
------ ----- ----- ---- ---
Less Distributions:
Dividends from net investment income (1.20)/1/ (1.18) (.94)/1/ (.84)/1/ (1.01)/1/
Distributions from net realized gains - - (.12) (.19) (.07)
------- ----- ----- ---- ----
Total distributions (1.20) (1.18) (1.06) (1.03) (1.08)
------ ----- ----- ---- -----
Net Asset Value, End of Year $16.86 $16.81 $14.27 $15.45 $15.95
====== ====== ===== ===== =====
Total Return/2/ 7.67% 18.10% (.62)% 10.40% 9.46%
Ratios/Supplemental Data:
Net assets, end of year (in millions) $811 $653 $576 $450 $224
Ratio of expenses to average net assets 1.09% 1.12% 1.11% 1.19% 1.38%
Ratio of net income to average net assets 6.07% 6.83% 6.88% 6.25% 6.88%
Portfolio turnover rate 91.27% 104.96% 77.04% 27.95% 95.11%
/1/Amount includes realized non-U.S.currency gains of 12 cents, 4 cents, 3 cents
and 7 cents for the years ended 1996, 1994, 1993 and 1992, respectively, treated
as net investment income for federal income tax purposes.
/2/Calculated without deducting a sales charge. The maximum sales charge is 4.75%
of the fund's offering price.
</TABLE>
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. (the "Fund"), including the schedule of portfolio
investments, as of September 30, 1996, 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 as of September 30, 1996, 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, 1996, 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 29, 1996
1996 TAX INFORMATION (unaudited)
We are required to advise you within 60 days of the fund's fiscal year-end
regarding the federal tax statuse 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 1997 TO DETERMINE THE CALENDAR YEAR
AMOUNTS TO BE INCLUDED ON THEIR 1996 TAX RETURNS. SHAREHOLDERS SHOULD CONSULT
THEIR TAX ADVISERS.
CAPITAL WORLD BOND FUND
H. FREDERICK CHRISTIE
Rolling Hills Estates, California
Private investor; former President and Chief Executive Officer, The Mission
Group; former President, Southern California Edison Company
DIANE C. CREEL
Long Beach, California
Chief Executive Officer and President,
The Earth Technology Corporation
(environmental engineering)
MARTIN FENTON, JR.
San Diego, California
Chairman of the Board,
Senior Resource Group, Inc.
(senior living centers management)
LEONARD R. FULLER
Marina del Rey, California
President, Fuller & Company, Inc.
(financial management consulting)
ABNER D. GOLDSTINE
Los Angeles, California
President of the fund
Senior Vice President and Director,
Capital Research and Management Company
PAUL G. HAAGA, JR.
Los Angeles, California
Chairman of the Board of the fund
Senior Vice President and Director,
Capital Research and Management Company
HERBERT HOOVER III
San Marino, California
Private investor
RICHARD G. NEWMAN
Los Angeles, California
Chairman of the Board, President
and Chief Executive Officer,
AECOM Technology Corporation
(architectural engineering)
PETER C. VALLI
Long Beach, California
Chairman of the Board,
BW/IP International, Inc.
(industrial manufacturing)
OTHER OFFICERS
MICHAEL J. DOWNER
Los Angeles, California
Vice President of the fund
Senior Vice President-Fund Business Management Group,
Capital Research and Management Company
MARY C. HALL
Brea, California
Vice President and Treasurer of the fund
Senior Vice President-Fund Business Management Group,
Capital Research and Management Company
JULIE F. WILLIAMS
Los Angeles, California
Secretary of the fund
Vice President-Fund Business
Management Group,
Capital Research and Management Company
KIMBERLY S. VERDICK
Los Angeles, California
Assistant Secretary of the fund
Assistant Vice President-Fund
Business Management Group,
Capital Research and Management Company
ANTHONY W. HYNES, JR.
Brea, California
Assistant Treasurer of the fund
Vice President-Fund Business
Management Group,
Capital Research and Management Company
OFFICES OF THE FUND AND
OF THE INVESTMENT ADVISER,
CAPITAL RESEARCH AND MANAGEMENT COMPANY
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92821-5804
TRANSFER AGENT FOR
SHAREHOLDER ACCOUNTS
American Funds Service Company
(Please write to the office nearest you.)
P.O. Box 2205
Brea, California 92822-2205
P.O. Box 659522
San Antonio, Texas 78265-9522
P.O. Box 6007
Indianapolis, Indiana 46206-6007
P.O. Box 2280
Norfolk, Virginia 23501-2280
CUSTODIAN OF ASSETS
The Chase Manhattan Bank
One Chase Manhattan Plaza
New York, New York 10081-0001
COUNSEL
Morrison & Foerster LLP
345 California Street
San Francisco, California 94104-2675
INDEPENDENT AUDITORS
Deloitte & Touche LLP
1000 Wilshire Boulevard
Los Angeles, California 90017-2472
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
FOR MORE INFORMATION ABOUT YOUR ACCOUNT OR ANY OF THE FUND'S SERVICES, PLEASE
CONTACT YOUR FINANCIAL ADVISER OR CALL AMERICAN FUNDS SERVICE COMPANY,
TOLL-FREE, AT 800/421-0180.
This report is for the information of shareholders of Capital World Bond Fund,
but it may also be used as sales literature when preceded or accompanied by the
current prospectus, which gives details about charges, expenses, investment
objectives and operating policies of the fund. If used as sales material after
December 31, 1996, this report must be accompanied by an American Funds Group
Statistical Update for the most recently completed calendar quarter.
Printed on recycled paper
Litho in USA W/ALI/3121
Lit. No. WBF-011-1196
[The American Funds Group(R)]
