(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
CHECK THE APPROPRIATE BOX:
/ / Preliminary Proxy Statement
/X / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
/ / Confidential, for use of the Commission only (Rule 14a-6(e)(2))
Capital World Bond Fund, Inc.
(Name of Registrant as Specified In Its Charter)
Julie F. Williams
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filling fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number of
the Form or Schedule and the date of its filing.
1) Amount Previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
CAPITAL WORLD BOND FUND, INC.
333 South Hope Street, Los Angeles, California 90071
Fellow Shareholders:
We are writing to inform you of the upcoming meeting of the shareholders of
Capital World Bond Fund, Inc. (the "Fund") to be held at the offices of The
Capital Group Companies, Inc., 11100 Santa Monica Boulevard, 15th Floor, Los
Angeles, California, on Thursday, November 18, 1999 at 3:00 p.m., local time
(the "Meeting"). At this meeting, you are being asked to vote on important
proposals affecting the Fund. THE BOARD OF DIRECTORS OF THE FUND BELIEVES THAT
THESE PROPOSALS ARE IN THE BEST INTERESTS OF THE FUND AND ITS SHAREHOLDERS, AND
UNANIMOUSLY RECOMMENDS THAT YOU APPROVE ALL PROPOSALS PRESENTED FOR YOUR
CONSIDERATION.
At the Meeting, you will be asked to vote on:
1. The election of a Board of 10 Directors (Proposal 1).
2. A proposal to amend the Fund's Articles of Incorporation reducing the par
value per share of the Fund's capital stock from $0.01 to $0.001 in order to
reduce certain costs (Proposal 2).
3. A proposal to permit the Fund to invest a portion of its assets in below
investment grade debt securities (Proposal 3).
4. A proposal to eliminate or revise certain of the Fund's investment
restrictions (Proposal 4).
5. The ratification of the selection, by the Board of Directors of Deloitte &
Touche LLP as independent accountants for the Fund for the fiscal year 2000
(Proposal 5).
6. Any other business that may come before the Meeting (we are not
currently aware of any other items to be considered).
Some key points about Proposals 2, 3 and 4 are described below. The proposals
are described in more detail in the full text of the Proxy statement which you
should read before you vote.
ABOUT PROPOSAL 2:
In Proposal 2, we are asking you to approve an amendment to the Fund's
Articles of Incorporation reducing the par value per share of the Fund's
capital stock. When the Fund increases its authorized capital stock, it must
pay a fee to Maryland, its state of incorporation, based on the aggregate par
value of the new shares. Therefore, a reduced par value per share will reduce
the amount the Fund pays in fees for the registration of its shares. THE LOWER
PAR VALUE WILL HAVE NO EFFECT ON THE VALUE OF YOUR SHARES.
* * *
ABOUT PROPOSAL 3:
Since the Fund's inception in 1987, global bond markets have expanded rapidly.
Many securities currently available represent attractive investment
opportunities, consistent with the Fund's investment objective. Some of these
securities are rated below investment grade. Capital Research and Management
Company, the Fund's investment adviser, has recommended that the Fund revise
its investment policies to permit the Fund to invest a portion (up to 25%) of
its net assets in below investment grade debt securities. ALTHOUGH INVESTMENTS
IN BELOW INVESTMENT GRADE SECURITIES MAY PRESENT CERTAIN RISKS, THE PROPOSED
CHANGE OFFERS SIGNIFICANT BENEFITS TO THE FUND AND ITS SHAREHOLDERS, INCLUDING
THE POTENTIAL FOR GREATER DIVERSIFICATION AND INCREASED RETURNS OVER TIME.
THE BOARD HAS APPROVED THIS PROPOSAL, SUBJECT TO SHAREHOLDER APPROVAL.
ABOUT PROPOSAL 4:
Because the Fund was formed a number of years ago, it is subject to a number
of investment restrictions that do not reflect current conditions, practices or
legal requirements. In one case a restriction, although described as
"fundamental" because it requires shareholder approval to modify, was
originally adopted in response to state regulation that no longer applies to
the Fund. In other cases, we believe the language of the restrictions should
be modified to reflect current standards. We are also requesting that certain
restrictions be re-classified as non-fundamental, requiring only Board approval
to change. You may vote for any or all of the changes that are the subject of
Proposal 4 by so indicating on your Proxy card. THIS PROPOSAL WILL NOT AFFECT
THE FUND'S INVESTMENT OBJECTIVES, WHICH REMAIN UNCHANGED. MOREOVER, THE BOARD
DOES NOT ANTICIPATE THAT THE CHANGES, INDIVIDUALLY OR IN THE AGGREGATE, WILL
INCREASE TO A MATERIAL DEGREE THE LEVEL OF INVESTMENT RISK ASSOCIATED WITH AN
INVESTMENT IN THE FUND.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE TO APPROVE THESE
PROPOSALS.
We are sure that you, like most people, lead a busy life and are tempted to
put this Proxy aside for another day. Please don't delay. When
shareholders do not
return their proxies, additional expenses are incurred to pay for follow-up
mailings and telephone calls.
PLEASE TAKE A FEW MINUTES TO REVIEW THIS PROXY STATEMENT AND SIGN AND RETURN
THE ENCLOSED PROXY CARD TODAY. YOU MAY ALSO VOTE YOUR PROXY BY TELEPHONE
OR THE INTERNET BY FOLLOWING INSTRUCTIONS THAT APPEAR ON THE ENCLOSED PROXY
INSERT. Please be sure to sign and return each Proxy
card regardless of how many you receive.
If you have any questions regarding the issues to be voted on or need
assistance in completing your Proxy card, please contact us at (800) 421-0180.
Thank you for investing with us and for your continuing support.
Sincerely,
/s/ Paul G. Haaga, Jr. /s/ Abner D. Goldstine
Paul G. Haaga, Jr. Abner D. Goldstine
Chairman of the Board President
CAPITAL WORLD BOND FUND, INC.
NOTICE OF MEETING OF SHAREHOLDERS
NOVEMBER 18, 1999
TO THE SHAREHOLDERS OF
CAPITAL WORLD BOND FUND, INC.
A Meeting of Shareholders of Capital World Bond Fund, Inc. (the "Fund") will
be held at the offices of The Capital Group Companies, Inc., 11100 Santa Monica
Boulevard, 15th Floor, Los Angeles, California, on Thursday, November 18, 1999
at 3:00 P.M., local time, to consider and vote on the following matters
described under the corresponding numbers in the accompanying Proxy Statement:
(1) election of a board of 10 Directors;
(2) approval of amendment to the Fund's Articles of Incorporation reducing the
par value per share of the Fund's capital stock from $0.01 to $0.001;
(3) approval of non-fundamental investment policy permitting the Fund to invest
in below investment grade debt securities;
(4) approval of the elimination or revision of certain of the Fund's
fundamental investment policies;
(5) ratification of the selection of Deloitte & Touche LLP as the independent
accountant for the Fund for the fiscal year 2000; and
(6) such other matters as may properly come before the meeting.
You are entitled to vote if you held shares of the Fund at the close of
business on August 25, 1999.
THE PROPOSED BUSINESS CANNOT BE CONDUCTED AT THE ANNUAL MEETING UNLESS THE
HOLDERS OF A MAJORITY OF THE SHARES OF THE FUND OUTSTANDING ON THE RECORD DATE
ARE PRESENT IN PERSON OR BY PROXY. THEREFORE, PLEASE MARK, DATE, SIGN AND
RETURN THE ENCLOSED PROXY, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS. THE
PROXY IS REVOCABLE AND WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU
ATTEND THE MEETING.
By order of the Board of Directors,
/s/ Julie F. Williams
JULIE F. WILLIAMS
SECRETARY
September 23, 1999
IMPORTANT
YOU CAN HELP THE FUND AVOID THE NECESSITY AND EXPENSE OF SENDING
FOLLOW-UP LETTERS TO ENSURE A QUORUM BY PROMPTLY RETURNING THE ENCLOSED PROXY.
PLEASE MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN ORDER THAT THE
NECESSARY QUORUM MAY BE REPRESENTED AT THE MEETING. THE ENCLOSED ENVELOPE
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. YOU MAY ALSO VOTE BY
TELEPHONE OR THE INTERNET BY FOLLOWING INSTRUCTIONS THAT APPEAR ON THE
ENCLOSED PROXY INSERT.
CAPITAL WORLD BOND FUND, INC.
333 SOUTH HOPE STREET, LOS ANGELES, CALIFORNIA 90071
PROXY STATEMENT
MEETING OF SHAREHOLDERS
NOVEMBER 18, 1999
The enclosed Proxy is solicited by the Board of Directors of the Fund in
connection with the Meeting of Shareholders to be held on Thursday, November 18,
1999. Every Proxy returned in time to be voted at the meeting will be voted
and, if you specify how to vote on any proposal, the Proxy will be
voted accordingly. Unless you specify otherwise, the Proxy will be voted in
favor of the proposal. You can revoke a Proxy prior to
its exercise, either by filing with the Fund a written notice of revocation, by
delivering a duly executed Proxy bearing a later date, or by attending the
meeting and voting in person. This Proxy was first mailed to shareholders on
or about September 23, 1999.
At the close of business on August 25, 1999, the record date fixed by the
Board of Directors for the determination of shareholders entitled to notice of
and to vote at the meeting, there were outstanding 36,893,030
shares of capital stock, $0.01 par value per share, the only authorized
class of voting securities of the Fund (the "Shares"). Each Share is entitled
to one vote. There is no provision for cumulative voting. No person owned of
record or was known by the Fund to own beneficially 5% or more of the
outstanding Shares of the Fund.
With respect to the election of directors (Item 1), the ten nominees receiving
the highest number of votes will be elected. The vote required to
approve Item 2 is the affirmative vote of more than 50% of all outstanding
voting Shares on the record date. The vote required to approve Items 3 and 4
is the affirmative vote of the lesser of (a) 67% or more of all Shares
present and entitled to vote at the meeting, provided the holders of more than
50% of all outstanding Shares are present or represented by proxy, or (b) more
than 50% of all outstanding Shares on the record date. The vote required to
approve Item 5 is the affirmative vote of a majority of the Shares present or
represented by Proxy.
If sufficient votes are not received by the meeting date, a
person named as proxy may propose one or more adjournments of the meeting for a
period up to 120 days in the aggregate to permit further
solicitation of Proxies. The persons named as proxies may vote all Proxies in
favor of such adjournment. Signed but unmarked Proxies will be voted for the
directors nominated below and in favor of all proposals. Shareholders who
return Proxies marked as abstaining from voting on one or more proposals are
treated as being present at the meeting for purposes of obtaining the quorum
necessary to hold the meeting, but are not counted as part of the vote
necessary to approve the proposal(s). If brokers holding Shares for
their customers in Street Name have not received instructions and are not
authorized to vote without instruction, those shares also will be treated as
abstentions.
1. ELECTION OF DIRECTORS
Ten directors are to be elected at the meeting, each to hold office until
their resignation or removal and until a successor is elected and qualified.
Because meetings of shareholders will not be held each
year, the directors' terms will be indefinite in length. All of the nominees
for director except Richard G. Capen, Don R. Conlan and Frank M. Sanchez were
elected by shareholders at their last Annual Meeting on March 2, 1995. Mr.
Conlan was elected by directors effective December 16, 1996. Messrs. Capen
and Sanchez were elected by directors effective January 1, 1999. Herbert
Hoover III, a director since 1987, has reached the Fund's retirement age and is
not seeking for re-election.
Each of the nominees has agreed to serve as director if elected. If, due to
presently unforeseen circumstances, any nominee should not be available for
election, the persons named as proxies will vote the signed but unmarked
Proxies and those marked for the nominated directors for such other nominee as
the present directors may recommend. The table below sets forth certain
information regarding the nominees.
<TABLE>
<CAPTION>
NAME OF CURRENT PRINCIPAL YEAR MEMBERSHIPS ON BOARD SHARES OF THE
NOMINEE OCCUPATION AND FIRST OF OTHER REGISTERED FUND
(POSITION PRINCIPAL ELECTED INVESTMENT COMPANIES BENEFICIALLY
WITH FUND) EMPLOYMENT A AND PUBLICLY HELD OWNED, DIRECTLY
AND AGE DURING PAST FIVE TRUSTEE COMPANIES OR INDIRECTLY,
YEARS # AT AUGUST 25,
1999
THE
AMERICAN
FUNDS
FUND GROUP
<S> <C> <C> <C> <C>
Richard G. Corporate Director 1999 The American Funds 66 33,192
Capen, Jr. and author; former Group:
United States (Director/Trustee - 4
(Trustee) Ambassador to other funds)
63 Spain; former Vice
Chairman of the
Board, Knight
Ridder, Inc.;
former Chairman and
Publisher, The
Miami Herald
H. Frederick Private investor. 1987 The American Funds 448 382,158
Christie Former President Group:
and Chief Executive (Director/Trustee -
(Trustee) Officer, the 16 other funds)
66 Mission Group (non-utility holding The American Variable
company, subsidiary Insurance Series
of Southern
California Edison
Company)
Don R. Conlan President 1996 The American Funds 66 1,754,176+
* (retired), The Group:
(Trustee) Capital Group (Director/Trustee -
63 Companies, Inc. 11 other funds)
Diane C. CEO and President, 1994 The American Funds 89 2,759
Creel The Earth Group:
Technology (Director/Trustee -
(Trustee) Corporation 11 other funds)
50 (international Allegheny Teledyne Incorporated
consulting B.F. Goodrich
engineering)
Martin Fenton Chairman, Senior 1989 The American Funds 286 28,733
Resource Group, LLC Group:
(Trustee) (development and (Director/Trustee -
64 management of 13 other funds)
senior living The American Variable
communities) Insurance Series
Raintree Healthcare
Corporation
Leonard R. President, Fuller 1994 The American Funds 89 6,394
Fuller Consulting Group:
(financial (Director/Trustee - 11
(Trustee) management other funds)
52 consulting firm) The American Variable
Insurance Series
Abner D. Capital Research 1987 The American Funds 8,555+ 2,832,470+
Goldstine* and Management Group:
(President Company, Senior (Director/Trustee -
and Trustee) Vice President and 11 other funds)
69 Director
Paul G. Capital Research 1992 The American Funds 8,899+ 461,667+
Haaga, Jr. * and Management Group:
(Chairman of Company, Executive (Director/Trustee -
the Board) 50 Vice President and 13 other funds)
Director
Richard G. Chairman, President 1991 The American Funds 141 43,391
Newman and CEO AECOM Group:
Technology (Director/Trustee -
(Trustee) Corporation 12 other funds)
64 (architectural
engineering)
Frank M. Principal, The 1999 The American Funds 131 8,838
Sanchez Sanchez Family Group:
Corporation dba (Director/Trustee - 2
(Trustee) McDonald's other funds)
55 Restaurants
(McDonald's
licensee)
</TABLE>
_____________
# Corporate positions, in some instances, may have changed during this
period.
* Is considered an "interested person" of the Fund within the meaning of the
Investment Company Act of 1940 (the "1940 Act"),
on the basis of affiliation with Capital Research and Management Company (the
"Investment Adviser"). The Investment Adviser is a wholly owned subsidiary of
The Capital Group Companies, Inc.
+ Includes Shares beneficially held under a master retirement plan.
Capital Research and Management Company manages The American Funds Group
consisting of 29 funds: AMCAP Fund, 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., New World 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 Endowments, whose shareholders are
limited to (i) any entity exempt from taxation under Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended ("501(c)(3) organization"); (ii) any
trust, the present or future beneficiary of which is a 501(c)(3) organization;
and (iii) any other entity formed for the primary purpose of benefiting a
501(c)(3) organization. An affiliate of Capital Research and Management
Company, Capital International, Inc., manages Emerging Markets Growth Fund,
Inc.
The Fund has an Audit Committee composed of Richard G. Capen, Jr., H.
Frederick Christie and Leonard Fuller. The Committee's functions include such
specific matters as recommending
the independent accountant to the Board of Directors, reviewing the audit plan
and results of the audits and considering other matters deemed appropriate for
consideration by the Board of Directors and/or the Committee.
The Fund has a Nominating Committee composed of all directors who are not
considered to be "interested persons" of the Fund within the meaning of the
1940 Act. The Committee's functions include selecting and recommending to the
Board of Directors nominees for election as directors of the Company. While
the Committee normally is able to identify from its own resources an ample
number of qualified candidates, it will consider shareholder suggestions of
persons to be considered as nominees to fill future vacancies on the Board.
Such suggestions must be sent in writing to the Nominating Committee of the
Fund, c/o the Fund's Secretary, and must be accompanied by complete
biographical and occupational data on the prospective nominee, along with a
written consent of the prospective nominee to consideration of his or her name
by the Committee.
The Fund has a Contracts Committee composed of all directors who are not
considered to be "interested persons" of the Fund within the meaning of the
1940 Act. The Contracts Committee's function is to request, review and
consider the information deemed necessary to evaluate the terms of the
investment advisory and principal underwriting agreements and the Plan of
Distribution under rule 12b-1 that the Fund proposes to enter into, renew or
continue and to make its recommendations to the full
Board of Directors on these matters.
Each director is paid a fee of $1,500 per annum plus $200 for each Board of
Directors meeting attended and $200 for each meeting attended as a member of a
committee of the Board of Directors.
There were four Board of Directors, two Audit Committee, one Nominating
Committee and one Contracts Committee meetings during the year ended September
30, 1998. All incumbent directors attended at least 75% of all Board meetings
and meetings of the committees of which they were members.
The Fund pays no salaries or other compensation to its directors other than
directors' fees, which are paid to those directors who are unaffiliated with
the Investment Adviser as described below.
DIRECTOR COMPENSATION
<TABLE>
<CAPTION>
Director Aggregate Compensation Total Compensation (including Total Number of
(including Voluntarily Voluntarily Deferred Compensation) Fund Boards on
Deferred Compensation/1/) from all Funds Managed by which Director
from the Fund during Capital Research and Management
Fiscal Year ended 9/30/98 Company during the Fiscal Year
ended 9/30/98
<S> <C> <C> <C>
Richard G. Capen, Jr. none/3/ $33,250 5
H. Frederick Christie $4,500/4/ 180,700 19
Don R. Conlan none/5/ none/5/ 12
Diane C. Creel 3,700/4/ 44,250 12
Martin Fenton 4,100/4/ 122,584 15
Leonard R. Fuller 4,500/4/ 49,850 13
Abner D. Goldstine none/5/ none/5/ 12
Paul G. Haaga, Jr. none/5/ none/5/ 14
Richard G. Newman 4,100/4/ 100,650 13
Frank M. Sanchez none/3/ none/3/ 3
</TABLE>
1 Amounts may be deferred by eligible directors under a non-qualified deferred
compensation plan adopted by the Fund in 1993. 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 Includes funds managed by Capital Research and Management Company and
affiliates.
3 Richard G. Capen, Jr. and Frank M. Sanchez became directors of the Fund in
1999 and as such had not received any remuneration from the Fund as of its
9/30/98 fiscal year end.
4 Since the deferred compensation plan's adoption in 1993, the total amount of
deferred compensation accrued by the Fund (plus earnings thereon) for
participating directors is as follows: H. Frederick Christie ($7,050), Diane
C. Creel ($649), Martin Fenton ($7,351), and Richard G. Newman ($16,014).
5 Don R. Conlan, Abner D. Goldstine and Paul G. Haaga, Jr. are affiliated with
the Fund's Investment Adviser and, accordingly, receive no remuneration from
the Fund.
Other Executive Officers
<TABLE>
<CAPTION>
Name (Position with Fund) Principal Occupation/1/ Officer
and Age Continuously
Since /2/
<S> <C> <C> <C>
Mark H. Dalzell 44 Vice President - Investment 1998
(Vice President) Management Group,
Capital Research and Management
Company
Michael J. Downer 44 Senior Vice President - Fund Business 1994
(Vice President) Management Group, Capital Research and
Management Company
Julie F. Williams 51 Vice President - Fund Business 1986
(Secretary) Management Group,
Capital Research and Management
Company
Anthony W. Hynes, Jr. 36 Vice President - Fund Business 1993
(Treasurer) Management Group,
Capital Research and Management
Company
</TABLE>
/1/ The occupations shown reflect the principal employment of each individual
during the past five years. Corporate positions, in some instances, may have
changed during this period.
/2/ Officers hold office until their respective successors are
elected, or until they resign or are removed.
NO OFFICER, DIRECTOR OR EMPLOYEE OF THE INVESTMENT ADVISER RECEIVES ANY
REMUNERATION FROM THE FUND. ALL DIRECTORS AND OFFICERS AS A GROUP OWNED
BENEFICIALLY FEWER THAN 1% OF THE SHARES OUTSTANDING ON AUGUST 25, 1999.
2. APPROVAL OF AMENDMENT TO THE FUND'S ARTICLES OF INCORPORATION (REDUCTION IN
PAR VALUE)
On August 10, 1999, the Fund's Board of Directors unanimously voted to approve
an amendment to the Fund's Articles of Incorporation to reduce the par value of
shares of capital stock of the Fund from $.01 to $0.001 per share, and to
submit the amendment to the Fund's shareholders with the Board's
recommendation that it be approved.
Under Maryland law, the par value of shares determines the amount of a
corporation's stated capital. Stated capital has little meaning in the case of
an investment company like the Fund. However, when the Fund's increases its
authorized capital stock, it must pay a registration fee to the State of
Maryland based on the aggregate par value of the new shares. This change will
have no effect on the value of your shares. The Board of Directors therefore
recommends that the par value of the Fund's shares of capital stock be reduced
in order to save the Fund some expense in connection with the proposed increase
in authorized capital stock.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF THIS
PROPOSAL.
3. APPROVAL OF NON-FUNDAMENTAL INVESTMENT POLICY PERMITTING THE FUND TO INVEST
IN BELOW INVESTMENT GRADE SECURITIES
INTRODUCTION
The Fund is subject to investment restrictions which establish percentage and
other limits that govern its investment activities. Under the
Investment Company Act of 1940 (the "1940 Act"), investment restrictions
relating to certain activities are required to be "fundamental," which means
that any changes require shareholder approval. Investment companies, including
the Fund, are permitted to designate additional restrictions as fundamental.
They may also adopt "non-fundamental" investment restrictions, which may be
changed by the Fund's Board of Directors without shareholder approval.
CURRENT POLICIES
The Fund's stated investment objective, which is a fundamental policy, is "to
provide you, over the long term, with a high level of total return consistent
with prudent investment management." Since the Fund's inception in 1987, as a
matter of non-fundamental policy, the Fund has limited its investments to
investment grade debt securities. These are securities rated Baa/BBB or better
by Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's Corporation
("S&P") or unrated but determined to be of comparable quality by the Fund's
investment adviser. A description of Moody's and S&P ratings appears in
Appendix A hereto.
PROPOSED CHANGE
Global bond markets have expanded rapidly since the Fund began operations more
than a decade ago. A large increase in securities issuance by sovereign and
corporate
entities has occurred in both developed and developing countries throughout the
world. Many securities currently available represent attractive investment
opportunities that would also be consistent with the Fund's investment
objective. Some of these securities are rated below investment grade.
Although investments in below investment grade securities may present certain
risks (as described below), they also provide opportunities for better
diversification and increased returns over time.
In light of these developments, Capital Research and Management Company, the
Fund's investment adviser, has recommended that the Board of Directors modify
the Fund's current policy to permit the Fund to invest a portion (up to 25%) of
its net assets in below investment grade debt securities. The text of the
proposed policy is set forth below.
PROPOSED TEXT (NON-FUNDAMENTAL)
The Fund may invest up to 25% of its net assets in below investment grade debt
securities (those rated Ba or below by Moody's and BB or below by S&P or
unrated but determined to be of comparable quality).
The Fund's current policy regarding credit quality is a non-fundamental policy
which does not require shareholder approval to modify. However, the Board of
Directors has determined that it would be desirable to obtain shareholder
approval of the proposal before it becomes effective.
DISCUSSION
Below investment grade debt securities (also known as "high-yield" or "junk"
bonds) have higher yields than investment grade bonds. However, they
often have speculative characteristics that make them riskier than
investment grade securities. For example, they may be subject to greater
market fluctuations and a greater risk of default because of the issuer's low
creditworthiness. Their prices may decline significantly during periods of
general economic difficulty, and they may be less marketable. Capital Research
and Management Company would attempt to reduce these risks through
diversification of the portfolio, by credit analysis of each issuer as by
monitoring broad economic trends and corporate developments.
Currently, investments in securities of developing countries are limited to
investment grade debt obligations. Allowing for investments in below
investment grade developing market debt could heighten the risks normally
associated with investing outside the U.S., including currency fluctuations or
currency controls, political, social and economic instability, expropriation or
confiscatory taxation, differing securities regulations, and administrative
difficulties such as delays in clearing and settling portfolio transactions.
However, the investment adviser believes the proposed change offers significant
benefits to the Fund and its shareholders, including the potential for greater
diversification and increased returns over time.
The investment adviser has discussed this proposal with the Board of Directors
and explained the potential advantages and risks. The Board of Directors has
approved the proposal, subject to shareholder approval. If the new policy is
approved by shareholders, the Fund's prospectus and statement of additional
information will be revised to reflect this change. The
policy, once effective, could be revised further by the Board of Directors
without shareholder approval. If this change is not approved, the Fund's
current policy of investing only in investment grade securities will remain in
effect.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THIS
PROPOSAL.
4. APPROVAL OF THE ELIMINATION OR REVISION OF CERTAIN OF THE FUND'S FUNDAMENTAL
INVESTMENT POLICIES
INTRODUCTION AND SUMMARY
Some of the Fund's existing fundamental investment restrictions reflect
regulatory, business or industry conditions, practices or requirements that
have changed or no longer exist. With the passage of time, the development of
new practices, and changes in regulatory standards, management believes certain
fundamental restrictions ought to be revised, eliminated or reclassified as
non-fundamental.
The Board of Directors, together with the Fund's senior officers, have
analyzed the current fundamental investment restrictions, and have concluded
that five restrictions should be amended. One restriction would be revised but
remain fundamental, three
restrictions would be eliminated and one restriction would be revised and
reclassified as non-fundamental.
The proposed investment restrictions have been drafted to maintain important
investor protections while providing flexibility to respond to future legal,
regulatory and market changes. By reducing the number of policies that can be
changed only by shareholder vote, the Board of Directors and the Fund will have
greater flexibility to modify Fund policies, as appropriate, in response to
changing markets and in light of new investment opportunities and instruments.
The Fund will then be able to avoid the costs and delays associated with a
shareholder meeting when making changes to the non-fundamental investment
policies that the Board may consider desirable.
IMPORTANTLY, THE PROPOSED AMENDMENTS DO NOT AFFECT THE INVESTMENT OBJECTIVE OF
YOUR FUND, WHICH REMAINS UNCHANGED. MOREOVER, THE BOARD DOES NOT ANTICIPATE
THAT THE CHANGES SET FORTH WITHIN THIS PROPOSAL, INDIVIDUALLY OR IN THE
AGGREGATE, WILL CHANGE TO A MATERIAL DEGREE THE LEVEL OF INVESTMENT RISK
ASSOCIATED WITH AN INVESTMENT IN THE FUND.
The text of each proposed change to the Fund's fundamental restrictions is set
forth below. Shareholders may vote for any or all of the changes that are the
subject of Proposal 4. If the proposed changes are approved by the Fund's
shareholders, the Fund's prospectus and statement of additional information
will be revised, as appropriate, to reflect those changes.
RESTRICTION PROPOSED TO BE REVISED BUT REMAIN FUNDAMENTAL
4A. LENDING ACTIVITIES
Under the 1940 Act, the Fund is required to have a fundamental restriction
addressing its lending activities. These activities are also subject to
certain restrictions. Under the 1940 Act, loans of securities and other assets
are generally permitted up to 33-1/3% of a fund's total assets. The Fund's
current fundamental policy states that the Fund may not make loans, except that
it may invest in debt securities, enter into repurchase agreements, and lend
portfolio securities.
Under revised fundamental and non-fundamental policies, the Fund would be
permitted to lend securities or other assets up to 15% of total assets. The
Fund would also have the flexibility to invest, consistent with its investment
objective, in loans, loan participations, and other forms of direct debt
instruments. Direct debt instruments are interests in amounts owed to lenders
or lending syndicates or other parties. As the beneficial owner of a direct
debt instrument, the Fund would be entitled to receive payments of principal,
interest and any fees to which it is entitled. If the Fund acquires an
indirect interest in a loan (E.G., a loan participation), the Fund would be
entitled to receive these payments only from the lender selling the
participation. The Fund generally would have no right to enforce compliance by
the borrower with the terms of the loan agreement relating to the loan. It
would be subject to the credit risk of both the borrower and the lender selling
the participation.
CURRENT TEXT (FUNDAMENTAL)
[The Fund may not...] make loans, except that the fund may purchase debt
securities and enter into repurchase agreements and make loans of portfolio
securities.
PROPOSED TEXT (FUNDAMENTAL)
[The Fund may not...] lend any security or make any other loan if, as a result,
more than 15% of its total assets would be lent to third parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
PROPOSED TEXT (NON-FUNDAMENTAL)
The Fund does not currently intend to lend portfolio securities or other assets
to third parties, except by acquiring loans, loan participations, or other
forms of direct debt instruments. (This limitation does not apply to purchases
of debt securities or to repurchase agreements.)
RESTRICTIONS PROPOSED TO BE ELIMINATED
None of the following investment restrictions are required under the 1940 Act.
Many were originally adopted in response to state law restrictions or
interpretations that no longer apply to the Fund. Therefore, in order to
increase the ability of Fund management to manage the Fund's assets effectively
and efficiently in response to market and regulatory change, it is proposed
that these investment restrictions, which are currently listed as fundamental,
be eliminated. Further explanations pertaining to specific restrictions are
set forth below.
4B. PLEDGING ASSETS
In certain circumstances this restriction could interfere with the Fund's
ability to borrow temporarily for extraordinary or emergency purposes. The
Fund's current borrowing limits would remain unchanged.
CURRENT TEXT
[The Fund may not...] 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.
4C. AFFILIATED OWNERSHIP
The purposes intended to be served by this restriction are covered by the
Fund's Code of Ethics and by separate provisions of the 1940 Act.
CURRENT TEXT
[The Fund may not...] purchase or retain the securities of any issuer, if those
individual officers and Directors of the fund, its investment adviser or
principal underwriter, 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.
4D. UNSEASONED ISSUERS
This restriction was adopted in response to state regulation which no longer
applies. Because newly formed companies have no proven track record in
business, their prospects may be uncertain. Their securities may fluctuate in
price more widely than securities of established companies. Elimination of
this restriction will provide the Fund with greater investment flexibility,
subject to its investment objectives and policies. Retaining such a
restriction could, among other things, preclude
the Fund from making otherwise attractive investments in newly-formed companies
issuing asset-backed securities.
CURRENT TEXT
[The Fund may not...] 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.
RESTRICTIONS PROPOSED TO BE REVISED AND RECLASSIFIED AS NON-FUNDAMENTAL
4E. RESTRICTED/ILLIQUID SECURITIES
The Fund has a fundamental policy prohibiting the acquisition of "restricted
securities" (I.E., securities with legal or contractual limitations on
transfer) and other securities for which there is no readily available market.
This policy is not required to be fundamental under the 1940 Act.
Historically, there has been a concern that restricted securities, which
typically cannot be resold to the public, may be difficult for a mutual fund to
sell at approximately the value at which the fund is carrying the investment.
Restricted securities may or may not be illiquid, however. Some restricted
securities are actively traded among institutional investors and thus highly
liquid in the marketplace. Investors would be protected by the
proposed, non-fundamental investment restriction covering illiquid securities.
The proposed increase in the limit on these investments, from 10% to 15% of
total assets, is consistent with current regulatory standards
applicable to all non-money market mutual funds.
CURRENT TEXT (FUNDAMENTAL)
[The Fund may not...] 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 maturings in more than seven day, if, immediately after
and as a result, the value of such securities would exceed in the aggregate 10%
of the fund's total assets.
PROPOSED TEXT (NON-FUNDAMENTAL)
The Fund will not invest more than 15% of the value of its net assets in
illiquid securities.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF THESE
PROPOSED CHANGES TO FUNDAMENTAL INVESTMENT RESTRICTIONS.
5. RATIFICATION OF THE SELECTION BY THE BOARD OF DIRECTORS OF DELOITTE & TOUCHE
LLP AS INDEPENDENT PUBLIC ACCOUNTANT
Shareholders are requested to ratify the selection by the Board of Directors
(including a majority of the directors who are not "interested persons"of the
Fund as that term is defined in the 1940 Act) of
Deloitte & Touche LLP as independent accountant for the Fund for the fiscal
year 2000. In addition to the normal audit services, Deloitte & Touche LLP
provides services in connection with the preparation and review of federal and
state tax returns for the Fund. Deloitte & Touche LLP has served as the Fund's
independent accountant since the Fund's inception and has advised the Fund
that it has no
material direct or indirect financial interest in the Fund or its affiliates.
The Fund's Audit Committee recommended that Deloitte & Touche LLP be selected
as the Fund's independent accountant for the current fiscal year. The
employment of the accountant is conditioned upon the right of the Fund to
terminate such employment forthwith without any penalty. No representative of
Deloitte & Touche LLP is expected to attend the Meeting of
Shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF
ITS SELECTION OF DELOITTE & TOUCHE LLP.
OTHER MATTERS
Neither the persons named in the enclosed Proxy nor the Board of Directors are
aware of any matters that will be presented for action at the meeting other
than the matters set forth herein. If any other matters requiring a vote
of shareholders arise, the proxies in the accompanying form will confer upon
the person or persons entitled to vote the Shares they represent a
discretionary authority to vote the Shares in respect to any such other matters
in accordance with their best judgment in the interest of the Fund and its
shareholders.
SHAREHOLDER PROPOSALS
Any shareholder proposals for inclusion in proxy solicitation material for a
shareholders meeting should be submitted to the Secretary of the Fund, at the
Fund's principal executive offices, 333 South Hope Street, Los Angeles, CA
90071. Any such proposals must comply with the requirements of rule 14a-8 under
the Securities Exchange Act of 1934.
Under the laws of Maryland, where the Fund is incorporated, and the Fund's
Articles of Incorporation and By-Laws, the Fund is not required to hold regular
meetings of shareholders. Under the 1940 Act, a vote of shareholders is
required from time to time for particular matters but not necessarily on an
annual basis. As a result, the Fund does not expect to hold
shareholders meetings on a regular basis, and any shareholder proposal received
may not be considered until such a meeting is held.
GENERAL INFORMATION
Capital Research and Management Company is the investment adviser to the Fund
and is located at 333 South Hope Street, Los Angeles, CA 90071 and 135 South
State College Boulevard, Brea, CA 92821. American Funds Distributors, Inc. is
the principal underwriter of the Fund's shares and is located at the Los
Angeles and Brea addresses above and also at 3500 Wiseman Boulevard, San
Antonio, TX 78251, 8332 Woodfield Crossing Boulevard, Indianapolis, IN 46240,
and 5300 Robin Hood Road, Norfolk, VA 23513.
The enclosed Proxy is solicited by and on behalf of the Board of
Directors of the Fund. The Fund will pay the cost of soliciting proxies,
consisting of printing, handling and mailing of the Proxies and related
materials. In addition to solicitation by mail, certain officers and
directors of the Fund, who will receive no extra compensation for their
services, may solicit by telephone, telegram or personally. WE URGE ALL
SHAREHOLDERS TO MARK, DATE, SIGN, AND RETURN THE PROXY CARD IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. YOU MAY
ALSO VOTE YOUR PROXY BY TELEPHONE OR THE INTERNET BY FOLLOWING INSTRUCTIONS
THAT APPEAR ON THE ENCLOSED PROXY INSERT.
YOU MAY OBTAIN A COPY OF THE FUND'S MOST RECENT ANNUAL REPORT,
WITHOUT CHARGE,
BY WRITING TO THE SECRETARY OF THE FUND AT 333 SOUTH HOPE STREET, LOS ANGELES,
LOS ANGELES, CA 90071 OR BY TELEPHONING 800/421-0180. THESE REQUESTS WILL BE
HONORED WITHIN THREE BUSINESS DAYS OF RECEIPT.
By Order of the Board of Directors
/s/ Julie F. Williams
JULIE F. WILLIAMS
Secretary
September 23, 1999
THIS NOTICE OF MEETING AND PROXY
STATEMENT HAS BEEN PRINTED ON RECYCLED
PAPER THAT MEETS THE GUIDELINES OF THE
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY.
Appendix A
DESCRIPTION OF BOND RATINGS
MOODY'S INVESTORS SERVICE, INC. rates the long-term debt securities issued by
various entities from "Aaa" to "C," according to quality as described below:
"AAA -- Best quality. These securities 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."
"AA -- High quality by all standards. They are rated lower than the best bond
because margins of protection may not be as large as in Aaa securities,
fluctuation of protective elements may be of greater amplitude, or there may be
other elements present which make the long-term risks appear somewhat greater."
"A -- Upper medium grade obligations. These bonds possess many favorable
investment attributes. 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."
"BAA -- Medium grade obligations. 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."
"BA -- Have speculative elements; future cannot be considered as well assured.
The protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the future.
Bonds in this class are characterized by uncertainty of position."
"B -- Generally lack characteristics of the desirable investment; assurance of
interest and principal payments or of maintenance of other terms of the
contract over any long period of time may be small."
"CAA -- Of poor standing. Issues may be in default or there may be present
elements of danger with respect to principal or interest."
"CA -- Speculative in a high degree; often in default or have other marked
shortcomings."
"C -- Lowest rated class of bonds; can be regarded as having extremely poor
prospects of ever attaining any real investment standing."
STANDARD & POOR'S CORPORATION rates the long-term securities debt of various
entities in categories ranging from "AAA" to "D" according to quality as
described below:
"AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong."
"AA -- High grade. Very strong capacity to pay interest and repay principal.
Generally, these bonds differ from AAA issues only in a small degree."
"A -- Have a strong capacity to pay interest and repay principal, although they
are somewhat more susceptible to the adverse effects of change in circumstances
and economic conditions, than debt in higher rated categories."
"BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay interest and repay principal than for debt in
higher rated categories."
"BB, B, CCC, CC, C -- Regarded, on balance, as predominantly speculative with
respect to capacity to pay interest and repay principal in accordance with the
terms of the obligation. BB indicates the lowest degree of speculation and C
the highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions."
"C1 -- Reserved for income bonds on which no interest is being paid."
"D -- In default and payment of interest and/or repayment of principal is in
arrears."
PROXY CARD CAPITAL WORLD BOND FUND, INC. PROXY CARD
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE FUND
FOR THE MEETING OF SHAREHOLDERS TO BE HELD NOVEMBER 18, 1999
The undersigned hereby appoints Michael J. Downer, Paul G. Haaga, Jr., Anthony
W. Hynes, Jr., and Julie F. Williams, and each of them, his/her true and lawful
agents and proxies with full power of substitution to represent the undersigned
at the Meeting of Shareholders to be held at the Office of The Capital Group
Companies, Inc., 11100 Santa Monica Boulevard, 15th Floor, Los Angeles,
California, on Thursday, November 18, 1999 at 3:00 p.m., on all matters coming
before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER YOU DIRECTED. IF
NO DIRECTION IS GIVEN, WITH RESPECT TO ANY PARTICULAR ITEM, THIS PROXY WILL BE
VOTED FOR THE NOMINEES IN ITEM 1 AND FOR ITEMS 2, 3, 4 AND 5.
CONTROL NUMBER:
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR ON THIS CARD. JOINT OWNERS
SHOULD EACH SIGN INDIVIDUALLY. CORPORATE PROXIES SHOULD BE SIGNED IN FULL
CORPORATE NAME BY AN AUTHORIZED OFFICER. FIDUCIARIES SHOULD GIVE FULL TITLES.
Signature-------------------------
Signature of joint owner, if any---------------------
Date -------------------
CAPITAL WORLD BOND FUND, INC.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS. Example: []
<TABLE>
<CAPTION>
1. Election of Directors: FOR ALL WITHHOLD FOR ALL
ALL EXCEPT
<S> <C> <C> <C> <C> <C>
01 Richard G. Capen 06 Leonard R. Fuller [] [] []
02 H. Frederick Christie 07 Abner D. Goldstine
03 Don R. Conlan 08 Paul G. Haaga, Jr.
04 Diane C. Creel 09 Richard G. Newman
05 Martin Fenton 10 Frank M. Sanchez
</TABLE>
To withhold your vote for any individual nominee, mark the For All Except box
and write the nominee's number on the line provided below.
_____________________________________________________________________
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FOR AGAINST ABSTAIN
2. Approval of an amendment to the Articles of
Incorporation reducing the par value
per share: [] [] []
3. Approval of proposal to permit the Fund to invest up
to 25% of its net assets in below
investment grade debt securities: [] [] []
4. Approval of the proposed changes to the Fund's [] [] []
investment restrictions.
4A. Amend restriction regarding lending activities [] [] []
4B. Eliminate restriction on pledging assets [] [] []
4C. Eliminate restriction regarding affiliated ownership [] [] []
4D. Eliminate restriction regarding investments in
unseasoned issuers [] [] []
4E. Reclassify restriction regarding purchasing restricted/
illiquid securities as a non-fundamental restriction [] [] []
5. Ratification of selection of Deloitte & Touche LLP [] [] []
as independent accountant:
</TABLE>
In their discretion, upon other matters as may properly come before the
meeting.
IMPORTANT
SHAREHOLDERS CAN HELP THE FUND AVOID THE NECESSITY AND EXPENSE OF
SENDING FOLLOW-UP LETTERS BY PROMPTLY RETURNING THE ENCLOSED PROXY.
