[The American Funds Group(r)]
Capital World Bond Fund
Semi-Annual Report
For the six months ended March 31
2000
[cover illustration: collage of various currencies overlaying a world atlas]
<PAGE>
Capital World Bond Fund(r)
Capital World Bond Fund seeks to maximize long-term total return, consistent
with prudent management, by investing primarily in investment-grade bonds
denominated in U.S. dollars and other currencies. The fund may also invest in
lower quality, higher yielding debt securities.
Capital World Bond Fund is one of the 29 mutual funds in The American Funds
Group,(r) the nation's third-largest mutual fund family. For nearly seven
decades, Capital Research and Management Company, the American Funds adviser,
has invested with a long-term focus based on thorough research and attention to
risk.
Fund results in this report were calculated for Class A shares at net asset
value (without a sales charge) unless otherwise indicated. Here are the average
annual compound returns on a $1,000 investment with all distributions
reinvested for periods ended March 31, 2000:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
12 months 5 years 10 years
CLASS A SHARES -5.90% +3.96% +7.24%
reflecting 3.75% maximum sales charge
</TABLE>
The fund's 30-day yield for Class A shares as of April 30, 2000, calculated in
accordance with the Securities and Exchange Commission formula, was 5.24%. The
fund's distribution rate for Class A shares as of that date was 4.05%. 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. Accordingly, the fund's SEC yield and distribution rate may differ.
Results for Class B shares are not shown because of the brief time between
their introduction on March 15 and the end of the fund's fiscal period.
FIGURES SHOWN ARE PAST RESULTS AND ARE NOT PREDICTIVE OF FUTURE RESULTS. SHARE
PRICE AND RETURN WILL VARY, SO YOU MAY LOSE MONEY. INVESTING FOR SHORT PERIODS
MAKES LOSSES MORE LIKELY. INVESTMENTS ARE NOT FDIC-INSURED, NOR ARE THEY
DEPOSITS OF OR GUARANTEED BY A BANK OR ANY OTHER ENTITY. 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. High-yield bonds are subject to greater
fluctuations in value and risk of loss of income and principal. For more
complete information, please read the prospectus.
Please see the back cover for important information about Class A and Class B
shares.
<PAGE>
Fellow Shareholders:
Despite turbulence in global bond markets over the past six months, most global
bond prices ended the period about where they began. Certain currencies have
slipped against the U.S. dollar, however, reducing returns for global
investors.
[Begin Sidebar]
Investment Results at a Glance
<TABLE>
<CAPTION>
<S> <C>
6-month total return -1.8%
(10/1/99 - 3/31/00)
12-month total return -2.2
(4/1/99 - 3/31/00)
Lifetime total return +147.5
(8/4/87 - 3/31/00)
Lifetime average annual compound return +7.4
(8/4/87 - 3/31/00)
</TABLE>
[End Sidebar]
For the six months ended March 31, Capital World Bond Fund posted a decline of
1.8%, assuming reinvestment of distributions. The fund paid income dividends
totaling 45 cents a share during this period, reflecting three dividends
instead of the usual two quarterly payments. (As we mentioned in the 1999
annual report, the fund moved its September dividend to early October.) In
December, the fund also paid a capital gain distribution of 6.8 cents a share.
By comparison, the Salomon Smith Barney World Government Bond Index, which
tracks major world markets, posted a 1.2% decline over the six-month period.
The U.S. bond market fared better, with the Salomon Smith Barney Broad
Investment-Grade Bond Index gaining 2.0%. (Both indexes are unmanaged and
include compounded interest.)
Keeping A Long-Term Perspective
To understand the fund's six-month results, we must look at currency markets.
The U.S. dollar has made significant gains against the euro since its
introduction in January 1999. Since then, the euro's value has plummeted from
$1.18 to $0.96 on March 31. More recently, the dollar has also strengthened
against Australian and New Zealand dollars. The U.S. dollar's broad strength
has hurt the fund's returns, since its portfolio includes securities in a
variety of countries and currencies. Even so, we have opted not to hedge a
significant amount of non-U.S. currency exposure back into U.S. dollars, as we
have done at times in the past. When the U.S. dollar is a "hot" currency, as it
is now - attracting large amounts of global capital - we feel there is an
opportunity to benefit from exposure to bonds denominated in undervalued yet
attractive currencies. The U.S. dollar may well be nearing a peak, especially
if the stock market experiences a significant decline or if the U.S. economy
slows. Also posing a threat to the dollar is the gap between U.S. exports and
imports - a gap that continues to widen. When the dollar finally begins a
cooling trend, we believe that the fund will be well-positioned to benefit from
the returns from bonds denominated in other currencies.
Market Review
From October 1999 to January 2000, higher yields were seen in nearly all
developed markets. Short-term interest rate hikes in the United States and
Europe - designed to head off inflation - put downward pressure on bond prices,
which move inversely to yields. Subsequently, in an unusual development, prices
of 30-year U.S. Treasury bonds bounced back sharply, buoyed by the prospect of
a shortage of Treasuries caused by the shrinking of the federal debt. European
markets also saw prices recover after January. In the United Kingdom, bond
prices rose throughout the period, reflecting low inflation, subdued growth and
debt repayments. Japanese bonds ended the period mostly flat, although the
yen's continued strength helped boost returns for U.S. investors.
With the surge in U.S. Treasury prices, corporate bonds have begun to look
relatively attractive. On the next page, you'll notice that the fund has
introduced global high-yield bonds into its portfolio, including higher
yielding, higher risk corporate securities and developing-country debt. This
reflects the November 1999 shareholder vote that gave the fund flexibility to
invest up to 25% of its assets in below-investment-grade securities, which
offer higher yields. We have recently purchased high-yield bonds from
established companies such as Premier Parks, operator of Six Flags amusement
parks, and Container Corp. of America, part of the global paper company
Smurfitt Stone. In the developing-country category, we have added small
holdings of higher yielding, U.S. dollar-denominated government bonds from
countries such as Turkey, South Korea and Mexico. In each case, we have been
extremely selective, relying on the extensive research capabilities of the
fund's investment adviser, Capital Research and Management Company.
Outlook
With central banks taking steps to curb inflation before it becomes a major
threat, there could be a bumpy ride ahead for bond markets. Over the longer
term, however, we feel there is reason to be optimistic. U.S. and European bond
yields, having risen substantially in the past two years, now offer better
long-term opportunities. Furthermore, the fund is now more diversified than
ever, ready to take advantage of developments in a variety of industries,
countries and currency markets.
We look forward to reporting to you in November.
Cordially,
[signature] [signature]
Paul G. Haaga, Jr. Abner D. Goldstine
Chairman of the Board President
May 15, 2000
<PAGE>
Investment Portfolio
Portfolio Summary
Percent of net assets as of March 31, 2000
[pie chart]
<TABLE>
<S> <C>
Investment-Grade Bonds 84.5%
Non-U.S. Governments/Agencies 44.5
Corporate Bonds 24.6
Mortgage- and Asset-Backed Securities 7.1
U.S. Treasuries 6.7
U.S. Government Agency Notes 1.6
Non-Investment-Grade Bonds 10.9%
High-Yield Corporate Bonds 7.8
Developing-Country Bonds 3.1
Cash & Equivalents 4.6%
[end pie chart]
</TABLE>
A Look at the Fund's Portfolio -
What Helped and What Hurt Returns
as of March 31, 2000
<TABLE>
Salomon Smith Barney
World Government Bond Market
Capital World Bond Fund Total Returns
Net Assets Six months ended March 31, 2000
--------------------- ---------------------------------
Country Currency Weighting In Local Currency In U.S. Dollars
<S> <C> <C> <C>
United States 33.4%/1/ +3.0% +3.0%
European Monetary
Union 23.2/2/ +1.7 -8.6
Japan 14.9 +0.3 +4.2
New Zealand 5.9 +2.4 -1.5
Greece 4.7 - -
Denmark 4.3 +2.0 -8.5
United Kingdom 2.9 +4.7 +1.5
Australia 2.6 +2.1 -5.0
Poland 2.5 - -
Canada 2.3 +2.4 +3.6
Norway 1.4 +2.0 -6.3
Sweden 1.2 +3.7 -1.6
South Africa 0.7 - -
</TABLE>
Source: Salomon Smith Barney World Government Bond Index, based on bonds
with remaining maturities of at least one year.
/1/ Includes U.S. dollar-denominated developing-country bonds totaling 7.5%.
/2/ Includes bonds from Finland, France, Germany, Ireland, Italy, the
Netherlands and Spain; also includes bonds denominated in German marks
totaling 2.6%.
<TABLE>
<S> <C> <C> <C>
Capital World Bond Fund, Inc.
Investment Portfolio, March 31, 2000
Principal Market Percent
Amount Value of Net
Bonds and Notes (000) (000) Assets
-------------------------------- ------- ------- -------
EUROS
German Government:
8.875% 2000 E 1,500 US$ 1,483
8.25% 2001 2,600 2,624
7.25% 2002 6,850 6,964
8.00% 2002 6,641 6,818
6.75% 2003 1,023 1,035
6.50% 2005 8,000 8,197
6.875% 2005 4,974 5,156
6.00% 2006 1,300 1,304 12.14%
5.25% 2008 6,751 6,489
4.50% 2009 1,300 1,181
Treuhandanstalt:
7.125% 2003 4,908 4,990
7.50% 2004 4,695 4,948
Bundesrepublic:
5.00% 2002 6,500 6,275
6.00% 2007 600 601
Bayerische Vereinsbank:
5.00% 2008 2,000 1,839 2.22
5.50% 2008 9,226 8,784
Netherlands Government:
5.75% 2002 4,700 4,604
3.75% 2009 795 677 1.25
5.50% 2028 735 691
Italian Government BTPS:
6.00% 2007 3,744 3,731 1.17
5.00% 2008 2,000 1,873
Spanish Government:
6.00% 2008 3,486 3,467 1.04
6.15% 2013 1,503 1,516
French Government:
BTNS 4.75% 2002 600 577
4.50% 2003 2,500 2,382 1.00
OAT 5.25% 2008 1,906 1,832
Rheinische Hypothekenbank Eurobond 4.25% 2008 3,000 2,616 0.55
PTC International Finance II SA, 11.25% 2009 1,000 1,042 0.22
Kappa Beheer BV 10.625% 2009 1,000 1,001 0.21
Finland (Republic of) 5.75% 2011 1,000 985 0.20
Corporacion Andina de Fomento 4.75% 2004 1,000 917 0.19
General Motors Acceptance Corp. 4.00% 2006 1,000 884 0.18
COLT Telecom Group PLC 7.625% 2009 (1) 750 688 0.14
Ireland (Republic of) 2.75% 2002 400 366 0.08
------- -------
98,537 20.59
------- -------
GERMAN MARKS
Ford Motor Credit Co. 5.25% 2008 DM22,900 10,737 2.24
Telstra Corp. Ltd. 5.125% 2008 2,250 1,045 0.22
Viatel, Inc. 0%/12.40% 2008(2) 2,150 674 0.14
------- -------
12,456 2.60
------- -------
JAPANESE YEN
International Bank for Reconstruction and Development:
4.50% 2000 Y200,000 1,961
4.50% 2003 689,000 7,478 2.92
4.75% 2004 400,000 4,547
General Motors Acceptance Corp. 0.234% 2002(2) 1,376,000 13,174 2.75
KfW International Finance Inc. 1.00% 2004 1,300,000 12,587 2.63
European Investment Bank:
4.25% 2001 826,000 8,304 2.17
6.75% 2001 200,000 2,082
The Japan Development Bank 6.50% 2001 495,000 5,237 1.10
SHL 1991-1 Corp. Ltd.:(3)
Class A1, 0.571% 2024(2) 86,239 838
Class A2, 0.871% 2024(2) 130,000 1,263 0.93
Class A3, 2.09% 2024 250,000 2,370
Spain (Kingdom of) 3.11% 2006 380,000 4,059 0.85
Fannie Mae 2.125% 2007 350,000 3,518 0.74
Hellenic Republic 2.90% 2007 230,000 2,378 0.50
Inter-American Development Bank 6.75% 2001 150,000 1,540 0.32
------- -------
71,336 14.91
------- -------
NEW ZEALAND DOLLARS
New Zealand Government:
8.00% 2001 NZ$3,000 1,504
8.00% 2004 6,500 3,334
8.00% 2006 3,000 1,568 3.90
7.00% 2009 8,725 4,342
4.749% 2016 (2,4) 16,250 7,910
Fannie Mae 7.25% 2002 12,000 5,915 1.24
Canadian Government 6.625% 2007 7,500 3,513 0.73
------- -------
28,086 5.87
------- -------
GREEK DRACHMAS
Hellenic Republic:
8.90% 2004 GRD600,000 1,884
8.80% 2007 3,314,700 10,896 4.73
8.60% 2008 1,930,000 6,342
7.50% 2013 1,100,000 3,487
------- -------
22,609 4.73
------- -------
DANISH KRONER
Nykredit:(3)
6.00% 2029 DKr56,631 6,938 1.89
7.00% 2029 16,104 2,081
Denmark (Kingdom of):
8.00% 2003 10,000 1,389
7.00% 2004 6,000 825
5.00% 2005 31,000 3,936 1.51
7.00% 2007 5,000 703
6.00% 2009 2,800 372
Danske Kredit:(3)
6.00% 2029 27,113 3,321 0.91
7.00% 2029 8,112 1,043
------- -------
20,608 4.31
------- -------
BRITISH POUNDS
Tussauds Finance Ltd., Class A3, 7.078% 2020(1) L3,000 4,675 0.98
United Kingdom 6.50% 2003 2,000 3,228 0.67
Royal Bank of Scotland 8.375% 2007 1,000 1,700 0.36
Scottish Life Finance PLC 9.00% undated 800 1,319 0.28
Halifax Building Society 11.00% 2014 600 1,312 0.27
Pubmaster Finance Ltd., Class B, 8.44% 2025(1) 550 905 0.19
Polestar Corp. PLC 10.50% 2008 500 776 0.16
------- -------
13,915 2.91
------- -------
AUSTRALIAN DOLLARS
News America Holdings Inc. 8.625% 2014 A$9,000 5,452 1.14
Australian Government:
10.00% 2002 550 362
6.75% 2006 2,000 1,235 0.70
10.00% 2006 1,000 711
8.75% 2008 1,500 1,048
New South Wales Treasury Corp. 7.00% 2004 3,000 1,842 0.38
South Australian Government Financing Authority 11.25% 2001 1,500 969 0.20
Statens Bostadfinansier 6.50% 2000 1,300 790 0.17
------- -------
12,409 2.59
------- -------
POLISH ZLOTY
Polish Government:
0% 2001 PLZ5,500 1,020
12.00% 2001 8,250 1,882
13.00% 2001 22,250 5,186 2.55
12.00% 2003 10,000 2,278
8.50% 2004 9,000 1,831
------- -------
12,197 2.55
------- -------
CANADIAN DOLLARS
Canadian Government:
9.75% 2001 C$2,000 1,457
7.25% 2003 4,300 3,059 1.22
7.25% 2007 1,750 1,290
Lindsey Morden Group Inc., Series B, 7.00% 2008(1) 7,000 4,321 0.90
Domtar Inc. 10.00% 2011 1,000 777 0.16
------- -------
10,904 2.28
------- -------
NORWEGIAN KRONER
Norwegian Government 6.75% 2007 NOK55,500 6,776 1.42
------- -------
SWEDISH KRONOR
AB Spintab:
6.25% 2002 SKr32,000 3,763 0.90
7.50% 2004 4,600 564
Stadshypotek AB 5.50% 2008 12,000 1,327 0.28
------- -------
5,654 1.18
------- -------
SOUTH AFRICAN RANDS
South Africa (Republic of) 13.00% 2010 ZAR21,750 3,137 0.66
------- -------
U.S. DOLLARS
U.S. Treasury Obligations:
6.375% 2002 US$4,250 4,239
5.50% 2003 4,200 4,094
11.625% 2004 1,650 1,986
6.50% 2005 1,950 1,963
3.57% 2007(2,4) 1,065 1,026
6.125% 2007 1,345 1,332 6.69
7.25% 2007 1,345 1,342
5.50% 2009 1,000 952
6.00% 2009 5,750 5,677
7.50% 2016 1,750 1,982
8.875% 2017 1,200 1,535
7.875% 2021 1,200 1,437
3.7093% 2028(2,4) 2,060 1,957
5.25% 2029 2,750 2,466
Fannie Mae:
5.625% 2004 2,750 2,608
6.00% 2008 3,750 3,481 1.59
6.25% 2029 1,700 1,533
Komercni Finance BV 9.00%/10.75% 2008(1,2) 7,575 7,348 1.54
United Mexican States Government 9.875% 2010 5,500 5,830 1.22
Airplanes Pass Through Trust, pass-through certificates, 5,617 5,073 1.06
Series 1, Class C, 8.15% 2019(3)
Turkey (Republic of):
12.375% 2009 1,750 1,881 0.84
11.875% 2030 2,000 2,125
Government National Mortgage Assn:(3)
8.50% 2021 209 215
9.00% 2024 266 275
6.50% 2029 1,470 1,386 0.77
7.00% 2029 1,875 1,816
Bulgaria (Republic of) 7.063% 2011(2) 1,000 796 0.50
Bulgaria (Republic of) Front Loaded Interest Reduction 2,250 1,617
Bond, 2.75% 2012(2)
Hutchison Whampoa Finance Ltd.:(1)
7.45% 2017 1,500 1,413 0.47
Series C, 7.50% 2027 900 832
Grupo Financiero Banamex Accival, SA de CV 0% 2002(1,3) 2,376 2,154 0.45
State of Israel 7.75% 2010 2,000 2,024 0.42
Hyundai Semiconductor America, Inc.:
8.25% 2004(1) 2,000 1,848 0.42
8.25% 2004 150 139
Skandinaviska Enskilda Banken 6.875% 2009 2,000 1,886 0.39
Nationslink Funding Corp., Series 1999-1, Class D, 2,000 1,864 0.39
7.10% 2031(2,3)
Brazil (Federal Republic of), Bearer 8.00% 2014 2,426 1,826 0.38
Comcast UK Cable Partners Ltd. 0%/11.20% 2007(2) 1,000 950 0.36
NTL Communications Corp. 11.50% 2008 750 761
Reliance Industries Ltd.:
8.125% 2005 550 523
10.25% 2097(1) 1,250 1,170 0.35
Mirage Resorts, Inc.:
6.625% 2005 750 679 0.32
6.75% 2008 1,000 869
Nabisco, Inc. 6.375% 2035(2) 1,745 1,536 0.32
South Africa (Republic of) 9.125% 2009 1,500 1,511 0.32
DLJ Mortgage Acceptance Corp., Series 1996-CF1, 1,477 1,475 0.31
Class A1A, 7.28% 2028(1,3)
Allegiance Telecom, Inc.:
0%/11.75% 2008(2) 500 355 0.30
12.875% 2008 1,000 1,095
PDVSA Finance Ltd. 7.50% 2028 2,000 1,425 0.30
SBA Communications Corp. 12.00% 2008(2) 2,125 1,392 0.29
Household Finance Corp. 6.40% 2008 1,500 1,376 0.29
McDermott Inc. 9.375% 2002 1,500 1,320 0.28
Croatian Government:(2)
Series B, 7.063% 2006 423 404 0.27
Series A, 7.033% 2010 955 888
Nextel Partners, Inc. 0%/14.00% 2009(2) 2,000 1,280 0.27
SpectraSite Holdings, Inc., Series B, 0%/12.00% 2008(2) 2,000 1,255 0.26
Argentina (Republic of):
Series C, 0% 2001 300 262 0.26
Series E, 0% 2003 1,350 962
Premier Parks Inc.:
9.75% 2007 750 707 0.25
0%/10.00% 2008(2) 750 480
VoiceStream Wireless Corp. 0%/11.875% 2009(1,2) 1,000 600 0.24
Omnipoint Corp. 11.50% 2009 (1) 500 535
CSFB Finance Co. Ltd., Series 1995-A, 5.977% 2005(1,2,3) 1,250 1,116 0.23
Russian Federation 12.75% 2028 1,200 1,026 0.21
Gray Communications Systems, Inc. 10.625% 2006 1,000 1,000 0.21
American Media Operations, Inc. 10.25% 2009 1,000 990 0.21
Fairchild Semiconductor Corp. 10.375% 2007 1,000 982 0.21
Versatel Telecom International NV 11.875% 2009 1,000 980 0.20
Mass Transit Railway Corp. 7.50% 2009 1,000 973 0.20
Printpack, Inc. 10.625% 2006 1,000 970 0.20
Ford Motor Co. 7.45% 2031 1,000 967 0.20
HS Resources, Inc. 9.25% 2006 1,000 960 0.20
International Game Technology 7.875% 2004 1,000 930 0.19
Boyd Gaming Corp. 9.50% 2007 1,000 920 0.19
Transener SA 9.25% 2008(1) 1,000 920 0.19
Colombia (Republic of):
7.625% 2007 600 486 0.19
8.70% 2016 575 433
WMX Technologies, Inc. 7.10% 2026 500 462
USA Waste Services, Inc.: 0.19
6.50% 2002 250 231
7.00% 2004 250 225
Florida Panthers Holdings, Inc. 9.875% 2009 1,000 900 0.19
Charter Communications Holdings, LLC 8.625% 2009 1,000 880 0.18
Crown Castle International Corp. 0%/10.625% 2007(2) 1,250 862 0.18
Allied Waste North America, Inc., Series B, 10.00% 2009 1,000 750 0.16
Container Corp. of America 9.75% 2003 750 746 0.16
Chancellor Media Corp. of Los Angeles:
8.00% 2008 500 493 0.16
9.00% 2008 250 250
Structured Asset Securities Corp., Series 1998-RF2, 706 725 0.15
Class A, 8.544% 2022(1,2,3)
Sun Media Corp. 9.50% 2007 750 724 0.15
Clearnet Communications Inc. 0%/10.125% 2009(2) 1,250 706 0.15
Indah Kiat Finance Mauritius Ltd. 10.00% 2007 1,000 697 0.15
Home Products International, Inc. 9.625% 2008 750 682 0.14
Kindercare Learning Centers, Inc., Series B, 9.50% 2009 750 682 0.14
Cumulus Media Inc. 13.75% preferred 2009 (5) 500 shares 456 0.14
Cumulus Media 10.375% 2008 250 223
Sun International Hotels Ltd., Sun International 750 675 0.14
North America, Inc. 9.00% 2007
ACME Television, LLC, Series B, 0%/10.875% 2004(2) 750 667 0.14
Young Broadcasting Inc. 9.00% 2006 750 668 0.14
Carmike Cinemas, Inc., Series B, 9.375% 2009 1,000 640 0.13
Delta Beverage Group, Inc. 9.75% 2003 650 618 0.13
GT Group Telecom Inc. units 0%/13.25% 2010 (1,2) 1,000 570 0.12
Graham Packaging Co. 0%/10.75% 2009 (2) 1,000 550 0.12
Hanvit Bank 12.75% 2010 (1) 500 516 0.11
Vodafone AirTouch PLC, 7.75% 2010 (1) 500 510 0.11
TransWestern Publishing Co. LLC 9.625% 2007 500 470 0.10
KSL Recreation Group, Inc. 10.25% 2007 500 469 0.10
L.A. Arena Funding, LLC, Series 1, Class A, 500 465 0.10
7.656% 2026 (1,3)
Zilog, Inc. 9.50% 2005 400 356 0.07
CKE Restaurants, Inc. 9.125% 2009 500 350 0.07
Leap Wireless International, Inc. units 12.50% 2010 (1) 250 250 0.05
------- -------
137,889 28.82
------- -------
Total Bonds and Notes
(cost:$506,489,000) 456,513 95.42
------- -------
Short-Term Securities
Corporate Short-Term Notes
Associates First Capital, Inc. 6.24% due 4/3/2000 13,200 13,193 2.76
------- -------
Total Short-Term Securities 13,193 2.76
(cost:$13,193,000) ------- -------
Total Investment Securities 469,706 98.18
(cost:$519,682,000)
Excess of cash and receivables over payables 8,721 1.82
------- -------
Net Assets 478,427 100.00%
(1) Purchased in a private placement transaction;
resale may be limited to qualified institutional buyers;
resale to the public may require registration.
(2) Coupon rate may change periodically.
(3) Pass-through securities backed by a pool
of mortgages or other loans on which principal
payments are periodically made. Therefore,
the effective maturities are shorter than the stated
maturities.
(4) Index-linked bond whose principal amount
moves with a government retail price index.
(5) Payment in kind; the issuer has the option
of paying additional securities in lieu of cash.
See Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
Capital World Bond Fund
Financial Statements
Statement of Assets and Liabilities
at March 31, 2000 (Unaudited)
(dollars in
thousands)
<S> <C> <C>
Assets:
Investment securities at market
(Cost: $519,682) $469,706
Cash 61
Receivables for--
Sales of investments 27
Sales of fund's shares 408
Forward currency contracts-net 582
Dividends and accrued interest 9,930
Other 3 10,950
---------- ----------
480,717
Liabilities:
Payables for--
Repurchases of fund's shares 949
Forward currency contracts-net 847
Management services 272
Accrued expenses 222 2,290
---------- ----------
Net Assets at March 31, 2000 (authorized $478,427
capital stock -- 200,000,000 shares) ==========
Class A shares, $0.001 par value
Net Assets $478,306
Shares outstanding 32,719,680
Net asset value per share $14.62
Class B shares, $0.001 par value
Net Assets $ 121
Shares outstanding 8,280
Net asset value per share $14.62
STATEMENT OF OPERATIONS (Unaudited)
(dollars in
for the six months ended March 31, 2000 thousands)
Investment Income:
Income:
Interest $15,165
Dividends 34 $15,199
----------
Expenses:
Management services fee 1,690
Distribution expenses- Class A 619
Distribution expenses- Class B -
Transfer agent fee- Class A 298
Transfer agent fee- Class B -
Reports to shareholders 68
Registration statement and prospectus 37
Postage, stationery and supplies 121
Directors' fees 9
Auditing and legal fees 56
Custodian fee 72
Taxes other than federal income tax 15
Other expenses 46 3,031
---------- ----------
Net investment income 12,168
----------
Realized Loss and Unrealized
Depreciation on Investments:
Net realized loss (3,640)
Net change in unrealized depreciation on:
Investments (17,971)
Open forward currency contracts (302)
----------
Net unrealized depreciation (18,273)
----------
Net realized loss and
unrealized depreciation
on investments (21,913)
----------
Net Decrease in Net Assets Resulting
from Operations ($9,745)
==========
(dollars in
STATEMENT OF CHANGES IN NET ASSETS thousands)
Six months Year
ended ended
3/31/00* 9/30/99
---------- ----------
Operations:
Net investment income $ 12,168 $ 28,373
Net realized (loss)gain on investments (3,640) 9,498
Net unrealized depreciation
on investments (18,273) (40,896)
---------- ----------
Net decrease in net assets
resulting from operations (9,745) (3,025)
---------- ----------
Dividends and Distributions Paid to
Shareholders:
Dividends from net investment income:
Class A (15,481) (21,252)
Class B (1) -
Distributions from net realized gain on investments
Class A (2,356) (12,170)
Class B - -
---------- ----------
Total Dividends and Distributions (17,838) (33,422)
---------- ----------
Capital Share Transactions:
Proceeds from shares sold 66,837 138,397
Proceeds from shares issued in reinvestment
of net investment income dividends and
distributions of net realized gain on investments 15,849 30,005
Cost of shares repurchased (130,464) (222,735)
---------- ----------
Net decrease in net assets resulting from (47,778) (54,333)
capital share transactions ---------- ----------
Total Decrease in Net Assets (75,361) (90,780)
Net Assets:
Beginning of period 553,788 644,568
---------- ----------
End of period (including
undistributed net investment
income: $2,089 and $1,225
respectively) $478,427 $553,788
========== ==========
* unaudited
See Notes to Financial Statements
</TABLE>
Capital World Bond Fund
Notes to Financial Statements
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - 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 to maximize 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 FUND OFFERS CLASS A AND CLASS B SHARES. CLASS A SHARES ARE SOLD WITH AN
INITIAL SALES CHARGE OF UP TO 3.75%. CLASS B SHARES ARE SOLD WITH A CONTINGENT
DEFERRED SALES CHARGE, WHICH DECLINES FROM 5% TO ZERO DEPENDING ON THE LENGTH
OF TIME THE SHARES ARE HELD, AND INCLUDE A HIGHER DISTRIBUTION FEE THAN CLASS A
SHARES. CLASS B SHARES ARE AUTOMATICALLY CONVERTED TO CLASS A SHARES EIGHT
YEARS AFTER THE DATE OF PURCHASE. HOLDERS OF BOTH CLASSES OF SHARES HAVE EQUAL
PRO RATA RIGHTS TO ASSETS AND IDENTICAL VOTING, DIVIDEND, LIQUIDATION AND OTHER
RIGHTS, EXCEPT THAT EACH CLASS BEARS DIFFERENT DISTRIBUTION AND TRANSFER AGENT
EXPENSES, AND EACH CLASS SHALL HAVE EXCLUSIVE RIGHTS TO VOTE ON MATTERS
AFFECTING ONLY THEIR CLASS.
SIGNIFICANT ACCOUNTING POLICIES - The financial statements have been prepared
in conformity with generally accepted accounting principles which require
management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from
those estimates. The following is a summary of the significant accounting
policies consistently followed by the fund in the preparation of its financial
statements:
SECURITY VALUATION - Fixed-income securities are valued at prices obtained from
a pricing service, when such prices are available; however, in circumstances
where the investment adviser deems it appropriate to do so, such securities
will be valued at the mean quoted bid and asked prices or at prices for
securities of comparable maturity, quality and type. The ability of the issuers
of the debt securities held by the fund to meet their obligations may be
affected by economic developments in a specific industry, state or region.
Short-term securities maturing within 60 days are valued at amortized cost,
which approximates market value.
Forward currency contracts are valued at the mean of their
representative quoted bid and asked prices. Securities and assets for which
representative market quotations are not readily available are valued at fair
value as determined in good faith by a committee appointed by the Board of
Directors.
NON-U.S. CURRENCY TRANSLATION - Assets and liabilities initially expressed in
terms of non-U.S. currencies are translated into U.S. dollars at the prevailing
market rates at the end of the reporting period. Purchases and sales of
securities and income and expenses are translated into U.S. dollars at the
prevailing market rates on the dates of such transactions. The effects of
changes in non-U.S. currency exchange rates on investment securities and other
assets and liabilities are included with the net realized and unrealized gain
or loss on investment securities.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions are
accounted for as of the trade date. Realized gains and losses from securities
transactions are determined based on specific identified cost. In the event
securities are purchased on a delayed delivery or when-issued basis, the fund
will instruct the custodian to segregate liquid assets sufficient to meet its
payment obligations in these transactions. Dividend income is recognized on the
ex-dividend date, and interest income is recognized on an accrual basis. Market
discounts, premiums, and original issue discounts on securities purchased are
amortized daily over the expected life of the security.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends and distributions paid
to shareholders are recorded on the ex-dividend date.
FORWARD CURRENCY CONTRACTS - The fund may enter into forward currency
contracts, which represent agreements to exchange currencies of different
countries at specified future dates at specified rates. The fund enters into
these contracts to manage its exposure to fluctuations in foreign exchange
rates arising from investments denominated in non-U.S. currencies. The fund's
use of forward currency contracts involves market risk in excess of the amount
recognized in the statement of assets and liabilities. The contracts are
recorded in the statement of assets and liabilities at their net unrealized
value. The fund records realized gains or losses at the time the forward
contract is closed or offset by a matching contract. The face or contract
amount in U.S. dollars reflects the total exposure the fund has in that
particular contract. 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 non-U.S. exchange rates and securities values
underlying these instruments. Purchases and sales of forward currency exchange
contracts having the same settlement date and broker are offset and presented
net in the statement of assets and liabilities.
COMMON EXPENSES - INCOME, EXPENSES (OTHER THAN CLASS-SPECIFIC EXPENSES) AND
REALIZED AND UNREALIZED GAINS AND LOSSES ARE PRORATED BETWEEN THE CLASSES BASED
ON THE RELATIVE NET ASSETS OF EACH CLASS. DISTRIBUTION AND TRANSFER AGENT FEES,
AND OTHER CLASS-SPECIFIC EXPENSES, IF ANY, ARE CALCULATED DAILY AT THE CLASS
LEVEL BASED ON THE RELATIVE DAILY NET ASSETS OF EACH CLASS AND THE SPECIFIC
EXPENSE RATE APPLICABLE TO EACH CLASS.
2. NON-U.S. INVESTMENTS
INVESTMENT RISK - Investments in securities of non-U.S. issuers in certain
countries involve special investment risks. These risks may include, but are
not limited to, investment and repatriation restrictions, revaluation of
currencies, adverse political, social, and economic developments, government
involvement in the private sector, limited and less reliable investor
information, lack of liquidity, certain local tax law considerations, and
limited regulation of the securities markets.
CURRENCY GAINS AND LOSSES - Net realized currency losses on dividends,
interest, sales of non-U.S. bonds and notes, forward contracts, and other
receivables and payables, on a book basis, were $1,513,000 for the six months
ended March 31, 2000.
3. FEDERAL INCOME TAXATION
The fund complies with the requirements of the Internal Revenue Code applicable
to regulated investment companies and intends to distribute all of its net
taxable income and net capital gains for the fiscal year. As a regulated
investment company, the fund is not subject to income taxes if such
distributions are made. Required distributions are determined on a tax basis
and may differ from net investment income and net realized gains for financial
reporting purposes. In addition, the fiscal year in which amounts are
distributed may differ from the year in which the net investment income and net
realized gains are recorded by the fund.
As of March 31, 2000, net unrealized depreciation on investments, excluding
forward currency contracts, for book and federal income tax purposes aggregated
$49,976,000; $2,326,000 related to appreciated securities and $52,302,000
related to depreciated securities. During the six months ended March 31, 2000,
the fund realized, on a tax basis, a net capital loss of $2,719,000 on
securities transactions. Net losses related to non-U.S. currency transactions
of <$1,277,000> are treated as an adjustment to ordinary income for federal
income tax purposes. The cost of portfolio securities, excluding forward
currency contracts, for book and federal income tax purposes was $519,682,000
at March 31, 2000.
4. FEES AND TRANSACTIONS WITH RELATED PARTIES
INVESTMENT ADVISORY FEE - The fee of $1,690,000 for management services was
incurred 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 provided for monthly fees accrued
daily based on an annual rate of 0.65% of the first $500 million of average net
assets; 0.57% of such assets in excess of $500 million but not exceeding $1
billion; and 0.50% of such assets in excess of $1 billion.
DISTRIBUTION EXPENSES - Pursuant to a Plan of Distribution FOR CLASS A SHARES,
the fund may expend up to 0.30% of CLASS A average daily 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. PURSUANT TO A PLAN OF DISTRIBUTION
FOR CLASS B SHARES, THE FUND MAY EXPEND UP TO 1.00% OF CLASS B AVERAGE DAILY
NET ASSETS ANNUALLY TO COMPENSATE DEALERS FOR THEIR SELLING AND SERVICING
EFFORTS. DURING THE SIX MONTHS ENDED MARCH 31, 2000, DISTRIBUTION EXPENSES
UNDER THE PLANS OF DISTRIBUTION FOR CLASS A AND CLASS B SHARES WERE $619,000
AND $33. AS OF MARCH 31, 2000, ACCRUED AND UNPAID DISTRIBUTION EXPENSES FOR
CLASS A SHARES WERE $118,000.
American Funds Distributors, Inc. (AFD), the principal underwriter of the
fund's shares, received $79,000 (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.
TRANSFER AGENT FEE - American Funds Service Company (AFS), the transfer agent
for the fund, was paid a fee of $298,000.
DEFERRED DIRECTORS' FEES - 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 March 31, 2000, aggregate deferred amounts and earnings thereon
since the deferred compensation plan's adoption (1993), net of any payments to
Directors, were $63,000.
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.
5. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
The fund made purchases and sales of investment securities , excluding
short-term securities, of $170,057,000 and $224,000,000, respectively, during
the six months ended March 31, 2000.
As of March 31, 2000, net assets consist of the following:
<TABLE>
<CAPTION>
<S> <C>
Capital paid in on shares of beneficial interest $534,833,000
Undistributed net investment income
(2,089,000)
Accumulated net realized loss
(3,664,000)
Net unrealized depreciation (50,653,000)
Net Assets 478,427,000
</TABLE>
Capital share transactions in the fund were as follows:
<TABLE>
2000 1999
Amount (000) Shares Amount (000) Shares
<S> <C> <C> <C> <C>
Class A Shares:
Sold $ 66,712 4,495,429 $ 138,397 8,667,806
Reinvestment of dividends
and distributions 15,848 1,060,684 30,005 1,883,186
Repurchased (130,461) (8,766,473) (222,735) (14,112,384)
Net decrease in Class A (47,901) (3,210,360) (54,333) (3,561,392)
Class B Shares: - -
Sold 125 8,454 - -
Reinvestment of dividends
and distributions 1 74 - -
Repurchased (3) (248) - -
Net increase in Class B 123 8,280 - -
Total net decrease in fund $ (47,778) (3,202,080) $ (54,333) (3,561,392)
</TABLE>
Pursuant to the custodian agreement, the fund receives credits against its
custodian fee for imputed interest on certain balances with the custodian bank.
The custodian fee of $72,000 includes $8,000 that was paid by these credits
rather than in cash.
At March 31, 2000, the fund had outstanding forward currency contracts to sell
non-U.S. currencies as follows:
<TABLE>
U.S. Valuations
Non-U.S. Contract Amount at 03/31/2000
Currency -------------- -------------- -------------- --------------
Contracts Unrealized
Non-U.S. U.S. Amount (Depreciation)
Appreciation
------------------------ -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Purchases:
Canadian Dollars
expiring 10/12/1999 0 $ 0 $ 0 $ 0
Euros
expiring 5/10/2000 to
7/28/2000 E3,882,000 $3,959,000 $3,745,000 ($214,000)
-------------- -------------- --------------
Sales:
British Pounds
expiring 6/08/2000 to
6/14/2000 L483,000 761,000 771,000 (10,000)
Euros
expiring 04/14/2000 to
7/31/2000 E13,653,000 13,484,000 13,153,000 331,000
Japanese Yen
expiring 4/10/2000 to
8/03/2000 Y1,292,000 12,134,000 12,709,000 (575,000)
Norwegian Kroner
expiring 7/28/2000 NOK19,000,000. 2,359,000 2,251,000 108,000
1/31/2000 N0K0 2,358,365 2,250,528 107,837
Euros
expiring 11/02/1999 to
1/31/2000 0 0 0 0
-------------- -------------- --------------
28,738,000 28,884,000 (146,000)
-------------- -------------- --------------
Forward currency contracts - net $(360,000)
=============
</TABLE>
<TABLE>
PER-SHARE DATA AND RATIOS
<S> <C> <C> <C> <C> <C>
Net
gains/
(losses)
on
Net securities
asset (both Total
Period value, Net realized from
Ended beginning investment and investment
(1) of period income unrealized) operations
Class A :
2000 $ 15.41 $.35 (4) $(.62) (4) $(.27)
1999 16.32 .84 (.88) (.04)
1998 16.40 .43 .57 1.00
1997 16.86 .88 (.16) .72
1996 16.81 1.09 .16 1.25
1995 15.33 1.09 1.57 2.66
Class B (6):
2000 14.73 .03(4) .01(4) .04
Dividends
(from
net
realized Net
Dividends non-U.S. Distributions asset
(from net currency (from value,
investment gains) capital Total end of
income) (2) gains) Distributions period
Class A :
$(.45) - $(.07) $(.52) $ 14.62
(.55) - (.32) (.87) 15.41
(.80) - (.28) (1.08) 16.32
(.95) $(.23) - (1.18) 16.40
(1.08) (.12) - (1.20) 16.86
(1.18) - - (1.18) 16.81
Class B (6):
(.15) - - (.15) 14.62
Ratio Ratio
Net of of
assets, expenses income
end of to average to
Total period average average Portfolio
return (in net net turnover
(3) millions) assets assets rate
Class A :
(1.80)% (3,5) $478 .58% (5) 2.31% (5) 34.24% (5)
-0.32 (3) 554 1.08 4.66 129.25
6.42 (3) 645 1.06 5.15 100.92
4.38 (3) 758 1.07 5.21 79.00
7.67 (3) 811 1.09 6.07 91.27
18.10 (3) 653 1.12 6.83 104.96
Class B (6):
0.26 (3) 121 0.08 (5) 0.19 (5) 34.24 (7)
(1) The periods ended 1995
through 1999 represent fiscal
years ended September 30; the
period ended 2000 represents
the six months ended March
31 (unaudited).
(2) Realized non-U.S. currency
gains are treated as ordinary
income for federal income tax
purposes.
(3) Excludes sales charge on
Class A shares or contingent
deferred sales charge on Class
B shares.
(4) Based on average shares
outstanding.
(5) Based on operations for the
period shown and, accordingly,
not representative of a full
year.
(6) Class B shares offered for
sale commencing March 15, 2000.
(7) Represents portfolio
turnover rate for the period
ended March 31, 2000.
</TABLE>
Results of Shareholder Meeting (unaudited)
Held November 18, 1999
<TABLE>
<CAPTION>
<S> <C>
SHARES OUTSTANDING ON AUGUST 25, 1999 (RECORD DATE): 36,893,030
SHARES PRESENT ON NOVEMBER 18, 1999: 25,041,424 (67.9%)
</TABLE>
Proposal 1: Election of Directors
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Director Votes For Percent of Percent of
Shares Votes Shares
Voting For Withheld Withheld
Richard G. Capen, Jr. 24,632,951 98.4% 408,473 1.6%
H. Frederick Christie 24,647,408 98.4 394,016 1.6
Don R. Conlan 24,651,239 98.4 390,185 1.6
Diane C. Creel 24,629,457 98.4 411,967 1.6
Martin Fenton 24,648,748 98.4 392,676 1.6
Leonard R. Fuller 24,644,582 98.4 396,842 1.6
Abner D. Goldstine 24,634,814 98.4 406,610 1.6
Paul G. Haaga, Jr. 24,651,905 98.4 389,519 1.6
Richard G. Newman 24,642,854 98.4 398,570 1.6
Frank M. Sanchez 24,643,272 98.4 398,152 1.6
</TABLE>
Proposal 2: Amendment to Articles of Incorporation reducing the par value per
share of capital stock
Broker Non-Votes: 4,400,207
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Percent of Percent of Percent of
Shares Votes Shares Shares
Votes For Voting For Against Voting Against Abstentions Abstaining
18,473,380 73.8% 1,100,668 4.4% 1,067,169 4.2%
</TABLE>
Proposal 3: To allow investments in below-investment-grade debt securities
Broker Non-Votes: 4,400,207
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Percent of Percent of Percent of
Shares Votes Shares Shares
Votes For Voting For Against Voting Against Abstentions Abstaining
16,942,752 67.7% 2,690,035 10.7% 1,008,430 4.0%
</TABLE>
Proposal 4: Eliminate or revise certain of the fund$s investment restrictions
Broker Non-Votes: 4,400,207
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Percent of Percent of Percent of
Shares Votes Shares Shares
Votes For Voting For Against Voting Against Abstentions Abstaining
4A. Lending Activities 17,752,704 70.9% 1,790,886 7.1% 1,097,627 4.4%
4B. Pledging Assets 17,805,672 71.1 1,731,201 6.9 1,104,344 4.4
4C. Affiliated Ownership 17,671,213 70.6 1,852,661 7.4 1,117,343 4.4
4D. Unseasoned Issuers 17,661,105 70.5 1,859,770 7.4 1,120,342 4.5
4E. Restricted/ 17,602,043 70.3 1,838,427 7.3 1,200,747 4.8
illiquid Securities
</TABLE>
Proposal 5: Ratification of auditors
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Percent of Percent of Percent of
Shares Votes Shares Shares
Votes For Voting For Against Voting Against Abstentions Abstaining
24,056,113 96.1% 294,381 1.2% 690,930 2.7%
</TABLE>
<PAGE>
[The American Funds Group(r)]
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 92821-5823
Transfer agent for
shareholder accounts
American Funds Service Company
(Please write to the address 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
Paul, Hastings, Janofsky & Walker LLP
555 South Flower Street
Los Angeles, California 90071-2371
Principal underwriter
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
For information about your account or any of the fund's services, or for a
prospectus for any of the American Funds, please contact your financial
adviser. You may also call American Funds Service Company, toll-free, at
800/421-0180 or visit www.americanfunds.com on the World Wide Web. Please read
the prospectus carefully before you invest or send money.
This report is for the information of shareholders of Capital World Bond Fund,
but it may also be used as sales literature when preceded or accompanied by the
current prospectus, which gives details about charges, expenses, investment
objectives and operating policies of the fund. If used as sales material after
June 30, 2000, this report must be accompanied by an American Funds Group
Statistical Update for the most recently completed calendar quarter.
There are two ways to invest in Capital World Bond Fund. Class A shares are
subject to a 3.75% maximum up-front sales charge that declines for accounts of
$100,000 or more. Class B shares, which are not available for certain
employer-sponsored retirement plans, have no up-front charge. They are,
however, subject to additional expenses of approximately 0.75% a year over the
first eight years of ownership. If redeemed within six years, they may also be
subject to a contingent deferred sales charge (5% maximum) that declines over
time. Because expenses are first deducted from income, dividends for Class B
share accounts will be lower.
Printed on recycled paper
Litho in USA WG/INS/4578
Lit. No. WBF-013-0500
