UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
Certified Shareholder Report of
Registered Management Investment Companies
Investment Company Act File Number: 811-5104
Capital World Bond Fund, Inc.
(Exact Name of Registrant as specified in charter)
333 South Hope Street
Los Angeles, California 90071
(Address of principal executive offices)
Registrant's telephone number, including area code: (213) 486-9200
Date of fiscal year end: September 30, 2004
Date of reporting period: March 31, 2004
Julie F. Williams
Capital Research and Management Company
333 South Hope Street
Los Angeles, California 90071
(name and address of agent for service)
Copies to:
Robert E. Carlson, Esq.
Paul, Hastings, Janofsky & Walker LLP
515 South Flower Street
Los Angeles, California 90071
(Counsel for the Registrant)
ITEM 1 - Reports to Stockholders
[logo - American Funds(R)]
The right choice for the long term(R)
CAPITAL WORLD BOND FUND
[cover: computer screen and keyboard with cup of coffee, tablet of paper and
pencil, and two passports with airline tickets inside]
Semi-annual report for the six months ended March 31, 2004
CAPITAL WORLD BOND FUND(R) seeks to maximize long-term total return, consistent
with prudent management, by investing primarily in a global portfolio of
investment-grade bonds denominated in U.S. dollars and other currencies. The
fund may also invest in lower quality, high-yield debt securities.
This fund is one of the 29 American Funds, the nation's third-largest mutual
fund family. For more than seven decades, Capital Research and Management
Company,SM the American Funds adviser, has invested with a long-term focus based
on thorough research and attention to risk.
Here are the average annual total returns on a $1,000 investment with all
distributions reinvested for periods ended March 31, 2004:
1 YEAR 5 YEARS 10 YEARS
CLASS A SHARES
Reflecting 3.75% maximum sales charge +12.16% +6.75% +6.87%
The fund's 30-day yield for Class A shares as of April 30, 2004, calculated in
accordance with the Securities and Exchange Commission formula, was 3.23%. The
fund's distribution rate for Class A shares as of that date was 4.12%. Both
reflect the 3.75% maximum sales charge. The SEC yield reflects the rate at which
the fund is earning income on its current portfolio of securities while the
distribution rate reflects the fund's past dividends paid to shareholders.
Accordingly, the fund's SEC yield and distribution rate may differ.
Results for other share classes can be found on page 36. Please see the inside
back cover for important information about other share classes.
FIGURES SHOWN ON THESE TWO PAGES ARE PAST RESULTS FOR CLASS A SHARES AND ARE NOT
PREDICTIVE OF RESULTS IN FUTURE PERIODS. CURRENT AND FUTURE RESULTS MAY BE LOWER
OR HIGHER THAN THOSE SHOWN. SHARE PRICES AND RETURNS WILL VARY, SO INVESTORS MAY
LOSE MONEY. FOR THE MOST CURRENT INFORMATION AND MONTH-END RESULTS, VISIT
AMERICANFUNDS.COM. FUND RESULTS SHOWN, UNLESS OTHERWISE INDICATED, ARE AT NET
ASSET VALUE. IF A SALES CHARGE (MAXIMUM 3.75%) HAD BEEN DEDUCTED, THE RESULTS
WOULD HAVE BEEN LOWER.
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 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.
FELLOW SHAREHOLDERS:
For the first half of its 2004 fiscal year, Capital World Bond Fund recorded a
total return of 7.2%. Security price gains, currency fluctuations and interest
income all contributed to strong results for the period.
For the six months ended March 31, 2004, the fund paid dividends totaling 64
cents a share. These dividends were derived from interest paid by securities
held in the fund's portfolio as well as currency gains that were realized by the
fund. Those who reinvest dividends recorded an income return of 3.52% (7.04%
annualized), while those who elect to receive dividends in cash posted an income
return of 3.48% (6.96% annualized). Over the same period, the fund's share value
rose 3.65%.
The fund's total return surpassed the 6.1% return of the Lehman Brothers Global
Aggregate Bond Index, which is unmanaged and does not include expenses. In
addition, the fund's results outpaced the 5.6% average return of 93 global
income funds monitored by Lipper, the mutual fund tracking service.
A BROAD GLOBAL OVERVIEW
Over the six-month period, bond yields declined in most major markets as
investors worried about the magnitude and sustainability of economic growth
occurring in developed countries. (A bond's price rises as its yield declines.)
Importantly, inflation remained relatively subdued in the world's developed
economies, despite strong increases in energy and commodity prices during the
past year. Additionally, labor markets in Europe and North America exhibited
ongoing weakness, creating a more favorable climate for low interest rates.
AVERAGE ANNUAL CUMULATIVE
(AS OF MARCH 31, 2004, WITH ALL DISTRIBUTIONS REINVESTED) TOTAL RETURN TOTAL RETURN
Results at a glance
1 year -- +16.5%
5 years +7.6% +44.1
10 years +7.3 +102.0
Lifetime (since August 4, 1987) +8.1 +264.7
Economic and market conditions, however, vary from country to country and are
subject to continual change. In the weeks immediately following the close of the
period, for example, U.S. Treasury yields climbed sharply on news of
strengthening employment, robust retail sales and rising consumer prices. That
rapid rise erased most of the gains logged by U.S. government bonds over the
prior six months. In local currency terms, non-U.S. bonds generally fared better
during this April selloff.
Several factors differentiated European markets from that of the United States.
Although yields generally declined during the reporting period, interest rates
remained slightly higher than in the United States, even as most European
economies generated only tepid growth. These conditions sustained a somewhat
more favorable environment for bond prices and helped buffer European markets
from the April selloff that hurt U.S. bonds. The United Kingdom, we should note,
stands apart from its continental kin. Its labor markets remain relatively tight
and rising real estate prices have nurtured concerns about inflation.
Steady signs of faster economic growth in Japan gave a lift to stock prices in
that country, but deflation kept a lid on its bond market. Yields on Japanese
government debt remain much lower than those of comparable bonds in other
developed countries; but as growth takes hold in the region, deflation may be
ending for the time being and higher bond yields may result.
HOW THE FUND RESPONDED
During the reporting period, Capital World Bond Fund shareholders benefited from
a rise in the value of major currencies against the U.S. dollar. Despite
weakness late in the period, the euro was up 5.4% against the dollar by the end
of March and the yen ended 7.1% higher. The Canadian and Australian dollars and
non-euro currencies of Europe, such as the Swedish krona and the British pound,
also strengthened against the U.S. dollar. These advances served to magnify
returns on debt denominated in currencies of those countries, as can be seen in
the table on page 4. Changes in currency relations had a positive effect on a
variety of fund holdings, notably its euro-denominated bonds, which totaled
34.2% of portfolio holdings at the end of the period.
The fund's corporate holdings, which include both investment-grade and
high-yield bonds, also contributed to the recent strong returns. Among the
standout holdings were bank issuers (German and Japanese) and wireless and
diversified telecommunications services (mainly European). Corporate bonds of
both U.S. and non-U.S. issuers total some 25% of the fund's net assets.
Finally, bonds from developing countries continued to post solid gains, many
besting the returns of major developed nations. The fund's holdings in Turkey
and Hungary are two examples; both posted attractive returns and aided the
fund's results. But not every bond was a winner. The fund's relatively small
position in debt of the Dominican Republic weakened significantly as the
repercussions of a severe banking crisis and imminent elections raised concerns
about timely debt payments on the country's bonds.
SETTING SIGHTS ON THE FUTURE
During this fiscal first half, net assets of Capital World Bond Fund grew more
than 40%, and the number of shareholder accounts increased 34%. While we are
heartened by this growth, we remind investors that the returns of the recent
period were extraordinary. Over the long term, the fund has delivered attractive
returns, but at a more moderate pace than that of recent months. Shareholders
should understand that bond funds have the same interest rate, inflation and
credit risks that are associated with the underlying bonds owned by the fund. We
encourage all shareholders to set realistic goals for their investments. The
table on page 1 provides a sketch of the fund's historic returns.
With the potential for higher rates overhanging the U.S. bond market, we believe
that overseas markets could continue to offer investors some of the most
attractive fixed-income opportunities in the near term. Further appreciation in
European and Asian currencies would only enhance the appeal of these
investments. With its sweeping global reach and ready access to non-U.S. bonds,
Capital World Bond Fund offers its shareholders a timely and attractive means
for diversifying their portfolios.
We thank you for your continued confidence and support.
Cordially,
/s/ Paul G. Haaga, Jr. /s/ Abner D. Goldstine
Paul G. Haaga, Jr. Abner D. Goldstine
Chairman of the Board President
May 14, 2004
Past results are not predictive of results in future periods. Current and future
results may be lower or higher than past results. Share prices and returns will
vary, so investors may lose money.
For current information about the fund, visit americanfunds.com.
PORTFOLIO SUMMARY as of March 31, 2004
PERCENT OF
PORTFOLIO BY TYPE OF SECURITY NET ASSETS
[begin pie chart]
Non-U.S. government/agency securities 55.8%
Non-U.S. corporate bonds 15.7
U.S. corporate bonds 9.4
U.S. Treasury notes & bonds 8.8
Mortgage- and asset-backed securities 3.7
U.S. government agency notes & bonds 0.8
Equity-related securities 0.1
Municipal securities 0.1
Cash & equivalents 5.6
[end pie chart]
QUALITY BREAKDOWN
INVESTMENT-GRADE BONDS 80.2 %
NON-INVESTMENT-GRADE BONDS 14.1
Corporate bonds 7.5
Developing country bonds 6.6
EQUITY-RELATED SECURITIES 0.1
CASH & EQUIVALENTS 5.6
WHERE THE FUND INVESTED (by currency)
CAPITAL WORLD BOND FUND
Net assets
Currency weighting
Country (after hedging)
European Monetary Union (1) 34.2 %
United States 27.4 (2)
Japan 22.1
Sweden 2.2
Denmark 2.2
United Kingdom 2.1
Hungary 2.0
Poland 2.0
Canada 1.4
Turkey 1.1
Norway 0.9
South Korea 0.9
New Zealand 0.9
Australia 0.6
HOW GLOBAL MARKETS FARED
GOVERNMENT BOND MARKET TOTAL RETURNS (3)
Six months ended March 31, 2004
In local
Country currency In U.S. dollars
European Monetary Union (1) 2.6 % 8.3 %
United States 2.5 2.5
Japan 0.7 8.2
Sweden 4.0 6.7
Denmark 2.8 8.2
United Kingdom 1.7 12.5
Hungary - -
Poland 0.6 2.5
Canada 3.8 6.6
Turkey - -
Norway 5.2 8.1
South Korea - -
New Zealand 3.1 15.5
Australia 2.2 15.3
(1) European Monetary Union consists of Austria, Belgium, Finland, France,
Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and
Spain
(2) Includes U.S. dollar-denominated bonds of other countries.
(3) Source: Citigroup World Government Bond Index, based on bonds with
reamining maturities of at least one year. This index does not provide
returns for Turkey, South Korea or Hungary.
INVESTMENT PORTFOLIO, March 31, 2004 unaudited
PRINCIPAL MARKET
AMOUNT (000) VALUE
BONDS AND NOTES - 94.33% OR SHARES (000)
EURO - 36.05%
German Government:
7.50% 2004 Euro 45 US$ 57
6.50% 2005 2,750 3,605
6.875% 2005 1,940 2,512
4.50% 2006 2,065 2,668
6.00% 2006 500 655
6.00% 2007 600 814
5.25% 2008 30,321 40,567
4.50% 2009 5,500 7,199
5.375% 2010 11,650 15,881
5.25% 2011 25,470 34,639
5.00% 2012 9,200 12,300
6.25% 2024 9,750 14,534
6.25% 2030 10,900 16,437
5.50% 2031 3,500 4,800
French Government:
OAT 5.25% 2008 3,489 4,680
OAT 4.00% 2009 32,300 41,383
OAT 5.00% 2011 16,220 21,649
OAT Strip Principal 0% 2019 15,200 9,241
OAT 5.50% 2029 3,500 4,780
Netherlands Government:
5.25% 2008 5,750 7,732
3.75% 2009 9,045 11,447
5.50% 2010 4,000 5,499
5.00% 2012 6,495 8,677
7.50% 2023 1,500 2,525
5.50% 2028 3,310 4,523
Spanish Government:
6.00% 2008 8,090 11,121
6.15% 2013 9,588 13,796
Bayer Hypo-Vereinsbank 6.00% 2014 10,470 14,175
HVB Funding Trust VIII 7.055% (undated) 6,880 9,534
Bayerische Vereinsbank 5.50% 2008 (1) 750 1,008
Finland (Republic of) 5.75% 2011 17,340 24,212
United Mexican States Government Eurobonds, Global 7.50% 2010 8,950 12,651
Greece (Republic of):
8.80% 2007 5,047 7,379
8.60% 2008 1,994 2,972
7.50% 2013 1,108 1,726
Deutsche Telekom International Finance BV: (2)
7.50% 2007 250 347
7.125% 2011 2,105 3,006
8.125% 2012 5,345 8,209
Edison SPA:
7.625% 2007 (2) 3,690 5,096
5.125% 2010 3,940 5,048
Belgium (Kingdom of) 4.25% 2014 8,090 10,129
Bulgaria (Republic of) 7.50% 2013 5,788 8,319
Romania (Republic of):
10.625% 2008 3,565 5,432
8.50% 2012 1,735 2,566
Veolia Environnement:
5.875% 2008 1,500 2,016
4.875% 2013 3,550 4,452
Telecom Italia SpA:
5.625% 2007 2,280 2,989
7.00% 2011 750 1,070
6.25% 2012 1,760 2,405
NGG Finance PLC:
5.25% 2006 2,000 2,595
6.125% 2011 2,715 3,716
British Telecommunications PLC: (2)
6.375% 2006 3,000 3,937
7.125% 2011 1,130 1,629
France Telecom:
7.50% 2008 (2) 3,030 4,233
7.00% 2009 900 1,283
HSBC Capital Funding LP 8.03% noncumulative preferred (undated) (2) 2,570 3,911
Household Finance Corp. 5.125% 2009 1,000 1,317
National Westminster Bank PLC 6.625% (undated) (2) 3,000 4,193
Royal Bank of Scotland PLC 4.875% 2009 250 326
Skandinaviska Enskilda Banken AB 5.625% 2012 (2) 3,400 4,513
mmO2 6.375% 2007 3,150 4,218
Rheinische Hypothekenbank Eurobond 4.25% 2008 (1) 3,000 3,869
MBNA Europe Funding PLC 6.50% 2007 2,700 3,630
TDC A/S 5.20% 2010 2,500 3,248
Mizuho Financial Group (Cayman) Ltd. 4.75% 2014 (2) 2,325 2,918
BNP Paribas Capital Trust III 6.625% (undated) 1,700 2,397
BNP Paribas 5.25% 2014 (2) 250 333
Banque Centrale de Tunisie 4.75% 2011 2,000 2,449
Bank of America Corp. 3.625% 2008 1,850 2,321
E.ON International Finance BV 5.75% 2009 1,700 2,315
Standard Chartered Bank 5.375% 2009 1,650 2,188
Ireland (Republic of) Eurobond:
4.25% 2007 1,000 1,293
5.00% 2013 630 841
RWE Finance BV:
5.50% 2007 1,250 1,662
6.125% 2012 250 349
HBOS PLC 6.05% (undated) (2) 880 1,201
Halifax Group Euro Finance (Jersey) LP 7.627% (undated) (2) 500 741
Barclays Bank PLC 7.50% (undated) (2) 1,300 1,909
ING Bank NV 5.50% 2012 1,100 1,477
International Paper Co. 5.375% 2006 1,135 1,471
Antenna TV SA 9.75% 2008 1,000 1,257
Corporacion Andina de Fomento 4.75% 2004 1,000 1,232
Munich Re Finance BV 6.75% 2023 850 1,179
Svenska Handelsbanken AB 5.50% 2011 (2) 900 1,167
Telefonica Europe BV 5.125% 2013 885 1,140
Ford Motor Credit Co. 6.75% 2008 800 1,055
International Endesa BV 5.375% 2013 800 1,050
UPM-Kymmene Corp. 6.125% 2012 770 1,046
Telenet Communication NV 9.00% 2013 750 941
Commerzbank AG, Series 360, 6.125% 2011 520 711
Societe Generale 5.625% 2012 440 596
Landesbank Hessen-Thueringen 5.50% 2015 440 593
UniCredito Italiano SpA 5.00% 2011 (2) 455 590
Governor and Company of the Bank of Ireland 6.45% 2010 415 584
AT&T Corp. 6.75% 2006 (2) (3) 250 335
524,421
JAPANESE YEN - 9.72%
Japanese Government:
0.10% 2004 Yen 4,857,750 46,639
0.40% 2006 150,000 1,447
0.90% 2008 4,375,000 42,661
1.80% 2010 1,765,000 17,909
0.50% 2013 1,999,000 17,746
Fannie Mae 2.125% 2007 570,000 5,791
Spain (Kingdom of) 3.10% 2006 370,000 3,789
Ontario (Province of) 1.875% 2010 225,000 2,250
SHL 1999-1 Corp. Ltd.:
Class A-2, 0.751% 2024 (1) (2) 77,890 749
Class A-3, 2.09% 2024 (1) 149,788 1,461
KfW International Finance Inc. 1.75% 2010 100,000 1,006
141,448
SWEDISH KRONOR - 2.37%
Swedish Government:
3.50% 2006 SKr 14,000 1,890
8.00% 2007 13,000 1,995
5.00% 2009 94,250 13,350
5.25% 2011 92,000 13,207
AB Spintab 6.00% 2009 28,000 4,085
34,527
BRITISH POUNDS - 2.33%
United Kingdom:
8.50% 2005 Lira 7,500 14,713
7.25% 2007 500 1,002
5.00% 2008 4,150 7,747
4.00% 2009 1,250 2,239
5.00% 2014 3,150 5,922
6.00% 2028 350 772
Halifax Building Society 11.00% 2014 400 1,035
Monumental Global Funding Ltd., Series 2001-N, 5.75% 2007 235 437
33,867
DANISH KRONER - 2.16%
Denmark (Kingdom of):
7.00% 2004 DKr 2,500 427
5.00% 2005 21,000 3,598
6.00% 2009 67,800 12,676
Nykredit: (1)
6.00% 2029 8,725 1,515
7.00% 2029 291 52
5.00% 2035 34,586 5,666
Realkredit Danmark A/S 5.00% 2035 (1) 36,110 5,916
Danske Kredit: (1)
6.00% 2029 9,093 1,579
7.00% 2029 157 28
31,457
HUNGARIAN FORINTS - 2.04%
Hungarian Government:
7.00% 2006 HUF 1,650,000 7,740
8.50% 2006 580,000 2,805
6.25% 2007 2,586,630 11,715
Class C, 6.25% 2008 550,000 2,464
6.75% 2013 1,070,000 4,889
29,613
POLISH ZLOTY - 1.95%
Polish Government:
8.50% 2006 PLZ 89,250 24,291
8.50% 2006 4,000 1,077
6.00% 2010 12,000 3,007
28,375
CANADIAN DOLLARS - 1.14%
Canadian Government:
7.25% 2007 C$ 250 216
4.25% 2008 7,750 6,135
5.50% 2010 10,700 8,911
8.00% 2023 1,200 1,262
16,524
TURKISH LIRA - 1.12%
Turkish Treasury Bill:
0% 2004 TRL 14,353,300,000 9,706
0% 2004 5,500,000,000 3,869
0% 2005 4,351,000,000 2,656
16,231
NORWEGIAN KRONER - 0.96%
Norwegian Government:
6.75% 2007 NOK 15,200 2,448
6.00% 2011 70,500 11,557
14,005
SOUTH KOREAN WON - 0.93%
Korea Treasury Bond 4.50% 2008 KRW 15,700,000 13,534
NEW ZEALAND DOLLARS - 0.62%
New Zealand Government:
6.50% 2013 NZ$ 3,000 2,099
4.50% 2016 (4) 9,592 6,960
9,059
AUSTRALIAN DOLLARS - 0.33%
News America Holdings Inc. 8.625% 2014 A$ 5,050 3,973
Australian Government 6.75% 2006 1,000 793
4,766
MEXICAN PESOS - 0.00%
United Mexican States Government, Series M10, 10.50% 2011 MXP 11 1
U.S. DOLLARS - 32.61%
U.S. Treasury notes & bonds:
1.875% 2004 US$ 1,000 1,004
2.00% 2004 750 755
5.875% 2004 3,125 3,218
1.125% 2005 (5) 5,695 5,689
6.75% 2005 (5) 7,250 7,696
3.50% 2006 21,050 21,945
6.875% 2006 (5) 750 832
4.375% 2007 20,500 21,929
4.75% 2008 (5) 9,000 9,818
5.75% 2010 (5) 15,800 18,143
5.00% 2011 (5) 6,750 7,439
3.00% 2012 (4) 5,978 6,791
3.875% 2013 2,410 2,443
4.25% 2013 (5) 3,000 3,109
7.50% 2016 (5) 1,000 1,319
8.875% 2017 750 1,099
6.125% 2027 (5) 2,550 3,009
5.25% 2029 (5) 10,500 11,099
6.25% 2030 890 1,074
Russian Federation:
8.25% 2010 9,450 10,751
5.00% 2030 (6) 15,200 15,295
Fannie Mae:
4.25% 2007 (5) 2,875 3,041
6.00% 2008 (5) 750 844
6.00% 2013 (1) (5) 1,317 1,392
6.00% 2015 (1) (5) 853 902
Series 2002-W7, Class A-2, 4.80% 2022 (1) (5) 636 637
Series 2001-4, Class GA, 10.223% 2025 (1) (2) 73 83
3.815% 2033 (1) (2) (5) 3,790 3,846
5.50% 2033 (1) (5) 2,893 2,969
Brazil (Federal Republic of):
9.25% 2010 2,325 2,418
Bearer 8.00% 2014 (7) 7,512 7,361
11.00% 2040 2,700 2,897
IBJ Preferred Capital Co. LLC, Series A, 8.79% noncumulative preferred (undated) (2) (3) 5,370 6,095
Fuji JGB Investment LLC, Series A, 9.87% noncumulative preferred (undated) (2) (3) 4,125 4,857
Mizuho Financial Group (Cayman) Ltd. 5.79% 2014 (3) 1,050 1,079
Dominican Republic:
9.50% 2006 (3) 2,600 2,015
9.50% 2006 1,750 1,356
9.04% 2013 (3) 5,700 4,132
9.04% 2013 1,000 725
DBS Capital Funding Corp., Series A, 7.657% noncumulative
guaranteed preference shares (undated) (2) (3) 3,800 4,467
Development Bank of Singapore Ltd.: (3)
7.875% 2010 (5) 2,250 2,744
7.125% 2011 800 942
Freddie Mac:
3.50% 2007 (5) 3,000 3,103
6.00% 2017 (1) (5) 1,089 1,153
6.50% 2017 (1) 240 256
6.50% 2017 (1) 120 129
4.095% 2033 (1) (2) (5) 3,046 3,108
Colombia (Republic of):
10.00% 2012 1,050 1,224
10.75% 2013 3,500 4,223
Venezuela (Republic of):
10.75% 2013 (3) 2,635 2,767
10.75% 2013 565 593
9.25% 2027 1,120 1,002
9.375% 2034 1,000 885
Vodafone Group PLC:
7.75% 2010 2,250 2,715
5.375% 2015 2,000 2,100
Woori Bank 5.75% 2014 (2) (3) 4,500 4,753
General Motors Acceptance Corp.: (5)
6.875% 2011 765 831
7.25% 2011 3,500 3,890
Ukraine Government 7.65% 2013 (3) 4,500 4,714
DaimlerChrysler North America Holding Corp.:
4.75% 2008 530 553
7.75% 2011 3,500 4,094
Kazkommerts International BV:
10.125% 2007 1,000 1,113
8.50% 2013 (3) 2,000 2,130
JSC Kazkommertsbank 7.375% 2014 (3) 1,250 1,244
Korea First Bank 7.267% 2034 (2) (3) 3,435 3,641
Deutsche Telekom International Finance BV: (2)
8.50% 2010 1,500 1,844
9.25% 2032 1,250 1,782
SK Telecom Co. Ltd. 4.25% 2011 (3) 3,500 3,526
Enersis SA 7.375% 2014 (3) 3,200 3,325
Guatemala (Republic of):
10.25% 2011 1,000 1,210
10.25% 2011 (3) 750 907
9.25% 2013 (3) 975 1,133
HCA Inc.:
6.95% 2012 (5) 1,000 1,092
6.25% 2013 (5) 500 522
6.75% 2013 370 399
Columbia/HCA Healthcare Corp.: (5)
7.00% 2007 600 662
8.85% 2007 485 550
American Tower Corp.: (5)
9.375% 2009 2,550 2,703
7.50% 2012 (3) 475 456
Freeport-McMoRan Copper & Gold Inc. 10.125% 2010 (5) 2,760 3,146
Polish Government 5.25% 2014 3,000 3,135
Telecom Italia SpA, Series B, 5.25% 2013 (3) 3,000 3,101
British Telecommunications PLC 8.375% 2010 (2) 2,400 2,971
Peru (Republic of) 9.875% 2015 2,500 2,949
Ecuador (Republic of) 7.00% 2030 (2) 3,000 2,681
Edison Mission Energy:
10.00% 2008 1,250 1,322
7.73% 2009 500 485
Homer City Funding LLC 8.734% 2026 (1) (5) 700 780
State of Qatar 9.75% 2030 1,750 2,529
Burns Philp Capital Pty Ltd.: (3)
9.50% 2010 250 269
10.75% 2011 500 542
9.75% 2012 (5) 1,500 1,590
PETRONAS Capital Ltd. 7.00% 2012 (3) 2,050 2,386
France Telecom: (2)
8.20% 2006 500 553
8.75% 2011 1,480 1,810
Qwest Services Corp.: (3) (5)
13.00% 2007 1,100 1,270
13.50% 2010 500 584
Qwest Capital Funding, Inc. 7.75% 2006 500 505
Skandinaviska Enskilda Banken 6.875% 2009 (5) 1,985 2,268
Crown Castle International Corp.:
9.375% 2011 500 545
Series B, 7.50% 2013 900 889
7.50% 2013 700 691
Telefonica Europe BV 7.75% 2010 1,750 2,117
Panama (Republic of):
9.625% 2011 280 335
9.375% 2012 120 142
10.75% 2020 750 951
9.375% 2029 130 149
8.125% 2034 500 505
Banque Centrale de Tunisie 7.375% 2012 1,750 2,043
AES Corp.: (3)
10.00% 2005 (1) 604 622
8.75% 2013 (5) 1,250 1,381
Ras Laffan Liquefied Natural Gas Company Ltd. 3.437% 2009 (1) (3) 1,900 1,920
Six Flags, Inc.:
9.50% 2009 500 530
9.75% 2013 800 854
9.625% 2014 (3) 500 534
Graphic Packaging International, Inc. 8.50% 2011 (5) 1,650 1,848
Nextel Partners, Inc.:
12.50% 2009 (5) 171 202
11.00% 2010 250 279
8.125% 2011 (5) 1,275 1,355
Uruguay (Republic of):
7.25% 2011 1,000 915
7.50% 2015 1,000 867
Cendant Corp. 7.375% 2013 1,500 1,763
Millennium America Inc.: (5)
9.25% 2008 625 670
7.625% 2026 1,175 1,069
SocGen Real Estate Co. LLC, Series A, 7.64% (undated) (2) (3) 1,500 1,725
Nomura Asset Securities Corp., Series 1998-D6, Class A-1A, 6.28% 2030 (1) (5) 1,608 1,721
Worldspan, LP and WS Financing Corp. 9.625% 2011 (5) 1,600 1,720
Illinois Power Special Purpose Trust, Series 1998-1, Class A-6, 5.54% 2009 (1) (5) 1,575 1,698
Terex Corp.:
9.25% 2011 1,100 1,237
Class B, 10.375% 2011 400 458
Earle M. Jorgensen Co. 9.75% 2012 (5) 1,500 1,695
Solectron Corp. 9.625% 2009 (5) 1,500 1,665
Jacuzzi Brands, Inc. 9.625% 2010 (5) 1,500 1,665
WaMu Mortgage Pass-Through Certificates Trust, Series 2003-AR7,
Class A-7, 3.842% 2033 (1) (2) (5) 1,638 1,653
Koninklijke KPN NV 8.00% 2010 1,340 1,635
Verizon Wireless Capital LLC and Cellco Partnership 5.375% 2006 (5) 1,500 1,617
Northwest Airlines, Inc.:
7.625% 2005 (5) 1,000 980
9.875% 2007 400 344
10.00% 2009 350 285
Old Dominion Electric Cooperative, Series 2003-A, 5.676% 2028 (1) (5) 1,500 1,602
TFM, SA de CV:
10.25% 2007 585 608
11.75% 2009 170 172
12.50% 2012 715 804
Dynegy Holdings Inc. 10.125% 2013 (3) (5) 1,425 1,571
Cinemark USA, Inc.:
9.00% 2013 (5) 1,120 1,224
0%/9.75% 2014 (3) (6) 500 312
MMCA Auto Owner Trust, Series 2002-2, Class A-4, 4.30% 2010 (1) (5) 1,500 1,525
Dobson Communications Corp.:
13.00% senior exchangeable preferred 2009 714 shares 500
8.875% 2013 (5) US$ 670 529
American Cellular Corp., Series B, 10.00% 2011 (5) 500 482
Nextel Communications, Inc.: (5)
6.875% 2013 750 801
7.375% 2015 625 680
Petrozuata Finance, Inc., Series B: (1)
8.22% 2017 (3) 1,060 970
8.22% 2017 525 480
Tenneco Automotive Inc. 10.25% 2013 1,250 1,444
Delta Air Lines, Inc.:
7.70% 2005 1,250 1,069
10.00% 2008 (3) 500 357
United Mexican States Government Global:
4.625% 2008 1,025 1,063
10.375% 2009 250 323
Bulgaria (Republic of) 8.25% 2015 1,127 1,386
Williams Companies, Inc. 8.625% 2010 (5) 1,250 1,381
Univision Communications Inc. 7.85% 2011 (5) 1,100 1,336
CS First Boston Mortgage Securities Corp., Series 2001-CF2, Class A-3, 6.238% 2034 (1) (5) 1,200 1,334
Charter Communications Holdings, LLC and Charter Communications Holdings
' Capital Corp. 10.25% 2010 (3) 500 517
CCO Holdings, LLC and CCO Holdings Capital Corp. 8.75% 2013 (3) (5) 500 512
Charter Communications Holdings, LLC 10.75% 2009 325 286
CHL Mortgage Pass-Through Trust, Series 2003-HYB3, Class 4-A-1, 3.545% 2033 (1) (2) (5) 1,280 1,284
Carmike Cinemas, Inc. 7.50% 2014 (3) (5) 1,250 1,278
Westpac Capital Trust IV 5.256% (undated) (3) 1,250 1,250
GMAC Commercial Mortgage Securities, Inc., Series 1999-C1, Class A-1, 5.83% 2033 (1) (5) 1,175 1,246
Indonesia (Republic of) 6.75% 2014 (3) 1,250 1,241
Chase Commercial Mortgage Securities Corp., Series 1998-1, Class A-2, 6.56% 2030 (1) (5) 1,100 1,237
Concentra Operating Corp., Series A, 13.00% 2009 (5) 1,095 1,210
Stoneridge, Inc. 11.50% 2012 (5) 1,000 1,198
William Lyon Homes, Inc. 10.75% 2013 (5) 1,000 1,188
Turkey (Republic of) 9.50% 2014 1,000 1,185
Pathmark Stores, Inc. 8.75% 2012 (5) 1,125 1,181
KinderCare Learning Centers, Inc., Series B, 9.50% 2009 (5) 1,152 1,176
Owens-Illinois, Inc.:
7.35% 2008 400 396
7.50% 2010 (5) 600 578
Owens-Brockway Glass Container Inc.:
8.875% 2009 25 27
7.75% 2011 160 168
General Electric Capital Corp., Series A, 6.75% 2032 (5) 1,000 1,159
LBI Media, Inc. 10.125% 2012 (5) 1,000 1,148
Potlatch Corp. 10.00% 2011 (5) 1,000 1,135
Gray Communications Systems, Inc. 9.25% 2011 (5) 1,000 1,123
Litigation Settlement Monetized Fee Trust I, Series 2001-1, Class A-2, 10.98% 2031 (1) (3) (5) 1,000 1,122
Ford Motor Credit Co. 7.875% 2010 (5) 1,000 1,120
Radio One, Inc., Series B, 8.875% 2011 (5) 1,000 1,115
J.C. Penney Co., Inc.:
7.60% 2007 600 672
8.25% 2022 (1) 425 442
UFJ Finance Aruba AEC 6.75% 2013 1,000 1,108
AMC Entertainment Inc. 9.875% 2012 (5) 1,000 1,095
Tyco International Group SA 6.125% 2009 (5) 1,000 1,088
Xerox Corp. 7.125% 2010 (5) 1,000 1,065
Fairfax Financial Holdings Ltd. 6.875% 2008 1,000 1,045
Quintiles Transnational Corp. 10.00% 2013 (3) 1,000 1,045
Perkins Family Restaurants, LP, Perkins Finance Corp., Series B, 10.125% 2007 (5) 1,000 1,035
Quebecor Media Inc. 11.125% 2011 875 1,008
Motorola, Inc. 8.00% 2011 (5) 840 1,005
Centennial Communications Corp. and Centennial Cellular Operating Co. LLC 10.125% 2013 (5) 590 611
Centennial Communications Corp., Centennial Cellular
Operating Co. LLC and Centennial Puerto Rico Operating Corp. 8.125% 2014 (3) 425 394
Micron Technology, Inc. 6.50% 2005 (3) (5) 1,000 1,000
Triton PCS, Inc.:
8.75% 2011 375 356
9.375% 2011 500 485
8.50% 2013 125 134
State of Wisconsin, Badger Tobacco Asset Securitization Corp., Tobacco Settlement
Asset-backed Bonds, 6.125% 2027 (expected maturity 2014) (1) (5) 1,000 970
United Rentals (North America), Inc.: (3)
7.75% 2013 500 490
7.00% 2014 500 473
Sprint Capital Corp.:
6.00% 2007 250 272
7.625% 2011 580 678
General Maritime Corp. 10.00% 2013 (5) 825 928
MDC Holdings, Inc. 5.50% 2013 (5) 900 926
BAE SYSTEMS 2001 Asset Trust, Series 2001, Class B, 7.156% 2011 (1) (3) 826 921
Western Wireless Corp. 9.25% 2013 875 903
Laidlaw International, Inc. 10.75% 2011 (3) 800 900
RH Donnelley Inc. 10.875% 2012 (3) 750 898
SLM Corp., Series A, 5.00% 2015 (5) 875 889
Eldorado Resorts LLC 10.50% 2006 (5) 879 888
Tenet Healthcare Corp. 6.375% 2011 1,000 870
Gerdau Ameristeel Corp. and GUSAP Partners 10.375% 2011 750 851
Technical Olympic USA, Inc. 10.375% 2012 750 849
Open Joint Stock Co. Gazprom 9.125% 2007 750 845
WH Holdings and WH Capital 9.50% 2011 (3) (5) 800 840
Amkor Technology, Inc. 9.25% 2008 (5) 750 831
Buffets, Inc. 11.25% 2010 (5) 750 829
Koppers Inc. 9.875% 2013 (3) (5) 750 829
Stone Container Corp. 9.75% 2011 500 561
Jefferson Smurfit Corp. (U.S.) 7.50% 2013 250 265
FelCor Lodging LP 9.00% 2011 (2) 750 808
Hollinger Participation Trust 12.125% 2010 (2) (3) (7) 697 808
Packaging Corp. of America 5.75% 2013 (5) 755 796
Regal Cinemas Corp., Series B, 9.375% 2012 700 795
Toys "R" Us, Inc.:
7.875% 2013 475 501
7.375% 2018 295 291
Argosy Gaming Co. 7.00% 2014 (3) (5) 750 789
Playtex Products, Inc. 8.00% 2011 (3) (5) 750 784
Airgas, Inc. 6.25% 2014 (3) 750 776
Allied Waste North America, Inc.:
Series B, 8.875% 2008 (5) 250 282
5.75% 2011 (3) 250 243
6.125% 2014 (3) 250 243
Circus and Eldorado Joint Venture and Silver Legacy Resort Casino 10.125% 2012 (5) 750 767
Residential Asset Securities Corp. Trust, Series 2001-KS3, Class A-I-6, 5.96% 2031 (1) 700 755
Dex Media, Inc. 8.00% 2013 (3) (5) 750 748
Equistar Chemicals, LP:
10.125% 2008 325 351
8.75% 2009 150 154
Lyondell Chemical Co. 11.125% 2012 225 243
Hospitality Properties Trust 6.75% 2013 (5) 690 747
Salton, Inc. 12.25% 2008 750 739
GE Capital Commercial Mortgage Corp., Series 2001-1, Class A-1, 6.079% 2033 (1) (5) 654 716
ON Semiconductor Corp. 13.00% 2008 (2) (5) 536 651
WCI Communities, Inc.:
10.625% 2011 (5) 325 369
9.125% 2012 250 280
Wells Fargo & Co. 3.50% 2008 (5) 625 641
Bayer Hypo-Vereinsbank 8.741% 2031 (3) 500 631
Saks Inc. 9.875% 2011 500 618
Pemex Project Funding Master Trust 9.125% 2010 500 615
Government National Mortgage Assn.: (1)
6.00% 2013 (5) 526 560
8.50% 2021 19 21
6.50% 2029 19 20
Western Oil Sands Inc. 8.375% 2012 500 599
Sanmina-SCI Corp. 10.375% 2010 500 593
RBS Capital Trust I noncumulative trust preferred 4.709% (undated) 600 591
Liberty Media Corp. 7.875% 2009 (5) 500 591
RailAmerica Transportation Corp. 12.875% 2010 500 586
Office Depot, Inc. 6.25% 2013 (5) 525 572
Del Monte Corp., Series B, 8.625% 2012 (5) 500 565
Household Finance Corp. 6.40% 2008 (5) 500 563
NextMedia Operating, Inc. 10.75% 2011 (5) 500 563
Steel Dynamics, Inc. 9.50% 2009 500 561
Viasystems, Inc. 10.50% 2011 (3) 500 561
Centex Corp. 4.75% 2008 (5) 525 554
Premcor Refining Group Inc. 7.75% 2012 (5) 500 550
Royal Caribbean Cruises Ltd. 7.00% 2007 500 543
Washington Mutual, Inc. 5.625% 2007 (5) 500 542
Entravision Communications Corp. 8.125% 2009 500 539
Argentina (Republic of):
11.75% 2009 (8) 210 66
1.234% 2012 (2) 600 404
12.25% 2018 (7) (8) 223 66
Host Marriott, LP, Series K, 7.125% 2013 500 521
Dominion Resources, Inc., Series B, 4.125% 2008 (5) 500 519
Cincinnati Bell Inc. 7.25% 2013 (5) 500 508
L.A. Arena Funding, LLC, Series 1, Class A, 7.656% 2026 (1) (3) (5) 470 505
Merrill Lynch Mortgage Investors, Inc., Series 2004-A1, Class II-A-1, 4.67% 2034 (1) (2) 494 505
Visteon Corp. 7.00% 2014 500 498
First Union National Bank Commercial Mortgage Trust, Series 2000-C1,
Class A-1, 7.739% 2032 (1) (5) 439 495
Payless ShoeSource, Inc. 8.25% 2013 500 489
CS First Boston Mortgage Securities Corp., Series 2004-AR1,
' Class II-A-1, 4.833% 2034 (1) (2) 467 479
Electronic Data Systems Corp., Series B, 6.00% 2013 (2) (5) 490 476
Nalco Co. 7.75% 2011 (3) (5) 450 473
Associated Materials Inc. 0%/11.25% 2014 (3) (6) 750 459
MetLife, Inc. 3.911% 2005 (5) 440 451
NTELOS Inc. 9.00% convertible bond 2013 (3) (9) 395 436
AT&T Wireless Services, Inc. 8.125% 2012 (5) 345 421
Gold Kist Inc. 10.25% 2014 (3) 400 406
Ahold Finance U.S.A., Inc. 8.25% 2010 350 390
Nortek, Inc. 10.00% 2011 (3) (5) (6) 500 383
Winn-Dixie Stores, Inc. 8.875% 2008 375 334
Telenet Group Holding NV 0%/11.50% 2014 (3) (6) 490 301
Clear Channel Communications, Inc. 7.65% 2010 (5) 250 297
Telstra Corp. Ltd. 6.375% 2012 250 286
Toll Brothers, Inc. 6.875% 2012 250 284
Structured Asset Securities Corp., Series 1998-RF2, Class A, 8.54% 2027 (1) (2) (3) 253 281
Verizon Global Funding Corp. 7.375% 2012 (5) 220 263
Schering-Plough Corp. 5.30% 2013 250 261
Georgia-Pacific Corp. 8.25% 2023 250 259
ICI Wilmington, Inc. 4.375% 2008 250 257
International Game Technology 8.375% 2009 200 243
Young Broadcasting Inc. 10.00% 2011 (5) 170 183
Continental Airlines, Inc., Series 2000-1, Class A-1, 8.048% 2022 (1) 158 161
Southern Capital Corp. Pass-Through Trust, Series 2002-1, Class G,
MBIA insured, 5.70% 2023 (1) (3) 116 124
Great Atlantic & Pacific Tea Co., Inc. 9.125% 2011 100 88
Kaiser Aluminum & Chemical Corp. 12.75% 2003 (10) 375 45
474,500
TOTAL BONDS AND NOTES (cost: $1,251,809,000) 1,372,328
MARKET
VALUE
EQUITY-RELATED SECURITIES - 0.13% SHARES (000)
SpectraSite, Inc. (9) (11) 37,290 US$ 1,176
NTELOS Inc. (9) (11) 33,891 740
GT Group Telecom Inc., warrants, expire 2010 (3) (9) (11) 1,000 0
TOTAL EQUITY-RELATED SECURITIES (cost: $1,759,000) 1,916
PRINCIPAL MARKET
AMOUNT VALUE
SHORT-TERM SECURITIES - 4.27% (000) (000)
CORPORATE SHORT-TERM NOTES - 3.59%
KFW International Finance Inc. 1.00% due 4/7/2004 (3) US$ 10,030 US$ 10,028
KFW International Finance Inc. 1.00% due 5/3/2004 (3) 5,820 5,815
Bank of Ireland 1.025% due 5/17/2004 (3) 10,500 10,486
New Center Asset Trust 1.06% due 4/1/2004 10,200 10,200
American Honda Finance Corp. 1.02% due 5/19/2004 5,700 5,692
GlaxoSmithKline Finance PLC 1.00% due 4/5/2004 5,000 4,999
Barton Capital Corp. 1.03% due 4/26/2004 (3) 5,000 4,996
52,216
U.S. TREASURIES - 0.34%
U.S. Treasury Bills 0.90% due 5/20/2004 (5) 5,000 4,994
FEDERAL AGENCY DISCOUNT NOTES - 0.34%
Fannie Mae 1.015% due 5/5/2004 (5) 4,900 4,895
TOTAL SHORT-TERM SECURITIES (cost: $62,105,000) 62,105
TOTAL INVESTMENT SECURITIES (cost: $1,315,673,000) 1,436,349
Other assets less liabilities 18,528
NET ASSETS US$ 1,454,877
(1) 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.
(2) Coupon rate may change periodically.
(3) Purchased in a private placement transaction; resale may be limited to
qualified institutional buyers; resale to the public may require
registration.
(4) Index-linked bond whose principal amount moves with a government retail
price index.
(5) This security, or a portion of this security, has been segregated to cover
funding requirements on investment transactions settling in the future.
(6) Step bond; coupon rate will increase at a later date.
(7) Payment in kind; the issuer has the option of paying additional securities
in lieu of cash.
(8) Scheduled interest payments not made; reorganization pending.
(9) Valued under fair value procedures adopted by authority of the Board of
Directors.
(10) Company not making scheduled interest payments; bankruptcy proceedings
pending.
(11) Security did not produce income during the last 12 months.
See Notes to Financial Statements
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES unaudited
at March 31, 2004
(dollars and shares in thousands,except per-share amounts)
ASSETS:
Investment securities at market (cost: $1,315,673) $1,436,349
Cash 917
Receivables for:
Sales of investments $ 555
Sales of fund's shares 8,328
Open forward currency contracts 5,671
Closed forward currency contracts 2,215
Dividends and interest 23,452 40,221
1,477,487
LIABILITIES:
Payables for:
Purchases of investments 17,522
Repurchases of fund's shares 1,514
Open forward currency contracts 444
Closed forward currency contracts 1,793
Investment advisory services 654
Services provided by affiliates 392
Deferred Directors' compensation 52
Other fees and expenses 239 22,610
NET ASSETS AT MARCH 31, 2004 $1,454,877
NET ASSETS CONSIST OF:
Capital paid in on shares of capital stock $1,315,150
Distributions in excess of net investment income (5,583)
Undistributed net realized gain 19,247
Net unrealized appreciation 126,063
NET ASSETS AT MARCH 31, 2004 $1,454,877
TOTAL AUTHORIZED CAPITAL STOCK - 200,000 SHARES, $0.001 PAR VALUE
SHARES NET ASSET VALUE
NET ASSETS OUTSTANDING PER SHARE (1)
Class A $1,080,100 56,719 $19.04
Class B 71,879 3,791 18.96
Class C 94,534 5,001 18.90
Class F 134,265 7,077 18.97
Class 529-A 16,840 883 19.08
Class 529-B 3,822 201 19.02
Class 529-C 8,637 454 19.02
Class 529-E 883 46 19.03
Class 529-F 986 52 19.01
Class R-1 895 47 19.02
Class R-2 7,286 383 19.00
Class R-3 4,672 246 19.03
Class R-4 584 31 19.06
Class R-5 29,494 1,549 19.04
(1) Maximum offering price and redemption price per share were equal to the net
asset value per share for all share classes, except for classes A and
529-A, for which the maximum offering prices per share were $19.78 and
$19.82, respectively.
See Notes to Financial Statements
STATEMENT OF OPERATIONS unaudited
for the six months ended March 31, 2004 (dollars in thousands)
INVESTMENT INCOME:
Income:
Interest (net of non-U.S. withholding
tax of $22) $28,209
Dividends 50 $28,259
Fees and expenses:
Investment advisory services 3,467
Distribution services 2,148
Transfer agent services 616
Administrative services 239
Reports to shareholders 81
Registration statement and prospectus 108
Postage, stationery and supplies 92
Directors' compensation 18
Auditing and legal 63
Custodian 140
State and local taxes 21
Other 22
Total expenses before reimbursement 7,015
Reimbursement of expenses 87 6,928
Net investment income 21,331
NET REALIZED GAIN AND UNREALIZED
APPRECIATION ON INVESTMENTS
AND NON-U.S. CURRENCY:
Net realized gain on:
Investments 20,238
Non-U.S. currency transactions 4,769 25,007
Net unrealized appreciation on:
Investments 36,245
Non-U.S. currency translations 1,433 37,678
Net realized gain and
unrealized appreciation
on investments and non-U.S. currency 62,685
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $84,016
See Notes to Financial Statements
STATEMENT OF CHANGES IN NET ASSETS (dollars in thousands)
Six months ended Year ended
March 31, 2004* September 30, 2003
OPERATIONS:
Net investment income $21,331 $34,300
Net realized gain on investments and non-U.S. currency transactions 25,007 583
Net unrealized appreciation on investments and non-U.S. currency translations 37,678 113,635
Net increase in net assets resulting from operations 84,016 148,518
DIVIDENDS PAID TO SHAREHOLDERS FROM NET INVESTMENT INCOME AND CURRENCY GAINS (40,255) (22,556)
CAPITAL SHARE TRANSACTIONS 373,795 334,271
TOTAL INCREASE IN NET ASSETS 417,556 460,233
NET ASSETS:
Beginning of period 1,037,321 577,088
End of period (including distributions in excess of and undistributed
net investment income: $(5,583) and $13,341, respectively) $1,454,877 $1,037,321
*Unaudited
See Notes to Financial Statements
NOTES TO FINANCIAL STATEMENTS unaudited
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 primarily in a global portfolio
of investment-grade bonds denominated in U.S. dollars and other currencies. The
fund may also invest in lower quality, high-yield debt securities.
The fund offers 14 share classes consisting of four retail share classes, five
CollegeAmerica savings plan share classes and five retirement plan share
classes. The CollegeAmerica savings plan share classes (529-A, 529-B, 529-C,
529-E and 529-F) are sponsored by the Commonwealth of Virginia and can be
utilized to save for college education. The five retirement plan share classes
(R-1, R-2, R-3, R-4 and R-5) are sold without any sales charges and do not carry
any conversion rights. The fund's share classes are described below:
- -------------------------------------------------------------------------------------------------------------
Initial sales Contingent deferred sales
Share class charge charge upon redemption Conversion feature
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Classes A and 529-A Up to 3.75% None (except 1% for certain None
redemptions within one year of
purchase without an initial
sales charge)
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Classes B and 529-B None Declines from 5% to zero for Classes B and 529-B
for redemptions within six convert to classes A
years of purchase and 529-A, respectively,
after eight years
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Class C None 1% for redemptions within Class C converts to Class F
one year of purchase after 10 years
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Class 529-C None 1% for redemptions within None
one year of purchase
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Class 529-E None None None
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Classes F and 529-F None None None
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Classes R-1, R-2, R-3, None None None
R-4 and R-5
- -------------------------------------------------------------------------------------------------------------
Holders of all share classes have equal pro rata rights to assets, dividends and
liquidation. Each share class has identical voting rights, except for the
exclusive right to vote on matters affecting only its class. Share classes have
different fees and expenses ("class-specific fees and expenses"), primarily due
to different arrangements for distribution, administrative and shareholder
services. Differences in class-specific fees and expenses will result in
differences in net investment income and, therefore, the payment of different
per-share dividends by each class.
SIGNIFICANT ACCOUNTING POLICIES - The financial statements have been prepared to
comply with accounting principles generally accepted in the United States of
America. These principles require management to make estimates and assumptions
that affect reported amounts and disclosures. Actual results could differ from
those estimates. The following is a summary of the significant accounting
policies followed by the fund:
SECURITY VALUATION - Equity securities are valued at the official closing
price of, or the last reported sale price on, the exchange or market on
which such securities are traded, as of the close of business on the day
the securities are being valued or, lacking any sales, at the last
available bid price. Prices for each security are taken from the principal
exchange or market in which the security trades. Fixed-income securities
are valued at prices obtained from an independent pricing service, when
such prices are available. However, where the investment adviser deems it
appropriate, such securities will be valued at the mean quoted bid and
asked prices or at prices for securities of comparable maturity, quality
and type. Short-term securities maturing within 60 days are valued at
amortized cost, which approximates market value. 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.
Forward currency contracts are valued at the mean of their representative
quoted bid and asked prices. Securities and other assets for which
representative market quotations are not readily available are fair valued
as determined in good faith by authority of the fund's Board of Directors.
Various factors may be reviewed in order to make a good faith determination
of a security's fair value. These factors include, but are not limited to,
the type and cost of the security; contractual or legal restrictions on
resale of the security; relevant financial or business developments of the
issuer; actively traded similar or related securities; conversion or
exchange rights on the security; related corporate actions; significant
events occurring after the close of trading in the security; and changes in
overall market conditions.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions
are recorded by the fund as of the date the trades are executed with
brokers. Realized gains and losses from security transactions are
determined based on the specific identified cost of the securities. In the
event a security is purchased with a delayed payment date, the fund will
segregate liquid assets sufficient to meet its payment obligations.
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 fixed-income securities are amortized daily over the
expected life of the security.
CLASS ALLOCATIONS - Income, fees and expenses (other than class-specific
fees and expenses) and realized and unrealized gains and losses are
allocated daily among the various share classes based on their relative net
assets. Class-specific fees and expenses, such as distribution,
administrative and shareholder services, are charged directly to the
respective share class.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends and distributions
paid to shareholders are recorded on the ex-dividend date.
NON-U.S. CURRENCY TRANSLATION - Assets and liabilities, including
investment securities, denominated in non-U.S. currencies are translated
into U.S. dollars at the exchange rates in effect at the end of the
reporting period. Purchases and sales of investment securities and income
and expenses are translated into U.S. dollars at the exchange rates on the
dates of such transactions. In the accompanying financial statements, the
effects of changes in non-U.S. exchange rates on investment securities are
included with the net realized gain or loss and net unrealized appreciation
or depreciation on investments. The realized gain or loss and unrealized
appreciation or depreciation resulting from all other transactions
denominated in non-U.S. currencies are disclosed separately.
FORWARD CURRENCY CONTRACTS - The fund may enter into forward currency
contracts, which represent agreements to exchange non-U.S. currencies on
specific future dates at predetermined rates. The fund enters into these
contracts to manage its exposure to changes in non-U.S. exchange rates
arising from investments denominated in non-U.S. currencies. Upon entering
into these contracts, risks may arise from the potential inability of
counterparties to meet the terms of their contracts and from possible
movements in non-U.S. exchange rates. Due to these risks, the fund could
incur losses up to the entire contract amount, which may exceed the net
unrealized value shown in the accompanying financial statements. On a daily
basis, the fund values forward currency contracts based on the applicable
exchange rates and records unrealized gains or losses. The fund records
realized gains or losses at the time the forward contract is closed or
offset by another contract with the same broker for the same settlement
date and currency.
MORTGAGE DOLLAR ROLLS - The fund may enter into mortgage dollar roll
transactions in which the fund sells a mortgage-backed security to a
counterparty and simultaneously enters into an agreement with the same
counterparty to buy back a similar security on a specific future date at a
predetermined price. Each mortgage dollar roll is treated as a financing
transaction, therefore, any gain or loss is considered unrealized until the
roll reaches completion. Risks may arise due to the delayed payment date
and the potential inability of counterparties to complete the transaction.
Income is generated as consideration for entering into these transactions
and is included in interest income in the accompanying financial
statements.
2. NON-U.S. INVESTMENTS
INVESTMENT RISK - The risks of investing in securities of non-U.S. issuers 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.
TAXATION - Dividend and interest income is recorded net of non-U.S. taxes paid.
Realized and unrealized gains on securities in certain countries are subject to
non-U.S. taxes. The fund records a liability based on realized and unrealized
gains to provide for potential non-U.S. taxes payable on these securities. For
the six months ended March 31, 2004, non-U.S. taxes recorded based on realized
gains were $152,000 and non-U.S. taxes recorded based on unrealized gains were
$18,000.
3. FEDERAL INCOME TAXATION AND DISTRIBUTIONS
The fund complies with the requirements under Subchapter M of the Internal
Revenue Code applicable to mutual funds and intends to distribute substantially
all of its net taxable income and net capital gains each year. The fund is not
subject to income taxes to the extent such distributions are made.
DISTRIBUTIONS - Distributions paid to shareholders are based on net investment
income and net realized gains determined on a tax basis, which may differ from
net investment income and net realized gains for financial reporting purposes.
These differences are due primarily to differing treatment for items such as
non-U.S. currency gains and losses; short-term capital gains and losses;
deferred expenses; cost of investments sold; paydowns on investments; and net
capital losses. 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, 2004, the cost of investment securities, excluding
forward currency contracts, for federal income tax purposes was $1,315,674,000.
As of March 31, 2004, the components of distributable earnings on a tax basis
were as follows:
(dollars in thousands)
Undistributed net investment income and currency gains $12,198
Accumulated short-term capital losses (3,408)
Undistributed long-term capital gains 4,703
Gross unrealized appreciation on investment securities 124,784
Gross unrealized depreciation on investment securities (4,109)
Accumulated short-term capital losses above include capital loss carryforwards
of $716,000, $1,694,000, $2,178,000 and $1,164,000 expiring in 2008, 2009, 2010
and 2011, respectively. The capital loss carryforwards will be used to offset
any capital gains realized by the fund in the current year or in subsequent
years through the expiration dates. The fund will not make distributions from
capital gains while capital loss carryforwards remain.
Tax basis distributions paid to shareholders from net investment income and
currency gains were as follows (dollars in thousands):
Six months ended Year ended
SHARE CLASS March 31, 2004 September 30, 2003
Class A $ 31,462 $ 19,751
Class B 1,789 755
Class C 1,935 520
Class F 3,011 740
Class 529-A 401 130
Class 529-B 87 27
Class 529-C 174 51
Class 529-E 27 8
Class 529-F 22 3
Class R-1 25 8
Class R-2 137 16
Class R-3 195 12
Class R-4 12 -*
Class R-5 978 535
Total $ 40,255 $ 22,556
* Amount less than one thousand.
4. FEES AND TRANSACTIONS WITH RELATED PARTIES
Capital Research and Management Company ("CRMC"), the fund's investment adviser,
is the parent company of American Funds Service Company ("AFS"), the fund's
transfer agent, and American Funds Distributors, Inc. ("AFD"), the principal
underwriter of the fund's shares.
INVESTMENT ADVISORY SERVICES - The Investment Advisory and Service Agreement
with CRMC provides for monthly fees accrued daily. At the beginning of the
period, these fees were based on a declining series of annual rates beginning
with 0.650% on the first $500 million of daily net assets and decreasing to
0.500% on such assets in excess of $1 billion. The Board of Directors approved
an amended agreement effective November 1, 2003, reducing the rate on the first
$500 million of daily net assets from 0.650% to 0.570%. Until the effective
date, CRMC voluntarily reduced investment advisory services fees to the rates
provided by the amended agreement. As a result, for the six months ended March
31, 2004, the fee shown on the accompanying financial statements of $3,467,000,
which was equivalent to an annualized rate of 0.569%, was voluntarily reduced by
$68,000 to $3,399,000, or 0.557% of average daily net assets.
CLASS-SPECIFIC FEES AND EXPENSES - Expenses that are specific to individual
share classes are accrued directly to the respective share class. The principal
class-specific fees and expenses are described below:
DISTRIBUTION SERVICES - The fund has adopted plans of distribution for all
share classes, except Class R-5. Under the plans, the Board of Directors
approves certain categories of expenses that are used to finance activities
primarily intended to sell fund shares. The plans provide for annual
expenses, based on a percentage of average daily net assets, ranging from
0.30% to 1.00% as noted on the following page. In some cases, the Board of
Directors has approved expense amounts lower than plan limits. All share
classes may use up to 0.25% of average daily net assets to pay service
fees, or to compensate AFD for paying service fees, to firms that have
entered into agreements with AFD for providing certain shareholder
services. Expenses in excess of these amounts, up to approved limits, may
be used to compensate dealers and wholesalers for shares sold.
For classes A and 529-A, the Board of Directors has also approved the
reimbursement of dealer and wholesaler commissions paid by AFD for certain
shares sold without a sales charge. Each class reimburses AFD for amounts
billed within the prior 15 months but only to the extent that the overall
annual expense limit of 0.30% is not exceeded. As of March 31, 2004, there
were no unreimbursed expenses subject to reimbursement for classes A or
529-A.
------------------------------------------------------------------
Currently
Share class approved limits Plan limits
------------------------------------------------------------------
------------------------------------------------------------------
Class A 0.30% 0.30%
------------------------------------------------------------------
------------------------------------------------------------------
Class 529-A 0.30 0.50
------------------------------------------------------------------
------------------------------------------------------------------
Classes B and 529-B 1.00 1.00
------------------------------------------------------------------
------------------------------------------------------------------
Classes C, 529-C and R-1 1.00 1.00
------------------------------------------------------------------
------------------------------------------------------------------
Class R-2 0.75 1.00
------------------------------------------------------------------
------------------------------------------------------------------
Classes 529-E and R-3 0.50 0.75
------------------------------------------------------------------
------------------------------------------------------------------
Classes F, 529-F and R-4 0.25 0.50
------------------------------------------------------------------
TRANSFER AGENT SERVICES - The fund has a transfer agent agreement with AFS
for classes A and B. Under this agreement, these share classes compensate
AFS for transfer agent services including shareholder recordkeeping,
communications and transaction processing. AFS is also compensated for
certain transfer agent services provided to all other share classes from
the administrative services fees paid to CRMC described below.
ADMINISTRATIVE SERVICES - The fund has an administrative services agreement
with CRMC to provide transfer agent and other related shareholder services
for all classes of shares other than classes A and B. Each relevant class
pays CRMC annual fees of 0.15% (0.10% for Class R-5) based on its
respective average daily net assets. Each relevant class also pays AFS
additional amounts for certain transfer agent services. CRMC and AFS may
use these fees to compensate third parties for performing these services.
During the start-up period for classes R-1, R-2, R-3 and R-4, CRMC has
voluntarily agreed to pay a portion of these fees. For the six months ended
March 31, 2004, the total fees paid by CRMC were $19,000. Each 529 share
class is subject to an additional annual administrative services fee of
0.10% of its respective average daily net assets; this fee is payable to
the Commonwealth of Virginia for the maintenance of the CollegeAmerica
plan. Although these amounts are included with administrative services fees
in the accompanying financial statements, the Commonwealth of Virginia is
not considered a related party. Administrative services fees are presented
gross of any payments made by CRMC.
Expenses under the agreements described on the previous page for the
six months ended March 31, 2004, were as follows (dollars in
thousands):
==============================================================================================================
ADMINISTRATIVE SERVICES
------------------------------------------------------------
COMMONWEALTH OF
CRMC VIRGINIA
DISTRIBUTION TRANSFER AGENT ADMINISTRATIVE TRANSFER AGENT ADMINISTRATIVE
SHARE CLASS SERVICES SERVICES SERVICES SERVICES SERVICES
--------------------------------------------------------------------------------------------------------------
Class A $1,271 $573 Not applicable Not applicable Not applicable
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class B 314 43 Not applicable Not applicable Not applicable
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class C 343 Included $51 $15 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class F 116 Included 69 16 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-A 16 Included 10 2 $6
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-B 16 Included 2 1 2
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-C 33 Included 5 2 3
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-E 2 Included 1 -* -*
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-F 1 Included 1 -* 1
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-1 4 Included 1 1 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-2 18 Included 3 24 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-3 14 Included 4 5 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-4 -* Included -* -* Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-5 Not applicable Included 14 -* Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Total $2,148 $616 $161 $66 $12
==============================================================================================================
* Amount less than one thousand.
DEFERRED DIRECTORS' COMPENSATION - Since the adoption of the deferred
compensation plan in 1993, Directors who are unaffiliated with CRMC may elect to
defer the cash payment of part or all of their compensation. These deferred
amounts, which remain as liabilities of the fund, are treated as if invested in
shares of the fund or other American Funds. These amounts represent general,
unsecured liabilities of the fund and vary according to the total returns of the
selected funds. Directors' compensation in the accompanying financial statements
includes $10,000 in current fees (either paid in cash or deferred) and a net
increase of $8,000 in the value of the deferred amounts.
AFFILIATED OFFICERS AND DIRECTORS - Officers and certain Directors of the fund
are or may be considered to be affiliated with CRMC, AFS and AFD. No affiliated
officers or Directors received any compensation directly from the fund.
5. CAPITAL SHARE TRANSACTIONS
Capital share transactions in the fund were as follows (dollars and shares in
thousands):
SHARE CLASS SALES(1) REINVESTMENTS OF DIVIDENDS REPURCHASES(1) NET INCREASE
AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
SIX MONTHS ENDED MARCH 31, 2004
Class A $ 310,335 16,567 $ 28,030 1,503 $ (118,338) (6,354) $ 220,027 11,716
Class B 23,473 1,259 1,591 86 (11,511) (619) 13,553 726
Class C 54,905 2,957 1,660 89 (11,280) (612) 45,285 2,434
Class F 82,316 4,411 2,704 145 (13,113) (704) 71,907 3,852
Class 529-A 7,472 397 401 22 (925) (49) 6,948 370
Class 529-B 1,140 61 87 5 (179) (10) 1,048 56
Class 529-C 3,706 198 174 9 (406) (22) 3,474 185
Class 529-E 344 18 27 1 (268) (14) 103 5
Class 529-F 607 33 22 1 (18) (1) 611 33
Class R-1 512 28 25 1 (488) (27) 49 2
Class R-2 4,696 251 137 7 (611) (33) 4,222 225
Class R-3 17,328 924 195 11 (14,981) (795) 2,542 140
Class R-4 329 17 12 1 (9) -* 332 18
Class R-5 4,748 254 860 46 (1,914) (102) 3,694 198
Total net increase
(decrease) $ 511,911 27,375 $ 35,925 1,927 $ (174,041) (9,342) $ 373,795 19,960
YEAR ENDED SEPTEMBER 30, 2003
Class A $ 524,729 30,608 $ 17,833 1,065 $ (340,241) (19,776) $ 202,321 11,897
Class B 53,204 3,104 668 40 (21,718) (1,264) 32,154 1,880
Class C 72,048 4,182 480 28 (40,206) (2,328) 32,322 1,882
Class F 70,377 4,063 657 39 (31,360) (1,851) 39,674 2,251
Class 529-A 7,647 444 130 8 (702) (40) 7,075 412
Class 529-B 2,125 125 27 2 (163) (10) 1,989 117
Class 529-C 3,870 228 51 3 (346) (20) 3,575 211
Class 529-E 636 37 8 1 (28) (2) 616 36
Class 529-F 322 19 3 -* - - 325 19
Class R-1 875 51 8 1 (264) (15) 619 37
Class R-2 3,238 186 16 1 (533) (31) 2,721 156
Class R-3 2,286 131 11 1 (496) (29) 1,801 103
Class R-4 391 22 -* -* (163) (9) 228 13
Class R-5 10,861 613 460 28 (2,470) (140) 8,851 501
Total net increase
(decrease) $ 752,609 43,813 $ 20,352 1,217 $ (438,690) (25,515) $ 334,271 19,515
* Amount less than one thousand.
(1) Includes exchanges between share classes of the fund.
6. FORWARD CURRENCY CONTRACTS
As of March 31, 2004, the fund had open forward currency contracts to purchase
or sell non-U.S. currencies as follows:
Contract amount U.S. valuations at March 31, 2004
Unrealized
appreciation
Non-U.S. U.S. Amount (depreciation)
Non-U.S. currency contracts (000) (000) (000) (000)
PURCHASES:
Australian dollars
expiring 6/18/2004 A$ 4,431 $ 3,250 $ 3,350 $ 100
Canadian dollars
expiring 5/5/2004 C$ 4,441 3,313 3,379 66
Euros
expiring 4/7-7/30/2004 Euro 19,775 24,479 24,281 (198)
Japanese yen
expiring 4/7-9/17/2004 Yen 18,743,673 175,608 180,060 4,452
New Zealand dollars
expiring 6/18/2004 NZ$ 5,041 3,250 3,327 77
Swedish kronor
expiring 6/16/2004 SKr 21,949 2,894 2,900 6
212,794 217,297 4,503
SALES:
British pounds
expiring 6/28/2004 Lira 1,771 3,199 3,234 (35)
Euros
expiring 4/13-7/2/2004 Euro 42,063 52,468 51,675 793
Norwegian kroner
expiring 7/30/2004 NOK 6,000 871 872 (1)
Swedish kronor
expiring 5/27-6/28/2004 SKr 36,470 4,786 4,819 (33)
61,324 60,600 724
FORWARD CURRENCY CONTRACTS - NET $ 5,227
7. RESTRICTED SECURITIES
The fund has invested in certain securities for which resale may be limited to
qualified buyers or which are otherwise restricted. These securities are
identified in the investment portfolio. As of March 31, 2004, the total value of
restricted securities was $128,382,000, which represented 8.82% of the net
assets of the fund.
8. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
The fund made purchases and sales of investment securities, excluding short-term
securities, of $749,166,000 and $408,928,000, respectively, during the six
months ended March 31, 2004.
The fund receives a reduction in its custodian fee equal to the amount of
interest calculated on certain cash balances held at the custodian bank. For the
six months ended March 31, 2004, the custodian fee of $140,000 included $4,000
that was offset by this reduction, rather than paid in cash.
FINANCIAL HIGHLIGHTS (1)
Income (loss) from investment operations(2)
Net gains
Net asset (losses) on
value, Net securities Total from
beginning investment (both realized investment
of period income and unrealized) operations
CLASS A:
Six months ended 3/31/2004 (5) $18.37 $.34 $.97 $1.31
Year ended 9/30/2003 15.60 .72 2.55 3.27
Year ended 9/30/2002 14.63 .80 .49 1.29
Year ended 9/30/2001 14.16 .79 .07 .86
Year ended 9/30/2000 15.41 .68 (1.26) (.58)
Year ended 9/30/1999 16.32 .84 (.88) (.04)
CLASS B:
Six months ended 3/31/2004 (5) 18.27 .27 .96 1.23
Year ended 9/30/2003 15.52 .58 2.55 3.13
Year ended 9/30/2002 14.59 .70 .47 1.17
Year ended 9/30/2001 14.12 .71 .04 .75
Period from 3/15/2000 to 9/30/2000 14.74 .28 (.63) (.35)
CLASS C:
Six months ended 3/31/2004 (5) 18.22 .26 .97 1.23
Year ended 9/30/2003 15.48 .57 2.54 3.11
Year ended 9/30/2002 14.54 .69 .47 1.16
Period from 3/15/2001 to 9/30/2001 14.50 .42 (.34) .08
CLASS F:
Six months ended 3/31/2004 (5) 18.31 .33 .97 1.30
Year ended 9/30/2003 15.55 .71 2.54 3.25
Year ended 9/30/2002 14.59 .80 .47 1.27
Period from 3/16/2001 to 9/30/2001 14.44 .49 (.26) .23
CLASS 529-A:
Six months ended 3/31/2004 (5) 18.41 .32 .98 1.30
Year ended 9/30/2003 15.63 .72 2.56 3.28
Period from 2/15/2002 to 9/30/2002 14.48 .50 .81 1.31
CLASS 529-B:
Six months ended 3/31/2004 (5) 18.32 .25 .97 1.22
Year ended 9/30/2003 15.56 .55 2.56 3.11
Period from 2/25/2002 to 9/30/2002 14.42 .41 .85 1.26
CLASS 529-C:
Six months ended 3/31/2004 (5) 18.32 .25 .98 1.23
Year ended 9/30/2003 15.56 .56 2.55 3.11
Period from 2/28/2002 to 9/30/2002 14.43 .41 .85 1.26
CLASS 529-E:
Six months ended 3/31/2004 (5) 18.35 .30 .97 1.27
Year ended 9/30/2003 15.59 .65 2.55 3.20
Period from 5/16/2002 to 9/30/2002 14.81 .29 .56 .85
CLASS 529-F:
Six months ended 3/31/2004 (5) 18.36 .32 .96 1.28
Year ended 9/30/2003 15.60 .69 2.56 3.25
Period from 9/17/2002 to 9/30/2002 15.48 .03 .09 .12
CLASS R-1:
Six months ended 3/31/2004 (5) $18.32 $.26 $.98 $1.24
Year ended 9/30/2003 15.57 .58 2.54 3.12
Period from 6/28/2002 to 9/30/2002 15.32 .18 .07 .25
CLASS R-2:
Six months ended 3/31/2004 (5) 18.32 .26 .98 1.24
Year ended 9/30/2003 15.57 .58 2.55 3.13
Period from 7/9/2002 to 9/30/2002 15.34 .17 .06 .23
CLASS R-3:
Six months ended 3/31/2004 (5) 18.32 .30 1.00 1.30
Year ended 9/30/2003 15.59 .64 2.53 3.17
Period from 7/16/2002 to 9/30/2002 15.50 .16 (.07) .09
CLASS R-4:
Six months ended 3/31/2004 (5) 18.40 .33 .98 1.31
Year ended 9/30/2003 15.63 .70 2.57 3.27
Period from 8/15/2002 to 9/30/2002 15.28 .20 .15 .35
CLASS R-5:
Six months ended 3/31/2004 (5) 18.38 .37 .97 1.34
Year ended 9/30/2003 15.62 .77 2.54 3.31
Period from 5/15/2002 to 9/30/2002 14.79 .34 .58 .92
Dividends and distributions
Dividends
(from net Distributions Total Net asset
investment (from capital dividends and value, end Total
income) gains) distributions of period return (3)
CLASS A:
Six months ended 3/31/2004 (5) $(.64) $ - $(.64) $19.04 7.24%
Year ended 9/30/2003 (.50) - (.50) 18.37 21.34
Year ended 9/30/2002 (.32) - (.32) 15.60 8.97
Year ended 9/30/2001 (.39) - (.39) 14.63 6.18
Year ended 9/30/2000 (.60) (.07) (.67) 14.16 (3.89)
Year ended 9/30/1999 (.55) (.32) (.87) 15.41 (.32)
CLASS B:
Six months ended 3/31/2004 (5) (.54) - (.54) 18.96 6.82
Year ended 9/30/2003 (.38) - (.38) 18.27 20.41
Year ended 9/30/2002 (.24) - (.24) 15.52 8.10
Year ended 9/30/2001 (.28) - (.28) 14.59 5.35
Period from 3/15/2000 to 9/30/2000 (.27) - (.27) 14.12 (2.34)
CLASS C:
Six months ended 3/31/2004 (5) (.55) - (.55) 18.90 6.81
Year ended 9/30/2003 (.37) - (.37) 18.22 20.33
Year ended 9/30/2002 (.22) - (.22) 15.48 8.10
Period from 3/15/2001 to 9/30/2001 (.04) - (.04) 14.54 .58
CLASS F:
Six months ended 3/31/2004 (5) (.64) - (.64) 18.97 7.22
Year ended 9/30/2003 (.49) - (.49) 18.31 21.27
Year ended 9/30/2002 (.31) - (.31) 15.55 8.87
Period from 3/16/2001 to 9/30/2001 (.08) - (.08) 14.59 1.60
CLASS 529-A:
Six months ended 3/31/2004 (5) (.63) - (.63) 19.08 7.18
Year ended 9/30/2003 (.50) - (.50) 18.41 21.35
Period from 2/15/2002 to 9/30/2002 (.16) - (.16) 15.63 9.08
CLASS 529-B:
Six months ended 3/31/2004 (5) (.52) - (.52) 19.02 6.75
Year ended 9/30/2003 (.35) - (.35) 18.32 20.22
Period from 2/25/2002 to 9/30/2002 (.12) - (.12) 15.56 8.80
CLASS 529-C:
Six months ended 3/31/2004 (5) (.53) - (.53) 19.02 6.78
Year ended 9/30/2003 (.35) - (.35) 18.32 20.24
Period from 2/28/2002 to 9/30/2002 (.13) - (.13) 15.56 8.76
CLASS 529-E:
Six months ended 3/31/2004 (5) (.59) - (.59) 19.03 7.01
Year ended 9/30/2003 (.44) - (.44) 18.35 20.84
Period from 5/16/2002 to 9/30/2002 (.07) - (.07) 15.59 5.77
CLASS 529-F:
Six months ended 3/31/2004 (5) (.63) - (.63) 19.01 7.07
Year ended 9/30/2003 (.49) - (.49) 18.36 21.19
Period from 9/17/2002 to 9/30/2002 - - - 15.60 .77
CLASS R-1:
Six months ended 3/31/2004 (5) $(.54) $ - $(.54) $19.02 6.85%
Year ended 9/30/2003 (.37) - (.37) 18.32 20.33
Period from 6/28/2002 to 9/30/2002 - - - 15.57 1.63
CLASS R-2:
Six months ended 3/31/2004 (5) (.56) - (.56) 19.00 6.86
Year ended 9/30/2003 (.38) - (.38) 18.32 20.38
Period from 7/9/2002 to 9/30/2002 - - - 15.57 1.50
CLASS R-3:
Six months ended 3/31/2004 (5) (.59) - (.59) 19.03 7.08
Year ended 9/30/2003 (.44) - (.44) 18.32 20.81
Period from 7/16/2002 to 9/30/2002 - - - 15.59 .58
CLASS R-4:
Six months ended 3/31/2004 (5) (.65) - (.65) 19.06 7.19
Year ended 9/30/2003 (.50) - (.50) 18.40 21.34
Period from 8/15/2002 to 9/30/2002 - - - 15.63 2.29
CLASS R-5:
Six months ended 3/31/2004 (5) (.68) - (.68) 19.04 7.40
Year ended 9/30/2003 (.55) - (.55) 18.38 21.60
Period from 5/15/2002 to 9/30/2002 (.09) - (.09) 15.62 6.20
Ratio of
Net assets, Ratio of expenses Ratio of expenses net income
end of period to average net assets to average net assets to average
(in millions) before reimbursement after reimbursement (4) net assets
CLASS A:
Six months ended 3/31/2004 (5) $1,080 1.05% (6) 1.04% (6) 3.59% (6)
Year ended 9/30/2003 827 1.09 1.04 4.22
Year ended 9/30/2002 517 1.16 1.08 5.38
Year ended 9/30/2001 399 1.13 1.12 5.46
Year ended 9/30/2000 416 1.12 1.12 4.66
Year ended 9/30/1999 554 1.08 1.08 4.66
CLASS B:
Six months ended 3/31/2004 (5) 72 1.79 (6) 1.78 (6) 2.85 (6)
Year ended 9/30/2003 56 1.86 1.81 3.40
Year ended 9/30/2002 18 1.92 1.84 4.65
Year ended 9/30/2001 4 1.86 1.85 4.92
Period from 3/15/2000 to 9/30/2000 1 1.81 (6) 1.81 (6) 3.99 (6)
CLASS C:
Six months ended 3/31/2004 (5) 94 1.86 (6) 1.85 (6) 2.77 (6)
Year ended 9/30/2003 47 1.92 1.87 3.32
Year ended 9/30/2002 11 1.98 1.90 4.60
Period from 3/15/2001 to 9/30/2001 2 1.99 (6) 1.98 (6) 5.34 (6)
CLASS F:
Six months ended 3/31/2004 (5) 134 1.08 (6) 1.07 (6) 3.54 (6)
Year ended 9/30/2003 59 1.16 1.11 4.09
Year ended 9/30/2002 15 1.24 1.16 5.34
Period from 3/16/2001 to 9/30/2001 3 1.21 (6) 1.20 (6) 6.30 (6)
CLASS 529-A:
Six months ended 3/31/2004 (5) 17 1.18 (6) 1.17 (6) 3.45 (6)
Year ended 9/30/2003 9 1.07 1.02 4.16
Period from 2/15/2002 to 9/30/2002 2 1.33 (6) 1.25 (6) 5.26 (6)
CLASS 529-B:
Six months ended 3/31/2004 (5) 4 1.98 (6) 1.97 (6) 2.66 (6)
Year ended 9/30/2003 2 2.04 1.99 3.19
Period from 2/25/2002 to 9/30/2002 - (7) 2.08 (6) 2.00 (6) 4.51 (6)
CLASS 529-C:
Six months ended 3/31/2004 (5) 9 1.96 (6) 1.95 (6) 2.67 (6)
Year ended 9/30/2003 5 2.02 1.97 3.22
Period from 2/28/2002 to 9/30/2002 1 2.07 (6) 1.99 (6) 4.53 (6)
CLASS 529-E:
Six months ended 3/31/2004 (5) 1 1.43 (6) 1.42 (6) 3.22 (6)
Year ended 9/30/2003 1 1.48 1.43 3.71
Period from 5/16/2002 to 9/30/2002 - (7) .62 .54 1.92
CLASS 529-F:
Six months ended 3/31/2004 (5) 1 1.19 (6) 1.18 (6) 3.44 (6)
Year ended 9/30/2003 - (7) 1.23 1.18 3.94
Period from 9/17/2002 to 9/30/2002 - (7) .08 - (8) .20
CLASS R-1:
Six months ended 3/31/2004 (5) $1 1.96% (6) 1.84% (6) 2.80% (6)
Year ended 9/30/2003 1 2.15 1.86 3.32
Period from 6/28/2002 to 9/30/2002 - (7) .62 .47 1.17
CLASS R-2:
Six months ended 3/31/2004 (5) 7 2.55 (6) 1.81 (6) 2.80 (6)
Year ended 9/30/2003 3 2.91 1.81 3.29
Period from 7/9/2002 to 9/30/2002 - (7) 1.79 .42 1.08
CLASS R-3:
Six months ended 3/31/2004 (5) 5 1.46 (6) 1.42 (6) 3.19 (6)
Year ended 9/30/2003 2 1.73 1.43 3.68
Period from 7/16/2002 to 9/30/2002 - (7) .64 .32 1.02
CLASS R-4:
Six months ended 3/31/2004 (5) 1 1.16 (6) 1.07 (6) 3.54 (6)
Year ended 9/30/2003 - (7) 2.70 1.08 3.94
Period from 8/15/2002 to 9/30/2002 - (7) 35.55 - (8) 1.32
CLASS R-5:
Six months ended 3/31/2004 (5) 29 .75 (6) .74 (6) 3.90 (6)
Year ended 9/30/2003 25 .81 .76 4.49
Period from 5/15/2002 to 9/30/2002 13 .37 .29 2.17
Six months ended
March 31, Year ended September 30
2004 (5) 2003 2002 2001 2000 1999
PORTFOLIO TURNOVER RATE
FOR ALL CLASSES OF SHARES 36% 83% 48% 61% 52% 129%
(1) Based on operations for the period shown (unless otherwise noted) and,
accordingly, may not be representative of a full year.
(2) Year ended 1999 is based on shares outstanding on the last day of the year;
all other periods are based on average shares outstanding.
(3) Total returns exclude all sales charges, including contingent deferred
sales charges.
(4) The ratios in this column reflect the impact, if any, of certain
reimbursements and payments from CRMC. During some of the periods shown,
CRMC voluntarily reduced fees for investment advisory services for all
share classes. In addition, during the start-up period for the retirement
share classes (except Class R-5), CRMC voluntarily agreed to pay a portion
of the fees related to transfer agent services.
(5) Unaudited.
(6) Annualized.
(7) Amount less than $1 million.
(8) Amount less than .01 percent.
See Notes to Financial Statements
OTHER SHARE CLASS RESULTS unaudited
CLASS B, CLASS C, CLASS F AND CLASS 529
Life
Returns for periods ended March 31, 2004: 1 Year of class
CLASS B SHARES
Reflecting applicable contingent deferred sales charge (CDSC), maximum of 5%,
payable only if shares are sold within six years of purchase +10.61% +8.88% (1)
Not reflecting CDSC +15.61% +9.26% (1)
CLASS C SHARES
Reflecting CDSC, maximum of 1%, payable only if shares are sold within
one year of purchase +14.55% +11.62% (2)
Not reflecting CDSC +15.55% +11.62% (2)
CLASS F SHARES (3)
Not reflecting annual asset-based fee charged by sponsoring firm +16.49% +12.69% (4)
CLASS 529-A SHARES
Reflecting 3.75% maximum sales charge +12.02% +15.84% (5)
Not reflecting maximum sales charge +16.41% +17.93% (5)
CLASS 529-B SHARES
Reflecting applicable CDSC, maximum of 5%, payable only if shares are
sold within six years of purchase +10.47% +15.67% (6)
Not reflecting CDSC +15.47% +17.29% (6)
CLASS 529-C SHARES
Reflecting CDSC, maximum of 1%, payable only if shares are sold within
one year of purchase +14.50% +17.36% (7)
Not reflecting CDSC +15.50% +17.36% (7)
CLASS 529-E SHARES (3) +16.01% +18.18% (8)
CLASS 529-F SHARES (3)
Not reflecting annual asset-based fee charged by sponsoring firm +16.22% +19.10% (9)
Figures shown on this page are past results and are not predictive of results in
future periods. Current and future results may be lower or higher than those
shown. Share prices and returns will vary, so investors may lose money. For the
most current information and month-end results, visit americanfunds.com.
(1) Average annual total return from March 15, 2000, when Class B shares were
first sold.
(2) Average annual total return from March 15, 2001, when Class C shares were
first sold.
(3) These shares are sold without any initial or contingent deferred sales
charge.
(4) Average annual total return from March 16, 2001, when Class F shares were
first sold.
(5) Average annual total return from February 15, 2002, when Class 529-A shares
were first sold.
(6) Average annual total return from February 25, 2002, when Class 529-B shares
were first sold.
(7) Average annual total return from February 28, 2002, when Class 529-C shares
were first sold.
(8) Average annual total return from May 16, 2002, when Class 529-E shares were
first sold.
(9) Average annual total return from September 17, 2002, when Class 529-F
shares were first sold.
OFFICES OF THE FUND AND OF THE INVESTMENT ADVISER
Capital Research and Management Company
333 South Hope Street
Los Angeles, CA 90071-1406
135 South State College Boulevard
Brea, CA 92821-5823
TRANSFER AGENT FOR SHAREHOLDER ACCOUNTS
American Funds Service Company
(Please write to the address nearest you.)
P.O. Box 25065 Santa Ana, CA 92799-5065
P.O. Box 659522 San Antonio, TX 78265-9522
P.O. Box 6007 Indianapolis, IN 46206-6007
P.O. Box 2280 Norfolk, VA 23501-2280
CUSTODIAN OF ASSETS
JPMorgan Chase Bank
270 Park Avenue
New York, NY 10017-2070
COUNSEL
Paul, Hastings, Janofsky & Walker LLP
515 South Flower Street
Los Angeles, CA 90071-2228
INDEPENDENT AUDITORS
Deloitte & Touche LLP
Two California Plaza
350 South Grand Avenue
Los Angeles, CA 90071-3462
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, CA 90071-1406
There are several 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 (and
aggregated investments) of $100,000 or more. Other share classes, which are
generally not available for certain employer-sponsored retirement plans, have no
up-front sales charges but are subject to additional annual expenses and fees.
Annualized expenses for Class B shares were 0.74 percentage points higher than
for Class A shares; Class B shares convert to Class A shares after eight years
of ownership. If redeemed within six years, Class B shares may also be subject
to a contingent deferred sales charge ("CDSC") of up to 5% that declines over
time. Class C shares were subject to annualized expenses 0.81 percentage points
higher than those for Class A shares and a 1% CDSC if redeemed within the first
year after purchase. Class C shares convert to Class F shares after 10 years.
Class F shares, which are available only through certain fee-based programs
offered by broker-dealer firms and registered investment advisers, had higher
annualized expenses (by 0.03 percentage points) than did Class A shares, and an
annual asset-based fee charged by the sponsoring firm. Expenses are deducted
from income earned by the fund. As a result, dividends and investment results
will differ for each share class.
INVESTORS SHOULD CAREFULLY CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES
AND EXPENSES OF CAPITAL WORLD BOND FUND AND COLLEGEAMERICA. THIS AND OTHER
IMPORTANT INFORMATION IS CONTAINED IN THE PROSPECTUS, WHICH CAN BE OBTAINED FROM
YOUR FINANCIAL ADVISER AND SHOULD BE READ CAREFULLY BEFORE INVESTING. YOU MAY
ALSO CALL AMERICAN FUNDS SERVICE COMPANY AT 800/421-0180 OR VISIT THE AMERICAN
FUNDS WEBSITE AT AMERICANFUNDS.COM.
"AMERICAN FUNDS PROXY VOTING GUIDELINES" -- WHICH DESCRIBES HOW WE VOTE PROXIES
RELATING TO PORTFOLIO SECURITIES -- IS AVAILABLE UPON REQUEST, FREE OF CHARGE,
BY CALLING AMERICAN FUNDS SERVICE COMPANY, VISITING THE AMERICAN FUNDS WEBSITE
OR ACCESSING THE U.S. SECURITIES AND EXCHANGE COMMISSION WEBSITE AT WWW.SEC.GOV.
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, 2004, this report must be accompanied by an American Funds statistical
update for the most recently completed calendar quarter.
[logo - American Funds(R)]
The right choice for the long term(R)
WHAT MAKES AMERICAN FUNDS DIFFERENT?
For more than 70 years, we have followed a consistent philosophy that we firmly
believe is in our investors' best interests. The range of opportunities offered
by our family of just 29 carefully conceived, broadly diversified funds has
attracted over 25 million shareholder accounts.
OUR UNIQUE COMBINATION OF STRENGTHS INCLUDES THESE FIVE FACTORS:
o A LONG-TERM, VALUE-ORIENTED APPROACH
Rather than follow fads, we pursue a consistent strategy, focusing on each
investment's long-term potential.
o AN UNPARALLELED GLOBAL RESEARCH EFFORT
American Funds draws on one of the industry's most globally integrated
research networks.
o THE MULTIPLE PORTFOLIO COUNSELOR SYSTEM
Every American Fund is divided among a number of portfolio counselors. Each
takes responsibility for a portion independently, within each fund's
objectives; in most cases, research analysts manage a portion as well. Over
time this method has contributed to a consistency of results and continuity
of management.
o EXPERIENCED INVESTMENT PROFESSIONALS
The recent market decline was not the first for most of the portfolio
counselors who serve the American Funds. Nearly 70% of them were in the
investment business before the sharp market decline of 1987.
o A COMMITMENT TO LOW OPERATING EXPENSES
American Funds' operating expenses are among the lowest in the mutual fund
industry. Our portfolio turnover rates are low as well, keeping transaction
costs and tax consequences contained.
29 MUTUAL FUNDS, CONSISTENT PHILOSOPHY, CONSISTENT RESULTS
o GROWTH FUNDS
AMCAP Fund(R)
EuroPacific Growth Fund(R)
The Growth Fund of America(R)
The New Economy Fund(R)
New Perspective Fund(R)
New World FundSM
SMALLCAP World Fund(R)
o GROWTH-AND-INCOME FUNDS
American Mutual Fund(R)
Capital World Growth and Income FundSM
Fundamental InvestorsSM
The Investment Company of America(R)
Washington Mutual Investors FundSM
o EQUITY-INCOME FUNDS
Capital Income Builder(R)
The Income Fund of America(R)
o BALANCED FUND
American Balanced Fund(R)
o BOND FUNDS
American High-Income TrustSM
The Bond Fund of AmericaSM
> CAPITAL WORLD BOND FUND(R)
Intermediate Bond Fund of America(R)
U.S. Government Securities FundSM
o TAX-EXEMPT BOND FUNDS
American High-Income Municipal Bond Fund(R)
Limited Term Tax-Exempt Bond Fund of AmericaSM
The Tax-Exempt Bond Fund of America(R)
STATE-SPECIFIC TAX-EXEMPT FUNDS
The Tax-Exempt Fund of California(R)
The Tax-Exempt Fund of Maryland(R)
The Tax-Exempt Fund of Virginia(R)
o MONEY MARKET FUNDS
The Cash Management Trust of America(R)
The Tax-Exempt Money Fund of AmericaSM
The U.S. Treasury Money Fund of AmericaSM
THE CAPITAL GROUP COMPANIES
American Funds
Capital Research and Management
Capital International
Capital Guardian
Capital Bank and Trust
Lit. No. MFGESR-931-0504
Litho in USA WG/INS/8098
Printed on recycled paper
ITEM 2 - Code of Ethics
Not applicable for filing of Semiannual Reports to Shareholders.
ITEM 3 - Audit Committee Financial Expert
Not applicable for filing of Semiannual Reports to Shareholders.
ITEM 4 - Principal Accountant Fees and Services
Not applicable for filing of Semiannual Reports to Shareholders.
ITEM 5 - Audit Committee of Listed Registrants
Not applicable.
ITEM 6 - Reserved
ITEM 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies
Not applicable to this Registrant, insofar as the Registrant is not a closed-end
management investment company.
ITEM 8 - Reserved
ITEM 9 - Submission of Matters to a Vote of Security Holders
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrant's Board of Directors since the registrant
last submitted a proxy statement to its shareholders. The procedures are as
follows. The registrant has a nominating committee comprised solely of persons
who are not considered "interested persons" of the registrant within the meaning
of the Investment Company Act of 1940. The committee periodically reviews such
issues as the Board's composition, responsibilities, committees, compensation
and other relevant issues, and recommends any appropriate changes to the full
Board of Directors. 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 registrant, c/o the registrant'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 for
consideration of his or her name by the nominating committee.
ITEM 10 - Controls and Procedures
(a) The officers providing the certifications in this report in accordance with
rule 30a-2 under the Investment Company Act of 1940 have concluded, based
on their evaluation of the Registrant's disclosure controls and procedures
(as such term is defined in such rule), that such controls and procedures
are adequate and reasonably designed to achieve the purposes described in
paragraph (c) of such rule.
(b) There were no changes in the Registrant's internal controls over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act of
1940) that occurred during the Registrant's last fiscal half-year (the
Registrant's second fiscal half-year in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the
Registrant's internal control over financial reporting.
ITEM 11 - Exhibits
(a) The Code of Ethics - not applicable for filing of Semiannual Reports to
Shareholders.
(b) The certifications required by Rule 30a-2 of the Investment Company Act of
1940, as amended, and Sections 302 and 906 of the Sarbanes-Oxley Act of
2002 are attached as exhibits hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
CAPITAL WORLD BOND FUND, INC.
By /s/ Abner D. Goldstine
Abner D. Goldstine, President and PEO
Date: June 8, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/ Abner D. Goldstine
Abner D. Goldstine, President and PEO
Date: June 8, 2004
By /s/ Sharon G. Moseley
Sharon G. Moseley, Treasurer
Date: June 8, 2004