THE BOND FUND OF AMERICA, INC.
PART B
STATEMENT OF ADDITIONAL INFORMATION
MARCH 1, 1995
(AS AMENDED JUNE 15, 1995)
This document is not a prospectus but should be read in conjunction with the
current Prospectus of The Bond Fund of America, Inc. (the "fund") dated March
1, 1995. The Prospectus may be obtained from your investment dealer or
financial planner or by writing to the fund at the following address:
The Bond Fund of America, Inc.
Attention: Secretary
333 South Hope Street
Los Angeles, CA 90071
(213) 486-9200
The fund has two forms of prospectuses. Each reference to the prospectus in
this Statement of Additional Information includes both of the fund's
prospectuses. Shareholders who purchase shares at net asset value through
eligible retirement plans should note that not all of the services or features
described below may be available to them, and they should contact their
employer for details.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE NO.
<S> <C>
DESCRIPTION OF CERTAIN SECURITIES 2
INVESTMENT RESTRICTIONS 5
FUND OFFICERS AND DIRECTORS 7
MANAGEMENT 10
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES 12
PURCHASE OF SHARES 15
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES 17
REDEMPTION OF SHARES 18
EXECUTION OF PORTFOLIO TRANSACTIONS 18
GENERAL INFORMATION 19
INVESTMENT RESULTS 20
DESCRIPTION OF BOND RATINGS 25
FINANCIAL STATEMENTS ATTACHED
</TABLE>
DESCRIPTION OF CERTAIN SECURITIES
CERTAIN RISK FACTORS RELATING TO HIGH-YIELD, HIGH-RISK BONDS
SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES - High-yield, high-risk bonds
can be sensitive to adverse economic changes and corporate developments.
During an economic downturn or substantial period of rising interest rates,
highly leveraged issuers may experience financial stress that would adversely
affect their ability to service their principal and interest payment
obligations, to meet projected business goals, and to obtain additional
financing. If the issuer of a bond defaulted on its obligations to pay
interest or principal or entered into bankruptcy proceedings, the fund may
incur losses or expenses in seeking recovery of amounts owed to it. In
addition, periods of economic uncertainty and changes can be expected to result
in increased volatility of market prices and yields of high-yield, high-risk
bonds.
PAYMENT EXPECTATIONS - High-yield, high-risk bonds may contain redemption or
call provisions. If an issuer exercised these provisions in a declining
interest rate market, the fund would have to replace the security with a lower
yielding security, resulting in a decreased return for investors. Conversely,
a high-yield, high-risk bond's value will decrease in a rising interest rate
market, as will the value of the fund's assets.
LIQUIDITY AND VALUATION - There may be little trading in the secondary market
for particular bonds, which may affect adversely the fund's ability to value
accurately or dispose of such bonds. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of high-yield, high-risk bonds, especially in a thin
market.
DOWNGRADE POLICY - The fund is not normally required to dispose of a security
in the event that its rating is reduced to Ba or below by Moody's Investors,
Inc. or BB or below by Standard & Poors Corporation (or it is not rated and its
quality becomes equivalent to such a security). The fund, however, has no
current intention to hold 35% or more of its net assets in these securities
(also known as "high-yield, high-risk" or "junk" bonds).
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION CERTIFICATES - Certificates issued by
the Government National Mortgage Association ("GNMA") are mortgage-backed
securities representing part ownership of a pool of mortgage loans, which are
issued by lenders such as mortgage bankers, commercial banks and savings and
loan associations, and are either insured by the Federal Housing Administration
or guaranteed by the Veterans Administration. A pool of these mortgages is
assembled and, after being approved by GNMA, is offered to investors through
securities dealers. The timely payment of interest and principal on each
mortgage is guaranteed by GNMA and backed by the full faith and credit of the
U.S. Government.
Principal is paid back monthly by the borrower over the term of the loan.
Reinvestment of prepayments may occur at higher or lower rates than the
original yield on the certificates. Due to the prepayment feature and the need
to reinvest prepayments of principal at current market rates, GNMA certificates
can be less effective than typical bonds of similar maturities at "locking in"
yields during periods of declining interest rates. GNMA certificates typically
appreciate or decline in market value during periods of declining or rising
interest rates, respectively. Due to the regular repayment of principal and
the prepayment feature, the effective maturities of mortgage pass-through
securities are shorter than stated maturities, will vary based on market
conditions and cannot be predicted in advance. The effective maturities of
newly-issued GNMA certificates backed by relatively new loans at or near the
prevailing interest rates are generally assumed to range between approximately
9 and 12 years.
FNMA AND FHLMC MORTGAGE-BACKED OBLIGATIONS - FNMA, a federally chartered and
privately-owned corporation, issues pass-through securities representing
interests in a pool of conventional mortgage loans. FNMA guarantees the timely
payment of principal and interest but this guarantee is not backed by the full
faith and credit of the U.S. Government.
FHLMC, a corporate instrumentality of the U.S. Government, issues
participation certificates which represent an interest in a pool of
conventional mortgage loans. FHLMC guarantees the timely payment of interest
and the ultimate collection of principal, and maintains reserves to protect
holders against losses due to default, but the certificates are not backed by
the full faith and credit of the U.S. Government.
As is the case with GNMA certificates, the actual maturity of and realized
yield on particular FNMA and FHLMC pass-through securities will vary based on
the prepayment experience of the underlying pool of mortgages.
OTHER MORTGAGE-RELATED SECURITIES - The fund may invest in mortgage-related
securities issued by financial institutions such as commercial banks, savings
and loan associations, mortgage bankers and securities broker-dealers (or
separate trusts or affiliates of such institutions established to issue these
securities). These securities include mortgage pass-through certificates,
collateralized mortgage obligations (including real estate mortgage investment
conduits as authorized under the Internal Revenue Code of 1986) (CMOs) or
mortgage-backed bonds. Each class of bonds in a CMO series may have a
different maturity, bear a different coupon, and have a different priority in
receiving payments. All principal payments, both regular principal payments as
well as any prepayment of principal, are passed through to the holders of the
various CMO classes dependent on the characteristics of each class. In some
cases, all payments are passed through first to the holders of the class with
the shortest stated maturity until it is completely retired. Thereafter,
principal payments are passed through to the next class of bonds in the series,
until all the classes have been paid off. In other cases, payments are passed
through to holders of whichever class first has the shortest effective maturity
at the time payments are made. As a result, an acceleration in the rate of
prepayments that may be associated with declining interest rates shortens the
expected life of each class. The impact of an acceleration in prepayments
affects the expected life of each class differently depending on the unique
characteristics of that class. In the case of some CMO series, each class may
receive a differing proportion of the monthly interest and principal repayments
on the underlying collateral. In these series the classes would be more
affected by an acceleration (or slowing) in the rate of prepayments than CMOs
which share principal and interest proportionally.
Mortgage-backed bonds are general obligations of the issuer fully
collateralized directly or indirectly by a pool of mortgages. The mortgages
serve as collateral for the issuer's payment obligations on the bonds, but
interest and principal payments on the mortgages are not passed through either
directly (as with GNMA certificates and FNMA and FHLMC pass-through securities)
or on a modified basis (as with CMO's). Accordingly, a change in the rate of
prepayments on the pool of mortgages could change the effective maturity of a
CMO but not that of a mortgage-backed bond (although, like many bonds,
mortgage-backed bonds can provide that they are callable by the issuer prior to
maturity).
OTHER ASSET-BACKED SECURITIES - The fund may invest in bonds or notes backed by
loan paper or accounts receivable originated by banks, credit card companies,
or other providers of credit. These securities are often "enhanced" by a bank
letter of credit or by insurance coverage provided by an institution other than
the issuer; such an enhancement typically covers only a portion of the par
value until exhausted. Generally, the originator of the loan or accounts
receivable paper sells it to a specially created trust, which repackages it as
securities with a term of five years or less. Examples of these types of
securities include "certificates for automobile receivables" and bonds backed
by credit card loan receivables. The loans underlying these securities are
subject to prepayments which can decrease maturities and returns. The values
of these securities are ultimately dependent upon payment of the underlying
loans by individuals, and the holders generally have no recourse against the
originator of the loans. Holders of these securities may experience losses or
delays in payment if the original payments of principal and interest are not
made to the trust with respect to the underlying loans. The values of these
securities also may fluctuate due to changes in the market perception of the
creditworthiness of the servicing agent for the loan pool, the originator of
the loan, or the financial institution providing the credit enhancement.
CURRENCY TRANSACTIONS - The fund has the ability to hold a portion of its
assets in various currencies and to enter into forward currency contracts to
protect against changes in currency exchange rates. A forward currency
contract is an obligation to purchase or sell a specific currency at a future
date, which may be any fixed number of days from the date of the contract
agreed upon by the parties, at a price set at the time of the contract. The
fund might purchase a currency or enter into a forward purchase contract for
the currency to preserve the U.S. dollar price of securities it has the
authority to purchase or has contracted to purchase. Alternatively, it might
sell a currency on either a spot or forward basis to hedge against an
anticipated decline in the U.S. dollar value of securities in its portfolio or
which it intends or has contracted to sell. Although this strategy could
minimize the risk of loss due to a decline in the value of the hedged currency,
it could also limit any potential gain which might result from an increase in
the value of the currency.
LOANS OF PORTFOLIO SECURITIES - Although the fund has no current intention of
doing so during the next 12 months, the fund is authorized to lend portfolio
securities to selected securities dealers or to other institutional investors
whose financial condition is monitored by Capital Research and Management
Company (the "Investment Adviser"). The borrower must maintain with the fund's
custodian collateral consisting of cash, cash equivalents or U.S. Government
securities equal to at least 100% of the value of the borrowed securities, plus
any accrued interest. The Investment Adviser will monitor the adequacy of the
collateral on a daily basis. The fund may at any time call a loan of its
portfolio securities and obtain the return of the loaned securities. The fund
will receive any interest paid on the loaned securities and a fee or a portion
of the interest earned on the collateral. The fund will limit its loans of
portfolio securities to an aggregate of one-third of the value of its total
assets, measured at the time any such loan is made.
PORTFOLIO TRADING - The fund intends to engage in portfolio trading when it is
believed that the sale of a security owned by the fund and the purchase of
another security of better value can enhance principal and/or increase income.
A security may be sold to avoid any prospective decline in market value in
light of what is evaluated as an expected rise in prevailing yields, or a
security may be purchased in anticipation of a market rise (a decline in
prevailing yields). A security also may be sold and a comparable security
purchased coincidentally in order to take advantage of what is believed to be a
disparity in the normal yield and price relationship between the two
securities, or in connection with a "roll" transaction as described in the
Prospectus under "Certain Securities and Investment Techniques."
INVERSE FLOATING RATE NOTES - The fund is authorized to invest up to 1.5% of
the fund's net assets in inverse floating rate notes (a type of derivative
instrument). These notes have rates that move in the opposite direction of
prevailing interest rates; thus, a change in prevailing interest rates will
often result in a greater change in the instruments' interest rates. As a
result, these instruments may have a greater degree of volatility than other
types of interest-bearing securities.
STRATEGIC PORTFOLIO ADJUSTMENT - The composition of the fund's portfolio will
change from time to time primarily in response to expected changes in interest
rates and in the yield relationships among sectors of the fixed-income market.
The Investment Adviser continually monitors the creditworthiness of companies,
the price and yield relationships among different sections of the debt market
and the outlook for interest rates in general and in particular parts of the
debt market. Yield relationships among securities of various types of issuers,
maturities, coupon rates or quality ratings frequently change in response to
changing supply-demand influences in the market. When it appears to the
Investment Adviser that the yield relationships may change, the composition of
the portfolio may be adjusted, should such changes offer the opportunity to
further the fund's investment objective. Changes may also be made if the
Investment Adviser believes that there is a temporary disparity among
individual securities of comparable characteristics. Some such changes may
result in short-term gains or losses to the fund. This information, which is
shared among the Investment Adviser's other departments and its affiliates,
makes up a part of the Investment Adviser's investment decisions.
PORTFOLIO TURNOVER - Portfolio changes will be made without regard to the
length of time particular investments may have been held. High portfolio
turnover involves correspondingly greater transaction costs in the form of
dealer spreads or brokerage commissions, and may result in the realization of
net capital gains, which are taxable when distributed to shareholders.
Fixed-income securities are generally traded on a net basis and usually neither
brokerage commissions nor transfer taxes are involved. The fund does not
anticipate its portfolio turnover to exceed 100% annually. The fund's
portfolio turnover rate would equal 100% if each security in the fund's
portfolio were replaced once per year. See "Financial Highlights" in the
Prospectus for the fund's portfolio turnover for each of the last 10 years.
OTHER POLICIES - The fund may not make direct purchases of common or preferred
stocks or warrants or rights to acquire such common or preferred stocks. The
fund may invest in debt securities which are convertible into or exchangeable
for or which carry warrants or rights to purchase common stock or other equity
interests. Equity interests acquired through such conversion, exchange or
exercise will be disposed of by the fund as soon as it may feasibly be done in
an orderly manner.
INVESTMENT RESTRICTIONS
The fund has adopted certain additional investment restrictions which may not
be changed without approval of the holders of a majority of its outstanding
shares. Such majority is defined by the 1940 Act as the vote of the lesser of
(i) 67% or more of the outstanding voting securities present at a meeting, if
the holders of more than 50% of the outstanding voting securities are present
in person or by proxy, or (ii) more than 50% of the outstanding voting
securities. These restrictions provide that the fund may not:
1. Purchase any security (other than securities issued or guaranteed by the
U.S. government or its agencies or instrumentalities) if, immediately after and
as a result of such investment (a) more than 5% of the value of the fund's
total assets would be invested in securities of the issuer; or (b) the fund
would hold more than 10% of the voting securities of the issuer; or (c) 25% or
more of the value of the fund's assets would be invested in a single industry.
Each of the electric utility, natural gas distribution, natural gas pipeline,
combined electric and natural gas utility, and telephone industries shall be
considered as a separate industry for this purpose;
2. Invest in companies for the purpose of exercising control or management;
3. Knowingly purchase securities of other investment companies, except in
connection with a merger, consolidation, acquisition, or reorganization;
4. Buy or sell real estate in the ordinary course of its business; however,
the fund may invest in debt securities secured by real estate or interests
therein or issued by companies, including real estate investment trusts, which
invest in real estate or interests therein;
5. Buy or sell commodities or commodity contracts in the ordinary course of
its business, provided, however, that this shall not prohibit the fund from
purchasing or selling currencies including forward currency contracts;
6. Invest more than 15% of the value of its net assets in securities that are
illiquid;
7. Engage in the business of underwriting of securities of other issuers,
except to the extent that the disposal of an investment position may
technically constitute the fund an underwriter as that term is defined under
the Securities Act of 1933;
8. Make loans in an aggregate amount in excess of 10% of the value of the
fund's total assets, taken at the time any loan is made, provided, (i) that the
purchase of debt securities pursuant to the fund's investment objectives and
entering into repurchase agreements maturing in seven days or less shall not be
deemed loans for the purposes of this restriction, and (ii) that loans of
portfolio securities as described under "Loans of Portfolio Securities," shall
be made only in accordance with the terms and conditions therein set forth;
9. Sell securities short, except to the extent that the fund contemporaneously
owns or has the right to acquire at no additional cost securities identical to
those sold short;
10. Purchase securities at margin;
11. Borrow money except from banks for temporary or emergency purposes, not in
excess of 5% of the value of the fund's total assets;
12. Mortgage, pledge, or hypothecate any of its assets;
13. Purchase or retain the securities of any issuer, if those individual
officers and directors of the fund, its investment adviser, or distributor,
each owning beneficially more than 1/2 of 1% of the securities of such issuer,
together own more than 5% of the securities of such issuer;
The fund has adopted the following non-fundamental investment policies, which
may be changed by action of the Board of Directors without shareholder
approval: (a) the fund will not invest more than 5% of its total assets in
securities of companies having, together with their predecessors, a record of
less than three years of continuous operation, and (b) the fund will not
purchase partnership interests or invest in leases to develop, or explore for,
oil, gas or minerals.
Notwithstanding Investment Restriction #3, the fund may invest in securities
of other managed investment companies if deemed advisable by its officers in
connection with the administration of a deferred compensation plan adopted by
Directors pursuant to an exemptive order granted by the Securities and Exchange
Commission.
FUND OFFICERS AND DIRECTORS
Directors and Director Compensation
(with their principal occupations during the past five years)#
<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE POSITION WITH PRINCIPAL OCCUPATION(S) DURING AGGREGATE TOTAL COMPENSATION TOTAL NUMBER
REGISTRANT PAST 5 YEARS (POSITIONS WITHIN THE COMPENSATION FROM ALL FUNDS OF FUND
ORGANIZATIONS LISTED MAY HAVE (INCLUDING MANAGED BY CAPITAL BOARDS/2/ ON
CHANGED DURING THIS PERIOD) VOLUNTARILY DEFERRED RESEARCH AND WHICH
COMPENSATION/1/) FROM MANAGEMENT COMPANY/2/ DIRECTOR
FUND DURING FISCAL SERVES
YEAR ENDED 12/31/94
<S> <C> <C> <C> <C> <C>
++ H. Frederick Christie Director Private Investor. The Mission
P. O. Box 144 Group (non-utility holding $6,000 $135,583 18
Palos Verdes, CA 90274 Company, subsidiary of Southern
Age: 61 California Edison Company),
former President and Chief
Executive Officer
Diane C. Creel Director Chairwoman, CEO and President,
100 W. Broadway The Earth Technology Corporation 533 7200 10
Suite 5000
Long Beach, CA 90802
Age: 46
Martin Fenton, Jr. Director Chairman, Senior Resource Group
4350 Executive Drive (management of senior living 5,600/3/ 93,050 15
Suite 101 centers)
San Diego, CA 92123
Age: 59
Leonard R. Fuller Director President, Fuller & Company, Inc.
4333 Admiralty Way (financial management consulting 533 7,200 10
Suite 841 ETH firm)
Marina del Rey, CA
90292
Age: 48
+* Abner D. Goldstine President, PEO Capital Research and Management
Age: 65 and Director Company, Senior Vice President none/4/ none/4/ 12
and Director
+** Paul G. Haaga, Jr. Chairman of Capital Research and Management
Age: 46 the Board Company, Senior Vice President none/4/ none/4/ 14
and Director
Herbert Hoover III Director Private Investor
200 S. Los Robles 5,400 57,850 14
Avenue
Suite 520
Pasadena, CA
91101-2431
Age: 67
Richard G. Newman Director Chairman, President and CEO,
3250 Wilshire Boulevard AECOM Technology Corporation 5,600/3/ 42,050 12
Los Angeles, CA 90010- (architectural engineering)
1599
Age: 60
Peter C. Valli Director Chairman and CEO, BW/IP
200 Oceangate Boulevard International Inc. (industrial 5,600/3/ 40,850 12
Suite 900 manufacturing)
Long Beach, CA 90802
Age: 68
</TABLE>
+ Directors who are considered "interested persons as defined in the Investment
Company Act of 1940, as amended (the "1940 Act"), on the basis of their
affiliation with the fund's Investment Adviser, Capital Research and Management
Company.
++ May be deemed an "interested person" of the fund due to membership on the
board of directors of the parent company of a registered broker-dealer.
* Address is 11100 Santa Monica Boulevard, Los Angeles, CA 90025.
** Address is 333 South Hope Street, Los Angeles, CA 90071
/1/ Amounts may be deferred by eligible directors under a non-qualified
deferred compensation plan adopted by the Fund in 1993. Deferred amounts
accumulate at an earnings rate determined by the total return of one or more
funds in The American Funds Group as designated by the Director.
/2/ Capital Research and Management Company manages The American Funds Group
consisting of 28 funds: AMCAP Fund, American Balanced Fund, Inc., American
High-Income Municipal Bond Fund, Inc., American High-Income Trust, American
Mutual Fund, Inc., The Bond Fund of America, Inc., The Cash Management Trust of
America, Capital Income Builder, Inc., Capital World Growth and Income Fund,
Inc., Capital World Bond Fund, Inc., EuroPacific Growth Fund, Fundamental
Investors, Inc., The Growth Fund of America, Inc., The Income Fund of America,
Inc., Intermediate Bond Fund of America, The Investment Company of America,
Limited Term Tax-Exempt Bond Fund of America, The New Economy Fund, New
Perspective Fund, Inc., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of
America, Inc., The Tax-Exempt Fund of California, The Tax-Exempt Fund of
Maryland, The Tax-Exempt Fund of Virginia, The Tax-Exempt Money Fund of
America, The U. S. Treasury Money Fund of America, U.S. Government Securities
Fund and Washington Mutual Investors Fund, Inc. Capital Research and
Management Company also manages American Variable Insurance Series and Anchor
Pathway Fund which serve as the underlying investment vehicle for certain
variable insurance contracts; and Bond Portfolio for Endowments, Inc. and
Endowments, Inc. whose shares may be owned only by tax-exempt organizations.
/3/ Since the plan's adoption, the total amount of deferred compensation
accrued by the fund (plus earnings thereon) for participating Directors is as
follows: Martin Fenton, Jr. ($5,804), Richard G. Newman ($5,752) and Peter C.
Valli ($5,737). Amounts deferred and accumulated earnings thereon are not
funded and are general unsecured liabilities of the fund until paid to the
Director.
/4/ Paul G. Haaga, Jr. and Abner D. Goldstine are affiliated with the
Investment Adviser and, accordingly, receive no compensation from the Fund.
OFFICERS
(with their principal occupations during the past five years)#
* RICHARD T. SCHOTTE, SENIOR VICE PRESIDENT. Capital Research Company, Senior
Vice
President
* JOHN H. SMET, VICE PRESIDENT. Capital Research and Management Company, Vice
President
** MARY C. CREMIN, VICE PRESIDENT AND TREASURER. Capital Research and
Management
Company, Senior Vice President - Fund Business Management Group
*** MICHAEL J. DOWNER, VICE PRESIDENT. Capital Research and Management
Company,
Senior Vice President - Fund Business Management Group
*** JULIE F. WILLIAMS, SECRETARY. Capital Research and Management Company,
Vice President - Fund Business Management Group
*** KIMBERLY S. VERDICK, ASSISTANT SECRETARY. Capital Research and Management
Company, Compliance Associate.
OFFICERS (cont.)
** ANTHONY W. HYNES, Assistant Treasurer. Capital Research and Management
Company, Vice President - Fund Business Management Group
# Positions within the organizations listed may have changed during this
period.
* Address is 11100 Santa Monica Boulevard, Los Angeles, CA 90025.
** Address is 135 South State College Boulevard, Brea, CA 92621.
*** Address is 333 South Hope Street, Los Angeles, CA 90071.
The fund pays annual fees of $2850 to Directors who are not affiliated with
the Investment Adviser, plus $200 for each Board of Directors meeting attended,
plus $200 for each meeting attended as a member of a committee of the Board of
Directors. The Directors may elect, on a voluntary basis, to defer all or a
portion of these fees through a deferred compensation plan in effect for the
fund. The fund also reimburses certain expenses of the Directors who are not
affiliated with the Investment Adviser. As of February 1, 1995, the officers
and Directors and their families, as a group, owned beneficially or of record
less than 1% of the outstanding shares of the fund.
MANAGEMENT
INVESTMENT ADVISER - The Investment Adviser, founded in 1931, maintains
research facilities in the U.S. and abroad, with a staff of professionals, many
of whom have a number of years of investment experience. The Investment
Adviser's research professionals travel several million miles a year, making
more than 5,000 research visits in more than 50 countries around the world.
The Investment Adviser believes that it is able to attract and retain quality
personnel.
An affiliate of the Investment Adviser compiles indices for major stock
markets around the world and compiles and edits the Morgan Stanley Capital
International Perspective, providing financial and market information about
more than 2,400 companies around the world.
The Investment Adviser is responsible for approximately $100 billion of
stocks, bonds and money market instruments and serve over five million
investors of all types throughout the world. These investors include privately
owned businesses and large corporations, as well as schools, colleges,
foundations and other non-profit and tax-exempt organizations.
INVESTMENT ADVISORY AND SERVICE AGREEMENT - The Investment Advisory and
Service Agreement (the "Agreement") between the fund and the Investment Adviser
will continue until October 31, 1995 unless sooner terminated and may be
renewed from year to year thereafter, provided that any such renewal has been
specifically approved at least annually by (i) the Board of Directors, or by
the vote of a majority (as defined in the 1940 Act) of the outstanding voting
securities, and (ii) the vote of a majority of directors who are not parties to
the Agreement or interested persons (as defined in the 1940 Act) of any such
party, cast in person at a meeting called for the purpose of voting on such
approval. The Agreement provides that the Investment Adviser has no liability
to the fund for its acts or omissions in the performance of its obligations to
the fund not involving willful misconduct, bad faith, gross negligence or
reckless disregard of its obligations under the Agreement. The Agreement also
provides that either party has the right to terminate it, without penalty, upon
60 days' written notice to the other party and that the Agreement automatically
terminates in the event of its assignment (as defined in the 1940 Act).
The Investment Adviser, in addition to providing investment advisory services,
furnishes the services and pays the compensation and travel expenses of persons
to perform the executive, administrative, clerical and bookkeeping functions of
the fund, provides suitable office space and utilities, necessary small office
equipment and general purpose accounting forms, supplies, and postage used at
the offices of the fund. The fund pays all expenses not assumed by the
Investment Adviser, including, but not limited to, custodian, stock transfer
and dividend disbursing fees and expenses; costs of the designing, printing and
mailing of reports, prospectuses, proxy statements, and notices to its
shareholders, taxes; expenses of the issuance and redemption of shares
(including stock certificates, registration and qualification fees and
expenses); legal and auditing expenses; compensation, fees, and expenses paid
to directors unaffiliated with the Investment Adviser; association dues; and
costs of stationery and forms prepared exclusively for the fund.
The Investment Adviser has agreed to reduce the fee payable to it under the
agreement, (a) by the amount by which the ordinary operating expenses of the
fund for any fiscal year of the fund, excluding interest, taxes and
extraordinary expenses such as litigation, shall exceed the greater of (i) one
percent (1%) of the average month-end net assets of the fund for such fiscal
year, or (ii) ten percent (10%) of the fund's gross investment income, and (b)
by any additional amount necessary to assure that such ordinary operating
expenses of the fund in any year after such reduction do not exceed the lesser
of (i) one and one-half percent (1 1/2%) of the first $30 million of average
month-end net assets of the fund, plus one percent (1%) of the average
month-end net assets in excess thereof or (ii) twenty-five percent (25%) of the
fund's gross investment income.
During the fiscal years ended December 31, 1994, 1993, and 1992, the
Investment Adviser's total fees amounted to $18,755,000, $17,170,000, and
$13,243,000, respectively.
PRINCIPAL UNDERWRITER - American Funds Distributors, Inc. (the "Principal
Underwriter") is the principal underwriter of the fund's shares. The fund has
adopted a Plan of Distribution (the "Plan"), pursuant to rule 12b-1 under the
1940 Act (see "Principal Underwriter" in the Prospectus). The Principal
Underwriter receives amounts payable pursuant to the Plan (see below) and
commissions consisting of that portion of the sales charge remaining after the
discounts which it allows to investment dealers. Commissions retained by the
Principal Underwriter on sales of fund shares during the fiscal year ended
December 31, 1994 amounted to $4,561,902 after allowance of $19,570,842 to
dealers. During the fiscal years ended December 31, 1992 and 1991 the
Principal Underwriter retained $8,418,631 and $7,091,000, respectively.
As required by rule 12b-1, the Plan (together with the Principal Underwriting
Agreement) has been approved by the full Board of Directors and separately by a
majority of the Directors who are not "interested persons" of the fund and who
have no direct or indirect financial interest in the operation of the Plan or
the Principal Underwriting Agreement, and the Plan has been approved by the
vote of a majority of the outstanding voting securities of the fund. The
officers and directors who are "interested persons" of the fund due to present
or past affiliations with the investment adviser and related companies may be
considered to have a direct or indirect financial interest in the operation of
the Plan. Potential benefits of the plan to the fund include improved
shareholder services, savings to the fund in transfer agency costs, savings to
the fund in advisory fees and other expenses, benefits to the investment
process from growth or stability of assets and maintenance of a financially
healthy management organization. The selection and nomination of Directors who
are not "interested persons" of the fund is committed to the discretion of the
Directors who are not "interested persons" during the existence of the Plan.
The Plan is reviewed quarterly and must be renewed annually by the Board of
Directors.
Under the Plan the fund may expend up to 0.25% of its average net assets
annually to finance any activity which is primarily intended to result in the
sale of fund shares, provided the fund's Board of Directors has approved the
category of expenses for which payment is being made. These include service
fees for qualified dealers and dealer commissions and wholesaler compensation
on sales of shares exceeding $1 million (including purchases by any defined
contribution plan qualified under Section 401(a) of the Internal Revenue Code
including a "401(k)" plan with 200 or more eligible employees). Only expenses
incurred during the preceding 12 months and accrued while the Plan is in effect
may be paid by the fund. During the fiscal year ended December 31, 1994, the
fund paid $11,347,000 under the Plan as compensation to dealers. As of
December 31, 1994 accrued and unpaid distribution expenses were $829,000.
The Glass-Steagall Act and other applicable laws, among other things,
generally prohibit commercial banks from engaging in the business of
underwriting, selling or distributing securities, but permit banks to make
shares of mutual funds available to their customers and to perform
administrative and shareholder servicing functions. However, judicial or
administrative decisions or interpretations of such laws, as well as changes in
either federal or state statutes or regulations relating to the permissible
activities of banks or their subsidiaries of affiliates, could prevent a bank
from continuing to perform all or a part of its servicing activities. If a
bank were prohibited from so acting, shareholder clients of such bank would be
permitted to remain shareholders of the fund and alternate means for continuing
the servicing of such shareholders would be sought. In such event, changes in
the operation of the fund might occur and shareholders serviced by such bank
might no longer be able to avail themselves of any automatic investment or
other services then being provided by such bank. It is not expected that
shareholders would suffer with adverse financial consequences as a result of
any of these occurrences.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and certain banks and financial
institutions may be required to be registered as dealers pursuant to state law.
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES
The fund intends to meet all the requirements and has elected the tax status
of a "regulated investment company" under the provisions of Subchapter M of the
Internal Revenue Code of 1986 (the "Code"). Under Subchapter M, if the fund
distributes within specified times at least 90% of the sum of its investment
company taxable investment income (net investment income and the excess of net
short-term capital gains over net long-term capital losses) and its tax-exempt
interest, if any, it will be taxed only on that portion (if any) of the
investment company taxable income and net capital gain that it retains.
To qualify, the fund must (a) derive at least 90% of its gross income from
dividends, interest, payments with respect to securities loans and gains from
the sale or other disposition of stock, securities, currencies or other income
derived with respect to its business of investing in such stock, securities or
currencies; (b) derive less than 30% of its gross income from the sale or other
disposition of stock or securities held for less than three months; and (c)
diversify its holdings so that at the end of each fiscal quarter, (i) at least
50% of the market value of the fund's assets is represented by cash, U.S.
Government securities and other securities which must be limited, in respect of
any one issuer, to an amount not greater than 5% of the fund's assets and 10%
of the outstanding voting securities of such issuer, and (ii) not more than 25%
of the value of its assets is invested in the securities of any one issuer
(other than U.S. Government securities or the securities of other regulated
investment companies), or in two or more issuers which the fund controls and
which are engaged in the same or similar trades or businesses or related trades
or businesses.
Under the Code, a nondeductible excise tax of 4% is imposed on the excess of a
regulated investment company's "required distribution" for the calendar year
ending within the regulated investment company's taxable year over the
"distributed amount" for such calendar year. The term "required distribution"
means the sum of (i) 98% of ordinary income (generally net investment income)
for the calendar year, (ii) 98% of capital gain (both long-term and short-term)
for the one-year period ending on October 31 (as though the one-year period
ending on October 31 were the regulated investment company's taxable year), and
(iii) the sum of any untaxed, undistributed net investment income and net
capital gains of the regulated investment company for prior periods. The term
"distributed amount" generally means the sum of (i) amounts actually
distributed by the fund from its current year's ordinary income and net capital
gain and (ii) any amount on which the fund pays income tax during the periods
described above. The fund intends to distribute net investment income and net
capital gains so as to minimize or avoid the excise tax liability.
The fund also intends to distribute to shareholders all of the excess of net
long-term capital gain over net short-term capital loss on sales of
securities. If the net asset value of shares of the fund should, by reason of
a distribution of realized capital gains, be reduced below a shareholder's
cost, such distribution would to that extent be a return of capital to that
shareholder even though taxable to the shareholder, and a sale of shares by a
shareholder at net asset value at that time would establish a capital loss for
federal tax purposes. In particular, investors should consider the tax
implications of purchasing shares just prior to a dividend or distribution
record date. Those investors purchasing shares just prior to such a date will
then receive a partial return of capital upon the dividend or distribution,
which will nevertheless be taxable to them as an ordinary or capital gains
dividend.
Dividends generally are taxable to shareholders at the time they are paid.
However, dividends and distributions declared in October, November and December
and made payable to shareholders of record in such a month are treated as paid
and are thereby taxable as of December 31, provided that the fund pays the
dividend no later than the end of January of the following year.
If a shareholder exchanges or otherwise disposes of shares of the fund within
90 days of having acquired such shares, and if, as a result of having acquired
those shares, the shareholder subsequently pays a reduced sales charge for
shares of the fund, or of a different fund, the sales charge previously
incurred in acquiring the fund's shares shall not be taken into account (to the
extent such previous sales charges do not exceed the reduction in sales
charges) for the purpose of determining the amount of gain or loss on the
exchange, but will be treated as having been incurred in the acquisition of
such other shares. Also, any loss realized on a redemption or exchange of
shares of a fund will be disallowed to the extent shares are reacquired within
the 61-day period beginning 30 days before and ending 30 days after the shares
are disposed of.
Under the Code, distributions of net investment income by the fund to a
shareholder who, as to the U.S., is a nonresident alien individual, nonresident
alien fiduciary of a trust or estate, non-U.S. corporation, or non-U.S.
partnership (a "non-U.S. shareholder") will be subject to U.S. withholding tax
(at a rate of 30% or lower treaty rate). Withholding will not apply if a
dividend paid by the fund to a non-U.S. shareholder is "effectively connected"
with a U.S. trade or business, in which case the reporting and withholding
requirements applicable to U.S. citizens, U.S. residents or domestic
corporations will apply. However, if the distribution is effectively connected
with the conduct of the non-U.S. shareholder's trade or business within the
U.S., the distribution would be included in the net income of the shareholder
and subject to U.S. income tax at the applicable marginal rate. Distributions
of capital gains not effectively connected with a U.S. trade or business are
not subject to the withholding, but if the non-U.S. shareholder was an
individual who was physically present in the U.S. during the tax year for more
than 182 days and such shareholder is nonetheless treated as a nonresident
alien, the distributions would be subject to a 30% tax.
The fund may be required to pay withholding and other taxes imposed by
countries outside the United States which would reduce the fund's investment
income, generally at rates from 10% to 40%. Tax conventions between certain
countries and the United States may reduce or eliminate such taxes. If more
than 50% in value of the fund's total assets at the close of its taxable year
consist of securities of non-U.S. corporations, the fund will be eligible to
file elections with the Internal Revenue Service pursuant to which shareholders
of the fund will be required to include their respective pro rata portions of
such withholding taxes in their federal income tax returns as gross income,
treat such amounts as foreign taxes paid by them, and deduct such amounts in
computing their taxable incomes or, alternatively, use them as foreign tax
credits against their federal income taxes. The fund does not currently expect
to meet the eligibility requirement for filing this election as its investments
in securities of non-U.S. issuers are limited.
Sales of forward currency contracts which are intended to hedge against a
change in the value of securities or currencies held by the fund may affect the
holding period of such securities or currencies and, consequently, the nature
of the gain or loss on such securities or currencies upon disposition.
The amount of any realized gain or loss on closing out a forward currency
contract such as a forward commitment for the purchase or sale of non-U.S.
currency will generally result in a realized capital gain or loss for tax
purposes. Under Code Section 1256, forward currency contracts held by the fund
at the end of each fiscal year will be required to be "marked to market" for
federal income tax purposes, that is, deemed to have been sold at market value.
Except for transactions in forward currency contracts which are classified as
part of a "mixed straddle," any gain nor loss recognized with respect to
forward currency contracts is considered to be 60% long-term capital gain or
loss, and 40% short-term capital gain or loss, without regard to the holding
period of the contract. In the case of a transaction classified as a "mixed
straddle," the recognition of losses may be deferred to a later taxable year.
Code Section 988 may also apply to forward currency contracts. Under Section
988, each non-U.S. currency gain or loss is generally computed separately and
treated as ordinary income or loss. In the case of overlap between Sections
1256 and 988, special provisions determine the character and timing of any
income, gain or loss. The fund will attempt to monitor Section 988
transactions to avoid an adverse tax impact.
Under the Code, a fund's taxable income for each year will be computed without
regard to any net non-U.S. currency loss attributable to transactions after
October 31, and any such net non-U.S. currency loss will be treated as arising
on the first day of the following taxable year.
As of the date of this statement of additional information, the maximum
individual Federal tax rate applicable to ordinary income is 39.6% (effective
tax rates may be higher for some individuals due to phase out of exemptions and
elimination of deductions); the maximum individual tax rate applicable to net
capital gain is 28%; and the maximum corporate tax applicable to ordinary
income and net capital gain is 35% (except that corporations which have taxable
income in excess of $100,000 for a taxable year will be required to pay an
additional amount of income tax of up to $11,750 and corporations which have
taxable income in excess of $15,000,000 for a taxable year will be required to
pay an additional amount of income tax of up to $100,000). Naturally, the
amount of tax payable by an individual will be affected by a combination of tax
law rules covering, E.G., deductions, credits, deferrals, exemptions, sources
of income and other matters. Under the Code, an individual is entitled to
establish and contribute to an IRA each year (prior to the tax return filing
deadline for that year) whereby earnings on investments are tax-deferred. In
addition, in some cases, the IRA contribution itself may be deductible.
The foregoing is limited to a summary discussion of federal taxation and
should not be viewed as a comprehensive discussion of all provisions of the
Code relevant to investors. Dividends and distributions may also be subject to
state or local taxes. Investors should consult their own tax advisers for
additional details as to their particular tax status.
PURCHASE OF SHARES
PRICE OF SHARES - Purchases of shares are made at the offering price next
determined after the purchase order is received by the fund or American Funds
Service Company; this offering price is effective for orders received by
American Funds Service Company (the "Transfer Agent"), the fund or investment
dealers prior to the time of determination of the net asset value and, in the
case of orders placed with dealers, accepted by the Principal Underwriter prior
to its close of business. The dealer is responsible for promptly transmitting
purchase orders to the Principal Underwriter. Orders received by the
investment dealer, the Transfer Agent, or the fund after the time of the
determination of the net asset value will be entered at the next calculated
offering price. Prices which appear in the newspaper are not always indicative
of prices at which you will be purchasing and redeeming shares of the fund,
since such prices generally reflect the previous day's closing price whereas
purchases and redemptions are made at the next calculated price.
The price you pay for shares, the offering price, is based on the net asset
value per share which is calculated once daily at the close of trading
(currently 4:00 p.m., New York time) each day the New York Stock Exchange is
open. The New York Stock Exchange is currently closed on weekends and on the
following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving and Christmas Day. The net
asset value per share is determined as follows:
1. Stocks and convertible debentures are stated at market value based upon
closing sales prices reported on recognized securities exchanges on the last
business day of the period or, for listed securities having no sales reported,
upon last-reported bid prices on that date. Securities traded in the
over-the-counter market are valued at the last available sale prior prior to
the time of valuation, or, lacking any sales, at the last reported bid
price.
Bonds and notes are valued at prices obtained from a bond-pricing service
provided by a major dealer in bonds, when such prices are available; however,
in circumstances where the Investment Adviser deems it appropriate to do so,
such securities will be valued at the mean of representative quoted bid and
asked prices or, if such prices are not available, at prices for securities of
comparable maturity, quality and type. Securities denominated in non-U.S.
currencies are generally valued on the basis of bid quotations. Short-term
securities with original or remaining maturities in excess of 60 days are
valued at the mean of their quoted bid and asked prices. Short-term securities
with 60 days or less to maturity are valued at amortized cost, which
approximates market value. The maturities of variable or floating rate
instruments are deemed to be the time remaining until the next interest rate
adjustment date.
2. Where pricing service or market quotations are not readily available,
securities will be valued at fair value by the Valuation Committee of the Board
of Directors.
3. There are deducted from the total assets, thus determined, the liabilities,
including proper accruals of taxes and other expense items; and
4. The net assets so obtained is then divided by the total number of shares
outstanding, and the result, rounded to the nearest cent, is the net asset
value per share.
Any purchase order may be rejected by the Principal Underwriter or by the
fund. The fund will not knowingly sell shares (other than for the reinvestment
of dividends or capital gain distributions) directly or indirectly or through a
unit investment trust to any other investment company, person or entity, where,
after the sale, such investment company, person, or entity would own
beneficially directly, indirectly, or through a unit investment trust more than
3% of the outstanding shares of the fund without the consent of a majority of
the Board of Directors.
STATEMENT OF INTENTION - The reduced sales charges and offering prices set
forth in the Prospectus apply to purchases of $25,000 or more made within a
13-month period pursuant to the terms of a written statement of intention (the
"Statement") in the form provided by the Principal Underwriter and signed by
the purchaser. The Statement is not a binding obligation to purchase the
indicated amount. When a shareholder signs a Statement in order to qualify for
a reduced sales charge, shares equal to 5% of the dollar amount specified in
the Statement will be held in escrow in the shareholder's account out of the
initial purchase (or subsequent purchases, if necessary) by the Transfer Agent.
All dividends and capital gain distributions on shares held in escrow will be
credited to the shareholder's account in shares (or paid in cash, if
requested). If the intended investment is not completed within the specified
13-month period, the purchaser will remit to the Principal Underwriter the
difference between the sales charge actually paid and the sales charge which
would have been paid if the total of such purchases had been made at a single
time. If the difference is not paid within 20 days after written request by
the Principal Underwriter or the securities dealer, the appropriate number of
escrowed shares will be redeemed to pay such difference. If the proceeds from
this redemption are inadequate, the purchaser will be liable to the Principal
Underwriter for the balance still outstanding. The Statement may be revised
upward at any time during the 13-month period, and such a revision will be
treated as a new Statement, except that the 13-month period during which the
purchase must be made will remain unchanged and there will be no retroactive
reduction of the sales charges paid on prior purchases.
In the case of purchase orders by the trustees of certain retirement plans by
payroll deduction, the sales charge for the investments made during the
13-month period will be handled as follows: The investment made the first
month of the 13-month period will be multiplied by 13 and then multiplied by
1.5. On the first investment and all other investments made pursuant to the
statement of intention, a sales charge will be assessed according to the sales
charge breakpoint thus determined. There will be no retroactive adjustments in
sales charges on investments previously made during the 13-month period.
DEALER COMMISSIONS - The following commissions will be paid to dealers who
initiate and are responsible for purchases of $1 million or more, for purchases
by any defined contribution plan qualified under Section 401(a) of the Internal
Revenue Code including a "401(k)" plan with 200 or more eligible employees, and
for purchases made at net asset value by certain retirement plans of
organizations with collective retirement plan assets of $100 million or more:
1.00% on amounts of $1 million to $2 million, 0.80% on amounts over $2 million
to $3 million, 0.50% on amounts over $3 million to $50 million, 0.25% on
amounts over $50 million to $100 million, and 0.15% on amounts over $100
million. The level of dealer commissions will be determined based on sales
made over a 12-month period commencing from the date of the first sale at net
asset value. See "The American Funds Shareholder Guide" in the fund's
Prospectus for more information.
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES
AUTOMATIC INVESTMENT PLAN - The automatic investment plan enables shareholders
to make regular monthly or quarterly investments in shares through automatic
charges to their bank accounts. With shareholder authorization and bank
approval, the Transfer Agent will automatically charge the bank account for the
amount specified ($50 minimum), which will be automatically invested in shares
at the offering price on or about the 10th day of the month (or on or about the
15th day of the month in the case of accounts for retirement plans where
Capital Guardian Trust Company serves as trustee or custodian). Bank accounts
will be charged on the day or a few days before investments are credited,
depending on the bank's capabilities, and shareholders will receive a
confirmation statement showing the current transaction. Participation in the
plan will begin within 30 days after receipt of the account application. If
the shareholder's bank account cannot be charged due to insufficient funds, a
stop-payment order or closing of the account, the plan may be terminated and
the related investment reversed. The shareholder may change the amount of the
investment or discontinue the plan at any time by writing the Transfer Agent.
AUTOMATIC WITHDRAWALS - Withdrawal payments are not to be considered as
dividends, yield or income. Automatic investments may not be made into a
shareholder account from which there are automatic withdrawals. Withdrawals of
amounts exceeding reinvested dividends and distributions and increases in share
value would reduce the aggregate value of the shareholder's account. The
Transfer Agent arranges for the redemption by the fund of sufficient shares,
deposited by the shareholder with the Transfer Agent, to provide the withdrawal
payment specified.
CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS - A shareholder in one fund
may elect to cross-reinvest dividends or dividends and capital gain
distributions paid by that fund (the "paying fund") into any other fund in The
American Funds Group (the "receiving fund") subject to the following
conditions: (i) the aggregate value of the shareholder's account(s) in the
paying fund(s) must equal or exceed $5,000 (this condition is waived if the
value of the account in the receiving fund equals or exceeds that fund's
minimum initial investment requirement), (ii) as long as the value of the
account in the receiving fund is below that fund's minimum initial investment
requirement, dividends and capital gain distributions paid by the receiving
fund must be automatically reinvested in the receiving fund, and (iii) if this
privilege is discontinued with respect to a particular receiving fund, the
value of the account in that fund must equal or exceed the fund's minimum
initial investment requirement or the fund shall have the right, if the
shareholder fails to increase the value of the account to such minimum within
90 days after being notified of the deficiency, automatically to redeem the
account and send the proceeds to the shareholder. These cross-reinvestments of
dividends and capital gain distributions will be at net asset value (without
sales charge).
REDEMPTION OF SHARES
The fund's Articles of Incorporation permit the fund to direct the Transfer
Agent to redeem the shares of any shareholder if the shares owned by such
shareholder through redemptions, market decline or otherwise, have a value of
less than $150 (determined, for this purpose only as the greater of the
shareholder's cost or the current net asset value of the shares, including any
shares acquired through reinvestment of income dividends and capital gain
distributions), or are fewer than ten shares. Prior notice of at least 60 days
will be given to a shareholder before the involuntary redemption provision is
made effective with respect to the shareholder's account. The shareholder will
have not less than 30 days from the date of such notice within which to bring
the account up to the minimum determined as set forth above.
While payment of redemptions normally will be in cash, the fund's Articles of
Incorporation permit payment of the redemption price wholly or partly in
securities or other property included in the assets belonging to the fund when
in the opinion of the fund's Board of Directors, which shall be conclusive,
conditions exist which make payment wholly in cash unwise or undesirable.
EXECUTION OF PORTFOLIO TRANSACTIONS
There are occasions on which portfolio transactions for the fund may be
executed as part of concurrent authorizations to purchase or sell the same
security for other funds served by the Investment Adviser, or for trusts or
other accounts served by affiliated companies of the Investment Adviser.
Although such concurrent authorizations potentially could be either
advantageous or disadvantageous to the fund, they are effected only when the
Investment Adviser believes that to do so is in the interest of the fund. When
such concurrent authorizations occur, the objective is to allocate the
executions in an equitable manner. The fund does not intend to pay a mark-up
in exchange for research in connection with principal transactions.
The fund held certain debt securities of two of its regular brokers or dealers
or their parents which included securities of Ford Motor Credit Co. and General
Electric Capital Corp. in the amounts of $71,353,000 and $35,201,000,
respectively, at December 31, 1994.
Brokerage commissions paid on portfolio transactions, including dealer
concessions on underwritings, for the fiscal years ended December 31, 1994,
1993, and 1992, amounted to $6,647,968, $8,431,000, and $5,572,000,
respectively.
GENERAL INFORMATION
CUSTODIAN OF ASSETS - Securities and cash owned by the fund, including proceeds
from the sale of shares of the fund and of securities in the fund's portfolio,
are held by The Chase Manhattan Bank (National Association), One Chase
Manhattan Plaza, New York, NY 10081, as Custodian. Non-U.S. securities may be
held by the Custodian pursuant to sub-custodial agreements in non-U.S. banks or
non-U.S. branches of U.S. banks.
TRANSFER AGENT - The Transfer Agent, maintains the record of each shareholder's
account, processes purchases and redemptions of the fund's shares, acts as
dividend and capital gain distribution disbursing agent, and performs other
related shareholder service functions. When fund shares are purchased by an
insurance company separate account to serve as the underlying investment
vehicle for variable insurance contracts, the fund may pay a fee to the
insurance company or another party for performing certain transfer agent
services with respect to contract owners having interests in the fund. The
fund has entered into such an agreement with Nationwide Life Insurance Company.
INDEPENDENT ACCOUNTANTS - Deloitte & Touche LLP, 1000 Wilshire Boulevard, 15th
Floor, Los Angeles, CA 90017, has served as the fund's independent auditors
since its inception, providing audit services, preparation of tax returns and
review of certain documents to be filed with the Securities and Exchange
Commission. The financial statements, included in this Statement of Additional
Information from the attached Annual Report, have been so included in reliance
on the independent auditors' report given on the authority of said firm as
experts in accounting and auditing.
REMOVAL OF DIRECTORS BY SHAREHOLDERS - At any meeting of shareholders, duly
called and at which a quorum is present, the shareholders may, by the
affirmative vote of the holders of a majority of the votes entitled to be cast
thereon, remove any director or directors from office and may elect a successor
or successors to fill any resulting vacancies for the unexpired terms of
removed directors. The fund has made an undertaking, at the request of the
staff of the Securities and Exchange Commission, to apply the provisions of
section 16(c) of the 1940 Act with respect to the removal of directors, as
though the fund were a common-law trust. Accordingly, the Directors of the
fund shall promptly call a meeting of shareholders for the purpose of voting
upon the question of removal of any Director when requested in writing to do so
by the record holders of not less than 10% of the outstanding shares.
REPORTS TO SHAREHOLDERS - The fund's fiscal year ends on December 31.
Shareholders are provided at least semi-annually with reports showing the
investment portfolio, financial statements and other information. The fund's
annual financial statements are audited by the fund's independent auditors,
Deloitte & Touche LLP, whose selection is determined annually by the Board of
Directors.
PERSONAL INVESTING POLICY - Capital Research and Management Company and its
affiliated companies have adopted a personal investing policy consistent with
Investment Company Institute guidelines. This policy includes: a ban on
acquisitions of securities pursuant to an initial public offering; restrictions
on acquisitions of private placement securities; pre-clearance and reporting
requirements; review of duplicate confirmation statements; annual
recertification of compliance with codes of ethics; disclosure of personal
holdings by certain investment personnel prior to recommendation for purchase
for the fund; blackout periods on personal investing for certain investment
personnel; ban on short-term trading profits for investment personnel;
limitations on service as a director of publicly traded companies; and
disclosure of personal securities transactions.
The financial statements including the investment portfolio and the report of
Independent Auditors contained in the Annual Report are included in this
Statement of Additional Information. The following information is not included
in the Annual Report:
<TABLE>
<CAPTION>
DETERMINATION OF NET ASSET VALUE, REDEMPTION PRICE AND
MAXIMUM OFFERING PRICE PER SHARE - DECEMBER 31, 1994
<S> <C>
Net asset value and redemption price per share $12.69
(Net assets divided by shares outstanding)
Maximum offering price per share $13.32
(100/95.25 of net asset value per share, which takes
into account the fund's current maximum sales charge)
</TABLE>
INVESTMENT RESULTS
The fund's yield is 7.95% based on a 30-day (or one month) period ended
December 31, 1994, computed by dividing the net investment income per share
earned during the period by the maximum offering price per share on the last
day of the period, according to the following formula:
YIELD = 2[( a-b/cd + 1)/6/ -1]
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period that were
entitled to receive dividends.
d = the maximum offering price per share on the last day of the period.
The fund's total return over the past twelve months and average annual total
returns over the past 5-year and 10-year periods ending on December 31, 1994,
were -9.52%, 7.52%, and 10.04%, respectively. The average total return ("T")
is computed by equating the value at the end of the period ("ERV") with a
hypothetical initial investment of $1,000 ("P") over a period of years ("n")
according to the following formula as required by the Securities and Exchange
Commission: P(1+T)/n/ = ERV.
The following assumptions will be reflected in computations made in accordance
with the formula stated above: (1) deduction of the maximum sales charge of
4.75% from the $1,000 initial investment; (2) reinvestment of dividends and
distributions at net asset value on the reinvestment date determined by the
Board; and (3) a complete redemption at the end of any period illustrated.
The investment results for the fund (also referred to as "BFA") set forth
below were calculated as described in the fund's prospectus. Data contained in
Salomon Brothers' Market Performance and Lehman Brother's The Bond Market
Report are used to calculate cumulative total return from their base period
(12/31/79 and 12/31/72, respectively) for each index. The percentage increases
shown in the table below or used in published reports of the fund are obtained
by subtracting the index results at the beginning of the period from the index
results at the end of the period and dividing the difference by the index
results at the beginning of the period.
THE FUND VS. VARIOUS UNMANAGED INDICES
<TABLE>
<CAPTION>
Period The Fund Salomon Lehman Average
1/1 - 12/31 Brothers (1) Brothers (2) Savings
Deposit (3)
<S> <C> <C> <C> <C>
1985 - 1994 + 160% + 160% + 175% + 77%
1984 - 1993 + 207 + 208 + 233 + 88
1983 - 1992 + 194 + 203 + 225 + 99
1982 - 1991 + 252 + 271 + 316 + 112
1981 - 1990 + 210 + 240 + 261 + 122
1980 - 1989 + 210 + 221 + 236 + 125
1979 - 1988 + 191 n/a + 189 + 125
1978 - 1987 + 168 n/a + 165 + 125
1977 - 1986 + 176 n/a + 167 + 125
1976 - 1985 + 184 n/a + 173 + 123
1975 - 1984 + 152 n/a + 157 + 119
1974*- 1983 + 134 n/a + 118 + 109
</TABLE>
* From May 28.
(1) THE SALOMON BROTHERS BROAD INVESTMENT GRADE BOND INDEX SPANS THE AVAILABLE
MARKET FOR U.S. TREASURY/AGENCY SECURITIES, INVESTMENT GRADE CORPORATE BONDS
WHICH HAVE A RATING OF BBB OR BETTER BY STANDARD AND POOR'S CORPORATION, AND
MORTGAGE PASS-THROUGH SECURITIES. THIS INDEX'S INCEPTION DATE IS 12/31/79.
(2) THE LEHMAN BROTHERS CORPORATE BOND INDEX IS COMPRISED OF A LARGE UNIVERSE
OF BONDS ISSUED BY INDUSTRIAL, UTILITY AND FINANCIAL COMPANIES WHICH HAVE A
MINIMUM RATING OF BAA BY MOODY'S INVESTORS SERVICE, BBB BY STANDARD AND POOR'S
CORPORATION OR, IN THE CASE OF BANK BONDS NOT RATED BY EITHER OF THE PREVIOUSLY
MENTIONED SERVICES, BBB BY FITCH INVESTORS SERVICE.
(3) BASED ON FIGURES SUPPLIED BY THE U.S. LEAGUE OF SAVINGS INSTITUTIONS AND
THE FEDERAL RESERVE BOARD WHICH REFLECT ALL KINDS OF SAVINGS DEPOSITS,
INCLUDING LONGER-TERM CERTIFICATES. SAVINGS ACCOUNTS OFFER A GUARANTEED RETURN
OF PRINCIPAL, BUT NO OPPORTUNITY FOR CAPITAL GROWTH. DURING A PORTION OF THE
PERIOD, THE MAXIMUM RATES PAID ON SOME SAVINGS DEPOSITS WERE FIXED BY LAW.
IF YOU ARE CONSIDERING THE FUND FOR AN INDIVIDUAL RETIREMENT ACCOUNT . . .
<TABLE>
<CAPTION>
<S> <C>
Here's how much you would have if you had invested $2,000 on
January 1 of each year in the Fund over the past 5 and 10 years:
5 Years 10 Years
(1/1/90-12/31/94) (1/1/85-12/31/94)
$11,832 $31,405
</TABLE>
SEE THE DIFFERENCE TIME CAN MAKE IN AN INVESTMENT PROGRAM
<TABLE>
<CAPTION>
If you had invested ...and taken all
$10,000 in the Fund distributions in shares,
this many years ago... your investment would
have been worth this
much at Dec. 31, 1994
| Period |
Number of Years 1/1-12/31 Value
<S> <C> <C>
1 1994
$ 9,048
2 1993 - 1994
10,325
3 1992 - 1994
11,500
4 1991 - 1994
13,914
5 1990 - 1994
14,371
6 1989 - 1994
15,827
7 1988 - 1994
17,515
8 1987 - 1994
17,863
9 1986 - 1994
20,572
10 1985 - 1994
26,039
11 1984 - 1994
29,157
12 1983 - 1994
31,924
13 1982 - 1994
42,433
14 1981 - 1994
45,221
15 1980 - 1994
46,825
16 1979 - 1994
48,307
17 1978 - 1994
49,289
18 1977 - 1994
51,827
19 1976 - 1994
61,237
20 1975 - 1994
68,988
21 1974*- 1994
71,582
</TABLE>
* From May 28, 1974, the fund's inception date
FUND COMPARISONS
According to Lipper Analytical Services, during the period May 31, 1974
through December 31, 1994 (the fund's lifetime), the fund ranked first among
the thirteen similar bond funds that were in existence for that period.
The fund may also refer to results compiled by organizations such as CDA
Investment Technologies, Ibbottson Associates, Lipper Analytical Services and
Wiesenberger Investment Companies Services. Additionally, the Fund may, from
time to time, refer to results published in various periodicals, including
Barrons, Forbes, Institutional Investor, Kiplinger's Personal Finance Magazine,
Money, U.S. News and World Report and The Wall Street Journal.
In addition, the fund may also, from time to time, illustrate the benefits of
tax deferral by comparing taxable investments to investments made through
tax-deferred retirement plans.
Past results are not an indication of future investment results.
ILLUSTRATION OF A $10,000 INVESTMENT IN THE FUND WITH
DIVIDENDS REINVESTED AND CAPITAL GAIN DISTRIBUTIONS TAKEN IN SHARES
(For the lifetime of the Fund May 28, 1974 through December 31, 1994)
<TABLE>
<CAPTION>
COST OF SHARES VALUE
OF SHARES
Fiscal Annual Dividends Total From From From Total
Year End Dividends (cumulative) Investment Initial Capital Gains Dividends Value
Dec. 31 Cost Investment Reinvested Reinvested
<S> <C> <C> <C> <C> <C> <C> <C>
1974 $ 413 $ 413 $10,413 $ 9,473 $ 0 $ 411 $ 9,884
1975 897 1,310 11,310 9,799 0 1,338 11,137
1976 1,010 2,320 12,320 10,555 126 2,473 13,154
1977 1,114 3,434 13,434 10,125 240 3,466 13,831
1978 1,198 4,632 14,632 9,438 278 4,396 14,112
1979 1,387 6,019 16,019 8,848 260 5,448 14,556
1980 1,706 7,725 17,725 8,147 240 6,685 15,072
1981 2,096 9,821 19,821 7,564 222 8,287 16,073
1982 2,408 12,229 22,229 8,799 259 12,303 21,361
1983 2,529 14,758 24,758 8,612 253 14,517 23,382
1984 2,838 17,596 27,596 8,563 252 17,360 26,175
1985 3,193 20,789 30,789 9,722 286 23,132 33,140
1986 3,566 24,355 34,355 9,861 1,325 26,980 38,166
1987 3,746 28,101 38,101 9,119 1,225 28,571 38,915
1988 3,912 32,013 42,013 9,188 1,235 32,657 43,080
1989 4,425 36,438 46,438 9,181 1,234 37,028 47,443
1990 4,650 41,088 51,088 8,598 1,155 39,240 48,993
1991 4,859 45,947 55,947 9,507 1,277 48,519 59,303
1992 5,221 51,168 61,168 9,709 1,491 54,828 66,028
1993 5,269 56,437 66,437 10,028 3,501 61,833 75,362
1994 5,673 62,110 72,110 8,806 3,075 59,701 71,582
</TABLE>
The dollar amount of capital gain distributions during the period was $3,490
DESCRIPTION OF BOND RATINGS
MOODY'S INVESTORS SERVICE, INC. rates the long-term debt securities issued by
various entities from "Aaa" to "C," according to quality as described below:
"AAA -- Best quality. These securities carry the smallest degree of investment
risk and are generally referred to as "gilt edge." Interest payments are
protected by a large, or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the fundamentally
strong position of such issues."
"AA -- High quality by all standards. They are rated lower than the best bond
because margins of protection may not be as large as in Aaa securities,
fluctuation of protective elements may be of greater amplitude, or there may be
other elements present which make the long-term risks appear somewhat greater."
"A -- Upper medium grade obligations. These bonds possess many favorable
investment attributes. Factors giving security to principal and interest are
considered adequate, but elements may be present which suggest a susceptibility
to impairment sometime in the future."
"BAA -- Medium grade obligations. Interest payments and principal security
appear adequate for the present but certain protective elements may be lacking
or may be characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and, in fact, have
speculative characteristics as well."
"BA -- Have speculative elements; future cannot be considered as well assured.
The protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the future.
Bonds in this class are characterized by uncertainty of position."
"B -- Generally lack characteristics of the desirable investment; assurance of
interest and principal payments or of maintenance of other terms of the
contract over any long period of time may be small."
"CAA -- Of poor standing. Issues may be in default or there may be present
elements of danger with respect to principal or interest."
"CA -- Speculative in a high degree; often in default or have other marked
shortcomings."
"C -- Lowest rated class of bonds; can be regarded as having extremely poor
prospects of ever attaining any real investment standing."
STANDARD & POOR'S CORPORATION rates the long-term securities debt of various
entities in categories ranging from "AAA" to "D" according to quality as
described below:
"AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong."
"AA -- High grade. Very strong capacity to pay interest and repay principal.
Generally, these bonds differ from AAA issues only in a small degree."
"A -- Have a strong capacity to pay interest and repay principal, although they
are somewhat more susceptible to the adverse effects of change in circumstances
and economic conditions, than debt in higher rated categories."
"BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay interest and repay principal than for debt in
higher rated categories."
"BB, B, CCC, CC, C -- Regarded, on balance, as predominantly speculative with
respect to capacity to pay interest and repay principal in accordance with the
terms of the obligation. BB indicates the lowest degree of speculation and C
the highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions."
"C1 -- Reserved for income bonds on which no interest is being paid."
"D -- In default and payment of interest and/or repayment of principal is in
arrears."
THE BOND FUND OF AMERICA
INVESTMENT PORTFOLIO December 31, 1994
Corporate Bonds 41%
U.S. Treasury Securities 23%
Mortgage and Asset-Backed Securities 19%
Cash Equivalents 11%
Non-U.S. Government Bonds and
Development Agencies 6%
THE BOND FUND OF AMERICA
INVESTMENT PORTFOLIO DECEMBER 31, 1994
<TABLE>
<CAPTION>
THE BOND FUND OF AMERICA Market Percent
Principal of
INVESTMENT PORTFOLIO DECEMBER 31, 1994 Amount Value Net
Assets
(000) (000)
<S> <C> <C> <C>
ELECTRICAL & GAS UTILITIES
UTILITIES: ELECTRICAL & GAS
Big Rivers Electic Corp. 10.70% 2017 $17,000 $18,610 .38%
CEZ Finance BV 8.875% 1999/1/ 3,000 2,977 0.06
CMS Energy 0%/9.50% 1997/2/ 2,000 1,860 0.04
Commonwealth Edison Co. 6.50% 2000 5,000 4,515 0.09
Coso Funding Corp. 8.87% 2001/1/ 7,500 7,215 0.15
Hero Asia (BVI) Co. Ltd. 9.11% 2001/1/ 5,000 4,826 0.1
Korea Electric Power Corp. 6.375% 2003 13,000 11,036 0.22
Long Island Lighting Co. 8.90% 2019 5,000 4,090 0.08
Midland Cogeneration Venture, LP 10.33% 2002 13,537 12,861 0.26
Midland Cogeneration Venture, LP, secured lease
obligation bonds, 10.33% 2002 7,209 6,849 0.14
Transco Energy Co. 9.125% 1998 2,000 2,002 0.04
Transco Energy Co. 9.625% 2000 2,000 2,030 0.04
Transco Energy Co. 9.375% 2001 5,800 5,829 0.12
United Illuminating Co. 9.76% 2006 5,388 5,455 0.11
---------- ---------
-
90,155 1.45
---------- ---------
-
INDUSTRIAL & SERVICE
AUTOMOBILES
General Motors Corp. 9.45% 2011 20,000 20,504 0.41
General Motors Corp. 8.80% 2021 50,000 51,191 1.04
---------- ---------
-
71,695 1.45
---------- ---------
-
BEVERAGES & TOBACCO
Canandaigua Wine Co., Inc. 8.75% 2003 5,000 4,550 0.09
Dr. Pepper Bottlng Co. of Texas 10.25% 2000 8,500 8,500 0.17
Dr. Pepper/Seven-Up Cos. 0%/11.50% 2002/2/ 5,572 4,416 0.09
RJR Nabisco, Inc. 8.75% 2004 5,000 4,606 0.09
RJR Nabisco, Inc. 8.75% 2005 4,000 3,647 0.07
RJR Nabisco, Inc. 9.25% 2013 6,000 5,396 0.11
---------- ---------
-
31,115 0.62
---------- ---------
-
BROADCASTING & PUBLISHING
Infinity Broadcasting Corp. 10.375% 2002 11,250 11,362 0.23
Marvel Holdings, Inc. 0% 1998 52,750 32,441 0.66
Univision Television Group, Inc. 11.75% 2001/1/ 5,500 5,748 0.12
Univision Television Group, Inc. 7.00% 2002/1/ 3,498 2,064 0.04
---------- ---------
-
51,615 1.05
---------- ---------
-
CONSTRUCTION & HOUSING
Del Webb Corp. 9.75% 2003 10,000 8,300 0.17
Kaufman & Broad Home Corp. 10.375% 1999 7,500 7,462 0.15
M.D.C. Holdings, Inc. 11.125% 2003 9,000 7,200 0.15
---------- ---------
-
22,962 0.47
---------- ---------
-
DATA PROCESSING & REPRODUCTION
Data General Corp. 7.75% convertible debentures 2001 8,000 6,920 0.14
Data General Corp. 8.375% 2002 1,250 1,084 0.02
Digital Equipment Corp. 7.125% 2002 6,500 5,377 0.11
Maxtor Corp. 5.75% convertible debentures 2012 2,000 1,050 0.02
Neodata Services, Inc. 0%/12.00% 2003/2/ 12,000 9,360 0.19
Unisys Corp. 15.00% 1997 4,000 4,280 0.09
---------- ---------
-
28,071 0.57
---------- ---------
-
DIVERSIFIED MEDIA & CABLE TELEVISION
Adelphia Communications Corp. 9.50% 2004 3,507 2,359 0.05
American Media Operations, Inc. 11.625% 2004 2,000 2,050 0.04
Bell Cablemedia PLC 0%/11.95% 2004/2/ 36,000 19,260 0.39
Cablevision Industries Corp. 10.75% 2004 1,000 1,000 0.02
Cablevision Industries Corp. 9.875% 2013 5,000 4,500 0.09
Century Communications Corp. 9.50% 2000 5,650 5,424 0.11
Century Communications Corp. 9.75% 2002 5,550 5,328 0.11
Comcast Corp. 10.25% 2001 11,000 10,780 0.22
Comcast Corp. 1.125% convertible debentures 2007 25,000 10,062 0.2
Continental Cablevision, Inc. 8.50% 2001 22,050 20,506 0.42
Continental Cablevision, Inc. 10.625% 2002 4,500 4,511 0.09
Continental Cablevision, Inc. 8.625% 2003 4,000 3,640 0.07
Continental Cablevision, Inc. 8.875% 2005 12,000 10,860 0.22
Continental Cablevision, Inc. 11.00% 2007 4,000 4,060 0.08
Continental Cablevision, Inc. 9.00% 2008 12,000 10,800 0.22
Continental Cablevision, Inc. 9.50 % 2013 13,000 11,895 0.24
Insight Communications Co. 8.25% 2000/3/ 11,250 10,575 0.21
International CableTel Inc. 0%/10.875% 2003/2/ 9,000 4,770 0.1
News America Holdings Inc. 9.125% 1999 7,000 7,056 0.14
News America Holdings Inc. 12.00% 2001 4,250 4,722 0.1
News America Holdings Inc. 8.625% 2003 7,000 6,809 0.14
News America Holdings Inc. 10.125% 2012 27,500 28,366 0.58
News America Holdings Inc. 9.25% 2013 15,000 14,592 0.3
News America Holdings Inc. 8.625% 2014 3,250 1,890 0.04
News America Holdings Inc. 8.45% 2034 10,000 9,592 0.19
Rogers Communications Inc. 10.875% 2004 3,500 3,552 0.07
Storer Communications, Inc. 10.00% 2003 12,087 11,362 0.23
Tele-Communications, Inc. 7.375% 2000 6,000 5,624 0.11
Tele-Communications, Inc. 10.125% 2001 2,500 2,613 0.05
Time Warner Inc. 7.95% 2000 5,000 4,687 0.09
Time Warner Inc. 9.625% 2002/1/ 21,000 21,181 0.43
Time Warner Inc. 10.15% 2012/1/ 10,000 10,063 0.2
Time Warner Inc. 8.875% 2012/1/,/3/ 5,000 4,548 0.09
Time Warner Inc. 0% convertible debentures 2012 100,000 30,500 0.62
TKR Cable I, Inc. 10.50% 2007 26,000 26,590 0.54
Turner Broadcasting System 0% 2007 15,000 5,888 0.12
Viacom International Inc. 9.125% 1999 5,000 4,950 0.1
Viacom International Inc. 10.25% 2001 1,600 1,636 0.03
Videotron Holdings PLC 0%/11.125% 2004/2/ 16,500 8,663 0.18
---------- ---------
-
357,264 7.23
---------- ---------
-
ELECTRICAL & ELECTRONICS
General Electric Co. 8.625% 2008 3,000 3,084 0.06
MagneTek, Inc. 10.75% 1998 7,500 7,500 0.15
Samsung Electronics Co., Ltd. 8.50% 2002/1/ 27,850 26,590 0.54
Westinghouse Electric Corp. 8.875% 2001 4,000 3,855 0.08
Westinghouse Electric Corp. 8.375% 2002 7,000 6,504 0.13
---------- ---------
-
47,533 0.96
---------- ---------
-
ENERGY & RELATED COMPANIES
BP America Inc. 10.00% 2018 4,000 4,339 0.09
California Energy Co., Inc. 0%/10.25% 2004/2/ 33,600 24,024 0.49
Global Marine Inc. 12.75% 1999 12,750 13,706 0.28
Maxus Energy Corp. 9.875% 2002 5,500 4,785 0.1
Occidental Petroleum Corp. 9.25% 2019 12,000 12,521 0.25
Oryx Energy Co. 9.30% 1996 6,000 5,975 0.12
Oryx Energy Co. 9.50% 1999 3,500 3,351 0.07
Petronas 6.875% 2003/2/ 6,000 5,378 0.11
Subic Power Corp. 9.50% 2008/1/ 8,448 7,244 0.15
---------- ---------
-
81,323 1.66
---------- ---------
-
FOOD RETAILING
Ralphs Grocery Co. 10.25% 2002 16,700 16,408 0.33
Ralphs Grocery Co. 9.00% 2003 4,000 3,880 0.08
Safeway Inc. 10.00% 2002 1,500 1,530 0.03
Smith's Food & Drug Centers, Inc., Series 94A2,
0%/8.64% 2012/2/ 12,000 11,046 0.22
Star Markets Co., Inc. 13.00% 2004/1/ 1,500 1,530 0.03
Stater Brothers Holdings, Inc. 11.00% 2001 9,500 8,883 0.18
Vons Companies, Inc. 9.625% 2002 8,000 7,840 0.16
---------- ---------
-
51,117 1.03
---------- ---------
-
FOREST PRODUCTS & PAPER
Container Corp. of America 9.75% 2003 38,000 36,290 0.74
Container Corp. of America 11.25% 2004 2,500 2,562 0.05
Fort Howard Corp. 9.25% 2001 7,750 7,246 0.15
Fort Howard Corp. 10.00% 2003 9,750 9,116 0.18
Fort Howard Paper Co. 8.25% 2002 3,000 2,685 0.05
Fort Howard Paper Co. 9.00% 2006 6,750 5,805 0.12
Grupo Industrial Durango SA de CV 9.6875% 1996/1/,/3/ 7,500 7,200 0.15
Klabin Fabricadora de Papel e Celulose SA 10.00% 2001 2,500 2,213 0.04
P.T. Indah Kiat Paper & Pulp Corp. 11.375% 1999/1/ 4,500 4,388 0.09
P.T. Indah Kiat Paper & Pulp Corp. 8.875% 2000/1/ 9,135 7,947 0.16
P.T. Indorayon Yankee 9.125% 2000 3,000 2,445 0.05
Pacific Lumber Co. 10.50% 2003 500 465 0.01
Riverwood International Corp. 10.75% 2000 12,000 12,210 0.25
Riverwood International Corp. 11.25% 2002 5,000 5,137 0.1
Riverwood International Corp., Series II 10.75% 2000 3,500 3,561 0.07
Tjiwi Kimia International Finance Co. 13.25% 2001 10,250 10,352 0.21
---------- ---------
-
119,622 2.42
---------- ---------
-
GENERAL RETAILING & MERCHANDISING
Allied Supermarkets Inc. 6.625% 1998 3,590 3,267 0.07
Ann Taylor 8.75% 2000 5,000 4,725 0.1
Barnes & Noble, Inc. 11.875% 2003/1/ 10,500 11,235 0.23
CompUSA, Inc. 9.50% 2000 6,000 4,980 0.1
Dayton Hudson Corp. 9.52% 2015 7,500 8,197 0.17
Dayton Hudson Corp. 9.35% 2020 6,000 6,528 0.13
Levitz Furniture Corp. 12.375% 1997 7,750 7,982 0.16
Payless Cashways, Inc. 9.125% 2003 7,000 6,265 0.13
Thrifty Payless, Inc. 11.75% 2003 11,500 11,270 0.23
Thrifty Payless, Inc. 12.25% 2004 1,500 1,410 0.03
Thrifty Payless, Inc. 12.25% 2004 5,000 5,050 0.1
---------- ---------
-
70,909 1.45
---------- ---------
-
HEALTH & PERSONAL CARE
FHP International Corp. 7.00% 2003 5,000 4,440 0.09
---------- ---------
-
LEISURE & TOURISM
Circus Circus Enterprises, Inc. 10.625% 1997 8,000 8,233 0.17
Embassy Suites, Inc. 8.75% 2000 3,000 2,820 0.06
Euro Disney S.C.A. 6.75% convertible debentures 2001 FF108,780 14,441 0.29
Foodmaker, Inc. 9.25% 1999 $12,200 10,370 0.21
Foodmaker, Inc. 9.75% 2002 4,300 3,268 0.07
Four Seasons Hotels Inc. 9.125% 2000 6,000 5,520 0.11
Host Marriott Hospitality, Inc. 9.125% 2000 5,833 5,753 0.12
Host Marriott Hospitality, Inc. 10.375% 2011 1,480 1,480 0.03
Kloster Cruise Ltd. 13.00% 2003 13,500 12,150 0.25
Six Flags Corp. 0% 1999 22,000 13,690 0.28
---------- ---------
-
77,725 1.59
---------- ---------
-
MACHINERY & ENGINEERING
Coleman Holdings, Inc. 0% 1998 3,500 2,354 0.05
Coltec Industries 9.75% 1999 7,000 6,860 0.14
Coltec Industries 9.75% 2000 7,500 7,350 0.15
John Deere Capital Corp. 8.625% 2019 9,150 9,296 0.19
---------- ---------
-
25,860 0.53
---------- ---------
-
METALS
Acme Metals Inc. 0%/13.50% 2004/2/ 9,000 6,075 0.12
Armco Inc. 11.375% 1999 12,000 12,000 0.24
ISPAT Mexicana (Euro) 10.375% 2001 4,650 3,976 0.08
ISPAT Mexicana 10.375% 2001/1/ 5,000 4,275 0.09
Kaiser Aluminum and Chemical Corp. 12.75% 2003 2,500 2,519 0.05
Pohang Iron & Steel Co., Ltd. 7.50% 2002 10,000 9,282 0.19
Tubos de Acero de Mexico, SA 13.750% 1999/1/ 2,500 2,363 0.05
USX Corp. 9.625% 2003 6,000 6,157 0.12
USX Corp. 0% convertible debentures 2005 40,000 17,500 0.35
USX Corp. 9.125% 2013 5,000 4,770 0.1
---------- ---------
-
68,917 1.39
---------- ---------
-
MISCELLANEOUS MATERIALS & COMMODITIES
Anchor Glass Container Corp. 10.25% 2002 3,000 2,850 0.06
Hyster-Yale Materials Handling, Inc. 12.375% 1999 447 469 0.01
Owens-Illinois, Inc. 11.00% 2003 7,000 7,263 0.15
Tolmex, SA de CV 8.375% 2003 5,500 3,960 0.08
---------- ---------
-
14,542 0.3
---------- ---------
-
MULTI-INDUSTRY
Hanson America, Inc. 144A 2.39% convertible
debentures 2001/1/ 40,000 28,600 0.58
Tenneco Inc. 7.875% 2002 3,000 2,851 0.06
Tenneco Inc. 10.00% 2008 8,720 9,543 0.19
---------- ---------
-
40,994 0.83
---------- ---------
-
OTHER
United States Banknote Co. 10.375% 2002 1,500 1,275 0.03
---------- ---------
-
TELECOMMUNICATIONS
Cellular Inc. 0%/11.75% 2003/2/ 10,500 6,930 0.14
CenCall Communications Corp. 10.125% 2004 33,500 11,725 0.24
Centennial Cellular Corp. 8.875% 2001 19,000 16,815 0.34
Comcast Cellular Corp., Series A, 0% 2000 23,500 15,862 0.32
Comcast Cellular Corp., Series B, 0% 2000 29,400 19,845 0.4
Dial Call Communications, Inc. 0%/12.25% 2004/2/ 38,750 13,562 0.27
GTE Corp. 8.85% 1998 9,500 9,591 0.19
Horizon Cellular Telephone Co., LP 0%/11.375% 2000/2/ 13,000 9,165 0.19
MFS Communications Co., Inc. 0%/9.375% 2004/2/ 35,000 21,000 0.43
MobileMedia Communications, Inc. 0%/10.50% 2003/2/ 14,600 7,884 0.16
NEXTEL Communications, Inc. 0%/11.50% 2003/2/ 56,000 21,840 0.44
NEXTEL Communications, Inc. 0%/9.75% 2004/2/ 60,000 21,000 0.43
Northern Telecom Ltd. 8.75% 2001 3,500 3,544 0.07
Paging Network, Inc. 11.75% 2002 11,675 11,675 0.24
Paging Network, Inc. 8.875% 2006 2,000 1,560 0.03
PanAmSat, LP PanAmSat Capital Corp. 0%/11.375% 2003/2/ 14,000 8,750 0.18
PanAmSat, LP PanAmSat Capital Corp. 9.75% 2000 9,800 9,237 0.19
PriCellular Wireless Corp. 0%/14.00% 2001/2/ 3,500 2,328 0.05
Rogers Cantel Mobile Communications Inc. 10.75% 2001 38,475 38,956 0.79
---------- ---------
-
251,269 5.1
---------- ---------
-
TEXTILES & APPAREL
VF Corp. 9.25% 2022 4,000 4,032 0.08
Westpoint Stevens Inc. 8.75% 2001 4,500 4,140 0.08
---------- ---------
-
8,172 0.16
---------- ---------
-
TRANSPORTATION
Air Wis Services, Inc. 7.75% convertible debentures 2010 4,000 2,440 0.05
Alaska Air Lyon 0% convertible debentures 2006 23,750 9,916 0.2
Alaska Airlines, Series A, 9.50% 2010 2,461 2,236 0.05
Alaska Airlines, Series B, 9.50% 2010 3,092 2,806 0.06
Alaska Airlines, Series C, 9.50% 2010 3,002 2,705 0.05
Alaska Airlines, Series D, 9.50% 2012 4,990 4,513 0.09
American Airlines, Inc., 1991-A, pass-through
certificates, 9.71% 2007/1/, 4 9,496 9,131 0.18
AMR Corp. 9.00% 2012 7,500 6,732 0.14
Delta Air Lines, Inc. 8.25% 1996 6,000 5,937 0.12
Delta Air Lines, Inc. 9.875% 2000 8,000 7,971 0.16
Delta Air Lines, Inc. 10.375% 2011 2,500 2,444 0.05
Delta Air Lines, Inc. 10.00% 2014/1/ 3,000 2,700 0.05
Delta Air Lines, Inc., pass-through certificates,
Series 1992-A2, 9.20% 2014/4/ 5,000 4,275 0.09
Delta Air Lines, Inc., pass-through certificates,
Series 1992-B1, 9.375% 2007/4/ 9,495 8,866 0.18
Federal Express Corp. 8.40% 2010 10,000 9,245 0.19
NWA, Inc. 8.625% 1996 5,000 4,800 0.1
Northwest Airlines, Inc. 12.0916% 2000/1/ 7,973 7,813 0.16
TNT Transport (Euro) PLC/TNT (USA) Inc. 11.50% 2004 4,750 4,774 0.1
United Air Lines, Inc. 10.67% 2004 4,500 4,532 0.09
United Air Lines, Inc. 9.125% 2012 5,000 4,330 0.09
United Air Lines, Inc., pass-through certificates,
Series 1993-A3, 8.39% 2011/4/ 7,500 6,315 0.13
Viking 9.625% 2003 7,000 6,510 0.13
---------- ---------
-
120,991 2.46
---------- ---------
-
FINANCE
BANKING & THRIFTS
Bank of Scotland 8.80% 2004/1/ 16,000 16,123 0.33
CalFed Inc. 10.00% 2003 846 753 0.02
Chevy Chase Savings Bank, F.S.B. 9.25% 2005 3,500 2,940 0.06
Coast Federal Bank 13.00% 2002 5,000 5,500 0.11
Coast Savings Financial, Inc. 10.00% 2000 6,500 6,110 0.12
First Federal Michigan Eurobond 0% 2005 10,000 4,206 0.09
First Nationwide 12.25% 2001 9,000 9,045 0.18
First Nationwide 10.00% 2006 5,850 5,843 0.12
Midland American Capital 12.75% 2003 12,150 13,816 0.28
Skandinaviska Enskilda Banken (N.Y. City) 6.875% 2009 5,000 4,162 0.08
State Bank of New South Wales Euronotes 10.375% 1999 3,000 3,221 0.07
Union Bank Finland Ltd. 5.25% 1996 3,000 2,873 0.06
---------- ---------
-
74,592 1.52
---------- ---------
-
FINANCIAL SERVICES
Beneficial Corp. 12.875% 2013 3,800 4,449 0.09
Fairfax Financial Holdings Ltd. 7.75% 2003 7,750 6,870 0.14
Ford Motor Credit Co. 9.50% 2000 7,350 7,637 0.15
General Electric Capital Corp. 8.875% 2009 8,000 8,200 0.17
General Motors Acceptance Corp. 6.70% 1997 8,000 7,704 0.16
General Motors Acceptance Corp. 7.00% 2000 5,000 4,681 0.09
General Motors Acceptance Corp. 9.625% 2001 6,500 6,827 0.14
General Motors Acceptance Corp. 8.75% 2005 10,000 10,000 0.2
General Motors Acceptance Corp. 8.875% 2010 2,500 2,504 0.05
General Motors Acceptance Corp. International,
medium-term note (Euro-Yen), 3.75% 1999 <UNDEF>1000000 9,719 0.2
New American Capital, Inc. 9.60% 1999/1/ 15,000 14,813 0.3
Xerox Credit Corp. 10.125% 1999 5,000 5,113 0.1
---------- ---------
-
88,517 1.79
---------- ---------
-
INSURANCE
American Re Corp. 10.875% 2004 46,000 48,662 0.98
---------- ---------
-
REAL ESTATE
B.F. Saul REIT 11.625% 2002 13,500 11,340 0.23
Beverly Finance Corp. 8.36% 2004/1/ 15,000 14,284 0.29
Corporate Property Investors 9.00% 2002/1/ 15,000 15,206 0.31
Corporate Property Investors 7.75% 2004/1/ 7,500 7,023 0.14
Shopping Center Associates 6.75% 2004/1/ 7,500 6,514 0.13
---------- ---------
-
54,367 1.1
---------- ---------
-
COLLATERALIZED MORTGAGE/ASSET-BACKED OBLIGATIONS/4/
(EXCLUDING THOSE ISSUED BY FEDERAL AGENCIES)
Capstead Securities Corp., collateralized mortgage
obligations, Series 1992-A, Class 10, 13.123% 2002 3,913 1,937 0.04
Capstead Securities Corp. IV, collateralized mortgage
obligations, Series 1992-4, Class J, 24.231% 2002/5/ 8,750 8,312 0.17
Chase Manhattan Bank, N.A., Series 93-I, Class 2A5,
7.25% 2024 10,000 9,175 0.19
Countrywide Funding Corp., Series 94-2, Class A-12,
9.50341% 2009/5/ 5,206 2,291 0.05
GCC Home Equity Trust, asset-backed certificates,
Series 1990-1, 10.00% 2005 5,667 5,678 0.11
G E Capital Mortgage Services,Series 1994-15, Class
A10, 6.00% 2009 16,376 12,814 0.26
G E Capital Mortgage Services, Series 1994-10, Class
A26, 9.152% 2024/5/ 6,009 1,562 0.03
Green Tree Financial Corp., pass-through
certificates, Series 1994-A, Class NIM, 6.90% 2004 4,118 3,922 0.08
Green Tree Financial Corp., pass-through
certificates, Series 1993-2, Class B, 8.00% 2018 2,250 1,993 0.04
Jet Equipment Trust Series 1994-A 10.91% 2006 7,000 7,014 0.14
MBNA Credit Card Trust, asset-backed certificates,
Series 1991-1, 7.75% 1998 11,000 10,921 0.22
Prudential Home Mortgage Securities Co., Inc.,
Series 1993-48, Class A-6, 6.25% 2008 4,466 3,594 0.07
Prudential Home Mortgage Securities Co., Inc.,
Series 1992-46, Class A-13, 10.682% 2008/5/ 4,431 2,171 0.04
Prudential Home Mortgage Securities Co., Inc.,
Series 1992-37, Class A-6, 7.00% 2022 2,500 2,416 0.05
Prudential Home Mortgage Securities Co., Inc.,
Series 1993-7, Class A-4, 8.00% 2003 9,323 9,011 0.18
Prudential Home Mortgage Securities Co., Inc.,
Series 1993-7, Class A-5, 8.00% 2003 7,336 7,276 0.15
Residential Funding Mortgage Securities I, Inc.,
Series 1992-S22, Class A-5, 8.00% 2005 221 220 0
Residential Funding Mortgage Securities I, Inc.,
Series 1993-48, Class A-10, 8.2331% 2008 4,598 2,391 0.05
Residential Funding Mortgage Securities I, Inc.,
Series 1991-S5, Class A-8, 9.225% 2021 83 83 0
Residential Funding Mortgage Securities I, Inc.,
Series 1992-S6, Class A-10, 15.333% 2022/5/ 10,124 7,897 0.16
Resolution Trust Corp., Series 1991-M5, Class B,
9.00% 2017 2,806 2,701 0.05
Resolution Trust Corp., Series 1992-C5, Class C,
8.85% 2022 10,404 9,832 0.2
Resolution Trust Corp., Series 1992-6, Class A-2B,
8.40% 2024 10,602 10,443 0.21
Resolution Trust Corp., Series 1992-C6, Class C,
8.00% 2024 7,257 6,595 0.13
Resolution Trust Corp., Series 1993-C1, Class D,
9.45% 2024 9,352 8,943 0.18
Resolution Trust Corp., Series 1993-C1, Class E,
9.50% 2024 1,042 992 0.02
Resolution Trust Corp., Series 1993-C2, Class C,
8.00% 2025 3,000 2,738 0.06
Resolution Trust Corp., Series 1993-C2, Class D,
8.50% 2025 3,290 3,075 0.06
Resolution Trust Corp., Series 1993-C2, Class E,
8.50% 2025 1,244 1,172 0.02
Ryland Mortgage Securities Corp., Series 1991-14,
Class F, 26.374% 2021/5/ 1,070 1,188 0.02
Sears Credit Account Trust, Series 1991-C, 8.65% 1998 20,000 20,162 0.41
Standard Credit Card Master Trust I, credit card
participation certificates, Series 1991-1A, 8.50% 1997 20,500 20,654 0.42
Standard Credit Card Master Trust I, credit card
participation certificates, Series 1994-2A, 7.25% 2008 5,000 4,563 0.09
Standard Credit Card Trust, credit card participation
certificates, Series 1990-3A, 9.50% 1998 5,000 5,136 0.1
Standard Credit Card Trust, credit card participation
certificates, Series 1990-6A, 9.375% 1998 9,500 9,737 0.2
Standard Credit Card Trust, credit card participation
certificates, Series 1991-3A, 8.875% 1999 11,000 11,223 0.23
Travelers Mortgage Services, Inc., pass-through
certificates, Series 1989-9, Class Z-2, 8.80% 2019 1,003 978 0.02
---------- ---------
-
220,810 4.45
---------- ---------
-
GOVERNMENTAL
GOVERNMENTS (EXCLUDING U.S. GOVERNMENT)
Argentina (Republic of) 8.37% 2003 14,000 9,975 0.2
Argentina (Republic of) 4.00% 2023 15,000 6,356 0.13
Argentina Bocon 4.3125% 2001 11,500 6,692 0.14
British Columbia Hydro & Power Authority 15.50% 2011/1/ 17,000 19,743 0.4
British Columbia Hydro & Power Authority 15.50% 2011/1/ 11,967 14,127 0.29
British Columbia Hydro & Power Authority 12.50% 2013/3/ 4,000 4,637 0.09
British Columbia Hydro & Power Authority 12.50% 2014/4/ 7,000 8,165 0.17
Canadian Government 8.75% 1996 C$40,000 28,541 0.58
Canadian Government 9.25% 1996 46,250 33,252 0.67
Canadian Government 10.50% 2001 3,000 2,280 0.05
Canadian Government 4.25% 2021 1,000 661 0.01
Italian Government National 8.50% 1999 ITL5,000,0 2,706 0.05
00
Italian Government National 8.50% 2004 3,200,000 1,601 0.03
Italian Government National 8.50% 2004 12,500,000 6,185 0.13
Italy (Republic of) 6.875% 2023 $20000 15,754 0.32
Manitoba (Province of) 9.25% 2020 5,000 5,252 0.11
National Bank of Hungary 8.80% 2002 3,500 3,080 0.06
Netherlands Government DFL 7.50% 2023 FL5,000 2,711 0.05
New South Wales Treasury 6.50% 2006 A$3,000 1,711 0.03
Nova Scotia (Province of) 7.25% 2013 $ 4000 3,384 0.07
Nova Scotia (Province of) 11.50% 2013 2,212 2,460 0.05
Ontario (Province of) 7.75% 2002 3,500 3,381 0.07
Ontario (Province of) 17.00% 2011 11,250 13,535 0.27
Ontario (Province of) 15.25% 2012 6,985 8,443 0.17
Ontario (Province of) 11.50% 2013 5,000 5,553 0.11
Petroleo Brasileiro S.A. 9.275% debentures 1998/3/ 7,500 7,613 0.15
Quebec (Province of) 13.25% 2014 5,500 6,672 0.14
Queensland Global Treasury Note 8.00% 2001 17,000 11,701 0.24
Queensland Global Treasury Note 12.00% 2001 5,000 4,190 0.08
Spain (Kingdom of) 11.45% 1998 PTA600,000 4,530 0.09
Spain (Kingdom of) 10.50% 2003 600,000 4,231 0.09
United Mexican States Government Eurobonds, Series A,
6.25% 2019 1,000 538 0.01
United Mexican States Government Eurobonds, Series B,
6.25% 2019 6,500 3,494 0.07
---------- ---------
-
253,154 5.12
---------- ---------
-
DEVELOPMENT AUTHORITIES
Inter-American Development Bank 8.875% 2009 10,000 10,585 0.21
International Bank for Reconstruction & Development
14.90% 1997 2,500 2,854 0.06
---------- ---------
-
13,439 0.27
---------- ---------
-
FEDERAL AGENCY OBLIGATIONS - MORTGAGE PASS-THROUGHS/4/
Federal Home Loan Mortgage Corp. 8.00% 2003-2010
Federal Home Loan Mortgage Corp. 8.00% 2003-2010
Federal Home Loan Mortgage Corp. 8.00% 2003-2010
Federal Home Loan Mortgage Corp. 8.00% 2003-2010
Federal Home Loan Mortgage Corp. 8.00% 2003-2010
Federal Home Loan Mortgage Corp. 8.00% 2003-2010 9,114 8,740 0.18
Federal Home Loan Mortgage Corp. 8.25% 2007
Federal Home Loan Mortgage Corp. 8.25% 2007
Federal Home Loan Mortgage Corp. 8.25% 2007 4,011 3,874 0.08
Federal Home Loan Mortgage Corp. 8.50% 2002-2020
Federal Home Loan Mortgage Corp. 8.50% 2002-2020
Federal Home Loan Mortgage Corp. 8.50% 2002-2020
Federal Home Loan Mortgage Corp. 8.50% 2002-2020
Federal Home Loan Mortgage Corp. 8.50% 2002-2020
Federal Home Loan Mortgage Corp. 8.50% 2002-2020
Federal Home Loan Mortgage Corp. 8.50% 2002-2020
Federal Home Loan Mortgage Corp. 8.50% 2002-2020
Federal Home Loan Mortgage Corp. 8.50% 2002-2020
Federal Home Loan Mortgage Corp. 8.50% 2002-2020 16,442 16,172 0.33
Federal Home Loan Mortgage Corp. 8.75% 2008
Federal Home Loan Mortgage Corp. 8.75% 2008
Federal Home Loan Mortgage Corp. 8.75% 2008
Federal Home Loan Mortgage Corp. 8.75% 2008
Federal Home Loan Mortgage Corp. 8.75% 2008 5,267 5,191 0.11
Federal Home Loan Mortgage Corp. 9.00% 2021 1,548 1,557 0.03
Federal Home Loan Mortgage Corp. 10.00% 2011-2019
Federal Home Loan Mortgage Corp. 10.00% 2011-2019
Federal Home Loan Mortgage Corp. 10.00% 2011-2019 960 1,001 0.02
Federal Home Loan Mortgage Corp. 10.75% 2010
Federal Home Loan Mortgage Corp. 10.75% 2010
Federal Home Loan Mortgage Corp. 10.75% 2010 220 235 0
Federal Home Loan Mortgage Corp. 11.50% 2000
Federal Home Loan Mortgage Corp. 11.50% 2000
Federal Home Loan Mortgage Corp. 11.50% 2000 79 84 0
Federal Home Loan Mortgage Corp. 12.00% 2010-2015
Federal Home Loan Mortgage Corp. 12.00% 2010-2015
Federal Home Loan Mortgage Corp. 12.00% 2010-2015
Federal Home Loan Mortgage Corp. 12.00% 2010-2015
Federal Home Loan Mortgage Corp. 12.00% 2010-2015
Federal Home Loan Mortgage Corp. 12.00% 2010-2015
Federal Home Loan Mortgage Corp. 12.00% 2010-2015
Federal Home Loan Mortgage Corp. 12.00% 2010-2015
Federal Home Loan Mortgage Corp. 12.00% 2010-2015
Federal Home Loan Mortgage Corp. 12.00% 2010-2015
Federal Home Loan Mortgage Corp. 12.00% 2010-2015
Federal Home Loan Mortgage Corp. 12.00% 2010-2015 2,542 2,749 0.06
Federal Home Loan Mortgage Corp. 12.50% 2009-2019
Federal Home Loan Mortgage Corp. 12.50% 2009-2019
Federal Home Loan Mortgage Corp. 12.50% 2009-2019
Federal Home Loan Mortgage Corp. 12.50% 2009-2019
Federal Home Loan Mortgage Corp. 12.50% 2009-2019
Federal Home Loan Mortgage Corp. 12.50% 2009-2019
Federal Home Loan Mortgage Corp. 12.50% 2009-2019
Federal Home Loan Mortgage Corp. 12.50% 2009-2019
Federal Home Loan Mortgage Corp. 12.50% 2009-2019 2,816 3,212 0.07
Federal Home Loan Mortgage Corp. 12.75% 2015-2019
Federal Home Loan Mortgage Corp. 12.75% 2015-2019
Federal Home Loan Mortgage Corp. 12.75% 2015-2019 963 1,095 0.02
Federal Home Loan Mortgage Corp. 13.00% 2014 80 92 0
Federal Home Loan Mortgage Corp. 13.50% 2018 50 58 0
Federal Home Loan Mortgage Corp. 13.75% 2014 40 45 0
Federal National Mortgage Assn. 7.00% 2013-2023
Federal National Mortgage Assn. 7.00% 2013-2023
Federal National Mortgage Assn. 7.00% 2013-2023
Federal National Mortgage Assn. 7.00% 2013-2023
Federal National Mortgage Assn. 7.00% 2013-2023
Federal National Mortgage Assn. 7.00% 2013-2023
Federal National Mortgage Assn. 7.00% 2013-2023
Federal National Mortgage Assn. 7.00% 2013-2023
Federal National Mortgage Assn. 7.00% 2013-2023
Federal National Mortgage Assn. 7.00% 2013-2023
Federal National Mortgage Assn. 7.00% 2013-2023 34,509 31,318 0.63
Federal National Mortgage Assn. 7.50% 2023-2024
Federal National Mortgage Assn. 7.50% 2023-2024
Federal National Mortgage Assn. 7.50% 2023-2024
Federal National Mortgage Assn. 7.50% 2023-2024
Federal National Mortgage Assn. 7.50% 2023-2024
FNCI POOL #286168 7.500% 06-01-09
FNCI POOL #292811 7.500% 10-01-09
FNCI POOL #292956 7.500% 10-01-09
FNCI POOL #294214 7.500% 10-01-09
FNCI POOL #296707 7.500% 10-01-09
Federal National Mortgage Assn. 7.50% 2023-2024 18,472 17,366 0.35
Federal National Mortgage Assn. 8.00% 2023
Federal National Mortgage Assn. 8.00% 2023
Federal National Mortgage Assn. 8.00% 2023 3,985 3,817 0.08
Federal National Mortgage Assn. 8.50% 2022-2023
Federal National Mortgage Assn. 8.50% 2022-2023
Federal National Mortgage Assn. 8.50% 2022-2023
Federal National Mortgage Assn. 8.50% 2022-2023 9,083 8,936 0.18
Federal National Mortgage Assn. 9.00% 2018-2025
Federal National Mortgage Assn. 9.00% 2018-2025
Federal National Mortgage Assn. 9.00% 2018-2025 6,020 6,051 0.12
Federal National Mortgage Assn. 11.00% 2015 213 229 0
Federal National Mortgage Assn. 11.25% 2014 110 118 0
Federal National Mortgage Assn. 11.50% 2010-2014
Federal National Mortgage Assn. 11.50% 2010-2014
Federal National Mortgage Assn. 11.50% 2010-2014 454 493 0.01
Federal National Mortgage Assn. 12.00% 2015-2019
Federal National Mortgage Assn. 12.00% 2015-2019
Federal National Mortgage Assn. 12.00% 2015-2019 229 251 0.01
Federal National Mortgage Assn. 12.50% 2015
Federal National Mortgage Assn. 12.50% 2015
Federal National Mortgage Assn. 12.50% 2015 508 559 0.01
Federal National Mortgage Assn. 13.00% 2014 67 77 0
Federal National Mortgage Assn. 13.25% 2015 28 32 0
Federal National Mortgage Assn. 15.00% 2013 99 114 0
Government National Mortgage Assn. 4.50% 2023-2024
Government National Mortgage Assn. 4.50% 2023-2024
Government National Mortgage Assn. 4.50% 2023-2024
Government National Mortgage Assn. 4.50% 2023-2024
Government National Mortgage Assn. 4.50% 2023-2024
Government National Mortgage Assn. 4.50% 2023-2024/3/ 159,115 144,758 2.93
Government National Mortgage Assn. 5.00% 2024
Government National Mortgage Assn. 5.00% 2024
Government National Mortgage Assn. 5.00% 2024
Government National Mortgage Assn. 5.00% 2024
Government National Mortgage Assn. 5.00% 2024
Government National Mortgage Assn. 5.00% 2024
Government National Mortgage Assn. 5.00% 2024/3/ 66,023 61,131 1.24
Government National Mortgage Assn. 5.50% 2024
Government National Mortgage Assn. 5.50% 2024
Government National Mortgage Assn. 5.50% 2024/3/ 1,921 1,809 0.04
Government National Mortgage Assn. 6.50% 2023-2024
Government National Mortgage Assn. 6.50% 2023-2024
Government National Mortgage Assn. 6.50% 2023-2024
Government National Mortgage Assn. 6.50% 2023-2024
Government National Mortgage Assn. 6.50% 2023-2024
Government National Mortgage Assn. 6.50% 2023-2024
Government National Mortgage Assn. 6.50% 2023-2024
Government National Mortgage Assn. 6.50% 2023-2024
Government National Mortgage Assn. 6.50% 2023-2024
Government National Mortgage Assn. 6.50% 2023-2024 38,758 33,587 0.68
Government National Mortgage Assn. 7.00% 2022-2025
Government National Mortgage Assn. 7.00% 2022-2025
Government National Mortgage Assn. 7.00% 2022-2025
Government National Mortgage Assn. 7.00% 2022-2025
Government National Mortgage Assn. 7.00% 2022-2025
Government National Mortgage Assn. 7.00% 2022-2025
Government National Mortgage Assn. 7.00% 2022-2025
Government National Mortgage Assn. 7.00% 2022-2025
Government National Mortgage Assn. 7.00% 2022-2025
Government National Mortgage Assn. 7.00% 2022-2025
Government National Mortgage Assn. 7.00% 2022-2025
Government National Mortgage Assn. 7.00% 2022-2025
Government National Mortgage Assn. 7.00% 2022-2025
Government National Mortgage Assn. 7.00% 2022-2025
Government National Mortgage Assn. 7.00% 2022-2025
Government National Mortgage Assn. 7.00% 2022-2025
Government National Mortgage Assn. 7.00% 2022-2025
Government National Mortgage Assn. 7.00% 2022-2025
Government National Mortgage Assn. 7.00% 2022-2025
Government National Mortgage Assn. 7.00% 2022-2025
Government National Mortgage Assn. 7.00% 2022-2025
Government National Mortgage Assn. 7.00% 2022-2025
Government National Mortgage Assn. 7.00% 2022-2025
Government National Mortgage Assn. 7.00% 2022-2025
Government National Mortgage Assn. 7.00% 2022-2025
Government National Mortgage Assn. 7.00% 2022-2025
Government National Mortgage Assn. 7.00% 2022-2025
Government National Mortgage Assn. 7.00% 2022-2025
Government National Mortgage Assn. 7.00% 2022-2025
Government National Mortgage Assn. 7.00% 2022-2025
Government National Mortgage Assn. 7.00% 2022-2025
Government National Mortgage Assn. 7.00% 2022-2025
Government National Mortgage Assn. 7.00% 2022-2025
Government National Mortgage Assn. 7.00% 2022-2025 79,215 71,154 1.44
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2022-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2017-2024
Government National Mortgage Assn. 7.50% 2022-2024
Government National Mortgage Assn. 7.50% 2022-2024
Government National Mortgage Assn. 7.50% 2022-2024 58,614 54,417 1.1
Government National Mortgage Assn. 8.00% 2017-2023
Government National Mortgage Assn. 8.00% 2017-2023
Government National Mortgage Assn. 8.00% 2017-2023
Government National Mortgage Assn. 8.00% 2017-2023 4,167 4,013 0.08
Government National Mortgage Assn. 8.50% 2020 2,153 2,116 0.04
Government National Mortgage Assn. 9.00% 2016-2021
Government National Mortgage Assn. 9.00% 2016-2021
Government National Mortgage Assn. 9.00% 2016-2021
Government National Mortgage Assn. 9.00% 2016-2021
Government National Mortgage Assn. 9.00% 2016-2021
Government National Mortgage Assn. 9.00% 2016-2021
Government National Mortgage Assn. 9.00% 2016-2021
Government National Mortgage Assn. 9.00% 2016-2021
Government National Mortgage Assn. 9.00% 2016-2021
Government National Mortgage Assn. 9.00% 2016-2021
Government National Mortgage Assn. 9.00% 2016-2021
Government National Mortgage Assn. 9.00% 2016-2021
Government National Mortgage Assn. 9.00% 2016-2024
Government National Mortgage Assn. 9.00% 2016-2024
Government National Mortgage Assn. 9.00% 2016-2024
Government National Mortgage Assn. 9.00% 2016-2024
Government National Mortgage Assn. 9.00% 2016-2024 13,111 13,226 0.27
Government National Mortgage Assn. 9.50% 2017-2020
Government National Mortgage Assn. 9.50% 2017-2020
Government National Mortgage Assn. 9.50% 2017-2020
Government National Mortgage Assn. 9.50% 2017-2020 3,172 3,272 0.07
Government National Mortgage Assn. 10.00% 2017-2019
Government National Mortgage Assn. 10.00% 2017-2019
Government National Mortgage Assn. 10.00% 2017-2019
Government National Mortgage Assn. 10.00% 2017-2019
Government National Mortgage Assn. 10.00% 2017-2019
Government National Mortgage Assn. 10.00% 2017-2019
Government National Mortgage Assn. 10.00% 2017-2019
Government National Mortgage Assn. 10.00% 2017-2019
Government National Mortgage Assn. 10.00% 2017-2019
Government National Mortgage Assn. 10.00% 2017-2019
Government National Mortgage Assn. 10.00% 2017-2019
Government National Mortgage Assn. 10.00% 2017-2019
Government National Mortgage Assn. 10.00% 2017-2019 3,665 3,852 0.08
Government National Mortgage Assn. 10.50% 2015-2019
Government National Mortgage Assn. 10.50% 2015-2019
Government National Mortgage Assn. 10.50% 2015-2019
Government National Mortgage Assn. 10.50% 2015-2019
Government National Mortgage Assn. 10.50% 2015-2019
Government National Mortgage Assn. 10.50% 2015-2019
Government National Mortgage Assn. 10.50% 2015-2019
Government National Mortgage Assn. 10.50% 2015-2019
Government National Mortgage Assn. 10.50% 2015-2019
Government National Mortgage Assn. 10.50% 2015-2019 1,224 1,305 0.03
Government National Mortgage Assn. 11.00% 2013-2016
Government National Mortgage Assn. 11.00% 2013-2016
Government National Mortgage Assn. 11.00% 2013-2016
Government National Mortgage Assn. 11.00% 2013-2016
Government National Mortgage Assn. 11.00% 2013-2016
Government National Mortgage Assn. 11.00% 2013-2016
Government National Mortgage Assn. 11.00% 2013-2016
Government National Mortgage Assn. 11.00% 2013-2016
Government National Mortgage Assn. 11.00% 2013-2016
Government National Mortgage Assn. 11.00% 2013-2016
Government National Mortgage Assn. 11.00% 2013-2016
Government National Mortgage Assn. 11.00% 2013-2016
Government National Mortgage Assn. 11.00% 2013-2016
Government National Mortgage Assn. 11.00% 2013-2016 2,177 2,365 0.05
Government National Mortgage Assn. 11.50% 2015 82 90 0
Government National Mortgage Assn. 12.00% 2014 201 218 0
Government National Mortgage Assn. 12.50% 2010-2015
Government National Mortgage Assn. 12.50% 2010-2015
Government National Mortgage Assn. 12.50% 2010-2015
Government National Mortgage Assn. 12.50% 2010-2015
Government National Mortgage Assn. 12.50% 2010-2015
Government National Mortgage Assn. 12.50% 2010-2015
Government National Mortgage Assn. 12.50% 2010-2015
Government National Mortgage Assn. 12.50% 2010-2015
Government National Mortgage Assn. 12.50% 2010-2015
Government National Mortgage Assn. 12.50% 2010-2015
Government National Mortgage Assn. 12.50% 2010-2015
Government National Mortgage Assn. 12.50% 2010-2015
Government National Mortgage Assn. 12.50% 2010-2015
Government National Mortgage Assn. 12.50% 2010-2015
Government National Mortgage Assn. 12.50% 2010-2015
Government National Mortgage Assn. 12.50% 2010-2015
Government National Mortgage Assn. 12.50% 2010-2015
Government National Mortgage Assn. 12.50% 2010-2015
Government National Mortgage Assn. 12.50% 2010-2015
Government National Mortgage Assn. 12.50% 2010-2015
Government National Mortgage Assn. 12.50% 2010-2015
Government National Mortgage Assn. 12.50% 2010-2015
Government National Mortgage Assn. 12.50% 2010-2015
Government National Mortgage Assn. 12.50% 2010-2015 1,388 1,559 0.03
Government National Mortgage Assn. 13.25% 2014
Government National Mortgage Assn. 13.25% 2014
Government National Mortgage Assn. 13.25% 2014 113 126 0
---------- ---------
-
512,464 10.37
---------- ---------
-
FEDERAL AGENCY OBLIGATION - OTHER
Federal Home Loan Bank Bonds 6.00% 1996 10,000 9,787 0.2
Federal Home Loan Bank Bonds 8.23% 2004 5,000 4,830 0.1
Federal Home Loan Bank Notes 6.41% 2003 3,685 3,178 0.06
Federal Home Loan Bank Notes 6.16% 2004 24,000 20,625 0.42
Federal Home Loan Bank Notes 6.27% 2004 5,000 4,341 0.09
Federal Home Loan Mortgage Notes 5.74% 2003 6,500 5,450 0.11
Federal Home Loan Mortgage Notes 6.185% 2003 13,100 11,381 0.23
Federal Home Loan Mortgage Notes 6.24% 2003 2,900 2,508 0.05
Federal Home Loan Mortgage Notes 6.28% 2003 3,000 2,559 0.05
Federal Home Loan Mortgage Notes 6.30% 2003 2,000 1,756 0.04
Federal Home Loan Mortgage Notes 6.375% 2003 5,820 5,136 0.1
Federal Home Loan Mortgage Notes 6.39% 2003 4,500 3,960 0.08
Federal Home Loan Mortgage Notes 6.50% 2003 6,200 5,413 0.11
Federal Home Loan Mortgage Notes 6.19% 2004 6,000 5,137 0.1
Federal Home Loan Mortgage Notes 6.27% 2004 2,500 2,163 0.04
Federal Home Loan Mortgage Notes 7.29% 2004 6,000 5,535 0.11
Federal National Mortgage Association Notes 6.30% 1997 15,000 14,255 0.29
Federal National Mortgage Association, medium-term note,
5.20% 1998 15,000 13,733 0.28
Federal National Mortgage Association, medium-term note,
5.30% 1998 12,500 11,438 0.23
Federal National Mortgage Association, medium-term note,
6.14% 2004 13,000 11,239 0.23
FNSM Callable Principal STRIPS 0%/8.25% 2022/2/ 4,500 2,945 0.06
---------- ---------
-
147,369 2.98
---------- ---------
-
COLLATERALIZED MORTGAGE OBLIGATIONS - FEDERAL AGENCIES/4/
Federal Home Loan Mortgage Corp., Series 1604, Class SA,
7.5067% 2008/5/ 2,000 1,015 0.02
Federal Home Loan Mortgage Corp., Series 1625, Class SC,
7.117803% 2008/5/ 3,000 1,515 0.03
Federal Home Loan Mortgage Corp., Series 1716, Claass A,
6.50% 2009 4,750 4,061 0.08
Federal Home Loan Mortgage Corp., Series 1082, Class B,
9.00% 2020 2,522 2,533 0.05
Federal Home Loan Mortgage Corp., Series 1574, Class AB,
6.50% 2023 4,338 2,533 0.05
Federal Home Loan Mortgage Corp., Series 21, Class GNMA
SE, 8.0309% 2023/5/ 4,000 1,598 0.03
Federal Home Loan Mortgage Corp., Series 1657, Class SA,
8.6026% 2023/5/ 7,520 2,999 0.06
Federal Home Loan Mortgage Corp., Series 1673, Class SA,
6.7691% 2024/5/ 7,879 2,718 0.06
Federal Home Loan Mortgage Corp., Series 1671, Class O,
16.3085% 2024/5/ 13,330 4,399 0.09
Federal National Mortgage Assn., Series 90-142, Class J,
9.25% 2003 5,000 5,028 0.1
Federal National Mortgage Assn., Series 91-146, Class Z,
8.00% 2006 5,793 5,400 0.11
Federal National Mortgage Assn., Series 93-229, Class SB,
7.134% 2008/5/ 4,000 1,600 0.03
Federal National Mortgage Assn., Series 93-78, Class SB,
9.054% 2008 3,412 1,842 0.04
Federal National Mortgage Assn., Series 93-107, Class SA,
9.6212% 2008/5/ 5,906 3,278 0.07
Federal National Mortgage Assn., Series 91-65, Class X,
6.50% 2019 18,473 14,940 0.3
Federal National Mortgage Assn., Series 90-93, Class G,
5.50% 2020 1,500 1,190 0.02
Federal National Mortgage Assn., Series G93-19SJ, Class I,
1.7647% 2023/5/ 467 119 0
Federal National Mortgage Assn., Series 93-130, Class SA,
10.9133% 2023/5/ 3,758 1,747 0.04
Federal National Mortgage Assn., Series 93-120, Class SB,
10.9134% 2023/5/ 5,828 2,928 0.06
---------- ---------
-
61,443 1.24
---------- ---------
-
U.S. TREASURY OBLIGATIONS
12.625% May 1995 15,000 15,340 0.31
8.875% February 1996 42,000 42,623 0.86
7.625% April 1996 30,000 30,052 0.61
9.375% April 1996 20,000 20,444 0.41
7.25% August 1996 20,000 19,884 0.4
8.00% October 1996 14,500 14,577 0.3
8.00% January 1997 63,000 63,325 1.28
8.50% April 1997 50,000 50,750 1.03
8.75% October 1997 7,500 7,669 0.16
8.875% November 1997 11,500 11,804 0.24
8.125% February 1998 207,000 208,586 4.22
9.25% August 1998 170,000 177,385 3.59
8.875% February 1999 21,000 21,735 0.44
9.125% May 1999 18,750 19,605 0.4
6.875% July 1999 42,000 40,425 0.82
8.875% May 2000 10,000 10,459 0.21
8.750% August 2000 25,000 26,023 0.53
8.50% November 2000 30,000 30,923 0.63
7.75% February 2001 5,000 4,980 0.1
13.125% May 2001 21,500 27,147 0.55
14.25% February 2002 7,000 9,399 0.19
6.375% August 2002 9,200 8,424 0.17
11.625% November 2002 70,000 85,093 1.72
11.625% November 2004 94,750 118,674 2.4
10.375% November 2009 7,000 8,127 0.16
14.00% November 2011 12,000 17,467 0.35
8.875% August 2017 31,500 34,315 0.69
6.25% August 2023 10,000 8,130 0.16
---------- ---------
-
1,133,365 22.93
---------- ---------
-
FLOATING RATE EURODOLLAR NOTES (UNDATED)/3/
Allied Irish Banks Ltd. 6.187% 10,000 8,500 0.17
Bank of Nova Scotia 5.437% 15,000 11,903 0.24
Bergen Bank 5.4375% 5,000 3,913 0.08
Canadian Imperial Bank of Commerce 3.875% 18,500 14,800 0.3
Christiana Bank Og Kreditkasse 6.3125% 6,000 4,725 0.1
Financiere Credit Suisse 3.4375% 8,000 6,440 0.13
Hongkong and Shanghai Banking Corp. 5.5625% 10,000 8,050 0.16
Lloyds Bank FRN (#2) 5.412% 5,000 4,263 0.09
Lloyds Bank FRN (#3) 6.187% 5,000 4,213 0.09
National Bank of Canada 2.7187% 5,000 3,400 0.07
Standard Chartered Bank 7.00% 15,000 11,400 0.23
Standard Chartered Bank 5.025% 5,000 3,800 0.08
---------- ---------
-
85,407 1.74
---------- ---------
-
EQUITY-TYPE SECURITIES & MISCELLANEOUS
EQUITY-TYPE SECURITIES/6/
California Federal Bank, Inc., Class A 2,002 21,768 0.44
Dial Page, Inc., warrants 39 5 0
Glendale Federal Bank, warrants expire 03/10/00 8 8 0
---------- ---------
-
21,781 0.44
---------- ---------
-
MISCELLANEOUS
ASH Capital Finance, Ltd. 9.50% 2006 4,500 4,625 #DIV/0
#N/A 12,500 3,687 #DIV/0
#N/A 3,500 2,415 #DIV/0
#N/A 20,000 6,800 #DIV/0
Investment securities in the initial period of
acquisition 17,527 0.35
---------- ---------
-
TOTAL BONDS, NOTES AND EQUITY-TYPE SECURITIES ---------- ---------
-
(cost $4,718,738) 4,370,463 88.12
---------- ---------
-
SHORT-TERM SECURITIES
COMMERCIAL PAPER
AIG Funding Inc. 5.80% due 1/3/95 20,000 19,990 0.4
AIG Funding Inc. 6.01% due 1/11/95 10,000 9,982 0.2
American Telephone and Telegraph Co. 5.45% due 1/12/95 25,000 24,953 0.51
Bayerische Landesbank Girozentrale 6.01% due 1/11/95 12,000 11,978 0.24
Beneficial Corp. 5.76% due 1/18/95 10,000 9,971 0.2
Beneficial Corp. 5.99% due 1/31/95 10,000 9,949 0.2
Beneficial Corp. 6.15% due 2/17/95 25,000 24,797 0.5
Commerzbank U.S. Finance Inc. 5.88% due 1/3/95 27,700 27,686 0.56
Deere & Co. 6.11% due 2/21/95 20,000 19,827 0.4
Eli Lilly & Co. 5.77% due 1/6/95 15,800 15,785 0.32
Ford Motor Credit Co. 6.03% due 1/5/95 15,000 14,988 0.3
Ford Motor Credit Co. 6.10% due 1/19/95 25,000 24,920 0.5
Ford Motor Credit Co. 5.81% due 1/20/95 23,350 23,275 0.47
Ford Motor Credit Co. 6.01% due 2/28/95 8,250 8,170 0.17
General Electric Capital Corp. 5.49% due 1/9/95 35,250 35,201 0.71
H.J. Heinz Co. 5.95% due 1/20/95 15,000 14,951 0.3
H.J. Heinz Co. 5.95% due 1/23/95 3,970 3,955 0.08
H.J. Heinz Co. 6.10% due 1/24/95 25,000 24,899 0.5
H.J. Heinz Co. 5.95% due 2/15/95 8,000 7,939 0.16
John Deere Capital Corp. 6.14% due 2/6/95 15,000 14,907 0.3
Kimberly-Clark Corp. 5.93% due 1/18/95 20,000 19,941 0.4
Miles, Inc. 5.80% due 1/19/95 20,000 19,939 0.4
Monsanto Co. 5.93% due 1/6/95 6,150 6,144 0.12
National Rural Utilities Cooperative Finance Corp. 5.94%
due 1/12/95 10,000 9,980 0.2
Texaco Inc. 6.02% due 1/17/95 20,000 19,944 0.4
U S WEST Communications, Inc. 5.47% due 1/17/95 5,300 5,286 0.11
U S WEST Communications, Inc. 5.99% due 2/22/95 7,000 6,938 0.14
Xerox Corp. 5.89% due 2/6/95 22,000 21,868 0.44
Xerox Corp. 6.12% due 2/10/95 23,600 23,437 0.47
---------- ---------
-
481,600 9.7
---------- ---------
-
Federal Agency Discount Notes
Federal Farm Credit Banks 5.94% due 1/11/95 10,000 9,982 0.2
---------- ---------
-
TOTAL SHORT-TERM SECURITIES (Cost $491,585) 491,582 9.9
---------- ---------
-
TOTAL INVESTMENT SECURITIES (cost $5,210,323) 4,862,045 98.02
Excess of cash and receivables over payables 79,105 1.6
---------- ---------
-
NET ASSETS 4,941,150 99.62
========== =========
</TABLE>
/1/ Purchased in a private placement transaction; resale
to the public may require registration.
/2/ Represents a zero coupon bond which will convert to
an interest bearing security at a later date.
/3/ Coupon rates may change periodically.
/4/ Pass-through securities backed by a pool of
mortgages or other loans on which principal payments
are periodically made. Therefore, the effective
maturity of these securities is shorter than the stated
maturity.
/5/ Represents an inverse floater, which is a floating
rate note whose interest rate moves in the opposite
direction of prevailing interest rates.
/6/ Non-income-producing security
See Notes to Financial Statements
The Bond Fund of America
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
December 31, 1994 (dollars in thousands)
Assets:
Investment securities at market
<S> <C> <C>
(cost: $5,210,323) $4,862,045
Cash 3,838
Prepaid expense ....................
Receivables for--
Sales of investments $19,418
Sales of Fund's shares 13,531
Dividends and accrued interest 86,501 119,450
------------ --------------
-
4,985,333
Liabilities:
Payables for--
Purchases of investments 29,639
Repurchases of fund's shares 11,087
Forward currency contracts 1,403
Management services 1,586
Accrued expenses 468 44,183
------------ --------------
-
Net Assets at December 31, 1994--
Equivalent to $12.69 per share on
389,436,473 shares of $1 par value
capital stock outstanding (authorized
capital stock - 500,000,000 shares) $4,941,150
==============
=
STATEMENT OF OPERATIONS
for the year ended December 31, 1994 (dollars in thousands)
Investment Income:
Income:
Interest 430,119
Dividends from investment in stocks 20 $430,139
------------
Expenses:
Management services fee 18,755
Distribution expenses 11,347
Transfer agent fee 3,751
Reports to shareholders 175
Registration statement and prospectus 146
Postage, stationery and supplies 301
Directors' fees 37
Auditing and legal fees 46
Custodian fee 293
Taxes other than federal income tax 81 34,932
------------ --------------
-
Net investment income $395,207
==============
=
Realized Loss and Unrealized
Depreciation on Investments:
Net realized loss (36,092)
Net unrealized depreciation on
Investments (624,178)
Open forward currency contracts (2,363)
------------
Net unrealized depreciation (626,541)
--------------
-
Net realized loss and
unrealized depreciation
on investments (662,633)
--------------
-
Net Decrease in Net Assets Resulting ($267,426)
from Operations ==============
=
STATEMENT OF CHANGES IN NET ASSETS (dollars in thousands)
Year ended December 31
1994 1993
Operations:
Net investment income $395,207 $352,923
Net realized gain(loss) on investments (36,092) 130,054
Net unrealized appreciation
(depreciation) on investments (626,541) 121,833
------------ --------------
-
Net increase (decrease) in net assets
resulting from operations (267,426) 604,810
------------ --------------
-
Dividends and Distributions Paid to
Shareholders:
Dividends from net
investment income (396,205) (348,157)
Distributions from net realized gain
on investments -- (137,077)
------------ --------------
-
Total dividends and distributions (396,205) (485,234)
------------ --------------
-
Capital Share Transactions:
Proceeds from shares sold:
99,296,409 and 127,144,414
shares, respectively 1,337,647 1,858,704
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions
of net realized gain on investments:
20,827,138 and 24,515,759 shares,
respectively 277,618 357,602
Cost of shares repurchased:
96,388,393 and 66,054,022
shares, respectively (1,295,101) (968,614)
------------ --------------
-
Net increase in net assets
resulting from capital share
transactions 320,164 1,247,692
------------ --------------
-
Total Increase (Decrease) in Net Assets (343,467) 1,367,268
Net Assets:
Beginning of year 5,284,617 3,917,349
------------ --------------
-
End of year (including
undistributed net investment
income: $10,433 and $10,941
respectively) 4,941,150 $5,284,617
============ ==============
=
</TABLE>
See Notes to Financial Statements
NOTES TO FINANCIAL STATEMENTS
1. Bond Fund of America (the "fund") is registered under the Investment
Company Act of 1940 as an open-end, diversified management investment company.
The following paragraphs summarize the significant accounting policies
consistently followed by the fund in the preparation of its financial
statements:
Bonds and notes are valued at prices obtained from a bond-pricing service
provided by a major dealer in bonds, when such prices are available; however,
in circumstances where the investment adviser deems it appropriate to do so,
such securities will be valued at the mean of their representative quoted bid
and asked prices or, if such prices are not available, at the mean of such
prices for securities of comparable maturity, quality and type. Securities
denominated in non-U.S. currencies are generally valued on the basis of bid
quotations. Equity-type securities are stated at market value based upon
closing sales prices reported on recognized securities exchanges on the last
business day of the period or, for listed securities having no sales reported
and for unlisted securities, upon last-reported bid prices on that date.
Short-term securities with original or remaining maturities in excess of 60
days, including forward currency contracts, are valued at the mean of their
quoted bid and asked prices. Short-term securities with 60 days or less to
maturity are valued at amortized cost, which approximates market value. The
maturities of variable or floating rate instruments are deemed to be the time
remaining until the next interest rate adjustment date. Securities for which
market quotations are not readily available are valued at fair value as
determined in good faith by the Valuation Committee of the Board of Directors.
As is customary in the mutual fund industry, securities transactions are
accounted for on the date the securities are purchased or sold. Realized gains
and losses from securities transactions are reported on an identified cost
basis. Interest income is reported on the accrual basis. Discounts on
securities purchased are amortized over the life of the respective securities.
The fund does not amortize premiums on securities purchased. Dividends are
declared on a daily basis after determination of the fund's net asset value and
are paid to shareholders on a monthly basis.
Investment securities, including forward currency contracts, denominated in
non-U.S. currencies are recorded in the financial statements after translation
into U.S. dollars utilizing rates of exchange on the last business day of the
year. Interest income from such investments is calculated using the
approximate exchange rate as accrued or when received. Purchases and sales of
investment securities and interest income are calculated using the approximate
exchange rate as accrued. The fund does not identify the portion of each
amount shown in the fund's Statement of Operations under the caption "Realized
Loss and Unrealized Depreciation on Investments" that arises from changes in
non-U.S. currency exchange rates.
Pursuant to the custodian agreement, the fund receives credit against its
custodian fee for imputed interest on certain balances with the with the
custodian bank. The custodian fee of $293,000 includes $111,000 that was paid
by credits rather than in cash.
2. It is the fund's policy to continue to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its net taxable income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision
is required.
As of December 31, 1994, net unrealized depreciation on investments,
excluding forward currency contracts, for book and federal income tax purposes
aggregated $348,278,000, of which $29,860,000 related to appreciated securities
and $378,138,000 related to depreciated securities. During the year ended
December 31, 1994, the fund realized, on a tax basis, a net capital loss of
$36,090,000 on securities transactions. The fund has available at December 31,
1994, a net capital loss carryforward totaling $23,841,000 which may be used to
offset capital gains realized during subsequent years through 2002 and thereby
relieve the fund and its shareholders of any federal income tax liability with
respect to capital gains that are so offset. It is the intention of the fund
not to make distributions from capital gains while there is a capital loss
carryforward. The cost of portfolio securities, excluding foreign currency
contracts, for book and federal income tax purposes was $5,210,323,000 at
December 31, 1994.
3. The fee of $18,755,0000 for management services was paid pursuant to an
agreement with Capital Research and Management Company (CRMC), with which
certain officers and Directors of the fund are affiliated. The Investment
Advisory and Service Agreement provides for monthly fees, accrued daily, based
on an annual rate of 0.30% of the first $60 million of average net assets;
0.21% of such assets in excess of $60 million but not exceeding $1 billion;
0.18% of such assets in excess of $1 billion but not exceeding $3 billion; and
0.16% of such assets in excess of $3 billion ("asset-based fee"); plus 3.00% on
the first $450,000 of the fund's monthly gross investment income, plus 2.25% of
such income in excess of $450,000 ("income-based fee").
Pursuant to a Plan of Distribution, the fund may expend up to 0.25% of its
average net assets annually for any activities primarily intended to result in
sales of fund shares, provided the categories of expenses for which
reimbursement is made are approved by the fund's Board of Directors. Fund
expenses under the Plan include payments to dealers to compensate them for
their selling and servicing efforts. During the year ended December 31, 1994,
distribution expenses under the Plan were $11,347,000. As of December 31,
1994, accrued and unpaid distribution expenses were $829,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $3,751,000. American Funds Distributors, Inc. (AFD), the
principal underwriter of the fund's shares, received $4,562,000 (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.
CRMC is owned by The Capital Group, Inc. AFS and AFD are both wholly owned
subsidiaries of CRMC. Certain of the Directors and officers of the fund are or
may be considered to be affiliated with CRMC, AFS and AFD. No affiliated
officers, directors or employees of CRMC, AFS and AFD received any remuneration
directly from the fund.
4. As of December 31, 1994, accumulated undistributed net realized loss on
investments was $35,644,000 and paid-in capital was $4,926,606,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $2,822,901,000 and $2,634,896,000, respectively,
during the year ended December 31, 1994.
The fund purchases forward currency contracts in anticipation of, or to
protect itself against, fluctuations in exchange rates. The contracts are
recorded at market value and reflect the extent of the fund's involvement in
these financial instruments. Risks may arise upon entering these contracts
from the potential inability of counterparties to meet the terms of their
contracts and from the possible movements in foreign exchange rates and
securities values underlying these instruments. The fund reclassified
$7,850,000 from undistributed net realized gains to undistributed net
investment income for the year ended December 31, 1994. At December 31, 1994,
the fund had outstanding forward currency contracts to sell non-U.S. currencies
as follows:
*****
<TABLE>
<CAPTION>
Contract Amount U.S. at 12/31/94
Valuations
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Unrealized
Appreciation
Non-U.S. currency contracts Non-U.S. U.S. Amount (Depreciation
)
French Francs expiring 11/27/95 to 9/9/98 FF 70,000,000 $11,811,000 $13,051,000 ($1,240,000)
Great Britain Pounds expiring 5/19/95 GB 3,325,000 4,996,000 5,205,000 (209,000)
P
Japanese Yen expiring 11/22/95 ye 1,000,000,000 10,582,000 10,492,000 90,000
n
Netherland Guilders expiring 6/8/95 FL 4,820,000 2,753,000 2,797,000 (44,000)
----------- ----------- ----------
$30,142,000 $31,545,000 ($1,403,000)
============ ============ ==========
</TABLE>
*****
Per-Share Data and Ratios
<TABLE>
<CAPTION>
Year Ended December 31
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of years $14.45 $13.99 $13.70 $12.39 $13.23
------- ------- ------- ------ -----
Income from investment operations:
Net investment income 1.05 1.09 1.15 1.21 1.24
Net realized and unrealized gain(loss) on investments (1.76) 0.84 0.34 1.28 (0.84)
------- ------- ------- ------ -----
Total from investment operations (0.71) 1.93 1.49 2.49 0.40
------- ------- ------- ------ -----
Less distributions:
Dividends from net investment income (1.05) (1.08) (1.16) (1.18) (1.24)
Distributions from capital gains -- (0.39) (0.04) -- --
------- ------- ------- ------ -----
Total distributions (1.05) (1.47) (1.20) (1.18) (1.24)
------- ------- ------ ------ -----
Net asset value, end of year $12.69 $14.45 $13.99 $13.70 $12.39
======== ======== ======= ====== =====
Total Return* (5.02%) 14.14% 11.34% 21.04% 3.27%
Ratios/supplemental data:
Net assets, end of period (in millions) $4,941 $5,285 $3,917 $2,859 $1,945
Ratio of expenses to average net assets .69% .71% .73% .77% .76%
Ratio of net income to average net assets 7.77% 7.53% 8.36% 9.28% 9.70%
Portfolio turnover rate 57.0% 44.7% 49.7% 56.5% 59.9%
</TABLE>
*This was calculated without deducting a sales charge. The maximum sales
charge is 4.75% of the fund's offering price.
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
The Bond Fund of America, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the investment portfolio, of The Bond Fund of America, Inc., as of
December 31, 1994, and the related statement of operations for the year then
ended, the statement of changes in net assets for the two years then ended, and
the per-share data and ratios for each of the five years in the period then
ended. These financial statements and the per-share data and ratios are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the per-share data and ratios based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
per-share data and ratios are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned at December 31, 1994 by correspondence with the custodian and brokers.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and per-share data and ratios
referred to above present fairly, in all material respects, the financial
position of The Bond Fund of America, Inc., at December 31, 1994, the results
of its operations, the changes in its net assets and the per-share data and
ratios for the respective stated years, in conformity with generally accepted
accounting principles.
/s/ Deloitte & Touche LLP
Los Angeles, California
January 27, 1995
